Bill Gross (PIMCO) Aug 2010
Not only growth but capitalism itself may be in part dependent on a growing population.
The Politically Incorrect Guide to Ending Poverty
Sebastian Mallaby (Atlantic) Jul/Aug 2010
An eminent economist discovers the virtues of colonialism.
"Asia Leading the Way"
Finance and Development Jun/Aug 2010
Explores how the region is moving into a leadership role in the world economy. The issue looks at Asia's biggest economy, China, which has relied heavily on exports to grow, and its need to increase domestic demand and to promote global integration if it is to continue to thrive. China is not the only Asian economy that heavily depends on exports and all of them might take some cues from the region's second-biggest economy, India, which has a highly developed services sector. Min Zhu, the new Special Advisor to the IMF's Managing Director, talks about Asia in the global economy, the global financial crisis, correcting imbalances, and the IMF in Asia. And "People in Economics" profiles an Asian crusader for corporate governance, Korea's Jang Hasung. This issue of F&D also covers how best to reform central banking in the aftermath of the global economic crisis; the pernicious effects of derivatives trading on municipal government finances in Europe and the United States; and some ominous news for governments hoping to rely on better times to help them reduce their debt burdens. Mohamed El-Erian argues that sovereign wealth funds are well-placed to navigate the new global economy that will emerge following the world wide recession. "Back to Basics" explains supply and demand. "Data Spotlight" explores the continuing weakness in bank credit. And "Picture This" focuses on the high, and growing, cost of energy subsidies.
Global imbalances: Lessons from historical reversals
Luiz de Mello & Pier Carlo Padoan (VoxEU) Aug 1, 2010
Global imbalances are firmly back on the policy agenda. This column examines evidence from past imbalances that suggests that the current-account reversals can be sizeable and the resulting disruption to capital flows could pose risks for the global recovery.
High prices will fix what politicians cannot
Trevor Houser (FT) Aug 1, 2010
Today’s oil markets make public investment in clean-energy research and development, just now returning to 1970s levels, more palatable.
The Siren Song of Capital Controls
Eswar Prasad (Project Syndicate) Aug 2, 2010
Capital controls are back in vogue, winning favor with several emerging-market governments and even an endorsement from the IMF. But capital controls remain a bad idea, and there is good reason to see inflows into emerging markets as an opportunity to strengthen domestic capital markets, rather than as a threat to financial stability.
What do we know about the causes of the crisis?
Andrew K. Rose & Mark M. Spiegel (VoxEU) Aug 2, 2010
The global crisis has left many calling for early warning systems to prompt authorities into action before it’s too late. This column argues that such a system is restricted by our understanding of what caused the crisis in the first place. Indeed, it shows that popular explanations for the current crisis have little to no ability to predict past crises.
Uncertainty changing investment landscape
Richard Clarida and Mohamed El-Erian (FT) Aug 2, 2010
We should feel sorry for policymakers who face unusual dispersion in expectations for economic variables such as growth and inflation – the probability of a policy mistake is materially higher.
Financial History’s False Lessons
Paul Seabright (Project Syndicate) Aug 3, 2010
If history punishes those who fail to learn from it, financial history does its punishing with a sadistic twist – and also punishes those who learn from it too enthusiastically. Indeed, financial crises frequently reflect the weaknesses of regulatory systems founded on the lessons learned from previous crises - and the current one is no different.
An Age of Diminished Expectations?
Kenneth Rogoff (Project Syndicate) Aug 3, 2010
As the US and European economies continue to struggle, there is rising concern that they face a Japanese-style “lost decade.” But policymakers must remember that whether or not the US and Europe avoid Japan's fate depends on their economies' productive vitality, not simply on short-term demand-stimulation measures.
The Great Brain Race
Ben Wildavsky (Project Syndicate) Aug 3, 2010
A sharp increase in global academic competition – for both students and faculty – has caused much hand-wringing in the West. But educational protectionism, which some countries have embraced, is as big a mistake as trade protectionism.
The west must start living up to its ideals
Dominique Moïsi (FT) Aug 3, 2010
The new shift in global power should be greeted neither with American denial nor European soul-searching, for this moment constitutes unique opportunity for the western world.
Wall Street play for which we pay
John Kay (FT) Aug 3, 2010
Shakespeare’s princely characters were paid for by the work of the peasantry, whose labours yielded revenues to support lifestyles entirely disconnected from their own. Little has changed.
Bond yields fall into abyss as world turns upside down
Michael Heise (FT) Aug 3, 2010
The fact that increasing bond supply is not depressing prices and pushing up interest rates is reminiscent of the Japanese experience.
The World Economy Needs Balancing, But How?
David Dapice (YaleGlobal) Aug 3, 2010
Countries exporting, while shying away from importing, won't reduce global debt.
Trade in natural resources and the WTO
Michele Ruta (VoxEU) Aug 4, 2010
Trade in natural resources accounts for a growing share of world trade and a growing share of policymakers’ attention. Given the economic, environmental, and political implications of natural resources, this column asks how to design rules that can promote mutual gains from resources trade. It provides recommendations for export policy, conservation policy, and domestic policy.
To spend or not to spend: Is that the main question?
Guillermo Calvo (VoxEU) Aug 4, 2010
The debate over fiscal policy has reached a fork in the road. One way leads to maintaining or increasing the fiscal stimulus. This column argues that policymakers should take the other path. This would mean phasing out government expenditure while phasing in social protection programmes at the risk of a double-dip recession but potentially resulting in a more vibrant economy.
Distressing Stress Tests
Harold James (Project Syndicate) Aug 4, 2010
Europeans hope that the recent publication of the results of stress tests of their banks will have the same stabilizing effect in Europe that last year's stress tests of US banks produced in America. But, while the results of stress tests may be good for the financial sector, they may be bad for the real economy.
Geithner and Financial Innovation
WSJ Aug 4, 2010
The Treasury Secretary supports it. Just not for Fan and Fred.
Targeting Guatemala, US Launches First-Ever Labour Rights Dispute Under an FTA
Bridges Weekly Trade News Digest, Volume 14, Number 29 Aug 4, 2010
In a landmark move, the US has launched a formal labour rights complaint against trade partner Guatemala under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR).
Why America sees red in corporate China
David Pilling (FT) Aug 4, 2010
The US must decide whether Chinese companies are making commercial decisions or whether they are part of some grand plan fashioned at Communist party HQ.
Yen has edge over gold in battle for supremacy
Peter Tasker (FT) Aug 4, 2010
The Japanese currency is not a sterile asset like gold, which is not really an investment at all – the yen generates a return.
China needs slower, better growth
Yu Yongding (FT) Aug 5, 2010
Beijing has concentrated obsessively on increasing GDP for too long, postponing much-needed structural adjustment.
Will the US be a global securities policeman?
Robert Pozen (FT) Aug 5, 2010
Two recent court decisions seem to be superseded by America's new financial reform legislation.
Trading volumes retreat with investor trust
Gillian Tett (FT) Aug 5, 2010
The most pernicious issue hanging over the system right now is a loss of confidence when it seems that nobody really understands how the basic mechanics of the equity market work any more.
Argentina’s Warning to Would-Be Euro Deserters
Mario I. Blejer and Eduardo Levy Yeyati (Project Syndicate) Aug 5, 2010
The tensions between the eurozone’s north and south, and the complex and costly transfers required to dampen the euro crisis, have led many to think what was once unthinkable: saving the common currency requires that some countries leave it. But a look at what exiting the euro might actually mean in practice should stop such talk cold.
Hakan Altinay (Project Syndicate) Aug 5, 2010
Global governance is not a technocratic puzzle to be solved by clever institutional design. Given competing visions – particularly between the US and Europe – such governance cannot be established without an explicit understanding of our responsibilities towards those who are not our compatriots, and of the rights that emerge alongside those responsibilities.
Brazil's development bank: Nest egg or serpent's egg?
Economist Aug 5, 2010
Ahead of presidential elections, BNDES comes under scrutiny.
The New Push for a Global Currency
Llewellyn H. Rockwell Jr. (Mises Daily) Aug 6, 2010
You surely didn't think that the governing elites would let this economic crisis pass without pushing some cockamamie scheme for control. Well, here is the cloud no bigger than a man's hand, a revival of a 60-year-old idea of a global paper currency to fix what ails us.
The Security Trap
Raghuram Rajan (Project Syndicate) Aug 6, 2010
Even as the world becomes more integrated, the word “security” crops up again and again, as in “food security” or “energy security,” which typically means a country creating and controlling domestic production facilities no matter what the cost. But such decisions merely lead to collective economic insecurity.
Global: Will Food Inflation Bite?
Manoj Pradhan (MS GEF) Aug 6, 2010
Soaring grain prices have brought food inflation back to centre stage. Using the expertise of our EM economics teams, we examine whether food inflation is likely to pose enough of a threat to get central banks to act aggressively.
It takes less than a sovereign default to cause instability
Giuseppe Grande & Fabio Panetta (VoxEU) Aug 7, 2010
The spectre of sovereign default looming over the world economy represents a major threat to economic stability. This column argues that, even without a fully-fledged debt crisis, the deterioration of public finances in major countries could trigger an increase in long-term interest rates and jeopardise the recovery.
Unusual is usual during a crisis
Venkatachalam Shunmugam (VoxEU) Aug 8, 2010
If the base rate rises, all things being equal, the exchange rate is expected to rise and bond prices to fall. This column argues that, during a financial crisis, such relationships between asset classes go haywire. When this happens, it says governments must provide strong signals to the market and make sure that they pick up the right signals from the market themselves.
Europe’s bank needs nous as well as rigour
Ralph Atkins (FT) Aug 8, 2010
As the world emerges from the traumas of recent years, is it time for an academic economist to lead the European Central Bank.
America must find a new China strategy
Thomas Wright (FT) Aug 8, 2010
President Barack Obama’s actions to maintain the current Pacific order are a step in the right direction, but he still lacks a strategic ‘roadmap’.
Look east, young unionists, for inspiration
John Lloyd (FT) Aug 8, 2010
The task of protecting rights might be declining sharply in developed nations. But they are increasingly common in the catch-up world – especially in China and elsewhere in south east Asia.
China and the I.M.F.
NYT Aug 8, 2010
It is good news that China agreed to submit to the International Monetary Fund's annual review of exchange rate and economic policies, but nobody should interpret this as a major shift in policy.
The Myth of Authoritarian Growth
Dani Rodrik (Project Syndicate) Aug 9, 2010
The relationship between a nation’s politics and its economic prospects is one of the most fundamental – and most studied – subjects in all of social science. When we look at systematic historical evidence, we find that for every authoritarian country that has managed to grow rapidly, there are several that have floundered.
Farm subsidies on increase
AT Aug 10, 2010
Billions of dollars in subsidies contribute an increasing share of agriculture revenue in the richest countries, in spite of evidence such support hurts the livelihoods of farmers in developing nations. Nor are the biggest gainers noted for having mud on their boots or driving tractors on a daily basis.
Time to regulate volatile food markets
Joachim von Braun (FT) Aug 9, 2010
While financial markets have been regulated to curb speculation, commodity markets have remained largely untouched.
‘Made in America’ is not the way out
Jagdish Bhagwati (FT) Aug 9, 2010
Even if it were true that the financial sector must be curbed, it would not follow that manufacturing must be expanded.
Improve banks' survival with living wills
Charles Goodhart and Dirk Schoenmaker (FT) Aug 9, 2010
A vital role to play in reducing moral hazard and reducing expectations of future bail-outs
Marriage Counseling for the G-20 and the IMF
Barry Eichengreen (Project Syndicate) Aug 10, 2010
The relationship between the IMF and the G-20 is symbiotic but conflicted. Like a long-married couple who habitually bicker and fight, the two can’t seem to live together – but they can’t live apart, either.
The Truth About Blood Diamonds
Jack Jolis (WSJ) Aug 10, 2010
Diamonds aren't a major reason for Africa's conflicts, and the Kimberley Process is no guarantee of a stone's pedigree in any case.
Promoting exports full of risk for world economy
Alan Beattie (FT) Aug 10, 2010
If governments are not careful, export manufacturing lobbies will seize control of government policy again and that would be unwise.
Eye China’s coasts, not its currency
Yukon Huang (FT) Aug 10, 2010
Forces are beginning to reshape China’s economic landscape in ways that may resolve the controversial role that China is accused of playing in shaping global trade imbalances.
Tax on Commodity Profits Could Postpone Scarcity
Joergen Oerstroem Moeller (YaleGlobal) Aug 10, 2010
As an era of plenty concludes, nations seek long-term benefits from mineral holdings.
A lengthening shadow
Economist Aug 11, 2010
Shadow economies have grown since the financial crisis began.
Debt and growth revisited
Carmen M. Reinhart & Kenneth Rogoff (VoxEU) Aug 11, 2010
With the advanced economies at a critical juncture, some economists are urging more fiscal stimulus while others argue that raising debt levels will stunt growth. This column presents the Reinhart-Rogoff findings on the relationship between debt and growth based on data from 44 countries over 200 years with a focus on the debt-growth link during high-debt episodes.
Cutting the corruption tax: A way out for Greece
Paul Romer (VoxEU) Aug 11, 2010
For many, corruption and political cronyism are seen as an inevitable part of Greek politics. This column argues that the same could have been said in the 1970s about Hong Kong, now a beacon of low corruption. Hong Kong managed this turnaround by appointing a non-elected governor accountable to the UK government. Greece could achieve the same by calling on the EU and start counting the benefits.
The Sun Is Rising in the East
Anders Åslund (PIIE) Aug 11, 2010
What hand wringing there has been recently on both sides of the Atlantic as the major European economies pursue austerity in their budgets and social programs! But is it not overdone? Europeans and Americans need only look east—to the European Union's new eastern members—to see that austerity can deliver growth and improve the efficiency of the European economic and social systems.
How India Survived the Financial Crisis
Shashi Tharoor (Project Syndicate) Aug 11, 2010
As the world economy begins to recover, Indians are looking back with particular satisfaction at how they coped with the recent crisis. Despite an unprecedented global recession, India remained the second fastest growing economy in the world.
The great false choice, stimulus or austerity
Olivier Blanchard and Carlo Cottarelli (FT) Aug 11, 2010
The divisions between fiscal tightening advocates and their opponents are often more apparent than real.
Thoughts on the troubles of banks
Samuel Brittan (FT) Aug 12, 2010
Bankers say there is a shortage of bankable propositions from the business side. If true, this is partly because of the recession the banks.
Web of shadow banking must be unravelled
Gillian Tett (FT) Aug 12, 2010
While the issue of rehypothecation might sound arcane, it is central to the financial system and regulators need to stay on their toes.
How Much Transparency is Too Much?
Peter Singer (Project Syndicate) Aug 12, 2010
Ever since the financial crisis erupted in 2008, there has been a call for “greater transparency” in financial services, and the same appeal has been used to force oil and mining companies to reveal their payments to governments of countries where they operate. But the recent Wikileaks imbroglio raises a key question: is greater transparency always good?
Testing America’s Financial Stability
Jose Vinals (Project Syndicate) Aug 12, 2010
The US authorities have done much to strengthen the financial sector, which speaks to their commitment to global efforts to ensure that the crisis of the last three years will not be repeated. The true test, however, will be how the recent reforms enacted by the US Congress are implemented domestically, and how they will be coordinated internationally.
The brain drain: New evidence
John Gibson & David McKenzie (VoxEU) Aug 12, 2010
Some argue that the global competition for talented workers leads to a “brain drain” robbing poor countries of their brightest sparks and stifling development. Others suggest that the local economy can benefit through trade, investment, and knowledge transfer. This column argues that for developing countries with the largest high-skilled migration, neither is spot on – by far the biggest impact is on the migrants themselves.
Changing Poverty's Parameters
NYT Aug 12, 2010
A recent Oxford study on poverty was the latest in a series of efforts, dating back at least two decades, to broaden the field of development beyond a narrow economic focus.
Economist Aug 12, 2010
Austerity or stimulus? Some economists have much more extreme views than that.
The world economy: Joy, pain and double dips
Economist Aug 12, 2010
Fear of renewed recession in America is overblown; so is some of the optimism in the euro area.
Gordon Gekko Reborn
Nouriel Roubini (Project Syndicate) Aug 13, 2010
In the 1987 film Wall Street, the character Gordon Gekko famously declared, “Greed is good,” before being packed off to prison. A generation later, the film's sequel – to be released next month – sees Gekko released from jail and returned to the financial world – a world in which greed, arrogance, and immorality remain untamed by adequate regulation.
Can We Regulate Systemic Risk?
Michael Spence (Project Syndicate) Aug 13, 2010
In the past two years, we have had two dangerous episodes of financial instability and sudden change in market dynamics. More are likely, because the global economy is out of balance in several respects as we emerge from the crisis, particularly in terms of the distribution of sovereign debt and the structure of global demand.
Reforming global economic governance: A strategy for middle powers in the G20
Daniel D. Bradlow (VoxEU) Aug 13, 2010
The global crisis has helped promote the G20 from supporting role to one of the leading forums on the world stage. This column argues that the G20 presents a unique opportunity for its medium-sized members to influence the global economic agenda – but only if they base their short-term actions on a long-term vision.
Beyond the zero lower bound on nominal interest rates
Rajiv Shastri (VoxEU) Aug 14, 2010
How can monetary policy overcome the zero lower bound on interest rates? This column explores the possibility of negative nominal interest rates, arguing that, for it to work, all reserve nations must agree to protect against using foreign currencies as an alternative means of exchange.
Are macro-prudential policies really that prudent?
Gianluca Benigno, Huigang Chen, Christopher Otrok, Alessandro Rebucci & Eric Young (VoxEU) Aug 16, 2010
The fallout from global crisis has left many calling for economy-wide, macro-prudential policies, such as taxes on capital flows and capital controls. This column argues that the case for such measures is ambiguous at best – the excessive borrowing on which they are predicated is not a general and robust feature of financially developed and integrated economies.
The idea of Euro-paralysis is an illusion
Jürgen Stark (FT) Aug 15, 2010
In the midst of the crisis, Europeans did not hesitate to act and to embrace reform. There is no shortage of evidence of swift and decisive action.
Why Europe Went to the Brink
Lorenzo Bini Smaghi (Globalist) Aug 16, 2010
How did the Greek economic recession expose the cracks in the EU's financial system?
Could Greece Go Over the Cliff?
Lorenzo Bini Smaghi (Globalist) Aug 17, 2010
Is a Greek financial default unavoidable — or are there signs that the country will recover?
How Not to Win Hearts and Minds
William Easterly (WSJ) Aug 16, 2010
In a U.N. survey, 52% of Afghans said foreign aid organizations 'are corrupt and are in the country just to get rich.'
Germany Is Not China
Heleen Mees (Project Syndicate) Aug 16, 2010
Global imbalances in trade and capital flows clearly are at least partly to blame for what has happened to the world economy since 2008. But not all imbalances are created equal, so it is important to weigh the consequences of individual countries’ external accounts for global economic stability and prosperity.
India’s weak state will not overhaul China
Arvind Subramanian (FT) Aug 16, 2010
Indian state will seldom be ahead of the curve in initiating or galvanising wider economic change. And that bottleneck will make Chinese-type growth rates elusive.
Debt and America’s Decline
Mario Margiocco (Project Syndicate) Aug 17, 2010
America’s Great Power status has always been tied to its level of public debt, which has now reached roughly 140% of GDP. The problem for the world economy is that there is no newly emerging Great Power that can assume responsibility for global finance, as the US did in 1914.
Let's Make a Deal: How to Bring the Doha Trade Talks to a Close
Gary Clyde Hufbauer and Robert Z. Lawrence (PIIE/Foreign Affairs) Aug 17, 2010
Originally scheduled to conclude in 2005, the Doha Round trade negotiations have dragged into their ninth year with no end in sight. The Doha Round was launched in November 2001 with the ambitious goal of liberalizing world trade and lifting living standards around the globe, especially in the least developed nations of the world. An agreement on the round would offer universal economic benefits by reducing farm subsidies, opening up new markets, and spurring investment. Yet without a final consensus on Doha, the WTO continues to lose its preeminence in the global trading system, as its members increasingly pursue trade interests, if at all, through bilateral agreements.
Japan as Number Three
WSJ Aug 17, 2010
Beijing's rise, Tokyo's fall and the wealth of nations.
Fed wavers as the world gets the sweats
Richard Cookson (FT) Aug 17, 2010
If growth was powered by an unsustainable rise in debt, then stimulus can be likened to giving methadone to a heroin addict.
Chinese labour disputes have silver lining
Jing Ulrich (FT) Aug 17, 2010
The upsurge of labour disputes in China since May suggests that the low-cost model of production is no longer robust but a rise in salaries will lead to an upsurge in domestic demand.
China to dominate in 2030? Maybe not.
Nin-Hai Tseng (Fortune) Aug 17, 2010
Now that Japan has been knocked out by China as the world's second-biggest economy, the next question is: When will it dominate the U.S.? The Asian powerhouse could unseat the U.S. from the top spot as early as 2030, experts say, reconfirming China's growing influence on economies in every corner of the globe.
China: Renminbi on Summer Break
Qing Wang (MS GEF) Aug 18, 2010
China is likely to be more proactive in implementing a flexible exchange rate after the summer.
The Bonus Risk
Luigi Zingales (Project Syndicate) Aug 18, 2010
In its July session, the European parliament approved some of the strictest rules in the world on the bonuses paid to bankers. If the problem is the moral hazard implied by being too big to fail, the solution is not to restrict pay, but to eliminate the hazard by forcing shareholders to issue more equity or lose their stock when banks’ debt starts to become risky.
The Great American Bond Bubble
Jeremy Siegel and Jeremy Schwartz (WSJ) Aug 18, 2010
If 10-year interest rates, which are now 2.8%, rise to 4% as they did last spring, bondholders will suffer a capital loss more than three times the current yield.
A capital-scarce world
Martin Hutchinson (AT) Aug 18, 2010
Ready availability of capital as seen over the past 15 years, with attendant low returns for investors and bubble-economics, will eventually give way to scarcity. The result won't be a great deal pleasanter, except for the thrifty. But philosophically, if not financially, we should welcome the change.
A price worth paying to make banks safer
Stephen Cecchetti (FT) Aug 18, 2010
The benefits of higher capital and liquidity requirements are likely to be significant and the costs very modest.
China at Number Two ... and counting
David Pilling (FT) Aug 18, 2010
For the first time since 1968, when Japan overtook the then West Germany to become the second largest capitalist economy, there is a new pretender to the US throne.
Unlocking the language of structured securities
Donald MacKenzie (FT) Aug 18, 2010
The single most important language of MBSs and similar products is a system called Intex, buts its limits emerged when MBSs were repackaged into collateralised debt obligations
How grain markets sow the spikes they fear
Robert Paarlberg (FT) Aug 18, 2010
Price spikes are been caused by a self-fulfilling fear in grain markets that even minor supply or demand shocks will trigger export restrictions by big suppliers. The best solution is one that is quite likely to unfold anyway – a long-term loss of reputation and market share for exporters that interrupt trade.
Needed: a new economic paradigm
Joseph Stiglitz (FT) Aug 18, 2010
Like Ptolemaic attempts to preserve earth-centric cosmologies, there will be heroic efforts to refine the standard model.
Time for debate on equity market structure
Gillian Tett (FT) Aug 18, 2010
Could it be time to ask investors to pay higher upfront trading fees in order to build a less costly financial system?
After the Golden Age of Finance
Howard Davies (Project Syndicate) Aug 19, 2010
It is hard to believe that we will quickly return to the heady growth in financial assets, credit, and risk we saw from the 1970’s to 2007. Financial-sector returns are likely to be lower – returns of 20% on equity targets are a thing of the past – and lower profitability will reduce pay more effectively than any direct regulatory controls.
Appeasing the Bond Gods
Paul Krugman (NYT) Aug 19, 2010
The policy elite are making a strange argument in demanding that we engage in human sacrifices to appease the anger of invisible gods.
Freeing the Yuan
WSJ Aug 19, 2010
A welcome step to internationalize China's currency.
Increasing banks' capital: Super model
Economist Aug 19, 2010
The Basel club publishes new analysis on the impact of higher capital.
Surplus countries and the gold standard: Paper chains
Economist Aug 19, 2010
Tight policies in surplus countries helped undo the gold standard, which is a lesson for the euro.
Cognitive Dissonance and the Financial Crisis
Javier Santiso (Globalist) Aug 19, 2010
How the financial crisis demonstrated the need to accommodate cognitive dissonance within our institutions.
EM capital markets growth prospects after the global crisis
Markus Jaeger (DB Research) Aug 20, 2010
The global crisis has further enhanced the relative growth prospects of emerging markets (EM) capital markets. Advanced economies’ capital markets will continue to make up the bulk of global financial assets, developed markets (DM) deleveraging and EM leveraging notwithstanding. Emerging Asia has not only the largest capital markets, but also the most developed markets in the EM space. From the perspective of global investors and, even more so, financial services providers, some (segments) of the rapidly growing EM financial markets can only be accessed with some difficulty and tapping into their growth requires a well-thought-out, focused strategy. This fact notwithstanding, the "opportunity costs" of not building exposure to – or a platform in – the EM will be increasing over time...
Global: Better the Devil You Know
Arnaud Mares & Joachim Fels (MS GEF) Aug 20, 2010
Central banks are likely to fear deflation more than inflation because deflation is the devil they don’t know.
Russia's Customs Union tinged with failure
Farkhad Sharip (AT) Aug 20, 2010
The Customs Union inaugurated recently between Kazakhstan, Russia and Belarus appears increasingly to be doomed to fail, a forced marriage motivated more by Moscow's wish to regain its former influence in the region than practical economics. - Farkhad Sharip
Bashing Beijing Will Not Help Our Trade Deficit
Robert C. Pozen (WSJ) Aug 20, 2010
Higher wages, not a stronger yuan, will help Chinese workers and reduce U.S. imports.
Toward a New Economic Order
Jagadeesh Gokhale (Globalist) Aug 20, 2010
Why must the fundamental structure of our economic order change in the wake of the financial crisis?
Strengthening the financial system: The benefits outweigh the costs
Stephen Cecchetti & Benjamin H Cohen (VoxEU) Aug 20, 2010
The extent of the damage from the global crisis has forced policymakers to rethink how they regulate finance. This column first examines the long-term impact of stronger capital and liquidity requirements and then estimates the transitional economic impact as the new standards are phased in. It argues that, while such reforms may come at a short-term cost, the benefits of a stronger and healthier financial system will be around for years to come.
Producing superstars for the economic World Cup: New evidence from Mexico
Lant Pritchett & Martina Viarengo (VoxEU) Aug 20, 2010
In the World Cup, countries rely not on the average quality of their footballers, but on the quality of their best footballers. Could superstars also be crucial in economic competition? This column reveals that each year Mexico produces fewer than 6,000 world class mathematicians at age 15. If superstars do play any role in economic performance then this is particularly problematic, especially since the dominant policy attention is focused elsewhere.
The Teamster Tariffs
WSJ Aug 21, 2010
U.S. workers pay for the Democrats' Mexican truck ban.
Japan and the Ancient Art of Shrugging
Norihiro Kato (NYT) Aug 21, 2010
It's a relief to no longer have the second-largest economy in the world.
Income Inequality and Financial Crises
Louise Story (NYT) Aug 21, 2010
New research raises a question: Do widening gaps between rich and poor necessarily lead to financial crises?
The last chance to avoid a global trade war
Michael Pettis (FT) Aug 22, 2010
Other economies must absorb a large share of the European shock – or the US will be forced into tariffs and import quotas.
Road to safer banks runs through Basel
Sheila Bair (FT) Aug 23, 2010
If we fail to follow through in strengthening bank capital, we risk wasting the capital we already have and exposing the global economy to the onerous and indefensible costs of another financial crisis.
The Yen's Lesson for the Yuan
Joseph A. Massey & Lee M. Sands (NYT) Aug 23, 2010
What America's old trade battles with Japan can teach us about our new trade battles with China.
The China Investment Challenge
Orville Schell (Project Syndicate) Aug 23, 2010
When it comes to Chinese foreign direct investment, the US and Europe have legitimate reasons to worry about national-security issues. But, if US and EU officials cannot figure out the proper mix between economic engagement and protecting national security, Chinese investment capital will go elsewhere, leaving the US and the EU weaker, not stronger.
Does trade liberalisation empower women? Evidence from 1990s Mexico
Ernesto Aguayo-Téllez, Jim Airola & Chinhui Juhn (VoxEU) Aug 24, 2010
Promoting gender equality is a Millennium Development Goal. This column explores the effects of trade liberalisation in Mexico during the 1990s on the country’s gender gap. It finds that trade benefitted sectors of the economy that employ more women, such as textiles and clothing, thereby helping to raise women’s earnings and relative social status.
The China Syndrome
Joel Kotkin (Forbes) Aug 24, 2010
Five reasons why the U.S. can stay ahead of the Middle Kingdom.
We need states to be smarter, not bigger
Ajay Chhibber (FT) Aug 24, 2010
Developing countries in Asia and elsewhere must build social protection systems but with ‘workfare’ rather than European-style ‘welfare’.
Demographics are upsetting the balance of capital flows
John Plender (FT) Aug 24, 2010
A recent report reminds us that balance of payments current accounts are driven by life cycle savings, indicating that the savings glut could become a more persistent feature of the world.
Brazilian fiscal lessons for Greece
Alan Beattie (FT) Aug 24, 2010
For an object lesson in how a centre-left government can turn fiscal stringency into political gain, George Papandreou could look across the Atlantic.
Growth in a Buddhist Economy
Jeffrey D. Sachs (Project Syndicate) Aug 25, 2010
In its quest for higher "gross national happiness," the Himalayan kingdom of Bhutan is posing a set of economic and social questions that are of pressing interest for the entire world. How to guide an economy to produce sustainable happiness – combining material well-being, environmental conservation, and psychological and cultural resiliency – needs to be addressed everywhere.
Long march to renminbi convertibility
David Pilling (FT) Aug 25, 2010
Some believe Beijing has started an experiment whose eventual aim is the establishment of a new reserve currency.
Fixing equity markets is not such an easy task
Larry Tabb (FT) Aug 25, 2010
The challenges we face are less structural and more economic and will not vanish with more robust execution rules. Demographics play a part, but the market's performance has not engendered much confidence.
What's Next for AIDS: New Approaches for Tackling HIV in the Developing World
SciAm Aug 25, 2010
The surprise success this summer of a clinical trial on an antiretroviral-based vaginal microbicide provides new traction for efforts to combat AIDS in the developing world. Here are some new directions to expect for treatment and prevention of this widespread killer
China and India: Those two big outliers
Arnelyn Abdon, Jesus Felipe & Utsav Kumar (VoxEU) Aug 26, 2010
Why have China and India been able to grow so quickly? This column argues that while the industrial policies pursued by both countries up until the 1980s led to gross mistakes and inefficiencies, China and India would not be where they are now without them. Their export baskets are far more sophisticated and diversified than expected given their income per capita.
Gazelles and Turtles
Hans-Werner Sinn (Project Syndicate) Aug 26, 2010
The world is currently divided into two groups of countries: those that are off to a strong recovery, and others that lag behind and are signaling new problems. This division, in turn, reflects a process of portfolio rebalancing, which is reversing the international ranking of growth rates relative to those before the crisis.
New Opportunities, Same Risks in Central Africa
Hannah Koep (Project Syndicate) Aug 26, 2010
Central Africa has lately been attracting some unfamiliar attention, as discoveries of large mineral deposits and other opportunities have brought a chance to diversify investment beyond the oil sectors of Equatorial Guinea and Gabon. But, as is true so often across the continent, the watchword for would-be investors in Central Africa’s resource boom should be caveat emptor.
Global: Ask Not Whether Governments Will Default, but How
Arnaud Mares (MS GEF) Aug 26, 2010
Investors should be prepared to face financial oppression, a credible threat against which current yields provide little protection.
Global Economy Needs Zero-Percent Rates Solution
Mark Gilbert (Bloomberg) Aug 26, 2010
The saying of radical things is easy sport among central-bank watchers. If they’re wrong, the wave of consensus erases most evidence they ever said anything at all. If, however, a wild, contrary call proves right, the rewards can be spectacular.
The return of beggar-my-neighbour policy
Samuel Brittan (FT) Aug 26, 2010
The evidence of resurgent mercantilism is all too abundant. UK citizens are exhorted to take their holidays at home. But if French and German holidaymakers heed similar exhortations, who gains?
How Africa can become the next Bric
Jim O’Neill (FT) Aug 26, 2010
South Africa is too small, but Nigeria, if it got everything right, could grow to be bigger than Canada, Italy or South Korea by 2050.
Regulating finance: Killing them softly
Economist Aug 26, 2010
International regulators are making progress on tackling too-big-to-fail banks.
European banks: A glow from the east
Economist Aug 26, 2010
A slow fuse still burns on eastern Europe's foreign-currency debts.
Time to Sort Out the Long Overdue Doha Round
Hugh Corbet (YaleGlobal) Aug 26, 2010
A solution to the global economic slowdown is in plain sight.
The Manufacturing Fallacy
Jagdish Bhagwati (Project Syndicate) Aug 27, 2010
Economists long ago put to rest Adam Smith’s error in arguing for the primacy of manufactures in a country’s economy. But the manufactures fetish recurs repeatedly, the latest manifestation being in the US in the wake of the recent crisis.
Prices vs quantities in the great trade collapse: New evidence
Mona Haddad, Ann Harrison & Catherine Hausman (VoxEU) Aug 27, 2010
The great trade collapse that accompanied the global crisis was historically severe. This column presents evidence from several countries suggesting that the great trade collapse was more concentrated along the intensive margin – the reduction in the value of goods already being traded – providing hope that trade may recover sooner than feared.
Let Them Eat Credit
Raghuram G. Rajan (TNR) Aug 27, 2010
How inequality is at the root of the Great Recession.
Global: Good Slowdown, Bad Slowdown
Manoj Pradhan & Joachim Fels (MS GEF) Aug 27, 2010
We stick to our view that the name of the game is growth moderation, rather than a double-dip.
Why South Korea Isn't Asia's Switzerland
Paul Kennedy (NYT/IHT) Aug 27, 2010
Seoul's impressive prosperity is tempered by its proximity to one of the world's maddest regimes.
Corruption, institutions, and firm productivity
Donato de Rosa, Nishaal Gooroochurn & Holger Görg (VoxEU) Aug 30, 2010
Does it pay to be corrupt? This column presents evidence from 22 emerging economies in Europe and the former Soviet Union on the effects of corruption on firm productivity. It finds that in a highly corrupt country, bribing officials actually has a negative effect on productivity, whereas in countries with strong institutions, it can open doors that competitors dare not touch.
Is Low-Wage China Disappearing?
Fan Gang (Project Syndicate) Aug 30, 2010
Reports of labor shortages, wage disputes, and wage increases in China have abounded of late, naturally raising concerns that China’s labor-cost advantages may be disappearing. But, because China must still reallocate almost 200 million workers to non-farm jobs, China should remain cost competitive for the foreseeable future.
The dangers of a Beijing consensus
Chrystia Freeland (WP) Aug 30, 2010
The notion that authoritarianism works is tempting at a time when so many Americans are skeptical of their own government.
Obama is right to be hard-nosed on China
Minxin Pei (FT) Aug 30, 2010
The US can manage China’s rising economic prowess, but can ill afford to allow its rival to become Asia’s hegemon.
Beware those who think the worst is past
Carmen Reinhart and Vincent Reinhart (FT) Aug 30, 2010
Our research found real per capita gross domestic product growth tends to be much lower during the decade following crises.
The lessons to be learnt from Japanese bonds
Jonathan Allum (FT) Aug 30, 2010
Japan, we were assured, would be the next Greece...but it hasn't quite worked out like that.
Tire-d Old Trade Policies
WSJ Aug 31, 2010
You can't boost exports by trashing imports.
America’s Saving Surprise
Martin Feldstein (Project Syndicate) Aug 31, 2010
The household saving rate in the US has tripled in the past three years. If the saving rate continues to rise rapidly, it could push America’s fragile economy into another downturn, which would mean lower imports and potential problems for countries that depend for their employment on exporting to the US.
The Great Depression in Economic Memory
Jean Pisani-Ferry (Project Syndicate) Aug 31, 2010
The dispute between proponents of further government stimulus and advocates of fiscal retrenchment feels very much like a debate about economic history. Both sides have revisited the Great Depression – as well as the centuries-long history of sovereign-debt crises – in a controversy that bears little resemblance to conventional economic-policy controversies.
The Varieties of Unemployment
J. Bradford DeLong (Project Syndicate) Aug 31, 2010
Critics of government stimulus maintain that the high unemployment currently afflicting much of Europe and North America is not cyclical but “structural,” and thus cannot be alleviated by policies that boost aggregate demand. But, while structural unemployment may appear if current unemployment rates persist, that is not the problem we face today.
Do countries “graduate” from crises? An historical perspective
Rong Qian, Carmen M. Reinhart & Kenneth Rogoff (VoxEU) Aug 31, 2010
Are declarations of victory against the global crisis premature? This column argues that “graduation” – the emergence from recurrent crisis bouts – is a long and painful process which neither developed nor developing countries look close to completing. Two centuries of evidence suggests that most countries need 50 years before the chances of further crises subside.
Focus on the meat and two veg of reform
Howard Davies (FT) Aug 31, 2010
The risk of pursuing a comprehensive financial and monetary overhaul is that France’s G20 presidency will get bogged down in a morass of initiatives.
Obama was too cautious in fearful times
Martin Wolf (FT) Aug 31, 2010
The idea that the policies adopted in the last few months of the Bush administration and the first months of this one were far better than nothing is weirdly controversial in the US.