While the developed world hustles to minimize the damage from the deepening economic crisis, developing countries have been mostly ignored. Yet it is precisely those poorer countries – and their hundreds of millions of people living on the knife edge of desperation – that will be most at risk in the coming weeks and months.
As the downturn leans into its second year, the international community is finally taking note. Earlier this week, the United Nations Human Rights Council urged developed nations to protect those most at risk during this crisis. Its draft solution may not solve the problem, but it's certain to draw attention to a very real concern.
The next day, Columbia University economics professor Joseph Stiglitz spoke about the impact of the financial crisis on global development as part of the United Nations University's speaker series.
"The problems are far deeper, surely, than we've seen so far," said Stiglitz, former chief economist at the World Bank. "The financial crisis is symptomatic of a deeper macro-economic crisis."
The Nobel laureate highlighted the need to fix the underlying problems or face more debilitating hurdles internationally.
"While the financial crisis began in the US, it's now reverberating around the world, including developing countries," said Stiglitz. These countries don't have the funds to enact stimulus policies like those of the West.
"If we don't give them the resources, they won't be able to stimulate their economy and global imbalances will be exacerbated," Stiglitz explained. On the other hand, "Europe and Japan have offered substantial increased funds to the IMF, but if those loans to developing countries are marred by the policies of the past, it will be counter-productive."
Stiglitz went one step further.
"I think we're going to come to a realization that the institutions that we created 60 years ago are not up to the task," he said, before proposing a new, more open-minded international credit facility as part of a "new global architecture."
In a recent interview with Devex, author of best-seller "The White Man's Burden" and New York University economics professor William Easterly acknowledged that the financial crisis would slow developing country growth yet thought it might provide an opportunity.
"How do we make aid even more effective to cope with this additional suffering?" wondered Easterly. "All those people who were spending all their energies campaigning for more aid money, well, maybe they should join those of us who've been campaigning for more results out of the same amount of money."
Posted to Devex.com on 26 February 2009