Stumble or fall? January 12th 2009
The trend is very clear. The emerging markets emerged out of the needs of the evolved and 'mature' markets.
The evolved markets in the 1st world economy virtually outsourced all so called non core functions that was considerd as a drain on the unit on a micro level.With out sourcing went out the job for the masses.
A few year down the line, to sustain the population without a gainful full time activity became very difficult as subsidy and welfare was not sustainable in longer terms.
So how do you reverse the wheel that you had set in motion. The power of ridicule is often overwhelming even for the strongest of the governments, so the way forward was to precipitate a crisis across the economy and then reverse the motion fo the wheel, in the hope of resurrecting the flagging economy.
Any economy, unless backed up by a proper mix of agrigarian, manufacturing and service can not be helathy in long run.
This global crisis precipitated is a percusor for the revival of the manufacturing sectors in the developed and mature economies, naturally the shrinkage effect would be more glaring to the emerging economies that opted to play the pawn in the game.
Thus a temporary mid term halting of these emerging economies would be more discernable that what we are contemplating today. Nonetheless, their are advantages to these economies, as they have stabilised their infrastructures to a large level and have also build up a credible economic base with relatively low cost economic metrics.
In times to come, the differentiator would get narrow as perceptible shift would be noticed across the globe in the egalaterian trend line and incomes for the masses would be not so disparate in emerging and devoleped economy. This is some time away.
But in the near and immediate future, emerging economy is bound to take a substantial hit , as consolidation of manufacturing sector takes place in developed world.
All the jos that went out would largely come back and that would be providing the feel good factor for all the politicians that they have been able to create so many jobs, the reality would be that they just got it restored somehow at the expense of trillions of dollars across the global economies by precipitating the crisis in the first place.
Classic case of of troubleshooting, where you began the trouble in the first place.
The resilienec of emerging economies in Asia & Latino world is quite enduring and I have the conviction and faith in those economies that has witnessed turbulence already, so what is there for them to fear. They can rise from the rubbles, provided they keep their independant mind and does not get manipulated on policy pills.
Time would tell , so would Economist.
Rajeev Pandey- Kenya
