white paper

The Bellagio Symposium on

New Growth Paradigms

A Growth Dialogue White Paper

April 18–19, 2012Bellagio, Italy

The Bellagio Symposium on

New Growth Paradigms

A Growth Dialogue White Paper

April 18–19, 2012

Bellagio, Italy

© 2012 The Growth Dialogue2201 G Street NWWashington, DC 20052Telephone: (202) 994-8122Internet: www.growthdialogue.orgE-mail: [email protected]

All rights reserved

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The Growth Dialogue is sponsored by the following organizations:

Canadian International Development Agency (CIDA)UK Department for International Development (DFID)Korea Development Institute (KDI)Government of Sweden

The findings, interpretations, and conclusions expressed herein do not nec-essarily reflect the views of the sponsoring organizations or the governments they represent.

The sponsoring organizations do not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the sponsoring organizations concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

All queries on rights and licenses, including subsidiary rights, should be addressed to The Growth Dialogue, 2201 G Street NW, Washington, DC 20052 USA; phone: (202) 994-8122; e-mail: [email protected]; fax: (202) 994-8289.

Cover design: Michael Alwan

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About the Growth Dialogue’s Bellagio Symposium on New Growth Paradigms

The global economic situation can aptly be described as worrisome. The regeneration of economic growth in the

advanced economies after the deep and prolonged recession has been slow and sputtering, and even the emerging market economies that buoyed growth in the past few years are now slowing down. At the same time, the combination of jobless-ness and worsening income prospects for many is producing political pressure for action. Governments, uncertain in the use of traditional macroeconomic tools, are more widely con-sidering microeconomic interventions to improve economic outcomes. It is therefore the right moment to consider what we think we know about the prevailing growth paradigm and its efficacy and to discuss what is to be done to restore stronger growth performance.

On April 18–19, The Growth Dialogue hosted the Bel-lagio Symposium on New Growth Paradigms. This high-level

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gathering convened at the Rockefeller Foundation’s Conference facility on Lake Como in northern Italy. Chaired by Nobel laureate Mike Spence, and co-chaired by the Managing Direc-tor of the Growth Dialogue, the symposium brought together leading academics, policy makers, and thinkers to discuss how the challenge of generating economic growth should be tackled in the current economic environment and for the future.

The symposium provided an ideal opportunity for the group to focus thinking on both conceptual and practical as-pects of promoting sustainable recovery of the major engines of growth. In particular, the symposium concentrated on those factors that would spur growth while improving the employ-ment outlook, as well as containing if not reversing adverse trends in the distribution of income. The discussions around these key issues culminated in a fruitful debate on the future role for the state in promoting growth through industrial change, innovation, and infrastructure development, while at the same time efficiently deploying active labor market, educa-tion, and social policies to ensure that growth outcomes benefit the majority. Two days was much too short a time to arrive at detailed recommendations. Nevertheless, the participants ex-plored the frontiers of current thinking and identified some of the more promising avenues for both research and policy mak-ing, some of which are presented in the White Paper on Growth.

This document, a Bellagio White Paper, is not meant as either a summary or a consensus declaration. Rather, in the minds of the three authors, it reflects a reasonable synthesis of the major issues and controversies discussed. It is hoped that this paper will spur further discussion of some of the major challenges we face in generating sustainable and shared eco-nomic growth. Our discussion was informed by a series of shared notes, both from participants, such as Philippe Aghion, and others who could not attend, including Professor Robert

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Solow and Governor Mark Carney. We were delighted that the Ministers of Finance of South Africa and Sweden could join us.

Our conferees included an impressive roster of current and former policy makers, leaders in global public policy debates, and thinkers from various arenas on matters related to economic growth in its broadest context. The symposium was chaired by Michael Spence, who led the Commission on Growth and Development that underpins the mandate of the Growth Dialogue, and we are grateful to him. The Bellagio conversation is also helping to guide the work program of the Growth Dialogue for the coming year. One of our goals is to help policy makers to see more clearly how pro-growth policies that are sustainable, affordable, and more welfare-enhancing can be fostered.

Danny LeipzigerManaging Director

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Where Are We?

The advanced economies of the world are out of money, out of growth, and out of trust. These are the principal chal-

lenges now facing the global economy. The response has been a paralysis of sorts, with governments both uncertain about the right course of action and also incapable of executing new poli-cies. As a result, a “hold-the-course” approach is the prevailing order of the day. It is a pattern that is repeating itself at global, national, and local levels. Policy and its implementation are no longer seen as effective given the structural challenges of low and jobless growth, unfavorable demographics that drive expenditures, and a pattern of excessive public debt. There ap-pears to be a vacuum of leadership, greater uncertainly about the sustainability of exiting growth paths, and weak political support. At the same time, citizens are expecting more from the state and the state is not delivering. Magnified at the global level, this is a cause for concern. The Bellagio Symposium was organized by the Growth Dialogue to discuss possible ways forward.

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The Big Picture

Global economic management and coordination is sputter-ing. After coming together in a significant way in 2009,

the G20 has proven itself unable to generate the political mo-mentum to enable national governments to pursue successful economic policies. Across the board, policy makers are com-plaining about the exchange-rate implications of uncoordinat-ed national monetary policies (or in the case of some emerging economies, of explicit nominal exchange rate targeting). The crisis period since 2008 has been characterized by very large fluctuations of the U.S. dollar/euro exchange rate, with a vola-tility that suggested that currencies were not reflecting underly-ing fundamentals. Global currency and debt markets, in turn, seemed to have lost confidence in the ability of governments to manage economies in an orderly way, and, without any anchor-ing of expectations, volatility has continued to be high. This has heightened risk and hindered investment.

The G20 is perceived to be the only body that could re-establish greater confidence in coherent international policy-making, but its framework of strong, sustainable, and balanced growth has not proven to be effective in restoring confidence. Major issues, such as the consistency of the international mon-etary system with long-term, stable growth, have remained un-addressed. Equally, the ability of the G20 to deliver on global

Global economic management and

coordination is sputtering.


public goods and reduce global bads has been limited. There has been some success in fighting protectionism, but failures in dealing with global food and energy price shocks, and, in a longer-term perspective, addressing the issue of climate change.

Calls for a strengthening of international institutions are offset by a sense that the political window for closer global co-operation may well have closed and no country today is really driving change in the international system; each is concentrat-ing instead on national self-interest. One might well charac-terize the current global system as one akin to an “absentee landlord.” The advanced economies are under stress and the emerging economies are not yet able or willing perhaps to take up the gauntlet of helping to manage the global system. There is no global decision-making process that appears up to the task at hand of restoring short-term confidence and stability, medium-term growth, and longer-term fiscal sustainability. Global policy making is still struggling to find a governance system that balances legitimacy and inclusion with effectiveness and action.

Global policy making is still struggling to find a governance system that balances legitimacy and inclusion with effectiveness and action.


National Challenges to Growth

At the national level, there are many countries that need to de-lever and adjust to establish a new sustainable pat-

tern of growth and employment. There was considerable concern expressed over the loss of confidence in governments in the advanced economies to manage themselves and ensure growth. The challenges of regaining fiscal control and rekin-dling growth have been formidable. In the case of emerging economies and some advanced economies, structural reform at the national level has for many years taken the shape of freeing the private sector from government controls—govern-ments largely stopped doing things they should not be doing. But in the process, the broader discourse has evolved in a way that has weakened governments’ ability to do things it should be doing—what is now referred to as “smart” or “strategic” government—especially as it relates to regulation and market oversight as well as investment and coordination to enhance competitiveness.

In 2009, fiscal policy was overwhelmingly driven by ag-gregate demand management concerns. However, the voices in favor of a stronger supply-side role for government have become increasingly vocal. Of course, fiscal policy still needs to address the current depressed stage of the global business cycle, but the ratio of potentially long-term unemployed in total unemploy-


ment has risen. This suggests a large structural component to labor market problems in many advanced economies.

A magic triangle of budget discipline, growth-supporting investments, and expenditures that promote social cohesion was proposed, with the implication being that governments would need to rebalance spending towards investment (espe-cially infrastructure), restructure how they spend to achieve greater accountability and results (for example, on universities that deliver results or competitive grants for innovation), and rebalance regulations on protected sectors such as retail trade and reinvigorate those in finance( to promote real competition).

At the local level, the concern was that broad national policies often failed to relate to the specific needs of disad-vantaged groups and were neither sufficiently tailored nor ef-fectively implemented to make a difference. For example, in India, urbanization rates had slowed down because of a lack of urban services and the inability to deal with land problems. South Africa’s unemployment problems seem intractable, and Ghana’s educational achievement level was inadequate. Other examples pertain to labor market policies (which may need to be more focused on lagging regions), young people, women, and migrants, who all operate in segments of the labor market that may not be affected significantly by broad-brush interven-tions. The conclusion was that very specific, well-crafted policy interventions are needed, with constant monitoring and feed-back during implementation. Relatively few governments these days seem to have the capacity to deliver well on this metric.


Politics and Policy Making

One strongly held view was that the economic prescriptions for overcoming current challenges were broadly known,

but that political will and institutional capacity for action were lacking. “It’s the politics, stupid” was a recurring sentiment, both in terms of making appropriate policy choices (includ-ing clearly distinguishing between long-term and short-term growth dynamics) and in terms of sustained implementation. The fact that the losses of the economic downturn have been so concentrated on particular groups, while the uncertainty cre-ated has so rattled the middle class, also means that the politics of economic policy making has become more complicated than before. Traditional macro-economic tools seem poorly suited to address the political concern to target both the poor and the middle class—the latter who seem to have lost income, wealth, and, most of all, confidence.

There was also an alternative view that policy makers were still fighting last year’s wars in thinking that the recession was simply a very pronounced cyclical downturn, and that riding it out and stressing fundamentals was the right course. This view of the world was largely rejected as not fully internalizing the seismic shifts in investment and consumption behaviors, risk tolerance, and the limits of government policy that have emerged. When added up on a global scale, these uncertain-

One strongly held view was

that political will and institutional

capacity for action were lacking.


ties that envelop policy making at present make it all the more difficult to coordinate and find superior global outcomes. Put theoretically, the result is that every government acts in its own self-interest, creating a low-level Nash equilibrium outcome, instead of cooperating to create a Pareto-superior result. In a world of multiple equilibria, confidence in the trajectory of policy making is vital in steering investment decisions so as to reach better global outcomes.

In these political circumstances, there has been a dangerous tendency to be selective in the interpretation of the effective-ness of different approaches and institutions. This is coupled with what many consider the erroneous path of picking a few of a wide range of policies that seemed to work—in East Asia, for example—and expecting economic miracles. Moreover, the hegemony of ideas by some elements of the economics profes-sion has been broken by the unexpected course of the global crisis. While this opens the door for new ideas and productive discussions, it also creates opportunities for a variety of bad ideas to flourish. Former policy makers commented on having to spend 70 percent of their time on combating bad ideas and only 30 percent on developing and championing good ideas. From this open debate, a strong recommendation emerged for maintaining a focus on long-term growth, employment, and productivity.

Although it may seem obvious that growth should be the primary preoccupation for politicians, there is increased concern that this may not be the case in practice. Given that the benefits from growth in advanced countries have become narrowly concentrated in the elite, and jobless growth is a com-mon phenomenon, the mass appeal of growth-oriented policies has declined. This is unfortunate, because there is virtually no escape from fiscal imbalances that does not require a restora-tion of economic growth. At the same time, the elderly, those

There was also an alternative view that policy makers were still fighting last year’s wars.


disadvantaged by market competition, environmentalists, and others have become skeptical that long-term growth policies will advance their aspirations. While much of the world is experiencing unparalleled prosperity in a historical context, maldistribution of gains and a greater focus on relative welfare measures has reduced trust in the system and the likelihood that growth will benefit the many at the expense of the few. The pro-growth coalition in advanced economies is shrinking. If the middle class joins the anti-growth bandwagon in the be-lief that capture and money politics has rigged the system, and if the erosion of trust in government continues, some economic policies that are detrimental will be hard to reverse.


The Growth Model

Growth is stronger in developing countries and the growth model there seems less affected. It seems apparent that

convergence between countries will continue, with low-income and middle-income countries able to sustain faster growth thanks to the diffusion of catch-up technology. Broadly speak-ing, there was an agreement that this would be good for global growth; but there was some unease that globalization, com-bined with powerful trends in technology, may be having a greater impact on jobs in advanced countries than commonly thought. The prevailing wisdom is that skills-biased technolog-ical change is responsible for a large majority of job losses, with global competition playing a secondary role. But this may be too sanguine. With industry-level productivity data, the effects of globalization and technology are hard to separate. If low-wage jobs are outsourced, the data may appear to show a skills-biased technology improvement in those jobs that remain, but in reality what has taken place is a shift of the supply chain due to globalization. There are further complications with interpreting productivity data (with the import price index, most significantly) so many academic studies could be flawed. Indeed, newer studies with alternative data suggest a consider-able adverse impact of foreign competition on U.S. jobs. This would support the rapidly falling preference for globalization


in recent surveys. Nevertheless, when trade, investment, and innovation are taken together, the view that global growth and globalization go hand-in-hand remained unquestioned.

That was not taken to imply that governments should be passive viewers of globalization—quite the reverse. Govern-ments need to actively consider globalization’s implications. One hot debate was on the degree of spillovers from manufac-turing. The importance of the manufacturing sector for pro-viding “good” jobs and hence helping promote broadly shared income gains and aiding social cohesion, as well as prodding innovation, was stressed. In the United States, manufacturing employment collapsed after 2001 due to plant closures (not layoffs) in labor-intensive, tradable sectors. But manufacturing firms account for two-thirds of all research and development in the United States, and almost all R&D is done within the United States, so manufacturing becomes an important com-ponent both of the broad social compact and as a source of continuous innovation. Manufacturing had been helped in the past by a supportive university system and by public investment in infrastructure, but the opportunities to use these levers for the promotion of long-term growth seems be underexploited in some advanced economies. What is more, the policy concern has shifted to trying to keep the lower-wage manufacturing jobs onshore, not just the higher-skills jobs that have been relatively protected.

The competitiveness of the manufacturing sector in a globalized world inevitably depends on exchange rates, and there was considerable interest in how exchange rate manage-ment should be viewed in this context. At one level, there was concern that the absence of a formal international monetary system introduced significant global risks, which were rising as the dominance of the U.S. dollar as an international safe asset of choice declines. Despite the importance of exchange rates to

Governments need to actively consider

globalization’s implications.


the real economy, monetary authorities appear to be willing to permit large fluctuations. The hoped-for emergence of a stable international monetary order, with all central banks targeting inflation around a common level of 2 percent, has disappoint-ed. Many important international players have simply not been willing to adopt the same ground rules. Some are exploiting the advantages of global currencies, others are promoting exports, and still others are concerned about regional stability. Recent events in Europe also cast doubt on the balance of objectives between inflation and growth.

Indeed, monetary and financial systems seem to be overly influenced by national self-interest and are not globally coher-ent. Financial innovation was broadly seen as a major part of the growth problem, rather than a driver of more rapid, long-term growth. There was a consensus appreciation of the inbuilt, long-run, boom-bust cycle that appears to be an in-evitable result of rapid financial innovation, even though the period of the Great Moderation tantalizingly promised the op-posite. The underlying growth model of this period was clearly flawed, based as it was on the buildup of high debt to support demand growth. Moreover, as one outside observer, iconic in the study of growth, noted: financial innovation has passed the point of usefulness for the global economy. But there was less consensus on what to do about this. Regulation, in and of itself, was also not perceived as the right answer for renewed growth, as it could simply encourage a shift into the unregulated seg-ments of the market. Indeed, there are many concerns over the large and still unregulated shadow banking system that some believe continues to pose serious systemic risks. The political economy of captured regulators and cozy rent-seekers making monopoly profits were also presented as a threat to growth, not just in finance, but in other sectors as well. In Europe and several middle-income countries, excessive regulation is also

Many important international players have simply not been willing to adopt the same ground rules.


visible in the retail and other services sectors, where competi-tion is thwarted and growth is stymied.

Regulations need to permit creative destruction and flex-ibility if they are to be supportive of growth. There was con-siderable interest in the German approach, where an appren-ticeship system has some of the properties of a low entry-wage level, coupled with organized skill development that permits future wage gains. The country’s tripartite system for conduct-ing a national dialogue on a social compact has proven effective in providing flexibility in wage costs, saving employment, and shifting resources into worker education and training. Perhaps just as pertinently, Germany has been actively responding to a perceived reduction in the tolerance in society for inequality, and has been doing something about inclusion. The success of this system in permitting Germany to navigate successfully through the Great Recession has led some to argue that the design of social policies would be more important to growth and productivity than the design of industrial policy, although the notion of absolute government “neutrality” was largely dis-carded as unrealistic.

The notion of absolute

government neutrality was

largely discarded as unrealistic.


Middle-Income Countries and Middle-Class Issues

In fact, a consensus emerged that, regardless of the specifics, growth strategies needed to be constantly adapted to chang-

ing country and global circumstances. Many developing coun-tries, where change is more rapid, have felt this for some time. Commodity exporters must figure out how to translate their riches from higher prices into sustainable growth. Middle-income countries need to avoid the middle-income trap and manage the expectations of a new middle class. Contrary to conventional wisdom that views the middle class as a major driver of growth through consumer spending, there was a con-cern that the middle class can also retard growth. If the middle class becomes unhappy despite rising incomes, because of ex-cessive debt, or through disappointment with low-wage jobs, then they can create political tensions and foment policies that are damaging to growth and the quality of life. Protectionism, lower taxes, general public expenditures, and fossil fuel subsi-dies are some of the growth-reducing policies that have been adopted in response to middle-class pressures. The new middle class in emerging economies is still vulnerable to shocks and has little by way of safety nets in the event of an accident or a health-related absence from work.


The difficulties experienced by middle-income countries are a concern in growth economics. The reasons why some states fail at low income levels are increasingly well understood in terms of their institutions and governance, but failure to grow at middle-income levels is just as prevalent and much less well understood. It may be that governments, supported by vested interests, do not adapt growth strategies rapidly enough to match the evolving structure of the economy. One basic is-sue relates to labor markets and jobs. In fact, a large part of the growth/jobs puzzle is why employment rates in so many middle-income and advanced countries are so low. For those families that are outside the labor market, familiar prescriptions from the left (unions, collective bargaining) or right (liberalize labor legislation, right-to-work laws) are both irrelevant. Finely targeted policies that address the specific barriers that prevent people from working are needed, including some gender-specific policies that encourage female labor force participation. Unless such barriers are identified and dealt with, and lead to higher employment rates, it will be hard for economies to achieve the social cohesion needed to support long-term growth strategies, and valuable human capital will continue to be wasted.

A disillusioned middle class can emerge when there is a sense that economic policies favor those at the top (socializa-tion of large financial sector losses and privatization of large, often non-welfare-improving gains), while government efforts at distribution are oriented to those at the bottom of the in-come distribution. In the case of the former, opportunities for middle-class economic advancement are lost. In the case of the latter, personal responsibility that is the bedrock of middle class values may be ignored. A healthy middle class, therefore, arises in environments where both opportunity and responsibility are taken seriously. Competition (in services), anti-discrimination (in education), transparency (in tax expenditures), and ac-

Capture of a dispropor tion ate

share of gains can be seen as a drag

on future growth generation.


countability (in teacher evaluations) are policies that can favor the middle class. Capture of a disproportionate share of gains by the uppermost income groups and ineffective redistribution efforts towards the middle class can be seen as drags on future growth generation.


Growth Drivers

One source of optimism about future growth comes from the recognition that technology is the main driver of

productivity, and that technological effort is continuing largely unabated, despite macroeconomic problems. Of course, tech-nology needs to be marshaled and managed, and this does not happen automatically. On the one hand, developing countries face a special problem in trying to manage sophisticated tech-nological systems and capture major benefits of innovation. When they cannot do this effectively (because of weaknesses in public sector capabilities), it reinforces the advantages of oper-ating in advanced countries. On the other hand, supply chains are evolving rapidly into new areas and new countries, under-lining the spread of globalization. It is therefore unclear who benefits and who loses most from globalization. Firms may be indifferent to location, but national governments cannot afford to be.

Making technology work for growth can require public management systems that drive systemic national changes. Do-ing this effectively requires bringing together well-designed in-centives for individual behavior, along with competition, into an accountability framework for growth. With large portions of any economy now dependent on public sector performance, improving public management is a priority. Incentives and gov-

Firms may be indifferent

to location, but national

governments cannot afford

to be.


ernance systems are quite different from those of the private sector. One conundrum is that finance ministers often keep new pilots small to manage governance problems, but then find themselves unable to scale up successes. Bringing technological change into the public sector may be a key component of en-suring that the benefits of technical change are felt throughout the economy.

In all countries, technology and globalization are equal-izing wages at higher skill levels. It is at lower skill levels where big differences remain. The entry into the global force of many lower-skilled workers in China may have accelerated an exist-ing trend that has depressed wages for workers with basic skills in advanced economies. That is bringing into question the impact of university education as a route through which indi-viduals or countries can gain a competitive edge. If the costs of tertiary education in advanced countries rise (as more students choose to go to college) while the benefits fall due to competi-tion from overseas, then rates of return can quickly plummet. The higher end of the income distribution, which has benefited most from globalization in the past, may also be vulnerable to globalization in the future. In the end, regardless of the divi-sion of responsibility for lower wages and fewer jobs between technological advances and off-shoring, the politics of lower real incomes is an undeniable challenge.

In managing economic challenges, there is a significant gap between theory and practice. Traditionally, this gap has been filled by resort to pragmatism and evidence-based policy-making. But such approaches may be harder to implement as new and more complex questions arise, for which appropri-ate data are not available. The inability of economists to fully understand the impact of globalization is in part because trade data are not disaggregated into value added and intermediate components and data for the global supply chain are opaque.


Without this information, the impact of trade policies on in-comes (a value added concept) or even on the size of current account imbalances cannot be properly measured. Similarly, data on income distribution are unable to permit a sorting out of inequality of outcomes from inequality of opportunity. They do not quantify perceptions about social fairness and the social compact as opposed to inequality. They do not measure happiness, trust, or confidence, all of which seem crucial to economic management today.

In several advanced economies, there is recognition of the inadequacy of data to provide a solid foundation for policy making. Efforts to expand national or state level accounts to incorporate natural resource use, to develop indicators of hap-piness, to disaggregate trade data, and the like are underway. These efforts are critical in ensuring that the growth paradigm can continue to evolve as necessary to provide new generations with improvements in living standards at the same pace as that delivered by the growth paradigm outlined in the 2008 Growth Commission Report.

The call for global safe assets and global safety nets as the two most important foundations to mitigate risk in the mod-ern global economy illustrates a paradox of modern growth. Innovation, entrepreneurship, and creative destruction are needed for productivity increases, but individuals are looking for greater safety in their investments and in their lives. Eco-nomic and political forces are moving in opposing directions. The role of government thus becomes even more essential.


What Next?

There is little doubt concerning the daunting challenges ahead. Indeed, there is talk these days of decelerating

growth models or those with inherent limitations. These built-in limits can affect large countries that have relied excessively on consumption to drive demand, as well as those who have relied too much on investment-led growth. In the former case, asset bubbles, over-indebtedness, and difficulties in income adjustment make the picture cloudy for households and na-tions. In the latter case, diminishing returns to investment and chronic under-consumption make for a difficult transition in the composition of growth and reduction of surpluses. What-ever policy choices are selected, key considerations involve first, political implementability, and second, international ac-ceptability. The emerging consensus was that the promotion of a more rapid long-term growth path, with improvements in fiscal balances and greater fairness in distribution, was possible for many economies.

Countries in Europe have achieved distinctly different income distributions after government actions on taxation and transfers, showing that growth and distribution combina-tions can be affected by policy. Some tough intergenerational issues will need to be tackled, however. The second challenge

The sense of the Group remains that a basic factor influencing future growth prospects revolves around the role of the state.


of squaring job creation with economic growth is potentially more difficult and involves the issues affecting middle-income countries and the middle class. These challenges require politi-cal economy solutions to be growth enhancing.

Attempting to make longer-term growth strategies com-patible with sustainability objectives is costly and difficult. However, there are many green investments, for instance, that will quickly pay for themselves and be growth promot-ing. Constraints are often political and economic rather than technological, and in some cases can be tackled at local levels. Moreover, effective investments in education can in the long run also improve incomes and build support for structural change, while enabling the creation of new growth engines.

The sense of the Group remains that a basic factor influ-encing future growth policies revolves around the role of the state. The state (i.e., government) has multiple roles as eco-nomic manager and shock absorber, regulator, redistributor, and strategic investor—all of which affect growth prospects. If the state is captured, then the benefits of growth cannot be shared in any fashion compatible with social cohesion. This is not a problem that only affects failed states—it affects all states. Moving government out of the way was not generally seen as the smart play in a world of greater uncertainty and greater inequality.

Looking internationally, for the stewardship of the global economy to function, especially during difficult times, groups of committed states need to cooperate and they require in-stitutional support. The fabric of the international system is frayed, but not broken. Recommitment and reinvestment in that system is indispensable. The capacity of governments to act, and their willingness to do so, depends in the first instance

The fabric of the international

system is frayed, but not broken.


on their ability to solve national growth challenges effectively. It is only within that calculus that globally better policies can be effectively pursued.

Homi KharasSenior Fellow and Deputy Director

Global Economy and Development ProgramThe Brookings Institution

Danny LeipzigerManaging Director

The Growth Dialogue and Professor of International Business

George Washington University

Michael SpenceNobel laureate in Economics

Professor of EconomicsStern School of Business

New York University

May 30, 2012


List of Participants Bellagio Symposium on New Growth Paradigms

April 18–19, 2012Bellagio, Italy

Name TitleOrganization/Institution Country

Aghion, Philippe Robert C. Waggoner Professor of Economics

Harvard University

United States

Aryeetey, Ernest Professor of Economics and Vice-Chancellor

University of Ghana

Ghana

Bernstein, Ann Executive Director Centre for Development and Enterprise

South Africa

Borg, Anders Minister Ministry of Finance

Sweden

Gordhan, Pravin Minister Ministry of Finance

South Africa

Han, Duck-soo Chairman Korea International Trade Association

Republic of Korea

Ingram, Joseph President and Chief Executive Officer

The North-South Institute

Canada

Kharas, Homi Senior Fellow and Deputy Director for the Global Economy and Development program

The Brookings Institution

United States

Leipziger, Danny Managing Director, The Growth Dialogue; Professor of International Business, George Washington University

The Growth Dialogue

United States


Name TitleOrganization/Institution Country

Mohan, Rakesh Professor, School of Management; Senior Fellow, Jackson Institute of Global Affairs

Yale University United States

Mundell, Robert Professor of Economics, 1999 Nobel laureate in Economics

Columbia University

United States

Nasar, Sylvia Professor of Business Journalism

Graduate School of Journalism, Columbia University

United States

Perry, Guillermo Professor Universidad de los Andes

Colombia

Sheng, Andrew President Fung Global Institute

Hong Kong SAR, People’s Republic of China

Spence, Michael William R. Berkley Professor; 2001 Nobel laureate in Economics

Stern School of Business, New York University

United States

Strauss-Kahn, Dominique

Former Managing Director

International Monetary Fund

France

Švejnar, Jan Professor of International and Public Affairs; Director, Center for Global Economic Governance

School of Public and International Affairs, Columbia University

United States

Tyson, Laura Professor of Global Management

Haas School of Business, University of California Berkeley

United States

Velasco, Andres Former Minister of Finance, Chile; the Tinker Visiting Professor

Columbia University

Chile

Yusuf, Shahid Chief Economist The Growth Dialogue

United States

http://www.growthdialogue.org/[email protected]

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