News and Analysis: 2-13 July 12 | EmergingFrontierMarkets.com

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Posted on Fri, 13 July 12:

Dani Rodrik: The new global economy's (relative) winners, Project Syndicate, 12 July 12 [courtesy Bus.Day/Nigeria]:
The world economy faces considerable uncertainty in the short term. This is the kind of global environment that diminishes every nation's potential growth. It is an environment that will produce deep disparities in econ performance around the world. Some nations will be much more adversely affected than others. Those that do relatively better will share 3 characteristics, says Harvard prof/ inaugural Albert Hirschman Prize awardee '07 of the Soc Sci Res Council in NY

Frontier markets - Next generation of emerging markets, Credit Suisse, 22 June 12:
Investors are increasingly looking for the next emerging generation, commonly described as frontier markets. Taking GDP growth forecasts as a proxy for future earnings, frontier markets are set to outgrow developed markets and are head-to-head with their emerging peers. Their more positive macro fundamentals place them ahead of emerging markets and their more promising demographics, a lower gov't debt burden and a less advanced credit cycle leave them well-positioned to attain long-term outperformance

Amer Econ Assn disclosure guidelines - 'Stronger than expected', Economics Intelligence, Jan '12:
One year ago, Gerald Epstein and Jessica Carrick-Hagenbarth, 2 U Massachusetts Amherst economists, organized an open letter to the AEA urging the org to "adopt a code of ethics that requires disclosure of potential conflicts of interest." More than 300 economists signed it, incl Nobel Laureate George Akerlof and fmr adviser to Pres Obama, Christina Romer. Almost exactly one year later, the AEA in fact agreed on a new disclosure codex [PDF]. What do the open letter's authors make of the new guidelines?

Posted on Wed, 11 July 12:

Allan Meltzer: What's wrong with the Federal Reserve?, Wall Street Journal, 10 July 12 [courtesy Stanford's Hoover Inst]:
By allowing its monetary policy to be influenced by politicians and market speculators, the Fed is putting its independence at risk. It is also neglecting basic economics. Consider the response to last week's employment report for June--a meager 80,000 net new jobs created, and an unemployment rate stuck at 8.2%. Day traders and speculators immediately clamored for additional monetary easing. To his credit, the Fed chair did not immediately agree. But he failed utterly to state the obvious, says Carnegie Mellon U prof/Inst distinguished visiting fellow

Simon Johnson: Predators and professors, Project Syndicate, 18 June 12 [courtesy Guatemala Times]:
Are America's great universities still the stalwart custodians of knowledge and leading forces for tech progress that they once were? Or have they become, in part, unscrupulous accomplices to increasingly rapacious econ elites? As Charles Ferguson shows in the Academy Award-winning documentary 'Inside Job' and in his recent book, Predator Nation, some prominent academics received significant sums to promote the interests of large banks and financial-sector firms, says fmr IMF chief economist/MIT prof

New book suggests principles for int'l regulation of capital flows, Peterson Inst, 11 June 12:
In their new book, Who Needs to Open the Capital Account?, Inst economists Olivier Jeanne, Arvind Subramanian and John Williamson call for new and ambitious rules to regulate int'l capital flows. Twenty years after the rise of emerging markets finance, there has been a distinct shift in attitudes towards int'l capital flows. Repeated financial crises have moved the pendulum from an enthusiastic embrace of foreign capital to wariness, which the authors think is well-warranted

Posted on Mon, 9 July 12:

Hans-Werner Sinn: The European banking union?, Handelsblatt, 3 July 12 [courtesy CESifo Grp]:
In blatant violation of the Maastricht Treaty, the EU Commission has come forward with one bailout plan after another for Europe's distressed economies. Now it wants to socialize not only gov't debt by introducing Eurobonds, but also banking debt by proclaiming a 'banking union' (In support of a European banking union, done properly--A Manifesto, Vox EU, 9 July) [Ed.'s note: This was in response to a statement by Prof. Sinn and 171 German economists in Frankfurter Allgemeine Zeitung (in German)]

Design policies to ensure growth is socially inclusive - report, OECD/World Bank, May '12:
Econ policy should be better designed to bring about more inclusive growth, ensuring that the benefits of increased prosperity are shared more evenly across society, acc to a recent report, 'Promoting Inclusive Growth: challenges and policies'. It assesses the options nations have as they seek to make growth not only stronger, but also more inclusive. Standard measures of econ expansion do not fully take into account how the benefits of growth are shared across society and affect poverty and income distribution

Christopher Paul: Should the US leave Afghanistan now?, Weblog at NY Times, 3 Apr 12 [courtesy Rand]:
What does history suggest about the prospects for further efforts in Afghanistan? We analyzed 30 counterinsurgency campaigns from '78 to '08 to determine the ingredients of success or failure. We compared the results to the ongoing Afghan campaign. Afghanistan lacks several traits that have been crucial to success historically. The result: the campaign appears poised on a knife's edge between success and failure, says Rand social scientist (Three pots of tea, Rand Review, Dec-Feb '12)

Posted on Fri, 6 July 12:

Global foreign direct investment losing momentum in '12, prospects for '13 cautiously optimistic, Unctad, 5 July 12:
A new report, World Investment Report 2012, indicates that global foreign direct investment (FDI) flows in '11 surpassed the pre-crisis average - reaching US$1.5 trillion, despite persistent uncertainty in the global economy. However, flows still remained more than 20% below their '07 peak. Also, the Unctad FDI attraction index, which measures the success of economies in attracting FDI, features 8 developing/transition economies in the top 10, compared with only 4 a decade ago

Winner named for Wolfson economics prize on Euro zone break-up plan, Policy Exchange, 5 July 12 [PDF]:
A team from an independent consultancy, Capital Economics, led by its managing director, Roger Bootle, has been announced the winner of the £250,000 Wolfson Economics Prize. The winning entry outlines the smoothest process by which a member state could exit the Euro zone. The team's submission, 'Leaving the euro: A practical guide' [summary, PDF], centers on the departure of a single weak member such as Greece

Amartya Sen: Austerity is undermining Europe's grand vision, Guardian, 3 July 12:
The dream of the unification of Europe goes back at least to the 15th century, but it is the nastiness of the world wars in the 20th century that established its urgent need in our time. Now, econ policy is triggering disaffection among nations - the very thing the pioneers of unity hoped to erase. There is no danger of a return to 1939, but it does not help Europe to have dogs barking, sequestered in resentment and contempt - if not hate, says Nobel Laureate '98/Harvard prof

Posted on Wed, 4 July 12:

Corruption, dysfunction await new World Bank president, Forbes, 27 June 12 [single-page format, courtesy Daily Star]:
With 188 member nations and an army of 9,000 employees and consultants, Kim will lead one of the world's most powerful institutions--charged with saving the world's poor--but also one of its most dysfunctional. With its $57 bln aid portfolio, muddled objectives and failure to contain corruption, a decade of reform efforts have done little to fix the Bank (The fate of a WB whistle-blower | Kim assumes WB presidency amid uncertainty, Inter Press Svce, 3 July)

Charles Wolf: The inequality debate -- US vs. China, Int'l Economy Mag, Mar-May '12 [PDF]:
The ongoing US debate is paralleled by one in China that is less visible and less audible, but no less intense. Despite their differences, the 2 debates share a common characteristic: what they emphasize is less important than what they neglect. They emphasize the magnitude of inequality and changes in it. They neglect why inequality occurs, which reasons are good and which are not, and what, if anything, to do about it, says Rand prof/Stanford's Hoover Inst senior fellow

Crash course: CERN announces observation of new particle consistent with long-sought Higgs boson, MIT News, 4 July 12:
Today, the European Org for Nuclear Research (known by its French initials CERN) announced the most conclusive evidence yet for the existence of the Higgs boson, a long-elusive cornerstone of the Standard Model of physics. This subatomic particle, 1st postulated in the '60s and widely sought ever since, is thought to underlie the origins of mass (3 Questions - The newly discovered particle | Explained: Sigma | Exploratorium: At the CERN)

Posted on Mon, 2 July 12:

Monopolies hold back Mexico's economy with high prices, poor service, McClatchy, 16 June 12 [courtesy Kansas City Star]:
Enter a store in Mexico, and you're likely to find only 2 brands of fresh milk, Lala and Alpura. The 2 companies control the market. The same goes for beer. Two conglomerates have a lock. In fresh bread, most brands belong to Bimbo, a massive company. Pick up the cellphone on the way home, and you'll probably be enriching the world's wealthiest man, Carlos Slim, who controls Telcel, its biggest cellular network (Congress'l Res Svce: US-Mexico econ relations--Trends, issues, and implications, Feb '11 | Mexico's economy after the global financial crisis, Sep '10) [courtesy Open CRS]

Developing economies warn of damage from Basel, Volcker rules, Bloomberg, 20 June 12:
Global regulators are being urged by some developing nations to amend plans that would force banks to boost their capital and liquid assets, expressing concerns the measures may harm their economies. A survey of developing and emerging economies conducted by the int'l Financial Stability Board revealed concerns that measures drawn up in the wake of the '08 Lehman collapse "could have adverse consequences on the financial markets in those nations" (Study on the potential unintended consequences of regulatory reforms on emerging market and developing economies: Media release | Report) [PDF]

Wealth managers need wake-up call to lift profits amid tough markets, Boston Consult. Grp, 31 May 12:
Facing volatile equity and bond markets, increasingly demanding clients, and ever-watchful regulatory agencies, players in the global wealth management industry must proactively find new ways to counter difficult trends if they hope to improve their performance, acc to a new report, 'The Battle to Regain Strength: Global Wealth 2012' [PDF] (Private banks forced to focus, KPMG, Feb '12 | Regulations, client expectations change status quo in wealth mgmt industry, PwC, June '11)

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