with the support of the Economic Policy Institute (EPI)
Washington, USA    |    5 October '09

The one-day informal working session co-organised by FEPS and the Economic Policy Institute (EPI) brought together more than 20 economists from all over the world to discuss the issue of economic recovery and international sustainable development.

The morning session served as a general assessment of the current situation after the first stimulus packages, where the representatives of Africa, Europe, India, North- and South-America all agreed that further stimulus is urgent in order to speed up the recovery process and avoid a W-shaped recession. Currently it seems that the primary factor for recovery is employment, otherwise there will be a downward spiral again. Recent upward growth signs do not mean that exit strategies are executed. The fact is that employment has not recovered yet. As this crisis is not just a slow down, but it is also a systematic crisis, it is necessary to talk about the new market model and about transformational reforms instead of only finding scapegoats on fundamental issues without changing the system itself.

In the afternoon, concrete examples of policy responses for stable growth and decent jobs were introduced and discussed, with a focus on unemployment benefits, wage subsidies, public employment programs and tax regimes. Opinions were more diverse on these issues, but the main difference is based on the fact that in some countries, like in the USA and Canada, public deficit is looked at as a sign of irresponsible government, whilst for example in Europe other factors, like diminishing the unemployment rate, are in the forefront.

In the concluding session the rise of new economic powers was at the center of the discussion. These countries represent an entirely different economic model, mixing capitalism and state, which hardly fit into Western conceptions. Nevertheless, it is important to have good bargaining between Europe, the US and these new powers, otherwise European and American industry will go down. Naturally, on a long term this is also not the interest of these countries. It has to be noted that the history of diplomacy is full of miscalculation. The other main issue of the debate was climate change. Global warming is the market’s biggest failure and we have to take responsibility to stop this process. It was suggested that citizenship at global level would increase the concern about environmental issues. The establishment of a network named “International Cooperation for a New Growth Model” was recommended which should discuss and exchange experiences on the key issues for bargaining, like the means for recovery, tackling climate change, promoting social standards and managing migration.