International finance and trade institutions play a fundamental role in the global economy. They must become more responsive to environmental and social concerns if society is to achieve the goal of sustainable development. The public expects openness and accountability from members of institutions such as the World Bank Group, the International Monetary Fund (IMF), the World Trade Organization (WTO), and regional development banks and trade organizations.
Economic expansion in the second half of the 20th century was unprecedented. With it came the recognition that nations must accept the concept of environmental sustainability. Achieving sustainability, however, requires changes in both individual and institutional behavior.
The United States has a powerful, diverse and technologically advanced economy that is by far the world's largest. U.S. firms are at the forefront in technological advances, especially in computers and medical, aerospace and military equipment and its financial services and media and entertainment sectors have true global presence.
More significantly for the global economy, over the past five years, the United States has been serving as the source of demand of last resort, running huge current account deficits as the world's export-oriented economies sold record amounts in the U.S, sustaining aggregate demand in many countries where it would otherwise have been weak. But, the country's longest economic expansion, which extended from 1991 to 2001, ended in the second quarter of 2001. The economy began decelerating beginning in the third quarter of 2000, actually began contracting in the second quarter of 2001 and declined at a 1.3 percent annual rate in the third quarter. At the same time, and perhaps led by the deceleration in the U.S., the world economy also began to slow dramatically, making 2001 the first year of global synchronization of recession since the middle 1970s.
The Sept. 11, 2001, terrorist attacks...