Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Ground developments show no signs of a tectonic shift in global economic hubs, but ivory-tower interpretations increasingly predict this. Since the 2008-11 Great Recession hammered the global economy, from which recovery still remains incomplete, at least three recent developments worsened the picture: the 2020-22 pandemic, from which many countries still reel; the Ukranian war reviving some features of the military-driven Cold War between the Soviet Union and the United States (and their groupings); and the resultant inflationary drive and gas export-related winter-crunch expected across Europe, predicting another recession like that 15 years ago. Pundits playing with long-term trends see Asian countries inching closer to the global economic steering-wheel as the United States battles its own external and internal demons.
Much has been said (and continue to be said) about the military U.S. contention with Russia and the economic tussle with China. These will shape the future no doubt, yet India arguably symbolises the gathering forces of future world leadership, challenging the evaporating United States, though not as a military contestant. What the implications might be for Bangladesh should leave plenty of food for thought and work for action.
Just as India replaced Great Britain as the world's fifth largest economy in September 2022 (and is on track to push Germany out of the 4th slot during the 2020s), talks of the United States sliding from a 'developed country' (DC) into a 'developing' country is also hitting the waves, opening prospects of Asian countries replacing Atlantic counterparts at the global helm. South Asia as a region leads global growth-rate forecasts for 2023 and 2024, as ground developments expose. On the other hand, ground-level U.S. economic performances rattle less these ivory-tower expectations and predictions than the socio-economic trends reconfiguring the domestic U.S. landscape. Truly, World Economic Forum's Felix Richter found, from polls, how a whopping 40 of high-income U.S. citizens (earning more than 90,000 USD annually) suddenly report 'financial hardship', when before the pandemic only 28 per cent did so. There is much more eyebrow-raising information.
Gonzalo Huertas and Jacob Funk Kirkegaard of the Milken Review elevated not economics particularly but demographic patterns whose impacts will not come immediately, but by mid-century they will become too dominant to ignore. Catalysing these will be skills-change. Hispanic immigrants, now the largest U.S. minority and hitherto with one of the highest population growth-rates, have overtaken white U.S. citizens in both entrepreneurship and workforce integration. The former was possible because high-school completion has climbed to 89 per cent from 60 per cent in the 1990s, thus feeding a possible entrepreneurial pool. Hispanics in California, Florida, New Mexico, and Texas (states with the leading Hispanic migrants and among the most thriving in the country today) show a higher growth-rate of business ownership than any other ethnic/racial group. More critically, no more can we associate them with low-wage, as what they now earn slowly approaches the national wage average.
Workforce integration exposes not only the growing Hispanic 'demographic dividend', but also how it is influencing the U.S. economy: it now contributes one-tenth to the U.S. growth-rate, and though this is only about 2 per cent now, one can only imagine where it would be without the Hispanic input. Ironically though, Hispanic labour may be of growing U.S. importance, but the 'Hispanic' identity is vanishing. This is not because Mexico's population, wherefrom the bulk of U.S. Hispanics emanates, growth-rate has fallen sharply (to the point, in fact, that it cannot send its citizens abroad anymore, if it is to survive). Intermarriage within the United States is the silent force blurring ethnic divisions: up to 39 per cent of all Hispanics (and 46 per cent of Asians), thus producing more of a 'melting pot' than a multicultural country.
A future Latin United States is unlikely to champion free-trade as the United States did from 1947, particularly because of the aforementioned ground-level developments today, but because of a historical oddity that makes Anglo-Saxons the springboard of free-trade and Hispanics or Iberians as protectionists. A mixture will no doubt emerge defining future U.S. identity, and it may already be showing. As Kathleen Frydl writes in the Asia Times that the United States is becoming a 'developing' country because of 'racism' not effectively handled since the Civil War ended in 1865 and its poorer claim to leading 'democracy' in the international system: even the Economist labels the United States as a "flawed democracy" in the wake of Trump populism and the resultant "fractured political culture." The country is ranked low on the SDG (sustainable developmental goals) attainment index: 41st (Bangladesh is 104th), out of over 160 countries, and 26th on the Economists Intelligence Unit democracy index (Bangladesh's "hybrid regime" ranks 75th here). Given the short-term problems of war, inflation, recession, and populism, the scope to wrest the U.S. future from its Asian and Latin immigrants/residents diminishes just as India's global relevance, for other reasons, rises, even if attained within the same populist bent. If populism rattles economic ranking, we have yet to interpret the nature, contents, and consequences accurately. Though past cases (from the 1920s), have not boded well on this front, more study is increasingly and desperately needed.
What do these mean for Bangladesh? Two flanks automatically come to mind, in spite of already functioning in fits and starts. The first is to push the country's Latin interest. With embassies in both Brazil and Mexico, we need to expand our visibility, while Latin Studies and both Spanish and Portuguese languages need to be imparted more widely in our universities. Opening such socio-cultural linkages often steadies and raises economic exchanges. Most importantly, we need to cultivate the two embassies we already have so that economic transactions cannot just flow, but they can also blossom; and investment opportunities need to be created. With the United States emerging as our largest country-specific RMG 'buyer', we could explore RMG production in Mexico, in return for Mexican exports/investments here (CEMEX could help our booming construction efforts with cement production). Academic and educational exchanges could pave the way.
The second is with the United States. We still have massive mega projects in the pipeline to facilitate and create the 'developed' target the country is seeking by the 2040s. Yet, we have probably not maximised economic opportunities to their fullest. We do not hear much of the United States when we discuss special economic zones (SEZs) or export processing zones (EPZs), especially when the United States is running rampant across the world to find new locations for enterprises exiting China (and with Vietnam flowering partly because of this exodus). At a time when Asian market-growth and dissonance with China grows inside the United States, we remain in the back-seat. Learning from Vietnam rather than dismissing it as a competitor helps.
That opens another issue worth exploring: comparing Bangladesh and Vietnam, both vying to become 'developed' countries in the 2040s, and standing at first-base with roughly the same low-wage platform, yet far different formulas and structures. Which country wins may shed more light on how reconfigurations within the United States will pan out, and with that, the mid-term future of world leadership. In the final analysis, since the U.S. Hispanic bubble ripples as far as Vietnam presently, we better take note.
Imtiaz A. Hussain is Professor, Department of Global Studies & Governance, Independent University, Bangladesh