aos partidos

Growth can be achieved through policy changes without government money. India’s remarkable growth since the 1990s has combined manufacturing gains with service sector reforms. A World Bank study of 4,000 Indian companies from 1993 to 2005 shows that reforms in banking, telecoms and transport raised manufacturing productivity. Policy changes in Africa encouraged the private sector to invest more than $60bn in technology, bringing 65 per cent of Africans in reach of wireless voice services.

Financial crises can spur reform. Last year as developed economies focused on Keynesian changes in demand, Asia-Pacific economies were advancing reforms – especially in services – to generate higher growth. As developed economies focused on financial regulation and a broader reregulatory movement, Asians were considering how deregulation might foster innovation and jobs.

Developing countries have understood that a sustainable recovery depends on reviving the private sector. Businesses will invest if the policy environment enables them to turn a profit. More governments implemented regulatory reforms to make it easier to do business in 2009 than in any year since 2004, with nearly 300 reforms registered worldwide. Most occurred in developing economies.

In “sustainable growth challenge, part one”, it is not about unmitigated austerity, but finding sustainable paths to prosperity. The EU and developed countries elsewhere need more than fiscal stringency, especially if achieved by piling on more taxes. They need to seize opportunities from growth in developing countries to avoid their own lost decade. There is a broader lesson: in 2008, the crisis was US-led; in 2010, it is European. For both the US and Europe, it is developing countries that point to the way ahead. It is time we took note.

By Robert Zoellick