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UN Conference on Trade and Development: Report 2013

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Helsworth
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UN Conference on Trade and Development: Report 2013

By Dan Kervick

Source: http://neweconomicperspectives.org/2013/...-2013.html

The UN Conference on Trade and Development released its 2013 report on September 12, and it is both an invigorating read and a welcome break from the stagnant and conservative thinking that dominates most US economic discussion. The full report can be downloaded from the UNCTAD website, and a much shorter overview of the report is also available.

You can also listen to this podcast of a public event at the London School of Economics marking the release of the report last Thursday. The Podcast features Richard Kozul-Wright, who heads the unit on Economic Integration and Cooperation Among Developing Countries at UNCTAD, and Robert Wade, professor of Political Economy and Development in the Department of International Development at LSE.

Here is an UNCTAD synopsis of the report’s main messages. I have highlighted the remarks that struck me as most important:


Five years after the onset of the global financial crisis the world economy remains in a state of disarray, with global output growing at around 2 per cent and global trade growth virtually grounding to a halt, the Trade and Development Report (TDR) 2013 stresses. Growth remains subdued in developed countries, where labour market conditions, fiscal tightening and on-going deleveraging hinder domestic demand. With an external economic environment showing few signs of improvement, developing and transition economies could not avoid growth deceleration.

Prior to the Great Recession, buoyant consumer demand in the developed countries seemed to justify the adoption of an export-oriented growth model by many developing and transition economies. But that expansion was built on unsustainable global demand and financing patterns. Thus, reverting to pre-crisis growth strategies cannot be an option. The Report notes that to adjust to what now appears to be a structural shift of the world economy, fundamental changes in prevailing growth strategies are needed.

TDR 2013 notes that developed countries must address the fundamental causes of the crisis: rising income inequality, the diminishing economic role of the State, the predominant role of a poorly regulated financial sector and an international system prone to global imbalances; while developing and transition economies that have been overly dependent on exports need to adopt a more balanced growth strategy that gives a greater role to domestic and regional demand.

Distinct from export-led growth, demand-led strategies can be pursued by all countries simultaneously without beggar-thy-neighbour effects. The Report also affirms that, if many developing countries manage to co-ordinately expand their domestic demand, their economies could become markets for each other, spurring regional and South-South trade. Hence, shifting the focus of development strategies to domestic markets does not mean minimizing the importance of the role of exports.

In adopting a growth strategy with a larger role for domestic demand, countries should achieve an appropriate balance between increases in household consumption, private investment and public expenditure. Fostering the purchasing power of the population is a key element in this regard. It can be achieved through an incomes policy, targeted social transfers and public sector employments schemes. Income creation and redistribution favouring lower- and middle-income households is crucial to this development strategy, because those households tend to spend a larger share of their income on consumption, particularly of locally or regionally produced goods and services.

Increased aggregate demand would provide an incentive to entrepreneurs to invest in expanding productive capacities and in adapting them to new demand patterns. Doing so requires investment which, in turn, necessitates access to reliable and affordable long-term finance.

With that aim, foreign capital may be useful in financing imports of essential intermediate and capital goods. However, large cross-border financial flows to developing and transition economies have often led to lending booms and busts, currency mispricing and the build-up of foreign liabilities without contributing to an economy’s capacity to grow and service such obligations. A cautious and selective approach towards cross-border capital flows is needed for reducing the vulnerability of receiving countries to external financial shocks and directing credit to productive investment.

The Report finally underlines that these countries should rely increasingly on domestic sources for investment finance. It affirms that central banks should enlarge their mandates beyond inflation control and, through a credit policy, play a much more engaged role financing the real economy. The implementation of such a credit policy can be facilitated through the involvement of specialised institutions, including national and regional development banks. Indeed, a network of specialized financial institutions may be more effective in channeling credit for development-enhancing purposes than big universal banks, which tend to become not only “too big to fail” but also “too big to regulate”.


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This post was last modified: 19.09.2013 17:24 by Helsworth.

19.09.2013 17:21
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TriniSary
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Post: #2
RE: UN Conference on Trade and Development: Report 2013

That just means we are moving Welfare State to U.S. while Europe is degaussed into "free market". U.S. people are stupid so it is okay to give them welfare for awhile, until they start to get too smart. European people are not stupid so they have to be made poor. This is the policy followed by European politicians. Meanwhile, in the U.S., we can now say that people with pre-existing conditions are covered by some sort of insurance. I think.

Try to see through these people. They are afflicted with sociopathology. The policies spoken of here still follow the paradigm of "money is a physical constraint", money is a "thing". More control to the central banks? Why? Let's work together, as they say. We can't work together if everything is controlled from the centre. Mondragon shows we do not need the state to do everything (though Mondragon is not overly concerned with social policy), and in the case of some agricultural related cooperatives, central management is not needed. No more for these crazies. Put the state back under local control, under individual authority.

This post was last modified: 21.09.2013 07:37 by TriniSary.

21.09.2013 07:13
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Helsworth
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Post: #3
RE: UN Conference on Trade and Development: Report 2013

You're giving "us" europeans too much credit. As for central authority; local governments/administrations have always depended on the national/central government to provide them with funds. Lets face it. A local government survives from local taxation. Its overall budget is established by the national government. Many local administration have way too small budgets for their regional needs.
So the ideological constraint is really a powerful tool. And part of the public is support it, as well. Look at the austrian-minded crazies who scream inflation and bankruptcy at every moment. They just can't understand what a currency sovereign can do, and what a household can't do.


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21.09.2013 09:15
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TriniSary
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Post: #4
RE: UN Conference on Trade and Development: Report 2013

Mondragon has local cooperatives and a corporate level also. It has achieved low unemployment in the region with it's policies. But the U.N. is not a cooperative and it's proposals aren't genuine reforms. They do not change the nature or structure of the organisations in question.

It is like expecting that WallStreet is fundamentally different if some key figures coalasced and presented some policies to make things run smoother. The only thing the U.N. has suggested here is making some repairs to the economy so that the west doesn't go bankrupt, or because war is afoot.

Because the structure is not different, with newly implemented the "free-trade" reforms, in the future Europe can end up with a Wall-Street as bad as that of the U.S., or whatever their plan is to make things rotten. Perhaps Europe will be destroyed next, and the U.S. will get "jobs" rebuilding it, or vice versa. We may even have some trouble with the siblings of the meteor that hit Russia. Where else would all these new import-export jobs come from? Do I need a new vacuum cleaner?

This post was last modified: 21.09.2013 11:21 by TriniSary.

21.09.2013 11:06
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