Pier Carlo Padoan - Chief Economist and Deputy Secretary-General of the Organisation for Economic Cooperation and Development; OECD, 2, André Pascal, 75775 Paris Cedex 16, France; E-mail:oecdmoscow@oecdmoscow.org  

Abstract

The author of the article analyses possible development scenarios of developed and developing countries in the course of implementing measures for overcoming current economic disbalances with due account of national context and global agenda. In conclusion the author looks at the G20 role in transition to sustainable growth.Long term growth will not come without imbalances. Current account imbalances are set to widen again as savings will rise above investment in emerging economies. Structural reforms that improve social security systems will help address imbalances by lowering saving in emerging surplus economies and could increase investment through product market liberalisation (especially services) in surplus advanced economies. The key point is to recognize that structural policies that impact one variable of growth, can have unintended consequences on other variables, such as equity. These unintended consequences need to be taken into account. Likewise, an important dimension of budget consolidation, not least for its political feasibility, is the extent to which it distributes the burden fairly across tax payers and benefits recipients. Such trade-offs will have to be taken into consideration in the definition of long term policy strategies.

The author argues that both national and international economic policy will be successful in overcoming the crisis if it manages to solve effectively both short-term and long-term problems.