The Importance of Cooperation Among Small Economies
Valda Henry, the deputy governor of the Eastern Caribbean Central Bank (ECCB), has emphasised the critical role of interdependence and cooperation among small economies. As the global economy braces for transformative changes, cooperation is no longer an option; it’s a necessity.
In her speech at Central Banking’s Autumn Meetings in Rio de Janeiro, Henry highlighted global economic fragmentation, the climate crisis, and artificial intelligence as key challenges confronting economies worldwide. These issues, she stressed, should not be handled in isolation but through shared and collective efforts.
Global Economic Fragmentation: A Shared Challenge
Global economic fragmentation is a pressing concern for economies, small and large. It refers to the phenomenon where the world economy breaks up into smaller, more regional economies. This fragmentation can lead to an increase in trade barriers, a decrease in economic interdependence, and potential conflict over resources. Therefore, cooperation between small economies can help navigate these challenges by fostering shared solutions and promoting dialogue.
Climate Crisis: An Urgent Priority
Climate change is another pressing issue that requires collective action. The impact of climate change on economies, particularly small ones, can be devastating. Rising sea levels, extreme weather events, and shifting agricultural patterns can disrupt economic stability. Therefore, small economies must unite and work together in mitigating climate change through shared initiatives and sustainable policies.
The Age of Artificial Intelligence
Artificial Intelligence (AI) is reshaping economies and societies. While it offers enormous potential for growth and innovation, it also poses significant challenges. AI can disrupt labour markets, exacerbate income inequalities, and raise complex ethical and legal questions. As such, cooperation among small economies can help harness AI’s potential while mitigating its risks. Shared research, policy coordination, and mutual learning can help in navigating the AI landscape.
The Way Forward
As the deputy governor of the ECCB, Valda Henry recognises the need for cooperation among small economies. Her call for shared and collective efforts echoes the sentiment of many economists: In an increasingly interconnected and complex world, cooperation is key to overcoming shared challenges and harnessing shared opportunities.
By working together, small economies can not only navigate the challenges of global economic fragmentation, climate change, and AI but also seize the opportunities these changes bring. Cooperation can lead to shared solutions, mutual learning, and collective resilience. It’s not just about survival; it’s about thriving in a world of change.
Read the original speech here.
