The Western world must realise that they cannot go a long way without the help of the emerging economies, Former RBI Governor Raghuram Rajan has pointed out.
Rajan, while speaking in Davos at a session of the World Economic Forum (WEF) Annual Meeting also warned that no one would be able to resolve any problem of a ‘fractured world’ if things are not set right soon.
He said the West must realise that their population is ageing and the demand for their products would mostly come from the emerging world.
Rajan reportedly said there is a risk that by the time the West goes to the emerging world for their support, they may have to answer quite a few questions about why they did not share the benefits earlier.
He warned that the approach of the Western world must change soon for the good, or else there may be a chance that we are not able to solve any of the problems of the ‘fractured world’.
About issues facing the Western world, he listed technology, ageing population and climate change.
He said some governments such as Singapore have done something to address the problems arising out of income inequality and the divisions in the society by setting up housing projects where middle class and lower middle class families can live together.
Rajan, who is known for his frank views on various economic and monetary policy matters, reportedly said he’s not sure about the US but some countries are doing things in this area and certainly the governments can play a role here.
The Chicago University professor, credited with having predicted the global financial crisis of 2007, also took on the economists who frown upon the idea of economic narratives and said it has become difficult to make people believe in them for setting things right.
“When the economist hears the word narratives and stories he thinks it’s below me. They believe they are beyond the tradition of narratives,” he said.
“Post World War II, we realised we have to come together once again and we need to break barriers of trade and everything else,” he was quoted as saying by news agencies.
Asked whether he is optimistic or pessimistic on the issue of narratives, Rajan said politicians just pick the economic theory that fits in their scheme of things but he hopes things do not go out of hand and there is a solution before that.
