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The euro zone debt crisis may have lost some of the drama we’ve seen before, but new figures out this morning show it is far from over. As for the U.S. economy, the best analysts can say is that it’s moving in the right direction, though tepidly.
So what can be done to spur growth in the U.S. and the euro zone? Peter Henry, Dean of NYU’s Stern School of Business, thinks the answer lies in developing countries. His latest book, Turnaround: Third World Lessons for First World Growth, explores this idea and boils the secret to economic progress down to one word: Discipline.
“The biggest lesson right now for the first world is that discipline in the context of economic policy does not mean fiscal austerity,” Henry says. “During the boom years from 2002-2007, countries like Chile saved so that when the global recession hit, Chile was able to instantly do a $4 billion tax cut package to stimulate the economy.”
Henry says discipline means focusing on the future and taking gradual steps to prepare for that future. He adds that developing economies are now better at this long-term thinking than the U.S. or Europe.
“This is a turnaround, today it’s the first world that is thinking short-term,” Henry says. “The key question is, do we have the humility to look beyond at our shores and to look at emerging economies, take those lessons back home, and start living up to our potential?”
To hear Henry’s thoughts on the benefits of global economic inter-dependency, click on the audio player above.
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