First published: Business Excellence, 15/12/2010
George Magnus argues that the financial crisis in the West has thrown down the gauntlet of structural reform for emerging markets. The prospects for the global economy, he says, depend not so much on mechanical extrapolations of GDP, than on good politics and robust legal and social institutions.
The West’s financial crisis has both caused and amplified a growing schism between the economic plight of richer industrial countries, and the economic power of major emerging nations. The Federal Reserve’s resumption of quantitative easing, for example, has unintentionally sharpened the trend towards greater currency and capital account protectionism in several major emerging nations, and given them new cause to complain, rightly or wrongly, that US economic policies are aggravating rising inflation and potential instability….. more