The impact of China and India on
may be felt
through a combination of direct and indirect effects. In general, the
direct impacts are much more visible and easier to compute and hence
may appear to be more amenable to a policy response.
Many of the key impacts of the Asian Drivers are felt as a consequence of direct bilateral links. For example:
Other impacts are more indirect in nature, and are experienced in third-country or global settings: For example:
In many cases, the indirect impacts may be much more severe than the direct ones. For example, Central American and SSA clothing exporters may gain from direct links such as the import of cheap and high quality fabrics from the Asian Drivers. However, on the export side, they may experience overwhelming competition from Asian Driver producers in external markets such as the US or the EU.
In general the indirect effects are much more difficult to compute, and can thus be easily ignored. For example, to what extent are global interest rates a consequence of high Chinese personal savings? Because they occur in global interactions, it may therefore also be much more difficult for individual countries to take action to counter the harmful impacts of indirect effects.