By Linda Lim & Ronald U. Mendoza
The discussion on global rebalancing is at a crossroad, and much of what will shape policy options moving forward will have to be taken-up in roundtables that include more countries than the two usual suspects: China and the United States. At its core, the global economic imbalance is an artifact of an uneven development pattern, whereby one country consumes excessively while the other feeds that consumption. A more orderly and sustained global rebalancing is likely synonymous with a more inclusive development pattern across countries, where consumption, investment and production are more evenly promoted across more countries. True “global rebalancing” will take place if more countries, and larger segments of their respective populations, are able to achieve higher standards of living. In this article, we map out some of the main messages for policymakers to achieve this.
