International policy coordination.

• Author: Cooper, Richard N.
• Position: Symposium: The United States and the World Economy

The world, by which I mean mainly journalists and academics, is constantly calling for more international economic cooperation and complaining that there is not enough international economic cooperation. The thesis I want to develop today is that, in fact, there is a lot of international economic cooperation. Most of it is so successful that it is invisible to everyone except the people directly involved. We take it for granted. A familiar example is air traffic control. There is a world system of air traffic control and it works. Another is the world system of public health standards, concerning inoculations, pharmaceuticals and so forth. Or international postal service. So the things that really work well are the things that we come to take for granted and do not normally think about. Dr. Bhagwati has just expounded on an extreme example of international economic cooperation, the Uruguay Round, in which 110 countries came together, agreed on a common general objective and translated that common general objective into a large number of specific commitments with implications for their own behavior. While major events have been episodic, we've had extensive cooperation since 1945 in the area of international trade, and that cooperation is responsible in considerable measure for the great growth in world prosperity during the past half century.

When complaints are registered, however, they often concern cooperation in the area of macroeconomic policy, inclusive of exchange-rate policy, which is really a subdivision of macroeconomic policy. We have relatively few clear examples of international coordination of macroeconomic policy: a coordinated reduction of interest rates at Chequers in 1967; the Bonn Economic Summit of 1978, where five countries agreed on concrete actions, different but coordinated; the Plaza Accord of 1985, in which seven nations agreed on the direction in which exchange rates should move, and then six months later followed up with a coordinated reduction in interest rates. Thus we have some examples, but it has been very episodic, and it is entirely true to say that there has not been systematic coordination of macroeconomic policy. Moreover, for the foreseeable future we are not likely to see systematic coordination of macroeconomic policy. But coordination is an especially strong form of cooperation; there are several less demanding forms of international cooperation that now occur routinely.

The first level of international economic cooperation is simply the exchange of information, so that officials in each country know what is going on elsewhere. Information is regularly available these days. It was not always so, partly because the information did not exist in easily digestible form, and partly because some economic information was regarded as state secrets.

A step beyond simple provision of information is standardization of information. Not only do we provide our information, but we put it in a form recognizable to other countries and it is often directly comparable. There has been a vast, and on the whole successful, worldwide effort to standardize the system of national accounts, the balance of payment accounts and so on --...