Experts from India and Germany, including academics, practitioners and policymakers, took part in a day-long seminar titled "Deconstructing the Economic Crisis" organised jointly by Observer Research Foundation (ORF) and the Rosa Luxemburg Stiftung (RLS), Berlin.
Leading economies of the world, including the United States, are yet to recover fully from the world economic crisis, and even the massive financial package from the States have only helped the recovery partially. The imbalances in the global economy are still worrisome. So is there a need for a new monetary framework? These issues were discussed in depth by economists, academics, practitioners and policy-makers from India and Germany at seminar on "Deconstructing the Economic Crisis" organised jointly by Observer Research Foundation (ORF) and the Rosa Luxemburg Stiftung (RLS), Berlin.
This seminar, organised at the ORF Delhi campus on November 23, 2010, was, in fact, the second leg of ORF-RLS collaborative initiative on understanding the Global Economic Crisis.
The seminar consisted of three separate sessions which included examining the impact of the crisis and the new development models that have come to fruition in its wake. Dr. Jayshree Sengupta, Senior Fellow, ORF, initiated the seminar by giving a brief yet detailed overview of not just the crisis, but the state of the global economy as we see it today.
The first session was titled ’Understanding the Crisis and its Impact’ and was chaired by Dr. Biswajit Dhar, Director General, RIS. Mr. Rajesh Mahapatra from The Hindustan Times was the first speaker. Mr. Mahapatra’s presentation focused on examining how the Indian media, particularly the print media, covered the global economic crisis. He highlighted the uneven coverage of the crisis by the media as well as the negative effect that increased corporate ownership in the media was having on news content. He also indicated how this was compounded by the disconnect that existed between the media and the public today.
Mr. Mario Candeias of the RLS was the second speaker in this session. His presentation focused on how the current stage of the crisis was only one of many more to come, and that the measures that the global economy has undertaken to tackle the crisis have only laid the groundwork for the next phase of the economic crisis. He argued that the persistence of global imbalances as well as the frequent reoccurrence of crises in the global economy points towards the inevitability of replacing the neo-liberal economic model. The only question is whether the change will be gradual and democratic or whether it would be a sudden revolutionary change.
The second session titled ’Impact of the Crisis on Trade, Energy and Climate’ was chaired by Dr. Ramgopal Agarwala, Distinguished Fellow, RIS. Ms. Judith Dellheim of the RLS was the first speaker in this session. Ms. Dellheim’s presentation focused on the impact of the crisis on the global energy market and the current status of global climate negotiations following Copenhagen 2009. She highlighted how the IEA has reported that while the global economy has shown signs of a slow recovery, it has not been matched by the improvement in energy and ecological standards. This status quo is not helped by the fact that investments in fossil fuels and green technology have reduced following the crisis.
The second presenter in this session was Mr. Bibek Debroy of the Centre for Policy Research (CPR), who focused on the impact of the Global Economic Crisis on India’s trade. Mr. Debroy gave a short yet in-depth summary of the contribution that trade has made to the Indian economy and the impact of the crisis on this sector, particularly its large contingent of informal workers. Mr. Debroy also felt that given India’s increased growth rates and capital inflows, it will be hard pressed to contain rupee appreciation indefinitely.
The third session entitled ’New Development Models’ was chaired by Prof. Charan Wadhwa. Mr. M.K Venu, Managing Editor of The Financial Express was the first speaker. In his presentation, Mr. Venu gave a succinct summary of the Indian experience of the global economic crisis. He then shed some light on the new trends visible in the economy such as the rise of savings and investment rate, greater investment in infrastructure as well as the increase seen in rural demand. He also cautioned that India still has significant structural imbalances that needed to be rectified at the earliest. This included the restructuring of India’s productive forces to avoid a future crisis.
Mr. Fabio De Masi, Economist, Parliamentary Group DIE LINKE, was the second speaker. His presentation focused on the role that a country’s monetary policy played in economic development -- an issue which is of increasing importance in the post crisis global economy. Mr. De Masi argued that monetary cooperation is superior to unilateral solutions to monetary policy. However as financial power or the ability to stimulate the economy by credit expansion is unevenly distributed across economies, it leaves emerging economies with limited financial power or little room to maneuver to improve their economic development. He argued that an entirely new monetary framework would be needed to support economic development for these countries.
Ms. Marlies Linke, Head (Asia Desk), Centre for International Dialogue and Co-operation, RLS, gave the concluding remarks
• Opening Remarks: Dr. Jayshree Sengupta
• Currency war vs. monetary cooperation: Dr. Fabio de Masi
• India after the Global Economic Crisis: Mr. M.K. Venu
(This report was prepared by Hemant Nair, Associate Fellow, Observer Research Foundation)
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