Asia’s Supply Chain and Global Rebalancing


By Anoop Singh

Much of the debate over global rebalancing has focused on the U.S.-China trade imbalance. But that’s missing the bigger picture.

With the growth of cross-border supply chains—a signature feature of Asia’s trade in recent decades—it would be misleading to focus on bilateral imbalances and exchange rates.

Instead of specializing in producing certain types of final goods, Asian exporters increasingly have specialized in certain stages of production and become vertically integrated with each other. So, as Asia’s economies strive to rebalance their growth models, we need to understand better how the regional supply chain affects the way exchange rates and shifts in global demand work. Continue reading

Subsidies—Love Them or Hate Them, It’s Better to Target Them


By Masood Ahmed

(Version in عربي)

For decades, countries in the Middle East and North Africa have relied heavily on food and fuel price subsidies as a form of social protection. And, understandably, governments have recently raised subsidies in response to hikes in global commodity prices and regional political developments.

Like many things, there may be a time and a place for using subsidies.But, they need to be better targeted. And, often, there will be better alternatives. Alternatives that do a better job of protecting the poor. Continue reading

BRICs and Mortar—Building Growth in Low-Income Countries


By Dominique Desruelle and Catherine Pattillo

(Versions in 中文PortuguêsEspañol,  Русский)

The so-called BRIC nations—Brazil, Russia, India and China—could be a game changer for how low-income countries build their economic futures.  

The growing economic and financial reach of the BRICs has seen them become a new source of growth for low-income countries (LICs).

LIC-BRIC ties—particularly trade, investment and development financing—have surged over the past decade. And the relationship could take on even more prominence after the global financial crisis, with stronger growth in the BRICs and their demand for LIC exports helping to buffer against sluggish demand in most advanced economies.

The potential benefits from LIC-BRIC ties are enormous.

But, so too are challenges and risks that must be managed if the LIC-BRIC relationship to support durable and balanced growth in LICs. Continue reading

Seven Pillars of Prosperity—Diversifying Economic Growth in the Caucasus and Central Asia


By David Owen

(Version in Русский)

Medium-term economic growth prospects in the Caucasus and Central Asia region are strong. But, to secure ongoing prosperity, the eight countries of the region—Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—will need to look beyond traditional sources of growth.

The challenge for policymakers will be to foster new and more diverse growth drivers, outside mining, oil, and gas.

There are seven policy pillars that can help them do that: Continue reading

Does Foreign Exchange Intervention Slow the Pace of Currency Appreciation?


By Gustavo Adler and Camilo E. Tovar

(Version in Español)

Abundant global liquidity and high exposure to capital movements have put foreign exchange intervention at center stage of the policy debate in Latin America. Although intervention is widely used, there is limited evidence about its effects on the exchange rate, and particularly in terms of slowing the pace of currency appreciation.

In the latest Regional Economic Outlook: Western Hemisphere we took a fresh look at this issue, examining intervention practices and effectiveness for a group of economies in Latin America and other regions during 2004-10. In particular, we sought to answer the following questions:

  • How do Latin American countries intervene and in what respects do they differ from other economies?
  • What are the rationales for these policies?
  • How effective have they been in affecting the exchange rate?  Continue reading

Confessions of a Dismal Scientist—Africa’s Resilience


By Abebe Aemro Selassie

(Version in Français)

Like many economists, I tend to fear the worst. I have witnessed phenomenal changes for the better in sub-Saharan Africa over the past 20 odd years. Part of me still worries that this trajectory will not endure. But, the more I see of the region’s economic performance and outlook, the more I’m changing my tune.

Old anxieties set aside

Until my latest source for anxiety took hold a few months ago (more on this in a moment), I’d worried about the impact of the global financial crisis on sub-Saharan Africa. The crisis hit just as many countries in the region were starting to enjoy a hard-earned period of economic growth, their best since at least the 1970s. I did not want this to be derailed by the crisis. Continue reading

Rethinking Economic Principles: Join the Debate


By iMFdirect

The global financial crisis caused immense hardship and suffering all over the world. To prevent a repeat, we need to rethink…

… what we know about economic theory …. We need to rethink, following this, the policies … coming from the analytical work. And then we will need also to rethink multilateralism.

IMF Managing Director Dominique Strauss-Kahn (April 16, 2011)

A wholesale reexamination of macroeconomic principles in the wake of the crisis was the goal of a conference at the IMF in early March.

But, for Olivier Blanchard and others, the conference was merely “the beginning of a conversation, the beginning of an exploration.”

Here is our list of recommended reads to help you be part of the conversation. Continue reading

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