Crisis and the Developing World

Refusing to emulate the response of big economic players to the current credit crisis, the three countries representing three big continents have argued that the developing economies should evolve their own approach, and there is no such thing as uniformed diagnosis for the ills around.

With a combined population of 1.3 billion and their economies growing at a phenomenal speed, the three emerging giants called for reforms in the global economy. The IBSA have rightly pointed out that the ‘haves’ and ‘have-nots’ need to sit down and do an appraisal of ‘what really went wrong’. They should also need to see what can be done to avoid such disasters in future.

The Keynes economy cannot withstand a 1929-like Crash. Nor are there any Roosevelts around to come up with a New Deal. Extreme poverty, unwarranted wars and climate change pose enough dangers to our survival. The dictum of one-size fits all, imposed on parts of the world by the Western economies, needs to be done away with. The ongoing crisis necessitates a dialogue to establish a coordinating mechanism on global financial crisis. Brazil’s President Lula da Silva minced no words in saying that extra care needs to be taken on the part of the developing economies as they “are sellers” and depend on the largesse of the West.

Expecting the US and Europe to act now -- 10-months after they failed to respond to the sub-prime crisis -- is a bit too much. Rather than banking on the West, developing countries should ensure that the Doha Trade talks are negotiated successfully, and a new equilibrium is introduced to promote growth-inclusive development. The need of the hour is to set in motion reforms that include stronger systems of multinational consultations and surveillance. The financial travails of the West should not be allowed to affect the whole world. It may be time for the developing world to lead from the front.