Friday, April 3, 2009

G20 Summit, global recession, and Doha Round

So, the G20 Summit concluded today passing a communiqué that laid emphasis on fighting global recession ($1.1 trillion worth of arsenal at their disposal now), arming the IMF with more money and power, creating a strong regulatory framework, and resisting protectionism and promoting global trade and investment, among others. [Did you hear that British PM Brown said "the era of Washington Consensus is over."]

Here are new funding pledges:
  • $500bn for the IMF to lend to struggling economies
  • $250bn to boost world trade
  • $250bn for a new IMF "overdraft facility" countries can draw on
  • $100bn that international development banks can lend to poorest countries
  • IMF will raise $6bn from selling gold reserves to increase lending for the poorest countries
Rodrik argues "the era of the World Bank and the IMF being run by Americans and Europeans, respectively, is over. And good riddance too." Here is a post by Green. Krugman is happy that the outcome was better what he expected. Meanwhile, Dadush feels that it fell short of agreeing on "measures needed to respond to the grave global situation." Here is Subramanian on the G20 Summit.

This caught my attention:
We remain committed to reaching an ambitious and balanced conclusion to the Doha Development Round, which is urgently needed. This could boost the global economy by at least $150 billion per annum. To achieve this we are committed to building on the progress already made, including with regard to modalities.
The estimation of benefits of Doha Round has been of a considerable debate among researchers. Generally, it is now agreed that the earlier estimations were inflated. Here is a research done by Sandra Polaski from Carnegie Endowment for International Peace (CEIP) about the winners and losers from the Doha Round under different scenarios. The general equilibrium model showed that total gains from trade to be between $32-55 billion, with rich nations getting $30 billion; middle income countries like China, Brazil and SA getting $20 billion; and poor countries getting $5 billion (about $2 per head). Here is my earlier post on this issue. Check this one as well.

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