Yılmaz Akyüz, guest blogger
The new millennium has witnessed a staggering rise of the South. During 2003-08, the average growth of developing economies (DEs) exceeded that of advanced economies (AEs) by some 5 percentage points, compared to around one point in the 1980s and 1990s. The difference widened further during 2008-11 as most DEs proved resilient to the crisis while growth collapsed in AEs.
This growth divergence has widely been seen as the decoupling of the South from the North. However, the evidence does not show the desynchronisation of cycles between DEs and AEs, and deviations of economic activity from underlying trends continue to be highly correlated. The more significant question is whether there has been a durable shift in the trend growth of the South relative to the North. Such a view is widely held, including among policy makers in DEs. However, a closer look suggests that the growth surge in the South owes as much, if not more, to exceptional and unsustainable global economic conditions as it does to improvements in their own fundamentals. There is, consequently, no room for complacency in policy circles in DEs.
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Robin Broad, guest blogger
Last week, U.S.-nominee Jim Kim was elected to be the next president of the World Bank group. Some well-known US economists and World Bank “insiders” criticized the choice – and supported Kim’s opponent Ngozi Okonjo-Iweala — because Kim is not an economist. From that criticism, one would surmise that the majority of World Bank presidents have indeed been economists.
But what really do we know about the background of the eleven men (yes, all men) who have held that post so far? So, expert pundits and readers alike, let’s see how well you do on the first annual World Bank President Trivia Game. Twelve men, so twelve questions:
The first category is education:
1. To repeat: Jim Kim does not hold a graduate degree in economics. How many of the eleven World Bank presidents do have graduate degrees (masters or doctorate) in economics?
ANSWER: None. While you would not know it from the criticisms of Kim, had Okonjo-Iweala won, she would have been the first. She holds a Ph.D. in regional economic development from the MIT.
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Cathie Jo Martin and Duane Swank, guest bloggers
Labor market coordination is the lynchpin of high-performance societies that maximize economic growth and equality, yet why does business ever cooperate? In a story replete with unintended consequences, The Political Construction of Business Interests recounts employers’ struggles to define their collective social identities at turning points in capitalist development, to understand why coordinated capitalism emerges in some countries but not others. The book tells of the construction of peak employers’ associations at the beginning of the Twentieth Century, the efforts to sustain these associations at century’s end, and the impact of these institutions on employers’ preferences for the welfare state.
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Sophia Murphy, guest blogger
UNCTAD—the U.N. Conference on Trade and Development—is holding its 13th quadrennial conference in Doha, Qatar this week (April 21–26). As South Centre Director, Martin Khor, underscored in his Triple Crisis blog last Friday, the meeting has generated considerably controversy, the first time UNCTAD has created such waves in more than a decade. Created in the 1960s as a forum for developing countries to explore global and regional macro-economic issues independently of the Western country-dominated Bretton Woods institutions, UNCTAD has never had an easy ride from the U.S., UK and other major powers. But for the first 20 or so years of its existence, UNCTAD received the resources and respect it needed to make a big contribution to supporting initiatives that supported development, from preferential trading schemes, to commodity agreements, to what were called “rules to control restrictive business practices” (today more commonly referred to as competition policy).
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Rainer Kattel and Ringa Raudla, guest bloggers
European crisis resolution seems to rest on one hope: austerity can bring growth. History and most of economic theory seems to suggest that this is not possible. The Baltics peg to differ. Or so it seems. During the 2008-2010 crisis the Baltic economies of Estonia, Latvia and Lithuania experienced peak-to-trough reductions in GDP as high as 20%, 25% and 17% respectively. Governments decided to stick to currency pegs and opt for austerity and internal devaluation by cutting government expenditure in 2009 around 8-9% and additional 3-4% (of GDP) in 2010. By 2011, all Baltic economies were growing again, real GDP growth, driven by rapid recovery in exports, topping European charts with 7.6% (Estonia), 5.5% (Latvia) and 5.9% (Lithuania). Based on our forthcoming paper, “The Baltic States and the Crisis of 2008-2010”, we discuss in what follows whether in fact the Baltic internal devaluation worked and, more importantly, whether it can be replicated anywhere else, Europe or elsewhere. All data comes from our paper, where the reader can also find detailed references.
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C. Peter Timmer, guest blogger
We are at a critical juncture with respect to the worldwide need for scholars who understand the broad forces shaping economic development and its impact on poverty reduction. These forces are driven from the macro economy, with critical sectoral and political dimensions that are virtually impossible to navigate without broad-based and policy-oriented training.
Since the development failures of the 1970s, and especially since the failures of post-Soviet privatizations to produce the predicted rapid growth in the Eastern bloc, mainstream economists have understandably been increasingly reluctant to claim that they have answers to big problems. By contrast, when economic development first came of age as an academic topic in the 1960s, economists were trained to conduct research on the big problems of world poverty. Crucially, this research was valued by the profession itself, in the form of academic appointments and international recognition.
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Eric Kemp-Benedict, Amanda Fencl and Elena Dawkins, guest bloggers
There’s a growing momentum around the world to build a ‘green’ economy – with a special focus on energy – as a key strategy to reduce greenhouse gas emissions and prevent dangerous climate change while also increasing energy security.
But resource constraints could hinder this endeavour. Low-carbon technologies such as photovoltaics, wind turbines, and electric and hybrid cars, for example, use metals that are mined only in a handful of countries, which can limit their availability. This is already a major international issue, as evidenced by the recent complaint filed by the U.S., the EU and Japan with the World Trade Organization, challenging China’s restrictions on exports of rare-earth metals.
Biofuels development, meanwhile, has faced substantial push-back because of concerns that fuel crops will displace food crops – or displace forests and vitally important ecosystems. In addition, these crops compete for what are often limited water resources.
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Robert H. Wade, guest blogger
In 2008, Triple Crisis blog partner GDAE gave Wade its prestigious Leontief Prize for Advancing the Frontiers of Economic Thought for his outstanding contributions to the economics of development. Today, GDAE awards the 2012 Leontief Prize to Michael Lipton and C. Peter Timmer for their critical work in the economics of food and agriculture. See full event details.
It is a commonplace to say that the world economy has become “multipolar”, as some developing countries gain a rapidly increasing share of world income. The implication is that the post-Second World War order, in which countries of the West govern the world economy, is now over. We are in the middle of a transition to a new world order in which governments of developing countries have a substantially larger voice in setting global norms and rules.
The negotiations going on in Geneva over the mandate of the United Nations Conference on Trade and Development (UNCTAD) provide a rude shock to this conventional wisdom. UNCTAD is the UN agency, which, since its establishment in 1964, has been most responsive to the preferences of developing countries on the subjects of debt, trade, and finance. It has often voiced a second opinion about issues on which the International Monetary Fund (IMF) and World Bank – governed largely by western governments — consider themselves to be authoritative.
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Robert Wade and Silla Sigurgeirsdóttir, guest bloggers
Firms subject to a regulator generally use one of three tactics to render the regulator ineffective: emasculate, capture or discredit it – or some of all three. Iceland’s financial regulatory agency, the FME (with similar functions as the UK’s Financial Services Authority), has experienced all these tactics since its creation in 1998. A sustained campaign has recently been waged to discredit the CEO appointed in the wake of Iceland’s Great Crash in October 2008, culminating in his firing at the beginning of March 2012. His case illustrates wider issues in the relations between regulators and powerful interest groups subject to their regulation and supervision, in Iceland and beyond.
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Calestous Juma, guest blogger
World renowned development economist Alice Amsden passed away this week.
It is with great sadness that I learned of the passing of Professor Alice Amsden. Alice was a true intellectual force and made remarkable contributions to our understanding of emerging economies.
She was widely recognized as one of the world’s leading visionaries. In 2003 she was awarded the Leontief Prize for Advancing the Frontiers of Economic Thought from GDAE at Tufts University. The prize recognizes scholars whose work has helped to broaden economics to better understand urgent contemporary issues. She has made important contributions to our understanding of the role of building productive capabilities as a foundation for innovation.
A few of us who came to work with her closely also knew her as a person of irrepressible character who maintained very high standards. She challenged herself as hard as she challenged others. She pursued her research with remarkable vigor.
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