Unctad calls for rethink on export-led growth for developing countries

[CHIMO]

The United Nations tonight called for a re-think of the export-led growth economic model foisted onto developing countries in recent decades as it warned that austerity programmes risked a deflationary spiral and a deeper jobs crisis.

In its annual report, the UN conference on trade and development (Unctad) said higher wages and stronger domestic demand were the necessary ingredients for sustained growth. "The global upturn from what is considered the worst economic and financial crisis since the 1930s remains fragile, and a premature exit from demand-stimulating macroeconomic policies aimed at fiscal consolidation could stall the recovery," said Unctad secretary-general Supachai Panitchpakdi.

"A continuation of the expansionary fiscal stance is necessary to prevent a deflationary spiral and a further worsening of the employment situation."

The report said that after a contraction of 2% in 2009 – the fastest fall in global output since 1945 – the world economy would grow by about 3.5% in 2010, spearheaded by the three leading developing countries of China, India and Brazil. Africa's growth rate is expected to be 5%, with even faster expansion of 6% pencilled in for sub-Saharan Africa.

http://www.guardian.co.uk/business/2010/sep/14/unctad-export-trade-policy-rethink

[leveymg]

1. "Higher wages and stronger domestic demand were the necessary ingredients for sustained growth."

Sounds like a good idea. Let's try it.