News and Analysis: 29 Aug-9 Sep 11 | EmergingFrontierMarkets.com

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Posted on Fri, 9 Sep 11:

Economists show support for Obama job-growth plan, AP, 9 Sep 11 [courtesy Denver Post]:
A tentative thumbs-up. That was the assessment Thu night from economists, who offered mainly positive reviews of Pres Obama's $447 bln plan to stimulate job creation. Some predicted it would put hundreds of thousands of people back to work next year, mainly because a Social Security tax cut for workers would be deepened and extended to small businesses. The heart of Obama's plan is an expansion of the Social Security tax cut, which took effect this year and is scheduled to expire by year's end. The tax cut now applies only to workers; it reduces their SS tax from 6.2% to 4.2% (Highlights of Obama's jobs plan, Chicago Sun-Times)

Brian Jenkins: Five myths about 9/11, Washington Post, 2 Sep 11 [courtesy Rand]:
In the decade since, no number of commissions, books, films and reports has been able to end the misconceptions about what 9/11 meant, US response to it and the nature of the ongoing threat. As the anniversary nears, let's tackle some of the most persistent myths: 1) 9/11 was unimaginable, 2) The attacks were a strategic success for al-Qaeda, 3) Washington overreacted, 4) A nuclear terrorist attack is a near inevitability, and 5) US civil liberties were decimated after the attacks, says senior adviser to the corp. pres (New book provides critical review of US actions since 9/11, July '11)

Untangling intangible assets, OECD Observer, 29 July 11:
How many people you know swear by their iPhone? Probably quite a few. The phone's look and feel, innovative design and user-friendly interface, and clever marketing have made it the ubiquitous portable communication device of recent years. What does Apple have that its competitors don't? A new report suggests that the answer concerns less the tactile physical item itself than all the clever underlying stuff you cannot touch or carry home in your pocket. These 'intangible assets' are often overlooked by policy makers, yet many firms have intangible assets to thank for much of their success

Posted on Wed, 7 Sep 11:

US competitiveness ranking continues to fall, emerging markets are closing the gap, World Econ Forum, 7 Sep 11:
Switzerland tops the rankings in the Global Competitiveness Report 2011/12 released today. Singapore overtakes Sweden for 2nd place, while Finland is 4th. The US continues its decline for the 3rd year in a row, falling to 5th. In addition to the macro vulnerabilities that continue to build, some aspects of its institutional environment continue to raise concern among biz leaders. The results show that while competitiveness in advanced nations has stagnated in the past 7 years, for many emerging markets it has improved, mirroring the shift in econ activity from advanced to emerging economies (Full rankings [PDF])

Jim O'Neill: Swissy never lies, Goldman Sachs, 3 Sep 11 [PDF]:
Throughout Aug's market mayhem, the Swiss franc has been sharing in the roller coaster rides of global markets. As any old bold forex trader will tell you, 'Swissy never lies', ie, there is a belief among market players that the Swiss franc's movements have some mystical powers that shadow all the world's ups and downs. Thus, when the world is in a mess, the franc strengthens. Since mid-Aug, I have wondered if we will see some kind of coordinated G20 policies to support the world economy. In my view, the policy responses that are now needed include the following, says GS asset mgmt chair

China may have technological, economic edge over India in 2025, but also demographic disadvantage, Rand, 22 Aug 11:
As India and China continue to grow in prominence, each has certain advantages, but neither one is primed to have clear across-the-board competitive advantages over the other, acc to a new report. While India's prime working-age population will overtake that of China in 2028, China has advantages in sci/tech, as well as in developing its nat'l defense capabilities. But India's more open and flexible political structure may allow it to move nimbly in making adjustments to its policies and thereby improve its relative performance, perhaps providing it with an advantage over China

Posted on Mon, 5 Sep 11:

Connecting the dots in spillover of financial risks from major economies, IMF Survey Mag, 2 Sep 11:
Since the '08 global financial crisis, economists and policy makers have become more aware of the risks and potential destabilizing effects that policies and shocks in major economies can have on other nations and regions ('spillover effects'). A new report underlines the importance of financial links in spreading risk and how policies in major economies impact financial markets. The so-called major economies are the world's 5 largest - China, the Euro zone, Japan, UK, and US

Robert Zoellick: The big questions China still has to answer, FT, 1 Sep 11 [courtesy World Bank]:
The world's econ leaders need to 'rebalance' their thinking as well as their economies. Fiscal and monetary policies have dominated. That makes sense to a degree: decisions on deficits, debt and the euro zone this autumn may well determine whether the global econ slides deeper into danger, or begins the long climb back. But these policies are insufficient for sustained growth: we need action on the structural dynamics to generate jobs, higher productivity, and a sustainable long-term rebalancing, says Bank pres

Sharp tools - Use with care, Times Higher Education/ UK, 20 May 11:
Global university rankings provide insights that can help guide policy makers, but they must be aware of the inherent limitations of rankings. It is clear that rankings have become a serious policy tool. To ensure that its offering was fit for such use, Times Higher Educ reformed its rankings in '09. QS, fmr data supplier to the THE-QS World Univ Rankings, confirmed that it would continue to produce a ranking after THE decided to develop a new methodology with data from Thomson Reuters (Measured, and found wanting more, July '10 | Handle with care)

Posted on Fri, 2 Sep 11:

Jordan Schwartz: Investing in infrastructure still best bet to spur growth, jobs, Weblog at World Bank, 30 Aug 11:
Every profession has its fantasy triple-win. For a gambler at the horse races, it's the trifecta. For musicians, it is a song that breaks hearts, moves feet and sells records. Yet even we geeks have our dreams. In the field of infrastructure, in LatAm and elsewhere, the ultimate triple-win is an investment that: 1) spurs econ growth, 2) contributes to social well-being, and 3) helps the environment, says member of Bank's global expert team on public-private partnerships

Arvind Subramanian: Countering China's economic dominance, Bus. Standard/ India, 24 Aug 11 [courtesy Peterson Inst]:
Bismarck famously said of the US that it had managed to "surround itself on 2 sides with weak neighbors and on the other 2 sides with fish." India, unfortunately, does not enjoy this luxury of splendid isolation: instead of fish, it has Pakistan on one side and China on the other, a China that is on the verge of becoming economically dominant, sharing that status with the US for now and enjoying it exclusively in the near future. The India-China relationship is fraught, says Inst senior fellow (Political constraints will obstruct China's effort to rebalance its economy, Eurasia Group, 17 Aug)

R Glennerster and M Kremer: Small changes, big results - Behavioral economics at work in poor nations, Boston Review, Mar-Apr '11:
A new type of economics, dubbed 'behavioral economics', seeks to understand deviations from the simple 'rational agent' model that has dominated econ for most of its history - why people procrastinate, say, or why they don't exercise or save enough. In the developed world, these ideas are beginning to affect policy. It is time we harness its approaches to alleviate poverty in the developing world as well, say MIT Jameel Poverty Action Lab exec dir and Harvard prof (Experimental fad - A comment by UC-Berkeley's Bardhan | Conf on poverty and behavioral econ, UNU-WIDER, 2 Sep)

Posted on Wed, 31 Aug 11:

From 'contact group' to 'friends of Libya', Agence France-Presse, 30 Aug 11 [courtesy Expatica/ Netherlands]:
The int'l contact group on Libya is due to gather in Paris on Thu, with French Pres Sarkozy proposing to turn it into a gathering of the 'Friends of Libya'. The informal group comprises 28 nations and 7 int'l organizations in all, although the number of states sending envoys to the Paris meeting is expected to top 50. Leading state actors include the US, UK and France, and Qatar, a prominent supporter of the rebels among the Arab states (UK, France to hold conference on Libya | China to send observer to Libya conference, Deutsche Presse-Agentur) [courtesy M&C]

Robert Shiller: Yes, we can do stimulus without adding debt. Here's how, New Republic, 29 Aug 11:
There are 2 facts about our current econ situation that can no longer be denied: our economy is in desperate need of gov't stimulus, and our political system won't abide any increase in our nat'l deficit. Taken together, the 2 points seem to bode poorly for the US. But we shouldn't be too quick to assume a contradiction. Just because stimulus has traditionally been understood as a function of deficit-spending doesn't mean that's how it has to work, says co-author, with George Akerlof, of Animal Spirits (2009)/ Yale U prof

Wisdom of crowds, MIT News, 24 Aug 11:
In developing nations, anti-poverty programs face a basic hurdle: who, exactly, is poor enough to qualify for the aid being given out? Emerging states often lack the official records, such as income and tax documents, that are used to make those judgments in wealthier nations. Now, a novel study co-authored by two MIT economists (Abhijit Banerjee and Benjamin Olken) has identified a surprisingly effective way of deciding who, in the developing world, is especially poor

Posted on Mon, 29 Aug 11:

The I-word, Boston Globe, 28 Aug 11 [PDF, courtesy Harvard]:
Like corruption, crime and asbestos, 'inflation' is a word that many imagine in all-red capital letters, flashing across TV screens amid warnings of crisis. Harvard economist Kenneth Rogoff has spent his career fighting inflation. But then came the '08 financial crisis and the ensuing slump. And as the economy has continued to stagnate, he has become the flag-bearer for an unlikely position: that as we struggle to help the economy find its way out of the darkness, inflation could be the answer

Robert Barro: Keynesian economics vs regular economics, Wall St Journal, 23 Aug 11 [PDF, courtesy Harvard]:
Keynesian economics - the go-to theory for those who like gov‘t at the controls of the economy - is in the forefront of the ongoing debate on fiscal-stimulus packages. The agric secy said recently that food stamps were an 'econ stimulus' and that 'every dollar of benefits generates $1.84 in terms of econ activity'. In regular economics, an expansion of transfers (like food stamps) decreases employment and gross domestic product, says Hoover Inst senior fellow/ Harvard prof    (Skidelsky: The Keynes-Hayek rematch, Proj Syndicate, 19 Aug | Taylor: What does anti-Keynesian mean?, July '11) [courtesy Daily News Egypt]

Dominic Barton: Why Japan must be reimagined, Simon & Schuster, July '11 [PDF 1.2MB, courtesy McKinsey]:
Earthquake, tsunami, and the worst nuclear crisis since Chernobyl: the triple disasters of Mar '11 hit Japan when it was already feeling vulnerable, its confidence shaken by debt, deflation, and political inertia. This book was on its way to the publisher when the quake hit; hence, many authors recast their work. Japan faces two emergencies: aside from rebuilding the quake/tsunami-hit region, the other emergency has to do with its long-term social and econ trends, says consultancy's global managing dir   (Reimagining Japan: The quest for a future that works)

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