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Recession Inevitable?


Anita K. Dixit

WORLD ECONOMIC SITUATION AND PROSPECTS: 2012
Academic Foundation, New Delhi, 2012, pp. 174, Rs. 995.00

VOLUME XXXVI NUMBER 12 DECEMBER 2012

The report deals with the impact of the recession of 2008 and the prospects for the future in the global economy. The predictions are dire and the policy prescriptions are regionally divided. The report starts with the statement that 'the world economy is on the brink of another major downturn'. The predic-ted double dip recession is expected to create a downturn in the jobs market, creating further obstacles to economic recovery. Therefore, the report theorizes a vicious circle between (nega-tive) growth and (negative) employment gene-ration. The important aspect that the report addresses is the differential impact of the recession among developed and developing countries. The fact that the world is about to enter another major recession is underlined, and this decline is seen globally. While the developed world is already in recession, its situation in-fluences the developing world as well. Growth in the developing world is slow and fluctuating, having declined between 2010 and 2011, but picking up slightly again in 2012. In terms of employment too, there is a difference in terms of developed and developing countries. In the developed world, the actual situation of employ-ment is in a rapid decline not reflected in of-ficial unemployment statistics. On the other hand, employment rates in developing countries have recovered but other issues like under-employment, poor payment etc., are major problems. Inflation is more of a concern in the developed than in the developing world. The economic crisis has created policy paralysis due to political divides. This is due to the different policy challenges facing the deve-loped and the developing world. In the deve-loped world, growth is the major area of con-cern, while the challenges of the developing world are more related to the lack of global aggregate demand (emanating from the stag-nation of developed countries). However, the developing world itself also contributes to the lack of aggregate demand, since global volatility has caused them to adopt restrictive trade po-licies. The chapter identifies the issues very well—the problem is that it treats the economic issues of the developed and developing world as separate problems, which they are not. Histo-rically, global trade, whether free or forced through colonization, has determined growth patterns in both the 'worlds'. This continues to be the case today, a point not addressed by the report. In contrast, an interesting analytical over-view of global trade. The well thought out and simple graphs give a reader-friendly picture of how trade is shifting ...


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