Rodrigo de Rato: Industry Revitalization Should be Rightly Implemented
Rodrigo de Rato: Industry Revitalization Should be Rightly Implemented
Not long ago “Project Syndicate” – worldly popular edition, published the article by Rodrigo de Rato – Executive Director of the International Monetary Fund, where famous economist talks about the implementation of the industry revitalization strategy depicted in 2004 of the world economy, which was actually planed before but due to scarce resources wasn’t funded.
Today’s world is full of controversies. The author is very much concerned about increased number of terrorist movements and local bloody conflicts; on the other hand, the rate of economic development in other regions of the world is considerably high. Inflation despite the rapid growth of fuel price, has maintained acceptable level. Financial market is as well on a normal basis. Economic advancement is pretty noticeable in couple of countries which endured financial crisis. It’s sheer that more activities should be arranged to ensure anticipated crisis avoidance and decrease the scale of poverty existing in the world.
What do these controversies refer to? To answer this question it’s important to alter the trends of individual countries as well as the whole international society towards the present day political processes of the world. The matter concerns the imbalance in global economy of the world, the rehabilitation of which requires the utilization of microeconomic policy and continuation of hindered reforms. The activities aim to elaborate the relevant methods in struggle against financial and economic hardships and as previously mentioned to lessen the scale of poverty in the world.
It’s about the time to do the proper work.
Not long ago the IMF and the World Bank 184 member country representatives met in traditional annual session held in Washington. This year’s meeting was extraordinary to a certain extant. It was the 60th anniversary of the establishment of these organizations. Exactly 60 years ago in a conference held in Breton Woods was decided to form the IMF and the World Bank as the major basis for the world economy. I underlined two major problems while making a speech at the conference. It can be explained in a simple way as follows: it’s essential we focus on idea and start actual activities. To make it more clear international society should fully use the opportunity of revitalization economic trends in the world for the benefit of economic stabilization. It should assist the countries lacking developing perspectives.
Rapid economic growth is important for countries. It facilitates the formation of certain protection mechanism against anticipated economic drawbacks. The international community should show a great will and devotion to use all the chances. We live in the world of global financial market economy meaning that if one country fails to maintain economic growth due to transnational financial crisis it will be very difficult for other countries to survive. We should learn from the experience of 90s. Disadvantages in the economy should be dealt until they grow into serious problem.
Rapid industry growth in 2004 is a sheer result of the contribution of 90s; more precisely special mechanisms were created to avoid critical situations. In addition to that, noticeable growth in 2004 wasn’t the same for all regions. Europe and Japan can’t even now use all the potential resources they have. The major world economy “lions” remain to be USA and China.
What is vital?
In today’s world economy it’s a key task to deal with global tax balance and budget deficit to ensure economic stabilization. This is more about the US which should deal with budget deficit in a short run. Concerning Europe and Japan, they should achieve rapid economic advancement in the country by structural reforms.
More affective economy would be possible by means of more elastic monetary policy in individual countries, globally as well as in China and Asia. The reform of financial sector is of vital importance. Developing countries achieving more success in the sphere of economy in recent years must not loose the speed of reforms to crack down on in and out economic danger.
Over time the agenda will include other problematic issues. Although the problem wasn’t considered short run the process of growing old population makes many country’s governments shift more attention on planning and implementation and accomplish social defense systems. The mentioned problems turned out to be urgent for South America, European countries and Japan. And the day is not far when other poor developing countries will be found in the same situation due to the absence of useful resources.
The energy resource and its rational usage is also a problem. Increased price on fuel exposed weak points connected to the problem which were more or less vague earlier. Many countries will have to reformulate the policy connected to energy. It covers fuel procession and utilization. The regulation of the problem with the procession of this valuable product will avoid unexpected price changes on it.
The priority of the IMF is to avoid crisis. Recent 10 years was considerably successful especially concerning transparency in financial system. The Foundation permanently stresses focus on changes in this sphere and observes the liability of other countries.
We believe it’s essential that activity mechanism be performed to provide our member countries clearly formulated advices based on thorough analysis and introduces problem recognition. Not only the IMF and the World Bank can regulate the situation but also the countries and their governments can contribute to the success of economy.
How can we decrease the scale of poverty?
Economic stabilization faces the danger poverty at international level. It’s fact that many operations were performed in recent years. Though it’s also our reality that every fifth person of our population lives in poverty. He/she is satisfied only with 1$. AIDS and other related diseases are prevailed and eradicate the population. Following the program activities administered by international society the scale of poverty will have been halved by the year 2005. But it will not be true to all countries. The program adopted by international foundations in Monterey at the conference of 2002 will serve to the above goal. In accordance with the program developing countries should perform industry policy based on right principles and rational administration. Industrial countries should enlarge the scale of assisting mechanism and decrease barriers hindering perfect import. In addition to that the IMF and the World Bank should provide relevant consultations, expertise and financial aid for these countries. The IMF itself should observe and explore the microeconomic and financial stabilization achievements of other countries which is very important for sustainable development and decreases the scale of poverty.
“Monterey Consensus” is already successfully exercised. Although the fact has to be mentioned that developing countries don’t receive enough assistance as was promised before. Certain measures should be made to facilitate economic growth in developing countries. The major role played successful negotiations arranged within the framwork of the World Trade Organization as the result will be of vital importance in long term development perspectives of the third world.
Present day world economic condition towards political or economic depression makes us more confident to assume how important it is to continue reforms in future. Governments of some countries as well as the IMF must remember that this is the unique way for sustainable economic advancement that would equally serve each citizen of the world.