Economic Divergence - finally a reality?

The Economist on the apparent V-shaped recovery of China and India amidst continued recession in the G8 countries.

Divergence was the concept that one day the big economies of the developing world would develop into true "continental economies" a la western Europe or the US --- that their economies had grown wealthy and diverse enough to generate their own economic cycles independent of the West, and that they did not depend upon either exports or currency flows to or from the West for their economic health.

Looks like this crisis may finally have brought this moment into focus. Thoughts?

The BRIC's are planned economies that is the Big lesson in my opinion. They don't wait for the Invisible Hand:D they use Human Hands and Minds.

I'd disagree with you about that one. Russia is the closest thing to being a planned economy, and they're doing the worst. India has liberalized greatly and so has China, though both still have significant sectors that are fully or partially state-owned --- especially the banking system, which as the Economist notes are providing critical stimulus in the form of easy credit in China.

For a dissenting note, see Andy Xie here on stimulus through liquidity.

All I know is that if we in our country don't get a handle on our economy, the military will not be able to enjoy some of the advantages we have had for the better part of a half century. Strong economy=strong military.


Boot

I could make the point that a strong economy can provide a pampered military. We -- DoD -- have beaucoup money; whether it is spent wisely is another issue for another thread. What is emphatically true is that we have survived lean economic times before and can do so again. Not all bad, encourages innovation and reduces the bureaucracy. :cool:

MRAPS come to mind...

I think it will depend on whether China and India can develop proportionately large middle classes before some other locale becomes the new cheap place to outsource manufacturing to, such as South America or Africa. If China and India look to those new locations as sources of cheap imports, rather than as competitors for cheap manufacturing, then that will be the moment of true divergence, in my non-economist opinion.

Quote:

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Originally Posted by tequila

I'd disagree with you about that one. Russia is the closest thing to being a planned economy, and they're doing the worst. India has liberalized greatly and so has China, though both still have significant sectors that are fully or partially state-owned --- especially the banking system, which as the Economist notes are providing critical stimulus in the form of easy credit in China.
For a dissenting note, see Andy Xie here on stimulus through liquidity.

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tequila...that is economic planning! Intentional purposeful actions designed to achieve a result. I agree Russia is the worst at it except for their Gas and Oil operations other than that they cain't seem to figure it out, However Putin is supposed to release a stimuls package sometime next week.


Good article by Andy Xie about what happens when you don't plan stuff.

Video Interview of F. William Engdahl with of few comments about how China and others are doing.

http://www.youtube.com/watch?v=Toz0n...eature=channel