To Which Extent Can We Count on Emerging Countries to Boost the World Economy
The end of the last decade saw the arising of a lot of questioning about the sustainability of the world economy growth. However, what is not questioned is that emerging countries are capturing the worlds growth while the rest of the world appears to stand still.
The rich economies can be jealous. Their way of proceeding which they believed was the result of their economical advance is not bringing as much as in the past. Worst, countries, which were nothing 50 years ago, succeed better than them. Soon, the emerging countries share of world’s GDP will be higher than developed countries.
An emerging country is characterized by a high inflation coming from a high internal demand, a weak internal offer but a low level of importation, due to some entry barriers. Meanwhile, the exportation is kept high, thanks to low wages and a low currency: inequities arising from an inefficient social system are maintaining the lowest production cost while increasing the risk of social disorder, which is preventing the currencies to appreciate (among other reasons). The social disorders are delayed as long as the growth is higher than inflation. The growth depends on the importation of developed countries. The developed country, on their side, have a relatively weak internal demand (the households are for the majority over-equipped and firms are more and more reluctant to invest), requesting some low cost products, and a strong offer specialized in high value added products, needing continually new markets. Because of their dynamic demography, emerging countries’ markets are very promising. Moreover, they usually accept to import these high value added products for the following reasons. First, it is requested by their top or middle-class (Luxury goods, services). Then it is required to improve their infrastructure (aircrafts, trains, civil works). Also, it may be required to extend their influence areas (security, weapons). But over all, they are required to keep alive the developed country market. The developed countries could still complain about delocalization,