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Thread: How dynamics of global power structure is changing?

  1. #1
    New Member Ajay's Avatar
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    How dynamics of global power structure is changing?

    Based on stage of economic development, countries are classified as developed, developing and underdeveloped.

    There is no comparison between size of GDP of developed countries and others.Per capita income of citizens is far ahead of that of citizens of other countries.Higher per capita income resulted in lifestyle which is far superior.Share of global trade of other countries is negligible.Developed economies are major source of aid for underdeveloped countries.Infrastructure in developed countries is par excellence.This economic power resulted in dominance of global financial institutions like World bank and IMF by developed countries.Till date no person from developing or underdeveloped countries has the honour of heading these global financial institutions.

    Some major corporations from developed countries have revenues more than GDP of many underdeveloped countries .Majority of top 100 global brands are from such corporations only.Some brands like Coke,McDonald,Nike,Mercedes,Sony have iconic status across the world.Global operations of these corporations from developed countries are major source of employment in other countries.Management practices of these companies are part of management study books.Domestic corporations from developing and underdeveloped countries were no match for these multi national corporations.

    Economic strength of developed countries helped them in higher allocation of resources to defence.Superior defence technology coupled with economic strength resulted in political dominance of entire world by developed economies.No developing or underdeveloped countries could disobey dictates of these nations.Afganistan,Iraq,Yugoslavia ,Libya are excellent examples of demonstration of economic,political and defence strengths of developed countries.

    Now entire world is witnessing current happenings in developed countries.US was on the verge of default on repayment of sovereign debt.Credit rating of US treasury bonds has been downgraded classifying them as more risky investment than before.Unemployement rate is at all time high.President of USA is seeking help of emerging economies to generate more jobs back home.Fiscal deficit position is getting out of control.Inflation is creeping up.Major US corporations had to be bailed out by government out of financial mess.Dollar is losing value day by day.Central bank across world are seriously thinking of reducing dependance on dollar as major reserve currency.

    Euro zone is in even more bad shape.Greece has technically defaulted on sovereign debt.Portugal and Spain are going same way.Bonds issued by these governments have a junk status.Italy,third largest economy of euro zone has somehow avoided default.Credit ratng agencies are seriously thinking of downgrading AAA rating of France,the second largest economy of euro zone.Germany,the largest economy of euro zone has slowed down.Bad state of these economies has resulted in higher unemployement.Recent riots in London are result of high rate of unemployment.

    Whereas emerging economies “BRICS” are growing rapidly.Unemployment rates are low.Consumption is growing rapidly.Higher economic growth has resulted in higher per capita income of citizens of these emerging economies.Lifestyles are improving.Growing emerging economies are creating opportunities which are being tapped by citizens of these countries.Investment cycle is peaking up.Better infrastructure is being put in place to support high growth rates.Major corporations from developed economies are banking on these emerging markets for survival and growth.Corporations from emerging economies are spreading their footprints across the globe.Jaguar is no more a British brand.It is one of the brands owned by Tata Motors.

    What do these developments indicate?Engine of global economy can no more be propelled forward solely by developed economies in the current situation.Evergrowing strength of emerging economies will have to push forward global economy.Ultimately dominance of global economy by emerging economies can be taken as “future shock” by developed countries.
    Last edited by Dave A; 28-Aug-11 at 09:16 PM. Reason: removed duplicate lines - copy and paste problems there, Ajay?

  2. #2
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Ajay View Post
    Whereas emerging economies “BRICS” are growing rapidly.Unemployment rates are low.
    Unemployment rates are low compared to the developed economies? Not so sure on that one, at least not yet. Certainly some of the developing economies are doing a better job of reducing unemployment than many of the developed economies just at the moment - but then they also had the advantage of greater scope for improvement

    On the economic growth bit, I listened to a disturbing comment by Clem Sunter a couple of weeks back. He suggested if South Africa didn't get its act together pretty quickly, it wasn't going to be too long until BRICS will become BRINC - with Nigeria overtaking South Africa as the African economic powerhouse of choice. I hear some major investors have already given direction on their African investment budget along the lines of "anywhere in Africa except South Africa."

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