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ERIA and IEA High-Level Panel Meeting Discusses New Global Economic Order

25 March 2024

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Boston, 25 March 2024: ERIA and the International Economic Association (IEA) convened a high-level panel virtual meeting on the New Global Economic Order. Notable attendees included esteemed economists Dr Lili Yan Ing, Professor Dani Rodrik, Dr Kevin O'Rourke, Prof Joseph Stiglitz, Prof Danny Quah, Dr Alessio Terzi, Prof Jose Ocampo, Prof Jayati Ghosh, and Dr Vera Songwe.

Dr O’Rourke offered a thorough overview of the global economic order's development over the last two centuries, analysing international economic relations from the mercantilist era to the present day and highlighting key historical shifts. His analysis provided valuable insights into the cyclical nature of economic changes, enhancing our understanding of today's global economy.

Prof Stiglitz and Prof Rodrik critiqued current global governance for favouring powerful nations and corporations, proposing a minimalist approach recognising constraints. They suggested competition among country blocs and justice movements for a fairer system. In A New World Order of Multipolarity and Multilateralism, Prof Quah proposed principles fostering inadvertent cooperation, categorising challenges, and allowing third-party intervention to manage fragmentation.

Dr Ing presented her work with Prof Justin Lin, which examined the transition in global economic governance from major developed nations to the G20, offering insights into the evolving landscape and ongoing transformations. They advocated for optimising comparative advantage, effective infrastructure, and digital transformation to address global economic challenges.

Prof Stiglitz and Prof Rodrik then emphasised the importance of explicit government policies in driving structural transformation in developing countries, proposing a strategy centred on green transition and productivity enhancement in labour-intensive services, stressing collaborative industrial policy and the impact of all government actions on economic growth.

Dr Terzi then presented a nuanced view of climate action, acknowledging the severity of climate change while advocating for structural change and political will. He stressed potential prosperity in climate mitigation and green technologies, guided by a pragmatic belief in human-driven progress.

Exploring recent global discussions on enhancing international financial and tax systems, Prof Ocampo emphasised the role of multilateral development banks (MDBs), addressed over-indebtedness, and bolstered international tax cooperation. He suggested four main reform areas: development financing, international monetary reform, addressing over-indebtedness, and international tax cooperation, with a focus on institutional dimensions.

Prof Ghosh advocated for a new global economic order on a different issue, proposing reforms for international financial institutions (IFIs), regular issuance of International Monetary Fund special drawing rights (SDRs), and sovereign debt resolution. She highlighted the importance of capital controls, financial regulation, reduced external debt reliance, and restructuring the international taxation system for equitable revenue generation. Prof Ghosh also called for issue-based coalitions to address global power imbalances through coordinated actions such as debt sustainability assessments, tax reforms, and financial regulation, potentially driving broader multilateral changes.

Dr Songwe then urged a re-evaluation of development finance, focusing on three key aspects: the growing role of the private sector, the decline in donor funding, and the importance of domestic resource mobilisation. She also highlighted regulatory controls such as Basel III and proposed allocating SDRs for climate initiatives to address environmental challenges. In summary, she advocated for a holistic approach to financing that adapts to changing dynamics and fosters sustainability.

The participants in this High-Level Panel among others also include Prof Elhanan Helpman, Prof Gene Grossman, Prof Eric Maskin, Prof Mari Pangestu, Dr Chatib Basri, and Dr Keyu Jin.

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