Globalization Under Threat, and yet Opportunity Exists

Anticipation was in the air as delegates awaited the opening words of GDN President Gerardo della Paolera at the first plenary of 11th Annual Global Development Conference. Paolera framed the outline of the conference, and underlined the crucial role the participants would play in driving forward regional and economic integration, and how it should be framed in the current financial crisis, and future crises.

Current and future responses will play a pivotal role in how the world reacts and meets such challenges. Underpinning this is the need for increased interdependence, a shared approach encompassing the free flow of ideas and best practices.

The Czech Minister of European Affairs, Juraj Chmiel welcomed delegates to Prague, but also took the opportunity to offer some warnings for the global community. He warned that “globalization should not be made the scapegoat of the financial crisis, because it’s the major engine for progress. Protectionism is not the cure for economic difficulties.”

These sentiments paved the way for Professor Guillermo Calvo to explore in more detail the financial crisis, and the future of economic and regional integration. Underpinning his address was his belief that “understanding the current situation is not enough, and there is first a need to reach agreement on these causes and then co-ordinate actions”. An important question raised here was “Why do minor events, such as the crisis in sub-prime mortgages in Russia, lead to major crisis?”

The answer is of course complex, and surrounds the sudden uncertainty over credit by local banks. This has a snowballing effect or a ‘bank-run’ that extends this uncertainty outwards. The 2008 crisis was accentuated further by the USA government’s unwillingness to bail the Lehman brothers out as ‘lender of last resort’.

Different thinking shaped the run-up to the current financial crisis. Professor Calvo outlined how “the USA didn’t see the crisis coming because predictions were based on stocks, but the flow of credit, not stocks are the key. The bottom line is that a liquidity crisis can undermine foundations of global economy, and solutions must be globally co-ordinated”

See more stories from the GDN 2010 Conference, watch participants’ videos interviews, download conference presentations and papers

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About Pier Andrea Pirani
Information, knowledge sharing and communications in international development - Social media and collaboration tools.

One Response to Globalization Under Threat, and yet Opportunity Exists

  1. Pingback: Communiqué: 11th Annual Global Development Conference Delivers Key Messages on Economic and Regional Integration « GDN 2010 Annual Conference

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