For reference The Australian is owned by the Murdoch-NewsCorp-Fox empire... Australia being the birthplace of Rupert Murdoch.
Commemorative coins for the Chinese calendar's Year of the Dragon are displayed in a Beijing store. Source: AFP
THE US has something to learn from the economic success story of China and other emerging market nations, Federal Reserve chairman Ben Bernanke said today.
Disciplined fiscal policies, the benefits of open trade and the need to encourage private capital formation were among the reasons listed by the Fed chief to explain the high growth rates experienced by China, India and other countries. Promoting technological advances and education are also key factors that helped these countries perform better than the US over the past decade.
"Advanced economies like the United States would do well to relearn some of the lessons from the experiences of the emerging market economies," Mr Bernanke said in a speech, part of the Cleveland Clinic's "Ideas for Tomorrow" series.
When talking about China, Mr Bernanke is usually critical. He's repeatedly blasted the country for relying too much on exports for economic growth. The Fed chief has warned that, by keeping the value of its currency artificially low, the Asian country runs the risk of overheating its economy. This time, he shifted his focus.
Fed will act if needed: Bernanke
While repeating his warning that China and other emerging nations will be challenged if they continue to rely too much on trade for growth, Mr Bernanke spent more time in his speech looking at the reasons behind the success story of China and other emerging countries.
To gauge performance, Mr Bernanke took three points from the "Washington consensus," a set of economic policy prescriptions promoted for crisis-wracked developing countries by the Washington-based World Bank, International Monetary Fund and US Treasury after the term was coined in 1989 by economist John Williamson.
First, emerging economies have improved their fiscal management to the point that their debt positions are now often more favourable than those of some advanced economies. Second, many developing nations have increased the role of markets in the economy via appropriate deregulation.
"Many countries have successfully promoted growth through a slow and pragmatic but continuing process of liberalisation," Mr Bernanke said.
Third, institutions that promote investment and business formation - particularly by enhancing property rights and the rule of law - have been strengthened in many emerging markets.
An important lesson of the past two decades involves the pivotal role of technology in economic development, Mr Bernanke said. Strong educational systems producing increasingly skilled workforces have proven crucial for climbing the technological ladder.
He pointed to India's information technology industry, which has thrived in large part because of the country's large supply of well educated, English-speaking workers.
China and other emerging market economies should manage to maintain relatively high growth rates for some years to come, as they continue to catch up to advanced economies like the US, he said. But over time, as they become wealthier and technologically more sophisticated, developing nations will gradually lose the advantages of starting from behind.
Mr Bernanke didn't comment on the Fed's latest unconventional step to help a weak US economy in his prepared remarks.
The central bank said on September 21 it will sell $US400 billion ($411.18bn) of its US Treasury securities maturing in the next three years and replace them with longer-term bonds maturing in six to 30 years. The program is meant to drive down long-term interest rates to make borrowing cheaper. The Fed also plans to halt the shrinkage of mortgage securities from its portfolio, a move directed at helping the housing sector.