It may seem obvious, but three years and counting into the economic crisis we need to say it: An economy that's not growing fast enough will struggle to pay its bills and create jobs. And that's exactly what's happening. Growth in the developing world, while still well above that of advanced countries in 2011, was hit hard by the extreme volatility in international financial markets, which in turn hurt domestic demand in many emerging-market economies and also had spillover effects in terms of capital flows and trade. Meanwhile, the International Labor Organization estimated a 2011 global unemployment rate of 6.1 percent -- that's 203.3 million people out of work.

Clearly, something must be done -- and here's an idea that could benefit economies large and small, wealthy and poor: a massive global investment in infrastructure, financed with the creativity required in this age of austerity and aimed at jump-starting growth.

Higher growth can only be realized through worldwide investment, yet as long as factories continue to carry spare capacity and homes and office buildings remain vacant, the private sector is unlikely to lead the way. Governments must play an active role, and the solution could take the form of a global infrastructure investment initiative of at least $1 trillion. A worldwide initiative of this type has not been attempted before. There are, however, proposed infrastructure plans for East Asia, Europe, and the Middle East. We should make these plans real, and global, by building consensus among multilateral development institutions, as well as through the G-20 and other important groupings.

Investments in infrastructure projects create jobs and growth now and enhance productivity in the future. For example, in the United States, just $1 billion in new investment in transportation, school buildings, water systems, and energy could create 18,000 jobs, mainly in the construction and manufacturing sectors, which have been particularly hard hit by the recession.

Infrastructure improvement is needed to keep advanced countries competitive. With government budgets tightening, however, such an initiative would need to rely on self-financing infrastructure projects, such as toll bridges and high-speed trains, or use innovative financing mechanisms that encourage private participation.

It's also vital to promote and facilitate infrastructure investments in developing countries where bottlenecks and low productivity choke off growth. In countries like Nigeria and Tanzania, lack of access to water, sanitation, roads, and electricity not only impinges on the daily lives of hundreds of millions, but also renders firms less competitive. How can you compete if you don't have electricity? Many businesses are never started because the required infrastructure services are not available. A little creative financing could go a long way.

It's time for rich and poor countries alike to join hands to literally build the future. Infrastructure investments in developing countries will increase demand for capital goods such as the turbines and excavators that are often produced in the United States and Europe. Infrastructure investments in developing countries will boost exports, manufacturing employment, and growth in high-income countries, while reducing poverty and enhancing growth in the developing world. It's a win-win solution. So what are we waiting for?

Kevork Djansezian/Getty Images

 SUBJECTS:
 

Justin Yifu Lin is chief economist and senior vice president for development economics at the World Bank and author of the forthcoming book Demystifying the Chinese Economy.

ATIMOSHENKO

2:42 PM ET

January 3, 2012

Combine this with the inflation idea?

An article in this same issue by Chinn and Frieden suggests whipping up inflation (which, I suppose also dovetails decently with Kedorsky's suggestion to decrease debt). Instead of accomplishing this with low interest rates as C&F suggest though (something that first benefits those with access to the Fed discount window), why not print money and give it away on green infrastructure projects?

 

STAFFORD.DOC.WILLIAMSON

1:09 PM ET

January 4, 2012

Green Exports Development Bank

There is an "interesting" mathematical "coincidence" (maybe not so coincidental) that the first Obama administration "stimulus" package (I know, "bad" word, change that to "economic investment program") amounted to approximately $700 Billion, which happens to also be roughly 5% of the USA GDP (approx. $14 Trillion). Getting a similar package through congress may have to wait until after the 2011 election (or, gosh, maybe never), but there are mechanisms the administration could use to create a "domestic manufacturing investment program" that would not only stimulate domestic manufacturing, as such, but also as Justin Yifu Lin says here, create vast numbers of domestic jobs, while rescuing the underdeveloped portions of the world from their collision course with "cheap fossil carbon" energy sources (and even then, it will take a great deal to get those impoverished regions economic engines going).

I don't want to argue the relative merits of using the Defense Production Act, or the fact that the T.A.R.P. funds had almost no restrictions on how they could be used, but TARP funds are already a program funding which Congress has approved (and the moneys are spent, but not "gone" since they were primarily loans in the first place). But what I do suggest is that for 5% of GDP, to be used as "loan guarantee fees". It is time the commercial and investment banks did something to deserve the bailouts that turned failing companies and imbalanced risk strategies into a public funds charity bazaar.

We need an economic policy (established by Administration and by Presidential fiat, if necessary) that creates a special class of Fed discounted funds for green export projects conditioned on domestic manufacturing and jobs creation. Therefore, assuming there must be some mechanism, or combination of mechanisms that can assemble $700 Billion for this purpose that could amount to a 1% loan guarantee for each of the first 5 years of the life of the loan(s). Principal amounts would be bought up by the Federal Reserve. The Fed receives the loan guarantee premiums, while the borrower (the company or foreign division of a domestic corporation) which is supplying the infrastructure to those underdeveloped regions then receives a guaranteed loan to purchase domestically manufactured goods and services, or similarly domestic manufacturers could access this same extremely low interest pool of funds to finance the production of the goods to be exported.

This is very similar to what the People’s Republic of China has been doing in support of their solar industry. Some may raise WTO objections. Others may point to inflationary possibilities, especially if the Green Exports Development Bank creates trillions of new capital for the banking system. The Organization for Economic Co-operation and Development (OECD) (of which the USA is a member) itself may raise objections too, but with the economic strength of Europe (i.e. Germany) devoted mainly to their own economic crises, the US is the only one with the wherewithal to create the foundation for green energy economics worldwide. At the same time to quote language used about future technologies from the International Energy Agency (IEA) website, this is also exactly the type of program that will help, “to identify and resolve barriers for advancement of economical, efficient, and environmentally preferable [biofuels] processes.”

It is definitely not a coincidence that this is exactly the kind of program the Administration needs to get rolling this (election) year, if it hopes to have four more years in office to accomplish some of these monumentally ambitious goals.

Sincerely,
Stafford “Doc” Williamson

 

THEBULLSS

2:41 AM ET

January 5, 2012

Taxes, regulation, legislation are in favor of the Supper Rich

Please stop supporting non-sense polices that would only benefits the Rich.
You cannot fix the problem by STOP SPENDING. It is a BS of starving the beast cowards...sorry crowds and you know it.
As long as we have the supper rich corporation, have the rich Representatives and Senators write one-sided legislations to enslave the masses we will not break out of this recession. We need something really big and out of box quickly. I suggest:
1) Reverse the Bush Tax Cut and then some, for the TOP Rich 5%.
2) Eliminate FICA payroll tax for Corp. and employees (at lease for a few years) for the people who are making under $30K of income.
3) Eliminate ceiling cap for FICA taxable amount (now at $ 109K) and make ALL incomes from all sources taxable for FICA taxable, so everybody pay the same percentage. That should include those bankers’ bonuses and Wall Street high rollers; I mean every conceivable income from every conceivable source must be FICA taxed.
4) Audit (real audit) every Gov. Agency, especially Pentagon and Federal Reserve (a Privet Bankster, and make it a real Federal Reserve Agency) for waste and corruption and so called mismanagements (playing favoritism).
5) Tax ALL Wall Street Transactions (stock, commodity, and even Derivative Instruments) say 1% on both side (Buyers & Sellers).
6) Close all loopholes on the tax codes for the rich and Corporations (is there any other loopholes? we have already stopped giving single Moms welfare.)
7) Create the biggest Depression-era Works Progress Administration for all kind of public infrastructure (hi-tech and low-tech.)
These simple steps would bring JOBS, stability to the Market, and slowly eliminates DEFICIT and will fix funding for Social Security Fund.