The New Core is beginning to realize what the structural adjustment will entail
Tuesday, May 19, 2009 at 3:32AM INTERNATIONAL: "Emerging markets and the credit crunch: Whom can we rely on?" The Economist, 9 May 2009.
The subtitle says it all:
Poor countries are not fretting about the boundaries between state and market. Instead, they are debating whether to rely on domestic or foreign demand.
The lack of "angst" in emerging markets contrasted with the freak-out "socialist!" factor in the Old Core West.
As one Indian economist puts it, there has been "no serious questioning of the role of the market" there. Why? The trigger was financial markets in the West, so why should the rising East and South rethink their marketization strategies? Rising pillars already feature heavy state involvement, more than in the West, so they see little reason to jack it up further.
Yes, during crisis there is more state intervention in general, but it's a temporary fix. In truth, globalization's problems lie less in markets themselves than in the structural trade imbalance between America and Asia that kept our money so damn cheap for so long.
So the real question going forward is, How fast must the emerging markets develop their domestic demand?
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