The Post-Crisis Global Economy: Getting to the Bottom of Some Unanswered Questions

Photos and story by Nina Gehan, Division of International Studies

As the global economy emerges from the worst economic crisis since the Great Depression, attention has shifted toward the prospects for recovery, as well as the need for reform of the policies and institutions governing international finance.

The global and U.S. economies in the aftermath of the financial crisis was at the center of the panel discussion,  The Post-Crisis Global Economy: Prospects for Recovery and Reform,” held earlier this week in  UW–Madison’s Grainger Hall.

After introductions by Gilles Bousquet, dean of the Division of International Studies, and Mark Copelovitch, assistant professor of political science and public affairs, Jeffry Frieden, Stanfield professor of International Peace at Harvard University, delivered the keynote address.

Frieden spoke about a debt crisis of monumental proportions that shared many similarities with other debt crises that have occurred since the 1880s. He blamed the crisis on massive foreign borrowing and a faltering U.S. economic policy, which he described as a “foreign borrowing binge.”

Frieden noted that it is not only debtor countries like the U.S. that will have to change their economic and political practices to recover from the financial crisis, but also surplus countries like China, that have relied heavily on exports to debtor countries in order to build their own economies.

Frieden concluded that the recovery would not be easy and might provoke a backlash which could threaten global economic cooperation.

“We face difficult times,” he concluded.

Frieden’s address was followed by responses from panelists Michael Knetter, Albert O. Nicholas dean of the Wisconsin School of Business, and Menzie Chinn, professor of economics and public affairs, both of UW–Madison. The three agreed that little had been done to address the problems that led to the global economic crisis, but that the U.S. was slowly taking steps towards recovery.

The panelists also considered if one can speak confidently of growth prospects in the U.S., whether the causes of the crisis have been adequately addressed, what further barriers exist to a full recovery, and how  further economic and financial crises can be avoided in the future.

“There’s a lot of thinking going on, but little has been done about these issues yet,” Chinn said.

The panel was organized by the Center for World Affairs and the Global Economy (WAGE) and the Center for International Business Education and Research (CIBER), sponsored by UW–Madison’s Division of International Studies and the Wisconsin School of Business, and co-sponsored by the Department of Political Science, and the La Follette School of Public Affairs.