Around the world economy in 80 minutes

Around the world economy in 80 minutes


Last week, I had the opportunity to moderate a panel titled "The World Economy in the Next Ten Years," sponsored by the Chazen Institute at Columbia Business School. The discussion, a whirlwind tour of the world economic system, was great fun — and provided useful economic evidence to back up Foreign Policy‘s own Nov. 30 event, which focused on the political "rise of the rest." The Chazen Institute has posted the videos of each speaker online, but let me give a quick rundown of what caught my attention as the most important and attention-grabbing points of the discussion.

FP contributor Arvind Panagariya reminded the audience that — despite the debate over whether India or China will be Asia’s preeminent economic giant – India is still an extremely poor country. It currently ranks in 165th place in the GDP per capita among countries worldwide, just above Mongolia and below countries such as Iraq and the Republic of Congo. But that’s about to change rapidly: India could grow at a 10 percent clip over the next 15 years.  This rapid growth means that, by 2025, the combined size of the Chinese and Indian economies could equal the U.S. economy.

Shang-Jin Wei, the director of the Chazen Institute, argued that China’s unique demography might hold the key to the country maintaining its torrid growth rates for the next decade. He pointed out that there are now 115 men in China for every 100 women, meaning that approximately one out of every nine Chinese men is unable to find a spouse (excluding the possibility of gay marriage or polygamy, presumably). He proposed that this competition for China’s scarce supply of brides encouraged men to accumulating the wealth necessary to attract a mate. That’s not just pop sociology: Wei cited data that showed workers in regions with skewed sex ratios were more likely to take dangerous or unpleasant jobs, and more likely to launch privately owned businesses.

But while the future is rosy in South and East Asia, it looks less bright in Europe. Charles Calomiris, a professor of financial institutions at Columbia University, predicted that the current economic crisis would cause "the end of the Eurozone as we know it." He painted a scenario where Europe’s weak economies, starting with Greece, were unable to repair their dismal fiscal situation without abandoning the euro.

John Coatsworth, the dean of Columbia’s School of International and Public Affairs (SIPA), discussed Latin America, which he suggested was essentially poised to split in two. The South American countries, which have successfully diversified their trading partners by establishing new relationships in Europe and Asia, would witness "the retreat of American leverage and capacity" to the levels that existed in the late 1800s. These countries, he argued, will enjoy rapid growth and exhibit growing independence from the United States on the international stage. Meanwhile, the countries of Central America and the Caribbean would be unable to break from their dependency on the United States — and consequently experience slower growth rates as the U.S. economy limps along.