Coming out of a recent global economic crisis, which epicenter was located in Europe and almost collapsed global markets; a new start has the whole world expecting for a better and brighter economic future. Is clear, there is not a define path to achieve this goal; different economic models promote different strategies but consensus is not agreeable. Well, these conflicts give me the opportunity to highlight the actual impact of Asia economic growth worldwide. After reaching a rate of 8.3 percent in 2010, GDP growth in Asia is projected to average nearly seven percent in 2011, 2012, and 2013 according to the IMF (International Monetary Fund).
You may wonder how that was possible; take in consideration that Asia now possesses three of the most resourceful and powerful economies worldwide: China, India and Japan. Although, Japan has been a powerful and stable nation since World War II, recent natural disasters and nuclear crisis has slow down their global economic influence. Never the less their technology and research development, low decency of oil and nuclear energy, and national productivity have maintained their economy ahead of many European nations. Future risk for this nation include inflation rates, which will lead to a lower competitive productivity edge compare to growing economies; rapid population aging and low immigration rates. These factors will present future challenges to Japan’s population and economic, but innovation and social development will overcome these problems.
Returning to the big picture, Asia economic growth main influences has been produced by the astonishing economic growth of China and India, both averaging above seven percent GDP growth on the past three years and it is expected to keep its pace throughout this decade. China and India economic success share some similarities, which include increment in foreign investment, massive cheap labor force, production capabilities, which compromise quality for volume and finally a global spirit of consumption.
Many experts argue that China economic growth could be threating for United States economy; because the United States is the most important market for China’s cheap goods and with a growing budget deficits and a huge national debt, depends on China as the main holder of U.S. Treasury securities, with Beijing's stockpile officially estimated to be nearly $800 billion. For China's economy to maintain a relatively high pace of growth over the next decade, it is important that gains in productivity are achieved. Studies indicate that a significant gain in economic productivity becomes possible when workers relocate from rural to urban areas. China faces a number of challenges with its economy, including rebalancing the economy's growth away from investment and exports and more towards domestic consumption. China also needs to focus on improving support for private enterprises and on phasing out the dominance of state-owned enterprises.
Finally, India influence is not all overshadow by China success; with an annual growth above eight percent of its GDP, India has a mayor advantage on its population 1.2 billion and rising, which half of them are under twenty-five year. As this new wave of young motivated people enter the work force and spending forces growth India will maintaining a stable economic growth. As the case of China, India economy is based on external and private investment, consumption demand and market productivity. Although India’s productivity cannot be compare to China’s, India had has a great success exporting technology, IT and software services. To consolidate a stronger economy India needs to spend more capital on infrastructure and social welfare, also it needs policy reform (tax increments) and administrative reforms, which will insure that the most qualified individuals to assume control of the nation.
-by Christian Alvarez
