Special Features
Interview with Jeffrey Sachs
The Great Convergence: the shifting balance of power in the 21st century Power and America have seemed synonymous for the last fifty years, but this is no longer the case. Power in the 21st century is shifting to the East: to India, the Middle East and above all to China. Facing up to the end of centuries of North Atlantic dominance - first Europe then the US - will pose huge challenges. Alongside the shifting balance of power, the 21st century will be marked by severe natural resource limits, the rise of new economic powers and the threats of failed states. Global cooperation of an unprecedented depth and scale will be needed but we are not yet prepared for such cooperation.Q. What’s the quickest way to fight poverty – by politics or economics? Can it be broken down to an imbalance in the basic supply and demand chain, or are there more unpredictable forces at work? The gap between rich and poor is tending to narrow as the relatively poor countries undergo faster economic growth. The faster this growth spreads, the better and safer the world will be: big divisions between rich and poor are a major contribution to global unrest.
The markets provide the first impetus to generate growth: relatively poor countries have the capacity to import, absorb and leapfrog technologies – which is what we are seeing in India, China and Brazil, which are experiencing massive growth.
Across the world, countries have strong motivation to engage in regional investment to ensure the whole region keeps on the path of economic development. Just look at sub-Saharan Africa, or developed China helping Western China. Inbound investment in the areas of healthcare, agriculture, education and infrastructure are vital to help each country grow.
Q. Emerging markets such as India and China are registering high levels of growth, yet some areas are still languishing in poverty. Will these two factors even themselves out, or is there a point where one is prevalent? You have to use the growth to fight poverty. Economic growth by itself cannot solve the problem, but it helps: it raises government revenues and makes direct investment in the lagging areas possible. So you have to promote the economic growth but channel the growth back into infrastructure investment. Look at India or China: dynamic urban regions are driving the development in less developed coastal or rural regions.
Q. What role does the MENA region have in the development of poorer nations and emerging markets? One broad trend that is very exciting is the economic integration of the Indian Ocean region – East Africa, Middle East, Persian Gulf, India, China, and South East Asia. The amount of increased trade within this enormous realm has led to vast investment across borders and this network of countries is developing tremendously.
The global economy used to be dominated by the North Atlantic, then it was tipped to be the Pacific Basin, but we are seeing the Indian Ocean bring major players to the table, as it becomes an increasingly integrated region. These neutral participants – with the GCC in the middle – have become an entrepot centre. Dubai has recognised this, and has led the capitals of the region into becoming hubs for education, healthcare, tourism, trade facilitation, and shopping. This is an example of the region’s ancient heritage giving it a 21st century role, which is exciting and positive.
Q. What does the Middle East need to do in the next 10 years to capitalise on the economic boom and high liquidity of today? To reach its full potential, it needs to invest in spectacular infrastructure, which the UAE and some other parts of the Gulf are already doing. But it needs to focus on higher education and upgrading the skills of its population, science and technology. This is the smart investment route, which is happening in Saharan Africa as well.
Q. So, in conclusion, what does tomorrow’s world look like? Will the increasing national, social and
