The Euro zone financial system smoulders. The credit crisis begun almost years ago is still with us. Yet it is this very policy -and the resultant inflation -that is perpetuating the crisis and undermining our economy, as well as the global economy. We are today observing the context of a rapidly changing international environment.
The term that mostly aptly describes these changes is “globalisation” which has been taking place for a long time now. However, in the last decade it has accelerated and marked by the growing inter-dependence of countries.
We are indeed constantly becoming a “global village”. The recent crisis in South Asia and Europe is a good example of this. The collapse of the financial markets not only affected the economic fundamentals of South and North America and Europe, but also led to a “slow down “of those economies.
While it is recognised that globalisation has the potential to improve the quality of life of the people of the world, in terms of increased trade, better communication, integrated markets, movement of labour and capital, we must also take cognisance of the devastating effects in a world system which is characterised by socio-economic inequalities.
Central Europe has transformed its economies in the two decades since communism’s fall. The Czech Republic, the more affluent half of the former Czechoslovakia, is a vivid example. Leveraging a well educated but relatively low-paid workforce at the crossroads of western and Eastern Europe, this country has attracted multi-national companies, especially financial service firms. It has also developed a thriving tourism and a strong rise in real estate values.
Result: one of the fastest growing economies in Europe, as they carry out the complex task of building a new and democratic country. If they can do it with all the burdens of the recent past, surely others like us can follow.