Speech delivered by Rajendra Pratap Gupta at the US-ASIA Business forum at Los Angeles , USA on 12th September 2009 at the Los Angeles Convention Center , LA, USA
Global Economy – in the new world order
Good Morning ladies and Gentlemen
A very interesting session !!
Like an earth quake changes the topography , the recession changes the eco-geography ( Economic Geography ) . Every time a recession has sets in , the world is put on a reset button. We have seen in the past that the earlier recessions have changed the world order. The 20th century recession changed the world .The supremacy of the British empire ended paving the way for a bi-polar world from a uni-polar world. This recession will shift the world order again . It will now change to a multi-polar world . It is a natural progression from a uni-polar world to a bi-polar world to a multi-polar world
For more than a century since the invention of the Steam Engine, America has been a source of inspiration and awe for the world. Today , it is a source of learning and unlearning . It has shown the difference between being ‘Big’ and being ‘Great’.
Over the years , we have also seen the growing interdependence of the developed economies on the developing world.
We have seen how G-4 nations, the group of four biggest economies have, over a period of time expanded to G-5, G-8, G-14 & now G-20. After the recent crises , India, China & other developing economies have been invited to participate and play a role in revival of the Global economy. We are just seeing the economic evolution , which is similar to the Human evolution. It was earlier the survival of the biggest , then came the survival of the fittest and now will be the survival of the most agile & interdependent economies .
We have seen that the corporations that stood tall for over 150 years, collapsed in weeks last year. It had a cascading effect . Companies that were associated with such global corporations suffered huge losses. Nothing is infallible in this dynamic world. We need to have foresight , intelligence & be responsible to keep standing tall.
I see that there has been a lot of hue and cry on outsourcing, and I don’t understand how can people drive the market by such ad hoc policies ? We must not forget that outsourcing was started to create economic, internal efficiencies and customer focus , and this finally lead to Globalization. Globalization is an irreversible process . It is a fact that market conditions drive the economies today. It is more important to see the index of the stock exchange every day and not the GDP of a nation to gauge the market sentiment and the economic outlook. Today, the companies are not driven by market share but by share market . So are the economies. We must not forget that the developed economies or the world class cities & global conglomerates have been built by immigrants and locals working together . Today, this is more relevant . We have moved to an interdependent World
Out sourcing is market driven and it will always exist, where ever companies & countries want to grow .
This year, for the first time, we have seen that about 20000 of the 65000 H1B VISA’s have not been used out of the yearly quota . This signals a drastic shift . Till last year , the applications were over quota on the first few days of the opening . And there used to be a lucky draw for allocating H1B Visa to applicants in India. Suddenly , there are no takers this year. The very ‘brand America’ is hit badly.
Today, there is one world economy interlinked with three category of customers – developed , developing and under-developed countries
The developed countries have reached the peak and are saturated , and growth is going to be marginal . Investments will not be forth-coming in such a scenario and money invested might not yield good returns . The major corporations from the developed world need to support and get support from the rest of the world for future growth.
Developing countries like India & China support more than 2.4 Billion consumers . A great place !! These customers need more investment, and growth & returns would be fantastic . These countries also need to learn from the experience of the developed world , they need knowledge sharing , technology support & investment to scale up and work with the developed world
Under –developed countries; The more we invest, the more better & bigger markets we will be able to create for developed & developing countries . This is the future
Today , the mix of the world economies present a unique synergy and a tremendous opportunity to work together and progress; much more , much faster. There is no competition at all globally , we just require to understand the growth equation in the world order & invest , collaborate and scale much ahead . Horizons are expanding as we are trying to reach them. The world is not just a market where we represent either sellers or buyers , but it is a family knit more closely than ever before . Globalization is not just irreversible but is also indispensible force that drives us together , ahead . Remember , we are equity partners in the global economic progress where wars drive down our returns and growth increases our returns . We know that , today, business interests drive the political decisions . So we require a more close and a strong business relationship between the developed , developing and the under-developed economies to ensure a lasting peace and progress universally.
For more than a decade , America has been a land of opportunity for the rest of the world . Today, the rest of the world is a land of opportunity for America .
I would like to define the developed , developing and under-developed economies as the past , present and future of the new world order and without past , you cannot plan your future !
Two important points to note :
First : There is a reversal of destinations , innovation has moved out of the developed world , as innovation always follows the struggling race. Today , developing and under-developed world houses the world’s best innovative minds & the real consumers . They are the fertile economies . Let’s accept this fact and shape our vision accordingly. The destinations have reversed in the last 15 years and we need to see them as interdependent destinations
Second: You cannot give up outsourcing and still sell your products and services to the developing and under-developed countries. You need to understand that the developing economies are also the consumers. Today China might be a developing economy but also is the biggest lender to America & has 1.3 billion consumers . If China decided to en-cash all the American bonds , the American economy will come down today evening . But we understand that the valuation of dollar is what holds the value of Chinese economy’s reserves. If China decides to en-cash US securities , Dollar will fall and so both the economies will collapse simultaneously. So today , we are closely inter woven and cannot bully a nation. We are partners in progress and partners in downfall alike . Today no country can be independent in resources to meet its population’s needs without interdependence . We depend on oil from Middle East , manufacturing from China & IT & Knowledge from the eastern countries like India . Indian & Chinese economy suffered a hit due to slowing down of the US economy but do you know why Germany slowed down ? Because the Chinese and Indian companies stopped buying heavy machinery from Germany and so was the case with many such countries . It was not just the US economy driving down production , it was also the developing economies that affected the developed world. We have to understand the fact that, it is a either win –win –win or a lose-lose-lose for the interdependent world in today’s equation. The world has come close together like one family during this crisis . We need to use this as an opportunity to develop more understanding for a longer and a deeper global partnership so that we can avoid future recessions . We are all living in a fully integrated and inter-dependent world. It is like a necklace . One weak link can break the entire chain and the necklace will fall off.
Also, America needs to have a re-think on some of its strategies . It needs to invest more on development of the developing world . Just think $ 568 billion was given as aid in S. Africa for the last 42 years and more than $ 642 Billion is being spent on Iraq war . Today the world could have been a much better place & probably out of recession, had the war money gone to the development of the world’s under-developed and developing economies . These could have been the biggest customers for US companies !! We should not forget the point that the majority of the biggest corporations in the world are from America .
Globalization according to me, means a truly interdependent and an intertwined world.
So, it is clear that we live in a truly interdependent world & that we need more even distribution of opportunity and challenges all over the world , and invest more on economic opportunities than enhancing military capabilities; to share more wealth to a much larger mass of population . Thriving businesses can do that faster without much involvement from the government . The forums like US-ASIA business forums must happen more frequently to develop an understanding , partnerships and facilitate a better flow of resources , ideas , goods & services to all the three categories of customers & vice versa
I would suggest my friend Kevin Kaul to take the US- ASIA business forum to a much broader scale and help develop the understanding of interdependence of the new world order between the past , present & future i.e. developed , developing and under developed economies to bring all round progress for the whole world
Thank you and enjoy the rest of your day
Rajendra Pratap Gupta
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