Allow room for local policy making: Stiglitz

The international community can help to accelerate economic development by allowing all countries enough space to develop their own policy, renowned economist Joseph E Stiglitz said while delivering the third Millennium Public Lecture at Delhi University today.

"The Washington Consensus or market fundamentalism policy of the international financial institutions needs to be replaced."

He said new rules of game should be devised as inequalities in developing countries had widened by 2 per cent since the conclusion of the Uruguay round.

"The average subsidy per cattle in the European Union is $2 per day, thus a cow in Europe lives better than most human beings in several developing countries," he noted.

The Council of Economic Advisors (CEA) and the Office of Science and Technology of the US administration had opposed the signing of the Trade Related Intellectual Property Rights (Trips) agreement in 1993-94 during the Uruguay round of talks that led to the formation of the World Trade Organisation.

"We were bitterly opposed to this agreement which besides depriving poor people in the less developed countries of life-saving drugs was detrimental to the progress of science as well," Stiglitz said.

Stiglitz was a member of the CEA from 1993-95 and its chairman during 1995-97.

Stiglitz said among the areas that needed global collective action was transfer of risk from those less able to bear it to those better suited for it. The Latin American debt crisis, both of the 80s and the 90s was the result of sudden spurt in interest rate.

He ended by saying that free market was the best way of organising production only if markets were complete and information was perfect, which is never the case in real world.