News & Commentary:

September 2007 Archives


The 'Made in China' Stigma Shock Recommended!
Ken DeWoskin (FEER) Sep 2007
The new distrust of Chinese products feeds into a global trend toward protectionism.

A Free Trade Area of the Asia-Pacific: An Idea with Merit, but Is It Feasible?
Myron Brilliant (Brookings) Sep 2007
Without question, the best hope to boost business opportunities and economic growth world wide would be the successful completion of the Doha Development Round. But the global trade talks are floundering and only modest results are now hoped for. In this environment, is it important that the United States take out some insurance coverage? You bet. Proceeding with a proposal to launch a Free Trade Area of the Asia-Pacific (FTAAP) might be just the right insurance policy, and the APEC summit in Sydney in early September provides an opportunity for progress on this initiative.

Now is a Good Time to Sell the Dollar
Barry Eichengreen (FT) Sep 3, 2007
Does the subprime crisis bode the long-anticipated unwinding of global imbalances? If consumer confidence deteriorates further, superimposing a decline in personal consumption on the fall in residential fixed investment, American spending will contract. That will include spending on imports. The US current account deficit that is such a familiar feature of the global economic landscape will then be history.

Immigrants' Labors Lost
Mark Lange (NYT) Sep 3, 2007
We have at least 12 million pragmatic reasons to turn a potentially permanent underclass into a productive asset.

Bogeymen of Financial Capitalism
Nouriel Roubini (Project Syndicate/Korea Times) Sep 3, 2007
The sub-prime crisis has diverted attention from rising fears about Sovereign Wealth Funds (SWF’s) as the new bogeyman of global finance. But the minute the sub-prime crisis subsides, anxieties about SWF’s will return. For the emergence of this vast and growing pool of state-controlled funds may have implications more far-reaching, and certainly more politically sensitive, than the hopefully temporary distress caused by the subprime crisis.

World Bank corruption
WSJ Sep 4, 2007
Bribery in India, and a test for Bob Zoellick.

Globalization and Cultural Diversity
Michael Lyon (WSJ) Sep 4, 2007
Recent years have seen an explosion of creativity outside of Hollywood.

Mind the GAP
Bret Stephens (WSJ) Sep 4, 2007
We will soon know the future of "integrity" at the World Bank.

Options if the Doha Round talks stall
Simon J Evenett (VoxEU) Sep 4, 2007
The WTO negotiations are likely to experience an 18-24 month suspension before, during, and after the US presidential election. This provides a first-rate opportunity to contemplate alternatives to the current set of negotiating proposals. Here are some ideas.

The globalisation paradox: more trade less inequality
Robert Z. Lawrence (VoxEU) Sep 4, 2007
US income inequality has grown but not in a way that suggests trade with developing countries is the major reason. It’s not the least skilled who have fallen behind, but profits and the wages of the very richest Americans that have raced ahead.

Watch Out for the China Bashers Wall Street Journal Subscription Required
Zachary Karabell Sep 5, 2007
If protectionists have their way, recent market instability will look mild by comparison.

Jonesin' for a Soda
Max Raskin (Mises Daily) Sep 5, 2007
The tongue is a discerning instrument; in the hands of a traveled soda aficionado, it is capable of leading to insightful truths about agricultural geopolitics. To the drinker who has imbibed foreign sodas, this truth stems from the peculiar, yet incontrovertible fact that American soda is not delicious.

Last Roll of the Dice for the Doha Round?
BRIDGES Weekly Trade News Digest - Vol. 11, Number Sep 5, 2007
Trade diplomats from around the world have returned to the bargaining table after a month-long holiday in an attempt to salvage a compromise in the Doha Round of global trade talks. Prospects for a WTO accord remain dim, with officials pointing to wide gaps on tariff and subsidy cuts compounded by an inauspicious political climate in Washington.

EU Appeals WTO Ruling in Retreaded Tyre Dispute with Brazil
BRIDGES Weekly Trade News Digest - Vol. 11, Number Sep 5, 2007
The EU has formally appealed a WTO ruling against Brazil's import restrictions on retreaded tyres, taking the unusual step of challenging a decision in which it was nominally victorious.

Novartis Patent Challenge Dismissed in India
BRIDGES Weekly Trade News Digest - Vol. 11, Number Sep 5, 2007
Pharmaceutical giant Novartis saw its challenge to Indian patent law dismissed in the Chennai High Court on 6 August. The multinational had filed the suit after the Indian authorities denied it a patent on Glivec, a cancer medicine, in January 2006, thus allowing the production of cheap generic copies of the drug to continue freely.

My Vision for the IMF Wall Street Journal Subscription Required
Dominique Strauss-Kahn (WSJ) Sep 6, 2007
Grant developing countries a stronger voice by overhauling the Fund's voting system.

Exchange Futures
Andrew Sheng & Emmanuel Pitsilis (WSJ) Sep 6, 2007
Cooperation would benefit Asian bourses.

That empty-nest feeling
Economist Sep 6, 2007
The World Bank, founded to fight poverty, is searching for the right role in places that need its help less and less.

Central banks worldwide moved to stem damage from the U.S. credit rout
IHT Sep 6, 2007
Australia's central bank said that it would buy debt backed by home loans.

Conflicts and the Credit Crunch Wall Street Journal Subscription Required
Arthur Levitt Jr. (WSJ) Sep 7, 2007
Rating agencies are playing both coach and referee in the debt game.

A Hypothesis on Currency Hedging and ‘Carry Trades’
Stephen Jen and Luca Bindelli (MSDW) Sep 7, 2007
In this note, we introduce a hypothesis to explain why G10 exchange rates have become so sensitive to nominal short-term interest rates in the past couple of years. Distinct from the popular view about ‘carry trades’ being the driver of exchange rates, our idea is that, with the extraordinary growth in cross-border financial asset holdings in recent years, the need to hedge against currency risk has risen commensurately. Since most of the hedging is done through relatively short-term instruments (3M forwards or swaps), nominal cash yield differentials have become important drivers of exchange rates. Technically, this could be considered a form of ‘carry trade’, but it is conceptually very distinct from the type of ‘carry trade’ we think most people have in mind. One implication from this hypothesis, if it is right, is that nominal interest rate differentials as a key driver of exchange rates will be a permanent feature of currency markets, and will not fade with changing risk appetite.

Is distance dying at last?
Rachel Griffith, Sokbae Lee & John Van Reenen (VoxEU) Sep 7, 2007
New empirical research on patent citations shows that when it comes to the flow of new ideas, distance is now dying. But for many sectors, especially in the more traditional and mature technologies, it is not yet dead; spatial agglomeration of R&D still makes sense.

For German beer makers, a new era in marketing
IHT Sep 7, 2007
Faced with global competition and declining domestic consumption, German family brewers are honing their images, and some are daring to go upmarket.

How not to leak
WSJ Sep 8, 2007
An odd kind of transparency at the World Bank.

As One Bubble Collapses, Is Another Taking Shape?
Teresa Tritch (NYT) Sep 9, 2007
The Treasury secretary needs to safeguard against a flow of foreign government capital that, poorly regulated, could impair our national security.

APEC meeting fizzles to inconclusive end
IHT Sep 9, 2007
The meeting in Sydney limped to a close with a compromised agreement on climate change and few answers on how to push the global trade agenda forward.

Drugs Banned, Many of World's Poor Suffer in Pain
NYT Sep 10, 2007
Millions of people are fated to die in pain because they cannot get morphine, a drug that is cheap and perfectly legal for medical uses in most countries.

Possible U.S. economic downturn draws concern of world's central bankers
IHT Sep 10, 2007
Jean-Claude Trichet, the ECB chief, said the current situation "calls for close observation and monitoring," of the economic situation.

Perpetual Trade Deficits Can Be Good
Robert Murphy (Mises Daily) Sep 11, 2007
A large trade deficit — even one that persists for decades — is not necessarily bad or unsustainable, writes Robert Murphy. If the Austro-libertarians ever realized their dream, the resulting society would almost certainly have massive trade deficits — and this would be a natural reflection of its economic might.

Free Trade Angst Wall Street Journal Subscription Required
Christopher Cooper (WSJ) Sep 11, 2007
It's time for Congress to pass the U.S.-Korea FTA.

IMF plan to cut imbalances Adobe Acrobat Required
IMF Survey Sep 11, 2007
Plus: IMF clarifies aid role; world growth update; financial globalization; growth in Africa; low-income countries need fiscal reform; Central America seeks stronger growth; IMF surveillance framework; news briefs

Liquidity Now! Wall Street Journal Subscription Required
Martin Feldstein (WSJ) Sep 12, 2007
Any targeted bailout for mortgage investors would be wrong. But we shouldn't keep interest rates high just to teach them a lesson.

Bank of England warns against bailing out struggling banks
IHT Sep 12, 2007
Governor Mervyn King criticized other major central banks for injecting hundreds of billions of liquidity to help stabilize credit markets.

Reserve Dominance of U.S. Dollar Declining
IMF Sep 12, 2007
The U.S. dollar is maintaining its dominance as a reserve currency, according to recent data from the IMF, although it is on a gradually declining trend and the euro is making headway in some areas.

China's Difficult Rebalancing Act
IMF Sep 12, 2007
Most economists agree that if China is to continue its strong economic growth it must rebalance its economy to rely less on investment and exports and more on domestic consumption.

The Rule of Law without the State
Spencer Heath MacCallum (Mises Daily) Sep 12, 2007
Were there such a category, Somalia would hold a place in Guinness World Records as the country with the longest absence of a functioning central government. When the Somalis dismantled their government in 1991 and returned to their precolonial political status, the expectation was that chaos would result — and that, of course, would be the politically correct thing to expect.

Dollar plumbs new lows against euro
IHT Sep 12, 2007
The dollar breached a new low against major currencies Wednesday as investors bet that the Federal Reserve would soon cut interest rates and after a warning from the U.S. Treasury secretary that turbulence in financial markets might linger.

Euro Hits New High; Oil Nears $80 a Barrel
NYT Sep 13, 2007
The dollar fell to an all-time low against the euro and oil prices hit a record, suggesting higher prices for imports.

Can China Make Its Exports Safe?
Herbert G. Klein (AEI) Sep 13, 2007
If Chinese exports raise enough concern, their lack of quality might end up crippling the world economy.

World Bank reckoning
WSJ Sep 13, 2007
Another Volcker report for another corrupt institution.

Roadblock Wall Street Journal Subscription Required
WSJ Sep 13, 2007
The protectionists in Washington are growing bolder.

Volker Review Report
Volker Independent Panel Sep 13, 2007
The panel headed by former chairman of the US Federal Reserve Paul Volcker, created to review the work of the World Bank's anti-corruption unit, the Department of Institutional Integrity (or 'INT' - headed by Wolfowitz acolyte Suzanne Rich Folsom), released its 40-page report today.

Is Japan's Yen Set to Rise?
IMF Survey Sep 13, 2007
A weak yen has fueled the perception that it is disconnected from the economic fundamentals that determine its long-term value.

Africa: World Agriculture Faces Serious Decline from Global Warming
CGD Sep 13, 2007
World agriculture faces a serious decline within this century due to global warming unless emissions of carbon dioxide and other greenhouse gases are substantially reduced from their rising path, and developing countries will suffer much steeper declines than high-income countries, according to a new study by a senior fellow at the Center for Global Development and the Peterson Institute.

The Circle of Growth and Petrodollar Flows
Serhan Cevik (MSDW) Sep 13, 2007
Slower global growth in the next 18 months will lower the oil price.

Global laptop project raises its price again, almost double original $100 goal
IHT Sep 13, 2007
The vaunted "$100 laptop" that Massachusetts Institute of Technology researchers dreamed up for international schoolchildren is becoming a slightly more distant concept.

`'s retreat raises fear of collapse
IHT Sep 13, 2007
Finance ministers and central bankers have long fretted that at some point, the rest of the world would lose its willingness to finance the United States' proclivity to consume far more than it produces - and that a potentially disastrous free-fall in the dollar's value would result.

China as an international investor
Philip Lane (VoxEU) Sep 14, 2007
Increasing the flexibility of the exchange rate regime is the major priority in setting a course towards the full integration of China into the international financial system.

Japanese Wives Sweat as Markets Reel
NYT Sep 16, 2007
Japanese homemakers who moonlight as currency speculators have been hit hard by turmoil in the markets.

A Fight Over Corruption
WP Sep 17, 2007
'Resistance' to the World Bank's anti-corruption office must come to an end.

Globalization Was Good Then, Not Now
Mark Thirlwell (YaleGlobal) Sep 17, 2007
Wealthy nations grimace about competition, only after emerging economies follow their advice.

World Bank and U.N. to Help Poor Nations Recover Stolen Assets
NYT Sep 18, 2007
A new system will help developing nations recover assets stolen and sent abroad by corrupt leaders, assets that amount to an estimated $40 billion a year.

Meeting the Challenge of Sovereign Wealth Funds
Edwin M. Truman (IIE/Handelsblatt) Sep 18, 2007
The growth of sovereign wealth funds presents several potential challenges—both economic and political—to home countries and investing countries alike.

Isolation of Gaza Chokes Off Trade
NYT Sep 19, 2007
With Gaza almost entirely shut off from normal trade, Palestinian businesses are enduring a deep depression.

The capitalism of magic
Economist Sep 19, 2007
Revealed: the wand in Adam Smith's invisible hand.

Ag Negotiators Discuss Market Access Exceptions As 'Core Group' Intensifies Work
BRIDGES Weekly Trade News Digest - Vol. 11, Number 31 Sep 19, 2007
Two weeks of intensive discussions have yielded "some tangible progress" in the Doha Round agriculture talks, the chair of the negotiations said last week, though not enough to put an agreement within WTO Members' reach.

China Files WTO Case Against US Trade Remedies
BRIDGES Weekly Trade News Digest - Vol. 11, Number 31 Sep 19, 2007
China on 14 September initiated WTO dispute proceedings against the US, requesting consultations on a series of extra duties imposed by Washington on some of its paper exports. Beijing contends that the US has failed to adequately justify the countervailing and anti-dumping tariffs.

U.S. steel industry calls for China trade restrictions
IHT Sep 19, 2007
A recovery in the U.S. steel sector in the past several years has not dampened the industry's desire for trade restrictions against China.

The Challenging Trail of a Weaker Dollar
Serhan Cevik (MSDW) Sep 19, 2007
The dollar’s weakness will challenge pegged exchange rate regimes in the Middle East.

Aiding Trade Wall Street Journal Subscription Required
Pascal Lamy & Haruhiko Kuroda (WSJ) Sep 20, 2007
Developing countries will be ready for free trade.

Attack Poverty, Inequality-de Rato
IMF Survey Sep 20, 2007
High growth and low inflation are essential to economic development, but there is a "powerful case" for directly attacking poverty, International Monetary Fund Managing Director Rodrigo de Rato said in a speech in Peru.

New blow to dollar amid U.S. growth fears
IHT Sep 20, 2007
The dollar sank Thursday, with the euro rising above $1.40 for the first time.

The turning point Recommended!
Economist Sep 20, 2007
Does the latest financial crisis signal the end of a golden age of stable growth?

The great Northern run
Economist Sep 20, 2007
The Northern Rock saga points to troubles buried elsewhere in British banks.

Global Risk of US Credit Crisis - Part I
David Dapice (YaleGlobal) Sep 21, 2007
The US - holding a few nails, but no hammer - responds too little, too late, to the credit crisis.

Managing Globalization
Daniel Altman (IHT/YaleGlobal) Sep 21, 2007
Globalization can play a role in either containing or spreading the US housing-market crisis.

'Super euro' deepens fear of economic slowdown in Europe
IHT Sep 21, 2007
Europe's stampeding currency prompted a warning from Airbus that it might have to cut costs by another ?1 billion.

Mattel apologizes to China for recall
IHT Sep 21, 2007
The world's largest toy maker said it regretted damaging China's reputation and admitted that it had included some goods that were actually fine.

Ringing the exchanges
Economist Sep 21, 2007
Rivals are busy swapping stakes.

Mattel and China Differ on Apology
WP Sep 22, 2007
After weeks of uproar and suspicion about the safety of Chinese-made products, an executive of the Mattel toy company met with China's top product safety official yesterday to issue an apology. Just what the apology meant, however, was caught up in translation.

Progress on Trade?
WP Sep 24, 2007
Congressional Democrats signal approval for a deal with Peru.

A Trade Deal on The Ropes
WP Sep 24, 2007
The World Trade Organization and global trade itself are at a critical crossroads, with one last chance to salvage the Doha round of talks. Failure would be disastrous for the WTO, would be particularly harmful to the least developed countries and could lead to a breakdown of the multilateral trade system.

Required Reading
WSJ Sep 24, 2007
A must read: the ITC's report on the U.S.-South Korea free trade agreement.

Buy a Laptop for a Child, Get Another Laptop Free
NYT Sep 24, 2007
One Laptop Per Child, an ambitious project to bring computing to the developing world's children, is reaching out to the public through an interesting marketing campaign.

The Tensions of Growth: Economic Perspectives and Key Factors for Human Development
Rodrigo de Rato (IMF) Sep 24, 2007
I would like to talk today about tensions arising in three areas. First, tensions in financial globalization—the very substantial increases in flows of capital across borders. These tensions are evident in the current turmoil in credit markets, and I will talk briefly about their implications for the global economy and the lessons we should draw from the recent turbulence. Second, tensions in the area of environmental policy and, specifically, the challenge of dangerous climate change, which is the most pressing environmental issue of the day. Finally, tensions coming from demographic change and, specifically, the effects and policy challenges for governments arising from aging populations.

New World Bank chief confronts aid shortfall
IHT Sep 24, 2007
Girls' schools in Bangladesh, clean water systems in Ghana, courthouses in Armenia, roads in Nicaragua. For decades, the World Bank has provided more than $10 billion a year for projects like these, the biggest source of aid for the world's poorest countries.

Global Markets Face Protracted Adjustment
IMF Sep 24, 2007
Markets are likely to go through a protracted adjustment period following recent financial turbulence triggered by the collapse of the U.S. subprime mortgage market, according to the IMF's latest Global Financial Stability Report (GFSR).

Vulnerability Up in Some Emerging Markets
IMF Sep 24, 2007
Although emerging markets have not felt the recent financial market turbulence as much as developed economies have, some emerging market countries may be vulnerable to a decision by investors to pull back capital, the IMF said in its Global Financial Stability Report (GFSR).

Lamy urges more aid to raise trade capacity of poorest nations
Pascal Lamy (WTO) Sep 25, 2007
We are here today because we want to make sure that new opportunities that hopefully will result from the Doha Development Agenda — whether the duty-free and quota-free access to developed and developing country markets, the sharp reductions in agriculture subsidies in rich countries, including those on cotton, the elimination of export subsidies, the disciplines on fishery subsidies or the new rules on trade facilitation — translate into trade realities for the LDCs.

Break On Through Wall Street Journal Subscription Required
Marco Annunziata (WSJ) Sep 25, 2007
Central bankers have more work to do in freeing up credit and money markets.

Outsourcing Works So Well, India Is Exporting Jobs
NYT Sep 25, 2007
Indian outsourcing companies are hiring workers and opening offices in other developing countries.

Save the Day
Stephen S. Roach (NYT) Sep 25, 2007
As long as the United States fails to address its saving problem, its large balance of payments deficit will persist and the dollar will keep dropping.

Rating Africa
Economist Sep 25, 2007
Mauritius is the best-run country in Africa, according to an index of governance published on Tuesday September 25th by the Mo Ibrahim Foundation, a body set up to promote good governance in Africa. The performance of 48 sub-Saharan African nations was rated for 2000, 2002 and 2005 (the latest year for which data are available) using 58 measures. These included security, human rights, economic stability, the rule of law, poverty and health. Small island nations tend to be well governed, as do countries with open democracies, such as South Africa. Somalia, which has not had a functioning government since 1991, fares worst. Rwanda is the most-improved nation, moving up 18 places since 2000.

World Bank Nears Rate Reduction
WSJ Sep 25, 2007
The World Bank which charged 0.3 percentage point above than the London Inter Bank Offer Rate (LIBOR) on loans made to middle income countries such as China, Brazil, and Mexico following the 1997-98 Asian financial crisis is likely to make significant cuts in interest rates as part of an agreement to increase aid for the world's poorest countries. As part of the deal, the World Bank will contribute as much as $3.5 billion to the International Development Association (IDA), a World Bank unit that provides grants and loans to the world's eighty poorest countries. Since the end of the Asian financial crisis, the middle-income countries demanded a reduction in the rates. The wealthy nations rejected their request because they did not want the World Bank to compete in private markets, and the poorest countries opposed it because it feared more competition from somewhat wealthier nations. World Bank President Robert Zoellick has played a leading role to broker this deal, because he believes in linking all countries - poor, rich and middle income - as way of creating a more inclusive form of globalization. The deal is expected to be presented for approval at its annual meeting on October 19, 2007, in Washington DC. The World Bank largely raises funds by borrowing on world markets at very favorable rates because it is backed by world's governments, and then lending the money at a higher rate to developing countries. In contrast, the IDA is funded by contributions from rich countries, which then provides interest-free loans or grants to the world's poorest countries. The World Bank raises new funds for the IDA every three years. It is now urging middle income and wealthy countries to commit between $25 billion to $30 billion ending June 30, 2011. The International Finance Corporation, a World Bank unit that lends to private companies and the World Bank will each earmark contributions as much as $1.75 billion each to IDA. Some smaller European countries and poor nations worry that the U.S. and other big donors will use the IFC contributions to IDA as an alibi to reduce their own commitments to the poorest nations.

Climate-Change Challenge for the Poor - Part I
Chandrashekhar Dasgupta (YaleGlobal) Sep 26, 2007
All nations have a responsibility to strive for lifestyles that are sustainable.

US Farm Subsidy Hint Not Enough to Jolt Sluggish Doha Negotiations
BRIDGES Weekly Trade News Digest - Vol. 11, Number 32 Sep 26, 2007
A breakthrough in the Doha Round negotiations does not yet appear within reach, despite modest (though rare) progress in the agriculture talks over the past three weeks.

Canada Issues Compulsory Licence For HIV/AIDS Drug Export to Rwanda in First Test of WTO Procedure
BRIDGES Weekly Trade News Digest - Vol. 11, Number 32 Sep 26, 2007
Rwanda last week came one step closer to becoming the first nation to use a WTO procedure designed to allow developing countries to import cut-price copies of patented medicines, when Canadian patent authorities issued a compulsory licence authorising the generic production of a patented HIV/AIDS drug for export to the central African country.

The Mideast Money Flows
NYT Sep 27, 2007
The growing influence in the financial world of Dubai and its neighbors is raising political concerns among U.S. lawmakers.

Our One-Dollar Dilemma Wall Street Journal Subscription Required
Judy Shelton (WSJ) Sep 27, 2007
Free trade is great. So why let floating currencies wipe out the benefits of tariff reductions?

How UNDP Comes Clean Wall Street Journal Subscription Required
WSJ Sep 27, 2007
Not with an audit, but with a one-page press release.

Rupee Whiplash Wall Street Journal Subscription Required
WSJ Sep 27, 2007
The Indian central bank is driving toward capital account convertibility.

Playing games with the planet Economist Subscription Required
Economist Sep 27, 2007
A version of the “prisoner's dilemma” may suggest ways to break through the Kyoto impasse.

The Immigration Charade
Christopher Jencks (NYRB) Sep 27, 2007
On State of Emergency: The Third World Invasion and Conquest of America by Patrick J. Buchanan.

Stronger China
Economist Sep 27, 2007
The strength of Asian emerging economies should help stabilise the world even if America goes into recession.

The Future of American Multilateralism
Philip H. Gordon and Edward Joseph (IHT) Oct 27, 2007
As they do every four years, Europeans are tracking the presidential election campaign in the United States with a mix of apprehension and hope. And this year, as in 2004, a majority will be pulling for a Democrat in the belief that any of the party's candidates will restore trans-Atlantic relations to their pre-Bush norm.

Beneath Booming Cities, China's Future Is Drying Up
NYT Sep 28, 2007
Groundwater levels are dropping around China, where leaders face tough choices as cities, industry and farming compete for an unbalanced and finite water supply.

Be Like Egypt Wall Street Journal Subscription Required
WSJ Sep 28, 2007
Unleashing the world's entrepreneurs.

Strauss-Kahn Named to Head IMF
IMF Survey Sep 28, 2007
Former French finance minister Dominique Strauss-Kahn was selected September 28 as the new Managing Director of the IMF.

Climate-Change Challenge for the Poor - Part II
Mira Kamdar (YaleGlobal) Sep 28, 2007
Unpredictable weather patterns, diversion of grain for biofuels, contribute to growing food shortages.

A Frenchman at the helm
Economist Sep 29, 2007
Dominique Strauss-Kahn is the new boss.

Home | Economics | Business & Finance | Politics | Law | ICT | Development | News | Research