|
Independent research & practical ideas for global prosperity
|
|
|
|
Independent research & practical ideas for global prosperity
|
|
Global Development: Views from the Center
Posts in: Capitol Flows/Financial CrisisThe Lingering Effects of the U.S. Debt Showdown: Q&A with Liliana Rojas-SuarezAugust 2, 2011Posted by Lawrence MacDonald in Capitol Flows/Financial Crisis Tags: debt crisis, Financial Crisis
The spectacle of U.S. politicians pushing the country to the brink of default is likely to have lingering effects on global financial markets and hence on development, the eleventh-hour compromise notwithstanding. In the near-term, however, the main issue is the U.S. economic slump and the increased likelihood that the world’s biggest economy will fall back into recession. 2 Comments »Restoring U.S. Financial Markets in a Credible Way: Comments on Feldstein and YellenJanuary 27, 2011Posted by Liliana Rojas-Suarez in Capitol Flows/Financial Crisis, Global Development Tags: Capitol Flows/Financial Crisis, China
From January 6-9, I participated in the annual ASSA (Allied Social Science Associations) conference in Denver, Colorado. I was part of a high-level panel discussion with a number of distinguished economists including Janet Yellen, the Federal Reserve’s Vice-Chair; Martin Feldstein, of Harvard University; Andrew Brimmer, former Governor of the Federal Reserve Board; and Alan Krueger, former Assistant Secretary for Economic Policy, among others. The discussion focused on the economic policies undertaken during the Obama administration. Perhaps the most interesting presentations on these issues were given by Yellen and Feldstein. Here I briefly summarize their main points and the comments that I delivered during the panel discussion. Read More… Comment »The Currency War: Risks for Latin America and the Role of Central BanksJanuary 7, 2011Posted by Liliana Rojas-Suarez in Capitol Flows/Financial Crisis, Global Development Tags: BRIC, CLAAF, G-20
During the 13th and 16th of November, the Latin American Shadow Financial Regulatory Committee (CLAAF) held their second meeting of the year in Lima with the purpose of discussing the effect of the currency wars on the Latin American region. As a result of the meeting, we presented the 23rd CLAAF statement. The statement has been extremely well received and broadly covered by the Peruvian press. The members of CLAAF that participated in the meetings were: Comment »Currency Wars Are a Development Problem and the G-20 Has a Major Role to Play in the SolutionOctober 25, 2010Posted by Liliana Rojas-Suarez in Capitol Flows/Financial Crisis, Global Development Tags: Currency Wars, G-20, IMF
Last weekend’s communiqué from the G-20 finance ministers is a first step to bridge the divide in the ongoing currency wars. I find both hope and disappointment in the Communiqué. It is very positive that the G-20 ministers have called for the IMF to help identify countries with policies leading to large and unsustainable imbalances. This is a step in the right direction, although no specific quantitative indicators have yet been advanced. Even better, in my opinion, is the Communiqué’s decision to shift IMF voting powers toward unrepresented developing countries, which would greatly increase the chances of resolving the currency wars. 1 Comment »Intellectual Property Rights at Copenhagen and BeyondDecember 18, 2009Posted by Matt Hoffman in Capitol Flows/Financial Crisis Tags: intellectual property rights, ipAs the United Nations Climate Change Conference in Copenhagen continues, negotiators face a series of unresolved questions. What emissions targets should be agreed to? How much money should be provided to finance mitigation and adaptation in developing countries, and how should these financial flows be governed? Should intellectual property rights be reformed to facilitate the diffusion of low-carbon technologies? Read More… Comment »Banks Raise Risky Holdings under the Eyes of SupervisorsDecember 1, 2009Posted by Liliana Rojas-Suarez in Capitol Flows/Financial Crisis, Financial Crisis, Global Development, International Financial Institutions Tags: Finance, International Financial InstitutionsThe Financial Times published my letter to the editor last week responding to Gillian Tett’s article “Will sovereign debt be the new subprime?” I elaborated on the risks of increasing public debt in the U.S. and other developed countries, and warned that mere perception of an excessive supply of sovereign debt can reduce the real value of that debt. Here’s my letter: Read More… Comment »Coordinate Capital ControlsNovember 25, 2009Posted by Arvind Subramanian in Capitol Flows/Financial Crisis, Economic Development Tags: Capital Flows, IndiaThis op-ed originally appeared in the Business Standard. By Arvind Subramanian / New Delhi November 25, 2009, Around the peak of the global financial crisis, in late November 2008, I wrote a column which concluded: “Some time in the not-too-distant future, when the storm clouds recede, when the rupee is at, say, Rs 50 to the dollar, Indian exports will be hypercompetitive, and Indian growth prospects will be restored to pre-crisis levels of 8-9 per cent. At that stage, capital, attracted by the higher returns, will once again come pouring into India. That is almost certain (Nov. 26, 2008).” Read More… Comment »Cash for Poor Countries, or Another Round of Subprime Lending?November 24, 2009Posted by Todd Moss in Capitol Flows/Financial Crisis, Debt Relief, International Financial Institutions, International Monetary Fund Tags: African Development Bank, IMF, International Financial Institutions, Subprime Lending, World BankThis is a joint post with Benjamin Leo. A special new lending facility was announced in July 2009 with the objective of providing up to $17 billion in new loans through 2014 and, to entice cash-strapped borrowers, the lender is waiving interest payments for the first two years. This may sound like dangerous new short-term teaser offers for sub-prime borrowers. But this isn’t coming from Countrywide Financial. It actually is a new IMF facility for low-income countries, including some of heavily indebted poor countries (HIPCs) who are just barely coming out of the last debt crisis. The stated objectives of the new IMF facility are laudable: to offset the effects of the global economic crisis by boosting international reserves and supporting adjustment policies. And yes, the overall terms are more concessional than past IMF loans. Nonetheless, the net impact on national debt levels may be significant. And it was just four years ago that the IMF committed to cancel roughly $6 billion in bad loans to many of these very same countries. Comment »Yes Bill, No Owen: Why I Still Doubt Aid-Growth RegressionsNovember 5, 2009Posted by David Roodman in Aid Effectiveness, Capitol Flows/Financial Crisis Tags: Foreign Aid, Foreign Assistance[Update: I posted slides from my turn as a discussant for this paper at the Brookings Institution on January 25, 2010.] In the last few days, Bill Easterly and Owen Barder, two respected bloggers who spent time at CGD, looked over a new paper and (at least provisionally) reached opposite conclusions about whether aid has at long last been shown to boost economic growth on average. Also in the last few days, I whacked Bill; now I’ll back him. The new paper by Channing Arndt, Sam Jones, and Finn Tarp (I’ll call them “AJT”) contains two statements I largely endorse:
The first quote says that unless you experiment on poor countries, randomly giving aid to some and not others, you have to make arguable assumptions about the world in order to infer anything from country-level data about whether foreign aid causes growth. The second quote might overreach slightly but is true in spirit: this is an impressively careful analysis. The authors work with a data set from a widely cited paper by Raghuram Rajan and my colleague Arvind Subramanian that concludes that there is no clear evidence of a systematic impact of aid on growth. Reanalyzing, AJT conclude that—on the contrary—it is reasonable to believe that aid worth 1% of a country’s gross domestic product (GDP) raised economic growth by 0.1%/year on average during 1970–2000. That is a small but helpful impact. While I cannot prove AJT wrong, I remain skeptical. In a new CGD paper, Blunt Instruments, Michael Clemens and Samuel Bazzi powerfully express my main concern. I’ve explained it less technically on my microfinance open book blog with reference to studies of the impact of microcredit, and will adapt that writing here. 5 Comments »Belated Reflections from WB-IMF Meetings in Istanbul — What the IFIs Could Learn from the IOCOctober 14, 2009Posted by Nancy Birdsall in Aid Effectiveness, Capitol Flows/Financial Crisis, Cash on Delivery Aid, Financial Crisis Tags: Cash on Delivery Aid, G-20, istanbulSome impressions from the World Bank-IMF meetings, held last week in Istanbul, where the views of the mosques are magnificent and the traffic is truly terrible!
Comment »CGD Task Force Supports IMF Financial Access InitiativeOctober 5, 2009Posted by Liliana Rojas-Suarez in Capitol Flows/Financial Crisis, Financial Crisis, International Monetary Fund Tags: Financial Access, IMF
This timely Dutch-funded initiative provides for the regular collection and sharing of national data on the geographic and demographic reach of financial services. Such data will be invaluable to policymakers around the globe, who increasingly recognize that access to financial services—secure savings, credit, insurance, even such seemingly simple things as checking accounts—is critical to equitable growth and poverty reduction. Read More… Comment »The IMF beyond IstanbulSeptember 30, 2009Posted by Arvind Subramanian in Capitol Flows/Financial Crisis, Global Development, International Financial Institutions, International Monetary Fund Tags: Capital Flows, IMF, International Financial InstitutionsThis post originally appeared in the Business Standard. Wanted: An Asian Managing Director and new approaches to capital flows. The IMF will strike a triumphalist tone at its forthcoming annual meetings in Istanbul. Some of this will be warranted because the IMF’s record in responding to the global financial crisis was commendable, even if its record leading up to it was less stellar (see http://www.iie.com/realtime/?p=942 for more details). Read More… Comment »Birdsall Urges Pittsburgh G-20 Summit to Prepare for Next Global CrisisSeptember 10, 2009Posted by Lawrence MacDonald in Capitol Flows/Financial Crisis, Climate Change, Environment, Global Development, International Financial Institutions, World Bank Tags: G-20, IMF, International Financial Institutions, Poverty, UN, World Bank
1 Comment »The Expanding Role of the Fed and Why It Matters for DevelopmentJuly 27, 2009Posted by Liliana Rojas-Suarez in Capitol Flows/Financial Crisis, Economic Growth, Global Development Tags: Federal Reserve
2 Comments »Birdsall Tells Worried House Subcommittee Why U.S. Support to IMF Makes SenseJune 15, 2009Posted by Sarah Jane Staats in Capitol Flows/Financial Crisis, Global Development Tags: IMF Gold, Nancy Birdsall, On the Hill, Security and Development, World BankIn testimony before the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation and Trade last week, CGD president Nancy Birdsall argued that support for the G-20 commitments to increase lending resources at the IMF is a critical part of ensuring U.S. recovery from the economic crisis and global prosperity and security. She was, however, confronted with a host of concerns about whether multilateral lending would go to governments like Iran, Sudan, and Syria, and with one member of Congress’s view that he “is a citizen of the United States, not the world.” The hearing cast a broad net: “Foreign Policy Implications of U.S. Efforts to Address the International Financial Crisis: TARP, TALF and the G20 Plan.” Other witnesses included Kevin Kearns, president of the U.S. Business and Industry Council; Roger Robinson Jr., president and CEO of Conflict Securities Advisory Group; Damon Silvers, associate general counsel at the American Federation of Labor and Congress of Industrial Organizations; and Terry Miller, director of the Center for International Trade and Economics at the Heritage Foundation. Birdsall’s testimony focused on the G-20 plan and its implications for emerging and developing economies, as well as for the United States. As in previous testimony, Birdsall said that today’s global challenges—disease, human and food insecurity, climate change, and financial crises—do not respect borders; they threaten security globally and at home.
Birdsall also referred to a statement that Tim Adams, former Under Secretary of Treasury for International Affairs, made when they testified before the House Financial Services Subcommittee on International Monetary Policy and Trade last month. Adams said,
Birdsall reminded the subcommittee that many of the recent recipients of International Monetary Fund (IMF) support (e.g. Mexico, Colombia, Poland, and Pakistan) are crucial players in the success or failure of our foreign policy and national security objectives. Birdsall also argued that in addition to the national security and foreign policy implications of the G-20 plan, U.S. recovery from the economic crisis depends not only on the U.S. stimulus, but on sustaining demand abroad, including in emerging and developing-country markets. She explained to the subcommittee that in economic terms, emerging-market and developing economies have driven much of recent world growth:
Birdsall urged members of the subcommittee to support the G-20 commitments currently moving through Congress, and in particular the proposed increase in lending resources for the IMF that have been attached to the war supplemental, but not yet voted on. Congress, however, remains strongly divided over the IMF proposals. The witnesses at this particular hearing, including Birdsall, encountered the type of disdain normally reserved for administration officials defending their own policies, not private guests invited to provide expert opinion on the matters at hand. The range of issues—TARP, TALF, and G-20—gave the members a virtual grab-bag for political grandstanding. My sense is that several members of this particular subcommittee were grumpier than usual because they feel that President Obama’s G-20 commitments bypass Congress’s policymaking and oversight role. It is true that the House really hasn’t had a chance for substantive floor or committee debate on the issues and that this subcommittee lacks direct jurisdiction (or control) over the IMF or World Bank issues. And in the absence of strong outreach and education on the complexities of the IMF and G-20 proposals, the administration’s gamble of attaching the IMF funding to the war supplemental may be backfiring (see this article in the Financial Times). The unfortunate result, however, is that many members of Congress are taking aim at the G-20, and multilateral engagement more broadly, rather than criticizing a flawed process. Bruised egos and flawed processes aside, there are several misconceptions expressed at the hearing that merit response.
More troubling is the refrain of Rep. Donald Manzullo (R-IL) who told the witnesses that he is “a citizen of the United States and not of the world” (apparently a phrase used by Newt Gingrich) and criticized the G-20 communiqué for saying that prosperity is indivisible. Manzullo said “the United States wants to be profitable” and “apparently everything we have to do in this world is to make sure that every third world country and every country has the same prosperity that we do.” Absent from his statements was a recognition, as many of the witnesses tried to convey, that what happens in the rest of the world matters for our own economy and our safety (not to mention the subcommittee’s issues on trade, nonproliferation and terrorism, or some of the largest employers in Manzullo’s district like Hamilton Sundstrand and Ingersoll Machine Tools that happen to be export-dependent manufacturers).
There are strong and compelling cases to be made on these issues, and it’s unfortunate that they are suffering under the weight of bailout fatigue, a panoply of other political hot-button issues, and a risky (but understandable) gamble from the administration on process with Congress. Here’s hoping the Obama administration and others can continue to work with members of Congress on explaining not only the IMF financing mechanisms to dispel concerns over an “IMF bailout,” but also continue to make the case that a more effective, legitimate, and better-resourced IMF is important for the United States’ own recovery from the economic crisis as well as national (and global) security, and that it is not the only mechanism that the United States can and should be using to help emerging and developing countries cope with the current crisis. 1 Comment »G-20 And IMF Rhythms: The Problem Is Not the Direction but the SpeedApril 7, 2009Posted by Nora Lustig in Capitol Flows/Financial Crisis, Global Development, International Financial Institutions Tags: Agriculture, G-20, IMF, International Financial InstitutionsIf the commitments made last week by the heads of state at the G-20 meeting materialize quickly, this is good news indeed. The increase in available IMF and MDB resources for middle- and low-income countries, along with IMF’s announcement of a Flexible Credit Line which will allow countries to borrow amounts without pre-determined limits or conditionality, are crucial for helping these countries cope with the impact of the financial crisis. Increased resources and the right instruments to deliver them can prevent lots of pain for millions of poor people. The mere existence of these options will give many developing country governments more leeway to make counter-cyclical policy responses and reduce the impact of the crisis on economic growth. Read More… 1 Comment »Radelet, Lancaster, and Natsios Call for Autonomous Development Voice at Senate HearingApril 6, 2009Posted by Sarah Jane Staats in Aid Effectiveness, Capitol Flows/Financial Crisis, Global Development Tags: Foreign Aid Reform, HIV/AIDS, MCA, MCC, On the Hill, PEPFAR
3 Comments »G-20 Pledge $1 Trillion for Developing Country Crisis ResponseApril 2, 2009Posted by Lawrence MacDonald in Capitol Flows/Financial Crisis, Global Development, Globalization, International Financial Institutions Tags: G-20, IMF, International Financial Institutions
Comment »Will the Financial Crisis Undermine Support for Market Capitalism in Russia?March 27, 2009Posted by Nora Lustig in Capitol Flows/Financial Crisis, Global Development Tags: Financial Bail-Out, Protectionism, RussiaAs part of CGD’s efforts to track the impact of the financial crisis, I have been leading a series of conference calls to discuss how recent policy responses—or the lack thereof—may affect poor people in the developing world. Our latest call on the prospects for Russia suggests that the government could—and should—do more. Read More… Comment »UN Calls for $1 Trillion Global Stimulus for Developing CountriesMarch 26, 2009Posted by Lawrence MacDonald in Capitol Flows/Financial Crisis Tags: Ban Ki-moon, CGD NoteThere’s a lot to like in UN Secretary General Ban Ki-moon’s call yesterday for the heads of heads of state attending the April 2 London Summit to commit to new measures to help developing countries cope with the global economic crisis. According to an interview reported in today’s Financial Times:
Comment » |
|
|
CENTER FOR GLOBAL DEVELOPMENT
1800 Massachusetts Avenue NW, Third Floor
Washington DC 20036
Tel 202.416.4000 | Fax 202.416.4050
|
|
|
Print
Share
First off, congratulations to Liliana Rojas-Suárez, her co-chairs and members of the 
CGD president Nancy Birdsall urged the United States to exercise leadership at the upcoming G20 Summit in Pittsburgh in a 
In a recent interview on 
Members of the Senate Foreign Relations Subcommittee on International Development held a 
Leaders from more than 20 major nations announced Thursday (
