KSU lecturer points out limits, perils of world economic growth
by Geoff Folsom
November 16, 2012 12:59 AM | 3289 views | 0 0 comments | 9 9 recommendations | email to a friend | print
Bhaskar Chakravorti
Bhaskar Chakravorti
KENNESAW — While the global economy remains in a deep funk, Dr. Bhaskar Chakravorti says the world is going through one of the largest periods of economic growth in history. He credits that to India and China each doubling their gross domestic products in the past 15 years, something that took the United Kingdom 150 years to do after the industrial revolution.

But that growth comes at a price, Chakravorti told the more than 50 students, professors and business people in a 90-minute lecture sponsored by Kennesaw State University’s India China America Institute on Thursday.

“We are reaching the limits of many non-renewable factors,” said Chakravorti, who heads the International Business Center at the Fletcher School at Tufts University near Boston. “Whether its natural resources, minerals, land, water — we’re running short of water, particularly India and China. And certainly clean air, and there doesn’t seem to be any way out of where we are. So what is happening is a lot of problems is being shifted away from the corporate centers of the community to the bottom of the pyramid.”

Chakravorti said this includes water being diverted from rural areas of China to the larger cities and minerals being taken from rural parts of India.

“You’re beginning to see a lot of problems being shifted internationally,” he said. “How long can we keep going and doing this?”

Chakravorti said that two of the three nations named in the title of the ICA Institute, KSU’s nonprofit organization designed to help foster trade and investment between the countries, are going through transition. China’s Communist Party is introducing new Central Committee leadership this week, while the United States re-elected President Barack Obama to a second term on Nov. 6.

Chakravorti expects to see “Obama 2.0” in his new term. That includes taking action in alternative energy, which he said cannot sustain itself without government assistance because of competition from shale natural gas.

“Maybe there will be some long-term investment in alternative energy research for solar and wind, but that remains to be seen,” Chakravorti said.

Chakravorti also expects to see Obama spend a disproportionate amount of his time on foreign policy. Issues he could deal with include the conflict between Israel and the Palestinian people, as well as problems in Iran, Syria, North Korea and north Africa.

“He is going to be naturally more inclined to be aggressive, since he’s a second-term president,” he said. “He’s naturally not comfortable with hanging out with House of Representatives, having cocktail hour, essentially massaging people’s shoulders … Given that he seems to have a personal distaste for doing that backroom chatter, it’s easier to get away from the messiness of having to push domestic stuff forward and go into foreign policy. When you look at foreign policy, it’s cleaner, it’s easier to push decisions through as a president, and there are grand problems to be solved in the international stage.”

Chakravorti said that difficult times could also create a positive climate for innovation. He said this can include people in real poverty, like residents of a slum in the Philippines who were able to use a bottle filled with water to create enough light to light their shack with the power of a 40-watt light bulb. Or it can refer to “artificial” forms of poverty, such as Facebook founder Mark Zuckerberg creating the social networking site in a Harvard dorm room.

“That’s why students are among the more inventive form of people,” he said. “Students are poor and they have limited access to money and they’re looking for free stuff. They’re looking for free music, so you create, produce ways to unbundle digital music, or you can’t have access to a social circle, so you start a social media company.”

He said artificial poverty can also extend to entrepreneurs, who may have ideas but need $100,000 to implement them, Chakravorti said. But they find an investor who is only willing to initially give them $30,000, with the promise of more once they reach a certain milestone.

“You’re essentially creating this artificial poverty,” he said. “Which forces the entrepreneur to be extremely inventive in many different ways. They are inventive in terms of where they get the rest of their resources. They are inventive in terms of how to use resources and they figure out how to spread the risk of failure.”

KSU senior Elizabeth Williams, a 20-year-old KSU international business major from Alpharetta, said she found Chakravorti’s presentation to be informative.

“He was kind of optimistic about the future,” she said. “That made me think there’s more of a chance the economy will do better.”
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