Forum Post: Nobel Economist Joseph Stiglitz Hails New BRICS Bank Challenging US-Dominated World Bank and IMF
Posted 3 months ago on July 18, 2014, 9:01 p.m. EST by LeoYoh
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Nobel Economist Joseph Stiglitz Hails New BRICS Bank Challenging US-Dominated World Bank and IMF
Friday, 18 July 2014 11:57
By Amy Goodman and Juan Gonzalez, Democracy Now! | Video Interview
A group of five countries has launched its own development bank to challenge the U.S.-dominated World Bank and International Monetary Fund. Leaders from the so-called BRICS countries — Brazil, Russia, India, China and South Africa — unveiled the New Development Bank at a summit in the Brazilian city of Fortaleza. The bank will be headquartered in Shanghai. Together, BRICS countries account for 25 percent of global GDP and 40 percent of the world’s population. To discuss this development, we are joined by Nobel Prize-winning economist Joseph Stiglitz, a professor at Columbia University and the World Bank’s former chief economist. "It’s very important in many ways," Stiglitz says of the New Development Bank’s founding. "This is adding to the flow of money that will go to finance infrastructure, adaptation to climate change — all the needs that are so evident in the poorest countries. It [also] reflects a fundamental change in global economic and political power. The BRICS countries today are richer than the advanced countries were when the World Bank and the IMF were founded. We’re in a different world — but the old institutions haven’t kept up."
Click here to watch Part 2 of this interview.
This is a rush transcript. Copy may not be in its final form.
JUAN GONZÁLEZ: A group of five countries have launched their own development bank to challenge the United States-dominated World Bank and International Monetary Fund. Leaders from the so-called BRICS countries—Brazil, Russia, India, China and South Africa—unveiled the New Development Bank at a summit in Brazil. The bank will be headquartered in Shanghai. Chinese President Xi Jinping said the agreement would have far-reaching benefits for BRICS members and other developing nations.
PRESIDENT XI JINPING: [translated] Through the concerted effort from all sides, we have managed to reach a consensus in the creation of the BRICS development bank today. This is the result of the significant implications and far reach of BRICS cooperation and is therefore the political will of BRICS nations for common development. This will not only help increase the voice of BRICS nations in terms of international finance, but, more importantly, will bring benefits to all the people in the BRICS countries and for all peoples in developing countries.
AMY GOODMAN: That was Chinese President Xi Jinping. Together, BRICS countries account for 25 percent of global GDP and 40 percent of the world’s population.
For more, we’re joined now by Joseph Stiglitz, the Nobel Prize-winning economist, professor at Columbia University, author of numerous books. His new book is called Creating a Learning Society: A New Approach to Growth, Development, and Social Progress.
We welcome you to Democracy Now!
JOSEPH STIGLITZ: Good to be here.
AMY GOODMAN: Talk about the significance of this bank.
JOSEPH STIGLITZ: Oh, it’s very, very important, in many ways. First, the need globally for more investment—in the developing countries, especially—is in the order of magnitude of trillions, couple trillion dollars a year. And the existing institutions just don’t have enough resources. They have enough for 2, 3, 4 percent. So, this is adding to the flow of money that will go to finance infrastructure, adaptation to climate change—all the needs that are so evident in the poorest countries.
Secondly, it reflects a fundamental change in global economic and political power, that one of the ideas behind this is that the BRICS countries today are richer than the advanced countries were when the World Bank and the IMF were founded. We’re in a different world. At the same time, the world hasn’t kept up. The old institutions have not kept up. You know, the G-20 talked about and agreed on a change in the governance of the IMF and the World Bank, which were set back in 1944—there have been some revisions—but the U.S. Congress refuses to follow along with the agreement. The administration failed to go along with what was widely understood as the basic notion that, you know, in the 21st century the heads of these institutions should be chosen on the basis of merit, not just because you’re an American. And yet, the U.S. effectively reneged on that agreement. So, this new institution reflects the disparity and the democratic deficiency in the global governance and is trying to restart, to rethink that.
Finally, there have been a lot of changes in the global economy. And a new institution reflects the broader set of mandates, the new concerns, the new sets of instruments that can be used, the new financial instruments, and the broader governance. Realizing the deficiencies in the old system of governance, hopefully, this new institution will spur the existing institutions to reform. And, you know, it’s not just competition. It’s really trying to get more resources to the developing countries in ways that are consistent with their interests and needs.
JUAN GONZÁLEZ: And the importance of countries like China, which obviously has huge monetary reserves, and Brazil, which had developed its own development bank now for several years, their being key players in this new financial organization?