International cooperation needed to tackle financial crises: Nobel Laureate

"We can try to come together globally and devise an international treaty. Countries may be willing to sign an international treaty in which they promise to reduce their carbon emissions to a safe level," Maskin said at an event here while explaining the 'mechanism design' problems facing the world today.

Mumbai: The major global challenges of climate change and financial crises can be solved only if countries agree to cooperate with each other and resist isolationism, economist and Nobel laureate Eric Stark Maskin said on Saturday.

However, he added that global collaboration will not be easy as more and more nations turn inward-looking.

"We can try to come together globally and devise an international treaty. Countries may be willing to sign an international treaty in which they promise to reduce their carbon emissions to a safe level," Maskin said at an event here while explaining the 'mechanism design' problems facing the world today.

He said solving climate change is not so easy because every country, though delighted if other nations reduce their carbon emissions, is reluctant to make those reductions itself as it is economically painful.

To reduce carbon emissions, countries must take steps like using new technology, which is expensive, as well as shutting down old factories, which will have a negative impact on their economies, he added.

Another big mechanism design problem is how to stop financial crises, said Maskin, who was awarded the Nobel Prize in economics in 2007.

"About 10 years ago, there was an enormous financial crisis, the biggest one since the 1930s. And this led to a global recession. In some ways, we still haven't recovered from it. I think stopping financial crises is as much a political problem as it is a technical problem," he said.

"I think the fact that we are becoming more national in our orientation, rather than international, is a worrying trend," Maskin noted.

International problems like climate change and financial crises can be solved only through international cooperation and not countries turning inward-looking, he added.