Shared Views

One of the objectives of the Growth Dialogue is to connect policymakers across regions and across generations to help expand the choices facing decision-makers in developing countries. Policy work is often highly constrained by political and other institutional circumstances; however, it is equally challenged by the lack of good practical advice from others who have face similar problems in the past. The Growth Dialogue is uniquely positioned to be able to help expand the advisory horizons of decision-makers by tapping into its network of experienced policymakers, experts, and development practitioners. Since economic outcomes often depend so crucially on policy directions and policy implementation, advisory work can deliver massive payoffs for sustainable economic growth.

Few doubt that the global economic order has shifted in the aftermath of the Great Recession. After all, the advanced economies are struggling as can be seen in their slow growth recoveries and major challenges. The US is mired in a high unemployment, high debt trap with low levels of consumer confidence; Japan, even before the recent natural disaster and nuclear accident, was in a demographically-induced low growth trap; and Europe is struggling to find a way to accommodate the economic crises of Greece, Portugal, Spain and Ireland without sacrificing the Euro or the principle of no debt default. This raises concerns for globalization inasmuch as these advanced economies have heretofore been the custodians of the multilateral system.

A spate of recent books and reports remind us that the economic future and social well being of mankind not to mention the health of the planet, is inextricably linked with urbanization. That cities drive GDP growth has been apparent from the national accounts for decades but it is only two years ago that a majority of the world's population began to live and work in cities. Having discovered - or rediscovered - the central role of cities and recognizing that the trends point inexorably towards continuing urbanization and the emergence of many more megacities, researchers are attempting to determine how urbanization can be managed so as to enhance sustainable growth rates, improve the quality of life in cities, and contain or better still reverse the diseconomies stemming from congestion, pollution, GHG emissions, urban sprawl and the increased consumption of non-renewable resources.

The Great Recession has broken many shibboleths. New doubts have been raised about the effectiveness of fiscal and monetary policies when confidence is damaged. Concerns about competitive depreciations have fostered the term "currency wars." And capital flows, long sought after, are now considered anathema to some emerging market economies. Has the economic policy paradigm irrevocably shifted? And what does this mean for developing countries?

In its supplement to the Growth Report, the Spence Commission on Growth and Development argued that its basic finding that export openness was a key ingredient of rapid growth was still valid post crisis. However, the commission did aver that the returns to that strategy might be lower in coming years. Others, such as Mohamad El-Erian, have spoken of the "new normal," a sea change in the economic landscape. Should developing countries proceed with the previous economic growth paradigm or should governments take away new lessons from this crisis? Read More