Toward a robust globalisation
In a famous speech exactly four years ago, Fed Chairman Bernanke represented the US as responding passively and benignly to the global “savings glut” which had developed following the East Asian crisis of 1997-98.
Even though most closely associated with Chairman Bernanke, this formulation is widely shared by respectable economists and commentators, such as Martin Wolf of the Financial Times, Professor Richard Portes of the London Business School and the Centre for Economic Policy Research, and Professor Max Corden of the University of Melbourne. The task of recycling these imbalances fell on the sophisticated financial systems of the advanced countries. In the event, for a variety of reasons, even they proved unequal to the burden placed upon them.
Not surprisingly, quite a different view is taken by the major current account surplus countries, notably China, but including Germany, Japan and, for a while, the major oil-exporting countries. Here, the finger is pointed squarely at the monetary policies followed by the US Federal Reserve
The G-20 is not the perfect vehicle for India to show leadership, but it is a start. India should grasp the opportunity being given to it and run with it. (via Suman Bery: Toward a robust globalisation).
The post laid out the position of the world economic structures and developments in the last few years, rather well – and the way Bretton Woods unravelled. And then, in the last paragraph, Suman Bery suddenly, from nowhere comes out that India is being ‘given an opportunity’! And makes out as though India(ns) should be grateful - kow-tow and bless the benefactors. And, before they change their mind.
RUN with the bone that they have thrown at India!
Note the language …
Similar is the story with Manu and Chiddu. They use the language of recipients, of pleading and impotence. Chidambaram says that ‘they’ will now “give greater representation and voice to developing countries” Manmohan Singh mirrors the sentiment when he says,”consultations were merely for the sake of form”.
The Developing World FTA
Instead of breaking heads with the WTO, the Developing World should declare a 100 country FTA. As Rajat Nag, of the ADB points out,
“East Asia already trades 55% of its output within the region. India’s trade with China, Japan and ASEAN (Association of Southeast Asian Nations) is increasing. That is the structural shift which will have to happen. Our forecasts are not based on any dramatic shift”
Put the Doha round in deep freeze, and turbo charge work on a FTA within the developing world. That can add another 2%-4% to economic growth – especially to the poorest countries.
The Third Global Reserve Currency
To this add the Third Global Reserve Currency option – and junk the Dollar and the Euro. With this, the World economy will have two strong drivers for economic growth – without dependence on the West. The world needs to move away from the Dollar-Euro duopoly to tri-polar currency regime.
This calls for leadership – intellectual and political. Does the developing world have it? Can India provide it?