Will the world economy collapses if the third world modernizes?
January 18, 2007 11:36pm CST
Every developed nation (US, Europe, Japan) has a trade deficit with developing nations. That is they import more materials than they export. Therefore is it possible for all nations to one day be developed? Does the system require that resource rich country remain impoverished?
24 Jan 07
Hey I said that, every developing nation is importing more than they export. Suppose if all the countries have been developed, then who will be there in export! This will naturally result in trade deficit!!! Every country will be intersted in import but no one will be there to export!
• United States
24 Jan 07
The developed nations import more than they export mainly because labor costs are cheaper in developing nations. When that is no longer the case--when the developing nations no longer have the comparative advantage in unskilled labor--developed nations will likely purchase domestically because mechanization (and the more productive labor which results) will be cost effective and because they will be able to save money on duties and freights. The developing nations will also become markets for the goods for which developed nations have comparative advantage, such as high-tech equipment. The laws of supply and demand, and the information contained in prices, will still exist as the world develops. A situation in which everyone wants to import and nobody steps up to export is as absurd as one in which I want to purchase an onion and the grocer has one but doesn't want to come to work to sell it to me. The world economy will look very different fifty years from now once India and China finish liberalizing and Africa stabilizes. Barring war or disaster, it's likely to be stronger.
19 Jan 07
in absolute term no two nation can be exactly at par with other in economies relative status exist in future there may be every country become developed but their development in diffent diffentials remain uneualled take india despite of so much development large chunke of peolple are below poverty line and may be even it achieves the status of developed nation that problem will not be eradicated and there econoies of cycle operates india was developed in past but poor now a days and there is equal probability that US may become downtrodden again like its past...cyclic variation of economies
• United States
23 Jan 07
The world econony won't collapse if the developing world modernises. The opposite will happen - the world economy will get stronger. At the moment the world relies on teh USA and Europe to buy goods from the rest of the world. But as the developing world gets richer, they will start buying goods too, and hence the world won't be reliant on just one or two consumers, but will have many.