News and Analysis: 25 Oct-5 Nov 10 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 5 Nov 10:

Ben Bernanke: Aiding the economy - What the Fed did and why--The Fed decided this week that, with unemployment high and inflation very low, further support to the economy is needed. With short-term interest rates already about as low as they can go, the Fed agreed to deliver that support by purchasing more longer-term securities, as it did in '08 and '09. The Fed intends to buy an extra $600bn of longer-term Treasury securities by mid-'11. Purchases of longer-term securities are a less familiar monetary policy tool than cutting short-term interest rates. But our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of money supply. Nor did it result in higher inflation, says Federal Reserve chair,   Washington Post (courtesy Fed), 4 Nov 10

People are healthier, wealthier and better educated - 'Human Development Report 2010': Most developing nations made dramatic yet often underestimated progress in health, education and basic living standards in recent decades, with many of the poorest nations posting the greatest gains, reveals a new analysis of long-term Human Development Index (HDI) trends in a new annual report. The top 5 nations in the HDI are Norway, Australia, New Zealand, US, and Ireland. The 'top 10 movers' - those among the 135 nations that improved most in HDI terms over the past 40 years - were led by Oman. The other 9 are China, Nepal, Indonesia, Saudi Arabia, Laos, Tunisia, SKorea, Algeria, and Morocco,   UNDP, 4 Nov 10 (Country rankings) [PDF]

Economies improving biz regulation, empowering entrepreneurs - 'Doing Business 2011': For the 5th year running, Singapore leads in the ease of doing biz, followed by Hong Kong, New Zealand, UK, and US, acc to the 8th in a series of annual reports ranking 183 economies on key aspects of biz regulation for domestic firms. This year's list of the 10 most-improved economies includes 3 in sub-Saharan Africa - Rwanda (a consistent reformer), Cape Verde, and Zambia - as well as Peru, Vietnam, Tajikistan, Hungary, Grenada, and Brunei. Kazakhstan improved the most in the past year,   Int'l Fin Corp/ World Bank, 4 Nov 10

Posted on Wed, 3 Nov 10:

World watches US election and speculates on impact: People around the world closely followed the bitter midterm elections that put part of Congress in Republican control, as speculation rose Wed. about the potential impact to US foreign policy. Pres Obama's ability to maneuver politically has been weakened after his party, the Democrats, lost control of the House of Representatives, analysts said, though it remains unclear how much US policies might change with Republicans leading that chamber. Democrats managed to maintain their Senate majority in Tue's vote,   AP (courtesy Hindu/ India), 3 Nov 10 (New US Congress - Aid cuts or reform?, Stimson Ctr's Weblog, 26 Oct)

Gary Becker: Contrasts between the US's and UK's post-recession policies--Many economists in the US are advocating a 2nd fiscal stimulus, believing that the close to $1 tril. in the Obama stimulus package was too modest. This is why the UK's experiment in cutting rather than raising gov't spending while it is still coming out of recession is not only daring. So which approach will be more successful - the UK one that will sharply cut gov't spending and fiscal deficits, or the US one that believes these deficits are necessary, and perhaps even too small, to get it out of recession?, asks Nobel Laureate '92/ U Chicago prof,   Becker-Posner Weblog, 31 Oct 10 (Richard Posner: UK's dramatic response to the econ crisis | UK spending plans protect dev't spending, Ctr Global Dev't, 22 Oct)

Rajan's "Fault Lines" wins the Business Book of the Year award: Raghuram Rajan won the Business Book of the Year Award 2010 for his book, which analyzes the flaws in the economy that led to the current financial crisis, and warns of changes essential for econ recovery. He saw off strong competition to win the £30,000 prize. The award, which was established in '05, aims to find the book that provides 'the most compelling and enjoyable insight into modern business issues'. Each of the 5 runners-up received a check for £10,000, an increase of £5,000 over previous years, and can expect heightened interest in their books,   FT/ Goldman Sachs, 27 Oct 10 (Princeton U Press--Fault Lines: How hidden fractures still threaten the world economy)

Posted on Mon, 1 Nov 10:

Brazil's first woman on top - Rousseff wants to build on economic success: Brazil's first female leader, Dilma Rousseff, may not have the charisma of her mentor Lula, but she does have a clear message: She wants to further boost the flourishing economy, to eradicate the poverty plaguing parts of the country and to deepen ties with top emerging economies - not with the US or Europe. Pres Lula wants to personally prepare his successor with a crash course on the perils of int'l econ and financial policy: He wants to take Rousseff to the G20 summit, which opens on 8 Nov, in Seoul,   Der Spiegel, 1 Nov 10

Shanghai World Expo ends, makes way for Yeosu--The Shanghai Expo came to a grand finale Sun. after a 6-month run.  Analysts say the expo, dubbed the 'economic Olympics', generated a flurry of records in the event's 150-year history. An estimated 73mn people visited the expo, or 400,000 people a day, and about 5% were foreign nationals. The top 5 attractions were the pavilions for China, Saudi Arabia, Germany, Japan and SKorea.  In the wake of its success, attention has shifted toward the 2012 World Expo in Yeosu, SKorea,   Dong-A Ilbo (SKorea), 1 Nov 10 (Turning Shanghai into a global financial hub, U Pennsylvania, July '10 |  Shanghai in 2020 - Asia's financial center, Goldman Sachs, June '10) [courtesy Panlv.net, PDF, 1.4MB]

Growth Week at the Int'l Growth Center: Recently the Int'l Growth Center held a conference at the Lond Sch Econ. The Dept for Int'l Dev't-funded center, led by LSE and U Oxford, has 10 offices in developing nations. Highlights of the confab included Paul Collier's discussion of China's investment in Africa, where he argued that investment is mutually beneficial. Another important debate concerned the tensions between rural and urban arenas for growth. A third highlight was Ricardo Hausman’s presentation on the ‘Quiescence Trap’, where he argued that particular capabilities are needed to make certain products, which many developing nations may lack,   Overseas Dev't Inst/ UK (Weblog), 25 Oct 10 (Growth Week report)

Posted on Fri, 29 Oct 10:

Argentina enters new political era as Kirchner dies: Tens of thousands of Argentines paid tribute on Thu to fmr Pres Nestor Kirchner, whose death rallied markets but robbed his wife and successor Pres Cristina Fernandez of her closest adviser. Many in Argentina credit center-leftist Kirchner with leading the nation out of the '01-'02 econ crisis. His criticism of free markets, big business and the IMF struck a chord with crisis-weary Argentines. But foreign investors disliked his interventionist econ policies and combative style, and never forgave him for the tough '05 renegotiation of some $100bn in defaulted bonds, which stuck creditors with a steep discount, Reuters, 29 Oct 10 UTC

Researchers defend Indonesian tsunami warning system: Media reports claiming that the German-Indonesian tsunami early warning system was vandalized and did not work after Mon's quake are baseless, the German Research Center for Geosciences in Potsdam says, Nature (Weblog), 28 Oct 10 ('No alert' in Indonesian tsunami, BBC News, 27 Oct)

Jeffrey Frankel: Look South to re-learn countercyclical fiscal policy--During much of the last decade, US fiscal policy has been procyclical, that is, destabilizing. We wasted the opportunity of the '03-'07 expansion by running large budget deficits. As a result, Washington now feels constrained by inherited debts to withdraw fiscal stimulus at a time when unemployment is still high. Fiscal policy in the UK and other European nations has been even more destabilizing over the last decade. Meanwhile, some emerging markets have learned how to run countercyclical fiscal policy - saving in the boom and easing in the recession - during the same decade that we industrial nations have forgotten how to, says Harvard prof/ Nat'l Bur Econ Res Business Cycle Dating Cmte member, Harvard Univ, 28 Oct 10

Posted on Wed, 27 Oct 10:

Indonesia hit by deadly tsunami, volcanic eruption: A volcanic eruption and a tsunami killed scores of people hundreds of miles apart in Indonesia - spasms from the Pacific 'Ring of Fire', which spawns disasters from deep within the Earth. Tue's eruption of Mt Merapi killed at least 18 people, forced thousands to flee down its slopes and spewed burning ash and smoke high into the air on the island of Java. Meanwhile, off the coast of Sumatra, about 800 miles (1,300 kms) west of the volcano, rescuers battled rough seas to reach Mentawai islands, where a 10-ft tsunami triggered by an earthquake Mon night swept away hundreds of homes, killing at least 113 villagers. Up to 500 others are missing, AP (courtesy Jakarta Post), 27 Oct 10

Development and the Seoul G20 summit: Reports of progress last weekend notwithstanding, the so-called currency wars - the reality and threat of competitive devaluations - are likely to continue to dominate the news about the upcoming Seoul G20 summit in Nov. But while exchange rates matter a lot for developing nations, the summit will also address other issues important to the billion-plus people in low-income nations not represented by the G20, by L MacDonald, Ctr Global Devt, 25 Oct 09 (The G20 is a great idea … but let's make sure the execution is right)

Global trends - Fourth quarter 2010: This report examines major trends shaping the global business environment, with a focus on: 1) China's rise in Asia, 2) Renewable power, 3) Africa's growth sectors, 4) Opportunities beyond the BRICs, and 5) Port infrastructure. It summarizes the findings of five white papers, Eurasia Group/ PricewaterhouseCoopers, Oct '10 [PDF, 1.6MB]

Posted on Tue, 26 Oct 10:
(In Lieu of Yesterday)

Response to global crises must prioritize zero tolerance for corruption - report: With gov'ts committing huge sums to tackle the world's most pressing problems, from the instability of financial markets to climate change and poverty, corruption remains an obstacle to achieving much needed progress, acc to the 2010 Corruption Perceptions Index (scroll), a measure of domestic, public sector corruption released today. Denmark, New Zealand and Singapore tie for 1st place, while unstable gov'ts, often with a legacy of conflict, continue to dominate the bottom rungs. Afghanistan and Myanmar share 2nd to last place, with Somalia coming in last, Transparency Int'l, 26 Oct 10

G20 ministers agree 'historic' reforms in IMF governance: Meeting in Gyeongju, SKorea, G20 finance ministers and central bank governors agreed on a doubling of IMF members' quotas - financial stakes that determine voting power in the institution - that will shift voting shares toward emerging markets and developing nations. As a result, the large emerging markets Brazil, China, India and Russia move up to be among the top 10 shareholders of the IMF. There will also be 2 fewer board members from industrial European nations, and all executive directors will be elected rather than appointed as some are now. The size of the board will remain at 24, IMF Survey Mag, 23 Oct 10

Michael Spence: Obama at halftime--The Obama admin was not responsible for poor US econ performance in the immediate post-crisis period; that was inevitable. But it was responsible for allowing flawed expectations of a sharp recovery to pre-crisis levels of output and consumption to persist. And that left the admin open to the charge that bad policy was the cause of poor econ performance, says Nobel Laureate '01/ Hoover Inst senior fellow, Proj Syndicate (courtesy Daily Star/ Lebanon), 22 Oct 10

EmergingFrontierMarkets.com

emerging and frontier markets:

the unofficial field guide