Lester Thurow

For the past 34 years Lester Thurow has held the chair in economics and management at the Massachusetts Institute of Technology and was the Dean of the Sloan School of Business at MIT. He has three New York Times best selling books to his credit and consults widely around the globe.

This former Oxford University Rhodes scholar, a distinction shared by Bill Clinton among others, has recently published a book on globalization entitled 'Fortune Favors the Bold'. It argues that globalization will continue whether we like it or not, and that global economic imbalances will have to be addressed.

Q. Professor Thurow, are you looking forward to the Leaders in Dubai this November? What makes this event special?

A. I get to Dubai two or three times a year and I always enjoy returning since Dubai is probably the most dynamic city in the Arab world.

November is also going to be interesting since we will know who is the American President for the next four years, and can make more reasonable forecasts as to what American economic policies will look like.

Q. Is the American economy leading the world out of a downturn or still 'skating on thin ice' as you said in early 2003? Is deflation off the agenda and inflationary risk back? Where is the US dollar heading next?

A. We are still 'skating on thin ice' precisely because of the dollar. What can not last, will not last but no one can predict the time table of when the dollar will fall to correct the US balance of payments. But it will happen.

If one looks at core inflation measurements (excluding food and energy) the rate of inflation in the US was very close to zero last month. We definitely have not seen the end of deflation and inflation is not back.

Q. What do high oil prices mean for economies in the Middle East, and for its politics? Does there always have to be an inverse relationship between Middle Eastern prosperity and pain for the industrialized world?

A. If higher oil revenue led to higher investments in non-oil industries in the oil producing countries it would be a good thing for both the oil producing world and the oil consuming world.

The real pain, however, is in the non-oil producing Third World and not in the oil-importing First World.

Q. What do you think of Dubai? Is this city to be seen as a 21st century regional role model?

A. Dubai is definite a role model for the rest of the Arab world. It manages to grow without higher oil prices.

Q. Is globalization central to understanding what the next few years have in store for the Middle East? Is Iraq the start of a regional free trade revolution?

A. Globalization is certainly necessary to understanding what is going on in the world. To some extent the emergence of India and China as global players changes the nature of the economic game for the Middle East and everyone else.

Regional free trade is not likely to flow from the events in Iraq. The economic implications cannot be predicted until the political situation reaches stability.