Trade and Development Report, 2010
|Developed countries||US$ 55|
|Developing countries||US$ 27.50|
|Least Developed Countries||US$ 13.75|
The Trade and Development Report 2010 focuses on the need to make employment creation a priority in economic policy. Unemployment is the most pressing social and economic problem of our time, not least because, especially in developing countries, it is closely related to poverty. The fallout from the global crisis has exacerbated what were already sluggish labour markets in most countries even before the crisis erupted.
The Report warns that a premature withdrawal of macroeconomic stimulus measures to expand demand in developed countries may trigger a deflationary spiral in the global economy, with attendant slumps in growth and employment. Furthermore, the pattern of the recovery resembles that of imbalanced global demand growth that contributed to the build-up of the crisis. The lack of macroeconomic policy coherence among the major economies causes global current-account imbalances to re-emerge. This, together with other remaining systemic shortcomings, such as insufficiently regulated financial markets, carries the danger of a double-dip recession.
On the way towards recovery, it is becoming clear that not all countries can rely on exports to boost growth and employment; more than ever they need to give greater attention to strengthening domestic demand. This is especially true today, because it is unlikely that the United States´ former role as the global engine of growth can be assumed by any other country or countries. The shift in focus on domestic-demand-led growth is necessary both in developed and emerging-market economies in order to prevent the recurrence of imbalances similar to those that contributed to the outbreak of the global financial crisis.
UNCTAD draws attention to the importance of strengthening the macroeconomic policy framework to promote sustainable growth and employment creation in both developed and developing countries. Job creation for absorbing surplus labour would result from a virtuous circle of high investment in fixed capital leading to faster productivity growth with corresponding wage increases that enable a steady expansion of domestic demand. Especially for developing countries, this implies a profound rethinking of the paradigm of export-led development based on keeping labour costs low. Policies should be based on establishing a balanced mix of domestic and external demand.
The Trade and Development Report 2010 makes recommendations for a reorientation of macroeconomic policies and institution building aimed at strengthening domestic demand. This would require monetary policy to keep interest rates low in order to facilitate the financing of fixed investment, as well as a well-conceived countercyclical fiscal policy. Appropriate monetary and fiscal policies should be combined with incomes policies which ensure that mass incomes rise in line with average productivity growth and a national inflation target. The adoption of such an incomes policy would involve a set of instruments and institution-building measures, such as collective bargaining arrangements among workers´ and employers´ associations, minimum wages or public employment schemes.
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