Two major global economic forces are competing for the world's attention. On the one hand, the promise of a "new economy" underpinned by information and communication technologies is exciting policy-makers, including those from the world's poorest countries. On the other hand, growing instability and uncertainty linked to globalisation have left policy-makers deeply worried about the impact of financial shocks on growth prospects. So far, the US is the only example of a country able to significantly turn these forces to its advantage. By some accounts the spread of new technologies has already considerably boosted productivity and raised the potential for growth. In contrast, the impact of new technologies has been much less evident in most of Europe and in Japan. Meanwhile the US economy has also been helped by economic uncertainty elsewhere in the global economy: financial crises in emerging markets have helped to sustain its rapid growth as capital is attracted to this safe haven and cheap imports help keep the lid on inflation. And the recent recovery in emerging markets has further added to demand for dollar assets as reserves are piled up as a safeguard against future crises.
The disparities in growth rates within the industrial world and a strong dollar have resulted in growing trade imbalances as the US has become the world's "buyer of last resort". Those countries with trade surpluses are more than willing to hold the proceeds in dollar assets in the US. At the same time, the combination of technological and financial innovations has aggravated the underlying fragility of current financial and trade flows. The vulnerability of developing countries to any policy shifts in the major industrial countries will, of course, depend on their current state of health, and the stronger than expected recoveries in some of the economies hardest hit by financial shocks offers a measure of hope. But with persistent biases and asymmetries in the trading system and the continuing structural uncertainty and volatility of the financial system, growth in many countries remains hostage to unstable capital flows.
The problems facing much of Africa are of a different order. The basic policy challenge there remains how to overcome savings and foreign-exchange constraints and to raise investment to the level required for growth of at least six percent per annum. The current level of private capital inflows is too small to fill the resource gap but still big enough to make many African economies vulnerable to the arbitrage arithmetic of short-term capital flows. This also means a steadily growing dependence on capital flows, though in recent years these have barely compensated for resource losses due to unfavourable trading conditions. The only way to end Africa's aid dependence is to launch a massive aid programme and to sustain rapid growth for long enough to allow domestic savings and external private flows to gradually replace official flows.
The pace of recovery of East Asia in the past year has been encouraging, although the fact that policy makers failed to anticipate both the depth of the crisis and the speed of the turnaround should caution against excessive exuberance. There are still reasons for concern. In the first place, recovery has been accompanied by only limited corporate restructuring, and the health of the East Asia financial system continues to rely on public intervention for credit. Second, exports are unlikely to continue at their recent pace, and public deficits and debt have been on the rise in most of the countries seriously affected by the crisis. Since premature fiscal tightening could stifle growth, fiscal consolidation needs to wait until private demand takes the lead in growth. This may be delayed, however, by persistent unemployment and the existence of excess capacity in many industries.
Finally, the recovery has been sustained thus far by highly favourable conditions in the world economy that are susceptible to change. Thus a sharp slowdown in the US and a deterioration in global financial conditions could be particularly damaging. A fundamental lesson of the financial crisis is that excessive reliance on foreign resources and markets leaves growth prospects vulnerable to external shocks. In an increasingly interdependent global financial and trading system, it is clear that trust in market forces and monetary policy alone will not be sufficient. Increased international cooperation and dialogue are needed if the full potential of new technologies to bridge the growing gap between the rich and poor is to be realised. This calls for bold leadership, of the kind which ushered in the postwar Golden Age.
Rubens Ricupero is Secretary-
General of the United Nations Conference on Trade and Development (UNCTAD).
Freitag, 12. Jänner 2001