Make the Most of What You’ve Got: Small States in the Spotlight


Min ZhuBy Min Zhu

The economies of small states have unique features. They have relatively higher costs, higher public spending needs, and more volatile economies. And their growth has not matched the improved economic performance of the rest of the world since the late 1990s, despite their many efforts over the years. We wanted a better grasp of why this is so we can better tailor our advice and support. Here is what we found.

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Lively Debate on the Dead Sea Shores


By Nemat Shafik

(Version in عربي)

 I’ve been in Jordan this weekend, attending a vibrant meeting of the World Economic Forum on jobs and growth in the Middle East. I participated in a panel on employment with Queen Rania, and I’d like to share some of the ideas generated during that discussion and at the meeting more generally.

The atmosphere was both cautious and optimistic—cautious because of the growing risk of the downturn in advanced economies (particularly Europe) spreading to the region, and optimistic because of the recent political gains in both Libya and Tunisia in particular.

 One of my biggest (and heartening) takeaways was that there were more young people bubbling with ideas and entrepreneurial spirit (ready to take risk) than ever before at this regional forum—which reflects a growing recognition of their current role in the Arab Spring and the role they will have to play in the future as drivers of economic change.

 Creating jobs for the young and growing population in the Middle East and North Africa remains the dominant topic. Here on the Dead Sea, it’s jobs, jobs, jobs that are still on everybody’s mind. And it’s clear that there’s a tension between the high hopes for a better future in the long term and the impatience and frustration with difficulties and challenges in the short term. Continue reading

Toughing It Out: How the Baltics Defied Predictions


By Christoph Rosenberg

Two years ago, the eyes of the financial world were not on Europe’s Western periphery but on its North-Eastern corner. The three Baltic states—Estonia, Latvia and Lithuania—were among the first victims of the global financial crisis.

After a spectacular boom, with several years of Chinese-style growth rates, these small and open economies faced an equally spectacular bust. Credit―and with it property prices, consumption, and investment―collapsed. Exports were hit by the global depression. And the financial sector came under severe stress. Indeed, Latvia was forced to nationalize its largest domestic bank and had to ask for a bailout from the European Union and the IMF.

The conventional wisdom at the time was that these three countries would have to give up their long-standing currency pegs against the euro and devalue. After all, this is what countries facing a trade and financial shock most often choose to do.

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