CONCEPT PAPER

Two years after the global economy began to unravel in what has been described as the “worst economic crisis since the Great Depression”, the world still bears witness to an intense and lively debate amongst scholars, analysts and policy-makers on the main repercussions of and appropriate responses to this economic turmoil.  Given that the impact of the crisis was not felt evenly in all parts of the world, the debate spills over to the effectiveness of the diverging policies adopted by the industrialized and emerging economies in the aftermath of the global financial downturn.

The verdict is still out on the outcomes of these different policy responses, and available evidence is still somewhat inconclusive.  To this day, issues are still being raised on the usefulness of bailouts and stimulus packages and the necessity of regulating the financial sector.  The industrialized economies, where the crisis originated, had adopted various configurations of stimulus packages which aim to prop up demand.    To a significant extent, this response entails an increase in the economic power of the state, in terms of both the administration of stimulus package, and the accompanying regulation of the financial sector to ensure the former’s chances of success.  The emerging economies, on the other hand, which were largely spared from the most damaging effects of the crisis, had taken a different tack – most of them called for more intensified deregulation and greater involvement of the private sector in the economy.

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