Daily Independent (Lagos)
Mojeed Jamiu
17 November 2008
Central Bank of Nigeria (CBN) Governor, Chukwuma Soludo, and nine other economists have been appointed as members of the United Nations think tank on measures to deal with the global economic crisis.
They will also ponder the reform of international financial institutions.
Joseph Stiglitz, winner of the Nobel Prize for Economics in 2001, who is a former chief economist of the World Bank, will chair the panel which will suggest steps UN members could take to stabilise the world economy.
The panelists were named at the weekend by UN General Assembly President, Miguel d'Escoto, who had warned last month that "there is growing recognition that the current turmoil in the financial system cannot be solved through piecemeal responses at the national and regional levels but requires a coordinated effort at the global level" which only the UN can provide.
Other members of the panel include Jomo Kwame Sundaram, Assistant Secretary General for Economic Development and the UN Department of Economic and Social Affairs (DESA); Jose Antonio Ocampo of Colombia, former Under-Secretary General for Economic and Social Affairs; Y.V. Reddy, former Reserve Bank of India Governor; Zeti Akhtar Aziz, Malaysian Central Bank Governor.
Jean-Paul Fitoussi, professor of economics at Institute d'Etudes Politiques de Paris in France; Avinash Persaud of Barbados, Chairman of Intelligence Capital Limited; Eisuke Sakakibara, a professor at Waseda University in Tokyo; and China's Yu Yongding, Director of the Institute of World Economics and Politics.
Soludo's appointment comes on the heels of the consolidation of Nigeria's financial sector three years ago that has helped to reduce the effects of the global financial meltdown on the Nigerian economy.
The CBN has injected about N1.7 trillion into the system to cushion such effects.
Soludo has predicted that the world economy may not survive the crisis, as it is the beginning of a long period of economic instability that requires policy makers to create an inclusive and responsive globalised capitalism.
He said from the cost of government interventions around the world, the other indirect costs of the crisis could run into several trillions of Dollars in income lost millions of people plunged into poverty for a generation, especially in developing countries.
"That one country could cause a crisis of this magnitude and many countries with sound fundamentals also plunged into a crisis because of the contagous effect, and then the rich ones bail themselves out because they have the resources to do so while the least developed countries suffer the long-lasting effects of the crisis, is a market-cum-system failure of global proportions."
Soludo argued that the analytical tools for understanding and managing the current system are inadequate, and the national and global governance infrastructure for resolving or even preventing a recurrence at best obsolete.
"The pace of financial and economic globalisation appears to have outstripped the pace of the theory and institutions that underlie it. No patchwork will do: a new economic thinking and a New Deal by way of fundamental institutional and governance architecture are urgently needed."
He called for a new economic theory that could effectively tackle the crisis, saying policy makers have to understand each other's economic theory to fashion solutions.
"One lesson of the current crisis is that policy makers can indeed deepen the crisis by the way they react to it. My hypothesis is that much of the global crisis was aggravated by the panicky reactions of the policy makers. Politics and grandstanding often take over from sober and sure-footed response.
"Politicians, under pressure to be seen to be sensitive to the suffering masses, sometimes behave like a panicky doctor in an emergency room who literally decides to administer all the drugs available to a convulsing patient in the hope that, with the cocktail, there is a chance that one of the medicines could get to the ailment."
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Well deserved appointment. Congrats, Soludo.