Global Macroeconomic Management and the Developing Countries

Abstract

As markets are increasingly integrated globally, industrialized countries’ firms, banks and households have become increasingly dependent on a healthy and growing developing world. Expanding and more open developing-countries’ markets would serve developed-countries’ exporters and investors, while households would enjoy relatively cheaper imports from developing countries. Thus, if developing economies encounter an economic crisis, it will retard the economic growth of the developed countries. Even though such a crisis could result from the industrialized countries’ monetary, fiscal, and exchange rate policies, there seems to be an almost total lack of consideration of the effects on the developing economies when the industrialized countries formulate their economic policies.

We are grateful to Shahen Abrahamian, Antonieta de Bonilla and participants in the G-24 Conference for helpful comments.