Wednesday, May 30, 2012

How to Save the Global Economy: Spend $1 Trillion on the Future

It may seem obvious, but three years and counting into the economic crisis we need to say it: An economy that's not growing fast enough will struggle to pay its bills and create jobs. And that's exactly what's happening. Growth in the developing world, while still well above that of advanced countries in 2011, was hit hard by the extreme volatility in international financial markets, which in turn hurt domestic demand in many emerging-market economies and also had spillover effects in terms of capital flows and trade. Meanwhile, the International Labor Organization estimated a 2011 global unemployment rate of 6.1 percent -- that's 203.3 million people out of work.

Clearly, something must be done -- and here's an idea that could benefit economies large and small, wealthy and poor: a massive global investment in infrastructure, financed with the creativity required in this age of austerity and aimed at jump-starting growth.

Higher growth can only be realized through worldwide investment, yet as long as factories continue to carry spare capacity and homes and office buildings remain vacant, the private sector is unlikely to lead the way. Governments must play an active role, and the solution could take the form of a global infrastructure investment initiative of at least $1 trillion. A worldwide initiative of this type has not been attempted before. There are, however, proposed infrastructure plans for East Asia, Europe, and the Middle East. We should make these plans real, and global, by building consensus among multilateral development institutions, as well as through the G-20 and other important groupings. Read more.....

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