With Rory Miller
There is relatively little to show by way of public goods in much of the West for the extended period of growth that began in the 1990s and ended with the financial crisis. Ireland is a case in point.
Ireland was once the poster child for globalisation, leading the world in attracting foreign direct investment (FDI). Wise men and women from across the globe made pilgrimages to Ireland to learn the mysteries behind the success of the "Celtic Tiger". Today the wise men and women from the European Union and the International Monetary Fund are in Dublin to see if it requires a bailout of many billion euros.
The country is the victim of the sharpest economic contraction of any developed economy since the Great Depression. One in eight in the workforce is unemployed, the banking system remains vulnerable, and arrears on home loans are rising sharply. Just when Ireland needs to fall back on past investment in education as well as research and development (R&D), it is becoming clear that it's been gravely lacking.
For the most part, the easy money of the last 20 years has been squandered. Both physical and intangible infrastructure have been neglected following years of under-investment, and not only in Ireland. Across the EU, government spending on R&D as a percentage of GDP stands at 1.84 per cent.
But many other developed economies are in a better position than Ireland and are attempting to make amends. In 2009, the US president Barack Obama promised to devote more than 3 per cent of US GDP to R&D. The White House is currently pushing the idea of R&D-related tax incentives in order to boost the lagging recovery. But in the US, as well as much of the rest of the developed world, weak government balance sheets mean that there is little money to go around and there will be few second chances to invest wisely.
Those best placed to learn from all of this are the cash-rich emerging nations such as Qatar, the UAE, Singapore and even Chile. The International Monetary Fund predicts that Qatar and Singapore will lead the world in 2010 with growth rates closing in on the 10 per cent mark.
In the Gulf, this impressive growth is driven by changing consumer tastes and rising consumerism in general as well as high commodity prices that have resulted in annual cash surpluses estimated at a staggering $300 billion.
Yet, under the guise of "global re-balancing", these small, cash-rich emerging nations are currently being implored to buy the assets and invest in the infrastructure of the indebted developed world.
They are spending their capital on physical infrastructure like defence and moving into more "intangible" areas like sports franchises and financial services, while also establishing themselves as leading global players in real estate.
For example, a Qatari consortium is building Europe's tallest building in a £2bn project in central London. The emirate is also buying up many flagship properties and businesses in the British capital.
And that's just the UK. Unsurprisingly, Qatar is estimated to be the largest overseas property investor in the world this year. Abu Dhabi has been busy as well, taking stakes in Daimler AG and Citigroup and buying the Chrysler Building in New York. Investment vehicles backed by the Abu Dhabi government have announced plans to increase their overseas holdings by $12 billion over the next five years. Of course, Abu Dhabi has also made considerable investments in its education system.
It is understandable that cash-rich emerging nations have looked to take advantage of depressed asset prices across the globe to diversify their national balance sheets. It is also true that the purchase of premium brands increases international profile.
However, if they are wise to the lessons of the past, they should place greater emphasis on investing at home rather than abroad. The post-spending spree realities of Japan in the late 1980s, when it picked up prime real estate like Manhattan's Rockefeller Center, and the more recent experience of Ireland, should offer sobering lessons.
For this reason, governments in emerging markets must think hard about what they want their societies to look like in the decades to come. They should actively plan to avoid squandering current prosperity. And they should invest their wealth in building up their intangible infrastructure - knowledge-driven areas such as education, health care, technology, innovation, financial services and the business services sectors, which can help to diversify growth and improve competitiveness in emerging markets.
Policymakers in emerging nations also need to be clear and open about the values on which they build their national development strategy. They must also be aware that their economies are still in an adolescent phase and that bursts of development may also be accompanied by ugly side-effects. In this respect, institutional development at home and abroad is important and requires integration into multilateral frameworks.
All this provides a very judicious - though not glamorous - way of building an international profile, increasing competitiveness and ensuring that emerging economies avoid the mistakes of their more developed partners.
Dr Michael O'Sullivan is the author of Ireland and the Global Question. Rory Miller is Professor of Middle East & Mediterranean Studies at King's College London. They are co-editors of What Did We Do Right: Global Views of the Irish Model