By Jeremy Clift
We live in an increasingly globalized and interconnected world, helping to spread ideas, information, and technology ever more quickly. The globalized economy has created a complex and interlocking network of capital and trade flows that have brought major economic gains, lifting hundreds of millions of people out of poverty around the world.
But, as we have seen from the prolonged global financial crisis, our interconnectedness carries grave risks as well as benefits. With instant communication comes the risk of rapid contagion. There is, thus, a strong public interest in ensuring that global economic integration is supported by a coherent set of coordinated national macroeconomic policies and a harmonized international regulatory regime that addresses the fragilities in our global financial system.
The new issue of Finance & Development magazine looks at different aspects of interconnectedness. Kishore Mahbubani, dean of the National University of Singapore’s Lee Kuan Yew School of Public Policy and author of the forthcoming book The Great Convergence: Asia, the West, and the Logic of One World, argues that what he terms the global village increasingly requires global solutions to big emerging problems such as climate change.
Kemal Derviş, former head of the United Nations Development Programme who is now a vice president at the Brookings Institution, looks at three fundamental shifts in the global economy that are leading to major adjustments in the balance between east and west. He argues that the world of the future will be ever more multipolar and interdependent, which calls for emerging and developing countries to play a greater role in international institutions.
In Straight Talk, Christine Lagarde, IMF managing director, says the Fund is making progress at mapping global financial risks and the links between the financial sector and the “real” economy, but that arguably the biggest challenge is persuading national policymakers to take a global perspective.
Masahiro Kawai, dean of the Asian Development Bank Institute, and Domenico Lombardi, president of The Oxford Institute for Economic Policy, examine the growing set of regional financial arrangements that help underpin global financial stability.
The magazine also
- profiles Justin Yifu Lin, the World Bank’s first chief economist from an emerging economy or developing country, who discusses New Structural Economics as a method for rethinking sustainable development;
- looks at how Myanmar is reintegrating into the global economy;
- how China can boost domestic spending;
- what India and China can learn from each other; and
- examines proposals to broaden taxation of the financial sector in Europe.
Filed under: Advanced Economies, Africa, Asia, Civil Society, Debt Relief, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Finance, Financial Crisis, Fiscal policy, Global Governance, Globalization, growth, Inequality, International Monetary Fund, Investment, Latin America, Low-income countries, Middle East, Multilateral Cooperation, Politics, Public debt Tagged: | Asian Development Bank Institute, capital, China, Christine Lagarde, Domenico Lombardi, Finance & Development magazine, financial crisis, Globalization, India, interconnected, Jeremy Clift, Justin Yifu Lin, Kemal Derviş, Kishore Mahbubani, lessons, Masahiro Kawai, Myanmar, New Structural Economics, Oxford Institute for Economic Policy, regional financial arrangements, taxation, trade, World Bank
At this point in time, everything has failed!
Parts of Socialism have failed such as “Communism” and parts of Capitalism have failed such as “extreme capitalism/GFC”
Globalization is great for some and bad for others. The developed nations lose their jobs and the impoverished countries gain employment but as slave labour!
Our leaders need to govern in reality instead of the fairytale lifestyle they live in and govern for the majority instead of the business elites because their way it will end up with the whole world becoming impoverished and divided into “slave & master” roles as the majority live to serve the minority.
What a load of horse-shit. The remarks about ‘ all’ the stakeholders are suppose to share their Responsibilities. In your dreams. All these Stakeholders, as u call them, are just as corrupt as the members of the E.U Commission. And as for calling on the IMF to stand up, forget it. All I can say to u is, Waken Up and stop living in a world of make-believe.
A horse also needs an active regulator — the rider who can properly manage the horse to drive the coach. While making decisions, some decisions give good results and others bad results. Good decisions are followed persistently whereas wrong decisions (that horse shirt) are used to avoid pitfalls in the future. Agree that fault lies with the regulators. If all are not clergies likewise all are not corrupt. Institutional framework needs to be strengthened and accountability of the regulators (IMF surveillance) to be deepened on a regular basis.
Kind regards
Interlocking gives gains like capital and trade flows and labor mobility; simultaneously this interconnectedness breeds contagion of systemic risks. In other words damn it if you do it and damn it if you do not do it. However these risks can be substantially mitigated as advised by Jeremy Clift by ensuring a coherent set of national macroeconomic policies and a harmonised global regulatory regime.
In order to have a healthy global village, economic and banking fundamentals have been nicely explained in this issue of Finance & Development. All the stakeholders are supposed to share their responsibilities in this world of interdependence.
@Christine Lagarde “As the crisis has shown repeatedly, risks can cascade through the system very quickly”
Not exactly Mme. Lagarde! What this crisis has really shown us, and like all the previous crises, is that what was perceived as absolutely safe can turn into risky, and cascade through the system.
Again I invite the IMF to stand up against the war that regulators, for no good reason at all, are waging against those perceived as “risky” and who of course are already suffering enough because of that perception.
Support my call for the bank regulators to debate this issue:
http://subprimeregulations.blogspot.com/2012/08/regulators-consider-yourselves.html