News and Analysis: 16-27 Jan 12 | EmergingFrontierMarkets.com

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Posted on Fri, 27 Jan 12:

European finance chiefs hail fiscal compact, call for growth and jobs focus, World Econ Forum, 27 Jan 12:
In a session in Davos on the future of the Euro zone, EU finance/ econ ministers hailed the imminent agreement on closer fiscal convergence as a major step to restore confidence in their distressed economies. However, the ministers acknowledged that there remains disagreement on key measures to address the debt crisis, incl the concept of a firewall to prevent the spread of panic in the event that the situation spins out of control    (US economy to grow 2-3% in '12, says Treas Secy Geithner)

Brazil's Rousseff snubs Davos, opts for anti-capitalist debate, Deutsche Presse-Agentur, 26 Jan 12 [courtesy M&C]:
Brazil's pres snubbed Davos this year and opted instead to take part in the anti-capitalist World Social Forum. She is expected to talk about the preparations for the UN Rio+20 Earth Summit, which is to be held in Rio de Janeiro in June. The gathering in Porto Alegre has as its theme this year 'Capitalist Crisis - Social and Environmental Justice'. It is also a platform to prepare the Peoples' Summit to be held in parallel to the Rio+20 gathering    (Brazil's Rousseff slams Europe for fiscal austerity | World Social Forum)

K Dervis and J Evans:  Put jobs center stage, World Econ Forum, 26 Jan 12:
There now appears less consensus on how to move forward than there was in 2008/09. The Euro-zone crisis has brought to the fore wholesale calls for more austerity in Europe in the short run to reduce public deficits and instill 'confidence' in financial markets. But positive growth expectations are as important for 'confidence' as deficit reduction. Without growth supporting policies, this scenario is more likely to create a deflationary spiral, say Brookings Inst vice-pres and member, trade union advisory cmte to OECD chair    (Session on: Employment for growth - One challenge, 6 solutions)

Posted on Wed, 25 Jan 12:

Euro zone crisis seen as major factor in sharp fall in private capital flows to emerging markets, Inst Int'l Fin, 23 Jan 12:
The Euro zone crisis is having a negative impact on private capital flows to emerging markets, as a new report forecasts a substantial slowing of flows into these markets. The IIF, a global association of financial services firms with more than 450 members, said private capital flows to emerging markets this year are likely to total $746 bln, down from $910 bln in '11, which in turn was a decline from $1,040 bln in '10

Raghuram Rajan: Too big to save?, Time, 19 Jan 12:
Consider banking, in which, more than in any other field, managers work with other people's money. At worst, failing bankers' liability would be limited to their losing their jobs. That gives bankers asymmetric incentives. They keep more of the wealth they create while suffering fewer of the losses they inflict on their investors and society. As a result, they have an incentive to take on more risk, not all of which is socially beneficial, says author of award-winning book Fault Lines (2010)/ fmr IMF chief economist

Survey reveals deepening US competitiveness problem, Harvard Univ, 18 Jan 12:
A survey of nearly 10,000 biz school alumni incorporates opinions of global execs in leadership and decision-making roles - 71% of whom expect US competitiveness to decline over the next 3 years. The survey provides a detailed look at factors motivating global firm location decisions. Of the cases where respondents had been personally involved in US-related location decisions within the past year, 57% considered the possibility of moving existing activity out of the US, while only 9% considered moving existing activities into the US (Harvard launches US competitiveness project, Dec '11)

Posted on Mon, 23 Jan 12:

Jeffrey Frankel: Will emerging markets fall in 2012?, Project Syndicate, 21 Jan 12 [courtesy New Times/ Rwanda]:
Emerging markets have performed amazingly well over the last 7 years. As '12 begins, however, investors are wondering if emerging markets may be due for a correction, triggered by a new wave of "risk off" behavior. Will China experience a hard landing? Will a decline in commodity prices hit LatAm? Will Europe's sovereign-debt woes spread to neighbors such as Turkey? Three possible lines of argument support the worry that emerging markets' econ performance could suffer dramatically, says Harvard prof

Germany's Angela Merkel to open meeting at Davos, World Economic Forum, 18 Jan 12:
The theme of this year's meeting from 25-29 Jan, 'The Great Transformation: Shaping new models', reflects the need for a profound overhaul in the face of a fraying global system and lingering econ malaise. The meeting's 4 sub-themes, which reflect the interconnected nature of the changes required, are: growth and employment models; leadership and innovation models; sustainability and resource models; and social and technological models (Schwab: Davos 2012 - Beating the burnout, 23 Jan)

New report outlines trends in US global competitiveness in sci/tech, Nat'l Science Board, 17 Jan 12:
The US remains the global leader in supporting S&T research and dev't, but only by a slim margin that could soon be overtaken by rapidly increasing Asian investments in knowledge-intensive economies, acc to a new report by the Nat'l Science Board, the policy making body for the Nat'l Science Foundation. The largest global S&T gains, says the report, occurred in the 'Asia 10' - China, India, Indonesia, Japan, Malaysia, Philippines, Singapore, SKorea, Taiwan and Thailand - as those nations integrate S&T into econ growth

Posted on Fri, 20 Jan 12:

John Taylor: Argentina in Dec 2001 vs Europe in Dec 2011, Author's Weblog, 31 Dec 11:
Despite the immediate and sharp impact of the Argentine default, there was very little int'l contagion at the time. This outcome was contrary to many warnings at the time that such a default would have large contagion effects much as the Russian default 3 years earlier in '98. Contagion is not automatic if the policy is clear and predictable, says fmr Treas undersecy/ Stanford prof (IMF's Indep.Evaluation Ofc releases report on role of IMF in Argentina, July '04 [PDF] | Fmr IMF official blames Fund in Argentina's econ collapse, July '02 | Michael Mussa, fmr IMF chief economist, dies at 67, 17 Jan) [courtesy Peterson Inst]

FDI index forecasts emerging markets to rise relative to developed nations over next 2 years, A T Kearney, 7 Dec 11:
A foreign direct investment rebound will be slow at best, and the focus of corporate investments is increasingly on developing markets, acc to the 2012 Foreign Direct Investment Confidence Index, a regular measure of senior exec sentiment at the world's largest firms. With India replacing the US for the no.2 position, 3 major emerging markets - China, India and Brazil - took the top 3 spots as investment destinations of choice. Conducted regularly for the last 13 years, the index provides a unique look at the present and future prospects for int'l direct investment flows

Robert Wade: How development economics can become 70% more effective, Asia Policy, Jan '11 [PDF]:
When dev't economists today tackle big issues of strategy, they tend to prescribe free markets, capital accumulation, and a policy that tilt toward export promotion as the keys to rapid econ growth. There is scarcely any analysis of the stages of econ transformation. Thus, Ozawa's new book, The Rise of Asia, is a blast of fresh air. He starts with the pioneering work of Akamatsu in the '30s, who coined the term 'flying geese' pattern of industrial dev't, says London Sch Econ prof (Bhagwati: Poor economic policies can be rather painful, literally, Times of India, July '11) [courtesy Amer Interest]

Posted on Wed, 18 Jan 12:

Turbulent year ahead for global economy, World Bank, 18 Jan 12:
The world economy in '12 is set to grow by just 2.5%, weighed down by ripple effects from the '08 financial crisis, says the Bank's latest Global Economic Prospects 2012, published today. Europe's sovereign debt crisis, which took a turn for the worse in Aug '11, coincides with slowing growth in several major developing nations (Brazil, India and, to a lesser extent, Russia, SAfrica and Turkey). As a result, developing country growth for '12 is now forecast at 5.4%, the 2nd lowest over the past 10 years

John Kay: Let's talk about the market economy, FT, 11 Jan 12 [courtesy author's site]:
The business leaders of today are not capitalists in the sense in which Rockefeller in the US and Arkwright in the UK were capitalists. Modern titans derive their authority and influence from their position in a hierarchy, not their ownership of capital. They have obtained these positions through their skills in organizational politics, in the traditional ways bishops and generals acquired positions in a church or military hierarchy, says Oxford U Said Bus.Sch founding dir (Summers: Why isn't capitalism working?, Weblog at Reuters, 9 Jan) [courtesy Harvard]

Coffee/Tea Room: The world's friendliest countries, Forbes, 6 Jan 12:
Living abroad doesn't have to lead to homesickness. That's esp. true for people who have relocated to New Zealand, Australia or S Africa. These are the 3 nations where it's easiest to befriend locals, learn the local language, integrate into the community and fit into the new culture, acc to the HSBC's Expat Explorer Survey results, released last month. Coming in just behind are Canada and US. In the largest global survey of expats, a research firm surveyed 3,385 expats in 100 nations between May and July '11

Posted on Mon, 16 Jan 12:

Barry Eichengreen: Europe's vicious spirals, Project Syndicate, 12 Jan 12 [courtesy Social Europe Jl]:
While '11 was supposed to be the year when European leaders finally got a grip on events, the euro-zone's problems went from bad to worse.  Indeed, by the end of the year, banks and govts had begun making contingency plans for the collapse of the monetary union. The problem is not just that Europe faces a sovereign-debt crisis, but also that it faces a growth crisis, which worsens the debt problem, says UC-Berkeley prof

'Rashomon' and the financial crisis, Boston Globe, 27 Dec 11:
Andrew Lo, who directs the MIT Lab for Financial Engineering, has reviewed 21 books about the crisis for the Jl Econ Literature - 10 by academic economists, 10 by journalists, and one by fmr Treas Secy Paulson. The experience, he writes, was like watching Akira Kurosawa's classic film 'Rashomon': "We're left with several mutually inconclusive narratives, none of which completely satisfies our need for redemption and closure." What's most disconcerting to Lo is "the fact that we can't even agree on all the facts"    (Reading about the financial crisis - A 21-book review, Jan '12 [PDF] |   Raising the right alarms on risk, Fortune, June '10)

C-suite/ Boardroom: Clayton Christensen--How will you measure your life?, Harvard Bus. Rev, July '10:
This past year I was diagnosed with cancer and faced the possibility that my life would end sooner than I'd planned. Thankfully, it now looks as if I'll be spared. But the experience has given me important insight into my life. I have a pretty clear idea of how my ideas have generated enormous revenue for companies that have used my research. But as I've confronted this disease, it's been interesting to see how unimportant that impact is to me now, says Harvard prof   (This article was recently selected for the top prize of the McKinsey Awards '11, which recognize the best articles published in the mag--Ed.)

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