Economic Analysis

Sushil Goyal(5699) Amit Bharadwaj(5622) MBA-1(A)

11/15/2010

School Of Management And Studies Mrs. Praveen Gill

China May Surpass U.S. by 2020 in `Super-Cycle

China will overtake the U.S. to become the worlds largest economy by 2020, helped by faster expansion and an appreciation of its currency Chinas economy will be twice as large as the U.S.s by 2030 and account for 24 percent of global output, up from 9 percent today, Lyons said in the 152-page SuperCycle Report. India will surpass Japan to be the third-biggest economy in the next decade, according to the report. Goldman Sachs Group Inc. estimates China will overtake the U.S. by 2027 The world may be experiencing its third super-cycle, which is defined as a period of historically high global growth, lasting a generation or more, driven by increasing trade, high rates of investment, urbanization and technological innovation, characterized by the emergence of large, new economies, first seen in high catch-up growth rates across the emerging world Output in China, the largest maker of mobile phones, computers and vehicles, surpassed Japan for the second straight quarter in the three months through September, Japans government said today. The Chinese economy overtook the U.K. as the fourth largest in 2005 and tipped Germany from third place in 2007.

Faster Growth
China has expanded by an average 10.3 percent a year over the past decade compared with an average 1.8 percent for the U.S. Standard Chartered estimates growth will slow to an annual 8 percent pace by the middle of the decade, easing to 5 percent from 2027 to 2030. The U.S. economy, by contrast, still faces another year or two of sluggish growth, forecast at 1.9 percent in 2011, before returning to its long-term trend rate of expansion of 2.5 percent in three to four years. Chinas comparatively faster expansion, together with an expected 25 percent appreciation of the yuan, should be enough for its nominal gross domestic product to exceed that of the U.S. by the end of the decade,

China could fall abruptly off the fast track as the Soviet Union and Latin America did in the 1970s and Indonesia and Thailand experienced in the 1990s Source:www.bloomberg.com date: Nov 15,2010

In the Grip of the New Monopolists Do away with Google? Break up Facebook? We can't imagine life without themand that's the problem
How hard would it be to go a week without Google? Or, life without Facebook, Amazon, Skype, Twitter, Apple, eBay and Google? It wouldn't be impossible, but for even a moderate Internet user, it would be a real pain. Forgoing Google and Amazon is just inconvenient; forgoing Facebook or Twitter means giving up whole categories of activity. For most of us, avoiding the Internet's dominant firms would be a lot harder than bypassing Starbucks, Wal-Mart or other companies that dominate some corner of what was once called the real world. The Internet has long been held up as a model for what the free market is supposed to look likecompetition in its purest form. So why does it look increasingly like a Monopoly board? Most of the major sectors today are controlled by one dominant company or an oligopoly. Google "owns" search; Facebook, social networking; eBay rules auctions; Apple dominates online content delivery; Amazon, retail; and so on. There are digital Kashmirs, disputed territories that remain anyone's game, like digital publishing. But the dominions of major firms have enjoyed surprisingly secure borders over the last five years, their core markets secure. Microsoft's Bing, launched last year by a giant with $40 billion in cash on hand, has captured a mere 3.25% of query volume (Google retains 83%). Still, no one expects Google Buzz to seriously encroach on Facebook's market, or, for that matter, Skype to take over from Twitter. Though the border incursions do keep dominant firms on their toes, they have largely foundered as business ventures. The rise of the app (a dedicated program that runs on a mobile device or Facebook) may seem to challenge the neat sorting of functions among a handful of firms, but even this development is part of the larger trend. To stay alive, all apps must secure a

place on a monopolist's platform, thus strengthening the monopolist's market dominance. Today's Internet borders will probably change eventually, especially as new markets appear. But it's hard to avoid the conclusion that we are living in an age of large information monopolies. Could it be that the free market on the Internet actually tends toward monopolies? Consider that, in the late 1990s, there were many competing search engines, like Lycos, AltaVista and Bigfoot. In the 2000s, there were many social networking sites, including Friendster. It was we, collectively, who made Google and Facebook dominant. The biggest sites were faster, better and easier to use than their competitors, and the benefits only grew as more users signed on. But all of those individually rational decisions to sign on to the same sites yielded a result that no one desires in principlea world with fewer options. The Internet is still relatively young, and we remain in the golden age of these monopolists. We can also take comfort from the fact that most of the Internet's giants profess an awareness of their awesome powers and some sense of attendant duty to the public. Perhaps if we're vigilant, we can prolong the benign phase of their rule. But let's not pretend that we live in anything but an age of monopolies. Source: www.wsj.com dated: nov 13,2010