Leading economist warns developing Commonwealth countries to take action

Nov 27, 2009 News

Professor Joseph Stiglitz

By Gary Eleazar in Trinidad

Leading world economist Professor Joseph Stiglitz is warning Commonwealth leaders to quickly take affirmative action and outline long term objectives in order to survive the current world economic downturn.
Professor Stiglitz made the charge during a Pre-Commonwealth Heads of Government Meeting (CHOGM) undertaken by Commonwealth Foreign Affairs Ministers who are currently laying the groundwork for their respective heads when they enter into deliberations as CHOGM 2009 officially opens today.
According to Stiglitz, climate change and the developed world seeking to garner finances for its own mitigation, has and will continue to have both a direct and indirect effect on a lot of Commonwealth countries, such as those in the Caribbean, including Guyana.
He pointed out that the developing world depends heavily on the developed nations for things such as exports, remittances and foreign direct investments, which results in their economies being affected.
As such, the Professor pointed out that the recovery of the developing world from the global financial crisis will be significantly lagging.
This, he said, means that there will not be the type of assistance required for long term projects such as climate change because, “unfortunately the developed countries feel that they have so much debt that has accumulated as a result of trying to address the crisis, they will feel less generous about helping others.”
He opined that a real source of concern is that the call for financing from the developing world could very well go unanswered, and if it is answered, it would not be nearly enough to correspond to the needs of the developing countries.
Professor Stiglitz told this newspaper that in his presentation to the Foreign Affairs Ministers, he attempted to emphasise the fact that in the process of recovery there must be a clear vision, “of where you want to go.”
This, he said, will enable the adequate stimulation of respective economies that the decision makers were looking to expand, “you make investments that facilitate those kinds of things that you want to grow.” He added that this would be dependent on the financing available.
Stiglitz stressed that there needs to be a strong focus not just on the short term, “but where the economy will be in 20 years.”
He cautioned that the risks are far too great and failing to listen could see the downturn lasting much longer for the developing countries, with the depth to which it would sink being significantly deeper.
“I think that the real worry is that five to ten years from now the countries will be weaker…it’s not a question of survival or not, it is a question of the living standards of the country.”
He explained that given the way in which the developed countries have reacted to the crisis, their debt would have increased significantly, making assistance the developing countries much more elusive.
Given the economic landscape that the professor mentioned, when asked about what he expected to happen in Copenhagen next month and what could countries such as Guyana expect, the professor said there will be some sort of agreement being a step to the future, but questioned just how big that step would actually be.
He stated that he was encouraged with the news that the Barack Obama administration is planning to go to Copenhagen and commit to a reduction in carbon emissions, and hopefully the US congress ratifies it, unlike the 1997 agreement.
While the news emanating from the US is that it will reduce carbon emissions, there is the fear that it would be hesitant to buy into the carbon market, as is the case that Guyana is pushing for under the Low Carbon Development Strategy, where the developed countries would pay for Guyana’s forest to largely remain intact and continue to act as a carbon sink and that service be sold.