America Urged To Turn Its Eyes To Asia
January 31, 1996
According to global trend forecasters, changes taking place in Asia -- particularly Southeast Asia -- are by far the most important developments on the planet. Economic and social developments on the planet. Economic and social developments there will drive the world economy through the end of this century and beyond.
Many Asians believe they will best the West competitively because they neither have nor want a social security system or other manifestations of the welfare state. In Asia, families take care of themselves and personal responsibility is a cultural given. The concept of taking care of the family first is why the savings rate in Asia is 30 percent or more in most countries. In fact, for Asians, the very idea of a central government being involved in family life is culturally unthinkable.
Furthermore, many Asians should have the wherewithal to maintain their financial independence, considering these factors:
- If Asian economies continue their 6 percent to 10 percent annual expansion of the past decade, their middle classes will double or triple in the next decade.
- The Asian middle class, not counting Japan, could number between 880 million and one billion people by 2010.
- That would imply a stunning $8 trillion to $10 trillion in spending power -- roughly 50 percent greater than today's U.S. economy provides.
- East Asia's gross domestic product is already larger than that of the United States or the European Union, and by 2005 will be bigger than both combined.
American investors are already eagerly participating in Asia's economic emergence.
- According to U.S. government statistics, the U.S. earned a return of 10.3 percent on its cumulative investment of $56.6 billion in the world in 1993.
- The same year, U.S. investments in a number of East Asian economies earned more than double the world average.
- For example, the return on investments in Indonesia was 34.3 percent; Malaysia, 33.7 percent; The Philippines, 23.7 percent; Hong Kong, 20 percent; and Singapore, 19.6 percent.
Will the West's spending on the welfare state cripple its global competitiveness? That is a question Asia will compel us to ponder.
Source: John Naisbitt, "Asia's Economic Renaissance," USA Today, January 31, 1996.
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