World Bank ex-chief says power heading east

World Bank ex-chief says power heading east


Hong Kong: The former president of the World Bank said that rich countries were ill-prepared to deal with the “tectonic shift" in economic power towards developing nations, in particular to India and China.

James Wolfensohn said rich nations still treated major developing nations with a “colonial" attitude and had not fully understood the way the power had moved eastward as a result of economic expansion.

“The leadership in the developed world, and people who should know better, still have not adjusted to the fact that this is not just a modest change in global economic power and influence, but a tectonic shift," he told a financial forum in Hong Kong.

“If you look at the developed world and how it is addressing this change, the steps that are being taken are relatively trivial," he said.Wolfensohn said that while developing countries made up just 10% of global GDP in 1950, they will make up 65% of the total by 2050.

Spectacular growth in China will see the Asian giant overtake US as the world’s richest country by 2040, with India in third place by 2050, he said.

Wolfensohn said power was already shifting away from developing countries and cited the example of African political and business leaders now engaging directly with China and India, bypassing western countries.

“We are ill-prepared for it. This is not some minor change," he said. He called for a greater focus on understanding Asia and in particular improving language skills, and a more developed sense of “social responsibility."

But he warned that Asian development must ensure its poorer citizens also benefit from growth, to avoid the political instability that had blighted Latin America.

“The challenge is how you bring about equitable development," he said. “There is an awakening of difference that happens in these countries (developing nations). It is an issue that is now happening in the developing world.