World Bank president Mr Robert Zoellick suggests policy action from Washington to strengthen the global recovery. He also says that Europe does not have much time to buy in order to solve the debt crisis.
Here is the edited version of the interview.
Q - He has pointed to Congress and fiscal policy administration to try and find ways to grow the economy. Do you agree with that and what can they do to try and turn things around?
A - Well I actually try to focus more on the fundamentals of growth. I think what would really help send a good signal to the market as well as the public is to try to deal with not just a year-by-year sort of so called discretionary spending but really start to get at the long-term, the entitlement spending. And there really people talk about cuts. You just need to slow the rate of increase and then secondly you start to get a mood in Washington across parties about a broad based texture form where you would sort of expand the base, lower the rates.
That would be a very good signal for the growth and I think a much more aggressive trade policy in terms of taking advantage of growth abroad. So, I tend to focus more whether in developing or developed countries on the structural aspects for growth.
Q - It's clear many non-financial companies are sitting on the largest hoard of cash they have ever sat on. They are just not creating jobs or not building factories and they see this as a demand problem and consumers are not consuming because they are worried about their jobs, they are worried about their homes. Who has to go first and how does anybody get them to go first to begin the growth process again here in the United States?
A - Well it's a question of building confidence. It's also a question of taking advantage of growth abroad. Developing countries have provided about a half of global growth, so there if you talk to most corporations now they see that as a huge opportunity for the future. But you talked about the fiscal issues, these are designed to stimulate demand and at times that can play an important role but my belief is that unless it's combined with an effort to deal with the long-term spending and debt issues then people just hunker down. They don't have the confidence in investment.
And you are exactly right. Many of American corporations very productive, high profits, lot of cash. They have an ability to expand if you create the right environment for them.
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