News and Analysis: 18-29 July 11 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 29 July 11:

Vincent Reinhart: Rebels without a clue, American Mag, 28 July 11:
All the talk about the US gov't hitting the brick wall of bankruptcy next week misses many of the finer points of fiscal mechanics. Tim Geithner will go to great lengths to avoid missing a payment of interest or principal on the debt. However, no one playing the ongoing game of fiscal chicken should bank on such prioritization going smoothly. The classic cinematic treatment of a game of chicken, Rebel without a Cause, revolves around teenagers, fueled by testosterone and with little thought of the future, dueling in hot rods. It ends with the character played by Sal Mineo going over a cliff because his coat gets caught in his car-door handle, says Amer Enterp Inst resident scholar

Isabel Sawhill: The Republicans are winning on the debt, but is the country?, American Square, 26 July 11 [courtesy Brookings Inst]:
Here we are careening toward the fiscal precipice with a lot of shouting and finger pointing but no brakes. If Moody's downgrades our debt, it will not be because our economy is broken like Greece's. It will be because our political system is broken like that of a third-world nation. Winston Churchill once said that Americans always do the right thing but only after they've exhausted all the alternatives. This may be a case where 'the right thing', which is to raise the debt ceiling and to put in place a long-term deficit reduction plan, eludes us. Who's to blame?, asks Inst senior fellow

The road to Busan, Weblog at OECD, 4 July 11:
An editor I once worked for had a golden rule for his reporters and editors: We don't do process. By that he meant that news stories should focus on what had happened, not the tedious ins and outs of how it had happened. Not bad advice it you want to write a vivid story, and many journalists would probably subscribe to it. Indeed, it may help to explain why there is such a gap in public awareness regarding two of the landmark development declarations of the 2000s

Posted on Wed, 27 July 11:

Investors scramble to position for expected US downgrade, Reuters, 26 July 11:
Fading hopes the US Congress will strike a deal in debt talks any time soon have left investors scrambling to position themselves for what many now view as an inevitable downgrade of the US. The 2 latest plans proposed by the Democrats and Republicans to deal with the deficit in the medium term are not enough to stop S & P or Moody's from stripping the US of its AAA rating (The difference between downgrade and default, UBS, 21 July | Alternatives to the US AAA - there's not much, Weblog at FT, 27 July)

Cross-border production without owing equity stakes is increasingly shaping global value chains, Unctad, 26 July 11:
Cross-border modes of int'l production without owning equity stakes in host-nation firms generated at least $2 trillion in sales globally in '10 and are growing rapidly, shaping world trade and investment patterns, acc to this year's World Investment Report. The study explains that int'l production is not exclusively about foreign direct investment and trade. Such 'non-equity modes' - which include contract manufacturing, services outsourcing, contract farming, franchising, licensing, and management contracts - allow transnational firms to coordinate activities in their global value chains and influence the mgmt of host-nation firms without owning equity stakes

Coffers: Improving our financial IQs - Why managing money should be a lifetime skill, Knowledge@Wharton, May '10:
It's no secret that many are financially illiterate - unable to understand basic principles of money mgmt, incl how to save, invest and manage their money. To address this situation, Wharton, Dartmouth and Rand have established the new Financial Literacy Ctr. Its director, A Lusardi - along with Treasury's dep asst secy for fincl educ/access M Greene - spoke with us about the need for financial literacy training and tools, the reasons why many tend to be ignorant when it comes to money matters, and why it's esp. important to teach smart spending and savings habits at a young age (Lusardi: The silent course of financial mistakes, Nov '09)

Posted on Mon, 25 July 11:

Jeffrey Sachs: Budgetary deceit and America's decline, Huffington Post, 23 July 11:
As I shuttle between East Africa, where a severe drought threatens the lives of more than 10 mln people, and Athens, where a financial crisis threatens Greece and all of Europe, I am shocked by the US budget negotiations between Congress and Pres Obama. Every part of the budget debate is built on a tissue of willful deceit. Consider the Republican Party's double mantra that the deficit results from 'runaway spending' and that more tax cuts are the key to econ growth, says Columbia U Earth Inst dir (Epstein: A 'debt limit' compromise, Hoover Inst, 19 July)

C-suite/ Boardroom: India's leading export - CEOs, Time, 25 July 11:
What on earth did the Banga brothers' mother feed them for breakfast? Whatever it was, it worked: Vindi grew up to become a top exec at Unilever, then a partner at a private-equity firm. His younger brother Ajay, after heading Citigroup Asia, was last year named MasterCard CEO. They are 2 of a growing roster of global Indian biz leaders, incl CEOs such as Citigroup's Pandit and PepsiCo's Nooyi as well as the deans of both Harvard Business School and Insead. What factors account for the rise and rise of India-trained biz minds? (Does management matter?, NBER Digest, June '11)

Switzerland ranks 1st among 125 economies on innovation, Insead, 30 June 11 [courtesy World Intell Property Org]:
Switzerland topped this year's Global Innovation Index rankings. Sweden is no.2, while Singapore, Hong Kong and Finland are nos. 3-5. The French business school Insead has been producing the index since '07. The index has evolved into a valuable benchmarking tool to encourage private-public dialogue among policy makers, business leaders and other stakeholders on the key role of innovation as a driver of econ growth and prosperity

Posted on Fri, 22 July 11:

At a glance - European debt deal, BBC News, 22 July 11:
Greece has more than 300 bln euros of debt - over 140% of its output - which few think it would have been able to pay back. EU and IMF agreed to a 110 bln-euro bailout last year. But that was not enough - with Ireland and Portugal bailed out afterwards and fears of contagion spreading to larger economies like Spain and Italy. Which led to this week's extraordinary summit in which the leaders of the euro zone plotted a deal to prevent more crises. So what was the deal?

Kemal Dervis: Small economies, big problems, and global interdependence, Project Syndicate, 19 July 11 [courtesy Daily News Egypt]:
The strong trade, financial, and natural-resource-related interconnections that have developed in the world economy can turn many otherwise small nations, or problems, into global systemic risks. The implications for global econ governance need to be understood and addressed. At the Seoul G20 summit in Nov '10, the leaders encouraged the IMF to work with the int'l Financial Stability Forum to develop an early warning system for global financial risks, and to analyze spillover effects of 'large economies' (China, US, UK, Japan, and the euro zone), says fmr UNDP head/ Brookings Inst vice-pres (Spillover Report - China, w/ key points [PDF,1.7MB])

Edward Glaeser: France and US - Vive la différence, Boston Globe, 14 July 11 [courtesy Harvard]:
Two hundred twenty-two years ago on 14 July, Parisians stormed the Bastille - the citadel and prison in the heart of their city. While the American Revolution required years of fighting from the fields of Concord to the woods of the Carolinas, an upheaval in Paris alone ensured major shifts in power in France in 1789 - and again in 1830, 1848, and 1871. Bastille Day inevitably reminds us of democratic ideals that resonate across national borders, but it should also remind us of how different we are from France, says Taubman Ctr dir/ Harvard prof

Posted on Wed, 20 July 11:

One Family: UN declares famine in Somalia, UN Humanitarian Office, 20 July 11 [courtesy ReliefWeb]:
The UN declared today that famine exists in 2 regions of southern Somalia. Nearly half of the Somali pop. of 3.7 mln people are now in crisis, of whom an estd. 2.8 mln people are in the south. Famine is declared when acute malnutrition rates among children exceed 30%; more than 2 people per 10,000 die per day; and people are not able to access food and other basic necessities. Consecutive droughts have affected the nation in the last few years, while the ongoing conflict has made it extremely difficult for agencies to operate and access communities in the south (UN airlift arrives with vital aid for Somali refugees in Kenya)

C Reinhart and K Rogoff: When debt stifles growth, Businessweek, 14 July 11:
There's considerable debate about the urgency of taming deficits with the aim of stabilizing and ultimately reducing debt as a percentage of gross domestic product The '90% Rule' is cited by policy makers arguing both for and vs more stimulus. Although we agree that govts must exercise caution in gradually reducing crisis-response spending, at what point does indebtedness become a problem?, ask co-authors of This Time Is Different: Eight centuries of financial folly (2009)/ Peterson Inst senior fellow and Harvard prof

'Trade in value-added' a better measure of world trade, WTO's Lamy says, World Trade Org News, 6 June 11:
In launching a publication on global value chains in E Asia, Lamy said that "by focusing on gross values of exports and imports, traditional trade stats give us a distorted picture of trade imbalances between nations." Aside from China, which is today dubbed the 'world manufacturer', there is a series of industrial success stories in Malaysia, Indonesia or Thailand. And this is not limited to manufacturing. Trade in commercial services has been spreading, as global manufacturing demands state-of-the-art logistical, communication and biz services to thrive. Hong Kong and Singapore have become giant trade hubs, while India and the Philippines have developed successful activities of biz-services exports (What's it like to work in an Indian call center?, ReadWriteWeb, 7 July | The world's hotline, BBC News, 17 July)

Posted on Mon, 18 July 11:

Hall of Fame: Obama wishes Mandela a happy birthday, allAfrica, 18 July 11:
Today is the world's 2nd ever Mandela Day, held to mark the legacy of the SAfrican leader and anti-apartheid campaigner. US Pres Obama and wife Michelle have saluted Mandela on his 93rd birthday, saying he set the standard for service delivery by civil servants worldwide. Michelle and her 2 daughters recently met him during an official visit to SAfrica (World icon Mandela's birthday sparks inspiring day of volunteer work | The life and times of Nelson Mandela, Journal/ Ireland)

Nancy Birdsall: Lipton and Zhu at the IMF - Intellectual and policy duopoly?, Weblog at Ctr Global Dev't, 14 July 11:
The appointment of fmr People's Bank of China deputy governor Zhu Min as one of the 2 IMF deputy dirs - the 1st time that a Chinese official has held such a post - suggests that Beijing extracted something worthwhile in exchange for backing Lagarde. His appointment also shows that China is interested in expanding its influence within the IMF. Power still matters; it’s just that power is shifting, says Ctr pres (Momani: Is the IMF a sexist org?, HuffPost, 7 July)

Global trends - Third quarter (exec sum), Eurasia Group/ PricewaterhouseCoopers, July-Sep '11 [PDF, 1MB]:
This report examines major trends shaping the global business environment, with a focus on: 1) Uneven progress on anti-corruption efforts, 2) The Fukushima effect - Gov't responses to the nuclear crisis in Japan, 3) Latin America's divergent trajectories, 4) The politics of US deficit reduction, and 5) Emerging markets fight inflation

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