A closer look on GDP growth rates worldwide might be only one option to estimate positive developments of those countries that were hardly a news subject in the past. With Mongolia (GDP annual growth rate 14,9%) at the top of the list, also smaller economies in Asia like the one of Sri Lanka, in Africa those of Rwanda or Botswana, and in Latin America the positive development of Peru and Colombia give a much less grim future outlook on world economy than shadows of the Western debt crisis might suggest.
A strong but not extreme population growth, improved governance and legal institutions as well as a share in technological advance have created essential growth dynamics and learning curves worldwide. These factors might even overcome Western models of development patterns. Industrialization in these world regions might create surprising new structures with services, tourism and organic farming standing equally next to mining or manufacturing. But direct investment and market information is not always fully transparent yet. The financial industry has not managed up to now fine-tuning its networks to empower more potentials in the ‘developing world’. Feedback and financial security mechanisms are not in place or still need technical improvement.
It is the financial industry and its competence gaps, its one-dimensional structures and the relating stereotypes that hamper an quick and effective use of adavanced financial networks and technologies to boost further the positive development especially in the formerly poorest areas of the world. Knowledge and awareness about new balances of growth and the great achievements that have been made in the recent deacade might help to come closer to more effective financial structures and services there. The outlook of sustainability in these regions is also depending from a better and more intensive media coverage. Especially in Germany, Italy and Russia for example the number and quality of international TV reports is low if compared to the British BBC or French media channels. Emerging economies need more media presence beyond a stereotyping focus on the BRICS world alone to attract investment and knowledge for sustainable development.
Daron Acemoglu and James A.Robinson—two of the world’s most renowned experts on development— reveal in their new book “Why nations fail” why it is not geography, disease, or culture that explain why some nations are rich and some poor, but rather a matter of institutions and politics. This highly accessible book provides welcome insight to specialists and general readers alike. A lecture at Krakov university by Acemoglu was among the presentation sessions of the fundamental theory behind the book that provides excellently researched arguments against racial, cultural or geographical explanations that have never been proven.
As it is widely known in expert circles societies in most parts of the world are getting older by the average age with Japan and central Europe at the top of the list. But also China is on the way to have a huge segment of elderly citizens soon as the one-child policy has a significant impact on the average age of the Chinese population.
Many emerging countries are getting rapidly older as the effects of modern life styles, contraception and technologies reduce the average number of born children drastically: mothers in Vietnam for example that had up to ten brothers and sisters in the past nowadays mostly do not have more than two children by themselves.
The challenge for traditional economics comes with a definition of growth and productivity excluding for example a care taker’s service a doctor’s or a nurse’s work. The traditional definition just sums up essential necessities and human demands as ‘costs’. But isn’t there a relevant growth potential in simplified technologies, barrier-free environments and new ways of cared living areas? What is the impact of much lower consumption by the elderly if not a boost of services instead of production?
Some economists have already ‘warned’ that the exchanges might face lower volumes in the future, that growth rates of the industrialized countries might slow down just because of the changing population patterns. But is this the right way to react to a changing reality? Or might it be better to change description and definition patterns instead?
There is no doubt that economic strategies are insufficient to provide quality of life, health or emotional fulfilment. But these are the key values of the elderly who mostly perceive life beyond fashion demands or technology driven innovation. The ‘market’ for them might be beyond profit optimization as well. As a pre-form for this upcoming market, given a prevailing human environment, scientific research about all aspects of health and aging, urban planning and housing technologies, usability optimization of new technologies, efficient health care systems and psychological awareness might play a fundamental role for the next ‘growth story’ in the ‘developed’ world. It is very likely that this story will emerge but we cannot say if traditional figures will reflect it.
With the leading world currency areas still lacking consent on fundamental monetary market reforms to curb worldwide inflation the destabilizing effects of current devaluation dynamics are posing high risks to political stability. As a result the chances for liberal political and economic reforms for example in Egypt as well as in other emerging countries are rapidly decreasing.
A new increase of cotton prices partly due to low harvesting results in China this year, might have a significant effect on global garment industries.
With rapidly increasing wages in China and similar tendencies in Vietnam and Bangladesh the increased cotton price could push additionally for further repositioning strategies of the industry especially focusing African countries. With wages for textile workers half of those in Bangladesh in Ethiopia for example (minimum wage 24 USD per month) the big retailers still try to counter increased cotton prices and transport costs by even lower salaries in Africa.
Both, increased cotton prices and more foreign investment in the textile sector, could help some African countries to create more jobs and fight poverty. On the other hand the ever lower pay levels and global inflation trends could outweigh these positive effects: Inflation trends are increasing in Eastern and Western Africa leaving workers very often without a chance to suffciently feed their families.
This is why more sustainable production approaches and ethical standards of retailers in the industrialized countries must have a more decisive relevance. Existing consumer price expectations in Europe or the US for example in case of a T-Shirt for less than 6,50 USD/5 EUR (according to the H&M retail chain, Sweden) is still the driving force behind the ruinous production price competition in the poor countries.
The new cotton price hike could add to more social tensions in these low costs production areas - or to necessary binding social standards, improved consumer awareness and a small add on to inflation dynamics that already exist anyway.