The race for the future

The Rise of Nations: The Race For Progress and Winning The Future, Amr Helmy, Cairo: Maktabat Al Adab, 2012
Recently published by the Library of Arts, this is a book by Ambassador Amr Helmy, the Assistant Minister of Foreign Affairs of Egypt. It is the single best selling book in Arabic at Diwan Bookstores in Cairo, Egypt.
The book addresses a number of issues that are gaining in importance in the context of international relations. The topics discussed comprise, inter alia, the changing balance of power, globalisation, the Knowledge Based Economy and the new theory of growth, as well as the challenges that the world economy will face in the future. The topics addressed in this book provide a ray of hope for the remaining emerging economies that are looking forward to building a better future for their peoples and winning the race for the future.
The first chapter of the book addresses the shift in the global balance of power and the end of an era characterised by the absolute dominance of the western countries that began around the 15th century during the Rise of the West. At that point Europe �ê" living through the agricultural and industrial revolutions �ê" was the centre of production, progress and innovation, especially in the fields of science, technology, trade and capitalism. It also had political dominance over many nations in the world. The onset of the 19th century witnessed the gradual transformation of the United States of America into the greatest world power. The status of America as a superpower in almost every realm remained uncontested until another great power shift started taking place. This shift is better known as the Rise of the Rest �ê" the rest referring to the rest of the world �ê" and more specifically the rise of the BRICS �ê" the acronym referring to Brazil, Russia, India, China and South Africa. These countries are becoming new centres of gravity attracting production, progress, innovation and capital into their national borders and away from "the free world". The growth of these emerging economies has fundamentally changed the global landscape. These economies are now the driving engine for global growth and are responsible for generating half of the global economic growth. This shift in global power is unique for a number of reasons.
The first is that the rise of these nations has been benevolent, with limited political ambitions, as evidenced by the fact that the rise of China is better known as the Peaceful Rise of China. The second reason is that these economies have followed an economic model that is different from the prevailing models of the West. For example, the Chinese economy is based on a new model better known as State Capitalism. This model has allowed China to become the second largest economy in the World, taking over Japan's position. Not only that, but China is now poised to becoming the emerging superpower of the World. China is the main centre of attraction of direct foreign investment worldwide and possesses the largest industrial base in the world. The level of foreign currency reserves in China has reached 2.8 trillion dollars, three times the level of the foreign reserves of all European Union member countries combined.
The first chapter also describes the fierce race between different nations in the quest for dominance �ê" with countries aiming at greater economic power, accumulating wealth and playing a greater role in global politics. The author classifies countries into different groups: a group that is concerned about its ability to maintain its existing competitiveness and leadership, a group that is steadily developing its human resources to sustain strong economic growth in order to surpass the exiting developed countries, a group that is standing still, and finally a group that unfortunately is actually retreating.
The second chapter of the book addresses the importance of creating the Knowledge Based Economy (KBE). When economies were based on agriculture, land was the most important factor of production; then, during the industrial revolution, raw materials became the primary factor. According to the New Theory of Growth, by contrast, knowledge is the single most valuable factor of production. Knowledge can only be created through modern education and developing social values without obliterating the existing cultural, religious and national identities. Modern education contributes to creating "innovating minds" capable of producing, being innovative and creating products and services that are competitive on a global scale. Developing these minds requires focusing on the STEM subjects: Science, Technology, Engineering and Mathematics; as well as directing efforts towards fostering the four pillars of the KBE: Biotechnology, Material technology and Nano technology as well as Information, Communication, Transportation and Technology (ICT&T). Nations should direct a greater portion of their expenditure to education; this includes developing the infrastructure to include better equipped schools, universities, centers for research and incubators as well as developing the skill sets of teachers and providers of education and finally updating existing syllabi to better prepare future generations and train their minds and characters. It is not the size of the population that matters, but the level of education and the preparation of the productive society that will make all the difference in the creation of wealth, welfare and progress.
The third chapter of the book is about globalisation; its contributions and the areas of its shortcomings. Globalisation is a phenomenon that has dramatically changed the world we live in since the end of the Cold War. The contributions of globalisation include facilitating and speeding the movement of capital, products, individuals, services and ideas between nations and even continents resulting in greater economic integration in a "borderless" world. The book discusses the views expressed by some about the shortcomings of globalization which include the adverse effects of increased economic interdependence in creating contagions and spreading economic crisis in an unchecked manner, the inability of globalisation to reduce or eliminate poverty, its limited contributions to closing the income gap between the haves and the have-nots, its responsibility for the erosion of the hegemony of western nations and in finally, as a result of facilitating an increased flow of immigrants with different cultural and religious backgrounds, for its role in contributing to the disintegration of social fabrics. Yet the shortcomings of globalisation cannot be compared to its contributions. In order to maximize the benefit from the valuable contributions of globalisation, the world has to concentrate on developing globalisation with a "human face" that takes the needs of developing countries into consideration.
The final chapter of the book addresses the challenges that the global economy will face in the future. These challenges are expected to come up as a consequence of a large increase in the world's population and an increasing shortage in strategic resources including water, food and nonrenewable sources of energy. Both of these factors are expected to increase tensions on the regional and global scales. In addition, the fact that the centres of innovation and economic growth are moving out of the western free world will have consequences for the international political and economic order. The existing arrangements will change. For example, it will no longer be sustainable to maintain the existing rules where the head of the World Bank has to be an American citizen while the head of the International Monetary Fund (IMF) has to be a European citizen. It is most likely that there will be changes at the level of the Security Council reflecting the new reality presenting itself in the power of the new emerging countries.
Additionally, this chapter focuses on the fact that it is not necessary to clone western economic models in order to achieve growth. The modern world had confined itself to lengthy debates on three alternative economic models: Capitalism, Communism and the so-called Managed Market Economy. However, after the fall of the Berlin wall in 1989, the unification of Germany in 1990 and the collapse of the Soviet Union in 1991, Communism disappeared �ê" leaving only two economic models. The first model is the Washington Consensus Strategy For Development. This school of thought focused on the mantra: Stabilise, Privatise and Liberalise �ê" where stabilisation refers to stabilising prices and limiting inflation, maintaining stable foreign exchange rates; privatisation shifting production and services to private-sector management; and liberalisation to the elimination of trade barriers and focusing on facilitating free trade among the nations of the world. This model focused on the necessity to promote ideas based on a market-driven economy, expanding the process of privatisation along with liberalisation of trade and financial markets, and strengthening the role of private business institutions. This movement believed in limiting the participation of the government in production and value creation, only allowing governmental bodies to play a regulatory role and oversee all activities with the objective of maintaining stability. Unfortunately, this model generated a number of consecutive economic crises in Latin America. The second school of thought, the Managed Market Economy Model, focused on the importance of the role of the government in achieving growth while generating employment, achieving social justice, protecting low-income earners and eradicating poverty. This model is being applied �ê" to various degrees �ê" in developed market economies. Unfortunately, this model failed to prevent the international financial crisis that hit in September 2008 and from which the world has not recovered until now.
However, China emerged with a new model �ê" State Capitalism. After assessing the shortcomings of the Washington Consensus Strategy for Development in a number of countries including the countries of Latin America, the shortcomings of the economic policies introduced by Boris Yeltsin in Russia and the weaknesses of the Managed Market Economy Model, the new Chinese model provides an interesting proposition. China has succeeded in maintaining an annual growth rate of 9-11 percent over the past 30 years, resulting in increasing the size of its economy eightfold and achieving the highest growth rate recorded by any nation at any point in time. It has also eliminated the poverty of 400 million people in an unprecedented poverty eradication experience in recent history.
The significant changes that the world has witnessed, especially the transformation of some poor and developing countries into new superpowers, demonstrates that any community is capable of achieving progress and enhancing its positioning on a global scale. In order to do so, countries need to possess qualified and visionary politicians capable of interpreting the developments taking place around them and facing the challenges that present themselves, taking their countries and people to a different level. More importantly, these politicians need to focus on developing their most important resource: the human and scientific capabilities of their people. They also need to carefully select the best economic model that will assist them in achieving their ambitions and winning the race for the future.
Book presentation by Al-Ahram Weekly