News and Analysis: 25 Apr-6 May 11 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 6 May 11:

N Birdsall, W Elhai and M Kinder: Friend or foe - Should the US cut aid to Pakistan?, Ctr Global Dev’t/ US, 3 May 11:
Some are asking: if Pakistan won't help the US, why should taxpayers in US keep giving them so much foreign aid? To be sure, Pakistan is a difficult environment for the US, or any other donor for that matter. If walking away is a bad option, so too is spending money with little to show for it. A skeptic might then ask: even if it is important for the US to get its aid program right, is it possible for it to do so in Pakistan?, ask Ctr pres, research asst and senior analyst (Key US lawmakers back aid to Pakistan, AFP, 6 May) [courtesy Express Trib/ Pak.]

Emerging markets tackle risks, cement global power, IMF Survey Mag, 18 Apr 11:
Emerging economies are set to strengthen their standing in the world economy, but they must take steps to manage the risks that come with shifting global econ power, said panelists at a recent seminar in Washington on 'Emerging markets: Leading the recovery, but what next?' Emerging markets are facing mounting risks. Overheating and inflationary pressures are the most pressing issues, with strong domestic demand, output levels that are close to their potential, and high capital inflows

M Spence and S Hlatshwayo: Jobs and structure in the global economy, Proj Syndicate (courtesy China Daily), 18 Mar 11:
It is not a good idea to assume that markets will solve problems of the distribution of benefits by themselves; the evolution of structure and the income distribution are largely the result of market incentives. All nations, industrial and emerging, have to address issues of inclusiveness, distribution, and equity as part of the core of their growth and dev't strategies. The late Paul Samuelson once said that every good cause is worth some inefficiency. Morally, pragmatically, and politically, he was right, say Nobel Laureate '01/ fmr chair of the Indep. Comm on Growth and Dev't, and NYU researcher (Book--The Next Convergence: The future of economic growth in a multispeed world [May '11])

Posted on Wed, 4 May 11:

Bin Laden's war vs the US economy, by Ezra Klein,   Weblog at Washington Post / Bloomberg, 3 May 11:
Did Osama bin Laden win? No. Did he succeed? Well, America is still standing, and he isn't. So why did a counterterrorism expert who specializes in al-Qaeda tell me that "bin Laden has been enormously successful"? There's no caliphate. There's no sweeping sharia law. Didn't we win this one in a clean knockout? Apparently not. Bin Laden had a strategy that we never bothered to understand, and thus that we never bothered to defend against. Though it didn't quite work out this time, it worked a lot better than most of us, in this exultant moment, are willing to admit

Should America be afraid of Chinese investment?,   Asia Society/ US, 2 May 11:
Is the US prepared for direct investment from China? Does Chinese investment pose a unique threat to US national security due to China's sheer size and level of state intervention? How should the US screen these investments? And lastly, what can the US gain from Chinese direct investment? A special report to be released today, which was undertaken by the Asia Society's Ctr on US-China Relations and the Kissinger Inst on China-US at the Woodrow Wilson Int'l Ctr for Scholars, provides the most comprehensive study to date of Chinese FDI in the US and outlines its enormous potential to create econ growth. It warns, however, that the US may squander immense opportunities for employment and investment gains through political fear-mongering

Justin Lin: Six steps for strategic government intervention,   Global Policy, Oct '10 [PDF]:
Econ dev't is a dynamic process that requires industrial upgrading and corresponding improvements in 'hard' (tangible) and 'soft' (intangible) infrastructure at each stage. In addition to an effective market mechanism, the gov't should play an active role. A framework for conceptualizing the facilitating role of gov't in industrial upgrading and econ diversification could involve a 6-step process. Such a systematic approach may be useful for formulating and implementing strategic gov't intervention, says World Bank chief economist (Robert Wade: A response to Lin, Jan '11 | After the crisis - Industrial policy and the developmental state in low-income nations)

Posted on Mon, 2 May 11:

Bradford DeLong: Economics in crisis,   Project Syndicate (courtesy Daily News Egypt), 1 May 11:
The most interesting moment at a recent conference held in Bretton Woods, New Hampshire - site of the '45 confab that created today’s global econ architecture - came when FT columnist Martin Wolf quizzed fmr US Treas Secy Larry Summers, Pres Obama's fmr asst for econ policy. "[Doesn't] what has happened in the past few years," Wolf asked, "simply suggest that [academic] economists did not understand what was going on?", notes UC-Berkeley prof (What drives changes in economic thought?, Richmond Fed's Region Focus, Jan-Mar '11 [PDF])

Global Trends - Second quarter (exec sum),   Eurasia Group / PricewaterhouseCoopers, Apr-June '11 [PDF, 2MB]:
This report examines major trends shaping the global business environment, with a focus on: 1) New energy boom creates new challenges, 2) Central and Eastern Europe - Evolving outlook for businesses, 3) The business of China's 12th Five Year Plan, 4) Middle East in transition - Business implications, and 5) Financial regulation in a G-Zero world

Deradicalization process is essential part of fighting terrorism,   RAND, Nov '10:
Deradicalizing Islamist extremists may be even more important than getting them to disengage from terrorist activities, acc to a new study that examines counter-radicalization programs in the Mideast, SE Asia, and Europe. Although there has been much research about the radicalization of Islamist extremists, there has been little study about how one deradicalizes those who have been recruited into the extremist movement. A key question is whether the objective of counter-radicalization programs should be disengagement (a change in behavior) or deradicalization (a change in beliefs) of militants. A unique challenge posed by militant Islamist groups is that their ideology is rooted in a major world religion

Posted on Fri, 29 Apr 11:

Coffee/Tea Room: Royal wedding int’l reaction - Praise for the 'restyled Windsor brand',   Daily Telegraph/ UK, 29 Apr 11:
The event caught the imagination of the world's media with many wondering why there was such planetary excitement about it. In Kenya, where Prince William proposed to his bride-to-be in Nov, red roses picked from the Rift Valley town of Naivasha were handed out by the Kenya Tourism Board. An editorial in the Times of India said the royal wedding has revived interest in the British monarchy following the "circus" of Prince Charles' doomed marriage to Princess Diana. It did not merit a single word in the People's Daily, the official newspaper of China’s Communist party. However, the country's livelier tabloids did cover the event (Spat between monarchists and republicans, BBC News)

Asia likely to suffer economic repercussions from Japan quake,   IMF Survey Mag, 28 Apr 11:
In an analysis of the likely effects of the disaster in Japan, the latest twice-yearly Regional Economic Outlook - Asia and Pacific suggests prolonged disruptions to production in Japan could affect other economies along the global supply chain, esp. in those industries where Japan provides a large share of global supply such as in the production of silicon wafers for microchips. Asia's economies are highly integrated through cross-border production networks, and Japan remains the 2nd most important source of imported intermediate inputs in the region. It accounts for 10-15% of the value added produced in some Asian nations, incl Malaysia, Thailand, and Taiwan (Robust growth in Asia, but inflation causing concern)

W Buiter and E Rahbari: Global growth generators - Moving beyond emerging markets and BRICs,   VoxEU, 22 Apr 11:
Which nations will drive global growth and investment opportunities for the next 40 years?   We identify which ones will be the global growth generators, or 3G. We don't want "3G" to join the list of cute but uninformative acronyms (BRIC, Next 11, 7 Percent Club), although we did flirt with an intriguing label like the Magnificent 7, the Nine Nazgûl or the 39 Steps. Our 3G nations - there are 11- comprise Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka, and Vietnam. China will overtake the US by 2020 (at PPP forex rates, a decade longer at market forex rates). We also propose a "2nd 11 + 1 substitute" of mainly middle-income nations with robust but not spectacular growth prospects, say Citigroup chief economist and team member (Citi report)

Posted on Wed, 27 Apr 11:

Brett Arends: IMF bombshell - Age of America nears end, China’s economy will surpass US in '16,   MarketWatch/ US, 25 Apr 11:
The IMF has just dropped a bombshell, and nobody noticed. For the 1st time, the int'l org has set a date for the moment when the 'Age of America' will end and the US will be overtaken by China. And it's a lot closer than you may think. Acc to the latest IMF official forecasts, which was quietly posted on its website just 2 weeks ago, China will surpass America in '16 - just 5 years from now.  In a response to this article, IMF confirmed the report but challenged my interpretation of the data, says WSJ columnist (China as No.1? Give us a break, Investor's Biz Daily/ US)

Mari Pangestu: New market opportunities in emerging markets,   Int'l Trade Forum/ Switz., Dec-Feb '11:
World trade contracted by approximately 10% in '09, but projections suggest it is growing again at a rate of 25%. In Asia, Africa and the Mideast, growth is even stronger at a rate of 35%, driven by demand in Asia and increasing commodity prices. So the big question is: what will happen beyond '10? How sustainable export and trade growth will be in the coming years is dependent on the diversification of both markets and products. In the sense of market diversification, the big story is the growth of South–South trade and the strengthening of the emerging economies, says Indonesia trade minister

Aart Jan de Geus: How to reform and be re-elected?,   OECD Observer, Oct ‘10 [PDF]:
'To reform and to perform' is the goal of many a serious politician. It is not an easy task. Noble people with fine ideas frequently find their proposals scrutinized, distorted, and must put their own careers and personalities in the firing line. During times of crisis, the public clamors for change, but may balk noisily at the solutions. As Kenneth Galbraith once wrote, contradicting Bismarck, in a letter to Pres Kennedy, 'politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable.' If this is so, how can reforms be made to work?, asks OECD deputy sec-gen/ fmr Dutch social aff, employ. minister (Making Reform Happen conference | Free gov'ts, good policies, Finance & Dev't, Mar-May '11)

Posted on Mon, 25 Apr 11:

Dean Karlan: Fighting malaria - selling vs giving, AlertNet, 25 Apr 11 | (World Malaria Day):
Each year over a million lives are lost to malaria. This loss is all the more tragic because there is such a cheap and simple way to fight transmission: insecticide-treated bed nets. There are strong reasons to give these nets out for free because they have positive spillover effects - even those not sleeping under one benefit because the chain of transmission is broken. However, some economists worry that giving bed nets out for free will only lead to waste, says Innovations for Poverty pres/ Yale prof (AP reports on Global Fund malaria drug thefts, issues correction, Kaiser Family Found./ US, 22 Apr | Global Fund refutes misleading AP article on drug theft)

Citizen security, justice, jobs key to breaking cycles of political, criminal violence,   World Bank, 11 Apr 11:
Some 1.5 bln people live in nations affected by repeated cycles of political and criminal violence, and no low-income fragile or conflict-affected nation has yet to achieve a single Millennium Development Goal, acc to the latest yearly World Development Report 2011: Conflict, Security and Dev't. Fixing the econ, political, and security problems that disrupt dev't and trap fragile states in cycles of violence requires strengthening national institutions and improving governance in ways that prioritize citizen security, justice, and jobs, says the report

New capitols of capital,   World Policy Jnl/ US, Mar-May '11:
Since the beginning of the global trade in securities, bonds and currencies, 3 cities have emerged as the world's preeminent money centers: NY (Wall St), London (The City) and Tokyo. Today, with the emergence of dynamic economies in the developing world, there is a host of new potential global financial centers. The list is long: Mumbai, Singapore, Hong Kong, Seoul, Dubai, Lagos, Johannesburg. None yet rivals the current triumvirate. Three observers (A Galbraith, M Elder, and J Blount) based in 3 particularly interesting prospects - Shanghai, Moscow and São Paulo - weigh the strengths and weaknesses of their respective cities

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