Development Economics: And the Winners of the 2013 Leontief Prize Are …

Timothy A. Wise

My institute has just announced the winners of its 2013 Leontief Prize for Advancing the Frontiers of Economic Thought, and I’m proud to announce that the winners are (…drumroll…) Albert Hirschman and Frances Stewart. There is exciting and renewed attention to development economics in the wake of the global financial crisis, as developing countries pick through the rubble of orthodoxy in the hopes of rescuing something of value. Albert Hirschman and Frances Stewart have certainly given us all much of value, and the current prize is a fitting tribute to another great development economist, Alice Amsden, one of our previous Leontief laureates who passed away earlier this year. (See Kevin Gallagher’s lovely tribute to Alice on Triple Crisis.) As Global Development and Environment Institute co-director, Neva Goodwin, said, “A serious return to development theory must start with the work of Albert Hirshman, one of the early leaders in the field. Frances Stewart’s practical and theoretical work on the challenges of modern development further advances such interdisciplinary approaches to international development.”

Read the announcement of the awards and more on the Leontief Prize, including last year’s event featuring lectures by Peter Timmer and Michael Lipton and interviews with each.

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September 17, 2012 | Posted in: Uncategorized | Comments Closed

The Dangers of Pseudo Fiscal Union in the EMU

Philip Arestis and Malcolm Sawyer

We write this as people who have long argued that a currency union such as the Economic and Monetary Union (EMU) would need to be accompanied by what could be termed a fiscal union (see, for example, Arestis, P., McCauley, K. and Sawyer, M. (2001), “An Alternative Stability and Growth Pact for the European Union,” Cambridge Journal of Economics, Vol. 25, No. 1, pp. 113-130.)

It would then seem that we should be celebrating the proposed moves in EMU towards what is termed fiscal union; we rather, however, write of the dangers of the proposed fiscal union. The fiscal union, which we would view as required, would be one where there are substantial tax raising powers at the EMU level, say of the order of 10 per cent of EMU GDP (compare this with the Federal government in the USA raises taxes of the order of 20 per cent of GDP).

This fiscal union would involve a significant amount of fiscal transfer from richer countries to poorer countries: a proportional tax regime would raise absolutely more money in richer countries than in poorer countries, and a progressive one also relatively more. Provided that public expenditure did not exactly match tax revenue in a particular region, but rather was to some degree related to population size and to need, there would be transfer of resources from rich to poor.

Another key element of such a fiscal union would be the ability of the relevant Federal authority (Ministry of Finance) to operate a fiscal policy with deficits and surpluses as appropriate for the state of the economy. Further it would require the support of the European Central Bank in the operation of fiscal policy and willingness to buy where the bonds issued by that Federal authority.

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The Summit that Revitalised the Non-Aligned Movement

Martin Khor

The Summit of the Non-Aligned Movement, held last week in Tehran, was held in high spirits, with leaders calling for a new multi-polar world with developing countries having their proper say in decision-making

The Summit of the Non Aligned Movement concluded in Tehran on 31 August in high spirits with the political leaders adopting several declarations and action plans, and many of them calling for a revival of the importance of NAM, especially to protect the countries from foreign intervention and to build a new multi-polar world.

The Summit was already notable for the presence about 25 Presidents and Prime Ministers, and the Vice Presidents, Ministers and other senior officials of another 95 member states, and representatives of 16 observer and guest countries.

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Going Off the Grid

Sunita Narain

Supply issues comprise one part of the energy conundrum, as we discussed last fortnight. The cost of energy and our ability to pay for it is the other. The matter gets vexed because the rise in price of raw material of all energy sources is accompanied by huge inefficiency in distribution and accounting. But importantly, we remain a poor country where cost of energy is a factor in its availability and accessibility for all.

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September 10, 2012 | Posted in: Uncategorized | Comments Closed

Is Growth Still Possible?

Matias Vernengo

Paul Krugman has recently pointed out a very pessimistic, but very provocative paper by Robert Gordon, about the possibilities of long run growth. Gordon suggests that the “rapid progress made over the past 250 years could well turn out to be a unique episode in human history.” In his view, long-term stagnation is a very possible outcome. He asserts that the reasons for this are the effects of technical progress on investment.

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If we want food to remain cheap we need to stop putting it in our cars

Timothy Wise

Yes the global community is facing a food crisis but biofuel production rather the rising demand for meat-based protein is to blame, and the solutions are relatively straightforward.

Coverage of the US drought and the run-up in corn, soybean, and wheat prices has been extensive and welcome. It has also been prone to the repetition of falsehoods and the perpetuation of myths about the causes of the food crisis – and the solutions. A recent Guardian article, “The era of cheap food may be over,” is a case in point. Specifically, it perpetuates the myth that the main driver of food price increases is demand for meat in fast-growing developing countries. This effectively downplays the full impact of biofuels and ignores two problems underlying price volatility: financial speculation and the lack of publicly held food reserves.

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