Avoid mistakes of the West: Stiglitz
Kingdom needs its own growth model, must opt out of TPP, Nobel laureate advisesEmerging markets including Thailand, other Asean countries and China should "decouple themselves from Western markets", Nobel laureate economist Joseph Stiglitz said during a speech in Bangkok yesterday.
To be able to grow, emerging markets must be less dependent on exports, boost domestic consumption and find their own model of sustainable economic growth, the US economist said.
Stiglitz said the most serious questions facing the global and regional economies were whether the euro zone would survive; whether the European Union would drop the austerity policies that have caused recession and switch to a policy of growth; and whether the US will be able to move beyond its current gridlock. Stiglitz expected not more than 3 per cent growth in the US in the near future, adding that the country needs to reduce its significant unemployment level. But full employment was not in sight this decade, he said.
"It's going to be a long time before we can get back to what I may call normal," he said.
He also expected emerging markets, China in particular, to be able to decouple their economies from Western economies and develop in a sustainable way.
Stiglitz was speaking during an on-stage interview with Nation Multimedia Group chairman Suthichai Yoon. He earlier gave a lecture on the global economic outlook as part of an international academic seminar at Dhurakij Pundit University.
The Nobel laureate opposes austerity measures, saying they had proven to lead to recession and depression. To avoid repeating developed countries' mistakes, newly emerging economies should invest in education, technology, the environment and public health and find a sustainable model of economic growth, he said.
"Focus on quality of growth, environment, living standards and how the benefits are shared," he said.
US innovations had contributed in part to the country's current economic instability. The innovations were created to save labour costs, but now unemployment rates are problematic, he said.
The US and European countries, as well as Japan, also need structural and educational reforms, but implementing them was difficult now that they were facing economic problems, Stiglitz said.
"From the point of view of the region and from the point of view of the planet, it's going to be very important for China to develop a new model of economic growth, because if it imitates the economic growth of the United States based on [unchecked] consumption and material goods, our planet won't survive," he said.
Discussing the problems in the euro zone, he voiced opposition to the idea of a common currency - a direction in which Asean might be heading.
"If you go down the common currency [route], that is a bad idea. You need to talk about Asian cooperation," he said. "Sharing a currency takes away the ability to adapt, to adjust," he said.
"A common market is a good idea; while the issues of the market are relatively small, they can still benefit from economy of scale."
Stiglitz said corporations' lobbying of politicians was standing in the way of resolving economic problems.
He also warned that the Trans-Pacific Strategic Economic Partnership (TPP) that the US is trying to reach with other countries is dangerous.
"While negotiations are behind closed doors, cooperation is on the table," he said.
Drug companies, for example, are among the corporations lobbying politicians in secret negotiations, he said.
"The objective [of drug companies] is to make profit. The way they do this is to make you pay high prices even though the basic research is paid for by the American government," he said.
"They are very bad for the development of generic drug industries. Thailand is one of the good countries in this area. It would be a mistake for you to give up on that. And if you join the TPP, you will have to," he said.
During his visit to Thailand last year, US President Barack Obama tried to convince Thailand to join in the TPP.