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A decade of economic evolution out of crises and prosperity
Date: 2010/12/30 Click: 922
In the sphere of the world economy, the first decade of the 21st century was characterized by the coexistence of crises and prosperity, of destruction and progress and of declines and rises.

"It was the best of times, it was the worst of times." The classic words by British novelist Charles Dickens seem quite appropriate to describe the world economy during the past 10 years.

GLOBAL DEVELOPMENT

If the world was still in chaos in the 1990s after the end of the Cold War, then the fabric of global economic development has become increasingly clear in the first decade of the 21st century.

For the 10 years, the world economy continued to evolve along a variety of development paths. The international financial crisis that started in 2008 on Wall Street demonstrated that with its inherent drawbacks, the Western economic and financial system was not a globally applicable paradigm.

On the other hand, the majority of developing countries have chosen their own development modes in accordance with their national conditions, and have emerged as a positive force to promote the world's economic recovery.

On the whole, this was a decade without total war. Though the world economy was bookended by the U.S. dot-com bubble burst and the financial crisis and experienced a lot of setbacks in between, the decade managed to maintain growth, with increases in world output, expansion in international trade and a deepening of international industrial labor division, globalization and regionalization.

Benefiting from science and technology, especially communications technology, a new round of globalization has significantly sped up since the 1980s.

More people, more local markets and more resources have been included in the global economic system. Wealth created by mankind has increased, economic exchanges among countries have expanded, and the living standard of most people has improved.

Meanwhile, bubbles can also have upsides. Thomas Friedman, author of "The World Is Flat," pointed out that it was investment during the Internet bubble period in Internet infrastructures like the transoceanic fiber optic cables that laid the material foundation for additional development of globalization after the crisis.

Currently, it is widely expected that international financial regulations should be strengthened and international economic and financial systems should be reformed.

The concept of green, low-carbon, environmental protection and sustainable development has become more popular. All this can become the driving force for the world economy during the next 10 years.

CHANGE OF INDIVIDUAL COUNTRIES

In the background of continued development of the world economy as a whole, the development of each country and each region over the past decade has been quite different.

Developed countries led by the United States began the first decade of the new century with a crisis and ended it in the aftershock of a bigger crisis.

From the Internet bubble to the housing market bubble and then to the financial crisis, and from a crisis to prosperity and then to a larger crisis, this was a somewhat struggling decade for the developed countries.

As Simon Johnson, former chief economist of the International Monetary Fund, said before, the abnormal development of the financial sector and the prevalence of speculation pushed the U.S. economy into a cycle of boom and doom.

Meanwhile, for the majority of developing countries, the past decade has been relatively stable with continuous development and great economic and social progress.

Accordingly, the balance of power between developed and developing countries has relatively changed. The world economic structure is evolving toward a more balanced and rational future.

Changes have also occurred in major international organizations like the International Monetary Fund, the World Bank, the Group of Eight (G-8) and the Group of Twenty (G-20). For example, the G-20 has replaced the G-8 as the main platform for international economic governance.

PREPARING FOR THE NEXT TEN YEARS

Looking at the next 10 years, the pattern of the world economy is set to change.

After the once-in-a-century international financial crisis, the next decade will witness great changes, adjustments and developments in the world economy.

Various signs have indicated that the development of the world economy will produce three major trends.

Firstly, the world economic situation will change more rapidly, with national governments making important adjustments in their development approaches.

The international financial crisis shattered America's debt-driven consumption and speculation, which also injected new momentum for economic restructuring in developed countries. Developed economies are trying to restore the balance between saving and consumption and between virtual economy and real economy.

Meanwhile, developing countries need to decrease their dependence on exports, improve their social security systems, upgrade their income distribution systems, expand domestic demand and raise their living standards.

On the whole, aside from unpredictable factors such as large-scale wars, plagues and natural disasters, the majority of emerging economies are expected to embrace a new decade of development and progress. World economic governance reform will continue to deepen.

In addition, as environmental issues become increasingly prominent, the concept of sustainable development will be more popular. Low-carbon economies, green economies and environment-friendly economies will achieve greater development worldwide.

Secondly, the international financial and monetary system will experience significant adjustments. The outbreak of the international financial crisis fully exposed the unsustainability of the current system.

Strengthening financial supervision does not mean to contain financial innovation or deny the role of the financial system in modern economic operations.

However, if international financial rules are not re-adjusted, the so-called once-in-a-century international financial crisis probably will come again in a few decades.

In addition, the risk of the U.S.-dollar-dominated international monetary system will gradually increase.

Thirdly, globalization will continue to develop with the coexistence of risks and opportunities. In the next decade, globalization will continue to "transform" world production, consumption patterns, and international trade, which will make the world increasingly "flat."

Low-cost, convenient and modern communication networks will bring opportunities for more people to participate in the process of globalization.

Meanwhile, a number of vulnerable countries will probably sink into more trouble because of war, disease or natural disasters in the fierce competition in the world market.

Traditional economic powers will either keep their preeminence with industrial upgrading or be defeated in the competition. Emerging economies may also face problems like the so-called "middle-income trap."

In short, each country has its own opportunities and challenges. The next decade will be just like any other in history. The opportunities always favor the prepared counties, enterprises and individuals. For them, the most important thing is to make full use of the opportunities.
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