The United Nations is forecasting contraction in world gross product for 2009 by -2.6 percent. This is a serious decline from an average growth rate of 3.8 percent between 2004 and 2007. Most of the decline in growth will be felt by the developed economies, the economies in transition and the Latin America and Caribbean region. While the rest of the developing economies will be posting some growth, these figures will be much lower than the previous years. These statistics make for a compelling argument for all governments to respond to the crisis at hand. The scale, depth and severity of the crisis additionally requires that responses be coordinated in order to ensure that everyone benefits from combined action.
Double Standards: Unequal power and unfair rules
Looking at the ways in which the governments of the world have responded demonstrate clearly the unequal capacities of state institutions across the world to deal with the impact of the crisis. One factor is the policy space available to government.
Policy space has been discussed in relation to how international agreements can place limits on the policy options available to a government. In other instances, it is a governments’ dealings with international financial institutions that place limits through, for example, the use of policy conditionalities attached to loans or grants. Behind the policy conditionalities associated with IFIs is a decisionmaking structure based on equity shares controlled by developed countries. These undemocratic structures have become a symbol of the unequal global distribution of political power among nation-states …