News and Analysis: 14-18 June 10 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Thu, 17 June 10:

China warns finger-pointing could derail G20: Finger-pointing at the G20 will be self-defeating for an intl forum that should be focused on coordination, not criticism, of econ policies, a senior Chinese govt official said. A 2nd official said that the Group of 20 summit in Canada on 26-27 June was not the right place for discussing 'the yuan issue'. The comments appeared to be an attempt to draw a line in the sand about what should be discussed at the summit of wealthy and emerging economies, cast as a warning that controversy could hinder the global recovery by rattling market confidence, Reuters (courtesy PublicBroad casting.net), 17 June 10

Oil subsidies - Costly and rising: Petroleum subsidies are costly, inequitable, and rising, and reducing them could have benefits for budgets and the environment, acc to a new report. Eliminating these subsidies can help reduce the large budget deficits many nations accumulated during the global econ crisis, as well as combat global warming. Some budgetary savings can be redirected to programs to mitigate any adverse impact on the poor, Finance & Devt, June-Aug '10 (Petroleum subsidies on the rise, IMF Survey Mag, May '10)

Michael Boskin: Back from the grave--One of the worst responses by officials to the financial crisis and deep recession has been to revive 'industrial policy'. Once again, govts are using subsidies, mandates, regulation and capital investment to pick industrial winners and losers, rather than using a broad, even-handed approach. Industrial policy is appealing to politicians who can favor key constituencies while claiming to be helping the economy as a whole. But it usually does far more harm than good, says Stanford U prof/ fmr US Pres.'s Council Econ Advisers chair, Proj Syndicate (courtesy Jordan Times), Dec '10 ; and

From our archive (13 Apr 10): Dani Rodrik--The return of industrial policy--UK PM Gordon Brown promotes it as a vehicle for creating high-skill jobs. French Pres Nicolas Sarkozy talks about using it to keep industrial jobs in France. World Bank's chief economist Justin Lin openly supports it to speed up structural change in developing nations. McKinsey is advising govts on how to do it right. Industrial policy is back, says Harvard economist, Proj Syndicate (courtesy Korea Times), 14 Apr 10

Posted on Wed, 16 June 10:

Developing nations lead recovery, but high-income country debt clouds outlook: The global econ recovery continues to advance, but Europe's debt crisis has created new hurdles on the road to sustainable medium-term growth, cautions the latest Global Economic Prospects 2010. And regardless of how the debt situation in high-income Europe evolves, a 2nd round financial crisis cannot be ruled out in certain nations of developing Europe and Central Asia, where rising non-performing loans, due to slow recovery and significant levels of short-term debt, may threaten banking-sector solvency, World Bank, 9 June 10

Jeffrey Sachs: Obama's crude awakening--In wake of the Gulf disaster, he needs to think big - esp on energy: In responding to the oil spill that has ravaged the Gulf and deeply shaken so many citizens, Pres Obama rightly noted that the tragedy "underscores the urgent need for this nation to develop clean, renewable sources of energy." What the disaster truly makes clear, however, is the inadequacy of the admin's own approach to overhauling the nation's energy system. Rather than pressing ahead from the start w/ a bold, imaginative, and specific long-term strategy - together w/ a plan to implement it - he has relied on the least appropriate of political strategies: the backroom deal, notes Columbia U Earth Inst dir, NY Daily News, 6 June 10

Posted on Tue, 15 June 10:

Notice from the Publisher: We did say "forewarned is forearmed." So, in case some of you are wondering why we did not post on Mon, 14 June, it was not because of the World Cup (though we do our share of watching). Rather, it was due to a disruption in our workflow, similar to (but not the same as) what we already reported to our visitors last Jan, and just as deserving of blame and censure, EmergingFrontierMarkets.com, 15 June 10

'End Gaza blockade' - EU ministers: The European Union's council of foreign ministers issued a statement on Mon, demanding an end to the Gaza blockade w/ guarantees of Israel's security, and an impartial inquiry into the flotilla w/ intl representation. Part of the EU statement was also addressed to Hamas, calling on it to unconditionally allow ICRC access and end its interference w/ the operations of NGOs and UN agencies in Gaza. The ministers were earlier addressed by the Quartet's Mideast mediator, Tony Blair, Jerusalem Post, 14 June 10 ('Gaza economy collapsing under siege')

Asian real estate markets - On bubble alert?: While much of the world continues to grapple w/ the housing bust, housing prices and sales in some Asian nations have recovered quickly (notably in China, Hong Kong, SKorea, and Singapore), which might pose risks to financial stability. While policy makers are taking measures to cool down property markets, they may also need to fine-tune their policies to maintain the delicate balance needed bet. containing bubble risk and ensuring solid recovery, IMF Survey Mag, 2 June 10

How to compete and grow - A sector guide to policy: Given the fragility of the biz/ econ climate and strained public coffers, the responsibility to get policy right is acute. Experience shows that govts have a mixed record in this regard. An important reason why public intervention in markets has been hit or miss is that action has tended to be based on research that has looked through an economy-wide lens to understand competitiveness - in other words, whether one nation is 'more competitive' than another. This approach has all too often failed to capture the fact that the conditions that promote competitiveness differ significantly from sector to sector. The lessons that emerge from our case studies are applicable to other sectors, and across nations at different income levels, McKinsey, Mar '10 (w/ exec sum)

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