If we liken the search for a solution to the US recession to a jigsaw, the key is to find the critical, central, but complex piece (or set of pieces) to complete the puzzle. A well-designed stimulus plan for the US is at best a necessary but insufficient condition. The missing piece is the international coordination for a fiscal stimulus. Dousing the fire in the US does not tackle the global conflagration. The US plan is most effective only when each and every country—developed and developing—contributes to the collective effort to revive the global economy.
In the case of the Philippines, a fiscal stimulus is necessary to mitigate the impact of the crisis by strengthening social protection and increasing economic activities (e.g. construction). It is also a way for the Philippines to contribute to the global collective action. Of course, global collective action is not just about coordinated fiscal stimulus policies. An elaboration of what constitutes global collective action is the subject of another essay. (See Global Collective Action)
