Developing world key to future prosperity: OECD

Developing world key to future prosperity: OECD

PARIS (Reuter): Rich nations may feel their jobs and wages are threatened by emerging economies of the developing world, but their gains from new and lucrative markets will far outweigh the costs, the OECD has said.

If China, India and Indonesia maintain their rapid economic growth rate of six percent a year, by 2010 their total output of goods and services would almost double to 60 percent of the output in the developed world.

In a report on Tuesday on "linkages" between those countries once written off as doomed to permanent poverty and the traditionally rich nations, the Organization for Economic Co- operation and Development saw in such projections the seeds of global wealth.

"This rapid expansion and growing weight in the world market will provide a fresh impetus to OECD growth through trade in goods and services," the economic think-tank said.

That message was a cheering one for the 25 OECD nations, whose current economic upturn is paltry when set against the spectacular growth of many Asian countries and whose unemployment problem remains a tough nut to crack.

The "Linkages" report argued that developing countries' expansion and growing weight in the world market will provide a fresh impetus to OECD area growth through trade in goods and services.

An expected explosion in the middle-class population of China, India and Indonesia to 700 million people by 2010 from 100 million today should bring a particularly lucrative market.

It said the OECD nations needed to pursue linkage strategies to tie major developing nations into the international market- place and thus commit them to globally accepted "rules of the game" on trade and investment.

The threats to the Western world are few.

However, it is true that some industries such as clothing and footwear have been hurt by competition from cheaper labor in developing nations. This has raised the question of how the West can adapt production systems and make their labor markets more flexible to meet that challenge.

The OECD report also sounded some alarms on the aggravation of global problems that continued high-speed growth in developing nations could pose.

Rapid industrialization, urban development and rising living standards carry downside risks of pollution, population strains and increased demands on scarce commodity resources.

Without new policy initiatives, global emissions of carbon dioxide will triple by the middle of the next century, the OECD said, noting that China will probably become a larger source of energy-related emissions than the United States, and India.