Corliss Online Financial Mag

MADRID, SPAIN - CUATRO TORRES BUSINESS AREA

Everything indicated that after the fall of the Berlin Wall and the collapse of the Soviet Union, the world would enter a long period of stability, with order and security provided by the last remaining superpower –the ‘hyperpower’ in the words of Hubert Védrine–: the US. And that is how it worked out, although only for a few years, in the roaring 90s, as John Stiglitz called them –years in which to reap the peace dividend, years of democratisation and growth, the years of the dot.com boom–.

But we entered the 21st century through a ‘gate of fire’, in the epic phrase coined by the then UN Secretary General, Kofi Annan, in reference to September 11, 2001. The event brought onto the stage of world history what we still call the Third World, behind which is the biggest economic and social revolution the world has ever seen. And there we are, in the midst of an economic and social upheaval only comparable to the Industrial Revolution but which is far more extensive, as it affects the entire planet and not just the old G8 countries. It is also deeper, more intense and, especially, much faster moving. China now boasts the world’s second-largest economy, but it will soon be the largest, while India will soon be number three, and so on. What we are seeing is a global convergence which the current crisis is fostering and deepening by clearly accentuating the relative decline of Europe, and, who knows, perhaps of the West itself.

The underlying reason is simple and clear enough: huge but unevenly spread demographic growth. The result is that Europe now accounts for less than 10% of the world’s population, while Asia accounts for 60%. When the productivity of the masses of people in underdeveloped countries was low, their population weight did not translate into economic or political power. But that is no longer the case. There is now a tremendous transfer of technology (both hard and soft) underway, from West to East and from North to South. This brings countries’ per capita productivity levels closer together, turning demographic powers turn into economic powers, and the latter into political and military powers.Read More