World Economic and Social Survey (WESS)

English
Frequency
Annual
ISSN: 
2412-1509 (online)
http://dx.doi.org/10.18356/69d42e13-en
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The World Economic and Social Survey (WESS) provides objective analysis of pressing long-term social and economic development issues, and discusses the positive and negative impact of corresponding policies.
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World Economic and Social Survey 2010

World Economic and Social Survey 2010

Retooling Global Development You do not have access to this content

English
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    http://oecd.metastore.ingenta.com/content/c0276af9-en.pdf
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Author(s):
DESA
06 July 2010
Pages:
197
ISBN:
9789210543583 (PDF)
http://dx.doi.org/10.18356/c0276af9-en

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The Survey points out promising directions for reform, including strengthening government capacities for formulating and implementing national development strategies; doing more to ensure that official development assistance is aligned with national priorities; strengthening the international trade and financial systems so that countries with limited capabilities can successfully integrate into the global economy; creating new mechanisms for dealing with deficiencies, such as specialized multilateral frameworks through which to govern international migration and labour mobility, international financial regulation, multinational corporations and global value chains regulation, as well as sovereign debt workouts. Most importantly, the Survey highlights the need for a strong mechanism for global economic coordination which establishes coherence across all areas of global economic governance.
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  • Preface
    The global financial crisis has exposed serious weaknesses not only in the world economy but also in global economic governance. Fortunately, a remarkable spirit of multilateralism has prevailed in the responses to this upheaval. Countries have refrained, by and large, from resorting to protectionist measures. Governments have enacted stimulus packages, kept interest rates low and provided additional finance to the International Monetary Fund and the World Bank that is aimed at helping countries in need. These efforts stand in sharp contrast to the approach of the 1930s, when beggar-thy-neighbour policies had pushed the global economy into a prolonged depression and deepened the political crisis that led to the Second World War.
  • Acknowledgements
    The World Economic and Social Survey is the annual flagship publication on major development issues prepared by the Department of Economic and Social Affairs of the United Nations Secretariat (UN/DESA).
  • Overview
    The global economic crisis of 2008-2009 exposed systemic failures in the workings of financial markets and major deficiencies at the core of economic policy making. The rapid spread of the financial fallout in the United States of America throughout nearly the entire world, affecting jobs and livelihoods, underscored the interconnectedness of the global economy. Moreover, the economic and financial crisis came on top of several other crises. Skyrocketing but highly volatile world food and energy prices reflected a decades-long neglect of food agriculture and failure to reign in increasingly speculative energy markets. Climate change is already a clear and present danger whose consequences are being felt in many parts of the world in the form of more frequent and severe droughts and excessive rainfall; its effects are compounding the other crises.
  • Explanatory notes
  • Introduction
    As the world emerges from its worst recession since the Second World War, it is important to remind ourselves that interdependence across nations is an essential feature of economic development. Over the past few years, many have come to feel that interdependence is the carrier of economic distress. Skyrocketing food and energy prices have affected the livelihoods of many. The strong rise in food prices during 2007 and 2008 exposed not only the structural basis of food insecurity—the result of decades of underinvestment in agriculture, especially in developing countries—but also the interconnectedness of such insecurity with other global problems. The effects of climate change are already being felt in many parts of the world in the form of more frequent and intense droughts and excessive rainfall which have exacerbated food insecurity and intensified price volatility.
  • Retooling poverty reduction strategies: Towards a new consensus?
    While it was always an underlying aspiration, poverty reduction was not an explicit direct goal of initial development programmes. Rooted in modern growth theory which dominated early development theory, development policies of the 1950s and 1960s focused on promoting modern industrial development to accelerate overall economic growth. Industrial growth was supported through trade protection, cheap credits and subsidies and large-scale public investments in infrastructure. Output growth was expected to “trickle down” to the entire population and reduce poverty through rising wages and employment generation, even if initially poverty reduction might not be commensurate with the rate of output growth, as rising income inequality was expected to be an inevitable, although temporary side effect of industrialization. Capital productivity growth would lead to rising profit shares and allow for higher savings to finance domestic investment. Over time, at higher levels of development, gains from growth would be shared more broadly with faster real wage growth and dynamic employment expansion.
  • Towards a new aid architecture
    There have been substantial shifts in the system of official development assistance (ODA) over the past 60 years. Shifts in the dominant development ideas and in the relative economic power among countries have induced changes in the mechanisms and modalities of aid. The emergence of significant global economic players from the ranks of developing countries as well as the international philanthropy community is expected to initiate a new realignment which is already putting its stamp on the international aid system. The increased participation of new players, the ongoing deep rethinking of decades-old beliefs held on correct economic management approaches, the challenges facing donors in raising the aid resources required, and emerging development challenges, such as climate change, present both dilemmas and opportunities to those engaged in reshaping the global aid system.
  • Retooling global trade
    Export-led growth emerged as a pillar of development strategies in the last three decades. The progressive reduction of tariff and non-tariff barriers to trade between countries has been instrumental in generating a fivefold expansion of the volume of world exports since 1980. Paradoxically, economic growth in most developing countries has not matched the rates of economic progress achieved in the first decades after the Second World War when many followed import-substitution strategies. Exceptions to this pattern—notably China and the newly industrializing countries in East Asia—have systematically followed a pragmatic approach that combines a gradual exposure to external markets with an effective collaboration between the private and the public sector towards building dynamic long-term competitiveness. Their experiences suggest that neither protectionism nor abrupt liberalization is the best strategy for achieving high and sustained rates of economic growth.
  • Reforming the international financial architecture
    There is general agreement that weaknesses in the system of international financial cooperation played a key role in the current global economic crisis. These weaknesses also played a role in the fuel and food crises.
  • A feasible globalization
    Enormous changes in the workings of and the mechanisms of governance over the international economy are under way as a result of the current global crisis, the deepest the international community has faced since the Great Depression more than 75 years ago. However, the actual shape of the outcome is uncertain. While there are powerful interests pressing to restore the system’s configuration before the crisis, even these will be thwarted by the significant economic trends that are already in evidence and the unprecedented restructuring that is already in train. The current recession could persist for some time, even if it does not turn into a depression, because of the thoroughgoing recapitalization and de-leveraging in the major financial sectors that has to take place. Even if the world were simply to be rebooted worldwide so as to function exactly as it had, one might expect the scale of private flows to be more subdued in years to come. Yet, more limited flows could still cause additional severe damage in an unreformed system. The enhanced risk for sovereign debt crises in Europe that emerged in early 2010 was matched by equally risky surges in short-term capital flows to emerging markets which triggered renewed financial turmoil worldwide. The fact that policymakers have been slow to respond highlights once more the glaring gaps in global economic governance.
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