Restructuring always timelyLeaders of world’s 20 major economies declared that they were “united” in resolve to promote growth and jobs in a communique announced Tuesday after a two-day meeting in the Mexican beach resort of Los Cabos.
Re-emphasis on growth came as the spreading debt crisis in Europe is undermining the global economy. “We will work together to strengthen recovery and address financial market tensions. We will work collectively to strengthen demand and restore confidence with a view to support growth and foster financial stability,” said the communique reassuring that “strong, sustainable and balanced growth remains the top priority of the G-20.”
As jitters in Greece and Spain demonstrate, austerity alone cannot solve the economic crisis. Reduced spending would only depress the economy, worsen fiscal revenues, and unsettle the financial markets.
Policies to spur growth and jobs can reduce risk and uncertainty as well as calming investment sentiment. Concrete plans to bolster growth can offer a breakthrough and impetus to end the economic impasse. G-20 leaders urged countries in the euro zone to take all necessary measures to safeguard the integrity and stability of the area.
They supported the idea of establishing a European Stability Mechanism to strengthen firewalls and moving toward an economic and monetary union to ensure more targeted investment, employment, growth and competitiveness.
But each country should take an individual step to boost growth and jobs. The Korean economy is relatively stable compared to that of Europe. Authorities should not take the G-20 guidelines as a cue to take aggressive fiscal and monetary measures to stimulate the economy. We should focus on reinforcing the domestic consumption market through advancement in the services sector.
It is important to raise growth potential through continued restructuring in economic structure. We should reconsider the past public-led stimuli means led by pork barrel projects. Boosting the supply-side to stimulate growth has a limited effect.
What we need to concentrate on is developing economic structures to be more productive, led by innovation and quality work. We should seek solutions to growth and jobs in education and training of our human resources.