What makes Jose Antonio Ocampo a good candidate for President of the World Bank

Stephany Griffith-Jones

It is excellent news that developing countries are putting forward such outstanding candidates for the Presidency of the World Bank. I have been lucky to have worked closely with one of the two candidates, Jose Antonio Ocampo. He would be an excellent choice for many reasons.

Jose Antonio provides the rare combination of an experienced and successful policy-maker at the highest level (he was Minister of three portfolios in Colombia, including Finance, but also Agriculture and Planning), an outstanding international civil servant again at the highest level (including as Under Secretary General at the United Nations, as well as well as Head of the UN Commission for Latin America and the Caribbean), and a leading academic researcher in key issues relating to development and macro-economic policy.

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Remembering Alice Amsden: Catching up or Falling Behind?

Mehdi Shafaeddin
This piece is dedicated to the memory of Professor Alice Amsden, who passed away last week.

Professor Amsden’s preoccupation was the analysis of the process by which some developing countries have managed to industrialize and accelerate their pace of economic development. The Republic of Korea, Taiwan Province of China and the so-called emerging economies (The Rest) were her main case studies. She was a visionary, and also believed in the need for tailor-made strategies for specific developing countries rather than one-size-fits-all economic policies. Nor did she believe in pure reliance on market forces as advocated by neo-liberals and reflected in an analysis of the question of “catch-up” in a recent issue of the Economist.

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New Data Confirms Food Crisis Model: Warns of coming price spikes

Timothy A. Wise

Today, researchers at the New England Complex Systems Institute (NECSI) released new modeling results they claim demonstrate the predictive validity of their food price model. Last September, they released a detailed report showing that US ethanol expansion explained the underlying secular rise in food prices, while financial speculation explained the two price spikes, in 2007-8 and 2010-11. (See my post on the study.) The Institute, which performs mathematical modeling to reveal social and political trends, has now extended its model to January 2012. With no modifications, the model still fits food price trends, predicting to a high degree of accuracy the bursting of the food price bubble last year.

In our recent report on the food crisis and a recent article in Economic and Political Weekly, Sophia Murphy and I argued that the international community has thus far failed to address the underlying causes of the food crisis. As the NECSI report highlights, those causes include biofuels expansion and price volatility stemming from excessive financial speculation and the lack of adequate food reserves.

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Hitting Them Where They Drive: Will rising gas prices prompt action on commodity speculation?

Timothy A. Wise

There’s nothing like a food riot to focus the attention of a developing country government. And perhaps there’s nothing like a gas-price spike to get the attention of US policymakers, particularly in an election year.

As oil prices jumped to $108/barrel and US gas prices inched toward the politically toxic $4.00/gallon, welcome attention is being focused on speculation in oil futures markets. Forbes reported last week that as much as one-quarter of the price of crude could be attributed to a surge in speculative capital, which now accounts for four of every five dollars on oil futures markets. Citing data from Goldman Sachs, they estimated this was costing US drivers $.56/gallon, a hefty 18% hike in the price at the pump.

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Yuan diplomacy

Kevin P. Gallagher

When no one was looking, China became the largest source of finance for Latin American governments. Indeed, in the past few weeks Chinese government-sponsored banks have extended $1bn to Ecuador and are discussing another $1bn to the Inter-American Development Bank.

This presents a great opportunity for Latin America, but also brings new risk. If the region can seize upon the new opportunities that come with Chinese finance they could come closer to their development goals, and pose a real challenge to the way Western-backed development banks do business.

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From “Technocrats” to Autocrats: Who elected the central bankers?

Gerald Epstein

The G-20 Finance Ministers’ meeting in Mexico City ended on Sunday, February 26, unsurprisingly, with no apparent progress on resolving the global economic crisis. Yet, according to some news reports, leaders at the meeting believed they had turned a corner on the euro crisis, primarily by agreeing to massive “fiscal consolidation”, another of the many euphemisms (this one for austerity) thrown up by the financial crisis.

Pushing through these austerity measures are a host of other actors, including the so-called “technocrats” who are running more institutions and even governments. Included among these so-called neutral technocrats is the “independent” European Central Bank (ECB).  Digging a bit deeper cracks open a façade of central bank “expertise” and neutrality to reveal not only a destructive adherence to a failed economic analysis but also the use of unelected central banks to exercise the raw power of financial and other elites over democratic societies.

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Rich Presidents of Poor Nations: An African story of oil and capital flight

The Triple Crisis Blog is pleased to welcome as a regular blogger Léonce Ndikumana, Andrew Glyn Professor of Economics and Director of the African Policy Program, Department of Economics and Political Economy Research Institute (PERI), University of Massachusetts at Amherst.

Stories of African presidents shipping suitcases of cash to finance political campaigns abroad in exchange for patronage have made the headlines recently, prompting legal probes into illicit wealth accumulation. On February 14th, France 24 reported that the French Police[1] searched the apartment of Theodoro Obiang Nguema, the President of Equatorial Guinea, whose family has accumulated massive wealth by mortgaging his country’s oil. In 2011, Global Witness reported that his flamboyant son Theodorin Obiang commissioned a personal super-yacht with a handsome price tag of $380 million, worth three times the country’s combined budget for health and education.[2] The French Justice system is also pursuing inquiries into the illicit wealth of Ali Bongo of Gabon and Denis Sassou Nguesso of the Republic of Congo. While they are dramatic, these stories reflect a deep seated tragedy of African resource-rich countries.

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Not so “sweetheart deals” from China in Latin America

Kevin P. Gallagher

Never letting data get in the way of a good story, pundits and policy-makers alike have clamored that Chinese development banks are engaged in “low-ball” finance that is out-competing Western finance in Latin America.  Not so simple, not so fast, according to findings in a new study that I co-authored titled “The New Banks in Town: Chinese Finance in Latin America.”

Frustrated by the lack of transparency exhibited by Chinese banks – notably the Chinese Development Bank (CDB) and the Export-Import Bank of China – we embarked on an effort to create a database of Chinese financing to Latin American governments from 2005 to the present.

Digging through SEC filings, government web pages, the press on both sides of the Pacific and beyond, we estimate that between 2005 and 2011 these banks provided upwards of $75bn in loan commitments to Latin American governments.  The Chinese committed $37bn to the region in 2010 alone, more than the World Bank, Inter-American Development Bank, and the United States Export-Import bank combined.

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10 Questions for Economists Who Oppose Manufacturing Subsidies

Jeff Madrick

Why are mainstream economists, right and left, so determined to push back any attempt to subsidize manufacturing in America? The question will arise anew tonight when President Obama presents his budget, complete with tax provisions to support manufacturing. After the president addressed the issue as his first topic in the State of the Union a couple of weeks ago, many esteemed economists seemed to rush to the offense. Obama proposed using tax carrots and sticks to encourage manufacturers to stay here, return here, or get out of those low-wage emerging markets. Some mainstreamers, seeming to represent the conventional wisdom among them, openly scorned the idea. At least one, Laura Tyson, has stood her ground in favor of a policy focus on manufacturing.

I understand the mainstream economic reflex. After working so hard to get world nations to reduce trade barriers for the last 40 to 50 years, they and their successors view subsidizing manufacturing in the U.S. as a retreat. It could provoke retaliation as well. And moving the world toward free trade makes eminently good theoretical sense — to a degree. The anti-manufacturing subsidy bias is really a subset of the firm, almost unshakable allegiance to free trade theory among the American mainstream.

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Romania’s lesson for austerity enthusiasts

The Triple Crisis blog is pleased to welcome Cornel Ban as a regular contributor. Ban is a Postdoctoral Scholar of International Studies and Deputy Director of the Development Studies Program at the Watson Institute for International Studies at Brown University. His research in international political economy focuses on the transnational spread of economic ideas and varieties of capitalist development.

You know that a ship is about to sink when the most loyal sailors head for the life raft. Until January 2012 the continuous expansion of the realm of the market and the shrinking of the state’s responsibility for delivering public goods was de rigueur in Romania. Indeed, this East European country that joined the EU in 2007 appeared as a poster child for austerity and market reforms. The country’s 2010 fiscal adjustment included the usual mass layoffs and wage cuts in the public sector but the government surprised even the visiting IMF chief with its utter lack of concern for distribution costs: drastic cuts in the social security benefits of the most vulnerable, a “flat” cut of 25 percent applied to all wages in the country’s very unequal public sector, and an undifferentiated hike of the VAT to one of Europe’s highest levels.

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