A Reuters story under the caption As G20 Chases Growth Goal, Members Differ On How To Get There, has indicated that against the backdrop of reductions in growth forecasts for many of the world’s leading economies by the Organisation for Economic Cooperation and Development (OECD), the leaders of the Group of 20 top economies seem committed more than ever to improve on their economic performances to the point where they can have a positive impact on global economic growth within the next four years. Specifically, the aim is to contribute about two percentage points to growth in the global economy by 2018, according to Australian Treasurer, Joe Hockey.
Amazingly, the story went on to say: “More than 900 individual growth proposals had been submitted and analyzed by officials, said Canadian Finance Minister Joe Oliver, the co-head of a G20 working group on growth. We believe that these actions in total – and if implemented, and that is key – would come very close to two per cent.” Am I delusional or is it the case that those with the authority to lead the world in the areas of finance and economics are just as puzzled as ordinary folks when it comes to actual policies for growing and developing our economies? With such a large number of specific proposals only one thing can be guaranteed – chaos in implementation and outcomes!
From my reading of the economic literature on economic growth and development, particularly from the empirical side, it is abundantly clear that there is no consensus when it comes to the sources of growth. Nonetheless, it is reasonable to conclude that there are factors that generally tend to retard growth (things such as huge fiscal deficits and high public debt) while others (for example, human resource development and institutional enhancement) can contribute positively to economic growth. Hence, it is generally up to countries to determine what combination of policies and strategies is best suited to expand economic activities given, inter alia, history of success and failure, domestic resource constraints and regional and international developments. Hence, creating and debating hundreds of individual proposals for growth can only be an exercise in futility if only because one size does not and cannot fit all.
Within that same spirit, it is even more confusing why, according to the same story, the United States and other countries would want to suggest to Germany the need for “more immediate stimulus”. Are additional stimuli the way to grow economies at a time when many countries are struggling with huge and rising fiscal and debt burdens? How effectively have stimulus programmes in the United States and other countries been to restoring economic prosperity? Are these stimuli programmes sustainable in the medium to long term? How exactly should these stimuli programmes be financed?
Logically, the answers to these questions will certainly provide a basis for confidence in the approach that is adopted by the G20 countries to achieve their stated goal of a two percentage point increase in growth in the global economy by 2018. Given past experiences, I remain very concerned about the achievement of any real level of sustained growth in the global economy any time soon. But for the sake of our small, open Caribbean economies, I hope I am wrong!
