This document summarizes the work and legacy of economist Hans Singer, including his contributions to establishing concepts like terms of trade and promoting pro-poor growth policies. It discusses his advocacy for soft loans to developing countries through the World Bank and criticism of commodity price fluctuations and agricultural trade liberalization undermining food security. The document outlines Singer's views that the UN should play a larger role in global economic governance and management over institutions like the IMF and World Bank. It analyzes the challenges developing countries face from the global economic crisis and argues for the need for fiscal space and reform of the international financial system to better support development goals.

1. Hans Singer,
Economic Development,
Crisis, Recovery and
the United Nations
Jomo Kwame Sundaram
United Nations Assistant Secretary General
for Economic Development
28 October 2010

2. Singer’s Legacy:
Well ahead of the curve
• UNICEF Report
• Terms of trade
• Soft loans, wild man
• Food security
• Kenya Report: pro-poor growth
• Basic needs: global social protection floor
• Global imbalances & inequality
• Global economic governance

3. 1947 UNICEF Report
• Importance of nutrition of children
and pregnant women
• Importance of education
• Social development important
• Right balance between investments
for present and future generations
• MDGs: SG’s maternal and child health

4. ‘Sensitive periods in early
brain development
Binocular vision
0 1 2 3 7654
High
Low
Habitual ways of responding
Language
Emotional control
Symbol
Peer social skills
Relative quantity
Central auditory system

5. Commodity Price Index, 20C
Figure 1
AGGREGATE REAL COMMODITY PRICE INDEX, EXCLUDING OIL (GYCPI)
30
50
70
90
110
130
150
1900 1920 1940 1960 1980 2000
1900=100

6. Manufactures’ Terms of Trade
Unit value of manufactures exported by developing countries
relative to manufactures exported by developed countries
90
95
100
105
110
115
120
125
130
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2001
2002

7. Wild man of the UN!
• SUNFED  IDA:
WB arm for soft loans
• For proposing soft loans for
developing countries,
attacked by:
• WB President Eugene Black
• Senator Joseph McCarthy

8. Food insecurity
• Abolition of World Food Council created gap
• Problem further accentuated by GATT
Agreement and WTO creation
• Agricultural trade liberalization has undermined
food security  lost capacities
• 2007-08 food price spikes
- bio-fuels
- futures as financial assets:
post-subprime flight to safety
indexed trading

9. Global economic management
Original Bretton Woods proposals:
• Global economic management by United
Nations (General Assembly, ECOSOC)
• IMF to deal with financial, monetary, and
balance of payments disequilibria, with
overriding objective of full employment, and
many functions of world central bank
• World Bank to fund projects, not to be
involved with macroeconomic policies or
structural adjustment

10. IMF
• Not world’s central bank or lender of
last resort
• Full employment no longer consistent
objective
• Inflation targeting contrary to Article
IV, Section 1(i)
• Capital account liberalization promotion
contrary to Article VI

11. World Bank
• Programme lending – moved
away from projects
• Structural adjustment
programmes – failed to
generate growth spurts
• Hard/soft issues: WDC/NYC
 IMF/WB

12. IMF/WB governance
• Based on principle of ‘one dollar, one
vote’
• So, financially powerful countries
control BWIs, refuse to allow major
capital increase
• So far, inadequate voice, share reform
• Appointment of heads of WB, IMF
NOT on merit, open competition

13. BWI-UN relations
• Singer anomaly: WB President and IMF MD
address ECOSOC
• But SG no voice at BWIs’ annual meetings
• Partly rectified since 2002 Monterrey consensus
• Singer proposed:
–the Bank and Fund might well be requested to submit an
annual report to the General Assembly and ECOSOC to
explain what attention they have paid to the resolutions of
the GA and ECOSOC, in accordance with their Terms of
Agreement

14. 14
Crisis financial impacts on
developing countries
• Despite non-involvement in sub-prime debacle:
 Emerging stock markets collapse greater
 Reversal of capital flows, FDI also down
 Spreads rise, much higher borrowing costs
• But financial positions stronger than during
Asian + LA crises (more foreign reserves,
better fiscal balances)
But reserves rapidly evaporating with export
collapse; fiscal space also disappearing

15. 15
Trade impacts
• Exports decline 
all developing countries
• Terms of trade  primary exporters
• Trade surpluses,
reserves run down quickly
• But lower energy, food prices helped
net food and oil importers

16. Stimulus lags delay recovery
0 2 4 6 8
3 month delay
Immediate and
sustained
stimulus
efforts
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

17. Jobs recovery lags output
recovery, 1991, 2001Duration of output recovery and job market recovery after the 1991 and
2001 US recessions (in months)
0
10
20
30
40
50
60
Output Job market recovery
1991 2001

18. Major Challenges
• Lower commodity prices
• Reduced export demand
• Domestic demand down too
• Employment, incomes, demand lower
• Trade surpluses smaller, deficits bigger
• Short-term capital inflows reversal
• Less FDI
• Stock markets’ negative wealth effect
• Bank lending growth down; higher costs
• Domestic private investments down

19. IMF fiscal adjustments
IMF April 2010 target debt/GDP ratios:
Benchmarks:
• Developed countries, 60% debt/GDP ratio
– median pre-crisis ratio
• Developing economies, 40% debt/GDP ratio
– no explanation how figure derived
Average fiscal adjustments:
• 8.7% of GDP for developed countries
• 2.7% of GDP for developing economies 21

20. Conventional framework
• ‘A …budget deficit in excess of 1-2% of GDP is
evidence of…policy failure’ (Williamson 1990)
• ‘Developing economies should focus on
containing inflation and ... adopt credible
fiscal adjustment plans to boost confidence in
macroeconomic policies’ (GMR2010)
• Maintaining macroeconomic stability to ensure
confidence remains priority for all countries
(GMR 2010, p. 82) 22

21. IMF on debt implications
• GMR 2010: 67 low income countries
• Debt vulnerability:
–Low 20
–Moderate 24
–High 15
–Debt distress 8 (12%)
• Yet recommends: fiscal consolidation for
ALL countries 23

22. IMF: growth-based vs contractionary
fiscal consolidation (1996)
1996 IMF study of 74 cases in 20
industrialized countries during 1970-95:
• Strong global economic growth helps
achieve successful consolidation
• Weak global growth reduces chances that
consolidation will cut debt-to-GDP ratio
• Fiscal retrenchments + loose monetary
policy offset recessionary impacts

23. Fiscal consolidation
contractionary
• Fiscal consolidation typically contractionary
• Little empirical support that fiscal austerity
stimulates economic activity in short term
• 2 yrs after fiscal consolidation of 1% of GDP:
- reduces real GDP by ~ 0.5% after 2 yrs
- increases unemployment rate by ~ 0.3%
• Even for likely sovereign debt-default risk
countries, results not expansionary
– output falls by ~0.4% over 2 years

24. Impact of 1% GDP fiscal
consolidation contractionary

25. Spending cut impact matters

26. Composition matters
• Largest contractionary effect
from public investment cuts
• Even with transfer cuts, no
strong evidence of
expansionary effects – results
statistically insignificant

27. Conditions matter
• Without complementary policies, -ve
impact of fiscal consolidation much
larger
• Larger -ve impact due to sudden reversal,
premature, contractionary fiscal
consolidation
• Synchronized consolidation by large
economies even worse

28. Fiscal consolidation logic!
• Fiscal consolidation after sustainable
recovery assured
• East Asian recovery strongest
 EA should fiscally consolidate
• G7-US economies fiscally consolidating
now  weaken EA recovery, ability to
be new locomotive for world recovery
 cause new downturn 30

29. EMEs’ fiscal rules restrict space
31

30. Need for fiscal space
• Macroeconomic policies should not be
driven by fear of outliers
• Most developed countries have fiscal
space – no inflationary pressure
• Debt sustainability OK, but specific debt-
GDP targets arbitrarily determined
• Fiscal policy typically residual,
development not prioritized

31. Crisis should lead to reform
• A crisis foretold
• International financial architecture: non-system?
• Ideology: deregulation, self-regulation,
inadequate and inappropriate regulation
• Financial globalization: growth, stability?
• Capital account liberalization vs IMF Article 6
• Policy: market-led? Pro- or counter-cyclical?
• Finance’s inflation fetish? Public sector deficit?
• Reserve currency  Unsustainable global imbalances
• International cooperation: G7  G20, UN?

32. Lost Bretton Woods moment?
Bretton Woods, 1944: United Nations
conference on monetary + financial affairs
• 15 years after 1929 Depression
• Middle of WW2
• US initiative vs UK Treasury stance
• 44 countries (28 developing countries; 19 LA)
• UN system: IMF, IBRD, ITO
• Clear emphasis on sustaining growth, job
creation, post-war reconstruction, post-
colonial development, not just monetary +
financial stability

33. System reform agenda
• Lack of reserve currency system 
unsustainable global imbalances
• Financial deregulation
- deregulation, self-regulation
- inadequate + inappropriate regulation
• Capital account liberalization vs Art. 6
• International financial architecture: non-
system since 1971 end of BW
• Policy coherence: Align IMF, WB with UN
development agenda, IADGs

34. 37
Thank you
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Acknowledgements: UN-DESA, G24