Review: Towards A Gender, Development and Climate sensitive framework for exploring solutions to the present Global Economic and Financial Crises

The[1] global economy is in the midst of serious financial and economic crisis and its repercussions manifesting in the economic, political and social life, human development, human security, human rights (the right to be free from hunger), gender, as well as, peace and security. The paper argues that there is likely to be decline in standard of living and those are just above the poverty line will again be pushed into poverty. The assessment of the evolution of such crisis must differentiate between the long term structural causal factors and presenting symptoms. This would go a long way in finding sustainable solutions to the resulting problems. It is further pointed out that unless we adopt such a strategy the measures taken remain as ‘stop gap’ arrangements without making a dent on the lives of those who are the worst hit.

It is pointed out that in order to lead to a systematic understanding of the problem we must acknowledge the fact that the crisis has spread beyond the financial sector alone and has critical linkages with the food and fuel crisis as well. Hence the financial crisis must be located in the mode of production and economic and social governance system on which the financial markets thrive. Finally, the paper suggests that all the three crisis (food, fuel and financial) are man-made and signify economic, political and social failures of national governments and international financial institutions. Rapid liberalisation of markets without concerns for the rights of the marginalised and poor has led to systemic government market and institutional failures in dealing with the associated problems. Again, for the innumerable poor and the disadvantaged across the globe the impact of the crisis is not uniform and especially for the poor in the countries of the south where public expenditure is dwindling it is a matter of life and death for them. The case of global food crisis seems to have taken a back seat in the light of the expanding emphasis on the financial one.

However, linking the three crisis the paper also examines the seriousness of the impact of the financial crisis. While it worsens the international trade situation, its impact on the rising prices of commodities and fuel threaten the livelihood opportunities for the poor which also adversely affect the revenue generation of the governments with consequences as reduction in social spending.

The paper further invites the attention towards the lessons one could draw from the Asian crisis in terms of the macroeconomics issues dealt at the national and international level, trade and financial policies have laid the foundation for the crisis. One could also delve deeper to understand the ramification of finance generated crisis on the social sector, especially gender and other inequalities. The paper lists some of the important causes that led to the crisis as identified by ILO as well.  They are:

·         Structural factors such as global savings-investment imbalance linked to large current account imbalances and growing income inequalities across the globe.

·         Stagnation of middle level incomes necessitated a rise in demand for credit to sustain consumption possibilities and housing investment decisions.

·         New, lightly regulated financial products that allowed excessive debt accumulation.

·         Regressive wage and tax polices that distorted local labor markets as well as redirected government priorities.

·         The accumulation of budget surpluses coupled with lack of funding of social policies and social protection. Informalization of labor market without emphasis on social protection and social services

·         Transfer of funds from South to the North in the form of debt payments, royalties and savings

·         Lack of accountability in the global financial market

It is in this line that the paper argues for such responses to deal with the crisis that goes beyond fiscal stimulus packages for the central banks and targets poverty eradication, sustaining economic development gains and employment creation. The fact that the global south faces difficult situations towards achieving the MDGs specifically poverty reduction and women’s social and economic empowerment the aim therefore should be equitable and sustainable development across the globe. A systematic approach to the crisis is not only revival of the financial market  but adequate funds are  necessary in order to ensure food security and access to essential public services and so such amounts should be injected into the poor economies as well. Further, as job loss and unemployment are causes for concern public work program to clear local labour market problems need to be implemented with greater force. Finally, the paper  identifies the road to recovery based on the fundamental four pillars:

1.       Financial regulation: It is pointed out that the entire financial markets seems to have been divided into two – on one hand is a formal banking system and on the other a shadow  of  wide assortments of assets such as debt swaps that are technically off the books. Asets such as Collateralized debt obligations  are of questionable values which makes it politically difficult for economic decision-makers to explicitly accept the real cost to the system. Then there are problems associated with the rating agencies. Again, regulators are said to have lacked theoretical understanding of the system and the connivance among key regulatory officials, the rating agencies and key financial firms led to the reversal of the role as a regulator. Therefore an independent body should be created to study new financial instruments and their consequences on the world financial system.

2.       Multilateral trading issues: The paper suggests that the World Bank cannot be both a bank and a research knowledge-technical assistance-capacity building institution. The development know-how, capacity building functions need to be decentralized into more independent and objective based national, regional and global centers. The conditionality based sytem need to be revised. Similar approach to be adopted  in the case of World Trade Organization and its trade and financial liberalization policies and no re-launch of the DOHA round of trade agreement until a proper social and gender impact assessment of the cost and benefits of the URA to economic development, poverty eradication and gender equality and women’s empowerment and the environment has been undertaken.

3.       Macro-economic issues: The paper reaffirms the emphasis on social, development, equity and re-distributive function and content of macroeconomic and trade policies. In the developing countries such policies have neglected “critical goals of employment generation, agricultural development rural development and human development”. Acknowledging the fact that growth and development does not take place without the significant participation of women the paper gives thrust to “gender sensitive, pro-poor, pro human development fiscal stimulus package in the north and the south geared towards agrarian reform and agricultural and industrial-service development.”

4.       Finally, reforming the global financial architecture and development of friendly debt sustainability framework will augur well for all.