Financial crisis presents opportunity for Asia: Jeffrey Sachs

The global economic crisis should be viewed by Asia’s policymakers as an opportunity to expand investment in "desperately" needed public goods, economist Jeffrey Sachs told an ADB audience.

Professor Sachs, director of the Earth Institute at Columbia University and a special advisor to UN Secretary General Ban Ki Moon, was speaking at ADB Headquarters today as part of the Distinguished Speakers Program.

In a lecture titled "Achieving Global Cooperation on Economic Recovery and Long-Term Sustainable Development", Prof. Sachs said that with the drop in external demand for Asian exports, the region will "have to rely on public spending," such as infrastructure, health, education and energy reforms.

"Asia needs all of that desperately," Prof. Sachs said. "This is still the region of the world with the fastest urbanization, with the most dramatic need for pollution control, for cleaning up the energy sector, for cleaning up the rivers, for sustainable urban development, for accommodating the migration of hundreds of millions of people from rural areas to urban areas. I like to view this crisis as an opportunity for Asia given the chronic underinvestment in public goods. Public spending has a very high social return and also has a very high macroeconomic purpose right now."

He said that with around $4 trillion in foreign exchange reserves, large current account surpluses and low inflation, Asia is well placed to expand public spending.