Macroeconomic Policy/International Trade

1. Macroeconomic Policy/International Trade KWABENA NYARKO OTOO

2. Macroeconomic Policy Objectives • In the last 30 years macroeconomic policy has focused too heavily on price stability • Having assumed full employment, macroeconomic management in particular, the use of fiscal policy measures has been rendered unnecessary • Again other important macroeconomic objectives including employment and growth itself have been neglected or treated as residual outcome of price stability • Linked to this is the continued assault on the state and the abiding faith in markets to solve all development challenges;

3. Macroeconomic Policy • The state has been weakened to an extent where it can no longer tax or act appropriately in guiding market outcomes • For much of the developing still mired in deep development challenges macroeconomic policy needs to be active rather than passive • Price stability is important but policies must not constraint growth and employment creation; • Fiscal policy must be rescued to fulfill the developmental needs of countries; • The state must be rehabilitated; to be able to tax and use revenues in the interest of citizens

4. International Trade • International trade as catalyst for development is well acknowledged • But the current framework/architecture for trade is difficult to defend; • The rules/practices are effectively rigged against the interests of developing countries; • The result has been the large trade imbalances that threatens the stability of the world economy; • Developed countries have huge trade-distorting subsidies particularly in products of exports interests to developing countries – agriculture products

5. International Trade • They keep promising to scrape the subsidies and continue to fail to deliver on those promises • At the same time, they continue to deprive developing countries policy measures necessary to shield their fledging industries from the harmful effects of the subsidies; • Concluding The Doha Round is necessary but not in its current form; • Multilateralism must be upheld; the growing spate of bilateral free trade agreement must be discourages as it undermines commitment to multilateral trade • Trade must not be used to deny developing countries the use of policy tools that served so well the development needs of countries in earlier times; • Developing countries must be afforded special and differential treatment and policy space recognizing their special development needs