West can’t go a long way without the east

Davos : Former RBI chief Raghuram Rajan, on Tuesday, said the Western world must realise they cannot go a long way without the help of the emerging economies and warned that no one would be able to resolve any problem of a ‘fractured world’ if things are not set right soon. Without naming any country, he said the West must realise their population is ageing and the demand for their products will mostly come from the emerging world. Speaking at the WEF, Rajan 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 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 may not able to solve the problems of the ‘fractured world’. About issues facing the Western world, he listed technology, ageing population and climate change. Rajan was speaking at a session on the power of economic narratives and how policymakers can address the challenges of the 21st century. He said governments like 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 said he’s not sure about the US but some countries are doing things in this area and certainly governments can play a role there. Rajan 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.