For Your Eyes Only: Three Jobs Not to Defer in 2013
IMF Blog, January 2, 2013
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- Authors: David Lipton
- Published: January 2, 2013
Overview and near-term policy priorities
- Policymakers need to "carry on supporting growth while correcting imbalances" by:
- providing accommodative monetary policy;
- striking a balance on fiscal adjustment—tightening where possible but taking care to support short-term growth;
- completing banking sector cleanup and making financial systems safer;
- implementing reforms to boost productivity and growth potential.
- A rebalancing of global demand toward dynamic markets, including emerging economies, should complement these efforts.
- Policymakers face the immediate challenge of finding the right balance between satisfying peoples’ high expectations and carrying out tough decisions to bring public finances under control and restore the strength of weakened financial systems.
Long-term strategic imperative: globalization with convergence
- Shift focus from the "development challenge" to the "convergence challenge": help emerging and developing countries achieve growth trajectories that produce sustained convergence of living standards toward rich country levels.
- Key components of convergence:
- modernizing economic structures and institutions (including supportive political institutions) to foster growth and employment;
- adapting to new technologies and their global dispersion;
- strengthened policy coordination—from financial market regulation to taming externalities such as carbon emissions and pollution.
- Acknowledged friction: continuation of shifting patterns of production and demand will bring rising living standards in emerging economies but disruption in advanced economies.
Three long-term issues requiring more attention and action
- Encourage and help countries modernize economic structures and institutions that are crucial to fostering growth and employment.
- Harness the technology and growth nexus so that countries can stay competitive and create, not destroy jobs.
- Face up to the challenges of climate change. With global warming continuing, a failure to mitigate emissions will bring costs and hardships that will likely prove irreversible.
Structural reform priorities and regional notes
- General reform directions:
- make labor markets more responsive to enterprise needs while more inclusive for employees;
- increase competition in product and service markets (notably in Europe but also elsewhere).
- Euro area priority: implementation of all the steps needed for both a fiscal and banking union.
- Regional highlight: challenges are particularly acute in the Middle East and North Africa, where countries must boost medium-term growth while stabilizing economies in the short term.
Technology, jobs, and competitiveness
- Technological change is profoundly affecting the relationship between people and their contribution to economic growth.
- Policy trade-off: invest in technology to stay competitive while managing implications for wages and jobs.
- The spread of mobile computing and pervasive computing expands possibilities and shifts business models, affecting cost, investment, and employment decisions.
Climate change: risks and policy actions
- Climate change and global warming pose real risks to economic performance, especially for countries least able to cope, by increasing the number and frequency of major weather events.
- Example statistic: Hurricane Sandy costs "climbing close to $70 billion" for damage to New York and New Jersey alone.
- Recommended policy steps:
- end fossil fuel subsidies in all countries;
- implement strong, credible carbon pricing to encourage conservation and use of cleaner fuel and to contribute to sounder public finances;
- pursue newer technologies to mitigate and adapt to climate risks.
- Observation: Progress on climate action has been "much too slow."
Conclusion: collective action and outlook
- Success requires governments, civil society, and the private sector to act now.
- While long-term issues could mean a more unstable outlook, negative outcomes are not inevitable.
- Coordinated efforts can enhance economic potential through technology and policy, achieving sustained and balanced growth.
- At the start of a new year, the imperative is "to look up and look ahead."
Source: For Your Eyes Only: Three Jobs Not to Defer in 2013 — David Lipton, January 2, 2013
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- Только для ваших глаз: три задачи в 2013 году, которые нельзя откладывать, Дэвид Липтон