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We are at the start of what promises to be an unusually difficult year in the global economy. Policy decisions in the United States and other rich world countries will matter immensely for poor and vulnerable people living in developing countries. Fortunately, there are a number of fairly straight-forward policy initiatives that could make life less difficult for poor people in the developing world while also benefiting the majority in high-income countries. With that in mind, here is my partial policy wish list for 2009:
Avoid protectionism. And may the Obama Administration take a positive step: Offer permanent duty-free, quota-free market access for the poorest countries. That rich countries manage to avoid protectionist trade and industrial policies that would exacerbate the global downturn and be particularly disastrous for household income and unskilled workers (in textiles for example) in low-income countries. A U.S. loan to the auto industry is less bad than the French subsidies that are on the table. Simon Johnson has a good idea. He suggests that the G-20 monitor and report on proto-protectionist steps among its members on its Web site. Besides doing no new harm, how about the incoming Obama Administration proposing to the Congress permanent duty-free quota-free access for select low-income countries as suggested by Kim Elliott? That would put trade to work for development (on which the Doha round has been a flop up to now), at virtually no cost to U.S. jobs.
Get serious about development as one of the Three Ds. That the Obama Administration strengthen the development leg of the three-legged foreign policy stool (defense, diplomacy and development) which I have noted could be done at a budget cost of less than $10 billion per year, excluding new R&D in clean energy. This amounts to an incredibly big bang for the buck in restoring global respect for the United States, especially when compared to the hundreds of billions we spend on traditional "security" and defense. The $10 billion covers not only reform of U.S. foreign assistance but also development-focused policy fixes to U.S. trade, migration and climate change policy.
Modernize foreign assistance -- and take the lead on universal basic education. That the incoming U.S. administration and the new Congress work together to lay the foundation for a major reform of U.S. foreign assistance programs, and embrace innovations such as our Cash on Delivery (COD) Aid proposal. Also that the United States take leadership creating a Global Education Fund to promote universal basic education, recently proposed by Gene Sperling and others.
Reform governance at the IMF and the World Bank. That the current crisis breathe life back into officialdom’s efforts to reform the IMF and the World Bank, especially to reform their embarrassingly outmoded mid-twentieth century governance arrangements. Specifically, that the announced commissions on IMF and World Bank governance, led respectively by Trevor Manuel and Ernesto Zedillo go beyond the timid incremental fixes of the last couple of years (marginal increases in votes and a third chair on the World Bank Board for African countries). For example, how about getting the United States and Europe to publicly renounce their patronage privileges in the appointment of future heads of the World Bank and IMF, respectively? Or how about instituting special majorities (for an excellent exposition see also) for election of those heads, that would require, for example, a majority of country members as well as a majority of weighted votes?
Is this too much to hope for in 2009? Which of these wishes looks promising to you and which is a bridge too far? Since seven is the magic number for a memorable list, what would you add?
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.