The Silk Road Economic Belt Is a Step Towards Integration
The Silk Road Economic Belt (SRIB) is an integrated trade and connectivity initiative that stretch along the current borders of China, Russia, India, Kazakhstan, and Pakistan. At its current configuration, the SRIB will stretch over a total distance of approximately 22 miles. This is a remarkable achievement in itself, since the old silk Roads connecting the Indian Ocean to the Caspian Sea were themselves a remarkably long endeavor spanning many thousands of kilometers. However, the recent addition of the Eurasian Economic Union to the present network of interconnected nations constitutes a truly major development in global trade relations.
In the wake of the Bretton Woods arrangements and the ending of the previous system of international trade, there emerged a new set of international rules which governed the international flows of capital, labor, goods, and services. These rules provided a much-needed shot in the arm for the faltering economies of many underdeveloped countries. Not only did they help boost struggling countries out of their negative growth trends, but they also provided a level of stability in trade relations which was long needed in these countries. The ability to trade freely with neighboring companies was restored as did the ability to quickly move between different parts of the world Silk Road economic belt.
With the opening up of the SRIB, it is expected that the economies of several other nations in Central Asia will catch up with those of the former Soviet Union within a very short period of time. The governments of these other nations will be faced with increased competition from both the current Western world and the rising economies of Japan and South Korea. Will their respective currencies rise to take advantage of the newly generated global market? This scenario spells great potential for investors in the region. While speculative trading has been rampant in the past, this sudden opening could prove to be a turning point in the history of the Silk Road Economic Belt.
The governments of these nations are counting on the experience and know-how of previous entrepreneurs. They are taking advantage of the fact that these entrepreneurs know how to tap the market, how to reach out to the consumer, and how to develop products and services which will meet the needs of their customers. They are making the most out of their historic past and are taking full advantage of opportunities offered by the globalization happening all around them. They are aware that this could be the beginning of the real turnaround of the global economy. In order to get there, however, they need the support of governments worldwide.
One of the first moves is for the Asian nations to develop a system to coordinate trade flows in the region. The governments of these nations must come up with an agreement on how to harmonize their trade and harmonize the rules that each country has in order to remain a player in the international market. They must also create a mechanism to promote trade with other nations in the region. If this is done right, the barriers to entry for companies will be significantly reduced allowing more companies to come into the market. The result will be higher employment levels, more investment capital, and more goods and services to sell.
Another important aspect is for these Asian countries to develop a more balanced system of foreign exchange. Presently, the majority of the currencies being traded are in US Dollars. This is a major obstacle for companies that need to do business in different countries because all of the currencies in the world are valued differently.
These Asian nations must also become a source of exporting jobs to the United States in order to bring back much needed infrastructure funds to the country. Right now, most of the labor in this region is being outsourced to other parts of the world. Companies need to make sure they have a robust network of subcontractors in the United States in order to continue to operate smoothly. The governments of these nations must work very hard to promote trade relations and increase cultural exchanges so that the United States can continue to play a leading role in promoting and maintaining good relations with these nations.
The economic belt is certainly an interesting way for the world to watch how the globalization process plays out. If China is able to pull off this venture, it will usher in a sea change in the trading relationships and flow of information across the trading communities. It is a major step towards globalization and integration of various nations on one stage. Whether or not China is successful at the beginning of the Silk Road Economic Belt, it is a positive sign for the future of global trade.