ABSTRACT
We seem condemned to live in interesting times. The rich nations in the global economy (the global North or OECD countries) are mired in recession, while at the same time yet another apparent shift in the global balance of economic power (towards ‘emerging’ economies) is the subject of considerable chatter amongst economists and within business circles. The current economic crisis is of considerable import, not just because of its size and magnitude, but because it has been accompanied by a change in the macroeconomic policy orthodoxy in the form of a quiet Keynesian counter-revolution which emphasizes counter-cyclical macroeconomic policies instead of inflation control. We employ the expression ‘quiet’ because there is no return to the earlier post-Second World War commitment of full employment, and fiscal and inflationary profligacy continues to be universally frowned upon. We also speak of another apparent shift in economic power, because present events such as the rise of Brazil, India and the enormous ‘surpluses’ of China are similar to the rise of the Asian Tigers, and the experience of the surpluses of Japan and West Germany in the global economy a quarter of a century ago. Could it be that the so-called global imbalances, mainly attributed to the USA’s current account deficit, which has existed since the 1970s, but accelerated during the 1980s (Edwards 2005) constitute a tribute exacted by the United States, the world hegemon, allowing it to absorb much more than it produces? Be that as it may, the current recession was expected to affect developing countries much less than their developed counterparts, and many developing countries, particularly in Asia are only experiencing a decline in their (positive) growth rates. 1
