Nobel laureate and economist Eric Maskin will meet with Prime Minister Hun Sen today and although Mr Maskin said no agenda has been established for the meeting, he is hoping to talk to the premier about the connection between globalization and an increase in financial and social inequality, Mr Maskin said yesterday in an interview.
Mr Maskin added that globalization has lifted many economies, including Cambodia’s, but a consequence of globalization is that inequality grows.
“It tends to be people with education and skills, at least some skills who benefit from global markets and people at the bottom, people without any skills, who are left behind,” he said. “They don’t get these benefits so the gap between the haves and the have-nots increases.”
A major investment in education and job training is key to correcting the equality, he added.
Mr Maskin, who was awarded the Nobel honor in 2007 for his part in discovering mechanism design theory, a concept that establishes outcomes first then looks at ways to accomplish the goals.
“Mechanism design theory is economics in reverse,” he said, adding most of the time economics studies institutions and predicts the possible outcomes and how they come about.
One highly anticipated outcome is the end of the economic downturn.
Mr Maskin said there are signs that the situation is improving thanks to government intervention in the form of economic stimulus.
“When an economy goes into a recession it means not all of its resources are being used, in particular labor is not being used,” he said, adding that a downward spiral starts with people losing jobs which leads to a decrease in spending on goods and services that in turns makes providers reduce supply and workforce. A government intervention is needed to stop the cycle.
“I think and I am happy to say [intervention] has been done and many countries in the world are beginning to emerge from this economic downturn,” Mr Maskin said. “The signs are encouraging that we are moving out of it.”
Although Mr Maskin said he is not an expert on the Cambodian economy, he said he has noticed that until the global economic downturn, Cambodia made solid progress but it relies on too few trading partners, which left the country vulnerable when the recession hit.
But he did mention that he was hopeful for the launch of the China-Asean trade agreement, which would remove many tariffs by 2015, because Cambodia could diversify its trading partners.
“There was a significant loss in GDP in 2009, not because Cambodia did something wrong,” Mr Maskin said. “It was because its trading partners did something wrong.”