The world has grappled with enormous challenges in 2009 as the global economic crisis gathered pace, affecting all nations. The global economy seemed headed towards stabilisation a year after the collapse of financial icons in September 2008. But preoccupation with stemming the crisis placed a number of emerging global challenges on the back-burner, just as they had begun capturing global attention.

At the same time, the worst economic downturn since the Great Depression of the 1930s spotlighted global interdependence and connectivity. As adverse repercussions rippled through developed and developing nations alike, joint actions by key players were taken to curb the worst ravages. The significance of partnerships was re-established.

Partnerships must now be strengthened and deepened to address the issues still on the table. As the global financial crisis strongly indicated, problems left unattended can fester into major disasters - deflecting nations from the predominant task of development and adversely impacting hundreds of millions of people, both poor and rich, across the world.

The Partnership Summit 2010 will be a platform for governments, businesses and civil societies to address key global issues, and India’s partnership role as a large developing nation in evolving roadmaps for the next decade.

Global agendas

Financial markets

Emergency financial support, pump-priming liquidity into frozen credit markets, and drastic reductions in interest rates helped avert a deep and prolonged recession in the world after the crisis erupted in September 2008. The aggressive and coordinated response of key governments and central banks must now be carried forward into regulating and monitoring the global financial system.

The question to be addressed is how much regulation of the financial markets will be needed. Stability of the financial system needs to be a priority issue in any kind of future regulation. At the same time, attempts to reform the system should not act as barriers to creativity and enterprise and to normal business activity. Future regulation must ensure that adequate trade credit and financing are always available in order to mitigate impact on the real economy.

India’s financial sector has been insulated from the global financial crisis due to timely action to prevent asset bubbles and undue exposure to toxic assets. On the basis of its experience, India can play a part in the new regulation and monitoring framework that is in the process of being developed.

Multilateral trade regime

The good news on the Doha Development Round is that 90% of the negotiations are completed. Unfortunately, the remaining one-tenth of the issues are the most contentious. Free and fair trade will however be the driving force for complete recovery of the global economy. The most encouraging aspect is that world leaders are returning to the negotiating table, perhaps with greater flexibility and stronger partnership approach to resolving disputes. Leaders have committed to finalising the discussions in 2010 and some forward movement on certain areas has taken place behind the scenes.

On the other hand, protectionism too has crept into trade. According to the World Bank, industry requests for import restrictions have jumped in 2009, and this might translate into protectionist measures down the road by both developed and developing economies. Leaders must recognise the dangers of protectionism and industry must be aware of the dangers of retaliation.

Benefiting from surge in global trade over recent years, India is committed to integration of its economy with the world flow of goods and service. India has taken the lead in revival of the talks by hosting an informal meeting in September 2009 of key players. It has also entered into key regional trading agreements and will continue to press for a free and fair global regime.

At the heart of the current crisis has been the world financial system. Awash with liquidity for the past few years and firm in their optimism about the future, financial players took unprecedented risks to maximize returns. Seamless interlocking of financial institutions helped spread the risk to otherwise strong economies. In the end-play, the domino effect predominated, and reputable financial institutions of mammoth sizes faced insolvency. Policy makers all over the world scrambled to invent solutions to avoid complete failure of the system.

Food security

While 2008 witnessed unprecedented surge in food prices, drought-like conditions in India the following year have raised new challenges of price management. Global prices of agricultural commodities such as sugar, rice and edible oil may be pressured by loss of area under cultivation in India. The country’s requirements for import of grains and other agricultural products for meeting domestic demand will layer on additional price levels.

Recognising the urgency of feeding an expected 9.2 billion global population by 2050, G8 countries in July pledged $20 billion for helping poor farmers in sustainable agriculture over the next three years. This is being followed up the FAO’s World Summit of Food Security in November 2009, where the intention is to establish global agreement on eradicating hunger completely by 2025.

Raising agricultural productivity in large countries such as India could be key to international food security going forward. A partnership approach to bringing new technology and investments into agricultural practices is needed, in a manner that protects the interests of small and marginal farmers across the world.

Climate change

Perhaps the most far-reaching of global discussions in 2009 will be the United Nations Climate Conference in December at Copenhagen. The targeted 2C limit on global warming is likely to lead to transformational changes in development models of industrialising economies and the way business is conducted in high carbon-emitting nations.

But convergence on this aim is still far off. Although poor countries are more at risk from climate change, costs to counter it are at unaffordable levels for them and could derail their path to development. For rich countries, the issue is of making lifestyle changes and developing new clean-tech products.

India has announced its commitment to not increase its carbon emissions per capita beyond that in industrialised countries. Since this figure for India is about one-twentieth that in the top emitting nations, there is a long way to go. But India is taking steps to reduce dependency on high-emitting fuels by pledging to increase renewable energy generation through nuclear, solar and wind sources.

The climate change dialogue must ensure simplicity, equitability and flexibility. Nations will have to leave entrenched positions to tackle issues such as historical economic development models and possible new models. Partnership will be a core for addressing climate change.

Conclusion

The global economic crisis has shaken up the world and it is evident that a new architecture of world order will emerge. Although its exact shape is still evolving, multipolarity will be a central feature, with a key role to large emerging economies. India would need to strengthen its partnerships with the rest of the world to meet common objectives.

Being held at Chennai, The Partnership Summit 2010 provides an opportune moment to take stock of where the world stands on key global agendas. Following on the heels of important global platforms for exchange of views, The Partnership Summit, a joint initiative of India’s Ministry of Commerce and Industry and apex industry chamber Confederation of Indian Industry, can set the pace for a new global agenda of collaboration and teamwork among the economies of the world.