Emerging economies can save the global
economy in distress?
In the past two years, the industrialized countries have been serious financial turmoil,Now again the deepening sovereign debt problem and with high unemployment.Is considered, meanwhile, are more likely to hit the emerging economies, however, show strong vitality.With the strong level of growth back to 2008 years ago, China, India and Brazil's performance to become today's important engine of global growth. Emerging economies are in high growth and financial stability is of great help to industrialized countries on a large scale adjustment.But this high growth will have a significant long-term impact.If according to the current pattern of development, the global economy will be the permanent transformation.In particular, as measured by the market price created after more than 10 years of developing country's GDP will be more than 50% of the world's GDP.
Clear whether this explosive growth stage, therefore, it is very important to sustainable.The answer comes from two aspects.A depends on the ability to deal with its success in emerging economies.Second, we must depend on the success of the global economy to emerging economies to adapt to the
degree.The first aspect is no problem, as for the second aspect is hard to say.
Emerging economies still have to continue to use the way of catch-up growth space, but it must be embarked on a continuous, fast, and sometimes it is difficult to structural adjustment, reform and system construction should also be kept pace.In recent years, systemically important countries in a flexible and practical aspects of record keeping is impressive.This situation may be maintained.
As we will continue to implement the government policy, we can expect domestic endogenous growth in emerging
economies engine (endogenous domestic growth drivers) gradually strengthened, and the growing middle class will become a mainstay.This, together with the growth of trade between emerging economies, even can not be completely decoupling and industrialized countries to emerging economies, will also make it less demand for the latter's dependence. Distribution and growth are equally important.Emerging economies need to be better is located in the reason for the growing income inequality and access to basic services of unequal opportunity caused by the growing of the internal tensions.Can not make a difference in this respect will seriously
damage the growth of the domestic and regional dynamic (growth dynamics).Emerging economies have a good
understanding about it, in its policy agenda, growth strategy has distribution problems into serious consideration. Emerging economies to deal with the problem of industrialized countries economic slowdown, but the bigger challenge is the transmission mechanism of financial department.The current low interest rate environment is that capital flows to emerging economies, pouring increases the risk of inflation and asset bubbles.When western Banks have state, trade credit will be affected, which could hurt domestic Banks.
These risks are real.Fortunately, some emerging economies still have cushion and shock absorbers.These countries in 2008-2009 crisis occurs in good condition (including a large number of international reserves, the budget and balance of payments surplus, and an abundance of cash and bank), there is no sign that the fiscal and financial flexibility are already at risk - the ability to cope with future shocks is still energetic. In general, emerging economies are in good condition, enough for industrialized countries in the world crisis and swing timing.However, they have not fully decoupling and
industrialized countries.To achieve the best results, still need to
industrialized countries can and willing to accept the bumps and strengthening constantly emerging economies.This is a risk, and may lead to a series of potential problems.
High growth rates in emerging economies is based on knowledge, capital and technology flows, which are linked to open, the rule of law and economic globalization are closely related.However, persistently high unemployment in developed countries, the financial turmoil of environment, the global structure facing heavy pressure.Global economic growth is a zero-sum game development, lead to suboptimal response. As a result, the industrialised countries market continues to open is no longer a matter of course.Political and policy direction are more narrow, more domestic, and international agenda and the pursuit of common interests of the world's voice is more and more small.
These challenges in the next few years will be bigger and bigger, and involved in the global system and governance issues. A bigger challenge is in an inconsistent in growth, strong or weak contrast is reversed in a world of growing and complex international relations.A world in which need to be better global governance, also must mend reform, so that emerging economies get reasonable voice and representation in
Without these changes, the global economy can only from one crisis to another, like a no head of flies everywhere disorderly bump.The end result is what economists call the "Nash equilibrium" (Nash equilibria), namely a series of subprime (suboptimal) part of the cooperation (quasi - cooperative) results.
This will bring us?
Do not match the growth in the current global economy, the balance sheet of industrialized countries need a long-term process of repair.In this case, the emerging economies will be asked to play a more important role.Only by their own means, they can be competent, but things are not so simple.Emerging economies by industrialized countries to adjust the growth of the lubricant effect depends on the size of the latter accept the global economy and governance structure will change.I hope these global problems are serious consideration.