Posted on March 7, 2017 by iMFdirect
By Emine Boz, Luis Cubeddu, and Maurice Obstfeld
Versions in عربي (Arabic), 中文 (Chinese), Français (French), 日本語 (Japanese), Русский (Russian), and Español (Spanish)
Basic economic theory tells us that capital should flow from slow-growing rich countries to faster-growing poor ones in search of higher returns. A decade ago, our former Research Department colleagues Eswar Prasad, Raghuram Rajan, and Arvind Subramanian examined why the reverse had been true—capital generally flowed “uphill” from poorer to richer countries. Building on the seminal work of Robert Lucas, they argued that certain characteristics of poorer countries, such as weaker institutions and lower levels of education, may reduce the risk-adjusted returns to investing there. Continue reading
Filed under: Advanced Economies, capital flows, capital markets, China, developing countries, Economic outlook, Economic research, Emerging Markets, exchange rates, IMF, Investment, U.S. | Tagged: advanced economies, capital flows, China, developing economies, domestic saving, emerging economies, exchange rate flexibility, foreign exchange reserves, global capital allocation, IMF, iMFdirect blog, investment climate, Maurice Obstfeld, monetary policy, protectionism, United States | Leave a comment »
Posted on October 25, 2010 by iMFdirect
By Anoop Singh
Continuing my travels through Asia for the launch of our October 2010 Regional Economic Outlook: Asia and Pacific, I am writing to you today from Singapore. In my last post, I focused on the near-term outlook and challenges for Asia. Today, I turn to the key medium-term challenge—the need to rebalance economies in the region away from heavy reliance on exports by strengthening domestic sources of growth. This is against a backdrop of the need to rebalance global growth that was emphasized over the weekend by the ministers of the Group of Twenty industrialized and emerging market countries.
Heavy reliance, arguably over-reliance, on exports is a common challenge across Asia. Yet, the policies to address it will differ among the countries in the region. Much of the public discussion focuses on ways to increase consumption, and this is something the IMF has written about extensively in the past. But the role of investment in rebalancing growth is equally important and something that should not be overlooked. Continue reading
Filed under: Asia, Economic outlook, IMF, International Monetary Fund | Tagged: ASEAN, Asian financial crisis, Association of Southeast Asian Nations, business environment, consumption, economic rebalancing, financial infrastructure, foreign investment, G-20, investment, investment climate, medium-term challenge, newly industrialized economies, private domestic demand, public-private partnerships, rebalance global economy, Regional Economic Outlook: Asia and Pacific | 1 Comment »
Posted on May 18, 2010 by iMFdirect
By Anoop Singh
As I have highlighted in previous posts, Asia has been leading the global recovery and it is expected to continue doing so in the near term.
Not only has Asia’s rapid growth helped output return to pre-crisis levels relatively quickly, it has attracted large capital inflows into the region. Foreign capital has poured in, attracted by Asia’s strong fundamentals and bright growth prospects. Portfolio and cross border banking flows have rebounded sharply as financial conditions normalized.
Looking ahead, our growth projections suggest that Asia is expected to outperform advanced countries. As a result, the region is likely to continue to attract significant capital inflows, assuming that fallout from the euro zone sovereign debt crisis is contained and that the recent spike in global risk aversion abates.
Filed under: Asia, Economic Crisis, Economic research, Financial Crisis, IMF | Tagged: capital inflows, China, debt crisis, domestic demand, foreign investors, Hong Kong, infrastructure development, investment climate, labor market, price bubbles, property prices, risk aversion | 1 Comment »