Uncertainty continues to cast a shadow over the global economic horizon, notwithstanding the fact that a second Greek bailout has recently been agreed to after prolonged deliberations. Serious reflection is, therefore, warranted on the global and eurozone crisis, its proximate causes, and solutions, both short and long term.

What are the problems that the world economy currently faces? Many of the developed economies, and some of the developing ones, face low and declining growth rates caused inter alia by a shortfall of aggregate demand. The need for fiscal austerity in view of mounting indebtedness and sovereign debt concerns adds to the woes since these affect growth and employment levels in turn. In addition, there are concerns related to huge imbalances and exchange rates. Asian economies, with large domestic markets, are somewhat better positioned.

What could be the reasons for the inadequacy of aggregate demand? In a recent article, Nobel laureate Joseph Stiglitz pointed out the fact that rapid growth in agricultural productivity in the early 20th century forced labour to move out from rural areas to the urban manufacturing sector. A rapid increase in productivity in manufacturing is now causing a decrease in employment in the sector, and a shift towards services. Also, globalisation is causing a shift in manufacturing activity to countries with a comparative advantage because of low wage rates, among other factors. Overall demand for manufactured goods has also been affected by growing inequality. Still another factor contributing to the trend towards declining employment and output levels in manufacturing is the not insubstantial build-up of foreign exchange reserves in emerging market economies.

Is there a way out for the global economy, which appears to be at a cross-roads of sorts, so as to escape the gloomy prospects of moving from a cold and frosty winter to a hot and humid summer in the coming months? Is there a possibility, seen by poet Emily Dickinson, of finding that ?A light exists in spring, not present on the year, at any other period, when March is scarcely here??

For spring to be felt, it is essential that the Greek bailout proceeds smoothly, and fiscal and other austerity measures adopted without hesitation in the economies besotted with debt problems, notwithstanding protests and resistance. While this will inevitably slow down growth rates, it will improve the likelihood of restoration of solvency and competitiveness of the concerned economies.

While the option of temporarily keeping Greece out of the eurozone is being actively considered, since it is no longer viewed as something that would spell the death-knell for the eurozone and the global economy, it is a possibility that is attractive neither to the Greeks, nor to those at the core of the eurozone, and is fraught with risks. It may possibly be better to consider abandoning it in favour of choices that cause less of a body blow and fewer tremors to an already fragile global recovery.

What exactly is an effective alternative to that which is now on the anvil? Members of the eurozone have recently agreed to a new ?fiscal compact? that entails significantly stronger coordination of economic policies in areas of common interest. However, what may be worth considering is something different. Instead of integrating the European Union further, and more closely, what may be worth considering is a new and less integrated union of many more nations and economies to replace the unsuccessful union of European member-states. China and other Gulf nations with substantial amounts in sovereign wealth funds are keen on exploring mechanisms through which they can lend support to Europe and the West, in the economies of which they have considerable stake both because of markets, and because these have been the largest source of importing technology. New frameworks of global governance need conceptualisation to enable longer-term solutions to emerge. As an immediate first step, a Commission for Global Governance and International Monetary and Financial Systems needs to be set up so as to facilitate further thinking.

In addition to the need for a mechanism that enables countries with surplus cash to invest in distressed economies, a second factor that supports the need for such a new framework of global governance is the inadequacy of aggregate demand at a global level. Institutions are required within the new framework of global governance to facilitate the expansion of investment in new and emerging markets, including those in Africa and the less developed world. While reducing global inequalities and vast disparities in income and wealth, between the developed and the developing world, it will enable the simultaneous resolution of the problem of inadequate aggregate demand. Enlarging the size of the cake, so as to ensure a larger slice for all, is what this entails.

A third area where fresh thinking is called for, and which could also be taken up by the Commission, relates to the sectors or areas where possibilities for greater employment can be explored, given the fact that increasing productivity in manufacturing has reduced its potential for employment. Services too have a finite capacity for employment. It is time, therefore, to think ahead. One such area that has immense possibilities for employment generation is research and creation of knowledge for a better world. This is because the world not only needs clean energy, more sophisticated technology and a better environment, but also research to reduce illness, disease, poverty, hunger, and all of the problems experienced by both, those at the core and those on the margins and fringes of society.

Finally, there is scope for the Commission to consider whether overemphasis on manufacturing and productivity alongside the improvement in technology has led to the neglect of ?craftsmen?. Perhaps it is time now to consider utilising the possibilities of enhancing employment by bringing craftsmanship, design and beauty back to the forefront in an otherwise drab world.

Initiating action on this ?slew? of measures for the long-term health of the global economy, while continuing with all that is being otherwise done to keep the eurozone ?Titanic? afloat from day to day and month to month, is the road that needs to be taken if the world is to see greater sunshine and brighter tomorrows.

The author is a civil servant