News & Commentary:

May 2006 Archives


International Growth Recommended!
Finance and Development Mar/May 2006
For policymakers around the world, finding ways to promote faster growth is a top priority. But what exactly do economists know and not know about growth? What direction should future research and policymaking take? This issue explores this topic, starting with a major World Bank study and research coming out of Harvard University that urges less reliance on simple formulas and the elusive search for best practices, and greater reliance on deeper economic analysis to identify each country's binding constraint(s) on growth. Other articles highlight IMF research on pinpointing effective levers for growth in developing countries and Africa's experience with growth accelerations. Also in the issue are pieces examining global economic imbalances, rapid credit growth in Eastern and Central Europe, and ways to boost productivity growth in Europe and Japan. In Straight Talk, Raghuram Rajan argues that if we want microfinance to become more than a fad, it has to follow the clear and unsentimental path of adding value and making money. Asian Development Bank's Haruhiko Kuroda sets out his vision for a new financial architecture in Asia. Finally, Picture This takes an in-depth look at global employment trends.

Putting China’s Capital to Work
Diana Farrell and Susan Lund (FEER) May 2006
Overhauling China’s financial system could enhance social stability.

The Offshoring of Innovation Far Eastern Economic Review Subscription Required
Dieter Ernst (FEER) May 2006
Dieter Ernst, a senior fellow at the East-West Center in Honolulu, describes the symbiotic relationship leading multinationals to offshore high-tech R&D to Asia.

One World, One Well Recommended!
Jill Boberg (RAND Review) Mar/May 2006
How Populations Can Grow on a Finite Water Supply.

Congress, Inc. Wall Street Journal Subscription Required
WSJ May 1, 2006
A new political assault on foreign investment.

Free Trade Vision Wall Street Journal Subscription Required
Rob Portman & Susan Schwab (WSJ) May 1, 2006
Reduce trade barriers and raise living standards.

IMF Spring Meeting overview Adobe Acrobat Required
IMF Survey May 1, 2006
Plus: IMFC communique; IMF medium-term strategy; Krueger to resign; World Economic Outlook; Sub-Saharan Africa outlook; Asia outlook; Western Hemisphere outlook; Dealing with scaled-up aid

Just dig a little deeper Economist Subscription Required
Economist May 2, 2006
Can the old economy be as over-hyped as the new?

Helping Asia find its voice
Philip Bowring (IHT) May 2, 2006
The Asian Development Bank is making an effort to play a role in trade and financial issues affecting the world as well as the region.

Rifts Deepen On Ag Market Access Flexibilities For Developing Countries
BRIDGES Weekly Trade News Digest - Vol. 10, Number 15 May 3, 2006
WTO farm trade negotiators met in Geneva from 26-28 April to discuss key market access flexibilities for developing countries, as delegations kicked off six weeks of continuous negotiations aiming to result in an agreement on modalities for Doha Round tariff and subsidy cuts. However, positions remained far apart, as the rift persisted between the most competitive farm exporters and those developing countries that are seeking the ability to provide some protection to their agricultural sectors. New informal 'non-papers' from the US and Thailand only seemed to entrench existing differences.

Lamy To TNC: Members Must Step Up Intensity Of Negotiations
BRIDGES Weekly Trade News Digest - Vol. 10, Number 15 May 3, 2006
Referring to WTO Members' failure to meet a key end-April deadline as a "disappointment... but not a disaster" Director-General Pascal Lamy exhorted trade negotiators on 1 May to step up efforts to agree on modalities for subsidy and tariff cuts as soon as possible in order to conclude the Doha Round trade negotiations by the end of the year. "We must now focus our efforts on working intensively, continuously and in an effective manner on a text-based negotiating process," he told the Trade Negotiations Committee (TNC).

NAMA: Chair Sets Out Work Plan Aiming At Modalities By Mid-June
BRIDGES Weekly Trade News Digest - Vol. 10, Number 15 May 3, 2006
With WTO Members far from consensus on the central issues in the ongoing talks on non-agricultural market access (NAMA), the chair of the negotiating group last week laid out a timetable for "intensive and continuous" work through 16 June aiming to culminate in full modalities - an agreement with specific figures for tariff cuts and the extent of flexible treatment for developing countries.

Let's Party Wall Street Journal Subscription Required
WSJ May 5, 2006
When Asian markets border on euphoric, it's good to ask why.

An Ugly Side of Free Trade: Sweatshops in Jordan
Steven Greenhouse and Michael Barbaro (NYT) May 4, 2006
Sweatshop abuses and allegations emerge in new locations.

Gold speculators relishing another great ride
IHT May 8, 2006
It is a splendid spring day in Connecticut's horse country, and James Sinclair, perhaps the best-known gold speculator of his era, is sitting before his trading terminal, contemplating the upward thrust of gold on his trader's chart.

A 'Brave New World' Wall Street Journal Subscription Required
Thomas Hout (WSJ) May 8, 2006
The distinction between a "home" and "foreign" market is disappearing.

Euro's rise is linked to good news this time
IHT May 9, 2006
The euro appears to be headed on an upward track while the U.S. dollar weakens against major currencies.

Global tides take some control from Fed
IHT May 9, 2006
If the Federal Reserve stops raising interest rates later this year, will the rest of the world go along?

Profits of Doom?
WSJ May 9, 2006
Americans should be happy that oil companies are making money.

Can the Doha Round Be Salvaged?
Ernesto Zedillo (YaleGlobal) May 9, 2006
Failure to agree on market access could weaken the WTO.

Managing Globalization: How diversification can act as a hedge
IHT May 10, 2006
When Evo Morales was elected president of Bolivia in December, he pledged to take over the country's natural gas industry - yet the stock prices of the foreign companies that extract the gas barely moved.

Fluttering down Economist Subscription Required
Economist May 10, 2006
The greenback has been drifting down against other currencies but there seems no sign, yet, of a collapse. There are also reasons to be hopeful that economic growth—in America and elsewhere—will be robust for some time to come.

U.S. Won't Press China Over Yuan
NYT May 11, 2006
The Bush administration said that it would not cite China as a currency manipulator and provoke a confrontation over the issue.

Growth speeds up within the euro zone
IHT May 11, 2006
Economic growth in the dozen countries that use the euro accelerated in the first three months of the year, the European Union statistics office reported Thursday, reinforcing expectations the European Central Bank would raise interest rates next month.

Globalization and International Locational Competition
Anne O. Krueger (IMF) May 11, 2006
Locational competition--the competition for economic activity--has important policy implications. As globalization has made the world economy more closely integrated, even small changes in the relative costs of doing business can induce producers to change location. Locational competition affects a higher and higher proportion of total economic activity at greater and greater distances.

Learning to live with costly fuel
IHT May 12, 2006
Many economists are coming around to the view that, since the energy crises of the 1970s, the world's major economies have learned to adapt to a seemingly persistent reality of rising oil prices.

Chinese exports climb anew for April, as imports falter, for big trade surplus
IHT May 12, 2006
Chinese exports climbed steeply in April while growth in imports faltered, producing an unexpectedly wide trade surplus that is likely to further upset China's critics in the United States, Europe and Japan.

American Generosity Wall Street Journal Subscription Required
WSJ May 13, 2006
Private U.S. giving far surpasses official aid.

U.S. accord prepares Vietnam for WTO deal
IHT May 15, 2006
Vietnam has reached agreement on a trade deal with the United States that paves the way for the Communist country to join the World Trade Organization this year, U.S. and Vietnamese officials said on Sunday.

Emerging clout of pipeline politics
IHT May 15, 2006
As energy-rich countries feel empowered by high oil prices, they are increasingly using a blunt instrument to make their influence felt. Call it the power of the pipeline.

About That Free Trade . . .
NYT May 15, 2006
Things are looking grim for free trade. And that is a disgrace that highlights the hypocrisy of speeches about abolishing global poverty that the leaders of rich countries gave last year.

Currency Games Wall Street Journal Subscription Required
WSJ May 15, 2006
The last thing President Bush needs now is a dollar crisis.

Funding the IMF Adobe Acrobat Required
IMF Survey May 15, 2006
Plus: Middle East and Central Asia economic outlook; Is globalization a choice?; Latin American reform; Trade conference; Aid effectiveness; Long-term interest rates in G7 countries; Wage flexibility; Joint external debt website launched.

Beijing lets yuan rise past threshold
IHT May 15, 2006
China allowed the yuan to strengthen Monday past the level of eight to the dollar, rattling currency and equity markets already shaken by the dollar's extended slide.

Euro brings scent of inflation for Slovenes
IHT May 15, 2006
Signs of the euro abound in Slovenia, but so does a mild suspicion among people that all is not well as the common currency arrives at the beginning of next year.

About that free trade
IHT May 15, 2006
Things are looking grim for free trade despite the speeches about abolishing global poverty that the leaders of rich countries gave last year.

WTO Makes Public All Official GATT Documents
WTO May 15, 2006
The WTO has decided to make public all official documents issued under the General Agreement on Tariffs and Trade (GATT) during the period 1947-1995. “Providing access to these historic documents is a further sign of the WTO's commitment to transparency. This will be especially important for academics, trade specialists and others with an interest in how the trading system evolved in the GATT era, from 1947 to 1995”, said WTO Director-General Pascal Lamy.

Wandering (Trade) Eye Wall Street Journal Subscription Required
WSJ May 16, 2006
A bad omen for the WTO's Doha Round.

The China conundrum Economist Subscription Required
Economist May 16, 2006
With an inflation scare in America, what of the prospects for Asian markets?

Next Stop, WTO Wall Street Journal Subscription Required
WSJ May 17, 2006
Vietnam needs to join the international trading community.

Jittery markets Economist Subscription Required
Economist May 17, 2006
Markets wobbled this week, as traders worried about America's economic health and the dollar continued to drift downwards.

Lamy: Talks Now In 'Red Zone,' Members Need To Compromise
BRIDGES Weekly Trade News Digest - Vol. 10, Number 17 May 17, 2006
Time is running out for WTO Members to reach a framework deal on Doha Round subsidy and tariff cuts, Director-General Pascal Lamy warned on 15 May. "We are now in the red zone, and… we are not far from the red part of this red zone," he told the General Council, "the more we move into the year, the more we risk to fail in our endeavour to conclude the round." Nevertheless, he insisted that an agreement remained within grasp if countries are willing to compromise.

Falconer Urges Members To Narrow Differences On Sensitive Products
BRIDGES Weekly Trade News Digest - Vol. 10, Number 17 May 17, 2006
WTO agriculture negotiations Chair Ambassador Crawford Falconer (New Zealand) is urging Members to try to narrow their differences to a "more manageable level" on both the number of 'sensitive' farm products and the extent to which they will be shielded from the full force of tariff cuts.

Members Clash On Evaluation, Liberalisation Of Environmental Goods
BRIDGES Weekly Trade News Digest - Vol. 10, Number 17 May 17, 2006
At an informal 10-12 May technical meeting of the WTO Committee on Trade and Environment Special Session (CTE-SS), Members were split on how to evaluate whether certain wastewater and solid and hazardous waste management products could be described as "environmental" for the purposes of expedited trade liberalisation. While several developing countries maintained that a single potential non-environmental end use should suffice to disqualify a product from consideration, developed countries countered that this would exclude all but a handful of items.

The IMF in A Changing World
Raghuram G. Rajan (IMF) May 17, 2006
The world, especially the financial world, is changing rapidly. Capital markets are becoming more integrated through cross-border capital flows, especially as the "home bias" of investors diminishes, product markets are becoming integrated through trade, and labor markets are becoming more seamless, partly through immigration but also partly through new technology that allows services to be provided at a distance. In such an increasingly integrated world, it is useful to ask what role an organization like the International Monetary Fund can play. The question is especially pertinent as emerging markets are becoming more mature and many believe the crises that were our focus have become curious artifacts of history.

In Gold We Trust Wall Street Journal Subscription Required
David Ranson & Penny Russell (WSJ) May 18, 2006
Changes in the commodity's price predict economic trouble.

Globalization à la carte
IHT/Yaleglobal May 18, 2006
Economic patriotism is the flip side of free-market liberalism and part of the current fashion for globalization à la carte.

The return of hot money
IHT/NYT May 19, 2006
Those lucky investors who have ridden the bull run of the emerging markets in recent years - and those still thinking about getting onboard - should remember one thing. What goes up quickly often goes down quickly as well.

Gambling on a Weaker Dollar
NYT May 20, 2006
A weakening dollar, on top of budget deficits and a savings shortfall, is a recipe for recession. The question now is whether the country will change direction in time.

How drug patenting fails the world's poor
IHT May 21, 2006
The World Health Organization will be discussing a new report that will increase pressure on pharmaceutical companies, governments and on the organization itself to do more to provide medicines for poor countries.

Going global, buying local
IHT May 22, 2006
Amid the flurry of multibillion-dollar maneuvers under way, brokers and watchful governments on both sides of the Atlantic still care a great deal where a stock exchange is located.

Promises? What Promises?
NYT May 22, 2006
Last year was long on promises by world leaders to fight global poverty and AIDS. This year has been disgracefully short on anything resembling action.

Markets tumble in emerging countries
IHT May 23, 2006
Stocks in Asian markets nose-dived Monday as traders rushed for safer investments.

Their People, Our Money Wall Street Journal Subscription Required
Joel Kurtzman & Glenn Yago (WSJ) May 26, 2006
Open doors swing both ways.

Undermining Mongolia Wall Street Journal Subscription Required
Michael Kohn (WSJ) May 26, 2006
Hard-ball tactics pull the rug out from foreign investors.

De Rato on global imbalances Adobe Acrobat Required
IMF Survey May 29, 2006
Plus: Committee to study IMF finances; IMF management change; Country briefs: Maldives, Israel; Emerging soverign debt markets; Euro area imbalances; Preference erosion; Import protection; Effects of IMF program; ECOSOC meeting.

Taiwan's Trade Mirage Wall Street Journal Subscription Required
Charles W. Freeman III (WSJ) May 30, 2006
Taiwan can't overcome a lack of American business support.

Paulson's progress Economist Subscription Required
Economist May 30, 2006
A new treasury secretary is nominated in America, as Henry Paulson agrees to move from Goldman Sachs. He takes over at a delicate time.

Paulsonomics Wall Street Journal Subscription Required
WSJ May 31, 2006
The Treasury nominee is solid on taxes, weaker on the dollar.

Lamy Sets End-June Deadline For Ag, NAMA Modalities
BRIDGES Weekly Trade News Digest - Vol. 10, Number 19 May 31, 2006
WTO Director-General Pascal Lamy on 30 May set an end-June deadline for a deal on 'modalities' for how much the Doha Round will cut farm subsidies as well as tariffs on both agricultural and industrial products. He told an informal heads-of-delegation meeting that this would be necessary for Members to wrap up the negotiations by the end of the year, as scheduled.

Ag Chair To Produce Draft Text Around 19 June, As Members Remain Divided On Subsidy Cuts
BRIDGES Weekly Trade News Digest - Vol. 10, Number 19 May 31, 2006
Doha Round agriculture Chair Ambassador Crawford Falconer (New Zealand) told an informal meeting on 30 May that he would circulate an initial draft 'modalities' text the week of 19 June, as per the timeline set out by WTO Director-General Pascal Lamy earlier that day (see related story, this issue). Falconer will do so in spite of persistent divisions on both tariff and subsidy cuts -- he cut short the scheduled discussion on overall trade-distorting support (OTDS) and its constituent 'amber box' payments after concluding that Members were saying nothing new that might enable them to bridge differences.

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