News and Analysis: 21 May-1 June 12 | EmergingFrontierMarkets.com

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Posted on Fri, 1 June 12:

Wolfgang Schauble: Germany says yes to growth, yes to rigor, Les Echos/France, 15 May 12 [transl. by Worldcrunch]:
Before discussing a 'growth initiative', we should 1st address a misunderstanding. By growth, I most certainly do not mean the artificial stimulation of demand by gov't spending. Such stimulus can be useful in the context of an acute shock, when the state coffers are well-stocked, but not when the impediments to growth are structural, says Germany's finance minister (Velasco: The Greek crisis - A cautionary tale from Argentina, Weblog at Guardian, 30 May)

Minder of the gaps - A profile of Laura Tyson, Finance & Dev't, by J Clift, June-Aug '12:
The 1st woman to head the US Pres.'s Council of Economic Advisers spends a lot of her time thinking about gaps and deficits - what's not there, what's missing: the jobs gap, the income gap, the education gap, the gender gap, and maybe the most disturbing gap of all, the yawning fiscal deficit. She also believes that protests vs rising income inequality in the US - where the top 1% of society are hugely wealthy compared with the bottom 99% - represent the new cause of our times

Eswar Prasad: India's rupee in free fall, Wall Street Journal, 21 May 12 [courtesy Brookings Inst]:
The falling Indian rupee, which recently closed at an all-time low to the dollar, is a perfect metaphor for the free fall India's economy seems to be in. Growth has slowed to below 7%, and industrial growth has virtually ground to a halt. High oil prices widened the current account deficit, and now finicky global investors are pulling capital out, says Inst senior fellow/ Cornell U prof (Subramanian: What is India's real growth potential?, Biz Standard) [courtesy Peterson Inst]

Posted on Wed, 30 May 12:

Greek Euro exit may exceed $1.25 trillion - Inst Int'l Fin, Bloomberg, 26 May 12:
The cost of Greece exiting the euro would be unmanageable and probably exceed the 1 trillion euros ($1.25 trillion) previously estimated by the Inst of Int'l Finance, its managing dir said. The Wash.-based IIF's projection from earlier this year is "a bit dated now" and "probably on the low side", he said in an interview (Greek bankruptcy would cost 1 trillion euros, Athens News, Mar '12 | Neither euro, nor drachma - Could a new 'Geuro' currency save Greece?, Die Welt, 23 May) [transl. by Worldcrunch]

David Warsh: Hard times for the elusive 'father of the Euro', Economic Principals, 27 May 12:
At 80, the so-called 'father of the euro' (and chief architect of 'supply-side economics') remains the same indistinct figure that he has been for 60 years, clearly in the picture but somehow just beyond the focal plane. A recent case in point: The 'MIT family tree', a 'charticle' that was authoritative enough to be posted on the bulletin board of MIT's econ dept. But missing altogether is Robert Mundell, who in a very real sense 1st plowed and planted the field known today as int'l macroeconomics, says financial journalism's Gerald Loeb Award two-time winner (Ahead of his time - A profile of Mundell, Finance & Dev't, Sep '06)

Why nations fail - and why Burma may succeed, Irrawaddy Mag/Thai., 23 Apr 12:
Why Nations Fail is arguably the most talked-about social science book of '12. Harvard's Robinson and MIT's Acemoglu take a look at some of the big issues for today: Will China's authoritarian growth model trump the West? Will the US falter? How can economically struggling nations, like Burma, achieve prosperity? We discussed Burma with the the authors, getting their thoughts on what might come next for the nation that is on a military-backed reform course, after a half-century of army rule (Will Burma succeed?, Why Nations Fail)

Posted on Mon, 28 May 12:

Debunking the myth of intuition--Q&A with Daniel Kahneman, Der Spiegel, 25 May 12:
Can doctors and investment advisers be trusted? And do we live more for experiences or memories? The Nobel Laureate in Economics '02 and author of Thinking, Fast and Slow (2011) discusses the innate weakness of human thought, deceptive memories and the misleading power of intuition. Q: You've spent your entire professional life studying the snares in which human thought can become entrapped

Robert Johnson: A pathway to sound economic thinking, OECD Observer, 15 May 12:
As Joseph Schumpeter once described, economics at its core is about 3 things: politics, politics, and politics. The parables of financial theory are themselves a reflection of the blind spots and taboos in modern politics that anthropologists identify when studying tribal cultures. Some assumptions simplify and are helpful and illuminating. Others introduce harmful ideas that are meant to serve concentrated powerful interests, says Inst for New Econ Thinking exec dir

'Austerity will surely fail' - Stiglitz, Europolitics, 4 May 12 [PDF, courtesy Columbia U] (Pls scroll to the last page--Ed.):
Because he is American and a Nobel Laureate, his discourse - disturbing, iconoclastic and in total opposition with European Council conclusions in recent months - stands a better chance of attracting attention. Joseph Stiglitz urges Europe to reverse the tough austerity measures being imposed on it by Germany and the budget pact signed by 25 of the 27 EU member states

Posted on Fri, 25 May 12:

Eswar Prasad: India and China should go their own ways, FT, 21 May 12 [courtesy Brookings Inst]:
In the aftermath of the financial crisis, emerging market economies, led by China and India, kept world growth from collapsing. As Europe again teeters on the brink of disaster and the tepid US recovery lurches along, the growth slowdowns in China and India augur rough times ahead for the world economy. To keep these 2 engines of world growth on track, fiscal policy intervention must be a priority. What is needed in each is a mirror image of the other, says Cornell U prof/ Inst senior fellow

Edward Lazear: Three views of the "fiscal cliff", WSJ, 20 May 12 [courtesy Hoover Inst]:
Discussion of the so-called "fiscal cliff"--the combination of tax increases and spending cuts that will come in '13 if Congress and the president don't act--confuses a number of different issues. Anyone who uses the term "fiscal cliff" accepts a Keynesian view of the economy, knowingly or not. Both tax increases and constrained spending are assumed to be bad for the economy. But there are 2 other views, says US pres.'s Council Econ Advisers fmr chair/ Stanford prof

The 'middle-income trap' -- Comparing Asian and LatAm experiences, OECD, May '12 [PDF,1.8MB]:
More than a decade of robust and sustained econ growth in emerging economies is contributing to a trend of increasing convergence in per capita income with high income nations. However, over the last decade, while 28 nations have reached middle-income status, only 12 nations have graduated into high-income country status. This suggests that, at middle levels of income, econ growth and structural upgrading become more arduous - the so-called 'middle-income trap'

Posted on Wed, 23 May 12:

80% of invest. promotion agencies' efforts falling short - report, Int'l Fin Corp/Multi. Invest. Guarantee Ag./WB, 20 May 12:
Even as nations compete to attract investments, national investment promotion agencies are failing to respond to investor inquiries in the key sectors of agribusiness and tourism, acc to the 'Global Investment Promotion Best Practices 2012' report. The report shows that limited resources need not be an obstacle to effectiveness, as in the case of Cyprus, with one of the world's top-performing agencies. Also, Nicaragua's agency emerged as the world's top investment facilitator, becoming the 1st developing nation to do so

Acemoglu/Robinson: What we owe Egypt, Project Syndicate, 4 May 12 [courtesy Korea Times]:

The protesters in Tahrir Square perceived the cause of Egypt's poverty in its non-responsive, repressive political system, its corrupt gov't, and the general lack of equality of opportunity in every sphere of their lives. They saw their current leaders as part of the problem, not part of the solution. There should be no illusion that the transformation that the protesters started will be smooth, say co-authors of Why Nations Fail (2012)/ MIT and Harvard profs

Mouse & wo/man: Nottebohm/Associates--Sizing the Internet economy in emerging countries, FT, 3 Apr 12 [courtesy McKinsey]:
In '11, we produced an estimate of the Internet’s econ impact in 13 economies that account for more than 70% of global GDP, incl the G8, the BRICs, Sweden and S Korea. We found that the Internet generated 10% of the GDP growth of the developed nations we studied over the past 15 years and 21% over the past five. But what do we know about the impact of the Internet in the emerging world?, ask McKinsey partner, director and Inst senior fellow (Online and upcoming - The Internet's impact on 'aspiring' countries, Jan '12)

Posted on Mon, 21 May 12:

G8 backs Greece, papers over tensions, AFP, 20 May 12 [courtesy Khaleej Times/UAE]:
G8 leaders said they want debt-stricken Greece to stay in the euro zone at a Camp David summit as the group papered over deep-seated divisions about how best to tackle the euro-zone crisis. The drama in Greece and growing voter unease in France and Germany pushed the euro zone crisis right to the top of the G8 summit agenda. Obama noted the leaders' agreement that growth and jobs must take precedence over austerity (Europe raises threat level vs Athens, Der Spiegel, 21 May)

Allan Meltzer: Banks need more capital, not more rules, Wall St Journal, 17 May 12 [courtesy Stanford Hoover Inst]:
The JP Morgan mistakes that resulted in a loss of $2 billion or more have awakened some senators to the fact that the Dodd-Frank financial-regulation legislation of '10 did not prevent errors of judgment and investment losses. But the politicians have drawn the wrong conclusion. They claim that more regulation will protect the public. That's wrong for three reasons, says Inst visiting fellow/ Carnegie Mellon U prof

Disclosure of assets and income by public officials is crucial to curbing corruption - study, World Bank-UN, 28 Mar 12:
Disclosure by public officials of their income, assets and interests should be mandated if the fight vs corruption is to succeed, acc to a study released by the Stolen Asset Recovery Initiative of the Bank and the UN Office on Drugs and Crime. The 1st global study of financial disclosure laws and practices also finds that asset disclosure systems are more effective when there is a credible threat that violations will be detected and punished

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