Ten Reforms to Make the World More Conducive to Development
By Paul
1. A “development box” in the WTO that legitimizes the use of trade and industrial incentives (including export subsidies) for developmental purposes (with burden of proof on those that argue the intervention is not developmental.
2. A recognition by the US, in particular, that prudential restrictions on capital flows (“capital account management”) in the developing world is an integral part of a development agenda.
3. Preparation of a “developmental impact statement” as a necessary requirement for any international agreement (including the costing out of the financial implications for LDCs, and laying out the modalities of how these will be financed).
4. Adoption of the “odious debt” notion, whereby debt contracts signed by oppressive regimes are no longer enforceable in Northern courts.
5. A 0.10% financial transaction tax on foreign currency transactions, with proceeds spent on global public goods.
6. Willingness to share information with LDC governments on Northern bank accounts held by LDC residents.
7. A temporary work permit scheme that allows workers from developing nations to spend 3-5 years in the advanced countries. (Revolving pool of workers; low and high skill; return important)
8. A multilateral agreement that disciplines the subsidization of DFI. (The only significant form of industrial policy that (a) is not banned; and (b) clearly transfers resources from developing to developed countries.)
9. Ending the monopoly of the World Bank in generating and disseminating policy ideas, particularly in the lowest income countries, by breaking it up into a number of competing agencies.
10. Moving the IMF’s Policy Development and Review (PDR) Department (and its staff) to a developing country, and rotating it in, say, among different African capitals every five years.
Those are list from Dani Rodrik.
See the rest of papers from the conference- Equality and the New Global Order, especially the one by Branko Milanovic.
Summary of Milanovic’s presentation by Jon Mandle at Crooked Timber;
“Does concern with global inequality require a different approach to international aid?
This presentation was very heavily empirical and gave an interesting insight into the theoretical difficulties of measuring inequality. He began by talking about the significance of the Gini coefficient and the extent of global inequality in income. But, he observed, any such measurement involves aggregation. So, if members of a wealthy country contribute to a poor country, it might turn out that some poor members of the wealthy country are subsidizing wealthy members of the poor country who are better off than they are. (See Rodrik’s example, above.) For many pairs of countries, this would be very unlikely to happen – there are few people in the poor country that have higher incomes than anyone in the rich country. But sometimes it might. For example, the wealthiest 15% of Chinese have a higher income than the poorest 5% of Germans. If we want truly progressive redistribution, we should have a way of measuring this likelihood. So, we need to take the internal distribution of a country into account. A progressive redistribution between countries should minimize the likelihood of regressive transfers. Furthermore, such redistributions should not make the national distribution more unequal. For example, even if the poor in a rich society are better off than the rich in a poor society, transferring from the former to the latter, although progressive, would increase the inequality within each country. The bottom line is that not only the richer, but also the more unequal a country is, the more it should contribute to the relief of global poverty.”
Related: World Inequality in the Second Half of the 20th Century