LETTERS TO THE EDITOR

Summer 2009

by Brigitte Öppinger-Walchshofer

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Sir,
The economic crisis seems to have come as unprecedented shock for many top business managers, as well as for opinion leaders, politicians and a large part of the general population. The worldwide repercussions of the U.S. sub-prime crisis were hard to understand, especially for people who played no part in the credit bubble but who were severely affected when it burst. As an extended period of unsustainable financial profit-making ended in chaos, even the staunchest economic liberals began calling for state intervention. And discussions at the last World Economic Forum included the case for changing the paradigm behind the global economic system.

While it seems the full effects of the crisis are still emerging, and forecasts of the economic downturn can still shock, certain consequences are now clear. The crisis will no doubt have a crucial (and deserved) impact on future trade and financial regulations, and help to redefine the economic role of the state. Hindsight also proves that “free” markets do not lead to socially desirable results in the long run. This is not just true for the poor but also (less expectedly) for the rich.

Analysts also agree that poor and middle-income countries will bear a considerable share of the economic burden. I therefore agree absolutely with Jean-Michel Debrat and Simon Maxwell that it is essential to maintain and even to increase development activities. I also agree the European Union should gain the international influence it deserves as the world’s biggest donor, and I fully support their arguments about the advantages of greater development cooperation.

To achieve the Millennium Development Goals (MDG) we will need a strong public sector plus close collaboration between developed and developing nations and between donor and recipient countries. We must also harness the power of the people to move on; it is astonishing to see the sort of strategies that innovative people come up with, especially at times of crisis. The private sector is another key partner, as recognised by international conventions such as the Cotonou Agreement and the Paris Declaration. Since global recession will now make public money even more difficult to mobilise for development, I believe donors should not ignore the potential contribution of entrepreneurs to achieving the MDGs.

Western economies maybe in recession, but other countries are still growing. So EU companies should be encouraged to build on the opportunities offered by developing economies and supported in their efforts to secure jobs and reduce poverty. Austria is already working with the European private sector, fostering best practice especially in the important sectors of alternative energy, rural development and sustainable agriculture. A lot of this work qualifies as “green investments” which are in great demand right now. One of Austria’s top priorities is our Public-Private Partnership Programme which builds on the entrepreneurial spirit in both developed and developing countries. Such an approach can create win-win situations in a world which is re-thinking all the old ways of doing business.