Bronwyn Curtis

Bronwyn Curtis writes a chapter in Michael Hodges book on the role of the G8 (Group of Eight) in the new millennium where she focuses on 'Promoting Growth in the World Economy'. She starts off by looking historically at what has happened in financial markets that has encouraged political parties to legislate unpopular but needed policies for their economy. She derives that instances for change arrive out of necessity and are spurred on by crises of a large nature. In looking at how the political structures are set up in democracies, Curtis makes mention of the fact that because the effects of policies can take time for their effects to be realised in the economy, many politicians may operate on a 'short-term' basis where politics now plays an important role in whether a government will opt to place a policy in motion or not. She moves on to look at what has transpired in the US and UK markets mainly and categorises the pre-1980's as ruled by the boom and bust cycle in economics. This volatility in the market required the labour force to be flexible enough for people to move in accordance with the changes in the needs of the economy (i.e. the market). The 1990s introduced more stability in the cyclical movements of the markets and as a result, institutions became more reliable, which in turn according to Bronwyn Curtis, led the fluctuations in the market to be manipulated by changes in expectations. To tie this analysis to her topic, Curtis now makes the connection between changes in expectations impacting the market to the need for reliable policies. As an example, the case of the Bank of England stating independence from the government is introduced to look at how trust in the policies implemented by the bank and their commitment to said policies affected expectations and economic growth.

In a slight shift in topic, Bronwyn Curtis shifts her focus from trust in institutions to her thoughts on Euroland and the adoption of the European Central Bank (as well as the adoption of the Euro across participating nation states across Europe). She brings up the worry that having participating nations each operating at different economic speeds brings up a disconnect if the policies implemented by the European Central Bank are to be the same across board. What this means is that a country like Italy, who might operate best with higher interest rates will be working with a country like France who might benefit from low and stable interest rates. She also brings up the fact that a small number of member countries in Euroland account for 2/3 of the total GDP for Euroland and yet each country will have 1 vote in the council. This will in turn lead the larger countries to bail out smaller countries who are in need at the cost of their individual growth for the stability of the collective.

The 3 main conclusions from this chapter hold that first, the policies that are needed for economic growth and usually not easy for the governments in power to enforce and as such will need to be spurred on by changes in the financial markets that lead to unrest with the society. Second is that change is not undertaken voluntarily, and that similar to the first main point, a large enough crisis is necessary to spur on the demand for change. Lastly, that the way that the Economic and Monetary Union (EMU) in Europe has been designed, will eventually lead to tension between nation states and will eventually dissolve.