The United Nations Conference on Trade and Development (UNCTAD) says rich and poor countries must change their economic policies in order to stimulate growth and prevent a resurgence of the problems that caused the recent financial crisis, and has warned that recovery of global output remains weak.
“Six years after the onset of the global economic and financial crisis, the world economy has not yet established a new sustainable growth regime. With an expected growth between 2.5 and 3 per cent in 2014, the recovery of global output remains weak,” UNCTAD says in its annual Trade and Development latest report.
Furthermore, the policies supporting the recovery are frequently inadequate, as they do not address the rise of income inequality, the steady erosion of policy space along with the diminishing economic role of governments and the primacy of the financial sector of the economy, which, according to UN organisation, are the root causes of the crisis of 2008.
Putting the world economy on the path of sustainable growth requires strengthening domestic and regional demand, with a reliance on better income distribution rather than new financial bubbles.
UNCTAD called on governments in industrialised countries to boost spending on social support systems, skills training and job creation as well as on infrastructure projects such as roads and schools.
Increasing government expenditure, the agency’s economists contend will have a knock-on effect on the private sector, cause firms to invest more and give people more confidence in their household’s ability to spend.
Richard Kozul Wright, Director of UNCTAD’s Division on Globalization and Development Strategies, said, “I think for us, a world of happy bankers, footloose corporations and stressed out households is a world that can neither be sustainable or inclusive. And if we continue with the kinds of policies that we’ve seen particularly in the advanced countries over the last few years, then that is the world that will continue and it ‘s a world that will produce booms and busts. It is a world that will be very vulnerable to financial crises on the scale that we saw in 2008 and 2009 and in that world, the people that lose out the most tend to be the most vulnerable,( and that’s true of the most vulnerable countries and it’s true of the most vulnerable populations within countries, so a business as usual strategy will not produce the sustainable growth that we need, and it will be a very unequal and ultimately, a rather volatile world.” UNCTAD is also advocating more international action to stop big corporations declaring their profits in countries with low taxes and indicating less revenue in countries with high taxation.
The UN agency says this tax manipulation and the use of tax havens by wealthy individuals, cost trillions of dollars.
Addressing the problem, the organization says, could earn developing countries much more than they receive in aid from wealthy nations.
Source : WAM News Agency for United Arab Emirates
