It is useful to note that the Word Economic Forum (WEF) made one useful suggestion in its annual meeting this year: countries should work to complete WTOs Doha round of trade negotiations. Expanding trade is generally a good idea and especially in today's Keynesian world. This solution would also avoid a repetition of the mistake made during the Depression of the 1930s.

The purpose of economic development should be to improve the standard of living by providing greater access to goods and services. Yet, when a country runs large trade surpluses it effectively uses its production of goods and services to improve the standard of living of residents of another country and accumulates in return paper money which is useless. The mercantilists were wrong 300 years ago. They are also wrong today.

Written by Manoj Pant who is Professor for Centre for International Trade and Development, JNU

Originally published in "The Economic Times" dated March 13, 2009, Ahmedabad