News and Analysis: 31 Jan-11 Feb 11 | EmergingFrontierMarkets.com

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Posted on Fri, 11 Feb 11:

Watchdog issues report on IMF's performance in run-up to financial crisis: The report by the Independent Evaluation Office found that the IMF provided few clear warnings about the risks and vulnerabilities associated with the impending crisis. During the run-up to the crisis, the banner message of IMF surveillance was characterized by overconfidence in the soundness and resiliency of large financial institutions, and endorsement of the financial practices in the main financial centers. The report said that the IMF's ability to identify the mounting risks was hindered by a number of factors, incl: a high degree of groupthink; intellectual capture; and a general mindset that a major financial crisis in the large industrial economies was unlikely. Weak internal governance and an institutional culture that discourages contrarian views also played an important role,   Indep. Eval. Ofc, 9 Feb 11 (Responses from Managing Director and IMF staff) [PDF]

On Charles Darwin's 202nd birth anniversary - 12 Feb:

Robert Frank: The invisible hand, trumped by Darwin?--If asked to identify the intellectual founder of their discipline, most economists today would probably cite Adam Smith. But that will change. Economists' forecasts generally aren't worth much, but I'll offer one that even my younger colleagues won't survive to refute: If we posed the same question 100 years from now, most economists would instead cite Charles Darwin. In Darwin's framework, Smith's invisible hand survivies as an interesting special case, says Cornell U economist,   NY Times (courtesy author's site), July '09 [PDF] (Since Darwin - The evolution of evolution, Smithsonian, July '10); and

Matt Ridley: The natural order of things--Today, generally, Adam Smith is claimed by the Right, Darwin by the Left. In the US South and Midwest, where Smith’s individualist, libertarian, small-gov't philosophy is all the rage, Darwin is reviled for his contradiction of creation. Yet if the market needs no central planner, why should life need an intelligent designer? Ideas evolve by descent with modification, just as bodies do, and Darwin at least partly got this idea from economists, who got it from empirical philosophers. Locke and Newton begat Hume and Voltaire, who begat Hutcheson and Smith, who begat Malthus and Ricardo, who begat Darwin and Wallace. Before Darwin, the supreme example of an undesigned system was Adam Smith’s economy, spontaneously self-ordered through the actions of individuals, rather than ordained by a monarch or a parliament, says science writer,   Spectator, Jan '09

Posted on Wed, 9 Feb 11:

Arab uprising revives hope for a new world - Lula: Fmr Brazilian Pres Lula da Silva on Mon. urged Africa to become aware of its own power amid rising hopes of a new world order in the wake of the popular uprisings sweeping the Arab world. His speech marked the 2nd day of the 6-day World Social Forum, an annual counterpunch to the Davos forum. This year's WSF in Dakar, which has drawn some 30,000 participants from 123 nations, is being held in Africa for the 2nd time after Nairobi in '07 and comes 10 years after the 1st edition of the forum took place in Porto Alegre, Brazil. This year's theme is 'Crises of the system and civilization',   News agencies AFP/ AP/ IPS (courtesy Tehran Times), 9 Feb 11

Stephen Roach: Asia's inflation trap--Export-led economies can't take currency appreciation lightly - it undermines competitiveness and risks eroding the country’s share of the global market. It also invites destabilizing hot-money capital inflows. Given the tenuous post-crisis climate, with uncertain demand prospects in the major markets of the developed world, Asia finds itself in a classic policy trap, dragging its feet on monetary tightening while risking the negative impact of stronger currencies, says Morgan Stanley Asia non-exec chair/ Yale prof,   Proj Syndicate (courtesy Burma Digest), 26 Jan 11

Taking stock of the youth challenge in the Middle East - New data and new questions: Young people in the Mideast (15-29 years old) constitute about one-third of the region's population. Growth rates for this age group trail only sub-Saharan Africa. This presents the region with an historic opportunity to build a lasting foundation for prosperity by harnessing the full potential of its young population. Yet young people in the region face severe econ and social exclusion due to substandard education, high unemployment, and poverty. Thus the inclusion of youth is the most critical development challenge facing the region today,   Brookings Inst, June '10 (Generation in waiting - The unfulfilled promise of young people in the Mideast, Nov '09)

Posted on Mon, 7 Feb 11:

World food prices continue climb to new record, UN releases food price index for Jan: The FAO has released its food price index for Jan. This report provides a measure of the monthly change in int'l prices for major food commodities. The Jan price index rose for the 7th consecutive month, showing a marked increase in the global price of all major commodities. Such an increase makes this month's price index the highest since the index was 1st backtracked in '90,   Int'l Food Policy Res Inst, 3 Feb 11 (Another food crisis? Not if we think this through, 31 Jan | 5 steps to prevent a repeat of the 2007/08 food crisis, Oct '10)

Robert Shiller: Economics for the people--We are in the midst of a boom in popular economics: books, articles, blogs, public lectures, all followed closely by the general public. I recently participated in a panel discussion of this phenomenon at the Amer Econ Assn annual meeting in Denver. An apparent paradox emerged from the discussion: The boom in popular economics comes at a time when the general public seems to have lost faith in professional economists, because almost all of us failed to predict, or even warn of, the current crisis, says Yale economist,   Proj Syndicate (courtesy Japan Times), 26 Jan 11 (Economics and finance - From theory to practice to policy, MIT News, 31 Jan)

Yoga Room: Sissela Bok--What we can learn about our own happiness: Were it not for my young mother's ideas about happiness, I would never have seen the light of day. However, she had refused point blank to have an operation that would have rendered her sterile. When I look at my life and those of all others as resulting thus from innumerable twists of fate, I see these lives as strange and unpredictable adventures. It makes no sense, from such a perspective, to settle into the rut of blaming parents, society, or fate for the course one's life has taken, says renowned moral philosopher-daughter of Nobel Laureates Gunnar and Alva Myrdal/ author of Exploring Happiness: From Aristotle to brain science (Yale, 2010),   Huffington Post, Sep '10 (On credibility, Amer Society of News Eds.)

Posted on Fri, 4 Feb 11:

Roger Owen: Freedom means dignity in the battle for Tahrir Square--Now, after several decades, the square is back as the main focus of a huge struggle between the regime and the people, with access to it as fiercely contested as that to any strategic fortress or Winter Palace. If I were searching for a name for this revolutionary moment, many of which go by felicitous but often ephemeral names (Tunisia's "Jasmine" being only the most recent), I would want to find something much more dramatic, something which would give the sense of a proud but beaten people who, having patiently endured many decades of blows to their spirit and their persons, have suddenly decided to fight back in a great demonstration of recovered dignity. 'Tahrir' (freedom) would seem to give just that sense, says Harvard prof of Mideast history, Al-Hayat/ UK, Feb '11

Egypt by the numbers--Charting the chaos: Calculating the cost of an uprising is hard. But pinpointing the conditions that took Egypt to the brink of revolution is much more straightforward, The Daily [About], 2 Feb 11 (The Daily - Indexed, Waxy (Weblog) | Egypt’s development efforts assessed, Sep '10; and Third Arab report on Millennium Dev't Goals (MDG) launched, Dec '10 | Egypt MDG Report [2.6MB] and Arab MDG Report [4.1MB]) [Word doc & PDF, courtesy UNDP]

The quest for a 'charter city': Economist Paul Romer made his mark 20 years ago arguing that ideas or 'recipes', as he calls them, are more important to growth than other economists believed. (It sounds simple, but it's the stuff of the Nobel Prize.) Now perched at NYU, he has been hopscotching the globe for the past couple of years, looking for a nation desperate enough to try his audacious notion: Start a new 'charter city', an enclave free of old laws and practices, as William Penn did in Pennsylvania. (Think 'charter school', a school free of union contracts and school bureaucracy.) He thinks he's found the perfect place to build a city that could be as prosperous as Hong Kong or China's Shenzhen, by D Wessel, Wall St J, 3 Feb 11 (Fuller / Romer: Cities from scratch - A new path for development, City Journal, Nov '10

Posted on Wed, 2 Feb 11:

Juan Cole: Egypt's class conflict--The failure of the regime to connect with the rapidly growing new urban working and middle classes, and its inability to provide jobs to the masses of college graduates it was creating, set the stage for last week’s events. Educated, white-collar people need a rule of law as the framework for their econ activities, and Mubarak's arbitrary rule is seen as a drag here. While the economy has been growing 5-6% in the past decade, what gov't impetus there was to this development remained relatively hidden – unlike its role in the land reform of the '50s and '60s, says U Michigan history prof/ Mideast expert, Informed Comment (Weblog), 30 Jan 11 (Unrest in Egypt - a timeline, AFP, 2 Feb | Tahrir Square's place in Egypt's history, BBC News) [courtesy Montreal Gazette]

Agriculture needs 'greenest' revolution to cope with rising prices: Declining food prices are a thing of the past, and the world must reform its agric system to prepare for increasingly volatile prices, the UK govt's Foresight program said. Foresight, which does in-depth studies examining major issues 20-80 years in the future, released the report, 'The future of food and farming: challenges and choices for global sustainability', after 2 years of research into agric supply and demand systems. The effort, which compiles data from some 400 experts from 35 nations, began after food prices suddenly rose after decades of decline in '07 and '08, Weblog at Nature Mag, 24 Jan 11

Global trends - First quarter (exec sum): This report examines major trends shaping the global business environment, with a focus on: 1) The dollar's slide - Country responses to appreciating currencies; 2) Food security drives global agricultural investments; 3) US gridlock to fuel business uncertainty in '11; 4) Regulations to test financial services industry; and 4) Challenges for business in a post-Kyoto world, Eurasia Group / Pricewaterhouse Coopers, Jan '11 [PDF,1.4MB]

Posted on Mon, 31 Jan 11:

Investors face risks however Egypt plays out: If Pres Hosni Mubarak clings to power, investors will reprice Egyptian and regional assets to brace for weeks, months or possibly years of heightened political risk. If he goes, global markets could still react with alarm, fearing a rising tide of unrest across the Mideast and possibly other authoritarian economies that could threaten energy supplies and potentially global econ recovery. Whatever happens, events in Egypt - coming close on the heels of the overthrow of Tunisia's gov't by protests that escalated to regime change in less than a month - have dented previous assumptions of stability,   Reuters (courtesy Al-Masry Al-Youm/ Egypt), 30 Jan 11 (At a glance--Egypt and its socio-econ profile  | Young people in Arab nations - Promoting opportunities, exec sum of a WB workshop, Apr '10 [PDF]) [courtesy AlertNet & World Bank]

Mouse & wo/man: ITU reports 2.08 billion world Internet users out of 6.8 billion people--The Int'l Telecommunications Union, a telecom agency for the UN, reports that the total no. of Internet users around the world ballooned to 2.08 bln at the end of '10. This compares well with the figure of 1.86 bln a year earlier. To put that in context, the world's pop. is currently 6.8 bln.   As a result, nearly 1 in 3 is now able to surf online. Some 57% of Internet users reside in developing nations, which originally overtook industrial nations 3 years ago,   ISPreview, 27 Jan 11 (ICT facts & figures '10 [PDF,1.8MB] | Egypt's Internet still offline, a day later, CNET News)

C-Suite/Boardroom:  'Hidden engines' of global economy - 100 companies from rapidly developing economies--A group of cos. from rapidly growing economies has begun to leapfrog past established multinationals in global industry rankings. A new report, 'Companies on the Move: Rising stars from rapidly developing economies are reshaping global industries', identifies 100 of these 'global challengers', about half of which could qualify for inclusion in the Fortune Global 500 within the next 5 years. Although China, India, Brazil, Mexico, and Russia still dominate the list of home nations, other regions are starting to foster world-class cos., notably Africa with 4 (from SAfrica and Egypt),   Boston Consult. Group, 18 Jan 11

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