Many centuries ago a fellow Greek, Plato, said among a few other things that
“Nothing endures but Change itself”
Let’s take a look at the global scene today:
Major changes in communications and information technology; great and rapid progress in transportation; international institutions and agreements; strong commitments to globalization, etc., have resulted to a significant economic and financial interconnectedness between nations and markets, which in effect have created a “BORDERLESS WORLD”
Capital, Technology, and Information do not have nationalities anymore. They flow essentially freely in and out through national borders.
Fifty years ago the USA, with a 27% of the world’s Gross Domestic Product was the
world’s economic power
The poorest countries such as India & China, were barely making 4% of the world’s
Now let’s jump ahead in today’s world. Let’s look at the state of the economies, about 50 years later and see what changed:
The USA portion of the world’s GDP has dropped to 22%
The “poor” countries of fifty years ago are growing at a rate that in another
30 years or so their economies will surpass those of the USA, Western Europe,
and Japan together!
Population Growth: with 6.5 billion people, the world demographic results in increase in life
expectancy; drop in fertility rates; increase in population age.
This might enhance economic growth in Africa and other underdeveloped areas.
Labor flow: the world has about 180 million migrants today. This number could expand significantly when we consider those regions with low income.
Multinational agencies such as the World Bank, world Trade Organization, and International Monetary Fund, have a very important role to play particularly if they evolve and continue to offer more effectively the needed expertise on economic issues such as development, monetary policy, and trade.
With these relatively rapid changes come risks, this time of major consequences, i.e. the recent melt down of the financial markets that are creating a recessionary environment due to uncertainties and credit tightness. Continue reading