The new normal

Representatives of chambers of commerce and private sector promotion agencies from developing countries expressed their concerns about where the new sources of growth would come from in future years, at a meeting of the World Bank Group's Private Sector Liaison Officers held in Istanbul on October 5.

A lively discussion between the PSLOs and MIGA management covered subjects relating to foreign direct investment into emerging economies, as well as investments by emerging economies into other emerging economies ("South-South" investment). 

There is a real concern about how the infrastructure gap in developing countries will be filled following the crisis, given the new scarcity of private funds for public-private partnerships. 

In the "new normal", where private long-term financing will be more difficult to obtain for projects in developing countries, guarantees -- not only from MIGA, but also from the World Bank. regional development banks and governments -- were seen to be essential instruments for infrastructure financing.  It is all part of the new partnership between the public and private sectors.

The PSLO representatives also waxed philosophical about the evolution of global financial governance structures.  Reference was made not only to such current players as Mr. Bernanke, Mr. Trichet and Mr. Greenspan, but also to Karl Marx, who observed that "institutional infrastructure" always lags actual trends in the underlying economy, until a crisis precipitates change. 

In essence, the crisis may have accelerated the modernization of global governance, which has been one of the centerpieces of this year's Annual Meetings discussion. This may be the silver lining in the dark clouds of the current economic situation.