Communiqué: 11th Annual Global Development Conference Delivers Key Messages on Economic and Regional Integration

There is no learning without dialogue, and no action without reasonable consensus. This assumption was put to the test over the course of the recent 11th Annual Global Development Conference, Prague. The event was framed by one central question – Regional and Economic Integration: Quo Vadis? The 450 participants from around the world attending the event had their own distinct views on exactly where regional and economic integration is going. It is these views we wanted – and the world needs – to hear.

The financial crisis that has rocked the global economy has had, and continues to have, dangerous repercussions for international development.

The global balance of world power is at a ‘tipping point’ according to GDN President Gerardo della Paolera. “Conventional thinking about globalization has been shaken to the core by the current financial crisis. The demise of the Washington Consensus, sealed by the events of 9/11 and those that followed, has left us in a ‘no man’s land’ with no obvious successor to the previous policymaking consensus.” The vast majority of conference participants agreed on this point.

But opinion was divided on the impact of the global financial crisis. Two strongly-held but opposing views emerged. The first, articulated by the first Roundtable on the second day of the conference, argued that there is cause for optimism in the responses seen from ‘the periphery’ i.e. countries that have learned from past economic shocks and have built better institutions, and instituted the fundamentals which have made them less vulnerable and more resilient to withstand global financial crises. The second view, presented by speakers such as Guillermo Calvo , Manuel Montes , and James Robinson concluded that we are neither understanding nor learning sufficiently from the various regional economic shocks of the past. This makes us, they argue, little more than willing victims of the next global crisis when it happens. It’s just a question of time.

Whither Capitalism

Capitalism has increasingly dominated the global economic agenda, and undoubtedly the shock of the recent economic crisis will lead some commentators to call for globalisation to be pushed back. That is a very dangerous option for the 1.4 billion people around the world living in poverty. China’s phenomenal rate of economic growth drew delegates into the debate on what future economic models countries should employ. ‘Authoritarian capitalism’ may well be more widely prescribed by economists in the future, but as always there is devil in the detail.

For instance, Harvard’s James Robinson preferred to bring the discussion down to economic institutions and the impact of globalization on them. He said “Economic institutions are the outcome of collective choices, and reflect the distribution of power in society. He added “Don’t think about changing the institutions, change the power relations in society.” Authoritarian institutions are a very different beast, stupendously hierarchical, and dependent on a society that has limited freedoms.

The transition of the global economy with a shifting centre of gravity from the West to the East poses an enormous political economy challenge to foster globalization and a more cohesive global governance architecture.

Searching for a new deal

As Anthony Giddens rightly pointed out on the first day of the conference, in the shadow of financial crisis and climate change, it is time to start the revolution – a new deal in climate change, underpinned by dramatic social, political and economic transformation. The liberalised economies of the world are in a far better position to start this revolution and drive sustainable solutions.

This revolution might not come any time soon, but the current challenges facing the global economy will not go away. We live in a ‘global neighbourhood’, and we have done for some time, but we are still waiting for effective global governance. This point was taken up by Ernesto Zedillo, Chair of GDN and Director of Yale Centre for the Study of Globalisation. He said “We have more intense globalisation, more interdependence and therefore we need more global governance. We will never get global co-ordination without an institutional mechanism with sufficient teeth to make it credible and enforceable.”

This emphasis, on the importance of institutions, was reiterated many times during three days of the conference. We lack truly functioning, accountable institutions at regional and global levels which enable us to act ‘above the state’ in the interests of a world community.

Learning from Europe

The EU represents a highly successful model of economic integration, and much can be learnt from the role the Commission has played in sustaining its progress. The EU model may not fit all contexts, but the different regions of the world must begin to recognise the important role institutions play in the long term stability of economic and regional integration. It was vision that sustained the European Union through rocky periods, and it is vision that is needed to make regional integration work in the rest of the world in a way that leads to positive development outcomes.

Where next?

The discussion will go on, but at some stage conclusions must be drawn from the debate. The 11th Annual Global Development Conference brought a great deal of pertinent issues into focus. It was a fantastic platform from which to build. As Alan Winters, DFID’s Chief Economist said: “It’s very important that people from every corner of the globe should be discussing these issues together.”

The baton must now be passed onto participants and their colleagues around the world to continue discussions, to build consensus and to ensure that policy-makers get the message. GDN has invested a great deal in providing a platform for debate and open dialogue. We think that this produced a successful conference.

But this is just the beginning. GDN is ambitious, and wants to build on this; to capture key messages that were heard at the conference; and to achieve a consensus that will shape policy and drive positive change. The mandate is clear. Push on.

Gerardo della Paolera, GDN President

George Mavrotas, GDN Chief Economist.

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