US 'Torpedoing' Major Projects of Developing Countries Like China-Led AIIB
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18:01 08.08.2015Get short URL
Nobel Prize-winning economist Joseph E. Stiglitz argues that emerging markets are capable of carrying out major projects "with high social returns" and intend to create new economic institutions which would benefit the developing world. Rich countries are not thrilled by the prospect.Needless to say, the United States is not happy about it and is doing all it can to maintain its grip on the global financial architecture and undermine these initiatives, he wrote in an article titled "America in the Way."
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Stiglitz praised emerging markets for succeeding in "truly enormous" tasks, ranging from infrastructure development to the shift to a green economy. Developing countries, according to the economist, "have demonstrated their ability to absorb huge amounts of money productively."
What they need is long-term investment. The West could offer the much needed funds through global financial markets. "The problem … is that the world's financial markets, meant to mediate efficiently between savings and investment opportunities, instead misallocate capital and create risk," Stiglitz stated.
Advanced economies have also pledged to support emerging markets by committing a certain percentage of their gross national product to development assistance under the so-called Millennium Development Goals, the economist noted. Only a few countries manage to deliver on their promises.
"Today, developing countries and emerging markets say to the US and others: If you will not live up to your promises, at least get out of the way and let us create an international architecture for a global economy that works for the poor, too. Not surprisingly, the existing hegemons, led by the US, are doing whatever they can to thwart such efforts," Stiglitz explained.
© REUTERS/ Takaki Yajima
China's President Xi Jinping (4th R) meets with the guests at the Asian Infrastructure Investment Bank (AIIB) launch ceremony at the Great Hall of the People in Beijing in this October 24, 2014
The economist recalls the US opposition to the newly-minted Asian Infrastructure Investment Bank (AIIB), initiated by China and expected to rival Western-led financial institutions, including the World Bank and the International Monetary Fund.
Beijing's initiative has largely been welcomed with open arms but a few countries, including the United States and Japan, decided not to join. Moreover, Washington tried to pressure several other states, including its allies, to avoid joining the $100 billion lender.
Stiglitz mentioned two other areas of contention between the United States and emerging markets. Developing countries want to create an international framework for sovereign-debt restructuring and foster international tax cooperation to which Washington is obstinately opposed.
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