Transcript
THE ROLE OF THE BANK (2)
For years, the compass that guided the economies of the region was the Washington Consensus, the recipe to adjust those economies to the demands of globalization and free trade.
But today, the results of this recipe have divided the world’s most renowned economists.
And after many of them participated in a gathering sponsored by the Inter-American Developing Bank’s Annual Meeting, the only consensus that remains clear is that there exists no such consensus.
This has triggered an intense debate about the role international lending institutions, like the IDB, play in the development of the countries they are devoted to.
Winner of the Nobel Prize for Economics Dr. Joseph Stiglitz insists the Washington Consensus has profound flaws and stressed the point that what is needed is a greater autonomy for countries to decide their individual economic futures.
Dr. Joseph Stiglitz -
Professor and Winner of the Nobel Prize for Economics
“I think one of the important lessons has been that quite often in Washington there is less of an understanding of the real problems in the developing world. There was an attempt to impose a set of policies from Washington on the developing world. I think there is a recognition now that there needs to be more scope for policy making in the country itself, not dictated from Washington.”
Dr. Stiglitz added trade increases do not necessarily mean that prosperity will also increase, when in fact, more often than not it means that the rich get richer through private monopolies.
Dr. Joseph Stiglitz “So, if you are going to have a response to globalization, make sure that you can take advantage of what you can do, but you also have to accompany it by very strong social programs. And that’s what has been left out of the formula of the past.”
This formula, says Dr. Stiglitz, has undermined the developing world’s democratic foundations despite the fact its original intention was the complete opposite.
But another Nobel Laureate, Dr. Douglass North, countered by saying it is essential that for this autonomy to work, there must be competent governments.
Dr. Douglass North-
Professor and Winner of the Nobel Prize for Economics
“And political economy is essential because you’ve got to have a theory and a set of policies that recognize when the government does a good job and when it rent-receives, and there are a lot of rent-receiving.”
Besides experts from throughout the region, this intense debate attracted top Brazilian officials, including Vice-President José Alencar Gomes da Silva, who emphasized the power of adaptation of institutions such as the IDB to create developing formulas.
José Alencar Gomes da Silva -
Vice-President of Brazil
“The IDB’s 47th annual meeting is a unique opportunity to discuss the realities of globalization, which already is irreversible. The question for our countries now is how to find the best way to insert ourselves in this process, a process with weaknesses and strengths.”
The region no doubt needs a new recipe. And perhaps, the first ingredients have already been found here, in Belo Horizonte.
| 
