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Increasing Economic Growth and Stability in Emerging Markets
By John B. Taylor
Introduction
The Bush administration's emerging market strategy is an interrelated part of our overall international economic agenda. The agenda focuses on two goals: increasing economic growth and increasing economic stability throughout the world, not only in emerging markets countries, but also in the developing countries and in the industrial countries, including the United States. President Bush's idea is that each country, by following proven economic policy principles and considering its own circumstances, can contribute significantly to greater global growth and stability. His stress is on country ownership of policies, with the United States willing to provide strong support for good policy reforms.
These economic goals have not changed since the start of the administration. Indeed, the challenges of the war on terrorism— especially the need for increased resources for security and for the removal of hotbeds of terrorism—make economic growth and stability more important than ever.
Consistent with these goals was the administration's perseverance in winning back presidential trade negotiation authority: free trade is a key driver of both economic growth and stability. The goals also underlie our economic policy program for the United States where fiscal and monetary policies to combat the recession were implemented in a remarkably timely fashion.
A theme of our pro-growth policy has been productivity growth through job creation in the private sector. Higher productivity is essential for increasing living standards and reducing poverty. The keys to raising productivity growth are the rule of law, sound fiscal policy, low-inflation monetary policy, and the reduction in barriers to trade—both external and internal.
Let me now focus on the part of our international economic agenda dealing with financial crises and other instabilities in emerging markets. I will begin by discussing the problems we are trying to solve with this strategy.
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