Author Topic: University of Karachi Area Study Centre for Europe organised a one-day seminar  (Read 1475 times)

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University of Karachi  Area Study Centre for Europe  organised a one-day seminar

Karachi:The University of Karachi (KU) Area Study Centre for Europe (ASCE) organised a one-day seminar on Thursday on The Global Financial Crisis: Impact on the World Economy and Developing Countries in collaboration with the Hanns-Seidel Foundation, Islamabad.

Ali Ercelan, from the Pakistan Institute of Labour Education and Research (PILER) began his talk with the adage capitalism for the poor and socialism for the rich, which he said is relevant to the prevalent condition in the world.

Economies in most countries can be categorized into two sectors. There is the formal or state sector, run through taxes etc and the peoples sector. The masses only get the leftover. The global financial crisis started in the United States and now it has turned into a worldwide economic crisis. Perhaps the US will ultimately benefit from this crisis, he elaborated.

The US had incessantly complained that the Chinese currency was overvalued, Ercelan said. Now since the aggregate demand has lessened, Chinas exports have gone down. The Euro had begun to challenge the dollar as an international reserve currency; the current crisis in European financial institutions is undermining the status of the single European currency.

The beneficiary in both cases is the US. The crisis is rooted in the inequality between nation-states and the inequality between individuals. While the average per capita income in the developed countries is around $ 25,000 while it is $ 1000 in the developing countries, he said.

Ercelan said that the logic of capitalism is that the entrepreneurs provide employment and whatever the rich spend trickles down to the poor. An impact of the financial crisis is that there has been a downwards revaluation of property prices, assets etc. This revaluation in its turn had an impact on the world economy. If there had been less international economic integration or in other words less globalization, the impact of this crisis would not have been so severe.

The countries in the developing world or the new emerging economies of South East Asia for instance are more severely hit than the more inward looking economies, for they are trade dependent.

Dr Shahida Wizarat, from the Applied Economics Research Centre (AERC), KU, said that the ongoing financial crisis might change the course of history. The last economic crisis of similar proportions was in 1973, when there was a steep rise in oil prices in the aftermath of the Arab-Israeli war of 1973. This had profoundly impacted the social, economic and political spheres and an important outcome was that the role of the state was greatly enhanced. She said that the current financial crisis has demolished neo-liberal ideas which gained much respectability in recent years. It all started with the housing market in the US.

Dr Wizarat said that since the communist and capitalist systems had both failed, the only logical alternative was the Islamic economic system. She pointed out that the Islamic Banks had been less affected by the economic downturn than the regular banks, for Islam does not allow investment in toxic assets.

Asif Iqbal from the Social Policy Development Centre (SPDC) pointed out that since Pakistan was not so well integrated in the global economy the impact on the country in the short-term was not so severe, but in the long-term there was bound to be a serious impact.
If you born poor, its not your fault....But if you die poor, its your fault...."Bill Gates"