Review of “China Engages Latin America: Tracing the Trajectory” by Adrian H. Hearn and José Luis León-Manríquez

Kevin P. Gallagher

During the early 1990s, many Latin American and U.S. analysts expressed concerns about an Asian giant that was buying Brazilian iron ore and investing in Mexican manufacturing, while at the same time showing signs of out-competing Latin American and U.S. firms in the region. That giant was Japan.

Hysteria heightened and academic research accumulated. But today few people worry about Japan’s role in the region—despite the fact that it is a top-five trading partner and has a large diaspora that includes Peru’s Alberto Fujimori, a former (now jailed) Latin American president.

Is history repeating itself? The new source of hand-wringing in the region is China, which, like Japan years earlier, is portrayed by many as stealing Latin American jobs, plundering the region’s resources and creating diplomatic alliances that could erode the rule of law. At the same time, some U.S. observers see China’s inroads as a threat in the U.S.’s backyard.

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Review of "China Engages Latin America: Tracing the Trajectory" by Adrian H. Hearn and José Luis León-Manríquez

Kevin P. Gallagher

During the early 1990s, many Latin American and U.S. analysts expressed concerns about an Asian giant that was buying Brazilian iron ore and investing in Mexican manufacturing, while at the same time showing signs of out-competing Latin American and U.S. firms in the region. That giant was Japan.

Hysteria heightened and academic research accumulated. But today few people worry about Japan’s role in the region—despite the fact that it is a top-five trading partner and has a large diaspora that includes Peru’s Alberto Fujimori, a former (now jailed) Latin American president.

Is history repeating itself? The new source of hand-wringing in the region is China, which, like Japan years earlier, is portrayed by many as stealing Latin American jobs, plundering the region’s resources and creating diplomatic alliances that could erode the rule of law. At the same time, some U.S. observers see China’s inroads as a threat in the U.S.’s backyard.

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Brazil, a country on the go…

Martin Khor

Last week I visited Brazil and found it to be a country on the go.  At a seminar in Rio de Janeiro and later visiting government officials and think-tanks in Brasilia, I found a country Brazil proud of its recent social achievements and embarking on a new development strategy to boost production.

The seminar was aptly titled “New Economic Thinking, Teaching and Policies”, organized by the Ford Foundation, the MINDS economists’ network and hosted by BNDS (the Brazilian Development Bank).

Local and foreign economists and policy makers examined the new Brazilian approach to development, which is now made more challenging because of the expected return of global recessionary conditions.
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Social protection is the best foundation for development

Jayati Ghosh

The social and economic system that has powered global economic relations in the past two decades is clearly in crisis. We now know only too well that periods of “rapid growth” have been based on unsustainable bubbles; that such growth has contributed little in terms of generating more decent work and has significantly increased inequality; and that people will no longer accept these unfair outcomes, as shown by the waves of protest in many countries.

We need a completely different approach to economic policy making, one that will provide for a more just and equitable society and be more compatible with the aspirations and expectations of citizens. This means that decent employment and better living conditions cannot be seen only as potential byproducts of income growth – or even as ends in themselves – but as a means to sustainable growth.

In this context, an important new report, Social protection floor: for a fair and inclusive globalisation (pdf), from the Social Protection Advisory Group, chaired by Michelle Bachelet for the International Labour Organisation (ILO) and World Health Organisation, (WHO) has just been released. The report provides a key element of the economic blueprint for forward-looking economic policy, by emphasising the role of social protection measures in cushioning the impact of the crisis among vulnerable populations, serving as a macroeconomic stabiliser fuelling demand and enabling people to better overcome poverty and social exclusion in both developing and developed countries.

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What’s New in Climate Economics

Frank Ackerman

Economic analysis has become increasingly central to the climate policy debate, but the models and assumptions of climate economics often lag far behind the latest developments in this fast-moving field. That’s why Elizabeth Stanton and I have written Climate Economics: The State of the Art, an in-depth review of new developments in climate economics and science since the Stern Review (2006) and the Intergovernmental Panel on Climate Change’s Fourth Assessment Report (2007), with more than 500 citations to the recent research literature.

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Spotlight G20: The Crisis in the Eurozone Conference

As the G20 is likely to focus primarily on the eurozone crisis at the Cannes Summit, we recommend checking out The Crisis in the Eurozone– a conference organized by James K. Galbraith taking place today and tomorrow at the University of Texas at Austin. The entire conference will be webcast live here and the program is available here. The event will focus on “A Modest Proposal for Overcoming the Euro Crisis” by Yanis Varoufakis and Stuart Holland, a plan which would combine the innovation of the Eurobond with a “New Deal” approach to European development.

For whom the blog Tols

Frank Ackerman

Is it true that there’s no such thing as bad publicity? If so, we’re in luck. The paper that Elizabeth A. Stanton and I wrote on the social cost of carbon has been discussed on the Bishop Hill blog, a leading forum for British climate skeptics – and in comments on that blog and on Twitter by Richard Tol.

Bishop Hill cites us as estimating that the social cost of carbon – the monetary value of the present and future damage caused by emitting one ton of carbon dioxide – could be $1,000 or more. Tol calls this estimate “complete nonsense,” and Bishop Hill refers to the increase from the U.S. government’s $21 estimate to $1,000 and higher as “fairly jawdropping.”

Feel free to pick your jaw back up; we never said that the social cost of carbon is $1,000. We did say that the value should reflect important climate uncertainties, and that our modeling of those uncertainties produced a range of possible values from $28 to almost $900 for emissions today, or from $64 to about $1,500 for emissions in 2050.

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Macroeconomic Policies and the Costs of Climate Change

Alejandro Nadal (also available in Portuguese)

Stabilizing concentrations of greenhouse gasses (GHG) in the atmosphere, and adapting to the impact of climate change, have significant economic costs. Can these costs be met under the macroeconomic policy posture currently embraced by most countries? This is an important question given the massive scale of resources that are involved in a sustained time horizon.

In spite of the global economic and financial crisis, most advanced capitalist countries still adopt a view of macroeconomic polices dominated by the overarching objectives of price stability and fiscal discipline. In fact, this is what is guiding today the policy response to the crisis in Europe and the United States. In the developing world, the picture is a bit more complicated, but it is fair to say that most countries still define their macroeconomic priorities in terms that closely resemble the dogmas of neoliberalism.

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The Occupy Wall Street Victory: Filling a Hole in Democracy

Jeff Madrick

The general scorn for the Occupy Wall Street movement (OWS), now spread to hundreds of cities in the U.S., reveals a lot about Wall Street, the press, and the state of economics. I was invited to speak there early in their campaign and found the people eager to learn, courteous and hell-bent for justice, not revenge.

The scorn has subsided somewhat as the movement grows and has withstood the threat of police and Michael Bloomberg’s demand that they should clear out of the park they occupy because the owners of the park wanted to clean it. It is called Zuccotti Park because it is privately owned by the Zuccotti family with the proviso that it is made available to the public at all times. Now it has become available to all America, and arguably all the world.

The unions joined in and this week, OWS has yet another clear victory. President Obama will announce some kind of student loan relief plan. He is also proposing a more aggressive mortgage refinancing scheme for under-water homeowners. This too may be partly the result of OWS.

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Why the Green New Deal is a Response to the European Debt Crisis

Gerhard Schick

The global economic crisis has not been overcome; its character has merely changed. For us parliamentarians, its most tangible characteristic is the smoldering debt crisis in some Euro countries. Similar to the crisis in the banking sector, the European government debt crisis is typical of a large-scale financial crisis, the “Second Great Depression,” and managing it has to be addressed in this context. If it were only an uncontrolled government debt accumulation in Europe, then it would now be appropriate to simply apply debt brakes to manage the public debt, and to work with stronger sanction options. But would this have prevented the problems in Ireland or Spain? No. The financial crises in Spain and Ireland have absolutely nothing to do with government irresponsibly incurring debt. The government debt only increased when the government had to react to the excessive indebtedness of the private households and banks that it had previously permitted.

The conservative reinterpretation of the debt crisis as a purely governmental debt crisis due to excessive government spending is politically smart but factually incorrect. Drastic austerity programs alone are therefore not very useful in overcoming the crisis. On the contrary, the current crisis policy aggravates the crisis in many areas.

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