News and Analysis: 11-22 Oct 10 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 22 Oct 10:

Currency skirmishes as US pushes plan at G20 meeting: G20 finance ministers and central bankers opened a 2-day meeting in SKorea, stalked by warnings of an all-out 'currency war' between debtor nations such as the US and export powerhouses such as China. The rhetoric has become heated as the G20 prepares for a Seoul summit next month. Meanwhile the decision of Brazil and Indonesia to skip this ministerial meeting has raised questions about the forum's effectiveness in tackling the currency question, and a range of nations have begun imposing their own controls to limit a tidal wave of capital entering their markets, Ag. France-Presse (courtesy ChNewsAsia/ S'pore), 22 Oct 10

Boosting demand, investment keys to Asian rebalancing: Ensuring stable growth in the post-crisis world economy will require a rebalancing of econ activity in several different nations. In Asia's export-dependent economies, this entails relying more on private domestic demand as a driver of growth. While some nations need to raise consumption, several nations need to raise investment or reorient it from exports to domestic-oriented sectors, IMF Survey Mag, 21 Oct 10 (Consolidating recovery, building sustainable growth in Asia | Robust recovery, rising risks: Large capital inflows present new policy challenges, World Bank, 19 Oct)

Joseph Stiglitz: The Federal Reserve's relevance test--With interest rates near zero, the US Fed and other central banks are struggling to remain relevant. The last arrow in their quiver is called quantitative easing (QE), and it is likely to be almost as ineffective in reviving the US economy as anything else the Fed has tried in recent years. Worse, QE is likely to cost taxpayers a bundle. Meanwhile, as investors look outside the US for higher yield, the flood of money out of the dollar has bid up exchange rates in emerging markets around the world, says Nobel Laureate '01/ Columbia U prof, Proj Syndicate (courtesy Burma Digest), 6 Oct 10

Posted on Wed, 20 Oct 10:

China's rate hike complicates bid to control yuan: China's 1st rate hike since '07 has laid bare official fears over surging prices but could also complicate Beijing's controversial efforts to keep a lid on its currency, analysts said. The move announced by the central bank late Tue caught global markets by surprise and came before a meeting this week of G20 finance ministers in SKorea, where currency frictions are expected to loom large. Rising inflation and soaring property prices forced the gov't to hike lending and deposit rates by 25 basis points each, after a range of previous measures introduced this year proved inadequate, analysts said, News agency (courtesy Economic Times/ India), 20 Oct 10

Coffers: Your next money-making opportunity is in the last place you'd think to look--Last month, a group of Goldman Sachs strategists predicted that the next 20 years will see the total equity capitalization of emerging markets soar from $14 tril. today - about the same value as all listed US companies - to $80 tril., a change that will prompt a land grab for assets across the developing world. Failed economies will become frontier ones before graduating to emerging markets status, while established emerging markets such as SKorea and Brazil come to be seen as fully developed, Business Week, 14 Oct 10 (Emerging markets equity in 2 decades - A changing landscape, Goldman Sachs, Sep '10 [courtesy Google Docs, w/ exec sum])

Overall African governance scores driven by gains in econ/ human development but undermined by democratic recession: The 2010 Ibrahim Index shows recent gains in many nations in human/ econ development but declines in political rights, personal safety and the rule of law. The index assesses the delivery of public goods and services to citizens by govts and non-state actors across 88 indicators. The top 3 scorers are Mauritius, Seychelles and Botswana. The index is Africa's leading assessment of governance, established to inform and empower the continent's citizens and to support gov'ts, parliaments and civil society to assess progress, Mo Ibrahim Foundation, 4 Oct 10 (Top 10)

Posted on Mon, 18 Oct 10:

Global Hunger Index top 10 - Which nations have reduced hunger most?: The Global Hunger Index released Mon finds that many developing nations primarily in South Asia and Latin America have made significant progress in reducing hunger. But continued improvement in the rates of hunger - and in addressing the development problems that result from hunger - depends on a universal focus on early childhood nutrition. The index is a nation-by-nation report card issued to correspond with World Food Day on 16 Oct. Two int'l poverty/hunger-reduction nongov't orgs, Germany's Welthungerhilfe and Ireland's Concern Worldwide, team up with Int'l Food Policy Research Inst to deliver the annual snapshot of global hunger, CSMonitor, 11 Oct 10 (2010 Global Hunger Index)

Charles Ferguson: Larry Summers and the subversion of economics--The Obama admin recently announced that Summers is resigning as director of the National Economic Council and will return to Harvard early next year. His imminent departure raises several questions: Who will replace him? What will he do next? But more important, it's a chance to consider the hugely damaging conflicts of interest of the senior academic economists who move among univs, gov't and banking, says director of the new documentary "Inside Job" and the '07 docu "No End in Sight: The American occupation of Iraq", Chronicle of Higher Educ Review, 3 Oct 10 ; and

Frederic Mishkin: The economist’s reply to the "Inside Job"--"You ought to be in pictures" is something no one has ever said to me. And as one of a number of economists making uncomfortable cameo appearances in the new Hollywood docu, "Inside Job", I now know why. In July '09, I agreed to be interviewed on camera for a film that was presented to me as a thoughtful examination of the factors leading up to the '08 global econ collapse. About 5 minutes after the microphone was clipped to my lapel, however, it became clear that my role was predetermined - and I would not be wearing a white hat, says fmr Federal Reserve Board member/ Columbia U prof, Economists' Forum at FT, 8 Oct 10 (Filmmaker Ferguson replies | Sony Pictures Classics--Inside Job)

Posted on Fri, 15 Oct 10:

B Eichengreen and D Irwin: How to prevent a disruptive currency war--Three years into the financial crisis, one might think that the world could put Great Depression analogies behind it. But they are back with more force than ever. Now the fear is that currency warfare, leading to tariffs and retaliation, could cause disruptions to the int'l trading system as serious as those of the 1930s. There's good reason to worry, say economists at UC-Berkeley and Dartmouth College, Proj Syndicate (courtesy Japan Times), 15 Oct 10

A new foreign direct investment (FDI) boom remains a distant prospect: As gov'ts are gradually winding down stimulus packages and in some cases reducing public investment in the face of mounting deficits and debt levels, private investment in the form of FDI does not appear ready to step up to the plate. Global FDI flows actually declined again in the 2nd qtr of '10, after 4 qtrs of low-level recovery in the wake of the financial crisis. Developing and transition economies continued to outperform industrial economies in terms of absolute value of FDI inflows, Unctad Global Investment Trends Monitor, 14 Oct 10 [PDF]

Field Trip: Spanish galleon replica sails into Yilan County's Wushi harbor--A Spanish replica of a 17th century galleon sailed into Wushi harbor in northeastern Taiwan. Constructed by Seville-based Nao Victoria Foundation, the ship visited Malta, Israel, Egypt, Sri Lanka and Singapore before appearing at the Shanghai Expo, Taiwan Today, 21 Sep 10 (Slideshows at M&C and People's Daily | Manila-Acapulco Galleon Trade at NY Metropolitan Museum of Art and the US Dept. of Interior | Spain's Nao Victoria Foundation)

Posted on Wed, 13 Oct 10:

Chile - Strong recovery after devastating earthquake: Seven months after Feb’s devastating earthquake, its economy is expected to recover strongly in '10-'11, driven by reconstruction spending and a rebuilding of inventories. In its regular annual assessment, the IMF noted that Chile's economy has shown remarkable resilience in the past 2 years. The recovery is fully under way, helped by appropriate policy responses to 2 large adverse shocks - the earthquake and last year's recession, IMF Survey Mag, 29 Sep 10 (Stock market integration - Chile, Colombia, and Peru, US Council of the Americas, 17 Sep | Chilean econ minister speaks on country's econ future, Stanford Daily, 23 Sep | Stanford ECorner)

Daniel Kaufmann: Worldwide governance indicators highlight successes, reversals and failures--The latest version of the Worldwide Governance Indicators covering 213 nations shows that Nordic countries and New Zealand are proof that very high standards of governance are attainable. And the most powerful economies are not always the best governed, since good governance is also found in nations that are not wealthy. Yet, on average, the world has not significantly improved in the quality of governance over the past dozen years. However, measuring governance is difficult, and all measures are necessarily imprecise, requiring interpretative caution, says Inst senior fellow, Brookings Inst, 24 Sep 10

Kemal Dervis: Unemployment, income distribution and macroeconomic management coming together in Oslo--The Oslo conference is taking place at a time when the jobs issue is dominating the policy debate and when macroeconomic policy tools seem to have reached their limits. When the recovery appeared stronger, the talk was all about how the monetary authorities were preparing to reverse their unorthodox quantitative easing policies, how liquidity had to be withdrawn and how policy interest rates would slowly rise. But no longer, says Brookings Inst vice-pres/ director of global economy and development, Up Front (Brookings Weblog), 13 Sep 10

Posted on Mon, 11 Oct 10:

Finding the right match: Nobel Prize in Economics 2010--Peter Diamond, Dale Mortensen and Christopher Pissarides, "for their analysis of markets with search frictions": Why are so many people unemployed at the same time that there are a large number of job openings? How can economic policy affect unemployment? This year's three Laureates have developed a theory which can be used to answer these questions. Diamond has analyzed the foundations of search markets. Mortensen and Pissarides have expanded the theory and applied it to the labor market. Search theory has also been applied to other areas, incl the housing market. The number of homes for sale varies over time, as does the time it takes for a house to find a buyer and the parties to agree on the price. Search theory has also been used to study questions related to monetary theory, public economics, financial economics, regional economics, and family economics., Nobel Foundation, 11 Oct 10

End to currency dispute eludes finance ministers: Differences that threaten the outbreak of a currency war persisted after a weekend meeting of global finance ministers, who left without resolving what to do. Various nations are seeking to devalue their currencies as a way to increase exports and jobs during hard times. They did agree, however, that the 187-nation IMF was the organization best suited to deal with rising currency tensions that risk overshadowing next month's G20 summit in SKorea. The G20 includes traditional econ powers such as the US and EU along with fast-growing economies such as China, Brazil and India, AP (courtesy Tehran Times/ Iran), 11 Oct 10

C-Suite/ Boardroom: Companies from emerging markets dominate rankings of world’s top shareholder value creators - report: One side effect of the Great Recession has been to accelerate the ascent of cos. from rapidly developing economies to the top ranks of the world’s creators of shareholder value, according to a new report. Of the 142 cos. included in this year’s global and industry rankings, 81 are located in developing economies (or 57%). Even more dramatic, the top 10 value creators in the 712-company sample are all from Asia: 5 cos. listed on stock exchanges in China, 2 in Hong Kong, and one each in India, Indonesia and SKorea, Boston Consulting Group, 7 Sep 10

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