[Congressional Record (Bound Edition), Volume 152 (2006), Part 8]
[Extensions of Remarks]
[Page 10734]
[From the U.S. Government Publishing Office, www.gpo.gov]




          THE ROLE OF DEVELOPING COUNTRIES IN GLOBAL ECONOMICS

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                         HON. CHARLES B. RANGEL

                              of new york

                    in the house of representatives

                          Friday, June 9, 2006

  Mr. RANGEL. Mr. Speaker, I rise today to address the issue of third 
world debt relief for the Record. In the article, Can Developing 
Countries Be Financial Saviors of Rich Nations?, published in Volume 
XXIV No. 1230 (May 24-30, 2006) issue of The New York CaribNews, Mr. 
Tony Best cites Dr. Jeremy Siegel, a professor of the Wharton School of 
Business. Addressing the possibility that the baby boomers' selling 
their savings stock and bonds would lead to a weakening of the assets 
of the rich nations, Dr. Siegel claims that the best solution is to 
allow investors from developing countries to buy up these excess stocks 
to maintain the market prices. Mr. Best asserts that some of ``the 
highest growth rates in dollar terms in market capitalization was in 
the emerging markets'' of Macedonia, West Bank and Gaza, Fiji, Nigeria, 
Jamaica, Botswana, Trinidad and Tobago, India, Kenya, Bermuda and 
Tanzania. As Mr. Best claims, if the global market is integrated so 
that ``the selling of assets from the old in the rich world to the 
young in the developing world is no more difficult than today's sales 
of assets by elderly folks,'' America's trade deficits in the 
developing world would not be a cause for concern. The increasing 
investments in American from the growing markets would be balanced by 
the existing trade deficits and debts owed by the developing countries 
to the U.S.

             [From the New York CaribNews, May 24-30, 2006]

     Can Developing Countries Be Financial Saviors of Rich Nations?

                             (By Tony Best)

       It may not be a case of reverse Robin Hood, meaning 
     stealing from the poor and giving it to the rich. But 
     investors and stock markets in relatively poor nations of the 
     Caribbean and Africa may in the long run be the next 
     financial saviors of future prosperity in the world's 
     wealthiest nations. Add Asia, Latin America and the Middle 
     East to that list and the prospects would become clear, very 
     clear.
       So, while people in G-8 nations and their affluent 
     neighbors may not steal from such developing and relatively 
     poor nations as Jamaica, Thailand, Trinidad and Tobago, 
     Barbados, Uzbekistan, Nigeria, Botswana, Pakistan, Swaziland, 
     Bermuda, Jordan and at least 40 other emerging markets, some 
     economists in the U.S., Britain and elsewhere in the 
     developed world are offering a bit of advice: keep your eyes 
     on these economies because they are poised to help make up 
     the shortfall of buyers of assets in the rich world.
       One such economist is Dr. Jeremy Siegel, a professor at the 
     prestigious Wharton School of Business in the U.S. He 
     believes that with many baby boomers in North America and 
     Europe, persons born between 1946-64, getting ready or 
     planning their retirement, they may sell off their stocks and 
     bonds in large quantities to finance their retirement and 
     that in turn can create a huge gap in the assets of rich 
     nations.
       ``The sale of these assets will lead to a sharp fall in 
     prices, because there are too few people in the smaller 
     generations that followed the boomers to buy all of those 
     assets at today's prices,'' stated The Economist as it 
     explained Siegel's theory.
       The upshot: unless the baby-boomers delay their retirement, 
     they could ``see their standard of living in retirement 
     halved, relative to their final year of work,'' the Economist 
     added. Siegel warns a huge sell-off of stocks and bonds by 
     the baby-boomers can trigger a 40-50 percent fall in stock 
     prices with a smaller pool of investors coming along in the 
     rich countries to take up the financial slack. That's where 
     the developing countries may come in, goes the argument. Some 
     figures tell an interesting story.
       Although the top 10 stock markets in terms of 
     capitalization are in the U.S., Japan, U.K., France, Germany, 
     Canada, Spain, Switzerland, Hong Kong and China in that 
     order, some of the highest growth rates in market 
     capitalization in dollar terms between 1983-2003 were in 
     emerging market. Macedonia, West Bank and Gaza, Fiji, 
     Nigeria, Jamaica, Botswana, Trinidad and Tobago, India, 
     Kenya, Bermuda and Tanzania are on that list. For instance, 
     Fiji's growth was put at 760 percent; Jamaica's 297 percent; 
     Trinidad and Tobago's 170 percent and Bermuda 92 percent.
       When it came to the highest growth in value traded between 
     1998-2003, Zimbabwe, Jordan, Jamaica, Israel, Trinidad and 
     Tobago, United Arab Emirates, Barbados, Malaysia, South 
     Africa, and Sri Lanka were listed among the 44 nations with 
     the best performance. For instance while Zimbabwe had growth 
     of 623 percent; Jamaica 507; percent Trinidad and Tobago 128 
     percent; Barbados 121 percent; and South Africa 76 percent; 
     Germany's pace of expansion was 51 percent and Canada's 42 
     percent.
       Of course, it would take decades before those countries 
     have the financial power to fill the financial gap but then 
     who would have predicted in 1980 that China, India and Dubai 
     would have become such economic giants as to drive fear in 
     the hearts of protectionist lawmakers on Capitol Hill in 
     Washington who worry about their ability to buy U.S. 
     companies. Dr. Siegel is writing a new book called, ``The 
     Global Solution,'' and in it he is insisting that by the 
     middle of the 21st century most multinational companies must 
     find new investors outside of North America, Europe and 
     Japan.
       ``The challenge is to integrate global markets so that 
     selling assets from the old in the rich world to the young in 
     developing countries is no harder, no more unusual, than 
     today's sales of assets by elderly folks,'' stated The 
     Economist. ``From this perspective, America's external 
     deficits, particularly with some developing countries may be 
     both long-lasting and nothing to worry about.'' It goes 
     without saying that investors in developing countries 
     shouldn't forget that protectionist tendencies in the rich 
     nations are alive and well and can retard growth.

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