This year’s World Economic Forum (WEF) summit in Davos reminds one of cricket. Cricket, the colonial game originally went international in Anglo-Australian rivalry, only to eventually become the leading sport of the subcontinent, with India pulling the purse strings of the game worldwide. The global economy may be going through a similar metamorphosis involving the West and Asia.
This year’s Davos summit is a far cry from the days when Asian leaders queued up to woo Western foreign direct investment (FDI), showcasing their reformist policies. Among the hot topics this year is the perceived Western reluctance to accepting funds from sovereign wealth funds of Asian and Middle Eastern nations flush with cash and foreign exchange reserves. Suddenly, the FDI boot seems to be on the other foot, and those who argued against the “colour of money” a couple of decades ago seem to be showing signs that it matters who is investing in a country. Sovereign wealth funds’ assets are set to reach $ 12 trillion by 2015, almost 10 per cent of all financial assets in the world. Nations like South Korea, United Arab Emirates, Singapore, Kuwait and Saudi Arabia are among the new investment elite. The US is staring into a possible recession, and Asian funds are in the forefront of buying shares and offering capital to shore up brandname banks of Wall Street that are reeling under the impact of the sub-prime home loan crisis spawned by reckless lending to people with poor credit records.
While that happens, also at Davos, the Secretary-General of the Organisation of Economic Cooperation and Development (OECD), Angel Gurria, urged that India, China and three other emerging nations be included in the leading Group of Eight (G-8) to help resolve the world’s economic instability. The hot debate over ‘decoupling’ is to what extent emerging economies and Asian prosperity are inter-linked to US growth. Mr Gurria sees no room for doubt, and believes the G-8 must become G-13 without much ado to resolve the world’s problems. It is also clear that China and India are also critical to fighting climate change and the West must take them in as serious negotiating partners than patronise them with moral posturings on what needs to be done. While all that went on at Davos, Microsoft billionaire Bill Gates pleaded for ‘creative capitalism’ to help the world’s poor. Whether it is including the poor of the world in the gains of growth, or the once lagging and now emerging economies, the writing on the wall should be clear for those who see reason: the rich cannot pull their own line and expect others to simply fall in.