The Commerce Times

The new world economic order

(From Left to right) : Dr. Cheng Li, L. N. Balaji and Erik NIlson discuss the New World Economic Order. Courtesy of Michael Chu

January 20, 2010 0 | By Parvinder Sachdeva

On December 4, 2009, the Ted Rogers School of Management hosted the Annual Global Management Symposium organized by the Global Management Department. To wrap up 2009 and look ahead to 2010, the main themes included the changing world economic order, rapidly developing economies like China and India as well as our journey from the economic meltdown to its recovery.

“No one in business today can contemplate really being in business unless they understand the global environment and the global situation,” said Dr. Ken Jones, Dean of the Ted Rogers School of Management, highlighting the importance of globalization in today’s economy. “The future business leaders of this country have a high probability of coming from the Ted Rogers School of Management.”

In front of a large student audience, a variety of dignitaries marked their presence at the symposium, including industry experts from India and China, economists, professors and the President of Ryerson University, Sheldon Levy.

“Another measure of the rise of Asian economies is the value of the U.S. dollar.”

Hosted by Dr. Carlyle Farrell, Chair of Global Management Studies, the symposium featured Erik Nilsson, a senior international economist at Scotiabank and a well-known expert on Asian and European markets, as one of its keynote speakers. Noting the recent changes in economic conditions, Nilsson mentioned the rise of India and China as economic powers in his speech. “The process of global reconfiguration is already underway. China and India together count for roughly 15 per cent of the global GDP, but the passing of the torch is unlikely to happen without hiccups,” he said. Another measure of the rise of Asian economies is the value of the U.S. dollar. “On an overall basis it [the value of the U.S. dollar] depreciated by about 30 per cent since 2002,” he said.

Regarding the economic condition in North America, Nilsson mentioned that while a recovery is sustainable, the situation may get worse. “The job losses number is going to get worse before it gets better,” he said. “Unfortunately most governments have let this crisis go to waste.” He credited the economic meltdown to the failure of six factors: regulation, supervision, risk management, governance, political will and imagination. Canadians must avoid being too optimistic about recovering from this economic crisis since complete recovery is a long road ahead. “We would have more inflation and less growth. We would be seeing more taxes. We would also see more regulation. We will be subject to more pain and less gain,” Nilsson said. India and China, were also fairly represented at the symposium by industry personnel. Representing India at the symposium was L. N. Balaji, President of ITC Infotech, one of India’s fastest growing IT companies.

Balaji talked about India’s role in the new economic world and the problems it has faced in recent years. “Contrary to the image that is created by software exports and contract research, India is in fact not very export intensive, which is a big problem,” he said. The rise of any economy is filled with roadblocks and the case of India is no different. In the past year alone, prices of basic commodities have nearly doubled in India. “We run the risk of monetary expansion and inflation, and inflation in India is particularly pernicious,” Balaji said.

On the other hand, China is a more mature economy than India. Contrary to common perception, China was also severely hit by the recession, with its stock market losing about 65 per cent of its value. However, they quickly recovered a majority of the losses. Dr. Cheng Li, senior Fellow and Director of Research at John L. Thornton China Center at the Brookings Institution, discussed China’s economy and recovery from the meltdown. “China’s economy was the first major economy in the world to recover,” said Li. Commenting on China’s remarkable progress in the recent decade, Li said, “While China’s progress can be a challenge for the existing world economic order, the right response is that it is an opportunity [for the rest of the world] due to China’s large commercial market.” The world should look upon China’s success as an example to follow.

Although the world economy has undergone tremendous changes in the past few years, there is still a lot more to come. It will be interesting to see if Western economies will be able to maintain economic superiority, or if countries like India and China will replace them as economic titans. Regardless, in years to come, the ability of an economy and society to adapt to these changes will be a crucial factor in determining its place in the new world economic order.