News & Commentary:

February 2004 Archives


The Millennium Development Goals
Finance and Development Dec 2003/Feb 2004
The issue focuses on the Millennium Development Goals and what it will take to achieve these globally adopted targets that center on halving the 1990 incidence of extreme poverty by the year 2015. The main article is based on a World Bank study of 18 low-income countries with relatively good policies. Separate articles look at debt sustainability, external shocks, and fiscal policy in low-income countries. Other articles examine financial systems in the CIS-7 countries and China’s integration into the global trading system. Hernando de Soto is interviewed for the People in Economics section, while Picture This focuses on the world’s forests. Kenneth Rogoff sees the past decade of global disinflation as an unsung benefit of globalization, while the Country Focus section examines the economies of the Commonwealth of Independent States.

Commodity prices and the terms of trade Adobe Acrobat Required
IMF Research Bulletin Dec 2003/Feb 2004
Plus: Research summary on reducing structural unemployment in Western Europe; country study: Greece; summaries of new study on hawala and recent books: Who Will Pay? and Russia Rebounds; agenda of Fourth Annual IMF Research Conference; contents of latest issue of IMF Staff Papers; summary of Workshop on Macroeconomic Challenges in Low-Income Countries; visiting scholars at the IMF; titles of recent IMF working papers.

A False Alarm: Overcoming Globalization's Discontents
Richard N. Cooper Jan/Feb 2004
A new book by an eminent economist takes on globalization's critics, disarming them with logic and killing them with compassion.

Don't Cry for Cancún
Jagdish Bhagwati Jan/Feb 2004
Despite the dramatic collapse of the recent trade talks in Cancún, things aren't nearly as bad as they seem. Cancún was no Seattle, as will soon become clear when progress resumes on Doha Round negotiations. Fault for the conference's breakdown lies with all the major parties, but the damage can quickly be remedied.

Nation-Building 101
Francis Fukuyama (Atlantic Monthly) Jan/Feb 2004
The chief threats to us and to world order come from weak, collapsed, or failed states. Learning how to fix such states--and building necessary political support at home--will be a defining issue for America in the century ahead.

Greater Transparency in the World Trading System
WTO News Feb 2004
Plus: Dispute Settlement: Equality of special treatment for all developing countries? (Alexander Roitinger); From the Book Shelf: Robert Z. Lawrence: Crimes and Punishments? Retaliation under the WTO (Martin Gedult v. Jungenfeld).

Creative Class War
Richard Florida (Washington Monthly) Jan/Feb 2004
How the GOP's anti-elitism could ruin America's economy.

World Bank, IMF and armed conflicts - Helping peace or creating the conditions for war?
Bretton Woods Update No.38 Jan/Feb 2004
Plus: Extractives report tables harsh criticism, many suggestions; Legislators courted but oversight insufficient; A 40 million dollar question: why fund the Development Gateway?; High-level conference on "trade, growth and poverty"; and Investigation into IFC Haiti project: "mixed results" but funds go ahead.

Soccer Vs. McWorld
Franklin Foer (Foreign Policy) Jan/Feb 2004
What could be more global than soccer? The world’s leading professional players and owners pay no mind to national borders, with major teams banking revenues in every currency available on the foreign exchange and billions of fans cheering for their champions in too many languages to count. But in many ways, the beautiful game reveals much more about globalization’s limits than its possibilities.

North America's Second Decade
Robert A. Pastor (Foreign Affairs) Jan/Feb 2004
In just ten years, NAFTA has created the world's most formidable free trade area. But in the absence of true partnerships and multilateral institutions, movement toward further regional integration has slowed. The United States, Mexico, and Canada have many common interests; they need to pursue them in common ways.

The New Face of the Silicon Age Recommended!
Daniel H. Pink (Wired) Feb 2004
How India became the capital of the computing revolution.

The Future of the Dollar: Has the Unthinkable Become Thinkable? Adobe Acrobat Required
Korkut A. Ertrk (Levy Economics Institute) Feb 2004
The big question is whether the dollar--the world's reserve currency--can survive a steep fall in its value without the active support of the major central banks. Can the United States broker another Plaza Accord, as it did in 1985 when the dollar lost half of its value against the yen and the mark within two years, without jeopardizing its unique international role? Is an orderly retreat for the dollar possible today?

Resolving Sovereign Debt Crises with Collective Action Clauses Recommended!
Kenneth Kletzer (FRBSF Letter) Feb 2004
Measuring the effects of CACs; The transition problem; The coordination problem with multiple bond issues; and Are CACs a small step in the right direction?

IMF and Iraq Adobe Acrobat Required
IMF Survey Feb 2, 2004
Plus: IMF completes first review of Argentina program; Continuing the WTO debate; Ethics and development; Central banks and financial stability; New development model for Asia?

The Euro -- Towards Adopting the Common Currency in Central Europe
Horst Köhler (IMF) Feb 2, 2004
Adopting the euro offers significant economic benefits for both current and future members of the euro area. Economic analysis suggests that, over the long term, euro adoption could raise GDP by an additional 20-25 percent in most Central European countries.1 And for the existing members of the euro area, traditional trade creation benefits will be complemented by long-term gains in political and economic stability that accompany successful currency unions. Realizing these gains will require strong and credible policies both within the current euro area and in the acceding countries. It also requires clarity and transparency in mapping out the path toward the euro for the new members and avoiding any ambiguity regarding the application of the criteria so as to minimize market uncertainty and volatility. This conference, and the in-depth analysis prepared by IMF staff, should be regarded as a basis for discussion, not its conclusion. I see it as an integral part of the IMF's surveillance mandate and our contribution, through dialogue, to promoting a smooth adoption of the euro in Central Europe. The path and pace will differ according to individual country circumstances, but there should be no doubt about the final destination.

Global: The MacroVision Debate Recommended!
Stephen Roach (MSDW) Feb 2, 2004
I’ve long said you can’t do global macro just by reading the Financial Times in your office in New York. And so I spend much of my time traveling the world in search of in-depth insights that can only be gleaned from first-hand observations. I tend to shy away from the global conference circuit, but I make a few exceptions — a couple of key gatherings each year in China, the World Economic Forum in Davos, and our own MacroVision. Last week, I laid out my observations from Davos (see my January 26 essay, “The Davos Debate”). In what follows, I present the findings from this year’s just-completed MacroVision. Having gone through these two intense drills in the past 10 days, the global debate takes on heightened clarity. I wish I could say the same for the outcome.

Currencies: RMB Float Still a 12- to 18-Month Risk, Not a 6-Month Risk
Stephen L Jen (MSDW) Feb 2, 2004
I have long argued that Beijing has no intention of moving to a managed float anytime soon, although a more flexible exchange rate regime is a longer-term policy objective. I believe Beijing still has a strong preference for moving away from the current de facto peg only when it is ready, but I would also underscore that it now sees a more flexible RMB as a bargaining chip that can be used later this year if ‘push comes to shove’. A ‘crawling band’ is a 12- to 18-month risk, not a 6-month risk, in my view. Such a prospective move is likely to be small and would have minimal effects on the USD. The level of angst concerning the RMB is unjustified by economic fundamentals and political reality, in my view.

Protection Racket
Brendan Miniter (WSJ) Feb 3, 2004
Trade barriers won't help South Carolina's economy--or America's.

Are Bubbles Efficient?
Robert Blumen (Mises Daily) Feb 3, 2004
Many investors purchased absurdly overvalued stocks during the late '90s and have since suffered devastating losses. The explanation now given for this is that the stock market was in a "bubble" which has burst, but those buying stocks at the time were not able to identify the bubble.

Global, Japan: Opinion Barbells
Robert Alan Feldman (MSDW) Feb 3, 2004
The apparent stability of financial markets indicates, in my opinion, not a world of consensus but rather a standoff between strikingly different views in a number of key areas. In short, this is not a world of consensus but of opinion barbells.

An emerging crisis
Economist Feb 3, 2004
The only people who should invest in emerging-market debt are those who need a loss for tax purposes

Soros Eyes Dueling Bubbles in China and U.S.
William Pesek Jr. (Bloomberg) Feb 4, 2004
George Soros gets lots of headlines, as might anyone who once made $1 billion betting against the British pound and got called a ``moron'' by a Malaysian prime minister.

Regional Trade Links Strengthen In Asia, Latin America
BRIDGES Weekly Trade News Digest - Vol. 8, Number 4 Feb 4, 2004
In the absence of substantive negotiations at the WTO (set to resume later this month), regional and bilateral meetings continue to move ahead. This past week, Asian and Latin American countries met in the Philippines to increase cooperation, Singapore and Korea showed intent to sign a free trade agreement by the end of the year and Brazil called for a trilateral trade pact with India and South Africa.

Lamy, Experts Take Serious Look At WTO Reform
BRIDGES Weekly Trade News Digest - Vol. 8, Number 4 Feb 4, 2004
In a 27 January address to members of the European Parliament's 'Kangaroo Group', European Trade Commissioner Pascal Lamy expanded on previously voiced ideas around reform of the WTO. His comments came as other calls for re-working the global trade body emerged this week from both a former member of the WTO Appellate Body and a panel of renowned economists.

The Impact of Science on Public Policy
Ronald Bailey (Reason) Feb 4, 2004
In trying to assess the impacts of scientific information on public policy, I think that looking back at the forecasts of what the state of the planet was supposed to be at the end of the last millennium would be a good place to start. Here I will be looking chiefly at past predictions dealing with 3 trends, depletion of nonrenewable resources, global population growth and famine, and briefly, projected rates of species extinction.

Brazil's new trade diplomacy
Economist Feb 5, 2004
Deputy trade ministers from 34 countries, meeting in Mexico, began by reaffirming their differences over the proposed Free Trade Area of the Americas. Brazil wants an “FTAA-lite”; America has offered deeper bilateral agreements to a dozen countries.

Strong euro seen as here to stay
IHT Feb 5, 2004
There is little hope that the EU can reverse the policies of the Bush administration.

China's Love Affair with Europe: Driving Business and Trade Far Eastern Economic Review Subscription Required
FEER Feb 5, 2004
China is moving closer to the European Union for much more than business, though their fast-growing trade will soon surpass that with China's other partners. Europe is also giving Beijing a means to counterbalance the United States and may be flexible on ending an arms embargo.

Breaking Up Euroland Might Not Be So Hard to Do Wall Street Journal Subscription Required
Joachim Fels (WSJE) Feb 5, 2004
Investors should consider the risks of a disunited Europe.

Asia Pacific: Tighten Capital Controls, Please
Andy Xie (MSDW) Feb 5, 2004
Speculative capital flow into Asia reached a record high last year, surpassing the previous peak in 1996. The recipients of capital inflow were Hong Kong, Korea, and Southeast Asia in 1996. China is the main recipient this time. Just as occurred for the recipients of capital inflow in the 1990s, China is experiencing an investment bubble.

Is the dollar too weak or too strong? Economist Subscription Required
Economist Feb 5, 2004
Ahead of a meeting of G7 finance ministers in Boca Raton, Florida, Japan revealed that its central bank had spent ¥20 trillion ($173 billion) last year in trying to stem the yen's rise, lifting reserves to a record $674 billion. Intervention has proved modestly successful: the yen hit a three-and-a-half year high against the dollar.

G7 Reach Compromise on the US Dollar
ST Feb 8, 2004
The United States and its allies resolved sharp differences over how to manage the falling US dollar, agreeing on a compromise that tempered the flexibility supported by the United States.

G7 leaders express concern over currency "volatility"
ST Feb 9, 2004
Top economic policymakers from the world's seven major industrial powers have indicated their concern about the United States dollar's sharp fall recently, issuing a statement denouncing 'excess volatility and disorderly movements in exchange rates'.

Jobs on the rebound in Asia, surveys show
ST Feb 9, 2004
Jobs are returning to Asia. Recent surveys show employers are keen to take on more workers in countries throughout the region in the months ahead.

U.S. drops its veil of support for dollar
IHT Feb 9, 2004
The administration is providing a big boost to American exporters by making their products cheaper.

Plaza? Louvre? Boca Accord Never Had a Chance
Caroline Baum (Bloomberg) Feb 9, 2004
We'll always have Paris. New York is one helluva town. But Boca?

Global: Coping with the Global Labor Arbitrage
Stephen Roach (MSDW) Feb 9, 2004
Month in and month out, the basic story really hasn’t changed. The United States remains in the midst of the most jobless recovery in modern-day, post-World War II history. It’s not the lags — especially after a 6% annualized growth spurt in the second half of 2003 and indications of more vigor to come in early 2004. Nor is it a measurement problem — with a small sample of households conveying a truth that a much larger sample of businesses is missing. Let’s face it: The Great American Job Machine has finally met its match.

An Uneasy Menage-a-Trois in Boca Raton Wall Street Journal Subscription Required
Thomas Mayer (WSJE) Feb 10, 2004
Americans believe in a Hollywood ending to the story. Europeans of course expect disaster.

Volatility? Nobody Here But Us Central Bankers Wall Street Journal Subscription Required
George Melloan (WSJ) Feb 10, 2004
G-7 finance chiefs are not adept at creating stability.

Traders greet G-7's currency wishes with a collective shrug
IHT Feb 10, 2004
Currency markets shrugged off a veiled call by industrial countries for Asia to share with Europe the burden of a declining dollar.

Japan: Which Benefits from Ambiguity?
Takehiro Sato (MSDW) Feb 10, 2004
Interpretation Split Between Preventing and Allowing Dollar Weakness

G-7, in Four Words, Makes Case for Yuan to Rise
Andy Mukherjee (Bloomberg) Feb 10, 2004
What compelled the Group of Seven industrial nations to qualify its call for flexible exchange rates after less than five months? And why did the G-7 do so by adding four seemingly redundant words?

The G7 and the duck-billed platypus
Economist Feb 10, 2004
The rich countries’ weekend communiqué on exchange rates was vacuous because they all want different things. So expect more of the same.

Bush adviser defends jobs outsourcing
ST Feb 11, 2004
The President's top economist argues that importing cheaper services will benefit US consumers and the economy

The Willy-Nilly Dollar Wall Street Journal Subscription Required
David Malpass (WSJ) Feb 11, 2004
The G-7 should be encouraging currency stability.

Perils of Outsourcing
Cecil E. Bohanon and T. Norman Van Cott (Mises Daily) Feb 11, 2004
The Chinese "yellow peril" was the late nineteenth century menace. And today, horrors, the Chinese and Indians are selling Americans things like computer software at bargain basement prices. In fact, when it comes to overall U.S. living standards, there is nothing special about outsourcing software technology. All that matters in this case is whether the Chinese and Indians sell for less than what current American software producers could earn in their next most lucrative employment. If so, outsourcing enhances U.S. living standards.

Rumors about yuan raise hopes in U.S.
IHT Feb 12, 2004
Hints that China might let its currency rise 5 percent to 10 percent against the dollar in the next few months have stoked hopes in the United States of a smaller trade deficit and some slowing, at least, of the flow of manufacturing jobs to China.

Here's a good way solve the dollar problem
Robert Hunter Wade (IHT) Feb 12, 2004
The Group of 7 finance ministers' meeting last weekend in Florida brought the tension over the dollar into the open. European and East Asian leaders are alarmed at the prospect of a continued fast fall in the dollar's value.

Lessons from the Asian Crisis
Anne O. Krueger (IMF) Feb 12, 2004
We are in a period of relative calm in the global economy. The recovery is strengthening. Financial crises are, by and large, notable for their absence. This is precisely the juncture at which responsible policymakers should be looking to the future—seeking to prevent disturbances wherever possible, and exploring ways of responding to shocks when they do occur. And let us be clear: crises will erupt. Unfortunately, we do not know where, or when.

Euroland's Aborted Economic Takeoff Wall Street Journal Subscription Required
Daniel Gros (WSJE) Feb 12, 2004
Another year of low growth for Europe.

It Is Turning Japanese Wall Street Journal Subscription Required
Jesper Koll (AWSJ) Feb 12, 2004
The G-7 appears to back Japan's long-held opposition to excess volatility in exchange rates.

WTO: General Council Sets Stage For Resumption Of Doha Negotiations
BRIDGES Weekly Trade News Digest - Vol. 8, Number 5 Feb 12, 2004
The WTO General Council (GC) met for the first time in 2004 on 11 February. The meeting, attended by a number of high-level officials from capitals, decided on a new slate of chairs for the various WTO bodies. They also took a decision to postpone Iran's request for accession to the WTO, while granting Iraq observership at the trade body. The GC was not yet prepared to take a decision on when to hold the next WTO Ministerial meeting, and postponed this item for a later session.

Be Creative, Not Protectionist Wall Street Journal Subscription Required
Carly Fiorina (WSJ) Feb 13, 2004
First Japan, now China and India. The answer: Compete!

Outsourcing Is an Old Story With New Critics Wall Street Journal Subscription Required
Ilya Patnaik (AWSJ) Feb 13, 2004
The trend will benefit America -- and the world -- in the long run.

Global: Offshoring Backlash Recommended!
Stephen Roach (MSDW) Feb 13, 2004
It’s economics versus politics. The free-trade theory of globalization embraces the cross-border transfer of jobs. Political systems do not — especially as election cycles heat up. That heat is now being turned up in Washington, as incumbent politicians in both parties come face to face with the angst of America’s jobless recovery. Jobs could well be the “hot button” in Campaign 2004. And offshoring — the transfer of high-wage US jobs to the low-wage developing world — could quite conceivably be the most contentious aspect of this debate and one of greatest risk factors for ever-complacent financial markets.

Currencies: Asset Prices, a 'Patient' Fed, and the Dollar
Stephen L. Jen (MSDW) Feb 13, 2004
Many factors drive the USD. Here, I focus on Fed policy. A ‘patient’ Fed may be marginally USD negative, and we will likely see further short-term GBP/USD and AUD/USD increases. However, we may be approaching the peak in cable and AUD/USD as the cash-rates gap maxes out.

Economic Reasons for Job Migration Seem to Be Changed
Steve Lohr (NYT) Feb 15, 2004
The chairman of President Bush's Council of Economic Advisers, N. Gregory Mankiw, stepped forcefully last week into an issue that has touched off an escalating, often strident, political debate: the migration of jobs, ranging from call center operators to computer programmers, to lower-cost countries like China and India.

Japan's pride and joy gets a 'Made in China' label
IHT Feb 17, 2004
Japan's top-end electronics manufacturers are taking advantage of abundant Chinese labor.

Political Timing, Outsourced
NYT Feb 17, 2004
Gregory Mankiw's comments about outsourcing, and the Democratic pouncing that followed, exposed the administration's lack of principled economic policymaking.

Aussie Rules Wall Street Journal Subscription Required
WSJ Feb 17, 2004
U.S. sugar 1, free trade 0.

The coming storm
Economist Feb 17, 2004
Banks are risking ever more of their own money in search of returns. Have they really learned nothing?

Global: Central Banking Discredited
Stephen Roach (MSDW) Feb 17, 2004
They are yesterday’s heroes. Central banks ruled the world during some 22 years of disinflation. But like most champions, they have overstayed their welcome. The world’s major central banks — the Federal Reserve, the Bank of Japan, and the European Central Bank — have squandered the capital they built up in the long and arduous war against inflation. And now, with their policy arsenals dangerously depleted, they are woefully ill-equipped to cope with the ever-daunting complexities of a post-inflation era. Bondholders beware: Your once-proud defenders have met their match. I fear modern-day central banking is on the brink of systemic failure.

A nation's challenge: sudden wealth
IHT Feb 18, 2004
The World Bank has staked its reputation on making sure that Chad manages its new wealth prudently.

Digital China is booming
Jayanthi Iyengar (AT) Feb 18, 2004
China has the second-highest number of Internet users in the world, next to the United States. While much has been said about Internet repression there, in fact most Chinese use the Internet for basic information, shopping, chatting and playing games - not searching for outlawed political content. And it's booming. -

China: The Yuan Peg Will Stay
Andy Xie (MSDW) Feb 18, 2004
China is not likely to modify its exchange rate regime in the foreseeable future. It is not in China’s (or the world’s interest for that matter) to change China’s currency regime now, in my view. Further, in a highly speculative environment, such a move could be quite destabilizing for both China and the world.

A Strong Euro Is Good for Europe
Melvyn Krauss (WSJE) Feb 19, 2004
The foreign exchange markets are not a zero sum game.

China's New Engagement With the Region
David Shambaugh (AWSJ) Feb 19, 2004
A new regional order is taking shape in Asia.

High-level Talks On Doha Round Ongoing
BRIDGES Weekly Trade News Digest - Vol. 8, Number 6 Feb 19, 2004
High-level trade officials and trade ministers have been on the road over the last week, meeting with their counterparts in capitals. Informal talks on trade issues, including on the revival of the Doha round, are being held in Mombasa, Kenya, from 18-19 February among a dozen African trade ministers as well as EC Trade Commissioner Pascal Lamy and US Trade Representative Robert Zoellick. WTO Director-General Supachai Panitchpakdi and Chair of the General Council Shotare Oshima are also present. Following a General Council meeting on 11 February, Geneva-based trade diplomats are expecting negotiating bodies to be scheduled in mid-March.

DSB Update: "Zeroing," Commercial Vessels And Lumber
BRIDGES Weekly Trade News Digest - Vol. 8, Number 6 Feb 19, 2004
The WTO Dispute Settlement Body (DSB) met on 17 February, where Members considered a range of ongoing cases and two new ones. The DSB adopted the Appellate Body report on the US-Canada dispute over softwood lumber. It also considered two panel requests; one by the EC for the establishment of a panel in the case on US-Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), and the other by Korea in the case on EC-Measures Affecting Commercial Vessels.

Thwarting a rising euro?
Economist Feb 19, 2004
The dollar's slide persisted. The currency hit a new record low against the euro, going above $1.29 for the first time. It also hit an 11-year low against sterling.

The great hollowing-out myth Recommended!
Economist Feb 19, 2004
Outsourcing to other countries has become a hot political issue in America. Contrary to what John Edwards, John Kerry and George Bush seem to think, it actually sustains American jobs.

Did the EU Create a Frankenstein Currency?
David DeRosa (Bloomberg) Feb 19, 2004
When the euro was first issued in 1999, members of the euro zone relished the idea that it might make a dent in the U.S. dollar's status as the world's premier reserve currency. Ironically, that may be the last thing the EU wants to see happen today.

Trading Places Wall Street Journal Subscription Required
WSJ Feb 20, 2004
With bilateral free trade deals proliferating, the U.S. can't afford to sit on the sidelines.

Edwards Notes Differences on Issue of World Trade
Katharine Q. Seelye & Elizabeth Becker (NYT) Feb 20, 2004
Trade, a major issue in several states that have seen jobs go overseas, is now the hottest topic of the two-man contest.

Dark Side of Free Trade
Bob Herbert (NYT) Feb 20, 2004
American workers are caught between corporations bent on extracting every ounce of productivity and a new globalized work force.

Argentina and its creditors
Economist Feb 20, 2004
Argentina is playing tough with its creditors. Should the IMF get tough with Argentina?

Global: All Cylinders? Recommended!
Stephen Roach (MSDW) Feb 20, 2004
The latest Japanese GDP growth report — a 7% annualized surge in the final three months of 2003 — added insult to injury for those of us who remain skeptical of the global economy’s newfound vigor. It rounds out a rather stunning picture of accelerating growth in most major segments of the world economy. With the important exception of Europe, the global economy now seems to be firing on all cylinders. Is a full-blown synchronous recovery in a long-sluggish global economy now at hand?

Currencies: Neck Deep in Overshoot Territory
Stephen L Jen (MSDW) Feb 20, 2004
After the latest G-7 meeting, the market has been trying to test the resolve of the ECB. I believe the market may well get what it is asking for and that the ECB will be compelled to respond (at around 1.32–1.33, I’m guessing). EUR/USD, GBP/USD, and AUD/USD are neck-deep in overshoot territory, in my view. I believe we are approaching the end of the structural rallies in these three exchange rates. I suspect the top is only 3% or so from the highs we’ve seen so far. Assuming ECB intervention occurs, EUR/USD will be capped at slightly below 1.35, and we look for EUR/USD to commence a gradual descent toward 1.20 for the remainder of 2004.

Japan Gets Wish With Dollar Short Squeeze
David DeRosa (Bloomberg) Feb 22, 2004
Japanese officials must be pinching themselves to make sure Friday's better-than-two-yen rise in the dollar was for real. Hopefully, they will note that the movement of the dollar against the yen happened without the Bank of Japan being a market participant.

Indian jobs, U.S. angst
Thomas L. Friedman (IHT) Feb 23, 2004
My contemporaries grew up with the hippies in the 1960s. Thanks to the high-tech revolution, many became yuppies in the 1980s. And now they should fasten their seat belts, because they may soon lose their jobs to "zippies" in the 2000s.

Global: Global Levers
Stephen Roach (MSDW) Feb 23, 2004
On the surface, the global economy certainly appears to be on the mend. Our estimates put world GDP growth in the 5-5.5% range in the second half of 2003 — double the average gains of 2001-02 and the strongest run-rate in about 20 years. But this global rebound is unlike any experienced in the past — it has been unusually dependent on policy stimulus. Can this nascent recovery in the world economy wean itself from these life-support measures and make the all-important transition to a self-sustaining upturn?

Our mutual friend
Economist Feb 24, 2004
Why is so much money pouring into mutual funds?

Don't Get Bitter About Sugar Wall Street Journal Subscription Required
Robert B. Zoellick (WSJ) Feb 25, 2004
The U.S.-Australian free-trade agreement is a win-win deal.

Free Trade vs. Good Jobs
Jack Beatty (Atlantic) Feb 25, 2004
"Keeping American jobs in America was the goal of trade policy from 1789 to 1933. Its instrument was the protective tariff, the most successful economic strategy in U.S. history. It is worth reviewing why the U.S. chose this path to development over free trade." What led America's early leaders to break the law of free trade? Should we break it again?

Free Trade Agreement: Thais Punt On Trade Talks Far Eastern Economic Review Subscription Required
FEER Feb 26, 2004
The U.S. and Thailand will soon work on a bilateral trade deal that could prove a winner for both. But major hurdles, such as agriculture, must be vaulted

Is free trade immoral?
WSJ Feb 26, 2004
Let's dissect what Kerry and Edwards are really saying.

Brave New World Wall Street Journal Subscription Required
Supachai Panitchpakdi (WSJ) Feb 26, 2004
America must lead on trade.

American Leadership and the World Trade Organization: What is the Alternative?
WTO Feb 26, 2004
WTO Director-General Supachai Panitchpakdi, in a speech to the National Press Club in Washington on 26 February 2004, warned that the alternative to the Doha Round is “a fragmented world, with greater conflict and uncertainty”. He stressed that US leadership is “indispensable” to the world trading system and the success of the negotiations.

Agriculture Negotiations: Signals Of Renewed Momentum Cropping Up
BRIDGES Weekly Trade News Digest - Vol. 8, Number 7 Feb 26, 2004
New signs of movement in agriculture negotiations -- the key element of the Doha round -- are cropping up after a period of scant progress following the collapse of trade talks in Cancun in September 2003. Due to a number of high-level meetings between individual trade ministers and groups of ministers over the past weeks, there are new signs that agriculture talks may be picking up speed. Key actors such as the US, the EC and the G-20 group of developing countries have signalled a renewed commitment to the round and a willingness to compromise. Recent remarks from both the EC and the US suggest that the task of reaching an agreement on at least a framework for agriculture modalities could be accomplished by August. Geneva observers have, however, cautioned against too much enthusiasm at this point, waiting to see concrete results at the next Committee on Agriculture (CoA) special (negotiating) session. The CoA's newly nominated Chair, New Zealand's Timothy Groser, has scheduled new WTO agriculture negotiations for 22-26 March in Geneva.

CTD: Declining Commodity Prices In The Spotlight
BRIDGES Weekly Trade News Digest - Vol. 8, Number 7 Feb 26, 2004
The WTO Committee on Trade and Development (CTD) held its 48th session on 18 February 2004, chaired by newly-elected Ambassador Trevor Clarke (Barbados). Discussions in the Committee focused mainly on the issue of declining commodity prices, which had been introduced by Kenya. The meeting formally elected Ambassador Clarke as the Committee's new chair for meetings in regular and dedicated sessions (small economies) and Ambassador Ian de Jong (Netherlands) as chair of the Sub-Committee on Least-Developed Countries.

EU to impose $4 billion in tariffs on U.S. goods
IHT Feb 27, 2004
The EU has promised to phase in sanctions gradually with a tariff that would rise to 17 percent over the coming year.

The silver lining of outsourcing overseas
Thomas L. Friedman (IHT) Feb 27, 2004
I've been in India for only a few days and I am already thinking about reincarnation. In my next life, I want to be a demagogue. Yes, I want to be able to huff and puff about complex issues - like outsourcing of jobs to India - without any reference to reality.

The Trade Tightrope
Paul Krugman (NYT) Feb 27, 2004
Free trade is viable only if it is backed by job creation measures and a strong domestic safety net.

'Stop!' Is Not an Option in the New World
Daniel Henninger (WSJ) Feb 27, 2004
From cloning to "outsourcing" jobs, America isn't able to isolate herself anymore.

Global: An Open Letter to Alan Greenspan
Stephen Roach (MSDW) Feb 27, 2004
Rare is the economy that transitions from recession to recovery and, ultimately, to expansion without an attendant rise in interest rates. And yet 27 months into the current recovery, that’s very much the state of affairs in the United States. The Federal Reserve is the key actor in this drama. Borrowing a page from the script of the New Paradigm of the late 1990s, the Fed continues to hold the view that monetary tightening need not interfere with the rapid growth of a productivity-led economy. But the prescription of low nominal interest rates introduces a new dimension of financial market risk into the equation -- the possibility of multiple asset bubbles. In an effort to spark debate over the wisdom of this policy strategy, the following “open letter” to Alan Greenspan appeared in the March 1, 2004, issue of Newsweek International.

Global: Oil Prices--Staying Higher for Longer
Eric Chaney and Richard Berner (MSDW) Feb 27, 2004
Once again, we raise our oil price assumptions.

Overpromising on Trade
NYT Feb 28, 2004
Though the debate on global markets has become more nuanced, there remains plenty of room for plain speaking from John Kerry and John Edwards.

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