But the impact will extend beyond the surplus countries.

First, as with all systems that preceded it, it puts the burden of adjustment on deficit countries, not on surplus countries.

Countries running surpluses accumulate massive stocks of foreign assets, and those resources have to be invested somewhere.

Indeed, Keynes believed that it was surplus countries, far more than deficit countries, that posed a threat to global prosperity he went so far as to recommend a tax on surplus countries.

America s net exports will have to increase, meaning that the net exports of China, Japan, and other surplus countries will consequently decrease.

This created a two speed Europe, with debtor countries sinking under the weight of their liabilities, and surplus countries forging ahead.

The solution is obvious deficit countries must be allowed to refinance the bulk of their debt on the same terms as surplus countries.

But John Maynard Keynes pointed out that surpluses lead to weak global aggregate demand countries running surpluses exert a negative externality on their trading partners.

The large hole (on the order of 700 billion or more) in global aggregate demand will have to be filled over time by a compensating increase in consumption in surplus economies, such as China and Japan.

Enhancing the role of its Special Drawing Rights (SDRs), or supplementing the dollar with another world reserve currency, would help facilitate the financing needs of both deficit and surplus countries.

(h) Surplus

Priority countries

For surplus countries that want to accumulate reserves, it would reduce exchange rate risk.

The End of China s Surplus

Countries with special needs

These factors together with the lack of trade data for regions within countries have led economists only rarely to consider countries internal surpluses or deficits.

By World Bank classification, 34 government donors were high income countries, 19 were upper middle income, 26 were lower middle income and 19 were low income countries.

Before the 2008 crisis, there was much talk of global imbalances, and the need for the trade surplus countries, like Germany and China, to increase their consumption.

In the run up to the Seoul summit, the US government put forward a proposal that the surplus regions of the world should increase their domestic demand mainly consumption to boost imports and thereby help the deficit regions (including the US) to recover.

Growth in the more diversified economies

A total of 93 Governments (35 high income, 41 middle income and 17 low income countries) contributed to regular resources.

But over saving countries such as China, Japan, and Germany that were running current account surpluses are resisting their currencies nominal appreciation.

The solution is obvious deficit countries must be allowed to refinance the bulk of their debt on the same terms as surplus countries.

Emerging market countries face an additional problem.

Public debt in the more diversified economies

Indeed, the vast majority of today s developed countries grew from strong agricultural foundations, where surplus production generated wealth and prosperity.

But this excess growth has not been evenly spread.

(b) Surplus deficit position of the fund

It is also correct that if OPEC had excess capacity, it would have already used it to flush out speculators to bring oil prices down.

Rather, deficit countries need to export their way back to balance, while imports should increase in surplus countries.

Indeed, this was the nineteenth century pattern. A system of foreign investment, pivoting on London, channeled the savings of rich (or surplus) countries to the poor (or deficit) countries.

The large, high growth emerging economies have certain advantages.

Countries continue financing the development of high tech arms.

So central banks are transferring their excess reserves to existing or newly created SWF s, which in turn invest in high return equities.

The country s unprecedentedly solid fiscal results are accompanied by foreign trade surpluses that are the envy of even the world s most fiscally solvent countries.

Middle income, low price wage countries would grow faster with a higher inflation rate.

By channeling the savings of China, Germany, Japan, and other surplus countries into infrastructure investments in the poor countries, the world s economies truly would be working in harmony.

Other low income countries should follow suit.

What s the leading cause of death in low and middle income countries?

There is no attempt to define the relevant group of countries with precision.

The middle income countries should receive substantial debt relief.

A favorable outcome also requires industrial countries ability and willingness to accommodate the growing size and prominence of emerging economies.

It also calls for high income countries to open their markets to developing country exports through the Doha trade round.

The programme is focused on marginalized, low income countries, and aims to strengthen the analytical foundation of UNIDO's activities in these countries.

In middle income countries and others where the goals are already within reach, Governments should adopt a Millennium Development Goals plus strategy, with more ambitious targets.