Michaelspence: The United States should promote capital-intensive industries

July 13 Morning News, the Korean government and the International Monetary Fund International High-level Meeting July 2010 12 to 13th in South Korea's Datian Convention and Exhibition Center. The theme of the conference was "Asia in the 21st century: The Road to the future".　　Nobel laureate Michael Spence said at the meeting that the biggest challenge facing the United States was underemployment, and suggested vigorously promoting capital-intensive industries to boost employment. Michael Spence says the U.S. is still the world's largest single economy, and US growth is vital to the global economy. America's recovery is fragile and unemployment is high. While the developed world is still deleveraging, America's problems are deep and long-term. In the past 15 years, the economic evolution of the United States has been largely driven by the excessive consumption of debt to drive asset inflation.　　While the crisis has halted such behaviour, structural problems continue to exist, such as the export sector is too small, underdeveloped, the financial system inflated, the volatility and threat of energy price growth and the lack of urban infrastructure investment. Michael Spence suggests that private consumption needs to be cut in the US, and that government spending should be reduced if taxes are raised. Michael Spence that the biggest challenge facing the United States is underemployment. This is not only because of the high unemployment rate caused by the decline in demand, there are deep-seated reasons. How to keep jobs in the United States is critical to the growth and competitiveness of America's entire tradable industry.　　Tradable goods and services are expanding globally, but the tradable sectors in developed countries are shrinking. "In the past 15 years, the effect of employment has been excessive consumption, financial, real estate industry, inflation masked, now the financial and real estate industry is shrinking, this problem is particularly urgent to solve." Michael Spence says multinationals can move into high-growth emerging markets and place their markets and supply chains where opportunities are concentrated.　　This means, however, that employment has left the developed world. Michael Spence said the solution to the problem was difficult to find, not just an export issue, and suggested that a broad public and private partnerships should be established for investment, technology development, and selected sectors of the tradable sector to enable developed countries to regain their competitiveness.　　The goal is to create capital-intensive employment opportunities and to change the incentive mechanisms of past markets through labour promotion and income consistency in developed countries, through public sector participation and resource input. "Such an approach would not affect developing countries, where the developed countries would not add up to hundreds of millions of jobs, and such projects would still leave the manufacturing opportunities in the vast majority of the labour-intensive tradable sectors in the developing world, enabling developing countries to further boost their income and comparative advantage, That, of course, would mean getting short-term jobs for advanced economies. "MichAEL Spence said. (Snow ting from Beijing) The following is a transcript: Michael Spence: Thank you very much for Mr. Zhu's gracious introduction.　　I've learned a lot from him and we've been working on it many times over the years.　　Ladies and gentlemen, I am very honored to be here to hear so many insights and I would like to say a few words about how to maintain a balanced economic growth in the coming years.　　Before I began, one of the members of the Growth Committee reminded me that if you had said that everyone would agree that no one would object, then it should not be said that his advice was always in my mind, and I am adhering to this idea today. The growth economies have shown strong resilience in the crisis, and this has been followed by a very effective response, with East Asia and South Asia growing more than before. Such growth is actually a long-term sustainable growth, even if the big environment is slow and the medium-term slow growth rate in developed countries becomes reality. We see that the growing economies are now getting bigger and the most important thing is that, compared to a few years ago, the income of emerging economies is rising, so the composition of demand and the production capacity of these economies, the evaluation of matching, better than before.　　Macroeconomic management is prudent and prudent and is introducing deep structural reforms. These developing economies are in a much better position to enter the crisis, and the assets are much better off after the crisis, and they have the financial capacity to ensure that the mechanism is advancing. In short, emerging economies in Asia and around the world have produced very strong economic growth, and in the global economy, in the drive for balanced growth, I think these economies should also play a more active role in G20 issues and play a more active role in the implementation of these agendas.　　This was quite different from a decade ago, and there were changes at the time, but overall demand was insufficient to ensure that significant and sustainable growth was achieved at a time of weak growth in the developed economies. As I mentioned briefly, emerging economies have continued to grow at a high rate in the midst of weak global growth, even in the context of another slowdown in the developed economies, and emerging economies will inevitably emerge once the developed economies have slowed again.　　The most important is to lay the foundation for the development of strong, strengthen our ability to prevent risks. G20 is taking a climbing road and may fail. Their stimulus policies are divided, and in industrialized countries, their growth-building modules are not yet fully in place, and these building blocks have plans to restructure these economies to ensure sustainable growth, and to lay this growth in the medium to long term of 3-5 years,　　Without these building blocks, policy co-ordination is even harder. Because without a clear set of growth strategies to be implemented in countries, especially in developed countries, where there is no such framework, these big powers are unaware of the commitment and efforts of the global economyWhat kind of devastation, fiscal policy positioning is very important, just a part of both developed and emerging economies, they need to make structural changes to invest and reform to ensure sustainable growth.　　In emerging economies, I've talked about structural changes that have been deeply embedded in policy and program implementation, laying the groundwork for growth in emerging economies, but not in developed countries. I'm going to spend some time this morning talking about America, the United States is still the world's largest single economy, the growth of the United States is vital to the global economy, and the role of the United States in global co-ordination is also very important, such coordination is to achieve a rebalancing of the global economy and the growth momentum of the maintenance, As the United States and developed economies recover, they are very fragile and unemployment is high. Low growth and high unemployment are inevitable, and the developed world is still deleveraging, but the problem is deeper and longer, and in the past 15 years the economy has largely been driven by the excessive consumption of debt to drive asset inflation. While the crisis has halted such behaviour, structural problems persist, the export sector is too small, underdeveloped, the financial system expands, the volatility and threat of energy price growth, and the lack of urban infrastructure investment.　　Although the education is somewhat strong, but in the efficiency and the effectiveness, in this kind of cognition skill training, the training person can not satisfy the labor market demand, still has the insufficiency. We see that state budgets are still in a state of tension, due to the growth of the crisis and, as a result of this initial positioning, policy support for a change in the order of infrastructure and so on. In the long run, we have to shift to find a balance between short-term stimulus policies to quickly escape from crisis and sovereign accounting risks.　　So it is also the main topic of debate, but also the topic of great differences, how to find such a balance. We assume that there is a fairly reasonable balance now, that the United States still needs to see the size of spending, investment and income, and in order to support long-term investments, I think domestic private consumption needs to be cut, tax increases, and government spending less. This will create greater space for public sector investment and, at the same time, restore long-term growth, which is a painful process, because high unemployment and slow growth will persist for a long time. These are not enough, in fact, the main long-term challenges in the United States, in the developed countries, mainly the production of underemployment. Not only is there a high level of unemployment due to falling demand, there are deep reasons.　　There was a recent article in the Grove that said that America's manufacturing industry is disappearing and that we have to reverse this trend as soon as possible. He documented some of the technology industry's data in his article, saying directly that we had to keep these jobs in the US. I have a different view of this description. Not just in terms of manufacturing,This is a bigger problem for the growth and competitiveness of the entire tradable sector. So the obvious question, since it is the most important, is not to restore protectionism, it is both an economic and a political issue. There are several things in the American compact, one that is open, flexible, vibrant economy. On the other hand, for hard working people to have a constant income, the second contract is collapsing. Tradable goods and services are expanding globally, but the tradable sectors in developed countries are shrinking. [Page] The employment effects of these trends over the past 15 years have been excessively consumed, inflation in the financial and real estate sectors has masked the shrinking of the financial and real estate sectors, where multinationals have played a key role in reaching high-growth emerging markets Place their markets and supply chains where opportunities are concentrated. This brings useful, the McKinsey study points out that this is an effective source, and in the manufacturing industry, in many services, such a reorientation means that jobs leave the developed world, which will naturally be in place to reduce labour intensity and increase capital intensity. Caused the loss of labor. Low-cost, highly educated workers in developing countries do not need to do this, they will continue to promote labour-intensive industries, and the weight of developed countries is increasingly in the non-trade sector, including high-end tradable services, which require both human capital and close to the final market. We see this deviation, which is small, on the one hand, the incentive mechanism on the one hand, and the priority of countries on the other, these trends have brought several problems. First, the degree of specialization in some economies is not ideal, even in terms of their independence and national security.　　As Ann arrives at Grove, it is inextricably linked to the development and manufacture of products, which, if not manufactured, can lead to a gradual loss of research and development advantages. 3rd, and most important, the industry that is now born is not necessarily able to provide a strong enough engine to create the productive jobs that economies need. Neither on the scale nor on the scope.　　This would result in a decline in growth and a difficult recovery in the export sector, which would have a negative impact from the point of view of income distribution. Solutions to these problems are difficult to find, especially in the global dialogue with developing countries, where we need developing countries to understand the challenges facing the developed countries. For poor income distribution can be solved through the redistribution of the tax system, but this is only a symptom and not the root causes. President Obama set up an export committee that will deal with the issues I have just mentioned, not just an export issue, but a large part of the tradable sector that involves finance, and we need to take bold steps I suggest that we should build up a broad public sector partnership with the private sector for investment, technology development,Some sectors of the tradable sector to allow developed countries to regain their competitiveness. The goal is to create capital-intensive jobs and to change the incentives of past markets through labour promotion and income consistency in developed countries, through public sector participation and resource input, which will not happen naturally.　　The technological sophistication of these advanced economies should not, then, be considered unchanged, and the public and private sectors should play a role. This will not affect the developing countries.　　The developed world does not add up to hundreds of millions of jobs, such projects would still leave the manufacturing opportunities in the vast majority of the labour-intensive tradable sectors in the developing world, enabling developing countries to further boost their income and comparative advantage, which would, of course, mean short-term job opportunities for advanced economies. Finally, I turn to the global need for rebalancing and recovery. We see that the world's major economies, with the momentum of global growth, are playing a very important role, as well as the developed economies we need some external help in terms of demand. This is a rebalancing of global demand, and we have a whole set of plans to restore growth. In the developed world, G20 may have reason to ask surplus countries to help make some structural changes to help restore global demand, which will ensure global growth and demand recovery. Of course, each country will adopt a different plan, because these surplus countries, their internal conditions are also different. Take China, for example, in China. In the past, like South Korea, we have seen successful entry into higher-income countries, China's policies are being readjusted, the supply and demand structure of the economy as a whole, saving less and relying more on domestic markets to boost growth.　　Like the United States and other countries, these structural reforms are complex and difficult to implement, although the goal is to achieve sustainable growth that will take a long time and the main challenge now is implementation. If G20 can find specific, nationally-grown growth strategies, and they can have these building blocks to coordinate, they should be bold enough to say so. The World Bank, the Bank for International Settlements and the regional Development Bank, they have a deep understanding of the structural factors and the fundamentals of growth in each country, but they are not effectively communicated to countries, but in institutions, they want to do their job and evaluate growth strategies and policies. , is not able to meet the needs of the country, is not needed to adjust. If such a foundation could be laid down, it would help us to deal with G20 's series of initiatives, increase its success rate further, and restore global demand, a way that would allow demand to be equitably distributed among countries, restart the WTO and support the growth goals of individual countries.　　At the same time, I also firmly believe that Doha can be completed, can help developing countries, establish the credibility of the WTO. There are a variety of problems that need to be addressed more or less, and it is particularly important that we understand the mainReserve countries, as well as sovereign wealth countries, they act on such investments as they are cutting the current-account surpluses as part of their transition. Finally, I'll talk about currency and exchange rates, I want to be systemic to solve this problem, we see the system is a hybrid system, in which the developed countries adopt free exchange rate, independent policy, open capital, in addition to Japan, there are not many reserves, emerging economies have adopted different policies, is in line with their development needs. Their exchange rates are managed, they may have capital controls, and after the crisis of 97 and 98, the large increase in foreign exchange reserves has a effect on the hybrid system, which has recently been less effective.　　In the past the system has met the needs of different economies, and emerging economies, which have had limited influence in the overall global balance, have had negligible impact, but such an era has gone. The external impact of the policies of emerging economies is enormous and cannot be overlooked, and emerging economies should understand and accept this reality. The hybrid system of the past is no longer functioning. Because of the relatively volatile capital markets, the floating exchange rate system is not very effective. We need a new system that meets the needs of different countries, and it is a major challenge to achieve balance and equity.　　G20 is not able to work through a mixture of past systems, because the size of emerging economies is already big enough.　　Finally, I came to the conclusion that at the Toronto meeting, the conclusion was very long, the scope was also said, the intention also said, but did not say through what process and road map to let us have some confidence to solve these problems. Then, from this point of view, the November G20 meeting in South Korea is crucial, it is a huge game to be done together, we have to learn the rules of the game, because different game protagonists between them is asymmetric. If we take steps that are inconsistent, and if there is a continuous conflict, there will not be sufficient results. It is hoped that the current G20 composition of this mutual evaluation project will move in the right direction.　　But now, I don't see any evidence to show that a mutual assessment like this, or any other process, has brought about any momentum in advanced economies towards structural changes that can achieve sustainable growth, or has driven a broad consensus. Maybe not, I may be wrong, this is not the first time, but at least we should be able to argue. In advanced economies, we lack to address this additional dispute. Like driving in the desert without a spare tire, this is extraordinary. This is unavoidable. The problem now is that on the current path, our goal may not be as attractive as the distance, and perhaps the global challenge is to make sure that this is not the case. Thank you.