We need growth that creates jobs

TheStar.com – opinion/editorialopinion
Published On Fri Nov 11 2011.    Christine Lagarde

This is an edited excerpt of an address to the 2011 International Finance Forum in Beijing this week by Christine Lagarde, managing director of the International Monetary Fund:

Since the advanced economies are at the centre of the global turmoil, they have a special responsibility to undertake the policies needed to restore confidence and lift growth.

In that respect, I am encouraged that on Oct. 26, euro area leaders agreed on a framework that would restore debt sustainability in Greece; recapitalize European banks; strengthen the firewall against financial contagion; and lay the foundations for robust economic governance in the euro area.

At the Cannes Summit just ended, the G20 countries endorsed this framework and emphasized the need for expeditious implementation. That is now the key.

More broadly, we also need to keep our eyes on the big prize — a strong, sustainable and balanced recovery. What does this mean for the advanced economies in terms of the policy path forward?

It means striking the appropriate balance in fiscal and monetary policies to promote stability and growth. It means pushing ahead with structural policies to boost competitiveness and employment; and strengthening financial regulation to make the financial sector safer and to put it back in the service of the real economy.

Of course, the mix of policies differs from country to country. There is no single path. Each must find the right balance which, when combined with what others are doing, leads to the kind of recovery we want — one that benefits as many people as possible.

And here, let me emphasize another key element of a truly sustainable recovery — the social dimension. We need growth, but we need growth that produces jobs. Without jobs, the great risk is that a generation of young people becomes unmoored from the productive economy and the bonds of society.

We need growth, but we need growth that is inclusive. As is borne out by recent IMF research, more equal income distribution is good for macroeconomic stability and sustainable growth.

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