International Conference on ‘Post Liberalisation Constraints on Macroeconomic policies’ Organised by IDEAs, Muttukadu, Tamil Nadu, India, January 27-29, 2006.

Supported by: The United Nations Development Programme (UNDP)

The IDEAs conference, the third of a series at Muttukadu, Chennai, featured a set of papers and open discussions on the impact of international trade and financial liberalization on macroeconomic policies at country levels, with special emphasis on the developing world. The conference was primarily concerned with how a selected set of industrialising countries have negotiated their relationship with the global economy given sweeping changes in the international context, and how these policy changes in turn affected the possibilities and potential for development for the world at large and developing countries in particular. As part of an IDEAs project, supported by UNDP, there were special presentations on China, India, Mexico and Turkey. Along with these country-focus papers, there were presentations on key aspects of the current phase of trade and financial liberalisation around the world.

The objective of the conference ran at three levels: (i) descriptive: to track the principal features of trade and financial liberalisation during appropriately defined and identified phases in the period since 1980s; (ii) analytic: to asses the proximate effects of liberalisation on the structure and pattern of trade and financial intermediation; and (iii) synthetic: to assess the direct and indirect consequences of these for the pursuit of macroeconomic policy geared to countercyclical intervention and to realising internal (near full-employment without inflation) and external (balance of payments stability) equilibrium within a reasonably egalitarian context.

Representing IDEAs’ international membership, the conference included about 85 participants from all over the world; 45 from India and around 40 participants from the rest of the world. It has been IDEAS’ vision to get academics, policy analysts, students and activists together to work on a feasible and long term development strategy for the south, and accordingly, the participants included economists such as Yilmaz Akyuz who has recently retired as the Director of the Department of Globalization and Development, UNCTAD and Mehdi Shafaeddin, who has also retired from UNCTAD, both renowned policymakers as well as policy analysts. Both of them presented papers that questioned the current system of international institutions and policy framework for international regulation of trade and capital flows. S P Shukla, who has retired as the Secretary of Finance, Government of India and is now a renowned campaigner for the interests of the South, was another participant with an in depth experience in the field of policy making.

From the realm of academics, there were participants who have been working extensively in the field of development economics from a wide range of universities across the world such as Prabhat Patnaik, renowned Marxist macroeconomist from the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India, and Abhijit Sen, who apart from being a faculty member at the same centre, is currently also a member of the Planning Commission of India. Prof Patnaik argued that the current rate of industrialization or development in the developing economies such as in Asia were not likely to be sustained given the role of the leading capitalist country holding the leading currency because it poses an inherent contradiction to capitalism.  Jayati Ghosh and C P Chandrasekhar from the same centre, who are also on the IDEAs’ executive committee, presented two papers on the Indian experience vis-a-vis trade and financial liberalization. Giovanni Andrea Cornia from the University of Florence, Italy, who has also worked extensively with the UN and WIDER, emphasized the need for domestic macroeconomic policies to necessarily include a pro poor perspective. From the University of Cambridge, UK, Ajit Singh and Alex Izurieta presented two papers on the current and potential instability in the global economy while Gabriel Palma, from the same university, presented a paper on inequality in Latin America. From the Chulalongkorn University in Thailand, Pasuk Phongpaichit, also the chairperson of the IDEAS Executive Committee, presided over two sessions and joined in the critical discussions. From Mexico, there were three distinguished academicians; Alicia Puyana from Flacso, Jose Romero from COLMEX, and Noemi Levy from UNAM, who specifically prepared papers for IDEAS on the impact of trade and financial liberalization in Mexico. Erinc Yeldan from Bilkent University, Ankara, Turkey, who is also a member of the IDEAS’ executive committee, along with Turkel Minibas from Istanbul University, presented papers on the Turkish experience. Zhiyuan Cui, from the School of Public Policy and Management, Tsinghua University, China, who works both in the realm of academics and policy management, and Sunanda Sen, from the Third World Studies, Jamila Milia Islamia University in New Delhi, presented two papers on China’s financial sector. Amiya Bagchi, among the foremost Indian leftist economists and currently the Director of the Institute for Development Studies, Kolkata, India, presented a paper on the Chinese and Indian development experiences.

Rammanohar Reddy, the editor-in-chief of the Economic and Political Weekly, a widely circulated academic journal in India, and S L Shetty, the editor of the EPW Research Foundation, also participated. In addition to many other academicians, journalists and thinkers, the conference included about 35 research students and young policy workers from across the developing world, who participated in a workshop just preceding the conference and who were invited (and funded) to stay on and attend the conference so they could have a more extensive exposure to the problems of development that is currently plaguing the South in general, and even some of the more successful developing nations today. The young participants asked many critical questions and provided much of the lively discussions that followed each session.

The topics covered at the conference included:

• ‘Financial Flows and Open Economy’ by Prabhat Patnaik from The Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India.
• ‘Reforming the IMF: Back to the Drawing Board’ by Yilmaz Akyuz
• ‘Globalisation, Instability and Economic Insecurity’ by Ajit Singh
• ‘Pro-Poor Macroeconomics: Potential and Limitations’ by Giovanni Andrea Cornia
• ‘The Policy-Space Question: An Alternative Approach to Trade and Industrial Implications for the World Trading System’ by Mehdi Shafaeddin
• ‘Scenarios for the World Economy and Strategies for Macro-economic Co-operation’ by Alex Izurieta
• ‘China and India: From Where? Where To? A Preliminary Investigation’, by Amiya Bagchi
• ‘Financial Liberalisation and Impact on Macroeconomic Policies in India’, by C.P. Chandrasekhar
• ‘Trade Liberalisation and Ecnomic restructuring: Can India Skip the Industrial Phase?’ by Jayati Ghosh
• ‘Impact of financial Liberalisation on Macroeconomic Performance and Implications for Development policy in Mexico’ by Noemi Levy
• ‘Trade Liberalisation in Mexico: Some Macroeconomic and Sectoral Implications for Macroeconomic Policy’ by Alicia Puyana and Jose Romero
• ‘Lessons from the Turkish Financial Liberalisation Experiences’ by Erinc Yeldan
• ‘Macroeconomic Constraints for Developing Nations: The Experience of Turkey’ by Turkel Minibas
• ‘Globalisation and inequality in Latin America’ by Gabriel Palma
• ‘Crises and Firm Level Upgrading/Downgrading Practices in Turkey’ by Ahmet Dikmen
• ‘National IPR Policies Under Globalisation’ by Sudip Chaudhuri
• ‘The Reform of China’s State-owned Banks: From Recapitalisation to IPO’ by Cui Zhiyuan
• ‘China in Global Finance’ by Sunanda Sen
• Panel discussion on ‘Post Liberalisation Constraints on Macroeconomic Policies: A Summing up’ by Chris Baker, Yilmaz Akyuz, S.P. Shukla, S.L Shetty, Terry Mckinley, Prabhat Patnaik. This session was chaired by Pasuk Phongpaichit.

The three day conference saw passionate and well informed discussions after all the presentations that included wide ranging questions from the floor. The evenings during the conference provided relaxed but extended hours to discuss, clarify and express views and strategies and to merge visions of the young and the experienced, the policy makers and the academics, and even that of the developed and the developing. To the satisfaction of the organizers, the conference was successful in that it could achieve what were its primary tasks; to educate and inform, to foster and promote independent thinking from a south based perspective, but most importantly, to engender the recognition of the need to come together and build a network for evolving a joint development strategy for the global economy in general and the South in particular, in a manner that is both sustainable and equitable.