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Commodity Boom: How Long Will It Last?
Finance and Development Volume 45, Number 1 Mar/May 2008
This issue dissects the fears and apprehensions that small, poor countries have when it comes to engaging in the world trading system. With the Doha Development Round at a critical juncture, developing countries must decide whether to fight to keep their preferential trade access to a few key developed country markets or engage in multilateral liberalization. Other articles look at how the IMF must change to stay relevant in the 21st century; and how improving the investment climate is key to economic growth. In The Book Review Section, Nancy Birdsall and Moises Naim debate Sebastian Mallaby's controversial book about the World Bank and its president, James Wolfensohn. Finally, People in Economics tells the story of Bodil Nyboe Andersen, Denmark's central bank governor.
Blood Barrels
Michael Ross (Foreign Affairs) May/June 2008
The world has grown much more peaceful over the past 15 years -- except for oil-rich countries. Oil wealth often wreaks havoc on a country's economy and politics, helps fund insurgents, and aggravates ethnic grievances. And with oil ever more in demand, the problems it spawns are likely to spread further.
Fuel Choices, Food Crises and Finger-Pointing
NYT Apr 15, 2008
Biofuels are fast becoming a new flash point in global diplomacy, putting pressure on Western politicians to reconsider their policies.
Delta and Northwest in $3 Billion Deal
NYT Apr 15, 2008
The boards of Delta Air Lines and Northwest Airlines announced a deal late Monday that will create the world's biggest airline and probably trigger other airlines to pursue mergers of their own.
Oil prices surge to a new high
IHT Apr 15, 2008
Oil rose past $114 a barrel at one point on Tuesday, as pipeline interruptions and a weak dollar pressured a tight global market.
India's Game, U.S. Spice
Tunku Vandarajan (NYT) Apr 15, 2008
How paradoxical, and delightful, that Bangalore, a city that has leapt to global prominence on the back of work outsourced by America, is now itself outsourcing from America.
White-Collar Outsourcing: Myth Vs. Reality
Jacob Kirkegaard (Globalist) Apr 15, 2008
Are white-collar jobs in the United States as imperiled as blue-collar jobs?
Enough With the Interest Rate Cuts
Martin Feldstein (WSJ) Apr 15, 2008
At this point they're only fueling inflation and political instability around the world.
Why financial regulation is both difficult and essential
Martin Wolf (FT) Apr 15, 2008
A voluntary banking code is almost certainly not worth the paper it is written on. If regulation is to be effective, it must cover all relevant institutions and the entire balance sheet and, not least, it must make finance less pro-cylical.
Marching Backward On Trade
Robert J. Samuelson (WP) Apr 16, 2008
On trade, many Democrats -- and some Republicans, too -- are fighting the last war.
A modest proposal for preventing world famine
Victor Mallet (FT) Apr 16, 2008
You do not need to be a neo-Malthusian to worry about the demands of a global population rising by 80m a year.
NAMA Chair: Members Finally Getting Ready For "A Real Negotiation"
BRIDGES Weekly Trade News Digest - Vol. 12, Number 13 Apr 16, 2008
WTO Members are still far from agreement on how to cut tariffs on manufactured goods, the chair of the Doha Round negotiations on non-agricultural market access acknowledged this week.
Global: Diverging Policy Paths
Joachim Fels & Manoj Pradhan (MSDW) Apr 17, 2008
Monetary policy paths are still diverging, with a major dichotomy between EM central banks – especially in EMEA and, to some extent, Latin America – battling against strong inflation pressures on the one hand and advanced economies affected by housing slowdowns and the financial crisis on the other.
Membership Has Its Privileges
Fredrick Erixon & Brian Hindley (WSJ) Apr 17, 2008
Ukraine became the latest former Soviet republic admitted to the World Trade Organization in February, joining the Baltics, Georgia, Moldova and Kyrgyzstan. These states have embraced open trade and market-oriented economic policies – and, in WTO membership, the best available guarantee that those policies will be maintained. All the other former Soviet states are still trying to show that they belong in the club (except for Turkmenistan, which has not applied for membership).
Krugman's conundrum
Economist Apr 17, 2008
The elusive link between trade and wage inequality.
Across Globe, Empty Bellies Bring Rising Anger
NYT Apr 18, 2008
Global food prices are spiraling out of reach, sowing volatile levels of discontent and putting new pressures on fragile governments.
Eight hundred years of financial folly
(VoxEU) Apr 19, 2008
In the context of the last thirty years, the present period appears to be unlikely to produce a wave of sovereign debt defaults. But a new database spanning eight centuries reveals that history has many lessons for those studying financial crises. Contrary to conventional wisdom, today may not be very different.
Commodities and speculation: metallic (and other) evidence
Paul Krugman (NYT) Apr 20, 2008
We’ve had a huge runup in commodity prices — fuels, food, metals. But why? Broadly, the debate is between those who see it as a speculative phenomenon, driven by some combination of low interest rates and irrational exuberance, and those who see it as a collision of rapidly growing demand with constrained supply.
Global approach required to tackle food prices
Dominique Strauss-Khan (FT) Apr 20, 2008
Completing the Doha round is critical as it would reduce trade barriers and encourage agricultural trade.
Now is the time to reduce international trade and migration barriers
Kym Anderson & L Alan Winters (VoxEU) Apr 21, 2008
Current prospects for liberalisation of barriers to international trade and migration seem dim. In this column, the authors of the Copenhagen Consensus paper on global economic integration outline the magnitude of the gains that politicians are opposing.
Where's the Beef?
WSJ Apr 21, 2008
The only thing holding up a U.S.-Korea free-trade agreement is Democratic pandering.
Currencies: Q&A on the Reserve Currency Status of the USD
Stephen Jen (MSDW) Apr 21, 2008
We still see the USD likely remaining the dominant international currency for the foreseeable future. The most likely challengers to the USD will be the CNY or an Asian currency unit centred on the CNY. But the key precondition is that Asia manages to develop its financial markets.
Currencies: A Sibling Rivalry: Central Banks versus SWFs
Stephen Jen (MSDW) Apr 21, 2008
Nobody likes to have money taken from them, especially hundreds of billions of US dollars. Competition will likely grow between central banks and SWFs of the same countries regarding management of foreign assets. This should be unambiguously positive for global risky assets, particularly developed market equities.
Another BRIC in the wall
Economist Apr 21, 2008
The perils of overestimating emerging markets.
A turning point in managing the world's economy
Martin Wolf (FT) Apr 22, 2008
How do we persuade citizens the rise of the emerging countries, the brightest story of our era, is to be welcomed.
Next-Door Neighbors Back Bush on Expanding Trade
NYT Apr 23, 2008
Canada and Mexico lent their weight to President Bush's campaign to expand free trade within the framework of Nafta.
High Food Prices Leave Developing Countries Struggling to Cope
BRIDGES Weekly Trade News Digest - Vol. 12, Number 14 Apr 23, 2008
For over six years, negotiators from governments around the world have been haggling over cuts to farm subsidies and barriers to agricultural trade in talks at the WTO. Competitive exporters seeking greater liberalisation have met stiff opposition from countries determined to protect their farm sectors from the full force of international competition. The wrangling continues, as WTO Members push for a deal in the troubled Doha Round of global trade talks.
TNC: Lamy Says Horizontal Process "Coming Soon," But When?
BRIDGES Weekly Trade News Digest - Vol. 12, Number 14 Apr 23, 2008
WTO Director-General Pascal Lamy said last week that "solid progress" since February meant that governments were "now much closer to the finish line" in the troubled Doha Round talks. Nevertheless, it remains unclear whether ministers from around the world will be in a position to hammer out a framework global trade deal by the second half of May.
Globalization's Aftershocks
Temma Ehrenfeld (Newsweek) Apr 23, 2008
Lack of regulation allows the underworld to flourish, undermining globalization's advantages.
Better Roses Than Cocaine
Nicholas Kristof (NYT) Apr 24, 2008
For seven years, Democrats have rightfully complained that President Bush has gratuitously antagonized the world, exasperating our allies and eroding America’s standing and influence.
Trichet says U.S. needs to support dollar 'more than ever'
IHT Apr 24, 2008
The comments from the ECB chief came on the same day that surveys showed that German and French business morale fell sharply in April, depressed by high oil prices, a strong euro and market turmoil.
Food prices: The need for insurance
Esther Duflo (VoxEU) Apr 25, 2008
Rising food prices are hurting many poor people, but they are helping poor agricultural producers. Food price volatility, on the other hand, is bad for everyone. This column explains poor people’s need for food price variability insurance.
Why this crisis is still far from finished
Mohamed El-Erian (FT) Apr 25, 2008
Financial dislocations have now caused the real economy to become, in itself, a source of potential disruption.
Food and Free Trade
Nancy Birdsall & Arvind Subramanian (WSJ) Apr 25, 2008
How rising prices relate to trade barriers.
Currencies: Foreign Official Reserves Could Reach US$8 Trillion by Year-End
Charles St-Arnaud (MSDW) Apr 25, 2008
The world’s official reserves have now reached a level of US$6.6 trillion, and have grown by about 25% over the last year. At this rate, they could easily breach the US$8 trillion mark before the end of 2008. Japan has breached the US$1 trillion level in reserves and Russia could follow in about two years.
Deadly Greed: The Role of Speculators in the Global Food Crisis
Beat Balzli and Frank Hornig (Spiegel Online) Apr 25, 2008
Profit-takers in the commodities markets shrug about food riots and starvation.
In EU, free traders and protectionists set up for clash
IHT Apr 25, 2008
The way the European Union draws up its trade policy baffles many outsiders, and it is about to get more complicated when new powers are granted to the European Parliament.
Stem Rust Never Sleeps
Norman E. Borlaug (NYT) Apr 26, 2008
With food prices soaring throughout Asia, Africa and Latin America, and shortages threatening hunger and political chaos, the time could not be worse for an epidemic of stem rust in the world’s wheat crops. Yet millions of wheat farmers, small and large, face this spreading and deadly crop infection.
The New Economics of Hunger
WP Apr 27, 2008
A brutal convergence of events has hit an unprepared global market, and grain prices are sky high. The world's poor suffer most.
Is Trade the Problem?
NYT Apr 27, 2008
Blaming Nafta and other trade agreements for American workers' pain may play well on the campaign stump. But it will not solve the country's economic problems.
What keeps Zhou Xiaochuan up at night
Brad Setser (RGE monitor) Apr 27, 2008
Friday’s Lex column highlighted the possibility that China’s real reserve growth may be far higher than the published increase in its reserves – and thus a lot more hot money may be flowing into China than the published increase in China’s reserves implies. Michael Pettis – drawing on the work of Logan Wright of Stone and McCarthy - and I have both published online estimates of the “true” pace of Chinese reserve growth. Wang Tao – formerly of the Bank of America – and Stephen Green of Standard Chartered have done similar work.
Global adjustment will be long and painful
Wolfgang Münchau (FT) Apr 27, 2008
Beware multiple crises could easily return like a bloodstained villain in a horror movie who rises to fight his last battle.
America needs to make a new case for trade
Lawrence Summers (FT) Apr 27, 2008
Since the end of the second world war, American economic policy has supported an integrated global economy, stimulating development in poor countries... Yet America’s commitment to internationalist economic policy is ever more in doubt.
Market power and trade policy
Bruce Blonigen (VoxEU) Apr 28, 2008
Though policymakers show great concern for market power when discussing antitrust policy, they neglect it when designing trade policies. This column summarises recent empirical research showing that some trade barriers impose significant costs on consumers by substantially raising the market power of domestic firms.
Saudis to launch $5.3bn sovereign fund
FT Apr 28, 2008
Saudi Arabia's Public Investment Fund is in the "final stages" of launching the kingdom's first sovereign wealth fund. But its early financial commitment will disappoint those hoping for another megafund.
Opec says oil could hit $200
FT Apr 28, 2008
Opec's president warned oil prices could hit $200 a barrel and there would be little the cartel could do to help.
Dollar hits two-month high against yen
FT Apr 28, 2008
The dollar hit a two-month high against the yen and held on to last week's sharp gains against the euro amid speculation that the Federal Reserve was approaching the end of its interest rate cutting cycle.
Do not panic over foreign wealth
Gideon Rachman (FT) Apr 28, 2008
The trouble is that legitimate caution about sovereign wealth funds could easily spill over into illegitimate hysteria. Foreign investment is still a subject that is exploited by demagogues, from the US to France to India.
Free school breakfasts in Cambodia threatened by rising rice prices
IHT Apr 28, 2008
Short of cash and facing huge increases in the price of rice, the United Nations agency that feeds the world's poorest people can no longer supply 450,000 Cambodian children with free breakfasts.
IMF Works With Vulnerable States on Food Price Policies
IMF Survey Apr 28, 2008
The IMF is working with vulnerable member countries to assess and respond to the fiscal, balance-of-payments, and income effects of higher food and commodity prices. Several countries have also asked for extra financial support to cover higher food import costs.
The lifecycle of regions
David B. Audretsch, Oliver Falck, Maryann P. Feldman & Stephan Heblich (VoxEU) Apr 29, 2008
Economic geography models suggest various relationships between innovation and spatial concentration, from benefits of diversity in cities to agglomeration gains in specialised industrial parks. This column summarises empirical research that uses these theories to explain various stages of “regional lifecycles.” An important result is that supra-national EU policymakers are poorly positioned to address regions’ differing needs.
IMF Reform Secures Backing By Wide Margin
IMF Survey Apr 29, 2008
The IMF's Board of Governors has adopted by a wide margin far-reaching reforms of the institution's governance, supporting measures to increase the voting shares of a majority of the 185 member countries.
Food crisis is a chance to reform global agriculture
Martin Wolf (FT) Apr 29, 2008
Nobody knows how long these shocks will last, but they demand rapid policy changes across the globe. We must choose between fragmenting markets further and integrating them, between helping the poor and letting even more starve.
Four mega-dangers international financial markets face
Dennis J Snower (VoxEU) Apr 30, 2008
Financial regulation never works the way it should. Here one of the world’s most experienced analysts of the global financial system presents some remarkably clear thinking on why we should not just do more of the same. An alternative model for policy action is proposed.
How Europe can shape the global system
Zaki Laïdi (FT) Apr 30, 2008
We need to focus on the issues where the bloc can make a difference, rather than thinking in terms of a superstate.
Agriculture Negotiators Ask for More Time, Extending Push for Modalities Deal
BRIDGES Weekly Trade News Digest - Vol. 12, Number 15 Apr 30, 2008
The release of a key negotiating text in the Doha Round farm trade talks has been postponed until mid-May, as delegates have asked for more time to try to resolve differences on certain specific issues in the troubled negotiations.
Global Push to Tackle Food Crisis
BRIDGES Weekly Trade News Digest - Vol. 12, Number 15 Apr 30, 2008
In an attempt to address the global crisis over high food prices, UN Secretary-General Ban Ki-moon has set up a special task force drawing on 27 international agencies, including UN bodies as well as the WTO and World Bank.
Reinventing Energy
Jeffrey D. Sachs (Project Syndicate) May 2008
The world economy is being battered by sharply higher energy prices. While a few energy-exporting countries in the Middle East and elsewhere reap huge profits, the rest of the world is suffering as the price of oil has topped $110 per barrel and that of coal has doubled.
The financial turmoil has been worsening as lagged adjustment processes play out. This column outlines economic dangers that may arise as they unwind, including a scenario in which the United States suffers extended stagflation.
Can Green Trade Tariffs Combat Climate Change?
Robert Collier (Project Syndicate) May 2008
In recent months, China has taken center stage in the international debate over global warming. It has surpassed the United States as the world’s largest source of greenhouse gases, and it became developing nations’ diplomatic champion at the recent United Nations climate negotiations in Bali. Now China may become the target of a full-fledged trade war that could destroy – or perhaps rescue – the chances of bringing rich and poor nations together to fight global warming.
Lemon Banking
Hans-Werner Sinn (Project Syndicate) May 2008
After the 1982 debt crisis, the Savings & Loan crisis in the United States in the late 1980’s, and the Asian financial crisis of 1997, the sub-prime mortgage crisis is the fourth major banking crisis since World War II, and by far the biggest. According to the IMF, the total loss in terms of balance sheet write-offs will be nearly $1 trillion worldwide, of which the lion’s share probably will be borne by US financial institutions. Given that the combined equity capital stock of all US financial institutions is roughly $1.2 trillion dollars, this is a breathtaking sum.
The End of Banks?
Xavier Vives (Project Syndicate) May 2008
Are banks doomed as a result of the current financial crisis? The securitization of mortgages originally was seen as a triumph, because it shifted risk to financial markets, while taking deposits and making and monitoring loans – the purview of traditional banks – was regarded as narrow and old-fashioned. By contrast, modern banks would seek finance mainly in the interbank market and securitize their loan portfolios.
The IMF’s Overlooked Revolution
Augustin Carstens (Project Syndicate) May 2008
As the turmoil swirling through global financial markets continues, there is a growing realization that global economic problems require global solutions and improved global governance. This March, amid the latest financial twists and turns, a significant achievement in this regard went largely unnoticed: an agreement by the executive board of the International Monetary Fund on a new quota formula and increases in quotas for under-represented members, particularly emerging-market and developing countries.
In recent months, China has taken center stage in the international debate over global warming. It has surpassed the United States as the world’s largest source of greenhouse gases, and it became developing nations’ diplomatic champion at the recent United Nations climate negotiations in Bali. Now China may become the target of a full-fledged trade war that could destroy – or perhaps rescue – the chances of bringing rich and poor nations together to fight global warming.
The inappropriateness of financial regulation
Avinash Persaud (VoxEU) May 1, 2008
Microfinance and the Food Crisis
David Apgar (Globalist) May 1, 2008
How will food price inflation affect the effectiveness of microfinance institutions?
In Search of the Global Customer
David Apgar (Globalist) May 1, 2008
How can microfinance help solve one of the thorniest development problems facing the world today?
International Working Group of Sovereign Wealth Funds is Established to Facilitate Work on Voluntary Principles
IMF May 1, 2008
From April 30-May 1, 2008, representatives of Sovereign Wealth Funds (SWFs) met at IMF Headquarters in Washington, D.C. The meeting facilitated a useful exchange of views among the SWFs, recipient countries, and representatives from the Organization for Economic Cooperation and Development (OECD) and the European Commission. Participants agreed that SWFs invest on the basis of economic and financial risk and return related considerations. An International Working Group of Sovereign Wealth Funds (IWG) was formally established by the meeting to present by October 2008 a set of SWF principles that properly reflects their investment practices and objectives.
Euro shows signs of end to bull run
FT May 1, 2008
Speculation that the single currency's seven-year run was coming to an end intensified as it fell to five-week lows against the dollar and the pound.
Clever conceits cannot hide the world's jagged edges
Philip Stephens (FT) May 1, 2008
You can always find some analogy or other from the past that can be said to illuminate the here and now. Yet upheavals in the global system since 1989 – the most profound for at least a century – are not susceptible to neatness.
Bush Seeks More Food Aid for Poor Countries
NYT May 2, 2008
President Bush on Thursday proposed an additional $770 million in emergency food assistance for poor countries, responding to rising food prices that have brought social unrest in several nations.
Global: The Inflation Conundrum
Joachim Fels & Manoj Pradhan (MSDW) May 2, 2008
Everybody talks about inflation, but market-based measures of inflation expectations have remained remarkably stable. We find this discrepancy between what investors talk about and what they seem to do puzzling. We discuss two possible explanations for this conundrum.
A strategy to promote healthy globalisation
Lawrence Summers (FT) May 4, 2008
US international economic policy needs to focus on issues in which the largest number of Americans have the greatest stake.
End-of-the-World Trade
The Financial Crisis: An Interview with George Soros
Donald MacKenzie (LRB) May 8, 2008
Last November, I spent several days in the skyscrapers of Canary Wharf, in banks’ headquarters in the City and in the pale wood and glass of a hedge fund’s St James’s office trying to understand the credit crisis that had erupted over the previous four months. I became intrigued by an oddity that I came to think of as the end-of-the-world trade. The trade is the purchase of insurance against what would in effect be the failure of the modern capitalist system. Read more
George Soros & Judy Woodruff (NYRB) May 15, 2008
The following is an edited and expanded version of an interview with George Soros, Chairman, Soros Fund Management, by Judy Woodruff on Bloomberg TV on April 4.
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