ESCAP Seminar offers a glimpse into the future of the world economy

Accelerating South-South and regional cooperation, the way forward, says Nobel Laureate

“Developing economies can no longer depend on developed countries to act as an engine of economic growth. They will have to rely on each other, and on internal demand,” Nobel Laureate Professor Joseph E. Stiglitz, from Columbia University, said during a seminar organized by the United Nations Economic and Social Commission for Asia and the Pacific’s South and South-West Asia Office (ESCAP-SSWA), in New Delhi this week.

“Greater cooperation and regional integration will stimulate growth. Developing economies need to get their act together and turn potential demand into effective demand,” explained Professor Stiglitz.

The High-level Seminar, “Future of the World Economy and Globalization in the aftermath of the Global Financial Crisis: Implications for Developing Economies,” assembled world-class and award-winning economists and development experts from diverse backgrounds and regions of the world, to outline emerging trends in the world economy and globalization and draw lessons for developing economies, such as India. Over 200 policymakers and decision makers, diplomats, academics, scholars, students and media from South Asian countries attended.

Key messages that emerged from the discussion were the importance of pursuing and nurturing a new form of multilateralism; advancing South-South and regional cooperation; reviving industrial policy; and managing globalization.

“The global financial crisis has been a watershed event for the world economy, challenging many assumptions,” ESCAP’s Chief Economist and Director of the ESCAP-SSWA Office, Dr. Nagesh Kumar said in his opening remarks. “It has also ended the dream run of the world economy where the advanced economies were expanding and acting as locomotives of global growth.”

Panelists discussed the role of capital account management tools that can act as ‘circuit breakers,’ providing a sensible and realistic policy framework that developing economies should employ to manage their integration with world markets. These tools can also insulate them from global economic volatility and contagion. The panel praised the creation of the BRICS Development Bank (Brazil, Russia, India, China and South Africa) as a good example of an initiative created by emerging market economies.

“The promise of the BRICS Bank and BRICS reserve pools can be models for international financial institutions’ reform,” explained Professor Kevin Gallagher from Boston University. “They should ensure more equitable decision making powers, engage in structural change and industrial policy, counter-cyclical and long-term lending and be more involved in social inclusion and environment sustainability.”

Other discussion points included new development thinking with a focus on the urgent need to move away from outdated models of development, unbalanced and asymmetrical power relations and trading regimes.

“The opportunities provided by the ‘old system’ are over,” explained Professor Jose Antonio Ocampo, Vice-President for the Initiative for Policy Dialogue at Columbia University, and former United Nations Under-Secretary-General. “We need to develop new ways to build and strengthen institutions and to harness South-South and regional cooperation.”

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or contact: Ms. Wanphen Sreshthaputra, ESCAP South and South-West Asia Office, New Delhi T: (+91) 11 309 73 706/M: (+91) 96505 10 663.