By Dawn Nakagawa and Dambisa Moyo, The Christian Science Monitor

Competition for scarce resources is driving up commodity prices. China’s strategy is to invest in resource-rich economies overlooked by the West. These economies are watching to see which model – US or Chinese-style capitalism and government – best delivers growth.

Dambisa Moyo is an economist and the award-winning author of “Dead Aid.” Her latest work is “Winner Take All.” She was interviewed by Dawn Nakagawa of the Berggruen Institute on Governance.

DAWN NAKAGAWA: What is the central thesis of your new book, “Winner Take All”?

DAMBISA MOYO: The book basically looks at how supply and demand for commodities are going to shape the future. On the demand side we have a rapidly increasing population, from 7 billion today to 10 billion by 2100; an unprecedented rate of economic development and global wealth whereby the emerging markets will deliver 3 billion new people into the middle class; and finally, a massive rate of urbanization. These three factors are [straining] and will continue to strain commodity resources. On the supply side, there simply is not enough land, water, energy, and minerals to support these trends.

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This competition for scarce resources is manifesting itself in higher commodity prices, which have increased 150 percent since 2009, and armed conflict. There have been about 25 wars the origins of which can be traced to commodities.

NAKAGAWA: Who will be the winners and losers in this competition?

MOYO: China is the only country with a systematic and deliberate plan for securing resources. There are three key pillars of their strategy:

First, they are investing in what I call the Axis of the Unloved – underdeveloped economies which have traditionally been overlooked by the Western developed countries as investment destinations: Latin America, Africa, Eastern Europe. China is making deals with these regions that are hungry for investment and economic development.

Second, they are making themselves the go-to buyer. China has over $3 trillion in exchange reserves and has announced that it is open for business by using the reserves to buy, sell, and lend actively in both developing and developed countries. China is in a position to overpay, and has done so. This is at a time when the Western world is suffering from credit and deficit crises.

Finally, China has become a monopsonist – the key buyer of a particular commodity, such as copper and coal – which means they can set the prices.

NAKAGAWA: So could the underdeveloped countries in the axis be among the winners, finally bringing these formerly marginalized economies into the globalized world?

MOYO: I hope so, but it will take a change in attitude by Western developed countries. China cannot do it alone. There is still a reluctance to treat regions that have traditionally only been targets of aid as equal partners. There has been one policy for developed and rapidly emerging markets, such as trade, foreign direct investment, and capital markets, and a completely different policy for Africa and other underdeveloped regions. The onus is on the policymakers to encourage investment by setting a different tone.

NAKAGAWA: How will the competition for scarce resources impact relations [between] East and West in the 21st century?

MOYO: There is a battle of philosophies under way between the US model, with democracy as a political ethos and private capitalism as its economic platform, and the Chinese model of authoritarianism and state capitalism. The emerging economies are the spectators to the battle, watching to see which model can best deliver economic growth. Democracy and private capitalism will be a harder sell when China has become the No. 1 economy, developed their economies, built their roads and schools.

NAKAGAWA: You refer to the “legal vacuum” in which China is operating, which points to a deficit in global governance. Whose responsibility is this, and what action needs to be taken to manage this competition?

MOYO: Despite the urgency and concerns around commodities scarcity, there is no global governance institution focused solely on commodities. We actually need a new institution where the full mandate is the effective management of scarce resources. I am not a believer in more bureaucracy as the answer, but we need a new institution for two reasons. First, the others have their mandates and this cannot be a priority for them. Secondly, they are legacy organizations that, in structure and attitude, are still in the 20th century.

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We need a new organization that acknowledges the massive transformations under way, treats all countries as equal citizens – both those who have the resources and those who want them – and doesn’t take for granted that Western-style democracy is going to be the dominant paradigm of the future.

© 2012 Berggruen Institute on Governance/Global Viewpoint Network. Hosted online by The Christian Science Monitor.

For more on this story go to:

http://www.csmonitor.com/Commentary/Opinion/2012/1121/China-is-the-only-country-with-a-plan-to-secure-scarce-global-resources?s=yaho