Global Economic Cooperation

Global Governance is currently at crossroads. With the spectre of the 2008 financial crisis still haunting us, perhaps there is no better opportunity for the G20 to refocus on the Governance debate. The negotiations around the current international monetary system are a matter of paramount importance for the future of the global economy (Strange 1998).

The G20 is not able to move forward with reforms necessary to prevent future financial crises. Successes as in crisis management cannot be transformed into joint crisis prevention. The global regulation of financial markets, agreed upon at previous G20 summits, was intended to make the international financial system more stable and more resilient against future crises. Alas, the resultant expectations were unfulfilled. Likewise, we cannot expect meaningful steps towards a reinforcement of the global regulation of financial markets from this year’s G20 summit in Australia. At least as serious are the failure of the Doha Round and the incapability of the G20 to prevent it, despite the frequently voiced commitment to a multilateral order. The structural crisis in global regulation of today is not least the result of an asymmetric sovereignty in financial politics: States possess only marginal influence on international financial markets, but they are liable in times of crisis. The result is a re-nationalization of financial policies. At the same time, the increasingly critical perception of globalization, in particular in OECD societies, complicates the further evolution of the multilateral trade order.

The Government of India (GoI) notified the National Food Security Act (NFSA), 2013 on 10th September, 2013, which is understood to have come into force since the 5th July, 2013 (see section 1 of The National Food Security Act, GoI, 2013).

The National Food Security Act (NFSA) was passed in the Lok Sabha on 26 August, 2013 and by the Rajya Sabha on 2 September, 2013. The debate on the NFSA tended to be exclusively focussed on the Public Distribution System (PDS) though, in fact, the new law attempts to take a “life-cycle approach” to food security. It includes the Integrated Child Development Services (ICDS) scheme which is aimed at children under the age of 6 years, the Mid-Day Meal (MDM) Scheme for school-going children in the 6–14 years age group and maternity entitlements for pregnant women, along with the PDS. Under the PDS, two-thirds of the population will be covered—75 % in rural areas and 50 % in urban areas.

The paper analyzes various correlates of food security, viz. availability, access, utilization and stability in countries of Sub-Saharan Africa, South Asia and Latin America. Econometric estimates, based on pooled data (1990–2012 for over 40 countries), indicate that while regional variations do exist, nevertheless, broad conclusions can be drawn in terms of determinants of food security. While increases in GDP per capita, as well as its growth; improvement in infrastructure, food production, and access to better drinking water reduce both undernutrition, and the depth of food deficit significantly, food inflation (as also its volatility) has a significant adverse effect on food security. Also, increase in food imports as a percentage of total merchandize exports, in general, has a negative (though non-significant) impact. Given that access to healthy food is a basic human right, steps need to be taken to build resilience of the poor. It is in this context that the paper concludes from a broad policy perspective.

Food insecurity is a complex problem that needs to be tackled in a meaningful, coordinated and collaborative manner. Deep reforms attacking the structural weaknesses of the global food systems need to be introduced. This paper analyses the broad economic and regulatory measures that affect food insecurity with specific focus on agricultural productivity, subsidies and safety nets, surge in biofuel demand and variations in foodgrains stocks-to-use ratio. It is important for the world community to understand that many of the shocks and stresses to which the hungry are exposed are caused by their actions and thus the need for them to participate in formulation of agenda to enhance food security. Unfortunately, the developed world and international organizations focus narrowly on production, information and mechanisms to provide food security, rather than on the broader economic and regulatory measures that affect food security, viz. an appropriate biofuel policy and the desirability of maintaining an adequate stock-to-use ratio. It is in this context, that policy recommendations are proposed.

How to manage food price volatility has re-emerged as a hotly debated question. Much of this new interest is related to limitations of safety nets that became apparent in the 2005-food crisis in the Sahel and the failure of the global food system to prevent the food price spikes of 2007–2008 and 2010–2011 from impairing food security.

The productive forces of the first and the second industrial revolution were triggered essentially by the discovery and development of fossil fuel energy resources of coal followed by hydro carbons and their later transformation into electricity. The development of concerned new energy technologies converged upon newly emerging technology of transport and communication which had radically transformed human society by reducing spatial distance and effecting wide diffusion of knowledge, information and technology. However, fossil fuel based economic development has given rise to the alarmingly large accumulation of unabsorbed wastes and pollution in the ecosystems of the earth resulting in global climate change and many other adverse consequences. The need for transforming the global economy and society to control climate change and clean up the environment at local and global level has led to the development of the vision of a new era of Third Industrial Revolution. It is being envisaged that the third revolution would revolve around the development of renewables and hydrogen to replace fossil fuel in the electricity and the transport sector. The development of IT on the other hand would lead to the emergence of technology of both way flows of energy and information between the source of generation and consumption of energy, so that energy can be widely shared through an energy internet of smart grid of power and the efficiency of the energy system can be vastly enhanced. The paper outlines the vision of the third revolution and describes how this remains still an important but distant goal for G-20 countries particularly of India as of today. It focuses on the current energy scenario of India with reference to energy efficiency and fuel mix and discusses the potential of her renewable resources and the state of its cumulative realization as of now. It also gives in this context some long run projections of how far India’s economic growth can become low carbon by utilizing such opportunities in the time frame of 2031–32. Finally, the paper points out the major challenges that India and the global community will have to face in order to make the apparent distant goal of the Third Revolution realizable in a shorter time horizon and what kind of responsibilities would be involved upon G-20 forum to facilitate such transition to the new revolutionary era.

The recent global financial crisis initiated the most far-reaching and comprehensive reform of financial regulation in advanced economies since the days of the Great Depression. The international initiative under the aegis of the G20 was supplemented by major national level initiatives in major jurisdictions. The paper discusses the progress of what it considers to be the core reforms of Basel III, shadow banking, ring-fencing and financial institutions deemed too big to fail. It goes on to discuss the impact and relevance of these reforms in emerging markets who, while willing participants in the reform process, have so far not been actively engaged in the global debate, perhaps since their financial systems are fundamentally different.

The global financial crisis of 2007–09 has promoted a renewed interest in cross-border spillovers of financial stress shocks. Financial stress is a serious disruption to the proper functioning of financial markets that has adverse effects on real economic activity. The US subprime mortgage crisis developed into a full-blown financial crisis, spreading the financial stress quickly to the rest of the world. The underlying cause of the crisis was the combination of excessive risk taking by private sectors and the failure of public sectors to address systemic risks arising from market failures. In response to the crisis, internationally coordinated efforts have been made to increase the resilience of global financial systems by promoting a range of regulatory reforms. However, the question remains as to whether the global financial systems will become much more resilient by the ongoing reforms.

In 2008, there was a real risk of an upsurge in trade and investment protectionist measures, as governments sought to protect their economies from being ravaged by the financial crisis.

G-20 has consistently supported ‘open, rules-based, transparent and non-discriminatory WTO-based trading system’. It also called for successful outcome of the 9th WTO Ministerial Conference in Bali in December 2013.

This paper documents and analyzes emerging trade patterns in Asia, with special reference to the implications of global production sharing with a view to informing the policy debate on forming the Regional Comprehensive Economic Partnership (RCEP). The analysis reveals that the degree of dependence of RCEP countries on this new form of global division of labour is much larger compared to Europe and North America. Global production sharing has certainly strengthened economic interdependence among the countries in the region, but the dynamism of the regional cross-border production networks depends inexorably on global, rather than regional, trade in final goods. The findings of this paper make a strong case for a global, rather than a regional, approach to trade and investment policy making.

The growth performance of the Indian economy since the economic reforms of 1991 has been widely acclaimed as a validation of the benefits of shifting from a controlled economy to a market-driven one.