(Graph credits: The Economist)
A few days ago I was viewing this nicely-displayed IMF forecast in the Economist. It could be seen as the aftermath of the financial crisis. This crisis has a merit, it showed off “the Rest, the very densely populated Rest, I would add. It finally makes the centre of discussion the problems of our times.
When I was born, the world that my parents knew was very different. Supposedly, we are no longer divided between Capitalism and Communism anymore; we are not divided in First World or Third World.
This crisis, however, proved the opposite.
First, the rise of communist China which has turned in a state with a market-oriented economy lead by the Communist Party, has proved to be more “capitalistic” than the United States. Second, we are not living in the First World, Third World and so on. We are living in one world, our Earth, and its resources matter, especially if these resources must feed approximately seven billion human beings.
Yes, the world has changed.
So what is the next step? Economic growth, redistribution and social justice served by performing institutions. However, institutions have recently shown several weaknesses. In the West, we are seeing degradation of institutions in many countries. The main problem in Western countries has its roots in consumption and, in my opinion, this is what the crisis is all about. This consumption that I talk about is the consumption that consumed the work force, the productivity and the quality of credit.
Historically, the Rest was more populous than the West and this creates many problems. On one hand we are seeing an ageing society and the welfare systems are put to a test; on the other hand, the Middle-Kingdom has put itself as an alternative model to the western one to drive economic growth, but it is not the only region in the world in this global competition.
Let’s take Africa as an example. Africa is a continent with 54 sovereign countries. I always see a lot of hypocrisy in how we are all willing to sign our check to send billions of dollars to some country in Africa but at the same time we don’t want to trade with them. I do believe that sending money to African countries caused more problems than solutions. People in Africa should be considered responsible of their past decline but now something is about to change, or at least some countries are on the right track. Having said that, big problems could arise in the disorganisation in infrastructures, in investments, in real estates or the financial structure, not to mention laws of these countries. Legislation must work hard and carefully in order to bring people out of poverty and to provide wealth and security to them.
In conclusion, today’s world, as we can see from this graph, presents unbalances and not only in the forecasts of economic growth.
I see challenges. I see reforms. We cannot think to go forward in the same fashion of the past sixty years. It is time to redefine the old categories. This graph is a white paper on which we can draw our future.