Aninat outlines ways to integrate all countries into increasingly globalized economy

• Pages: 227-230

Page 227

Following is an edited version of a speech delivered by IMF Deputy Managing Director Eduardo Aninat at the High-Level Meeting of the United Nations (UN) Economic and Social Council (ECOSOC) in New York on July 5.

The theme of this meeting—the role of information technology in a knowledge-based economy— raises the issue of “connectivity.” I am referring not just to the fact that some people, or segments of society, are connected to the Internet and the latest in high-tech communications, while others are not. The problem is that some people are connected to the global economy, enjoying the immense opportunities of globalization—higher investment, job creation, and growth—while others are not.

Not surprisingly, the “disconnected” happen to be the world’s poor, who lack access to basic social services, essential infrastructure, and income and employment opportunities, as well as to the web. Being disconnected bears an ever-growing cost of isolation and marginalization, at a time when there is already a growing gap between the rich and the poor within and among nations. What can the UN family––in particular, the IMF––do to help integrate all countries into our increasingly globalized economy? I would like to explore this question in my remarks today.

A brighter world economic outlook

The encouraging news is that the global economy has recovered remarkably quickly from the financial crises of 1997–98. After two years of slowdown, world growth should be around 4!/2 percent this year—the highest since 1988—and continue at close to this pace next year. Most of the emerging market countries that experienced crises are enjoying impressive growth, reflecting in part resolute action by policymakers to stick to adjustment and reform efforts, although much remains to be done. Other developing countries, as well as a number of economies in transition, are also contributing to the pickup.

Even so, we cannot afford to be complacent. Three key concerns come to mind: (1) Are we doing enough to ensure a gradual rebalancing of global growth among the principal currency areas—the United States, where growth remains strong; Japan, where a fragile recovery from recession is under way; and Europe, where recovery from a period of weakness is on track? (2) Are the values of the key currencies in line with their medium-term fundamentals, notably the euro against the dollar? (3) Are we doing enough to ensure that any needed adjustments in financial markets occur in as orderly a manner as possible?

It is more urgent than ever that we secure a smooth transition to a more balanced pattern of global growth. In the United States, this means containing excess demand pressures, being careful not to loosen the fiscal stance unduly. In Japan and Europe, it means tackling structural rigidities, including intelligent deregulation of key sectors. In Latin America, it means continuing to reduce fiscal deficits to build investor confidence and...