Reforming the European Central Bank to Promote Economic Prosperity

Philip Arestis and Malcolm Sawyer

In our blog in December we provide a quick critique of the ‘fiscal compact’ for the Economic and Monetary Union (‘euro area’) (now to be embodied in the Treaty on Stability, Coordination and Governance). The fiscal compact is more rigorous in terms of the constraints on budget deficits of the member states in relation to those that were contained in the Stability and Growth Pact and the requirement for a ‘structural balanced budget’. The proposed Treaty (signed by all the European Union members with the exception of the UK and the Czech Republic, and currently under a process of ratification by national parliaments) makes no mention of the role of the ‘independent’ European Central Bank.

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Uncertainty as UNCTAD XIII begins

Martin Khor

The ministerial meeting of the UN Conference on Trade and Development kicked off to a good start last Saturday with a opening session marked by a modern play and dance depicting the inequalities of the modern world, and with speeches by an impressive group of political leaders, including the Emir of Qatar, the President of Tunisia who came to power in the wake of the Arab Spring, and the Prime Ministers or Presidents of Turkey and Bangladesh.

Most of them stressed the need to rethink the model of economic growth that was driven by a financial system that is now seen as dysfunctional and by a pattern of development that may be economically and environmentally unsustainable.

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Defending UNCTAD's Role in Agriculture and Food Security

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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Defending UNCTAD’s Role in Agriculture and Food Security

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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UNCTAD’s future mandate on the line at UNCTAD XIII

Martin Khor

On 21 April, the UNCTAD ministerial conference known as UNCTAD XIII begins in Doha.   It is shaping up as an important milestone to reaffirm – or not – the mandate given to UNCTAD to work on key global economic issues, including finance and macro-economic policy.

In fact, UNCTAD enjoys that mandate already, given its role in the UN system to organize an integrated perspective on trade, finance and economic issues.

However, some developed countries have attempted to dilute the specific issues that the UNCTAD secretariat has highlighted in recent years, especially in the wake of the global financial and economic crisis.

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Can austerity bring growth?

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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Brazil’s Neo-Developmentalist Lesson for Europe’s Unemployment Problem

Cornel Ban

During the post-war decades the direct creation of jobs through the expansion of employment in the public sector or through the government funding of public works was a reliable policy workhorse for employment policy. However, over the past three decades this policy has been replaced by market-oriented strategies such as labor market deregulation and cuts in corporate and marginal income tax.

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Responding to the Food Crisis: A network to train young scholars in macro and institutional development

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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