Fair Share
Francesca Bastagli, David Coady, and Sanjeev Gupta (Finance and Development) Dec 1, 2012
Fighting income inequality with redistributive social spending has been more effective in advanced than in developing economies.
Every Which Way We Can
Dean Karlan (Finance and Development) Dec 1, 2012
Philanthropy and private investment are increasingly important in the global fight against poverty.
A Relative Question
Martin Ravallion (Finance and Development) Dec 1, 2012
The developing world is reevaluating what it means to be poor.
Spend or Send
Rabah Arezki, Arnaud Dupuy, and Alan Gelb (Finance and Development) Dec 1, 2012
Developing countries can spend commodity windfalls on physical investment, but it may be better in the short run to distribute part of them to their citizens.
China Prompting Western Creativity
Nick Bloom, Mirko Draca, and John Van Reenen (Finance and Development) Dec 1, 2012
Chinese manufacturing exporters are capturing low-skill production but driving high-skill innovation in the West.
The 1930s all over again
Reuven Brenner (AT) Dec 1, 2012
In the 1930s, as today, countries were uncertain about which model of society to strive for and how to repair monetary systems. Societies bet on the wrong ideas; we may be committing similar mistakes now. Centralization of powers and the thinning of capital markets are the most dangerous parallels.
Property: The Big Long
Economist Dec 1, 2012
A new generation of investors is betting on America’s housing market
The Insourcing Boom
Charles Fishman *Atlantic) Dec 1, 2012
An exploration of the startling, sustainable, just-getting-started return of manufacturing to the United States.
How Capitalist Are the Cubans?
Damien Cave (NYT) Dec 1, 2012
Cuba seems to be sputtering, but not roaring, toward capitalism.
Euro Zone Keeps Playing a Dangerous Game
Tyler Cowen (NYT) Dec 1, 2012
Although a potential solution to the euro zone's crisis is apparent, governments keep playing a dangerous game of chicken.
The World’s Most Promising Risk-On Currencies Are Changing
David Turner (II) Dec 1, 2012
Currency analysts warn that the Australian dollar may no longer be the monarch of risk-on currencies.
The Insourcing Boom
Charles Fishman (Atlantic) Dec 1, 2012
After years of offshore production, General Electric is moving much of its far-flung appliance-manufacturing operations back home. It is not alone. An exploration of the startling, sustainable, just-getting-started return of industry to the United States.
Uncertain foundations
Simon Rabinovitch (FT) Dec 1, 2012
China’s murky shadow banking system could amount to nearly 50% of GDP and debate is raging about the effectiveness of how it is
Downturn shakes Brazil from its dream
Joe Leahy (FT) Dec 2, 2012
Is the hope of finally crawling out of the so-called middle- income trap after a decade of solid economic growth suddenly coming unstuck.
‘Saudi America’ effect unlikely to dent oil prices
Ed Crooks (FT) Dec 2, 2012
The boom in US oil production has US consumers hoping for lower oil prices but a sustained fall in the price of crude runs counter to what industry wants.
Europe’s Economic War of Attrition
Mohamed A. El-Erian (Project Syndicate) Dec 2, 2012
During the war of attrition that followed Egypt's defeat in the June 1967 war with Israel, underlying tensions festered. While the parallels with today's European debt crisis are far from perfect – the threat is economic rather than military – there is a real sense of “no peace and no war.”
Why does finance matter for trade? Evidence from new data
Marc Auboin & Martina Engemann (VoxEU) Dec 3, 2012
What effect does trade finance have on international trade? This column uses new data to stress the importance of trade finance for international trade both in crisis and in non-crisis periods. The major policy lesson is that there must be high levels of market incentives for supplying trade credit, particularly during a period of ‘deleveraging’ of the financial system. That said, trade credit statistics could be vastly improved if we wish to continue comparing global trade finance transactions against global trade.
IMF Adopts Institutional View on Capital Flows
IMF Survey Dec 3, 2012
The International Monetary Fund has developed a comprehensive, flexible and balanced view on the management of capital flows to help give countries clear and consistent policy advice.
Trying to Save Europe 'Step by Step'
Matthew Kaminski (WSJ) Dec 3, 2012
Finance Minister Wolfgang Schauble on Germany's balancing act between euro scold and bailout enabler.
Managing Sustainability, Globally
Seán Cleary (Globalist) Dec 3, 2012
Gross domestic product (GDP) is an inadequate yardstick for measuring economic progress. Not only does it encourage unsustainable levels of consumption and accumulation, it fails to capture many of the important things that actually shape and define our quality of life — health, education, social ties, political voice, and quality of governance.
Time for Truth on Poverty, Power and Climate Change
Peter Goldmark and David De Ferranti (Globalist) Dec 4, 2012
Global warming is a problem in need of a global solution. Multinational organizations like the World Bank and the regional development banks will therefore play a pivotal role in helping developing nations invest in green technologies. But to make a real difference, they need to re-evaluate their support for the fossil fuel economy.
Jobs: The next piece of Africa’s growth jigsaw
David Fine & Susan Lund (VoxEU) Dec 4, 2012
Africa's recent growth is impressive, yet its rate of stable job creation is anything but. This column argues that Africa needs rapid growth in stable, wage-paying jobs in order to ensure future stable growth and prosperity. African governments must develop and implement targeted jobs strategies – which focus on labour-intensive, competitive industries – to get the most out Africa’s rapid economic emergence.
The Debtor Prisoner’s Dilemma
Harold James (Project Syndicate) Dec 4, 2012
Explicit debt defaults are historically rare, because the risks and costs to borrowers and creditors alike are enormous. Indeed, from Argentina to Greece, managing modern debt crises involves the extraordinary logic of throwing good money after bad in the hope of masking the underlying unsustainability.
The New Shape of China’s Economy
Zhang Monan (Project Syndicate) Dec 4, 2012
China’s leadership transition attracted global attention in 2012, and deservedly so, given the country’s global significance. But, more important, strategic transformations now underway seem certain to influence its future pattern of growth.
Innovation Crisis or Financial Crisis?
Kenneth Rogoff (Project Syndicate) Dec 4, 2012
Was the global financial crisis a harsh but transitory setback to advanced-country growth, or did it expose a deeper long-term malaise? The history of the first half of the twenty-first century may well turn on the answer.
Why China and the U.S. Can Be Capitalist Comrades
Clive Crook (Bloomberg) Dec 4, 2012
China’s growth has slowed a bit this year, but the surge in vivid predictions about the country’s future continues to amaze observers. This observer, at any rate.
How Ireland Got Its Groove Back
Stephen Kinsella (FA) Dec 4, 2012
For once, Ireland is projecting confidence and implementing painful austerity measures to get its fiscal house in order, which is allowing it to borrow money despite its many economic problems. Other debt-ridden European countries, however, would be wrong to conclude that they can do the same.
Myanmar: A nation rises
David Pilling and Gwen Robinson (FT) Dec 4, 2012
The impact of the rapid shift to democracy is far-reaching but barriers to a smooth transition remain – not least smouldering ethnic tension.
Beware membership of this elite club
Sebastian Mallaby (FT) Dec 4, 2012
The BRICS countries deserve plaudits for their macroeconomic resilience but the business climate leaves much to be desired.
How Cities Can Save China
Henry M. Paulson Jr. (NYT) Dec 4, 2012
Better urban policies can put China on a healthier path, economically and environmentally.
Old rivalries stir in Japan and Korea
David Pilling (FT) Dec 5, 2012
The differences between the elections in Asia’s second and fourth-largest economies are striking.
Seize the opportunity of the banking crisis
Philip Augar (FT) Dec 5, 2012
Far from sounding the death knell of investment banking, these should be ideal conditions to redesign an industry.
Lessons from Latin America for Greece
Guillermo Ortiz (FT) Dec 5, 2012
The strict regime imposed on the country has done nothing to halt a predictable deterioration.
Euro Lessons for East Asia
Jong-Wha Lee (Project Syndicate) Dec 5, 2012
Asian countries have learned from the eurozone crisis that effective management of cross-border capital flows requires well-constructed national, regional, and global responses. To respond effectively, East Asian countries must continue to improve the regional financial safety net and surveillance mechanism, and boost cooperation with the IMF.
Developing World: First Democratize, Then Restrain Yourself?
Kandeh K. Yumkella (Globalist) Dec 5, 2012
The West's message to the developing world is alluring: democratize, liberalize and grow, then you can consume like us. This aspiration is completely unrealistic.
EU Ministers Give Go-Ahead for Launch of Japan Trade Talks
Bridges Weekly Trade News Digest, Volume 16, Number 42 Dec 5, 2012
EU trade ministers have formally given the green light for Brussels to begin negotiations with Tokyo for a bilateral trade deal, officials announced late last week. The news comes as the 27-country bloc continues its efforts to finalise trade pacts with Canada, Colombia, and Peru, among others, while exploring options for new negotiations with other trading partners in an effort to create jobs and foster economic growth in the struggling eurozone.
Value-added exchange rates
Rudolfs Bems & Robert Johnson (VoxEU) Dec 6, 2012
With the rise of complex, globalised supply chains is the real effective exchange rate (REER), the most commonly used measure of competitiveness, now outdated? If it is, what should replace it? This column presents a ‘Value-Added REER’ and shows that it differs substantially from the conventional REER. Because it is possible to construct a new Value-Added REER from existing data, policymakers interested in improving their understanding of competitiveness might well consider including it in their toolbox.
The False Promise of a Eurozone Budget
Daniel Gros (Project Syndicate) Dec 6, 2012
The US monetary union is frequently said to work much better than Europe's because a large federal budget smooths the impact of shocks to individual states; so the eurozone, it is claimed, should have its own budget to provide similarly automatic insurance to its members. But this argument misreads the US experience.
Politics threatens Turkey’s trade links
Daniel Dombey (FT) Dec 6, 2012
Turkey’s economic success comes from looking to its south and east for new markets but this policy carries political risks.
The next productivity revolution: the ‘Industrial internet’
Marco Annunziata (VoxEU) Dec 6, 2012
Today’s technological innovation is regarded by many as all about social media and entertainment, with no impact on economic growth. This column argues that such scepticism is premature. A closer look at selected industries suggests that the ‘industrial internet‘ – a network that binds together intelligent machines, software analytics and people – through accelerated adoption of sensors and software analytics, will have a powerful impact on productivity and growth.
Twenty Years Later, Nafta Remains a Source of Tension
Julin Aguilar (NYT) Dec 6, 2012
Some say the North American Free Trade Agreement between the United States, Mexico and Canada has fueled trade and job creation; others say it has led to outsourcing and lower wages.
Europe's tax hydra
WT Dec 6, 2012
If there's one thing big-spending countries can't stand, it's a neighboring nation with the audacity to entice businesses with reasonable tax rates.
Capturing Congo
Peter Eichstaedt (FA) Dec 6, 2012
Bans on conflict minerals mined in DRC were supposed to help pacify the region, which has been torn by fights over control of lucrative mines. Instead, they have made militias such as M23, which captured and then lost the eastern Congolese city of Goma this month, more desperate and violent.
Africa's Resurgence and the Future of the Global Economy
Mzukisi Qobo (Globalist) Dec 7, 2012
To build on the economic success Africa experienced in the 2000s, Africa's leaders will need to rebuild the relationship between market and state, while strengthening education and social supports.
Trade, geography, and the unifying force of Islam
Stelios Michalopoulos, Alireza Naghavi & Giovanni Prarolo (VoxEU) Dec 8, 2012
Islam spread remarkably quickly before the era of European colonialism. This column argues that an important economic factor in determining the geographic range was spatial inequality that necessitated a politically unifying force like Islam. In regions that harboured such economic inequality, a system that offered progressive redistributive tenets with centralised authority to enforce them were especially ripe for Islam.
The sick man of Africa
Richard Dowden (Spectator) Dec 8, 2012
Why Congo isn’t sharing in its region’s renaissance.
Brazil’s economy: Stalled
Economist Dec 8, 2012
A long-awaited recovery still fails to materialise.
Macroprudential supervision in banking union
Dirk Schoenmaker (VoxEU) Dec 9, 2012
Eurozone banking union discussions are full of questions about the scope of Eurozone microprudential bank supervision. Yet, this column argues that there is surprisingly little debate on the macroprudential supervision that is necessary to safeguard the wider European financial system. After all it is macro developments, such as fast rising housing prices, that lie at the heart of the ongoing crisis in Europe. To safeguard the financial system, Eurozone macroprudential tools should be under the ECB, separate from microprudential functions, with input from national central banks when differentiation is necessary.
If We Don't Measure Leverage, We Risk More Crises
Mark Buchanan (Bloomberg) Dec 9, 2012
You can’t control what you don’t measure.
Signals in China of a More Open Economy
Edward Wong Xi (NYT) Dec 9, 2012
Xi Jinping, the new head of the Communist Party, appears to be tapping more deeply into the idea of a national revival than his recent predecessors.
Immigration and American Power
Joseph S. Nye (Project Syndicate) Dec 10, 2012
In recent years, US politics has had a strong anti-immigration slant, and the issue played an important role in the Republican Party’s presidential nomination battle in 2012. In fact, immigration is one of the most important sources of America's economic strength and soft power.
The multilateral approach to capital controls
Olivier Blanchard & Jonathan D Ostry (VoxEU) Dec 11, 2012
The IMF recently endorsed capital controls as useful policy responses to certain circumstances. This column explains the logic and the research that underpins the shift.
Argentina’s Debt Conundrum
Eduardo L. Yeyati (Project Syndicate) Dec 11, 2012
The recent ruling by a US federal judge ordering Argentina to pay its holdout bondholders presents its government with a political, economic, and legal dilemma. Unless Argentina puts forward an alternative payment proposal, the US Court of Appeals will have to choose between the holdouts’ “all” and Argentina’s “nothing.”
Japan should scare the eurozone
Sebastian Mallaby (FT) Dec 11, 2012
Europe risks replicating Japan’s two lost decades, but without the social and political cohesion of the Asian country.
Eurozone will survive debt crisis intact
Ralph Atkins (FT) Dec 11, 2012
A year ago fears that Europe’s monetary union was about to break-up were commonplace and it was seen heading towards the cliff edge.
Taxes Are Much Higher Than You Think
Edward C. Prescott and Lee E. Ohanian (WSJ) Dec 11, 2012
The combined levies on labor income and consumer spending have seriously reduced the hours that Europeans work. The U.S. isn't too far behind.
Jobs, Productivity and the Great Decoupling
Erik Brynjolfsson and Andrew McAfee (NYT) Dec 11, 2012
The gap between productivity and job growth is widening, like the jaws of a snake, and shows no sign of closing.
The Term Auction Facility effect on liquidity risk exposure
Stefano Puddu & Andreas Wälchli (VoxEU) Dec 12, 2012
Did the Federal Reserve act as ‘lender of last resort’ during the worst of the crisis? This column contributes to the current debate on the appropriateness and effectiveness of non-standard measures that have been taken by the Fed. Quantitatively measuring the effect of the Term Auction Facility on participating banks’ liquidity risk, it seems that, because the Term Auction Facility programme provided banks with enough time to adjust exposures on their balance sheets, the Fed did act as ‘lender of last resort’.
Greece’s Bogus Debt Deal
Ashoka Mody (Project Syndicate) Dec 12, 2012
The process of official forgiveness of Greek debt has begun, with the debt/GDP ratio targeted at 124% in 2020, down from roughly 200% today. But the idea that there is a smooth transition path for the debt/GDP ratio is fanciful, and, even if the 124% target were reached on time, Greece's debt still would not be sustainable.
WTO Members Aim for "Realistic" Doha Deliverables for 2013
Bridges Weekly Trade News Digest, Volume 16, Number 43 Dec 12, 2012
One year after the Doha Round of trade talks was formally declared at an impasse, WTO members are beginning to show signs of re-engagement in the negotiations, according to WTO Director-General Pascal Lamy. However, he warned delegates last Friday, members must be realistic and pragmatic in the months ahead to avoid jeopardising the small Doha deliverables package that they aim to clinch by next December's ninth ministerial conference (MC9) in Bali, Indonesia.
Argentina Trade Rows Escalate at WTO
Bridges Weekly Trade News Digest, Volume 16, Number 43 Dec 12, 2012
Tensions between Argentina and some of its major trading partners became further strained last week, as consultations over various contested trade policies failed to produce agreement. Buenos Aires has now requested that a WTO dispute settlement panel examine complaints it had filed earlier this year on Washington's curbs on imports of Argentine beef and lemons and Brussels' rules regarding biodiesel imports. Meanwhile, the EU, US, and Japan have joined Mexico in formally asking the global trade arbiter to hear their complaints over Argentina's import policies.
FAO: Poor Countries Must Invest in Farming to Tackle Hunger
Bridges Weekly Trade News Digest, Volume 16, Number 43 Dec 12, 2012
Poor country governments should invest more in "public goods" for agriculture in order to tackle rural poverty and hunger, the UN's Food and Agriculture Organization has said.
Cure for Europe lies at the state level
Lesze Balcerowicz (FT) Dec 12, 2012
Averting future crises depends far more on avoiding faulty domestic policies than on eurozone-wide governance.
Get Basel III right and avoid Basel IV
Thomas M. Hoenig (FT) Dec 12, 2012
To protect banks and the taxpayer, and to ensure access to reliable credit, we must get Basel III right and insist on strong capital for all banks.
For Better Planning, Watch Global Demographic Trends
Joseph Chamie (YaleGlobal) Dec 12, 2012
Certainty of demographic trends counters economic uncertainty.
Global Capital Rules
Dani Rodrik (Project Syndicate) Dec 13, 2012
The IMF has now put its stamp of approval on capital controls, thereby legitimizing the use of taxes and other restrictions on cross-border financial flows. Now the task is to devise the traffic rules needed in a world where different sovereigns regulate finance in diverse ways.
The Euroless Union?
Barry Eichengreen (Project Syndicate) Dec 13, 2012
Europe’s crisis has entered a quiet phase, coinciding with the run-up to Germany's election in 2013. But the crisis will be back, raising the question of whether the EU can survive without the single currency.
Europe’s Debt-Relief Calculus
Andres Velasco (Project Syndicate) Dec 13, 2012
The problem for Europe is not just that slow growth is driving up debt levels, but also that the debt overhang is itself becoming the cause of slow growth. Though few people want to go down that route, because it leads directly to the question of debt forgiveness, the issue can no longer be ignored.
Asymmetric information and mortgage lending: Understanding should precede fixing
Johannes Stroebel (VoxEU) Dec 13, 2012
Mortgage markets arguably spawned the post-Lehman crises – think subprime, Ireland, and Spain. This column argues that asymmetric information between competing lenders is an important feature in the financing of newly developed homes. Interestingly, lenders differ significantly in their information about true underlying housing collateral values. It is the identification of asymmetric information that allows policymakers to develop proposals that would improve how the market works and, with the right policies, how governments can limit the negative impact of asymmetry.
Greek bond buyback successful; 'Grexit' issue dead?
Antonia Oprita (Emerging Markets) Dec 13, 2012
Eurozone finance ministers and the IMF welcomed the results of a buyback of debt by Greece and released more aid for the country
FT Person of the Year: Mario Draghi
Lionel Barber and Michael Steen (FT) Dec 13, 2012
With two short, unscripted sentences, the ECB president has turned the tide in the three-year-old eurozone crisis.
State versus citizen in tomorrow’s world
Philip Stephens (FT) Dec 13, 2012
On their own, governments will find it increasingly difficult to deal with the insecurities their citizens find most troubling.
Sovereign Debt Difficulties: Had Enough Yet?
Barry Herman (Globalist) Dec 14, 2012
Argentina's debt crisis is back in the headlines (and Greece never left). But rather than the every-creditor-for-himself system we currently have, we should create an international forum charged with developing comprehensive workouts from insolvency.
The Anti-Bernanke
Leszek Balcerowicz (WSJ) Dec 14, 2012
Leszek Balcerowicz, the man who saved Poland's economy, on America's mistakes and the better way to heal from a financial crisis.
The Sino-American Mirror
Andrew Sheng and Xiao Geng (Project Syndicate) Dec 14, 2012
Rapid social, technological, and environmental change is challenging both the Western and Chinese models of governance and development, with both requiring significant reform. Both countries’ leaders must deliver reforms within a limited tenure, with limited resources, and within a global context of trade rivalry and interdependence.
Europe’s Two-Speed Future
Jean-Claude Piris (Project Syndicate) Dec 14, 2012
Europe’s leaders have made some progress on institutional reform, but the measures taken so far will not lead to genuine economic union. Given that treaty change is politically unfeasible, establishing a “two-speed Europe” is the EU’s best option for achieving the cooperation needed to escape the crisis intact.
Managing and harnessing volatile oil windfalls
Ton van den Bremer & Rick van der Ploeg (VoxEU) Dec 14, 2012
Many countries experience substantial revenue windfalls from natural resources. The consensus is that these should not be consumed but put in a fund to smooth the benefits across generations. This column examines how policy recommendations may differ among oil-rich countries, here Norway, Ghana and Iraq. It suggests that oil exporters may need to accumulate not only an intergenerational fund but also a liquidity fund to cope with oil price volatility and a domestic investment fund to alleviate the burden of capital scarcity.
Being in a global value chain: Hell or heaven?
Antonio Accetturo, Anna Giunta & Salvatore Rossi (VoxEU) Dec 15, 2012
Global value chains are increasingly viewed as the new paradigm in international production and trade. This column argues that a firm can perform better if it 'improves' its positioning in the world network by offshoring the production of its intermediates.
Non-bank finance in Europe: Embracing the alternatives
Economist Dec 15, 2012
Banks are changing. That means other providers of capital must step forward, especially in Europe.
Manufacturing the future: The next era of global growth and innovation
James Manyika, Jeff Sinclair, Richard Dobbs, Gernot Strube, Louis Rassey, Jan Mischke, Jaana Remes, Charles Roxburgh, Katy George, David O'Halloran and Sreenivas Ramaswamy (MGI) Nov 1, 2012
Despite much fretting in developed countries about a decline in manufacturing, it remains a critical, if often misunderstood, driver of the global economy. In a new report on mckinsey.com, the McKinsey Global Institute takes a close look at the past, present, and future of the sector to create a more nuanced view of how it is evolving as a new consuming class emerges in developing nations. This report explores how the sector's contribution to economies changes as they develop and how it will probably evolve over the coming decade in both developing and advanced markets. In addition, a slideshow highlights five manufacturing subcategories, their drivers of success, and regional leaders in each.
The World’s Worst War
Jeffrey Gettleman (NYT) Dec 15, 2012
Congo has become a never-ending nightmare, one of the bloodiest conflicts since World War II, with more than five million dead. It seems incomprehensible that the biggest country in sub-Saharan Africa and on paper one of the richest, teeming with copper, diamonds, gold, and more.
Without Babies, Can Japan Survive?
Alexandra Harney (NYT) Dec 15, 2012
Faced with an increasingly aging population, Japan must take steps to raise its alarmingly low birthrate.
The hysterical economy
Laurence J. Kotlikoff (VoxEU) Dec 16, 2012
A ‘self-fulfilling recession’ is a long-established idea in economics. This column argues that the US’s economic malaise continues to be caused by leaders’ hysteria rather than by actual engrained economic problems. Obama and Congress need to stop scaring the nation about the ‘fiscal cliff’ because, ultimately, they are coordinating expectations on there being a recession. Tackling the right policies now, and sending out the right message, will help more than hysteria.
Gross inflows and the incidence of credit booms
César Calderón & Megumi Kubota (VoxEU) Dec 16, 2012
How can we predict bad credit booms? This column argues that surges in gross private inflows are good predictors of booms in credit markets, especially those booms that end up in a systemic banking crisis. Using quarterly data on gross capital inflows and real credit, gross private inflows remain a useful measure even when accounting for the past history of credit and asset prices The evidence suggests that surges in capital flows may well mean future financial turmoil.
A blueprint for macroprudential policy in the banking union
Enrico Perotti (VoxEU) Dec 16, 2012
The crisis has shown how the Eurozone needs instruments to control bank-funding risks, as implementation of the necessary prudential legislation at the EU level has been much postponed. This column argues that the delay creates a precarious situation, especially in the Eurozone where a banking union is been introduced. Currently all liquidity policy is at the national level. Without some form of coordination, this shift all bank funding risk to ultimate ECB support without the Single Supervisory Mechanism having any adequate transition tools.
Time for Nominal Growth Targets
Jeffrey Frankel (Project Syndicate) Dec 16, 2012
Monetary policymakers in some countries would do well to consider a shift toward targeting nominal GDP – a switch that could be phased in gradually in such a way as to preserve credibility with respect to inflation. Indeed, for many advanced economies, in particular, a nominal-GDP target is clearly superior to the status quo.
Iraq – back in the flow
Guy Chazan (FT) Dec 16, 2012
Western oil groups have helped revive production at long-neglected fields, but bureaucratic red tape and stingy contract terms are driving some of the majors north to Kurdistan.
Why Canada is better bet for gas exporters
Ed Crooks (FT) Dec 16, 2012
North American companies seeking to sell natural gas to Asia are faced with a difficult choice.
Politics undermines hope of banking union
Wolfgang Münchau (FT) Dec 16, 2012
The ECB’s OMT programme has killed any appetite for a fiscal union and has turned the banking union into a phantom.
Why India Will Displace China as Global Growth Engine
A. Gary Shilling (Bloomberg) Dec 16, 2012
Most of us still look at China, the world’s second-largest economy, as the undisputed leader among major developing countries. In the long run, however, I’m betting on India to emerge as the more significant global economy.
India’s Accelerating Shift Toward Free Markets
A. Gary Shilling (Bloomberg) Dec 17, 2012
For a half-century after gaining independence in 1947, India’s politics were dominated by the Congress Party’s socialist orientation and tilt toward the Soviet Union.
Today’s challenges go beyond Keynes
Jeffrey Sachs (FT) Dec 17, 2012
The economist assumed a stable growth path hit by temporary shocks, but we require a very different kind of growth path.
Japan’s women hold key to growth
Mure Dickie (FT) Dec 17, 2012
IMF says Japan could lift GDP per head by as much as 8 per cent if it raised its female labour participation rate to northern European levels Read more >>
Corporate credit and the lessons of CPDOs
Bill Gross (FT) Dec 17, 2012
At the end of the global credit cycle in 2007, markets were focused on the US subprime crisis and ignoring constant proportion debt obligation.
Poland Finds It's Not Immune to Euro Crisis
Jac Ewing (NYT) Dec 17, 2012
Even with the healthiest big economy in Europe, Poland cannot escape the Continent's economic downturn.
The probability of Greek exit, revisited
Jens Nordvig (VoxEU) Dec 17, 2012
Fears of an imminent Greek exit from the Eurozone have subsided, for now. This column attempts to measure the probability of a Greek exit, finding that the changing fortunes of Greek political parties, and the possibility of an early election, mean that the risk of a Greek exit may actually be quite high. It suggests that, despite investors' efforts to measure political risk, a persistent sense of unease about the Eurozone’s future is set to continue into 2013 and that Eurozone financial assets will thus continue to embed significant risk premiums in the coming years.
Systemic risks in global banking: What available data can tell us and what more data are needed?
Eugenio Cerutti, Stijn Claessens & Patrick McGuire (VoxEU) Dec 17, 2012
The current global crisis highlights how interconnected the financial world has become. This interconnectedness is a challenge for global systemic risks analysis. This column argues that much of the data needed for tracking systemic risk are not available and that, in fact, world decision makers are leading in the dark. Recent initiatives that aim to improve aggregate banking statistics and gather better institution-level data are welcome, but the complexity of the system means that we won’t have the data we need for some time yet.
The Eurozone’s Delayed Reckoning
Nouriel Roubini (Project Syndicate) Dec 17, 2012
The tail risks of a Greek exit from the eurozone or a massive loss of market access in Italy and Spain have been reduced for 2013. But the fundamental crisis of the eurozone has not been resolved, and another year of muddling through could revive these risks in a more virulent form in 2014 and beyond.
The History of the World Is the History of Energy
Daniel B. Poneman (Globalist) Dec 17, 2012
With sufficient investment, the United States can fuel the growth of technologies for creating a sustainable and clean energy future.
India’s growth prospects less than golden
Henny Sender (FT) Dec 18, 2012
A fall in demand for gold is part of a wider malaise in every aspect of the country’s economy, including investment, production and consumption.
Central Africa: The quest for clean hands
Katrina Manson (FT) Dec 18, 2012
A provision in the Dodd-Frank act intended to stem the trade in ‘conflict minerals’ has confused industry and failed to rein in Congo’s armed groups.
Bernanke – the rebel with a cause
Sebastian Mallaby (FT) Dec 18, 2012
The Fed chairman’s move to target lower unemployment even if that means temporary inflation is genuinely radical.
Why Europe will bounce back in 2013
Ruchir Sharma (FT) Dec 18, 2012
The crisis in peripheral Europe has echoes of the late 1990s travails of east Asian countries and their subsequent recovery.
A new recipe for currency friction
John Plender (FT) Dec 18, 2012
Central banks are increasingly outlining intentions for looser monetary policy, but unwinding the experiment will be no picnic.
Models Behaving Badly
Robert Skidelsky (Project Syndicate( Dec 18, 2012
Economic forecasting is necessarily imprecise: too many things happen for forecasters to be able to foresee all of them. But imprecision is one thing; the systematic overestimate of the economic recovery in Europe is quite another.
Emerging Europe’s Deleveraging Dilemma
Erik Berglof and Bozidar Delic (Project Syndicate) Dec 18, 2012
Since 2011, the eurozone-based parent banks that dominate emerging Europe’s banking sector have been under pressure to deleverage – with potentially serious consequences for a fragile region. By ensuring orderly deleveraging, multilateral lenders and private banks can help to put emerging Europe on a more sustainable growth path.
An Economics Masterpiece You Should Be Reading Now
Clive Crook (Bloomberg) Dec 18, 2012
If you're interested in development, you have to read Lin's book.
How Global Headwinds Are Slowing Indian Growth
A. Gary Shilling (Bloomberg) Dec 18, 2012
India hasn’t been spared the effects of the recession and the recent slowing of global growth.
Why India Is Forced to Reform Its Economy
A. Gary Shilling (Bloomberg) Dec 18, 2012
Economic conditions in India became so dire last summer that the government was forced to implement reforms.
Europe takes an important step towards a European banking union
Nicolas Véron (VoxEU) Dec 19, 2012
European leaders pieced together an historic compromise last week on a European banking union. This column argues that the agreement, which centred on banking supervision, is only the first step on the long and winding road towards a banking union. But the fact that this step is now essentially confirmed is almost unqualified good news.
Monetary policy and banking supervision
Sylvester Eijffinger & Rob Nijskens (VoxEU) Dec 19, 2012
Eurozone leaders agreed to transfer bank supervision to the ECB with the detail yet to be fleshed out. It is widely acknowledged that giving the ECB two tasks creates a conflict of interest. This column argues that the two functions must be separated by setting up a Supervisory Board, operating independently within the ECB, and by granting the new supervisors a solvency instrument that is independent of the interest rate.
Central banks can phase in nominal GDP targets without damaging the inflation anchor
Jeffrey Frankel (VoxEU) Dec 19, 2012
The time is right for the world’s central banks to rethink how they conduct monetary policy. This column argues that central banks should follow the lead of Mark Carney, the Bank of England’s new Governor, in considering a move to nominal GDP targeting. If nominal GDP targeting is introduced in two distinct phases, its introduction can deliver the advantage of some stimulus now – when it is needed – while satisfying central bankers’ reluctance to abandon their cherished low inflation target.
Nordic innovation: Is ‘cuddly capitalism’ really less innovative?
Niku Määttänen, Mika Maliranta & Vesa Vihriälä (VoxEU) Dec 19, 2012
Do the ‘cuddly’ Nordic countries free ride on the ‘cut-throat’ incentives for innovation in US-style economies? Don’t PCs, the internet, Google, Windows, iPhones and the Big Mac speak for themselves? This column argues that, despite a higher overall tax burden and more generous safety nets, the Nordics have generated at least as much – if not more – innovation than the US. So far, ‘cut-throat’ capitalism has not been the only road to an innovative economy.
Staying prosperous
Nita Ghei (WT) Dec 18, 2012
The world's becoming a more prosperous place. That's good news for many countries -- just not the United States.
Developing Economies’ Long-Term Financing Shortfall
Mahmoud Mohieldin (Project Syndicate) Dec 19, 2012
Although emerging markets have accounted for roughly half of global economic growth in recent years, advanced economies continue to dominate the supply of long-term funding. The mismatch between the time horizon of available funding and that of investors and entrepreneurs is a source of vulnerability that impedes growth.
US Trade Policy in the Spotlight as Global Economic Uncertainty Looms
Bridges Weekly Trade News Digest, Volume 16, Number 44 Dec 19, 2012
Concerns over the impending US fiscal cliff, questions over the future of US agricultural policy, and what level of engagement Washington will have in multilateral trade negotiations were among the various topics raised yesterday as WTO members began their two-day biennial review of US trade policies.
EU, Singapore Clinch Trade Pact Aimed at Boosting "Green Growth"
Bridges Weekly Trade News Digest, Volume 16, Number 44 Dec 19, 2012
The EU and Singapore have completed final negotiations for a bilateral trade deal, which includes language aimed at promoting "green growth," the two sides announced on 16 December. The draft agreement is the EU's first to include such a clause, which is part of the bloc's "2020 strategy" for boosting the economy and reducing unemployment.
The Geopolitics of Shale
Robert D. Kaplan (Stratfor) Dec 19, 2012
According to the elite newspapers and journals of opinion, the future of foreign affairs mainly rests on ideas: the moral impetus for humanitarian intervention, the various theories governing exchange rates and debt rebalancing necessary to fix Europe, the rise of cosmopolitanism alongside the stubborn vibrancy of nationalism in East Asia and so on. In other words, the world of the future can be engineered and defined based on doctoral theses. And to a certain extent this may be true. As the 20th century showed us, ideologies -- whether communism, fascism or humanism -- matter and matter greatly.
Pakistan: A fragile transition
Victor Mallet and Farhan Bokhari (FT) Dec 19, 2012
The country is forging a stronger democratic foothold despite the threat of political, religious and economic unrest.
Renminbi’s rapid rise concentrates minds
Mike Rees (FT) Dec 19, 2012
Soon all companies trading with China will realise that the internationalisation of the currency is something on which they have to act now.
Europe must be sold on shale’s merits
Noe van Hulst (FT) Dec 19, 2012
By inviting environmental groups and the public to monitor implementation of best practices, industry can head off criticism.
The Libor Hammer
WSJ Dec 19, 2012
Regulators come down hard on UBS, give themselves a pass.
Challenging France to Do Business Differently
Liz Alderman (NYT) Dec 19, 2012
While the European crisis has made the French aware of the need to modernize the economy, there are mixed signals on whether the government of Franois Hollande is willing to heed the advice.
The surprise end game in global trade
Kati Suominen (VoxEU) Dec 20, 2012
Free trade agreements are now the centre of gravity in global commerce. This column says they are also the likeliest pathway to multilateral trade liberalisation. With the US negotiating two mega deals – the Trans-Pacific Partnership and a US-EU free-trade agreement – China and other emerging economies will have no choice but to play by common rules of the game. It concludes that with all heavyweights joining the charmed circle, multilateral talks in Geneva will no longer be needed.
True independence for the ECB: Triggering power - no more, no less
Markus K Brunnermeier & Hans Gersbach (VoxEU) Dec 20, 2012
As governments and the EU wring their hands over banking reform, a fragile system remains in place. This column argues that the ECB’s current role undermines its independence. What the Eurozone needs to reduce undue forbearance - while preserving the ECB's independence - is a ‘diarchy’ in which both a newly built Restructuring Authority and the ECB have the power to trigger bank-restructuring.
Taking Back Immigration
Peter Sutherland (Project Syndicate) Dec 20, 2012
Within hours of Barack Obama’s re-election last month, a powerful belief took hold: overwhelming support from Latino voters had helped to secure his victory. Whether true or not, the US election’s implications for immigration run deeper than electoral expediency – with lessons for governments around the world.
Farewell to Inflation Targeting?
Mohamed A. El-Erian (Project Syndicate) Oct 20, 2012
In a four-day period in mid-December, three seemingly unrelated developments suggested that modern central banking is in the midst of an historic change. To the extent that this shift gains momentum – which appears likely – it will affect economic performance, the functioning of markets, and asset-price valuations.
India's Unfinished Journey to Economic Success
A. Gary Shilling (Bloomberg) Dec 20, 2012
Even if the latest reforms succeed, India will need to do much more to acquire the efficiency, infrastructure, foreign direct investment, free markets and deregulated, corruption-free orientation that will allow the country to move from 5 percent annual real growth to higher sustainable gains.
Shale gas exports will aid US and its allies
Bill Richardson and Spencer Abraham (FT) Dec 20, 2012
Export permits would give US trade partners confidence to adopt natural gas in lieu of higher emitting fuels.
A case remains for economic liberalism
Samuel Brittan (FT) Dec 20, 2012
The philosophy seemed to be dealt a fatal blow by the financial crisis that began in 2007 but its basic tenets remain sound.
Has Japan’s bond market made its last widow?
Peter Tasker (FT) Dec 20, 2012
Shinzo Abe’s election victory means the last bastion of hard money has fallen. The next BoJ governor will be a dove.
Developed nations must boost growth
Supachai Panitchpakdi (AT) Dec 21, 2012
Renewed fragility in the world economy is threatening to bring on a second recession. Developing countries cannot bear the burden of supporting global growth alone, putting the onus on the developed world to take measures to prevent a recurrence of the financial and economic crisis.
Kenen on the euro
Barry Eichengreen & Charles Wyplosz (VoxEU) Dec 21, 2012
One of the world’s most influential international economists, Peter Kenen, passed this week. This column highlights the key role his insights played in the construction of the Eurozone and the problems that arose when his insights were ignored.
Avoiding middle-income growth traps
Pierre-Richard Agénor, Otaviano Canuto & Michael Jelenic (VoxEU) Dec 21, 2012
Many of the emerging economies of the last two decades are now ensnared by ‘the middle-income trap’, in which middle-income countries don’t quite push through to high income status. This column presents recent research suggesting that, if governments act early and decisively to improve access to advanced infrastructure, enhance the protection of property rights, and reform labour markets, trapped economies – like their East Asian counterparts in the 1990s – can push on through.
Financialisation in oil markets: Lessons for policy
Bassam Fattouh & Lavan Mahadeva (VoxEU) Dec 21, 2012
In the last decade, there has been an explosion in the variety of instruments that permit speculation in oil, such as futures, options, index funds, and exchange-traded funds. This has been called the financialisation of the oil markets. This column examines whether this has affected the oil price and predicts powerful natural limits on the ability of financialisation shifts to raise spot prices in frictionless markets.
Eurobonds: The design is crucial
Roel Beetsma & Konstantinos Mavromatis (VoxEU) Dec 21, 2012
Are Eurobonds a desirable solution to Eurozone members’ debt crises? Unhappily, it’s difficult to say. This column argues it very much depends on how the system is designed. However, looking at the most prominent proposals, it seems a cleverly designed Eurobonds system may well provide governments with the right incentives to encourage both issuing less debt and pursuing meaningful structural reform.
Banking union: No cause for celebration
Bernhard Speyer (DB Research) Dec 21, 2012
Shortly before Christmas, the EU finance ministers and heads of state and government agreed upon a compromise on the establishment of an EU banking union. In doing so, they managed to meet their self-imposed year-end deadline. Unfortunately, this came at the price of a useless compromise that lacks conceptual consistency.
Illegal Capital Flight Handicaps Asian Economies
Philip Bowring (Asia Sentinel) Dec 21, 2012
But report by Global Financial Integrity may be misstating the case.
Financial Reform’s Breakthrough Year
Simon Johnson (Project Syndicate) Dec 21, 2012
Although the global financial crisis is now more than four years old, and the Dodd-Frank financial reforms were adopted in the US back in 2010, not much has changed about how Wall Street operates – except that the large firms have become bigger and more powerful. But there are reasons to expect real change in 2013.
Did the Bankers Do It?
Raghuram Rajan (Project Syndicate) Dec 21, 2012
Bankers’ political tin ear in the aftermath of the crisis – first taking public bailouts and then paying themselves huge bonuses as if nothing had changed – ensured that they got the lion’s share of the blame. But “the bankers did it” narrative is incomplete, which makes it the wrong basis for reform.
The Rise of the Attention Economy
Esther Dyson (Project Syndicate) Dec 21, 2012
Just as we are driven to spread our physical DNA, so we (apparently) have an urge to spread our virtual identities, so that we cannot be erased. Instead of physical descendants, we are offering our own virtual selves to posterity, with a far more powerful economic impact than economists recognize.
WTO 2.0: Thinking ahead on global trade governance
Richard Baldwin (VoxEU) Dec 22, 2012
The world of international commerce has changed radically over the past years due to the rise of supply-chain trade. This column argues that the WTO has not kept up with the need for new rules governing the intertwining of trade, investment, intellectual property, and service. Bring these rules to the multilateral level will require the establishment of a new international organisation – a ‘WTO 2.0’.
Trade agreements as global internet governance
Susan Ariel Aaronson (VoxEU) Dec 22, 2012
The internet is an expanding opportunity for growth. This column argues that in recent years, however, policymakers and market actors have been undermining its potential. Governments and market actors are reducing both access to information and freedom of expression, as well as moving towards a splintered, non-global internet. Commitment to an open, free and global internet will be hard, but if bilateral, regional or multilateral trade agreements encourage interoperability, we might see some harmony among signatories’ privacy, online piracy, and security policies.
In defence of GDP as a measure of wellbeing
Nicholas Oulton (VoxEU) Dec 22, 2012
The idea of having GDP growth as the main target of economic policy has been under attack in recent years. This column addresses some of the criticisms and argues that continued GDP growth would be good for the UK and other European countries – and not just in the short term to reduce high levels of unemployment.
Asia Adrift
Jaswant Singh (Project Syndicate) Dec 22, 2012
The year 2012 began with festering Chinese sovereignty claims in the South and East China Seas, but also with hope that a code of conduct brokered by ASEAN would enable them to be resolved peacefully. The year is ending, however, with those hopes dashed and ASEAN more divided than it has ever been.
Why Africa is turning to China
Kwei Quartey (AT) Dec 22, 2012
Governments in Africa come and go, but whoever is in power their relations with China continue to deepen. Warnings of neo-colonialism overlook the Chinese role in building needed infrastructure, a sector largely shunned by Western investors, and China's goal of seeking "common prosperity".
UBS Libor Manipulation Deserves the Death Penalty
William D. Cohan (Bloomberg) Dec 23, 2012
There is no point in mincing words: UBS AG (UBSN), the Swiss global bank, has been disgracing the banking profession for years and needs to be shut down.
Are services traded differently?
Andrea Ariu (VoxEU) Dec 23, 2012
International trade is traditionally thought of as goods crossing borders. Trade in services, however, is becoming increasingly important for high-income countries. This column, using Belgian firm-level data from 1995-2005, argues that trade in goods and services differ deeply in key aspects such as firm participation rates, size and frequency of shipments, entry and exit rates in foreign markets and in growth strategies.
A year in a word: Grexit
Ralph Atkins (FT) Dec 23, 2012
(noun) an abbreviation for “Greek exit from the eurozone” – a nightmare scenario that confronted Europe’s leaders for much of 2012 Read more >>
Stabilization Won't Save Us
Nassim Nicholas Taleb (NYT) Dec 23, 2012
More stabilization won't save the economy. We need to decentralize decision making and force all players to put skin in the game.
A Reality Check for Organic Food Dreamers
John R. Block (WSJ) Dec 24, 2012
Modern farming methods offer the best hope to feed the world's billions
High-Frequency Trading Prospers at Expense of Everyone
Bloomberg Dec 25, 2012
Finally, a bit of evidence, rather than anecdote, about the costs of high-frequency trading.
Asia must free itself from western chains
Chandran Nair (FT) Dec 26, 2012
We are struggling with the stubborn belief that markets, technology and liberal democracy will deliver all our needs.
Bankers with Borders
Howard Davies (Project Syndicate) Dec 27, 2012
Bank regulators in the US and the UK are determined to require foreign banks to establish local, separately capitalized subsidiaries, in order to avoid being left holding the bill when parent banks' local losses pile up. But there is a risk that these interventions are the thin end of a dangerous wedge for the global economy.
The Global March Toward Peace
Gareth Evans (Porject Syndicate) Dec 27, 2012
Over the last two decades, major wars and episodes of mass violence worldwide have become much less frequent and deadly. Indeed, there are strong historical grounds for believing that waging aggressive war has simply run its course as an instrument of state policy.
India’s Second Wind
Martin Feldstein (Project Syndicate) Dec 27, 2012
The Indian economy is coming back. After several years of disappointing performance, the authorities are shifting to policies aimed at boosting the annual growth rate closer to the roughly 9% level that India achieved from 2004 to 2008.
The European Oasis
Dominique Moisi (Project Syndicate) Dec 27, 2012
Europe remains a significant economic and commercial actor – one that can rebound at any time, now that it has at least partly transcended its systemic crisis. It also remains a model of reconciliation in which people can continue to dream, despite unacceptably high levels of unemployment, particularly among the young.
A Second Chance for European Reform
Hans-Werner Sinn (Project Syndicate) Dec 27, 2012
The ECB has calmed the markets with its promise of unlimited purchases of eurozone government bonds, because it effectively assured bondholders that taxpayers and pensioners in the eurozone’s still-sound economies would, if necessary, repay them. This respite offers an ideal opportunity to push forward with reforms.
A delayed take-off
David Pilling and Roel Landingin (FT) Dec 27, 2012
The Philippines is finally picking up economic momentum, but critics argue that this rapid growth has passed over the vast majority of the poor.
Seismic events will shape the Middle East
David Gardner (FT) Dec 27, 2012
America may wish to pivot towards Asia and Europe may be turned inward, but the Middle East offers no respite.
Is Growth Over?
Paul Krugman (NYT) Dec 27, 2012
We've been hearing a lot about the short-run projections for our economy. But when it comes to the prospects for the long run, we know less than we think.
Shinzo Abe’s Monetary-Policy Delusions
Stephen S. Roach (Project Syndicate) Dec 28, 2012
The politicization of central banking worldwide continues unabated. The resurrection of Shinzo Abe and Japan’s Liberal Democratic Party – pillars of the political system that has left the Japanese economy mired in two lost decades and counting – is just the latest case in point.
Chinese capitalism in America
John Pomfret (WP) Dec 27, 2012
Chinese investment means greater opportunities for U.S. workers.
Transatlantic Free Trade?
Javier Solana (Project Syndicate) Dec 28, 2012
The international order's center of gravity is shifting to Asia, but Europe and the US can act to ensure their global roles. A transatlantic free-trade area would give both economies – still the world's largest – a significant dose of confidence, while boosting competitiveness, growth, and job creation.
2012 by numbers
Kate Allen (FT) Dec 30, 2012
From supersize national debts to subatomic particles to a sound barrier-busting free fall, we round up the year’s standout statistics.
A Canadian Rock Star and the Pacific Rim Fab Four
Mary Anastasia O'Grady (WSJ) Dec 30, 2013
Only 11% of Chile's population is living in poverty now, according to a recent U.N. report.
Globalization is on the ropes
Robert J. Samuelson (WP) Dec 30, 2013
Can it survive 2013?
India Looks East
Gordon G. Chang (World Affairs) Dec 31, 2013
Thanks to its aggressive behavior on trade and territorial issues, China has pushed India and the nations of Southeast Asia right into each other’s arms. But Beijing is still angling for leverage. Read More
Is State Capitalism Winning?
Daron Acemoglu and James Robinson (Project Syndicate) Dec 31, 2012
Success depends on society having control over the state.
Alternative Fiscal Medicine?
Jean Pisani-Ferry (Project Syndicate) Dec 31, 2013
All advanced-country governments are still officially committed to undergoing the pain of fiscal adjustment. But how many will become exhausted before implementing their reforms in full, and succumb to the belief that there are painless alternatives?
Europe’s New Year’s Irresolution
Joschka Fischer (Project Syndicate) Dec 31, 2013
Regardless of electoral outcomes in important EU member states, Europeans will remain unable to expect much from their political leaders in 2013, because opposition forces generally have little more to offer than the incumbents do. As a result, Europe will continue to need the pressure from the crisis in order to overcome it.
The Great Bank Escape
Anat Admati (Project Syndicate) Dec 31, 2012
Corporate decisions taken in the name of shareholder value often benefit only those whose wealth is closely tied to the firm's profits, and may be harmful to many shareholders. If policymakers and regulators do not strengthen their reform efforts, taxpayers and shareholders – not bankers – will suffer the consequences of the next crisis.
Asia’s Hard Road
Haruhiko Kuroda & Changyong Rhee (Project Syndicate) Dec 31, 2012
Next year will present significant challenges and new responsibilities – political, economic, and social – for developing Asia. The path to sustainable, inclusive economic growth will be difficult, but it will also entail exciting opportunities for Asia and for the rest of the world.
A Year on the Brink
Joseph E. Stiglitz (Project Syndicate) Dec 31, 2012
The two main surprises in 2012 were the slowdown in emerging markets, which was slightly sharper and more widespread than anticipated, and Europe’s embrace of some truly remarkable reforms – though still far short of what is needed. Looking to 2013, the biggest global economic risks are there and in the US.
Emerging World Rising
Jim O'Neill (Project Syndicate) Dec 31, 2012
The US will face recurring challenges with the “fiscal cliff” until financial markets pressure policymakers into more radical deficit reduction. But, despite this and associated growth disappointments, the global economy will perform better in 2013 than many people expect, owing to emerging countries' rising share of global output.