'ECONOMIES LIKE INDIA TO CONTRIBUTE FAR MORE': EX-CEA KV SUBRAMANIAN ASKS WORLD BANK, IMF TO PUSH FOR EVEN-HANDEDNESS IN POLICIES
Economist Krishnamurthy V Subramanian, who served as the 17th Chief Economic Adviser to the government highlighted that emerging economies, including India, would contribute far more to the global economy in the next 80 years, than it did in the previous 80 years. He also called for even-handedness when it comes to climate policies and trade policies.
Speaking at the G-24 Intergovernmental group on ‘Bretton Woods System at 80: Multilateralism in a changing world’, Subramanian underscored the importance of “even-handedness in policies especially for the Global South”.
He said that even-handedness in policies for the Global South is particularly important because the economic landscape is very different today in two important ways. “First, emerging economies today carry far more weight in the global economy than eighty years back. Second, emerging economies like India will be a far bigger contributor to global growth over the next eighty years than in the previous eighty. So, policies that foster this growth will be enormously beneficial for the global economy,” said the Executive Director of the International Monetary Fund.
Subramanian said that even-handedness is important in two aspects – climate policies and trade policies. He listed down the aspects in terms of climate change that the Bretton Woods institutions need to push for. The economist highlighted the climate change policies that adversely affect the growth of emerging economies that in turn exacerbate the inequity of cumulative contribution by emissions which is already higher in advanced economies than in the Global South.
The economist said that the “per-capita contributions to global emissions are far greater for the advanced economies than the Global South”, highlighting the necessity of growth of the Global South population. “Sovereign credit ratings, which affect countries’ ability to attract financing for climate adaptation and mitigation, depart most from fundamentals particularly for the countries that require the most climate financing,” said Subramanian, adding that the cost of capital and hurdle rates for investment become higher than demanded by fundamentals for the countries that actually require more climate financing.
“The Bretton Woods twins must take the initiative in creating a market for long-term hedging to foreign exchange risk at reasonable spreads to enable climate financing,” he said. The Bretton Woods twins refer to World Bank and the International Monetary Fund, the multilateral organizations created at the Bretton Woods Conference in 1944.
On trade, the economist said that the even-handedness in policy advocacy is critical. “The WTO data shows that advanced economies continue to maintain significant non-tariff barriers and remain mostly insular to reaping comparative advantages in trade in services even while they continue pushing EMEs to reduce their tariff barriers and open up trade in manufactured goods. So, trade policies must focus on tariff and non-tariff barriers and trade in manufacturing and services equally,” he said, adding that advanced economies implemented industrial policies to strengthen their domestic industry when they were in the process of becoming advanced and are doing it again now.
These advanced economies keep pushing industrial policies in emerging market economies (EMEs), who also need to follow a similar growth path.
He said that the Bretton Woods twins, World Bank and IMF, need to highlight these aspects to work in the interest of all its members.
2024-07-03T03:33:16Z dg43tfdfdgfd