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Trade and development report 2013

Adjusting to the changing dynamics of the world economy

image of Trade and development report 2013
The shape of the world economy has changed significantly over the last two decades, with a rising importance of several developing countries and regions as additional drivers of global economic growth. The main objective of Trade and Development Report 2013 is to assess the systemic changes in the underlying structure of the world economy and to analyse the resulting policy challenges. Particular attention will be paid to a plausible scenario in which developing and transition countries must design their development strategies in a context of a prolonged period of sluggish growth in developed countries. The Report’s main message will be that in order to achieve high, sustained and inclusive growth, developing and transition economies will need to move towards a new form of development, away from seeking net-export advantages on the back of global imbalances. Rather, the new context calls for strengthening domestic income and demand and reinvigorating regional and South-South coordination and economic linkages.

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Towards more balanced growth: A greater role for domestic demand in development strategies

The global economy is still struggling to recover from the Great Recession of 2008–2009 resulting from busts in the housing and financial markets of the major developed countries. The examination of the current challenges for the global economy in chapter I of this Report indicates that these countries may have a long way to go to achieve a self-sustaining recovery. Meanwhile, a prolonged period of slow growth in these countries will mean continued sluggish demand and thus slower growth in their imports from developing and transition economies beyond the short term. Countercyclical macroeconomic policies might be able to compensate for resulting growth shortfalls for some time, but will eventually result in fiscal or balance-of-payments constraints unless they are followed by policies that adopt a more comprehensive and longer term perspective. This chapter discusses possible longer term policy options to support rapid and sustained economic growth in developing and transition economies, with a focus on the complementarity of external and domestic demand.

English

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