global growth, they only re - distribute it. unless the exchange rate changes were accompanied by more expansion in demand globally, we would not have solved the problem of excess capacity, we would only have relocated it. the additional step needed is stronger domestic demand, compared with what would otherwise have occurred, in the countries whose currencies would appreciate in such circumstances. of course there should be room for this given that the higher exchange rate would, other things equal, help to dampen inflation. in principle, at least, this looks like a potential “ winwin ” outcome. the appreciating countries could enjoy faster growth in living standards than otherwise, while the weaker countries whose currencies were moving lower would get some stimulus to aid their recovery. there are, however, some complications. a number of asian countries have been experiencing worrying increases in property prices. low interest rates and easy financial conditions have contributed to this. arguably domestic financial conditions in these cases need to be tighter, not looser. so it is not clear that monetary policy would be the best option to boost domestic demand. that said, allowing exchange rates to appreciate more quickly would probably help to dampen increases in asset prices. what about more expansionary fiscal policies as the way of increasing domestic demand? many, though not all, asian countries would have some scope for that, given the long record of fiscal prudence and low public debt levels. but these countries are very unlikely to do things that would seriously impair their fiscal position in the long run. hence my suspicion is that fiscal action, if it came, would be only modest. some argue that structural changes are needed to lower national saving rates in countries like china. such changes could involve a shift in the distribution of national income away from state enterprises to households, who are thought more likely to spend it, a better developed social safety net, and so on. in all likelihood these sorts of changes will occur over time. but structural change is rarely a rapid process. so i think we should be realistic about how much difference exchange rate flexibility would make to the unbalanced nature of growth in the global economy, at least over a time horizon of just a few years. it is definitely part of the answer ( and it is surely in the interests of the countries with closely managed rates to accept more flexibility ), but it is no panacea. a full resolution of the imbalances will take time. it will involve more far - reaching changes to very deep

a good proportion of those 13 million - plus jobs will be in firms that don ’ t yet exist. some will be in industries or occupations that barely exist as yet. and no one can give you a blueprint for which areas will succeed and which will not, any more than the pundits a decade ago, at the height of the “ new economy ” fad, could foresee the shape of australia ’ s economy today. succeeding in the future won ’ t ultimately be a result of forecasting. it will be a result of adapting to the way the world is changing and giving constant attention to the fundamentals of improving productivity. that adaptability is as important as ever, in the uncertain times that we face.