Sunday, July 10, 2016
Facts, Statistics & Observations: Why Asia is eating everybody's lunch. Speaking before the MBA students at Stanford University, the former World Bank President, James Wolfensohn, highlights some very interesting facts, statistics & observations on dramatic changes that have been happening in the world and their consequences on each continent. The most notable observation that he makes is that Asia, specifically China and India are eating everyone's lunch and the rest of the world seems helpless in terms of finding counteracting measures that can reverse this trend. After the industrial revolution that put the USA and Europe on top of the world as far as GDP is concerned, Asia moved strategically to put in place political and economic structures that would make her competitive and attract industries. The measures taken and the structures put in place worked tremendously and within two decades the manufacturing industry has moved from the USA and Europe to Asia. The Service industry has also moved to Asia. And more recently the Technological industry has moved to Asia too. Unless something drastic happens China and India alone are going to have 50% of the world's GDP by the year 2050. Their per capita income will be about $50,000 to 80,000 compared to Africa's which will be at $2,000 to $3,000. To make matters worse, the population of Africa will have grown by about 2 billion people compared to the population of the USA which is projected to grow by only 150 million people within the same period of time. At present the developed world has only 1/6 of the world's population yet it harbors 80% of the world's income. The developing world, Africa included, has 5/6 of the world's population yet only has 20% of the world's income. To make matters worse, 90% of the wealth in the developing world is owned and controlled by only 10% of the population there. The rest of the world, especially the developing world, needs to learn a lot from Asia and take drastic measures to change its political and economic governance structures so as to infuse confidence in local and foreign investors who will in turn help to boost the economic sectors that need to grow for the GDP to grow too. Question: What can the USA do bring back her industries? Please don't give us the same tired lines that politicians give. NB: Still mulling over this & input is welcome. GB.