Currently, a substantial part of the global economy is facing challenges. Who can help it right here and right now? The experts agree, that it is the Middle East, yet only after it can finally take on the leadership role in the global economy’s financial regulatory and development bodies
There is great potential in improving the leadership role in the global economic system, which still is marked by the pride in excessive consumption (especially in the West), unjust globalization, and insufficient regulatory actions by major banks.
What is the key difference between the approaches?
If to look closely at excessive consumption, we will see, for example, that personal consumption expenditures of the Americans amount to 68% of the US GDP, which is about 10% more than in the majority of other developed countries, and about 30% more than in China. Every time when personal consumption exceeds about 50% of the GDP, it poses a serious risk for a country’s economy and true full employment.
This situation is followed by constant unjust and unbalanced consequences of globalization, regardless of the fact that during the last 25 years everything was working right. The problem is not that at the heart of globalization lies the comparative advantage theory. The defects of it are rather that the US and many European countries are often unable to compete with a combination of protectionism, strange labor standards, bad environmental practices, and currency manipulation.