The 21st century will be known as the “Asian Century,” according to Dr. Jeffrey Rosensweig, finance and international business professor at Emory Business School. He told some 200 attendees of the Atlanta Chamber of Commerce’s 7th Annual International Economic Briefing this week that Asia will eventally grow to a far greater economic magnitude than either the Americas or Europe.
By the year 2030 or so, Dr. Rosensweig believes there will be five great economies: China, North America, India, an integrated Europe and an east Asian economy centered on Japan. Even in the immediate future, China will continue to be a focal point of investor interest, he said, as it combines the world’s largest population with one of the world’s faster growth rates. The 12% growth it achieved in 1993, however, will not be sustained, he predicted.
Because the Chinese government will try to keep down inflation in the coastal urban centers and because of the difficulty of maintaining such a growth surge from a higher base level of production, he anticipates that China’s growth rate will fall to 9% this year. He also forecasted increasing political friction between the U.S. and China due to a sharp downtrend in the U.S. trade balance.
While he is convinced that China will surge ahead in coming decades, he also said that “India will get its act together and even surpass China as one of the great countries placing it in the top five along with the U.S., Europe, Japan and China.”
Asian gains will not necessarily be at the expense of continued growth in both the U.S. and Europe, he said. And he admitted that his views of Asian dominance were not unanimous among all economists. Europe’s claim to the century would be dependent on its strong educational systems and highly trained populations. The U.S. also would continue to grow at a moderate but steady rate, he said, and it would benefit from increased economic integration with Latin American countries.
He forecasted that the U.S. economy would experience 3% (inflation-adjusted) growth in 1994, while Mexico would benefit from from the North American Free Trade Agreement (NAFTA) and grow by a rate of 4.5%, which bodes well for U.S. exporters. He did confess, however, that because of his support for NAFTA, he did not widely publicize his view before the vote that Mexican companies will face enormous competitive challenges in coming years.
“If NAFTA hadn’t passed it would have screwed up the hemisphere,” he said, adding that “It’ll be much better off in 15 years.” But he then warned that in the coming months Mexican companies will have to lay off employees and learn to compete with U.S. firms that will be entering formerly protected markets.