Thursday, January 28, 2010

Time to look East (China & India)

The 'Look East' policy by Dr Mahathir back in the 80s meant looking towards Japan & Korea for their successful development models.

However, we had learned the hard way that these two countries would not transfer their technologies or impart with their know-how. Proton as a fine example whereby only until recently, all the main parts were imported from Japan and any Proton cars were only assembled in Malaysia under tight Japanese control.

Now in the 21st century, from this part of the world, as suggested by James Wolfensohn , 'look east' means India & China, the most populous nations on earth and the emerging economy powerhouse.

The below is an excerpt from an article in Arabian Business.

Of all the speakers, for my money ex-World Bank president James Wolfensohn was the best. Grandfatherly and kindly by appearance, the vision of the near future he painted was one of very rapid seismic transfers in the world order. Forgive me for reproducing much of it here, but is worth passing it on.

He said: "By 2050, according to research undertaken by the World Bank and the UN, the demographics are pretty clear. The world will grow from six billion people as it is today to a peak of nine billion in 2050. The consensus estimate is only a hundred million of that growth, of the people between six and nine billion, goes to the so-called wealthy countries, the OECD countries, and the other 2.9 billion goes to the developing countries. And that brings with it some very dramatic consequences.

"The first is the general consensus view that by 2050 China and India will comprise approximately 50 percent of global GDP. That has happened before, it happened in 1815, and it happened in the year 1500. And if you visit China and India, I think you will conclude that Chinese development is ahead of Indian development at the moment. But you have nonetheless a very strong movement in India. My belief is that somewhere around 2035 and 2040 the US will be replaced as the number one economic power by China and then India. I believe that is almost certain to happen.

"The other direction that is clear is that world consumption shifts. Two thirds of the world's consumption from the middle class will move to Asia. It is currently one third with two thirds coming from the OECD countries. So you will have then a 4.5 billion population on the planet that is middle class, with 1.5 billion being in the OECD countries, and three billion being in China, India and Asia. The direction is totally clear, and this is the working assumption that the World Bank is currently working on."

We have all heard for a long time that India and China are on the rise, but to have it laid out so starkly and with such certainty was arresting.

Wolfensohn's message was that these shifts in financial and cultural power presented huge opportunities for the forward thinking as well as huge challenges for the governments of nations affected by the changes. He urged the Middle East to look East now to build for the future.