News and Analysis: 10-21 Oct 11 | EmergingFrontierMarkets.com

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Posted on Fri, 21 Oct 11:

Report finds more economies implemented business reforms, Int'l Finance Corp/ World Bank, 20 Oct 11:
A new report finds that economies continued to implement reforms that enhance local firms' ability to do business, with transparency and access to info playing a key role in the reforms. The newly released Doing Business 2012 assesses regulations affecting domestic firms in 183 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders. This year, Singapore led on the overall ease of doing business, followed by Hong Kong, New Zealand, US, and Denmark (Rankings)

S Johnson and J Kwak: Debt and dumb, Vanity Fair, Nov '11:
As a young artillery captain in the Revolutionary War, Alexander Hamilton learned a crucial lesson. The young US just got lucky then. Although it was a poor credit risk, the Netherlands and France lent it money to spite the British, and the French provided troops and ships that helped tip the balance. But what he learned, as George Washington's aide, was that the new nation could not really be independent unless the world's powers backed off. And such powers never respect anyone without the ability to make war. His conclusion was simple: You cannot run a secure independent nation without the ability to finance the sudden surge in spending called for by a nat'l emergency - which requires borrowing large amounts of money quickly. As the 1st Treas secy, he built US ﬁscal policy on that principle, say fmr IMF chief economist/ MIT prof and Yale law student

J Dobbins and F Wehrey: Libyan nation building after Qaddafi, Foreign Affairs, Aug '11:
In Libya, the US and its allies face the familiar challenges of post-conflict stabilization and reconstruction. As in Bosnia, Kosovo, Iraq, and Afghanistan, the US and its allies have prevailed militarily and Western govts must now assume some role in helping establish a new order. Given the mixed results of the ventures in those regions, it is worth examining how Libya compares to them in terms of size, wealth, homogeneity, geography, and political maturity, say fmr asst secy of State and Rand senior policy analyst

Posted on Wed, 19 Oct 11:

Michael Spence: The global jobs challenge, Project Syndicate, 17 Oct 11 [courtesy NY Council on For. Relations]:
Over the past 3 decades, hundreds of millions of new workers have entered the global economy. They arrived with various levels of education and skill, and over time have generally gained in terms of 'human capital'. This has brought a tremendous, and ongoing, growth in income levels, opportunities, and the size of the global econ. But these new workers have also brought more employment competition and significant shifts in relative wages and prices, which is having profound distributional effects. These massive structural changes in the global econ present 3 great employment challenges worldwide, which vary for each nation, says Nobel Laureate '01/ Hoover Inst senior fellow

Can Greece avoid default? - Q&A with William Cline, senior fellow, Peterson Inst, 3 Oct 11 [PDF]:
Q: a) The odds of Greece avoiding default are widely debated. Cline's policy brief has just come out. Can you walk us through Greece's prospects? b) What do you mean by 'bankruptcy-type' restructuring? There's talk of a 50% haircut on debt. Is that the equivalent? c) What is it about this debt burden that makes it more manageable than some other analysts say? d) Just reading the news stories, the privatization seems to be going slowly and subject to some protest within Greece of selling the family jewels. What are the prospects?

Peter Thiel: The end of the future, National Review, 3 Oct 11:
Modern Western civilization stands on the twin plinths of science and technology. Taken together, these 2 interrelated domains reassure us that the 19th-century story of never-ending progress remains intact. Yet with the Great Recession, these great expectations have been supplemented by a desperate necessity. We need sci/tech to dig us out of our deep econ and financial hole, even though most of us cannot separate science from superstition or technology from magic. In our hearts and minds, we know that desperate optimism will not save us, says founding CEO of Pay Pal/ entrepreneur-venture capitalist

Posted on Mon, 17 Oct 11:

Jeffrey Sachs: Occupy Wall St and the demand for economic justice, Huff Post, 13 Oct 11:
Around the world, young people - students, workers, and the unemployed - are bringing their grievances to the public square. The specific grievances differ across nations, yet the animating demands are the same: democracy and econ justice. The young people occupying Wall St and now protesting in several dozen US cities are not a 'mob'. They are channeling sentiments felt very widely throughout the nation, indeed the world. Their defining message, "We are the 99 percent," draws attention to the way that the rich at the very top have run away with the prize in recent years, says Columbia U Earth Inst dir

Niall Ferguson: A clash of generations in Wall St protests, Daily Beast, 11 Oct 11:
After years when young Americans yearned only to be occupied on Wall St, suddenly they have taken to occupying it. It's easy to scoff at this phenomenon. I know, because I have. What is it that makes evidently educated young people yearn to adopt leftist positions that are eerily reminiscent of the ones their parents adopted in '68? Occupying Wall St isn't the answer to this generation's problems. The answer is to occupy the Tea Party - and wrest it from the grumpy old men who currently run it, says Harvard prof of business history

More aid for poor countries, but is it better aid?, OECD, 22 Sep 11:
Development aid has increased from $37 bln in '60 to $128 bln last year. However, poor co-ordination and unpredictable aid waste funds that should be eradicating poverty in the world's poorest nations. In '05, donor and developing nations signed up to the Paris Declaration on Aid Effectiveness. Donors committed to work with each other and with developing nations to help pave the path to progress, and all parties are accountable for the results. But are they keeping their commitments? A new survey of 78 nations and territories yields a global scorecard showing whether they are making aid more effective

Posted on Fri, 14 Oct 11:

G20 ministers meeting to discuss euro-zone debt crisis, BBC News, 14 Oct 11:
Finance ministers from the G20 are meeting in Paris later to continue efforts to find a solution to the debt crisis in the euro zone. Spain was hit by a further credit rating cut on Thu. Standard & Poor's reduced Spain's long term rating by one notch, citing weak growth and high levels of private sector debt. It came a week after credit rating agency Fitch also cut Spain's rating. Analysts caution that any major decisions on tackling the euro-zone debt crisis will not be announced until the meeting of EU leaders on 23 Oct

Seminar room: Columbia professors face new disclosure rules, Businessweek, 29 Sep 11:
Prodded by 'Inside Job', the Oscar-winning documentary that exposed ties between financial firms and academia, Columbia Univ is tightening disclosure rules for faculty who advise Wall St and other industries. Members of the Faculty of Arts & Sciences will have to post their outside professional activities online and inform deans about their time commitments outside the univ, says econ dept chair. The new rules may go into effect as early as Oct (The 'Inside Job' effect, Inside Higher Ed, Apr '11 | Glaeser: Where to draw a line on ethics, NYT, Jan '11) [courtesy Harvard]

Danny Quah: The great shift East, Global Herald, 30 May 11:
As the East continues to rise in econ strength, debate in the West grows increasingly alarmist. Invariably, the focus is how to respond; invariably, the focus is what is best for the West. But shouldn't the global community be asking instead, what is good for the world? This emergence of the East has, in the last 3 decades, yanked the world's econ center of gravity nearly 5000 km out of its '80 mid-Atlantic location eastwards past Helsinki and Bucharest, onto a trajectory aimed squarely at India and China, says London School Econ prof/ LSE global governance co-dir

Posted on Wed, 12 Oct 11:

David Henderson: A Nobel for non-Keynesians, Wall St J, 11 Oct 11 [courtesy Hoover Inst]:
The Swedish economists announcing the award emphasized, correctly, the importance of Sargent and Sims's thinking about the role people's expectations play in econ decision making and the larger economy.  Sargent was an early and important contributor to the 'rational expectations' revolution in macroeconomics. Sims's big contribution was to use a statistical tool, the vector autoregression (VAR), to model the macroeconomy and make macro forecasts. Why did he choose that approach? Because, he wrote in a path-breaking '80 article, the standard macroeconometric models rested on 'incredible' assumptions, says Inst res fellow/ editor of The Concise Encyc of Econ    (Kling: The soothsayers of macroeconometrics, American Mag, Sep '11)

Joseph Stiglitz: Austerity not the cure for economic slump, Proj Syndicate, 5 Oct 11 [courtesy Business Day/ S Africa]:
As the econ slump that began in '07 persists, the question on everyone's minds is: Why? Unless we have a better understanding of the causes of the crisis, we can't implement an effective recovery strategy. Fixing the financial sector was necessary for econ recovery, but far from sufficient. To understand what needs to be done, we have to understand the economy's problems before the crisis hit, says Nobel Laureate '01/ Columbia U prof    (An agenda for job creation in the global economy, Sep '11)

Branko Milanovic: More or less, Finance & Dev't, Sep-Nov '11:
Inequality is growing. Disparities are increasing - between the rich and poor in individual nations, and until recently, between nations. The global financial crisis is keeping real incomes stagnant in advanced economies but it probably narrowed global inequality between citizens of the world, because most developing nations continued with strong growth. Some say that inequality doesn't matter as long as markets are working efficiently, or if everyone is getting more. Others argue that inequality hampers growth, or that only so much disparity is ethically acceptable, says World Bank lead economist/ U Maryland visiting prof    (Econ inequality between nations and peoples, Five Books, Jan '11 |  Picture this - Inequality over the past century [PDF])

Posted on Tue, 11 Oct 11:

Slovakia on knife-edge over Greek bailout, Reuters, 11 Oct 11 [courtesy Scotsman]:
The Volkswagen, Peugeot and Kia car plants along the main road illustrate Slovakia's transformation from former communist backwater to euro zone success - it is now the world's top carmaker per capita. They also explain its dilemma over Greece. No strangers to privations and harsh reform, Slovaks are divided over whether their gov't should agree to increasing the powers of the bailout fund for Greece and others in the euro zone that have lived beyond their means. Should Slovakia, the euro zone's 2nd poorest nation, pay for nations like Greece, which borrowed too much and spurned the reforms that Slovaks endured to join the euro in '09? So laborious is EU decision-making that one dissenting voice among the 17 euro-zone nations could wreck the latest plan

NYU's Sargent, Princeton's Sims win Nobel prize for empirical work on macroeconomics, Nobel Foundation, 10 Oct 10:
One of the main tasks of economists is to explain how macro variables - such as GDP, investment, unemployment and inflation - behave over time. How are these affected by econ policy and by changes in the econ environment? How effective can the central bank's monetary policy be in stabilizing unwanted fluctuations in these variables? Similar questions can be raised about the govt's fiscal policy. Sargent and Sims have independently developed empirical methods to answer these questions. This year's prize recognizes these methods (Brief Q&A with Sims | Minneapolis Fed's interviews with Sims in '07, and Sargent in '10)

Building world-class research universities is significantly more complex than many nations estimate, World Bank, 6 Oct 11:
How do you build a world-class research university from scratch? In today's ever-faster, global economy, many nations are reflecting on the merits of building elite global universities to make their mark in world research. Recognizing that such univs are emerging as the central institutions of the 21st century's knowledge economies, a new book 'The Road to Academic Excellence: The making of world-class research univs' examines the recent experience of 11 univs in 9 nations of Africa, Asia, Latin America, and Eastern Europe that have grappled with the challenges of building successful research institutions under difficult circumstances, and synthesizes the lessons learned (Times Higher Ed's 2011 list of top 400 world univs)

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