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Trade and development report 2014

Global governance and policy space for development

image of Trade and development report 2014
The 2014 edition reviews recent trends in the world economy, examining the consistency and sustainability of the economic policies currently followed. It addresses the evolution and current conditions of the policy space needed for implementing growth-enhancing and inclusive development strategies. It discusses how countries can better manage capital flows in order to expand their policy space for pursuing development strategies. It looks at policy space as depending not only on the existing rules and commitments taken in international agreements, but also on the possibility of mobilizing resources for financing industrial policies, investment and growth. It argues that fiscal space is a key aspect of policy space, and that developing countries need to address loss of revenue stemming from illicit financial flows, tax havens and inadequate taxation of extractive industries.

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Towards a sustained economic recovery: Review of policy options

This chapter examines some of the main macroeconomic policy stances in developed and developing countries and their policy options. I t shows that not only is the recovery of global growth since the financial crisis rather weak, but also its drivers are inadequate. Indeed, in several major economies, policies intended to spur the recovery are similar to those that led to the latest global crisis in the first place, which raises justifiable doubts about the sustainability of the modest GDP growth attained so far. The chapter then undertakes an empirical modelling exercise to highlight the possible consequences of current policies, and offers an alternative set of policy options. This methodology helps to highlight issues of consistency (or the lack of it) between diverse policies applied at the national level, as well as the interrelationships between the outcomes of those policies in different countries and regions.

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