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Zoellick: The developed world’s going to have to solve the developed world’s problems

Marketplace Staff Sep 19, 2011

Zoellick: The developed world’s going to have to solve the developed world’s problems

Marketplace Staff Sep 19, 2011

Kai Ryssdal: Just because there aren’t enough macro-economic policy discussions happening right now in Washington D.C., there’s this on the agenda this coming weekend: A meeting of the world’s 20 largest developed and developing economies — the G20, as it’s known — and annual meetings of both the International Monetary Fund and the World Bank.

Robert Zoellick is the president of the World Bank. Good to have you with us.

Robert Zoellick: Glad to be with you.

Ryssdal: You gave some, I wouldn’t say harsh but I would say fairly pointed remarks, this morning about what the developed economies need to do — the United States, Europe and Japan — to get this crisis solved. Is it your sense that anybody’s listening?

Zoellick: Oh sure. People are very aware of the nature of these problems, but we’re starting to see some contagion to developing countries. And prior to August, the developing countries has been providing about half of global growth. So if this expands to developing countries, it’s going to push the whole world system into more difficult straits.

Ryssdal: Well let me ask you about that, because we were talking the other day on the broadcast about the BRIC countries — Brazil, India and China, specifically — actually volunteering to help out with the European mess and maybe buy some bonds and do what they can. What is the World Bank’s role as developing countries start helping out the developed world?

Zoellick: Well the developing countries are helping out the developed world simply by growing and by having good economic policies. And that flows through with trade effects; for example, their investments in infrastructure use a lot of U.S. and developed world equipment. On this idea of a bailout by developing countries, frankly, I think that’s been oversold. The developed world’s going to have to solve the developed world’s problems.

Ryssdal: The Europeans are going to have to solve the European problems, and we’re going to have to solve ours?

Zoellick: That sounds like the way most problems get solved, doesn’t it?

Ryssdal: Yes, but there’s this whole globally interconnected economy that we keep talking about.

Zoellick: Well look, let’s take the eurozone. The eurozone up to now has been putting financing in to try to help countries that can’t sell their debt, to try to support the banking the system — that is very important, but it fundamentally buys time. What the eurozone is going to have to do is deal with the interconnected problems of sovereign debt, and then for some countries, their overall competitiveness. Now what this means is that when the European Monetary Union was formed some-20 years ago, people left off a piece: the idea of whether they would have a complementary fiscal union. Now, these are decisions that only Europeans can make, they’re very political. But my message is we’re coming to a crunch point here, and they’re going to have to decide whether they’re going to create a complementary fiscal union or they’re going to have to prepare to deal with the consequences for members that are uncompetitive and have too much debt. The United States is also going to have to deal with, not necessarily cutting entitlements, but slowing the rate of growth of entitlements.

Ryssdal: I appreciate your message, but do you believe there’s a political will either in the European capitals or in Washington, D.C. to make these incredibly difficult choices?

Zoellick: I know there’s always the suspicion that democracies can’t decide. I worked on German unification in 1989, ’90 — that was a rather big issue and the Germans stepped up. So I really do think this is a question of leadership, and I happen to believe, having been involved with policy as well as politics, that in moments like this, the bold decision can also be good politics.

Ryssdal: Let me ask you about another thing the World Bank was out with today: a policy paper showing that we’re not doing enough to get women advanced in the global economy and, in fact, it’s a great detriment to solving a lot of the development problems we have in this economy. Why is it that we can never recognize the contribution that women make economically, and make decent policies about that?

Zoellick: Well what we hope this report that we just released will change that, because it shows in very practical terms how if you simply change some of the rules, some of the inhibitions — allow to women to own property, have access to inputs in agriculture in Africa — that you can increase productivity very significantly. So the basic logic starts out that if you’re a country that wants to grow and you want to get the full benefit of your public, you can’t ignore 50 percent of your population.

Ryssdal: Is this the moment with the global economy facing so many other troubles to try to raise this point? Are you worried it might be sort of lost in the rush of bad news?

Zoellick: There’s always the risk that the imminent news story drives this out, but the reason I think this is actually timely is we’re looking for sources of growth, and giving women an opportunity to reach their full potential — allowing them to move into engineering jobs; most of the agriculture workers in sub-Saharan Africa are women, so why not give them the access to the credit and the inputs? This can help economies.

Ryssdal: Robert Zoellick is the president of the World Bank. Annual meeting’s coming up this weekend. Mr. Zoellick, thank you so much.

Zoellick: Glad to be with you.

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