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Washington
09 February 2009
The World Bank's chief economist, Justin Yifu Lin, on Monday repeated his call for coordinated global stimulus to get the global economy out of deep recession.
Lin told an audience at Washington's Peterson Institute for International Economics that two major issues much be addressed to prevent the global downturn from becoming even more serious.
"One, is whether we can overcome the threat of [trade] protectionism, or not," said Lin. "And second, is whether we have the wisdom to come up with some kind of decisive, large enough, coordinated fiscal stimulus."
Lin expressed concern that the commitments to avoid protectionism made by the leaders of 20 high income and developing countries last November might be eroding. A follow-up summit to the November Group of 20 meeting is scheduled for April in London.
Lin is the first World Bank chief economist to come from a developing country. Prior to assuming his position in June, he headed a research agency at China's Beijing University. He earned an advanced degree in economics from the University of Chicago.
The World Bank official wants 0.7 percent of the value of each country's economic stimulus package to be committed as assistance to the world's poorest countries. Lin said these countries need infrastructure projects that can promote economic growth.
"It's because high income countries don't have so many opportunities of those kinds of [infrastructure] investments," he said. "You make those investments in high-income countries, and the case of Japan [in the 1990s] is going to be repeated."
Lin said Japan found that its program in the 1990s for combating a weak economy and deflation through government spending was stymied by consumers who cut back even further on spending. Lin did not say whether he thought the same might occur in the United States, which is finalizing a program of some $800 billion in tax cuts and emergency government spending.
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