from Ian Bremmer:
New world, new rules
By Paul Smalera
Welcome to the new world of volatility, globalization and a host of emerging markets. Merrill Lynch Chief Investment Officer Lisa Shalett and Eurasia Group President Ian Bremmer tell me, Reuters' Deputy Opinion editor Paul Smalera, their views on how best to navigate today's economy. To learn more about the report, including Bremmer's analysis of debtor nations and creditor nations, and the tremendous GDP growth among developing world nations in recent years, watch the video below. To read the entire report, check out ML.com.
Shifting wealth: does the developing world hold the key to building a stronger economy?
The following is a guest post by Angel Gurría, Secretary-General of the Organisation for Economic Co-operation Development. The opinions expressed are his own.
The world’s economic center of gravity is changing. Global GDP growth over the last decade owes more to the developing world than to high-income economies. If these trends continue, by 2030 developing countries will account for nearly 60% of world GDP on a purchasing-power parity basis, according to OECD calculations.
While high-income countries have been languishing in the worst recession since the 1930s, China and India have continued to power ahead. This is not a single stand-alone event, but a sign of an important structural transformation in the global economy, a process we call “shifting wealth.”
The tangible signs of shifting wealth are widespread. In 2009 China became the leading trading partner of Brazil, India and South Africa. The Indian multinational Tata is now the second most active investor in sub-Saharan Africa. Over 40% of the world’s researchers are now based in Asia. And by 2009, developing countries were holding USD 5.4 trillion in foreign currency reserves, nearly twice as much the amount held by rich countries.
Some commentators talk about these new trends with trepidation. But the “rise of the rest” is not a “threat to the west:” overall, the newfound prosperity in the developing world represents an enormous opportunity for citizens in the developing and developed world alike. Improvements in the range and quality of their exports, greater technological dynamism, better prospects for doing business, a larger consumption base – all these factors can create substantial welfare benefits for the world.
Moreover, imagine the consequences if the Asian Giants had followed the industrialised countries into recession? These large developing countries have helped soften the impact of the most serious global recession since the 1930s. Through their trade and investment links they have also mitigated the impact of the crisis on the rest of the developing world. Africa, for instance, is forecast to post growth of 4.5 percent this year – a figure below its pre-crisis level, but far in excess of that of the OECD average.
As world leaders work on the recovery and strengthening of the global economy and financial system, more attention deserves to be paid to South-South linkages, which promise to be one of the main engines of growth over the coming decade. Take trade, for example. Between 1990 and 2008, South-South trade multiplied more than twenty times over, while world trade expanded only four-fold. Yet trade barriers between developing countries are still high.
If the 19th and 20th century models for building an industrial society are followed by the developing world, their success will be even more short lived than that of Europe and the U.S..
Extending vaccines to the worlds poorest
–Joe Cerrell is director of Global Health Policy and Advocacy at the Bill & Melinda Gates foundation. He oversees the foundation’s global health communications, public policy, and international finance. The views expressed are his own. –
I recently took my three-year-old twin daughters to their annual doctor visit, where they received their latest round of routine vaccinations. Thanks to the miracle of vaccines, I know my daughters will be protected for life against measles, tetanus, and other diseases that were once serious threats. But incredibly, millions of children in poor countries still die from diseases that could easily be prevented with the effective, affordable vaccines that Americans take for granted.
Fortunately, that is starting to change. This week, a landmark report from the World Health Organization, UNICEF, and the World Bank concludes that a renewed global push on childhood immunization has raised the number of children vaccinated to an all-time high. The authors find that vaccines now save 2.5 million lives worldwide every year.
(Read related Reuters story: Global immunizations hit record but miss millions.)
As we continue expanding access to basic vaccines that have existed for decades, we also need to ensure that new vaccines quickly reach children in need. Typically, when new vaccines are invented, they don’t become available in poor countries until years, or even decades, after being introduced in the U.S. What’s more, effective vaccines don’t yet exist for some of the developing world’s biggest killers, like malaria and HIV.
This situation is a classic case of markets failing the world’s poorest people. Because poor countries have limited ability to pay, vaccine makers have little incentive to make the enormous investments required to develop and manufacture new vaccines for the developing world. So vaccines remain unavailable where they could save the most lives.
Now, innovative thinking on global markets promises to bring long-overdue change.
You speak of money as if it were worthless. It is a measure of worth.
It buys you the food you eat, the clothes you wear, the home you live in, the car you drive, electricity, clean water, health, and all the technology you take for granted.
All of these things are provided to you because you pay for them. If you didn’t pay for them, there would be no reason for anyone to make these things or provide them to you.
And where do you get the money to pay for them? From your work. From some form of contribution you make to the economy (i.e. society) which indicates that you are worth having the food, water, shelter and space to which you are accustomed.
Or alternatively, if you are not worth anything to society, there are enough other people of worth that you can live off the sweat of their brow instead of your own. Thanks to a nation wealthy enough to give government benefits.
The corporations are the reason for the immense wealth of the society in which you live. Whether you choose to give the money you earn to a charitable cause or not is your will. But whether you had a job to earn that money, or an economy to gain that money, or a country where you are wealthy enough to part with that money, is the will of the corporations.
Your definition of competition has no bearing with the actual meaning of the word in biology or society. It is merely your idea of what you think competition ‘should’ be as opposed to what it is.
Competition is the struggle for the lion share of resources, where the strong get the most and the weak get little. Where the group as a whole gain, it is at the expense of those who do without. Where the weak gain charity, it is because the group is rich enough to spare it. Look to animals in nature, or plants, society or economics. It is all the same.
And as for the words of prophets? Nothing you have said has been anything remotely to do with teaching men to fish.
Rather you believe in giving them fish each day, and feeding them for the rest of their lives at the expense of others. And expecting corporations to do the fishing forever, for other people, for free.
You think that the single force driving the economy, profit, should somehow cease to be. This makes as much sense as deciding your car doesn’t need wheels, and still expecting it to drive you somewhere.
We have two choices.
-We can have corporations, poverty and charity.
-Or we can have no corporations, no poverty and no charity.
Why would having no corporations mean no poverty? Because we would all be equally suffering and destitute. Meaning no rich, and hence no poor.
“Truman doctrine” could boost IMF firepower
– Paul Taylor is a Reuters columnist. The opinions expressed are his own –
The day before he returned to the U.S. Treasury for six weeks to help the understaffed Obama administration, Edwin Truman published a proposal to give the International Monetary Fund more firepower to fight the financial crisis.
Truman’s idea — a one-off $250 billion allocation of Special Drawing Rights (SDRs) to IMF member states — looks like the quickest way to put a safety net under developing countries and avert financial contagion. The Group of 20 world leaders should embrace it at the meeting in London on April 2.
U.S. Treasury Secretary Tim Geithner has not endorsed the plan in public, but the British minister preparing the summit confirmed it is one of the options under consideration. It could supplement a proposed doubling of the IMF’s resources and get around the reluctance of surplus countries such as China and Saudi Arabia to contribute more for now.
SDRs are international reserve assets, calculated in a basket of major currencies, that are allocated to the IMF’s 185 members according to their quota of the Fund’s capital. A special issue would be a bit like a global central bank printing money to help countries with payments difficulties.
A G20 endorsement would show financial markets that world powers are cooperating to overcome the crisis by supporting developing nations starved of credit by the collapse of international bank lending.
THE BENEFITS
Poor countries do not need to be economically and politically crushed with the burden of more debt. Instead of advancing $250 billion, why doesnt the IMF just FORGIVE $250 billion in existing debt??? Listen up all you politicians — the public is worn out on all this funny money stuff that does nothing but increase our collective tax burden.
