In an interview given to Financial Times, Zoellick said that it was indeed difficult to see US consumers trying to assume similar role as “demand drivers” that they had in earlier recoveries as they have to pay of their debts as well as improve their finances.

Said Zoellick in the interview which was given before his present visit to India, “The US consumer has to deleverage and has to rebuild savings,” he said. “This is one of the opportunities for Asia’s larger role in the recovery” in supplying more sources of demand, said Zoellick.

The World Bank president looked at China, India as well as other economies of Asia as the new engines of the present global progress against the existing backdrop of several developed nations that are still emerging from the recession.

Zoellick also says that in case employment remains in the US above 10% next year “you are going to see feedback effects,” “It’s going to increase delinquency for credit card debt, for consumer loans, in the US some commercial real estate is quite soft and that’s going to flow back into the banking system.” he warned.

” You will see some financial institutions doing very well but if they are dealing with the consumer retail market they will continue to be hit by those losses”, he said. He added that the world was awash with liquidity and that this posed a challenge to central bankers to some East Asian countries.”

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The levels of economic development do vary among the developing countries so there cannot be a prescribed criteria for deciding which countries are in the developing stage. Compared to the developed counties they are far behind in technological and other sectors.

The World Bank defines low as well as middle income countries as “developing”. Much would depend upon how much Gross National Product (GNP) they generate.

What are the facets of developing economy?

• Economically backward – The developing countries are economically poor and are unable to feed their population or meet their daily requirements of food, shelter and good health.
• Low per capita income – The per capita income is very low. The purchasing power of the people is very low. They are unable to buy good clothes and have better standard of living for themselves.
• Lower levels of national income – The national income levels are also low. The earnings earned from various sectors are not very high.
• Technologically backward – The technical know-how is not very advanced as compared to developed countries. Of course, countries such as India are making much advance in this sphere of activity also, yet it has a long way to go.
• High rate of population growth – Developing countries have a high population on account of which their economic growth is slower. They have to feed more people when compared to developed countries, which have lower levels of population.
• Poverty – There are large number of poor people living in these developing countries on account of the hugh population. Some of them live in abject poverty.
• Lower levels of investment – Industrial growth is at slower pace and level of investment is not very high in developing countries.
• Dependent on foreign aid – The developing countries receive international aid from developed countries to improve their economic conditions.They succumb to the domination of the developed countries.
• Inflation – Inflation rate is high in these countries. Since economic growth is slow and the general production output is also not very high, goods and service are available at a higher cost.

The developing countries or economies have too much to achieve in the sphere of industrial and agriculture sphere. They have to make tremendous efforts to feed their millions of people.

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China is making much growth in the economic sphere. In the Third World, China is expected to stand tall in the coming future. It will be a force to reckon with in world politics. Even the U.S. recognizes its potentiality.

Growth of Chinese manufacturing sector
The manufacturing sector expanded very rapidly at a fast rate within a span of 18 months according to survey. The economists also predict that the growth will be sustained. In October the manufacturing sector of China rose to about 55.2 %, up by about 0.9 per from the previous month. This was highlighted by China Federation of Logistics and Purchasing (CFLP).

The index was of course higher about 0.6 points higher than the number in September, when the PMI had increased by only 0.3 % points to 54.3 per cent. In fact, it was 8th month in row that the PMI reading that stayed above 50.

Above 50 reading implies expansion, whereas one below means contraction. The PMI includes an indices package that helps in measuring performance.

The survey which was conducted by the National Bureau of Statistics (NBS) also covers supply as well as purchasing managers in more than about 700 firms across China. PMI was launched by CFLP in 2005.

In October, the production index within PMI reached 59.3 percent, which is the highest level since last May.

The third largest economy, the Chinese economy in on a path of meeting Government target of 8.0 growth in this year of 2009. The National Bureau of Statistics has shown a growth of 8.9 %, which happens to be the fastest quarterly growth within a year.

The Gross Domestic Product of China grew by 7.7% in the initial 9 months of 2009 as compared to the same time last year according to data available.

China is indeed on its way to becoming a powerful nation, both strategically as well as economically. It is a nation which has stood on its own merit and is very proud of it.

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The United States and earlier the United Kingdom dictated terms to the less fortunate countries. They, of course, manipulated the world’s natural resources to their benefit. Great Britain took away many of the natural resources from India and built its industries. The white supremacy prevailed.

Now the scenario is different. Even the Asian countries are asserting themselves and are trying their maximum best to make considerable contribution to the world economic growth.

What is Asian Factor?
China and India are emerging as strong contenders for economic power in the world economy. No doubt, their rapid population growth is hampering their growth, but they are making headway in many technological spheres.

Today, China is on its way to becoming a superpower in its own right. India is not far behind. The West has realized the potential of both the countries to contribute to the world economy. Unlike India, China is less influenced by the Western culture. It retains its distinct cultural ethos. Being a communist country, it is definitely at loggerheads with democratic nations such as USA.

Both China and India are taking advantage of the Western technological innovations and are not averse to receiving their technical know-how and expertise. But yet they do not want to be dictated terms to. They prefer to stand on their own feet and develop indigenous products which have the potential to sell abroad as well.

India always suffered from “brain drain”. Many of its technocrats go off to the West for greener pastures. Unless and until it strengthens its local technical infrastructure, it will lose out on talented people.

Will China and India prove better than the West?
It is difficult to say now whether China and India will beat US and other European countries at their game; nevertheless, the West sees both these countries as potential rivals. Both are making much progress economically. They need of course to control their population. In India wealth has to be distributed equitably as the gap between the rich and the poor is widening. It is difficult to tell what exactly is happening in China as it is a closed society. But in the future it will be force to reckon with in world politics.

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What has recession meant to all of us?
Recession has, no doubt, taught us all to understand and appreciate hardships that many millions all over the world face otherwise. It was easy for most people prior to the recession. They had the money to buy luxury goods and lead comfortable life. Perhaps they never visualized that they would have to count their pennies.

For many people in the underdeveloped and developing world recession perhaps did not mean a thing as they always lived in abject poverty. It is mostly the developed countries like the US were hit very hard. Of course what happens in the US economy does have its impact on the world economy. Even in India, times were tough. Many were thrown out of their jobs. There was slump in the market as the purchasing power of the people came down.

Victims of recession suffered from depression and some even committed suicide as they were unable to face the financial crisis in their lives.

What has recession taught us?
It is quite obvious that people need now need to be careful with their spending habits. They should not take things for granted. Simplicity should be given preference. Consumerism is definitely unpredictable in case the economy goes awry.

Consumers yet will continue to behave as they are. Once the economy improves and their purchasing power also improves they will start spending again. People tend to forget past experiences and feel that it was only a bad phase.

Can recession occur again?
Undoubtedly this is a phenomenon that world at times experiences. When it strikes we do not know but it does strike. The lucky ones survive it and those who are unlucky bear the brunt.

By beginning of next year it is hoped that the world economy scenario will change. Slowly, recession will be forgotten and those looking out for employment will be able to fetch a good and decent job for themselves. Memories will remain.

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Why does poverty exist?
Poverty is indeed a curse. People suffering from it are unable to meet their basic needs of food, clothing and shelter as well as medical help. They experience hunger and are unable to change their circumstances as they remain in a vicious cycle which is difficult to be undone.

Lopsided economic development within a country and neglect of dealing with economic backwardness has led to poverty. Over population is another cause. Several developing and under developed countries do not pursue economic policies rigorously to eradicate poverty.

How can poverty be tackled?

• Policies to eradicate poverty must be pursued rigorously.
• Population growth must be controlled.
• Equitable distribution of wealth within the country as well as within nations.
• Education for all.
• Employment opportunity for both literate as illiterate people.
• Subsidies.

Why is poverty a curse?
Poverty is a curse as many people are poor and are unable to meet both their ends. They are unable to survive even on bare minimum. Many people remain hungry as they are food needs are not met. Their purchasing power is nil and they cannot purchase food, shelter and clothing.

Malnutrition is very common among the masses and disease spreads quickly. Medical facilities are almost nil or not up to the standard. Most children are deprived of education and are forced to work in appalling conditions. Unemployment results in poverty. Work opportunities are minimal. Daily wager earners do not find work.

Poverty restricts the growth of the individual. He or she who is living in abject poverty cannot contribute to the society in any way. He or she is a burden on society. It is not his fault though. The respective Government has failed to provide adequate facilities for his mental and physical growth.

Much needs to be done by the respective Governments to eradicate poverty. The progress of a country depends upon what comforts are provided by the respective Governments to their people. Poverty can be completely eradicated in case the right economic measures are adopted.

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Wealth in the world is not equally distributed. Some nations are very rich whereas others are very poor. The Western nations such as the US, West Germany, UK are very prosperous. On the other hand, economically poor countries such as those in the African continent and India, Pakistan are lagging behind. Why is this disparity so? Many economists have tried to answer this question and have suggested solutions to it, but yet it persists.

The question that arises is that why some nations enjoy a higher level of prosperity? Why do they have a higher per capita income? Let us observe this phenomenon.

Why nations are prosperous?

• Higher industrial productivity.
• Technical know-how.
• Less population.
• Efficient labor who are hardworking and committed to their work.
• Better utilization of natural resources.
• Higher education levels.
• Active participation of citizens in improving their lot. Questions are raised in Parliament in case the Government does not deliver.
• Stable Governments in power.
• Less outside interference. Many Eastern and African nations have been subjected to alien domination.
• Effective laws.

Government attitude towards economic development
In the rich nations, the elected governments owe a lot to their citizens and try their best to please them. They are in power on account of them and cannot afford to neglect them. In the less developed countries, the Government once they come to power, forget the needs of the people and are busy sorting out their vested interests. Corruption is higher in these countries and the people do not enjoy all the benefits of prosperity. Only a few do.

The governments in the developed countries are questioned in case they do not meet up to the expectations of the people. Naturally, they would ensure that economic development is at a higher pace so that people can enjoy better standards of living.

The US economy, for example, is a highly developed economy. The elected government takes its work of providing the people with all the luxuries and comforts of life.

Therefore, the countries which have a higher per capita income have streamlined administration and governments that run the country well in order to promote people’s well-being.

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How does a country benefit from trade relations?
Countries maintain trade relations with each other. The exchange of goods and services between countries is known as international trade. A country requires a market for its goods. Markets are available locally as well as internationally.

A businessman or woman has to make profits by selling his or products in the market. They should be buyers. In case, there are no buyers, the products will lie waste. Similarly, services also need to be availed of. The provider of services makes his or her income when people make use of their services and pay for it. In other words, both seller and buyer are important in business process.

At the local level, the citizens make use of the services and buy products for their personal consumption. At the international level, at times a respective Government plays a major role in the selling of a product by an international producer of another country. Often you come across machinery parts and machines as well which have been produced in another country. Garments are also exported. India exports its cottons to the Western world. One comes across Taiwanese or Chinese imports in India as well as those of Japan.

Benefits of International Trade – Advantage of international trade

• Monetary gains to the respective country indulging in trade.
• More variety of goods available for consumers.
• Better quality of goods.
• Competition both at the international level as well as local level.
• Closer ties between nations.
• More exchange of technical know-how.
• Local producers will try to improve the quality of their products.
• Increase in employment locally.

Disadvantage of international trade

• Local production may suffer
• Local industries may be overshadowed by their international competitors
• Rich countries may influence political matters in other countries and gain control over weaker nations.
• Ideological differences may emerge between nations with regard to the procedures in trade practices.

International trade is beneficial to world economy. It adds to the money coffers of the world at large. Every country can benefit monetarily if it is able to dispose off its surplus goods after meeting the requirements of the local people.

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An Utopian concept is to have one world, whereas there are less disparities existing between nations. Naturally, the economic disparities have to also be reduced in order to ensure that countries enjoy the same level of comforts for their citizens.

How can the economic gap be bridged between nations?

• There should be more exchange of technical know-how. Efforts are on now to share technology. Advanced countries do visit the less advanced ones in order to share their sophisticated technical know-how. Talks are held between dignitaries of respective countries who sign various memorandum of understanding, whereby the countries exchange technical expertise. But more needs to be done on this front.
• Countries need to help each other in improving their prosperity levels and providing higher living standards to their people. For example, the US has been outsourcing in IT industry providing jobs in other countries. This has benefited the less developed nations in many ways, as its citizens have more employment opportunities and higher source of income. No doubt, some may feel this is too much dependence upon another country, but mutual cooperation is essential for countries to exist on friendly terms.
• Increased trade will also help. All developing countries need markets to sell their products. Trade practices can be more liberalized for producers to benefit from the sale of their products.
• Investments should be made. Perhaps the international industrial community can look into more ways and means of making investments in other countries in order to increase employment, provide better goods and services and guide the less developed countries in industrial practices that would enhance profits. Of course, the more developed nations should not dictate terms to less fortunate ones and play havoc with their citizens’ life. The concept of one world is Utopian as the fortunate nations tend to interfere in the political and social lives of the less developed nations.
• Economic prosperity of nation should not be with the purpose of dominating over another nation. Many countries feel superior about their higher status and often create political conditions in such countries to ensure that they remain subservient to them.

Economic prosperity must not be at the expense of erosion of another country’s social values system. Every country has its own social ethos and practices. It prefers to adhere to them. Developed countries must not impose their value system on others.

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What’s the world economy scenario?
The world economy grew by about 5.2% in 2007 – China (11%), Russia (8%), India (9%). Situation appeared quite good for the world economy at the beginning of 2007. Of course, the global economy also was faced with the risk of stagflation of the 1970s style.

At the beginning of 1970s, the emerging global markets of China, Russia, India and Brazil (the BRIC countries) had been showing a growth rate of 7%to 10% for several years. The property as well as stock market booms had brought much prosperity to North America and Europe. In the Middle East as well as Africa much investments were on and Japan was also recovering from its deflationary phase.

Under developed and developing countries depended upon the well-being of the developed nations. Now Asian countries such as China and India are also trying to make it on their own steam. No doubt, their large population is holding them back from progressing well.

How recession affects the global economy?
The present recession has left both the developed and developing countries in the lurch. The US, otherwise a prosperous nation, is facing a financial crisis with rampant unemployment. Federal funds are being diverted to rescue banks and companies suffering from heavy losses. This has not been appreciated by taxpayers at all.

The recession in the US has also affected other world economies, particularly, developing ones, such as, India. Here also, banks are not supplying loans to investors, thus affecting investment. Unemployment is very high. People have just been laid off or are settling for lesser salaries.

Mortgage holders in the US are facing serious financial crunch and are faced with negative equity.

Rise in prices
Inflation has affected many economies. Oil prices have gone up and the prices of essential commodities have also gone up. The developing economies are definitely finding it difficult to feed their millions. Rice and food grain have doubled between 2007 and 2008.

Now In India, the rains have failed this year, thus adding fuel to the fire. The farmers are facing acute water shortage and are unable grow their crops. Naturally, the prices of food commodities have shot up. Many live below the poverty level and are unable to have a square meal a day. Such setbacks affect their living standards further, which happen to be very pathetic.

Rise in unemployment
Presently due to the recession even the developed countries are facing unemployment. Developing economies have always faced unemployment due to their over population and lack of proper technology to tap the natural resources to their maximum.

Stagflation Era
Stagflation refers to a condition whereby inflation coexists with economic stagnation. There are less growth opportunities. Prices continue to increase with less supply of commodities. The present era, according to economists is a stagflation era. The 1970s faced such situation.

Demand has been on the increase and one is concerned whether the earth’s resources are reaching a state of depletion. The view held is that more investments must be made in renewable energy in order to avert stagflation.

Lopsided Development
Rich nations are getting richer whereas the poorer nations are suffering from excessive malnutrition and poverty. World bodies are trying to help these poorer nations financially, yet the problem does not get resolved. War, internal strife and extremist activities are keeping nations apart. A global world is yet to emerge. The white racial superiority still persists, although US President Obama’s election indicates that there is a growing trend towards anti-racism.

The world is faced with an economic crisis now. It is better to realize that one must conserve the natural resources and avoid extravagant expenditure. The gap between the rich and the poor nations must be bridged. Unnecessary spending should be avoided. Yet recession is a temporary phase. Once it is over people will return to their normal spending habits.

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