Who should take the lead in getting international trade and the Multilateral trading system back on track?
Can developing countries carry the world economy? Yes; few developing countries are as indebted as the G3, they are headed for strong growth, the quality of policy making is improving significantly in many developing countries and tech transfer as a consequence of inclusion in international production networks is spurring development. Developing countries already (or still) experiencing growth should not be held back and have to wait around for the developed world to get back on track and take the lead in the world economy.
IMF leaders, Still a white boys club?
However, although quality of policy is improving many developing countries still lack a sustainable growth strategy. As an example Rodrik mentions China and the ongoing “currency war”. The world has put up with China’s subventions of their exports through an undervalued currency and this fact has largely been the reason to China’s unmatched growth rates. It is however unlikely that the world will put up with these subventions much longer and force an appreciation of the renminbi. An appreciation of the renminbi might effectively put a halt to China’s enormous growth.
Like noted by Dr Razeen Sally here at the LKY SPP a few weeks ago Professor Rodrik is worried about the lack of leadership not only in the WTO but also in global institutions like WB and IMF. However, Professor Rodrik takes it one step further and calls China, India and Brazil for free riders, unwilling to take lead and responsibility to get the world economy back on track regardless of their own increasingly important place in it. Are the emerging markets selfish or just immature in the leader’s role and in lack of sustainable international growth strategies?