What is most notable about the global crisis of 2008-? is the way in which it is proving productive for institutional experimentation in the realm of financial architectures in the global South. As with the Asian crisis, the current crisis has promoted interest in alternative modes of financial governance. Indeed, in a new study—“Financial architectures and development: Resilience, policy space, and human development in the global South”– I find that the current crisis has stimulated the expansion of existing institutions and arrangements and the emergence of new ones in the global South.
For the past few months, the rest of the world has been watching (often with a mix of fascination and revulsion) the complicated progress of the choice of the Republican candidate for the US Presidential election in November. Media reports across the world have provided the minutiae of the candidates, their performances in various state primaries, their likes and dislikes, their stated policy positions, their private lives. And because of the media, people continue to track what the various candidates say on all sorts of issues and about each other, in excruciating and often repetitive detail.
Of course this is only to be expected – the United States is after all still the most “significant” country in the world, and the outcome of its domestic politics affects all of us in all sorts of ways, whether we like it or not. But the extreme global obsession with it may be somewhat misplaced, for at least two reasons.
When you picture the effects of climate change, does a dying ocean come to mind?
Alongside the better-known terrestrial impacts of global warming, there are immense – and costly – damages that will occur beneath the waves. If we continue on our present course of unchecked carbon emissions, the losses due to climate change in five key ocean services could reach $2 trillion annually by the end of this century. Two-thirds of those losses could be avoided, effectively saving almost $1.4 trillion a year by 2100, if we embark on a rapid reduction in emissions to stabilize and protect the earth’s climate.
Eric Kemp-Benedict, Amanda Fencl and Elena Dawkins, guest bloggers
There’s a growing momentum around the world to build a ‘green’ economy – with a special focus on energy – as a key strategy to reduce greenhouse gas emissions and prevent dangerous climate change while also increasing energy security.
But resource constraints could hinder this endeavour. Low-carbon technologies such as photovoltaics, wind turbines, and electric and hybrid cars, for example, use metals that are mined only in a handful of countries, which can limit their availability. This is already a major international issue, as evidenced by the recent complaint filed by the U.S., the EU and Japan with the World Trade Organization, challenging China’s restrictions on exports of rare-earth metals.
Biofuels development, meanwhile, has faced substantial push-back because of concerns that fuel crops will displace food crops – or displace forests and vitally important ecosystems. In addition, these crops compete for what are often limited water resources.
As attention in comparatively rich countries continues to focus on the problem of growing inequality – the so-called 1% versus the 99% debate – it is easy to forget the most important equity problem facing the world today. This is the continuing problem of rural poverty in developing countries, and especially the tendency of the very poor in these countries to be concentrated in the most ecologically fragile, remote and marginal rural areas. At the recent Mount Holyoke Conference “Development in Crisis: Changing the Rules in a Global World”, I referred to this problem as the key challenge facing environmental sustainability and poverty eradication in the developing world.
Over the past two years much has been said in Europe about Tim Jackson’s book on ecological macroeconomics: “Prosperity without growth. Economics for a Finite Planet”, already translated into 30 languages. The author was responsible for the report on economics for the Sustainable Development Commission, an advisory body to the UK Government, in 2003-2011. Tim Jackson, well-known for his previous works on the social psychology of consumption, does not recommend the economic non-growth “medicine” to countries like India, China or Ecuador. But in countries where annual per capita income has reached USD 15 thousand, it is possible to verify that an increased income does not necessarily mean greater satisfaction or happiness. That is the so-called “Easterlin paradox”, corroborated through many a line of research.
For the first time ever developing countries have officially nominated candidates to serve at the President of the World Bank. Acknowledging that the process whereby the World Bank President is chosen by the United States lacks legitimacy, the World Bank has pledged that the next President will be chosen based on the merits. With Yu Yongding from the Chinese Academy of the Social Sciences, and Liqing Zhang from the Central University of Finance and Economics in China, the two of us circulated this petition endorsing Jose Antonio Ocampo for the World Bank Presidency. After just a few days from sending out our letter, you can see that we received overwhelming support from across the world, from renown academic economists, former Central Bank governors, and the heads of international agencies. It is our view, and the view of these economists, that Jose Antonio Ocampo is the best qualified to lead and reform the World Bank. We sent this letter and petition to the Executive Directors of the World Bank and post it here on the Triple Crisis blog.
Petition in support of World Bank presidential nominee Jose Antonio Ocampo
In relation to the forthcoming election of the President of the World Bank, in which you will play an important role, we wanted to express our strongest support for Jose Antonio Ocampo and provide some personal background about him which we hope will be of interest to you.
Jose Antonio Ocampo is outstandingly well suited for the job for three reasons. Firstly, he has had a distinguished career in his own country, where he was a highly successful and professional Minister of three portfolios: Finance, Agriculture and Planning. Therefore he has a deep understanding of policy challenges in developing and emerging countries.
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Little is more tragic about the eurozone crisis than that we know how to minimize it and provide the best chance for stability and growth yet we are not doing what we must. As an American, I should say ‘they’ are not doing it. It was just announced that eurozone unemployment reached a rate of 10.8 percent in February. What we should all recognize is that there are no mysteries about what to do.
The UK and the US have central banks of last resort. The Eurozone has resisted this. But the best evidence that such far more aggressive monetary policy is needed came last December when the relatively new European Central Bank chief, Mario Draghi, did an end-around and started to push hundreds of billions of euros into the banking system. Almost immediately, Spanish and Italian interest rates started to drop and Europe breathed a sigh of relief.
Robert H. Wade, guest blogger
In 2008, Triple Crisis blog partner GDAE gave Wade its prestigious Leontief Prize for Advancing the Frontiers of Economic Thought for his outstanding contributions to the economics of development. Today, GDAE awards the 2012 Leontief Prize to Michael Lipton and C. Peter Timmer for their critical work in the economics of food and agriculture. See full event details.
It is a commonplace to say that the world economy has become “multipolar”, as some developing countries gain a rapidly increasing share of world income. The implication is that the post-Second World War order, in which countries of the West govern the world economy, is now over. We are in the middle of a transition to a new world order in which governments of developing countries have a substantially larger voice in setting global norms and rules.
The negotiations going on in Geneva over the mandate of the United Nations Conference on Trade and Development (UNCTAD) provide a rude shock to this conventional wisdom. UNCTAD is the UN agency, which, since its establishment in 1964, has been most responsive to the preferences of developing countries on the subjects of debt, trade, and finance. It has often voiced a second opinion about issues on which the International Monetary Fund (IMF) and World Bank – governed largely by western governments — consider themselves to be authoritative.
It is truly historic to be engaged in a global debate about who should head the World Bank. For more than 60 years the Bank presidency has been dictated by the US. Finally, the US and the Bank have pledged the institution’s next president will be chosen on merit, not hegemony.
On merit, José Antonio Ocampo is far and away the most qualified candidate to lead and reform the World Bank.
Many of the leading media outlets and key development professionals have praised the US in acknowledging the need to change the process and for putting forth Jim Yong Kim but have expressed concern that he may have too narrow a resume to run the Bank, given the many challenges it faces.