Many analysts have supposed that either China alone or the developing countries as a group will be economically strong enough to pull the world economy out of recession. This policy brief takes issue with that assumption by closely examining the data on historic and projected growth rates. Its conclusion is that although developing countries are becoming more important as an engine of global growth, recovery from the current downturn will have to depend on growth in the US and Europe and not primarily on the emerging or developing economies. To enable developing countries to play a more beneficial role in aiding global recovery, the international financial institutions could play a role by supporting coordinated lending programs to groups of developing countries in such a manner that the economic spillover effects are maximized within each region, thus strengthening growth and demand. This would be a helpful policy measure.
Developing Countries – even China – Cannot Rescue the World Economy
Policy Brief #18