While Western nations have been mired in slow economic growth over the last few years, third world economies have flourished. According to Peter Blair Henry, dean of New York University's Stern School of Business and author of the new book Turnaround: Third World Lessons for First World Growth, there's a lot the West can learn from emerging markets and their governments.
"We are in a position right now where first world countries, like the United States and countries in the Eurozone, look a lot like third world countries from thirty years ago," says Henry. "The key idea is that today's emerging markets, which used to be third world countries, turned themselves around by applying three things: discipline, clarity and trust."
His three tenants are predicated on lawmakers working with each other, not against each other, and putting ideologies aside for the sake of the greater economic good.
"Emerging economies turned themselves around once the leaders in those countries were able to demonstrate a clear change of direction in policy," he says.
In greater detail, here are Henry's three key lessons:
- Discipline refers to lawmakers being able to come together to work toward long-term prosperity. (A situation that's not happening in the U.S. as both Democrats and Republicans are fighting over the country's fiscal policies).
- Clarity speaks directly to lawmakers being able to put political partisanship aside and to communicate one message and one set of policies to the voting public. He points to the dichotomy of U.S. lawmakers promoting austerity while the U.S. Federal Reserve is promoting expansionary monetary policy.
- Trust means global economies understanding that prosperity is not a zero-sum game, e.g. that prosperity does not have to come at the expense of other nations.
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