Jeffrey Sachs, on a visit to Bucharest, makes an X-ray of the world economy
More than a decade after the outbreak of the world economic crisis, which forced the world's biggest economies and the European Union as a whole to test their reaction capacity and manage an exceptional situation, the renowned American professor Jeffrey Sachs traveled to Bucharest at the invitation of the Romanian authorities, where he made an X-ray of the world economy. In his opinion, these are some good times for the world economy, and a new crisis in the near future can only be generated by the political leaderships of the world's states and not for reasons that have to do with the economy: "If there is a crisis coming, it's because of bad leadership. There's no reason for a crisis right now. All of the major regions, the US, Europe, China, India, are doing fine."
In other words, the world economy is looking well, but it all depends on the decisions made by the world leaders. The US is in a situation in which its economy is growing but its population is not doing any better. The population's living standards have been dropping by the year, people are unhappy and life expectancy rates are also dropping, said professor Sachs, who is known for his criticism of Donald Trump. In his opinion, economic crises are the result of pursuing the wrong policies, and there is a clear danger of that happening at the moment.
On the other hand, says professor Sachs, there is a positive and interesting global economic agenda that includes the use of new technologies to create more prosperity, end poverty and create a world economy based on renewable energy. He says the GDP indicator no longer reflects accurately what is happening in the economy and in society, such as air pollution and quality of life in general. Professor Sachs says economic growth can simply be confiscated by a handful of people or companies. He stresses that what's important is people's lives and prosperity and urges countries to cooperate and ask themselves what kind of world they want to live in and whether they want to live on a planet of peace, prosperity and sustainable development. He says our political action must be centred on the world we wish to create.
Considered one of the most important international experts in the fields of economic development and poverty reduction, professor Sachs has urged Romania to plead for a strong European Union, to remain an open economy and to increase its investments and channel them into sustainable development projects: "Romania needs a strong public and private investment effort, it needs that investment to be in the direction of sustainable development, meaning renewable energy, advanced technologies, movement towards electric vehicle, for example, as a basic new area of priority, sustainable infrastructure with a good connectivity, of course maintaining a long-term fiscal policy which enables this long-term investment. In today's modern economy, the key to long-term development includes a good-skilled workforce, excellent universities, linkages between business and universities and openness to foreign partners and foreign investors who helped to create international markets. So from Romania's point of view, in thinking about regional development, I think it would be important to ask the questions about regions, what kind of skilled development, what kind of infrastructure, what kind of links with international markets, what kind of success in attracting foreign investment partners and what should be done in public policy to ensure that all regions can benefit."
From the standpoint of business leaders in Romania, Romania's economic growth model, largely based on consumption, is not quite appropriate. A recently-published specialized survey has shown that more than 90% of them share this opinion. As for Romanian companies, 85% of them see their investments plans in jeopardy, because of fiscal uncertainty, according to the research carried by the Ernst&Young Romania.
With details on that, here is the research coordinator with the aforementioned institution, Mihaela Matei: "The main conclusion pertains to a general atmosphere of suspicion and concern on the part of organization leaders in Romania regarding this year's economic growth, the growth model based on an increase in consumption and the country strategy. In effect, 99% of the respondents would like the country strategy to be based on sustainable economic growth and would like the structural gaps between Romania and the Western European countries bridged "
IMF experts have also come to Bucharest and recommended a balanced mix of monetary and fiscal policies and support for investments, so that last year's growth rhythm be maintained. The IMF representatives have underscored the relevance of having an improved budget collection system and of maintaining public spending within sustainable limits. The Romanian government estimates an 6.1 % economic growth rate in 2018, based on investments, mostly from European funds.
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