TEN YEARS HENCE
Ten Points About Global Interdependence
FEBRUARY 9, 2007
On Feb. 9, 2007, David Martin, chief executive officer of M-CAM, presented "Emergence of the Fusion Economy," which contained the following excerpts:
- We live in an era defined by "ignorance arbitrage," where we rely on limited social constructs to explain circumstances and events. When events can't be explained by these constructs, we tend to redefine the events.
- This type of thinking has left us unable to recognize shifts in global economic power and to change our national policies in order to deal constructively with these shifts. In fact, our policies have laid the foundation for the erosion of our economy.
- By 1994, foreign students studying at federally funded U.S. institutions accounted for more than 50 percent of all doctoral degrees awarded in basic sciences, computer science and engineering.
- An early indicator of the transformation of the global economy came in 1996, when Chinese and Indian students training in basic and natural sciences became the majority group getting degrees. Their education allows them to not just improve upon U.S. technologies, but to invent and radically change them.
- The growth of hedge funds and derivatives has outpaced all other financial products introduced at any time in history. These transactions totaled $250 trillion in 2006, up from $1 trillion in 1987. However, the U.S. regulatory oversight of these transactions is minimal.
- One of the largest recent financial developments has been the creation of Islamic finance products, such as the sukuk, which comply with Sharia Islamic law. In the past two years, 10 percent of all global transactions has utilized this financing, while the United States continues to vilify parties connected to Islam as security risks.
- The Silk Road, which stretches from the eastern Mediterranean region to the Sea of Japan and southward to the Indian Ocean, is re-emerging as a literal and figurative power network. Nearly one-half of the world's emerging population resides within this swath.
- In 10 years, countries in this region, which are actively building cross-border cooperation, will account for 20 percent of total global GDP, a significant increase from its current level of 7 percent.
- The Federal Reserve estimates that two-thirds of all U.S. currency—about $700 billion—is held outside our borders by interests domiciled in the Silk Road swath. Foreign countries can now negotiate deals that violate U.S. foreign policy and pay for them using American currency.
- The Silk Road economic block suggests the emergence of a fusion economy, where national treasuries are adopting policies that recognize economic interdependency as the driving paradigm for foreign investment decisions, not just financial gain.