Leaders of the G-20 countries have met 3 times in the last one year to discuss ways and means of overcoming the world economic slow down. However, these countries including the rich countries such as the US, Japan and Germany and the emerging giants such as China and India have not fully succeeded in their efforts to overcome the economic and financial crisis in their own countries though they may finally succeed soon. The rest of the world should not look to the G-20 countries to help them fully recover from the crisis. The rich countries can help the poor countries only to a certain extent. Every country should in its own way find ways to recover from the crisis.
The simple solution for any country to register GDP growth is to increase production of goods and services. For this, governments should provide opportunities to all the people – including children above 14 or 15, women, handicapped and old people – to work according to their abilities. In fact, in difficult times, people should work longer (than the normal 8 hours, perhaps 10 hours a day) and harder to further increase production of goods and services.
Bringing in more liquidity i.e. bringing in more money into circulation is necessary to stimulate the economy but if this is not preceded or immediately followed by increased supply of goods and services, the economy would not grow. On the other hand, there would be increase in prices which in turn will lead to cut in production and negative growth in GDP. Money should be put into the hands of the people, after taking work from them. Embarking on additional welfare measures like extending financial and material assistance, waiver of loans, fees, charges, etc. will only help people to temporarily face the effects of recession but will not revive the economy. Ultimately, it would deepen the economic crisis.
Since there is greater scope of employment generation in developing countries than in developed countries, developing countries are in a better position to recover from economic and financial crisis earlier than in developed countries.
It would be helpful if World Bank and IMF could advise countries, particularly poor countries to gradually reduce grants and subsidies and provide opportunities for all people to work. Increase in production of food, clothing and housing should get priority in poor countries.