a paradigm shift..!

The global meltdown has put an end to growth model based on consumption as in the case of America and one that is entirely driven by exports as in China. The culture of excessive consumption in western contries due to easy availability of credit has resulted in low private savings rate. The problem is not too different at the government level as the US has been running a deficit budget for last few years. This mess in the financial system could have led to another crisis,had it not been for the cheap capital provided by developing countries, manly china in the form of deposits in the US treasury.
Now,this dual core engine of world growth based on consumption and exports has failed miserably. It should be seen as an opportunity to develop an alternate model based on high savings rate and a strong R&D culture resulting in the production of goods with high value addition instead of spending money on unproductive activities.
Moreover,the curbs on the flow of capital should be removed so that capital could finds its way to the country where the returns are maximum ,thus homogenising global growth in a fairly equitable manner.