Wolfensohn redefines great divide

The Nation, March 4, 2008

TODAY’S COMPLEX international environment can no longer be characterized by the binary division of ”North” versus “South’ or “East” versus “West but that of four distinct yet interconnected tiers of wealth and growth, former World Bank president James Wolfensohn says.

The tiers are described as a “four-speed world” by Wolfensohn. It is composed of first, the steadily growing, high-income economies, largely in Europe, East Asia and the Americas.

Second, the rapidly growing economies in Eurasia, led by Russia, China and India. The third group is that of volatile economies in many parts of the Middle East and Latin America. Fourth is the troubled region of Africa, with retrogressing and stagnant economies, such as those found in large portions of sub-Saharan Africa.

Wolfensohn, who is in Bangkok as part of the ongoing programme called “Bridges: Dialogues Towards A Culture of Peace” organized by the Vienna-based International Peace Foundation, said the population in Africa will double in the next 30 to 40 years and constitute a quarter of the world’s population. These deprived populations which are lagging behind are “not just a group that you can forget’ he said.

“This is not something that we can just push aside,” he said, adding the world must address the challenge of global inequity by reforming major global institutions and increasing global aid to developing countries. ASEAN can play a crucial role in it.
In 2050, eight billion people will live in developing countries and only one billion in developed countries. Some 57 per cent of the world’s GDP will likely come from Asia, he added.

China and India will likely emerge as the first and third largest economies by 2050 and issues like the environment and equity within the two countries will persist. India is opening new coal-fire power plants every week, while 14 out of 20 most polluted cities in the world are in China, said Wolfensohn.

This, he said, led to the Chinese government admitting that 300,000 to 400,000 Chinese citizens met premature deaths due to pollution.

There’s also in the issue of poor people in China and India and what will happen to them. Wolfensohn, who headed the World Bank between 1995 and 2005, predicts “turmoil” if inequality is not addressed by the two giant nations. In China alone, several hundred million continue to live on less than US$2.50 a day, and they live in poverty if not absolute poverty, he said.

“I don’t know what the answer is.” Nevertheless, Wolfensohn predicts the G7 group of nations will have to be expanded to something like G15 in the near future with China and India as part of it.

“China is now taking a tremendously active role,” said Wolfensohn, adding there were currently 88,000 Chinese students and 68,000 Indian students studying in US and European universities. Westerners studying in Asia are so few it could be called “myopia on the part of the West”. On the other hand, trade between China and Africa, as well as India and Africa is rapidly growing, especially in the past two years, and the Chinese have funded many town halls and cultural centres across the African continent and turned Africa into a market for its exports.

As for the United States, he said he was “a bit pessimistic” about the current sub prime and market meltdown. “I think we’re in for a pretty tough year,” he said of the US economy.