Global Competition among the Important Economic Blocks

Abstract

The last few decades marked a significant intensification of the global competition between the different economic superpowers of the world and also have brought about the emerging of new contestants in the international arena, such a China or India. Not only competition increased but the global interdependence (or globalisation) has developed at an unprecedented pace too. It is not surprising therefore that nowadays economic super-blocs are netting competitiveness as their primary policy objective. The different blocs seem to have different problems though: there is nothing wrong with the US growth or employment figures, though the ever-growing twin-deficit is threatening the economic outlook overseas driving the dollar to historic lows that hampers the recovery of European industry which is still heavily export-driven. Europe suffers from insufficient growth and weak domestic demand, Japan is in stagflation for years. China on the other hand has difficulties with controlling its wild economic growth and the growing international pressure to readjust its extremely undervalued exchange rate. Who will prevail with what sort of a policy mix, only time will teli, but odds are certainly not proportionally distributed amongst the parties. One thing is certain: Europe – seeking for higher growth and better competitiveness, while trying to preserve its special economic model, and faced by a dramatically ageing population – must do its utmost to keep up the pace.