Emerging economies and the middle-income trap

The Organization for Economic Cooperation and Development (OECD) promotes policies that aim to support economic and social well-being and, among other things, to improve the Human Development Index (HDI) of countries around the globe. The organization coordinates the efforts of its member countries by providing a forum for cooperation and the organization of seminars, research projects and several other educational initiatives on topics that range from growing economic and social inequality to environmental preservation.

One of the latest studies undertaken by the OECD, “Perspectives on Global Development 2014,” deals with the emerging economies of the so-called BRIIC countries – Brazil, Russia, India and China with the inclusion of Indonesia – and was presented at a seminar hosted by the Istituto Affari Internazionali (IAI) on 9 July 2014. A large number of entrepreneurs, diplomats and academics convened at IAI to welcome the guest speakers: Carl Dahlman, head of Global Development Research at OECD, and Fabrizio Saccomanni, former Italian Finance Minister and IAI senior economic advisor.

Dahlman, who worked for 25 years at the World Bank, introduced his arguments by affirming that the last decade has been extremely significant for BRIIC countries because of the enormous expansion of trade they witnessed. He emphasizes the fact that we now find ourselves in “a very complicated landscape” characterized by “tremendous global interdependence,” for which a financial crisis in the Western hemisphere can affect the export-oriented economies of South-East Asian countries. When these global shocks happen, what is mostly at stake is the tutelage of labor laws, workers’ rights and the quality of environmental protection measures. Dahlman then specified that there are three ways to strengthen and protect social and environmental sustainability: 1) by ensuring equal opportunities; 2) through the development of effective local policies to sponsor equitable growth and reduce regional disparities; 3) with the increased awareness of energy efficiency and environmental sustainability techniques.

Dahlman also acknowledged that having BRIIC countries consider these issues as priority areas on their political and economic agendas is not an easy task, since, as he put it, the issue when dealing with emerging economies and sustainable development is not the process of developing good policies itself but finding a government willing to implement them. Along similar lines, Saccomanni clarified that it is imperative for the policymakers of developing countries to tackle these issues and meditate over possible solutions to apply. The problem, again, is to find policymakers willing to take a risk and pursue policies for the greater good of the country and the world. Saccomanni cleverly brought this last point home and concluded the seminar by citing Juncker, who, speaking of the need to reform the EU’s structure and institutions, declared “we all know what to do, we just don't know how to get re-elected after we've done it.”