jump to navigation

A Decade to Lose March 19, 2009

Posted by tkcollier in Economy & Business.
Tags: ,
trackback

If governments don’t understand and simply try to bring back the “good times” of an asset-based economy, it could result in a decade of stagnation.

Developing economies are already 30 percent of the global economy at current price and nearly half on a purchasing power basis. The export model cannot thrive for shortage of customers. Developing countries have to trade more with each other and develop domestic demand. But this would require painful reforms to their political economies. The key is property rights and income distribution. The two must go hand in hand. Lack of domestic demand tends to result from income concentration, which is due to uneven playing field in opportunities. Many developing countries, like South American and Southeast Asian countries, have stagnated in the past decade due to their inability to reform their political economies.

Bursting of the credit bubble is triggering the biggest recession since the World War II. Repairing the global economy requires complex and difficult reforms. Simple stimulus can’t bring back prosperity. Thanks to Peggy Sadler
Andy Xie was Morgan Stanley’s Chief Economist for Asia Pacific from 1997 to 2006.

via A Decade to Lose.

Comments»

No comments yet — be the first.

Leave a Reply

%d bloggers like this: