Erle Frayne D. Argonza
Good evening from the Pearl of the Orient!
The International Monetary Fund or IMF has been quite bullish lately about Asian growth. It had forecast East Asia’s average growth at past 7% for this year, and shares an equally positive growth trend for RP at 5.5%-6%. Just what could be the implications of the growth trends on the global economy and the West?
As Asia expands, the West (Europe, USA, Canada, Japan) contracts. The trend will not change much over the next five (5) years, so let’s see where the East and West are headed for in the foreseeable future.
In early 2008 yet, the economists and financial analysts of the West (or North) were of the opinion that the technological cutting edge of the West was already breached by Asia by the end of 2007 yet. Remember that 2007 was the beginning of a new cycle of recession for the West which began in the USA with the implosion of the realty bubble.
Given that the Western economies are flat on their back growth-wise, and their toxic bubble economies have given them only virtual economy results (read: inflated values not based on real production but on speculation), there is ample reason to forecast that they will be mired in problems of saving their ailing banks, financial-monetary systems, and providing sovereign guarantees to their capitalists at the expense of taxpayers and infusing investments in the physical economy. This is now matter of fact, as we can clearly see.
Western economies have suffered from the ill effects of continuous de-industrialization for decades, of being remiss in their own infrastructures (USA seems to be the worst in infrastructure decay), and deteriorating investments in science & technology. From being a producer economy, Western economy generally has become a parasitical ‘eater economy’ that stands on no clear foundation other than financial quicksand.
In contrast, the Eastern economies have steadily built their strategic industries across the decades, reinforced their infrastructure expenditures and projects, and invested in science & technology. The Eastern economy generally has therefore been role-playing as ‘producer economy’ worth the emulation of other developing economies worldwide.
Result: by 2007, at the downspin year of a recessionary West, the East overtook the West in terms of cutting-edge technologies. To qualify, the technologies we refer to are those life-inducing technologies, not those death & destruction technologies that the West has clear edge till these days.
I still remember what my nationalist colleagues in the Sunday Kapihan that we then held every Sunday at the Sulo Hotel in Manila: the West knows nothing but perfect its Armaments. Dr. Emmanuel Yap, an economist who finished his PhD at Harvard University, was the most vocal about that emphasis on the death & destruction focus of Western innovations.
To continue, the added forecast that I’d share at this moment is this: from the years 2007 through 2015, Western markets will contract by at least 30%. That means their own consuming public will spend less and less across a 9-year stretch, until the consumption pattern will settle down by 2016 or so. Real GDP (gross domestic product) will radically decline during the period, shrinking by as much as 30%-40% contrasted to their 2006 levels (the last of the best years of the West).
In contrast, the Eastern markets will expand by at least 100% during the period. The giants China and India will go farther than that, with China expanding by as much as 200% during the same period. That means the middle income earners in the East will continue to rise by the year and consume more products by the year, even travel more overseas year by year.
Result: China will clearly overtake the shrunken economies of EU and USA by end of 2015. India may follow suit, at around the years 2020-2025. The last would be ASEAN, which will overtake the West by 2025-2030 period.
Once a region overtakes others technology-wise, it will just be a matter of time before the same innovator region will overtake the rest wealth-wise. Technologies—physical technologies, biotechnologies, social technologies, medical technologies—are precisely the cutting edge practices that will enable one region to overtake others across the globe.
The bad news for the West is this: if their own states and markets will fail to solve their ailing problems in infrastructures and reverse de-industrialization, they will pathetically go down as 3rd world or ‘developing economies’ past 2020. No less than their own economists warned of this possibility in the early 1990s yet, and sadly no one paid attention to them in their own backyards. City after city in the USA and EU will immerse in urban decay, becoming 3rd world cities in the process.
My mother just retired from New York where she migrated since the 80s yet. She decided to come home back to the Philippines, and visited the Libis & Cubao areas of Quezon City/Manila suburb pronto upon her arrival. She was so deeply enchanted by the esthetic beauty of the architectures and planning in those mixed land use zones, while she complained of the dilapidated buildings and nauseating smells of cinema theatres in downtown Manhattan.
Those observations are signs of the times indeed. In just a year from now, the Pagcor City will rise in Manila, housing the world’s tallest tower. Burj Dubai, Petronas Twin Towers, and Taipei 101 are already similar hallmarks in other Asian cities, signifying the power shift from East to West.
The message is hereby brought to the West’s peoples: shift back from virtual reality to physical reality, from the virtual economy to the real economy. We Asians will help you along the way, as we’ve already been doing through our colossal treasuries investments, direct foreign investments, and quality Asian expatriates in your backyards that have been saving your collapsing economies from rapid decay.
[Philippines, 13 July 2012]
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