be deficit - inducing. rising imbalances may have important social, as well as economic, roots. global imbalances – future so what will be the key forces driving global imbalances in the period ahead? judging from the recent past, two factors have been important : global financial integration ; differential savings behaviour. consider in turn their likely evolution. global financial integration. in the period ahead, this will be shaped by a number of mediumterm structural factors. one key such factor is cross - country gdp convergence. over time, we would expect countries ’ income levels to converge, as currently low income countries catch - up with their high income trading neighbours ( solow ( 1956 ) ). this convergence process is a well - established empirical phenomenon ( barro ( 1991 ) and mankiw, romer and weil ( 1992 ) ). accompanying this gdp convergence is likely to be catch - up in gross external balance sheet positions. as countries develop, so too does their integration into global capital markets, with higher levels of gross external assets and liabilities. cross - country evidence bears this out. there is a well - defined empirical relationship between a country ’ s gdp per head and its gross external balance sheet position ( chart 16 ). taken together, these two factors imply a pattern of steadily rising gross capital flows over time, with growth strongest among countries catching up with their high - income trading neighbours. it is possible to calibrate these integration trends and project them forward to simulate future external balance sheets positions among the major economies. these simulations take as initial conditions cross - country gdp per capita, projected forward using a calibrated rate of growth convergence drawn from previous empirical studies and adjusted for known future changes in population growth. this gives a set of cross - country projections for gdp per capita. these are then translated into gross external balance sheet positions using historical relationships with per capita gdp. chart 17 plots some projections of ( the average of ) gross external assets and liabilities relative to gdp for the g7 countries, china, india, brazil and russia. these projections go out to 2050. among the g7 economies, external balance sheet ratios are broadly flat at around twice nominal gdp. this flatness is driven in large part by assumption, as it is assumed the highest - income countries maintain a flat ratio of external assets to gdp. this is almost certainly too extreme an assumption. although smaller than in the past, there remain strong home biases in the investment portfolios of developed

raises fears relating to immigration and cultural impacts. what then can be done to improve readiness for labor mobility thereby strengthening asean citizenship? for the benefit of further exploration, i would like to propose that we consider a threepronged strategy as part of a sustainable solution to this problem : first, we should try to reduce short and long - term obstacles to labor mobility. it is critical to recognize that greater labor mobility brings greater competition for local professionals. this means that, in the medium and longer term, the “ brain drain ” is usually offset by remittances and a “ reverse brain drain ”, which brings wealth, skills, experience, and their business and social networks back home. therefore, actions are needed to further enhance the free flow of labor through increased use of mutual recognition of professional qualifications. forging university and regional professional networks will surely be supportive of this endeavor. visa, work permits, and regulatory requirements on foreign employment are all important issues that need to be quickly addressed to ensure that the investment environment is competitive. over the longer term, i also see it as very crucial that we address obstacles to integration at the root cause, which is the weak integration mindset. this integration mindset means that we need to assess the benefits and costs of integration more deeply and strategize how they fit with the overall economic development plans of individual asean member countries. there are dangers in allowing such an important assessment to remain vague. my concern is that many key stakeholders of asean integration still view the aec with cynicism ; that life will go on, with few changes to the status quo. and this complacency is very dangerous because we may wake up and find that we are already too late to catch the rising wave of asean. distinguished participants, the second part of this three - pronged strategy deals with human capital development to meet global competencies. my personal opinion as a ceo in the financial industry is that we need people or our human resources in the next decade to be assertive, flexible, analytical and quantitative, technology competent, as well as having strong leadership, people skills, foreign language proficiency, and cultural awareness. ceos in other industries can add more qualifications to this list according to what they need to satisfy future business bis central bankers ’ speeches solutions. moreover, to promote mobility, our local talent competency should also aim for a better fit with regional and global competency. in the case of thailand, broad statistical profile points to above 50 percent share of education