- The financial crisis and global recession have provided many lessons in terms of risk mitigation strategies as well as highlighting the need to improve assessment of systemic risk and macro prudential oversight.
- Apart from providing a stark warning that the business cycle has not disappeared, the global recession has also has revealed how country risk has been influenced by globalization in ways that were obscured by the 'great moderation'.
- Certainly countries that are particularly dependent on global cyclical industries, such as Germany and Japan, were exceptionally hard hit at the outset of the crisis - indeed, more than those weighted towards financial services, such as the US and UK.
- In view of 2009's deep recession and the realization of the grave risks that some countries face if global cycles similar to this one recur, what response may be expected and is there a role for risk mitigation policies beyond setting aside even more financial resources as a form of insurance in case of emergencies?
- Does China realize the implications of encouraging such a trend towards concentration of global-scale industries? Would China be able to absorb the impact, and bear the cost, of global cycles and, possibly, future shocks on a scale similar to that just seen or worse?
- Pursuing still greater industry concentration requires tough appraisal of the policies required to manage potential risks, such as financial provisioning and fiscal flexibility.
- The implications of these choices for the next phase of global industry development - and for international relations, trade and industry policy, productivity, inflation etc. - are very different and need careful consideration.