By Dr. Noeleen Heyzer for Nobel Laureate Professor Stiglitz and his presentation on the "United Nations System and the Economic Crisis: Towards a new Global Financial and Economic Architecture"
Excellencies, Distinguished delegates,
Ladies and Gentlemen,
It is an honour and privilege to welcome Professor Stiglitz to the Economic and Social Commission for Asia and the Pacific. We are delighted that you are here with us to share your thoughts and views on how to move towards a new global economic and financial architecture.
PROFESSOR JOSEPH STIGLITZ
Professor Stiglitz is one the greatest economists and thinkers of our generation and I am delighted that he has chosen to share his thoughts with us today. He has served as the Chairman of the Council of Economic Advisers to the President of the United States during the Clinton Administration from 1997-2000 as well as Chief Economist and Senior Vice President of the World Bank. Among his many positions and responsibilities Professor Stiglitz is co-founder and President of the Initiative for Policy Dialogue, Chair of Columbia University’s Committee on Global Thought, and the President Elect of the International Economic Association. He was appointed by the French President Nicholas Sarkozy to Co-Chair the Commission on the Measurement of Economic Performance and Social Progress, together with Professor Professor Amartya Sen. Professor Stiglitz has made major contributions to macro-economics and monetary theory, to development economic and trade theory. His work has helped explain the circumstances in which markets do not work well, and how selected government interventions can improve their performance. Professor Stiglitz received a Nobel Prize in Economic Sciences in 2001 in recognition for his many contributions to this field.
Most recently Professor Stiglitz chaired a UN Commission of Experts appointed by the President of the United Nations General Assembly to examine international monetary and financial system reforms required to respond to the current crisis. As the most trade-dependent region in the world Asia Pacific has been hit hard. Despite the robust economies of China and India, the average growth rate for developing countries in the Asia-Pacific has fallen from 8.8 per cent in 2007 to just 2.8 per cent this year. The real economy is experiencing decline in exports, reduced remittances, lower foreign direct investments, falls in capital flows and increasing joblessness. The economic gains that helped lift millions out of poverty over the past decade is now under threat.
Professor Stiglitz has challenged the one-size-fits-all policies for developing countries. Room for maneuverability varies across countries in terms of fiscal space
for the development of stimulus packages and employment generation. He has argued that these countries be allowed to take ownership of their development
policies; that future dialogue on a reform agenda not be dominated by a few large economies, and that development address inequalities and be more inclusive. He argues that we need to bring deeper reforms that will help prevent the recurrence of another economic crisis and build better economic governance for the future
Before turning the floor over to Professor Stiglitz I would like to contextualize today’s discussions in the regional realities of Asia Pacific.
IMPACT OF ECONOMIC CRISIS ON THE REGION
The economic crisis has rolled back the hard earned development gains of the past several decades. Sustainable development is under threat with fewer resources available to deal with both development threats and challenges. The human costs of this crisis have been incredibly high as millions lose their jobs and even more fall into poverty. Now more than ever, there is need for commitment to inclusive and sustainable development focusing on low carbon green growth and high on reducing poverty and inequality.
ESCAP Member States are re-shaping and re-prioritizing the development agenda to adopt a new development paradigm – an agenda for inclusive and sustainable
development. The next Commission Session will identify and invest in building blocks to realize this agenda for the region. Essentially it is about bringing economic,
social and ecological balance in an integrated whole to address various development deficits and inequalities facing our region.
THE IMPORTANCE OF REGIONAL DIMENSIONS
While the financial crisis started in the West as a result of a collapse in the investment banking sector, it has become an economic-trade crisis in Asia and the Pacific.
As the crisis unfolds it is estimated that as many as 24.8 million people in the Asia-Pacific region could lose their jobs. The people most at risk are the poor and informal sector casual workers. Women comprise the majority of affected workers in the manufacturing sector. Also affected are migrant workers.
While economic growth may resume relatively quickly, it can take up to 10 years to recover the ground lost to poverty and social break down, with increases in people smuggling and trafficking.
NOT ALL COUNTRIES HAVE ACCESS TO THE SAME RESOURCES
Besides job losses, another concern is the loss of development revenue due to the declining growth, capital outflow, loss of remittances and declining ODA in Least Developed, Land Locked Countries and Small Island States.
Asia Pacific is an incredibly diverse region that has developed a range of responses to deal with the economic crisis.
In economies where structurally domestic demand accounts for high contributions to economic growth, expansionary fiscal and monetary policies are expected to play a greater role in supporting economic growth particularly in the face of declining exports.
However, not all countries have the fiscal space to implement countercyclical measures due to large existing budget deficits.
Unlike the larger economies of the region, poor countries will be unable to afford the injection of billions of dollars into bailouts and subsidies.
With falling foreign exchange reserves, developing countries in the Asia-Pacific region will need to be helped to avoid a new debt crisis. If economic growth is not restored soon, our vulnerable economies will need substantial injections of ODA and direct budgetary support to bolster their governments’ balance sheets.
The time has come to restore stability and sustainability into the Asia-Pacific region’s economic and social order. The economic crisis has provided the region with a
unique opportunity to do this. The huge scale of government spending in the pipeline in many countries, offers an unprecedented opportunity to design
development policies that will bring about more inclusive and sustainable development. Pro-poor policies aimed at strengthening social protection systems not only create the social foundations for more inclusive societies, they also make economic sense. Green growth provides us with alternatives to traditional economic
growth models and can help lead the current climate change agenda.
The economic crisis can be used as an opportunity to move from individual country responses, to a more integrated and coordinated Asia and the Pacific that builds upon collective regional strengths and resources. Many of the larger economies and powerhouses in the region are investing in similar strategies. The recovery of larger economies like China, India and South Korea will have reciprocal positive spin offs for their smaller neighbors.
A NEW MULTILATERALISM
A new multilateralism is required, that recognizes the vulnerability of poor countries to the negative impacts of interconnected crises – financial instability, climate change,
volatile prices for food and energy and unacceptable levels of hunger, poverty and inequality. We cannot address the challenges of the twenty first century with the tools of the twentieth century. This crisis provides a unique opportunity to stimulate an new sustainable global economic recovery. The strengthened public investment programmes needed to boost demand and consumption has as broadly and rapidly as possible and drives the increasingly urgent transition towards a low carbon, more efficient economy which prioritizes poverty reduction and addresses inequality.
The recent coordinated actions to address financial market instability has shown that quick and decisive action is not only helpful is but required when we confront global
crises. Disjointed ad hoc solutions will fail. We need not just a new deal but a green deal for development and poverty reduction.
A reformed strategy and more inclusive multilateralism is our only option if we are to find workable and fair solutions. And in developing our policy responses we should never forget that the poor have had no hand in precipitating the economic crisis or the climate challenge we now face.
The audience is eagerly looking forward to hearing your presentation, Professor Stiglitz. So it is my pleasure to invite you to address us here today.
I Thank you.