The West and the Rest

| by Dr. Ruwantissa Abeyratne

( August 01, 2012, Ontario, Sri Lanka Guardian) In the context of Shenali Waduhge’s interesting article “Can Asia Challenge the West? Which was published in the Sri Lanka Guardian of 31 July 2012, I have the following comments.

Harvard historian Niall ferguson in his book Civilization: the West and the Rest comes up with the credible thesis that the nations of the West really broke away from the pack when they adopted what he calls six killer apps: competition, science, the rule of law, consumerism, modern medicine, and the work ethic. That's what made them rich and powerful and able to boss around everybody else. He argues that countries such as China and India challenge western societies with western ideas... ideas in which the west seems to have lost faith. The comments of economist and global commentator Fareed Zakaria, in his book The Post American World, which he claims is not a book about the decline of America, but rather about the rise of everyone else, are consistent with those of Ferguson.

Zakaria goes on to say ; “Over the last two decades, about two billion people have entered the world of markets and trade – a world that was, until recently, the province of a small club of western countries. The expansion was spurred by the movement of western capital to Asia and across the globe. As a result, between 1990 and 2010, the global economy grew from $22.1 trillion to $ 62 trillion, and global trade increased by 270 % .

So where are we headed? South America could develop as a wealthy region, with countries such as Brazil, Chile and Argentina leading the way. The region will improve its trade and political relations with China. Elsewhere in Asia, internal political strife will probably weaken Japan’s government structure and deflation will stultify economic growth. South Korea will increase its GDP in 2011 and there will be numerous political reforms in Singapore. Thailand, which has an inflation rate of 2% will continue to have rumblings and divisions in its society.

Countries in Sub Saharan Africa will further strengthen their trade ties with China and India and grow as a result. Fuelled by information technology and rapidly developing urbanization, investments will grow. New and emerging threats to civil aviation will continue to be a cause for concern to the aviation community. Grave threats such as those posed by the carriage of dangerous pathogens on board, the use of cyber technology calculated to interfere with air navigation systems, and the misuse of man portable air defence systems will remain real and will be addressed with vigour and regularity. States will continue to proceed with the juridification of war, where powerful sovereigns, as guardians of their Constitutions, in their extra judicial response to all exceptions to dangers within the political and legal spectrum, will justify the waging of war on the basis of the sovereign’s exclusive capability of identifying the enemy and the threat it poses to the State.

One of the incontrovertible truths that will have to be accepted in the near future, if it were to improve on human conduct we saw in 2012, is that contemporary globalization, which is neither uniform nor homogenous, is accelerating the intensity and pace of economic activity, quickly approaching a new epoch in human and economic affairs. Therefore, economic globalization could undermine the effectiveness of State based collective action. One of the unknown factors that is just emerging, and which might have an unexpected positive effect on the global economy could well be the discovery of the bounties of outer space. If an alternative energy source is discovered through mining for asteroids – a new field of science and enterprise just started there certainly could be new horizons for aviation. In April 2012, it was made known to the international community that a private entity in the United States had initiated a commercial measure that would mine asteroids. This measure, it is envisioned, would add trillions of dollars to the global GDP and open opportunities to mine precious metals such as platinum and cobalt from asteroids that are nudged to near Earth orbit.

The next few years could well bring in growth rather than austerity. Whether in Europe, the Americas or South America, merely cutting spending without the promotion of economic growth simply will not work. Economic stagnation could be avoided by taking a quick look at history, where in 1937, the tightening of fiscal and monetary policy saw the United States economy go down to disastrous levels. For most countries including China, which has transited from being an export driven economy to being labelled as a consumer focused society, investment in education and health services would be a priority. The Chinese would have to balance their phenomenal march towards infrastructure development with a structured programme of investment to uplift the lot of their lower classes, which are still in the millions.

A compelling direction developing countries would have to take is to vigorously pursue foreign direct investment (FDI) if their low income earning populaces are to lift themselves up from poverty. In the field of aviation FDI is a critical factor, the lack of which, as I explain in my r book “Aeronomics and Law” is a serious obstacle to the development of industry in most countries. Both developed and developing countries would need to focus on being competitive both in trade and in essential services such as education and health care.

There are three areas that would be crucial in the years to come if we are to avoid self- induced stagnation. They are: competition for growth; international intervention to secure the welfare of people; and investment in a balanced education and healthcare for the people. As for competition for growth, this is not a new measure of economic proactivity I have argued in my writings that national prosperity is created, not inherited. Although national resources are a States’ assets, the prosperity of a nation does not necessarily emerge solely from the natural endowments of the State concerned, nor from its labour resources, but rather from a certain localized process which engulfs economic structures, national values, culture and institutions. The essential catalyst to trade is national competitiveness.

National competitiveness is one of the most critical drivers of successful government and industry in every nation. Yet for all the discussion, debate, and writing on the topic, there is still no persuasive theory to explain national competitiveness. What is more, there is not even an accepted definition of the term “competitiveness” as applied to a nation. While the notion of a competitive company is clear, the notion of a competitive nation is not. When one ties up the trajectory of the global economy and its direction in the coming years along with the market economics of the air transport industry, it becomes eminently clear that the economic forces that are shaping the global economy will affect the progress of aviation. The World Energy Council (WEC) has reported that fuel demand in the transport sector in the next forty years will come mainly from developing countries such as China and India, where demand will grow by 200% to 300%. In contrast, the WEC is of the view that the transport fuel demand for the developed countries will drop by up to 20%, mainly due to increased efficiencies. The demand of the developing countries is expected to surpass that of the developed countries by the year 2025.

The report also forecasts that oil may still fuel more than 80% of the global transport sector for the next 40 years due to strong demand growth from the heavy duty sector, shipping and air traffic. WEC projects that by 2050 global fuel demand in all transport modes could increase by 30% to 82% compared to 2010 levels. This portends the inevitability that fossil fuels, the reserves of which are still being discovered, will retain its heavy influence over the coming years and therefore global efforts would have to be concentrated on market based measures as well as the development of alternative fuel technology.

At the moment, with things getting worse in the Eurozone countries, some economists are suggesting that even after the injection of a couple of trillion dollars’ worth of bail outs, privatization of almost everythin will be inevitable. Let us hope that required natural resources will also kick in to keep the global economy fuelled.