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'India, China to own 2/3 of world capital by 2050'

By BS Regional Bureau
January 07, 2006 04:35 IST
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By the year 2050, there will be a situation where two-thirds of the world's capital will be owned by Asian countries like India and China, said Jeremy Siegel, the Russell E Palmer professor of Finance, on the first day of the Wharton Alumni Forum, held in Mumbai.

The demographic changes in developing countries such as India and the developed ones like the US and European countries will alter the capital ownership patterns across continents, he added.

Siegel said, "The US will see rising life expectancy. There will be fewer workers to produce goods, coupled with a lot more ageing population who will want to consume those goods."

Which, according to Siegel, raises two questions: Who will produce the goods that are required by a vast section of the older population? And, who will buy the assets owned by the older population?

This is because younger people provide goods and the older people transfer their assets -- be it in terms of physical assets or even intangibles such as knowledge and experience.

That's where the developing countries like India will have a key role to play, Siegel said. India can see more young people in the working age group and fewer outside the working age.

Siegel summarised: "Developed countries will have to buy these goods from India and, in turn, transfer their assets to the people from this nation."

This is in sync with the mindset prevalent in the developed economy whereby the older populace in certain developed locations in the states like Florida, for instance, which have sold assets to the young in exchange for imported goods from the other 49 states.

A large worker population will also mean larger production of goods and this will result in 'India and China cornering twice the GDP of the developed world.'

 

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