News and Analysis: 1-15 Feb 2013 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 15 Feb 13:

Awash in liquidity, the global economy remains sluggish, Washington Post, 15 Feb 13:
There's plenty of money in the world. That's the good news. The not-so-good news: The flood of dollars, euros, yen and pounds pumped into the global economy by major central banks in recent years has yet to pay off in the form of job creation and stronger econ growth. Major currencies such as the dollar, euro and yen, however, don't stay at home. They circulate around the world as the fuel for the int'l monetary system. The issue will be at the center of talks this week in Moscow among finance and central bank officials from the Group of 20

Simon Evenett: Root causes of currency wars, Vox EU, 14 Feb 13:
There is an air of resignation--almost of inevitability--to some commentary on today's currency war. While the major industrial economies remain in the doldrums, differences in timing of monetary policy easing will result in repeated charges of beggar-thy-neighbor policymaking and so the currency war reads like a book with many chapters. It is 1st worth noting that the apparent inevitability has led to 5 rationalizations for the current currency war, writes UK Ctr Econ Policy Res int'l trade prog co-dir / Univ St Gallen (Switz) prof

Infrastructure productivity -- how to save $1 trillion a year, Mckinsey, Jan '13:
Meeting the world's large and growing infrastructure challenges is vital for growth and dev't. Insufficient or inadequate infrastructure--and the resulting congestion, power outages, and lack of access to safe water and roads--is a global concern. Typically, the debate about the growing need for infrastructure focuses on whether financing is sufficient to meet it. But, in fact, there are clear ways to create more and better infrastructure for less. We have identified 3 broad types of moves that could help deliver savings

Posted on Wed, 13 Feb 13:

Coffers: Investors are in denial, London Business School, 12 Feb 13:
Historic lows for interest rates and bond yields mean low prospective returns on all assets, acc. to London Bus. Sch's E Dimson, P Marsh and M Staunton, authors of the Credit Suisse's Global Investment Returns Yearbook 2013 [PDF]. The yearbook comprises feature articles, together with profiles of 22 national and 3 regional markets. It covers the 5 main asset classes, with a dataset that spans 113 years from 1900 to the present day. The 2013 edition includes 3 new nations incl China and Russia

Paola Subacchi: An era of 'currency wars'?, Project Syndicate, 1 Feb 13:
The term was coined in '10 by Brazil's finance minister to criticize successive rounds of so-called quantitative easing by advanced nations' central banks, which sent capital fleeing to developing nations in search of higher yields, driving up these nations' exchange rates in the process. This time, Bundesbank Pres Weidmann is warning that the erosion of central-bank independence in some nations (referring to Japan) will trigger competitive exchange-rate devaluations, writes UK's Royal Inst Int'l Affairs research dir of int'l econ

The search for a new Keynesianism, Globe and Mail, by K Carmichael, 18 Dec 12:
They're getting restive around the econ dept at Columbia U in NY. There's Jeffrey Sachs, head of its Earth Institute, declaring that we've got it all wrong. Sachs is in esteemed company. Nobel Laureate Edmund Phelps, another Columbia prof, used a speaking engagement in Wash. to call for a complete change in econ theory to bring about a change in US political culture (Sachs: Today's challenges go beyond Keynes, FT [PDF] | Rethinking expectations - the way forward for macroeconomics, Inst New Econ Thinking [blog])

Posted on Mon, 11 Feb 13:

Larry Summers: US must do more than focus on deficit, FT, 11 Feb 13 [courtesy Author's site]:
There should be little disagreement across the political spectrum that growth and job creation remain America's most serious national challenge. Ahead of Pres Obama's 1st State of the Union speech of his 2nd term, the US needs to think again about its priorities for econ policy. A weak economy and limited job creation make growth in middle class incomes all but impossible. We can do better, writes fmr head of Pres Obama's Nat'l Econ Council / Harvard prof (Taylor: Fed policy is a drag on the economy, WSJ) [courtesy Hoover Inst]

Broader sources of growth can boost Asian frontier economies, IMF Survey Mag, 28 Jan 13:
To continue on the path to becoming emerging-market nations, Asian frontier economies need to broaden the sources of growth beyond natural resource wealth or agriculture, delegates to a Bangkok conference heard. With a combined pop. of 350 mln people and a location in the world's most dynamic region, the confab heard that 'Frontier Asia' nations now have the potential to move from low-income to emerging-market economies--provided they make the right policy choices

Return to sender--What undeliverable mail can teach us about econ growth, Slate, by M Yglesias, 1 Oct 12:
In an experiment, a group of researchers sent letters to 10 fake addresses in 159 nations. The whole idea was to test gov't efficiency, by seeing how long it took to return the letters to the senders. All these nations, the researchers note, subscribe to an int'l postal convention (the UN's Universal Postal Union), which requires them to return letters they cannot deliver (Letter grading gov't efficiency, NBER Digest | What can postal behavior tell us about a nation?, Freakonomics)

Posted on Fri, 8 Feb 13:

Glassman and Birdsall: Can India defeat poverty?, Foreign Policy, 8 Jan 13 [courtesy Ctr Global Dev't];
Is the solution to poverty as simple as giving a little bit of money to a large number of people? We may be about to find out. On 1 Jan, India, the world's largest democracy, launched what may become the most ambitious anti-poverty program in history. Called the Direct Benefit Transfer, the initiative will directly provide cash to poor families--at 1st more than 200,000 people, then potentially hundreds of millions--via the banking system. Opposition politicians, however, are complaining that the gov't is moving too quickly, write Ctr senior fellow and pres

Paul Romer: Escape from the Great Distress - the role of rules, Issues in S&T, 4th Qtr '12:
What makes ideas so remarkable is their capacity for shared use. A bottle of valuable medicine can heal one person, but the formula that is used to make the medicine is as valuable as the total number of people on Earth. Economists call this concept 'non-rivalry'. There is a saying that you all know that we use to capture this character of non-rivalry: If you give someone a fish, you feed them for a day, but if you teach someone to fish, you destroy another aquatic ecosystem, writes founder of Charter Cities / NYU prof

Leverage points in global services for India, China, and Philippines, Everest Group (blog), 31 Oct 12:
India, China, and Philippines are often lumped together in regard to their roles in global services delivery. The reasons are not hard to fathom--these 3 nations are consistently featured as leading locations for global services delivery (both new centers and expansions). However, a deeper analysis of the source markets served by these 3 reveals some country-specific findings that are relevant for incumbents as well as new players (Times of India: Top 10 outsourcing cities -- Tholons research/advisory firm)

Posted on Wed, 6 Feb 13:

Rothschild / Posen: How capitalism can repair its bruised image, Wall St Jl, 1 Jan 13 [courtesy Peterson Inst]:
One of the alarming effects of the financial crisis has been the widespread erosion of confidence in capitalism itself. Doubt has grown that capitalist societies offer everyone as much chance of success as risk of failure. Better gov't policies might help accelerate econ recovery, but only business itself can restore faith in capitalism. The need is acute, write CEO of invest. firm E L Rothschild, and Inst pres (Chang: We must stop protecting the rich from market forces, Guardian)

Dale Jorgenson: The rise of Asia and the new world order, Asian Dev't Bank Inst (blog), 7 Dec 12:
Sources of econ growth can be classified between the replication of existing tech and innovation (ie, production processes and products). Replication entails increasing labor and capital inputs, and output increases in proportion to the rise in input, so there is no contribution to productivity growth. Evidence shows that global growth is mostly from replication and not innovation, since productivity explains only a modest proportion of growth, even for rapidly growing nations like China and India, writes Amer Econ Assn fmr pres / Harvard prof

Univ Pennsylvania's Olivia Mitchell on global financial literacy, State Street Global Advisors, 2nd Half '12 [PDF]:
The reliance on 'defined contribution' (DC) plans gives individuals most of the responsibility for their own retirement. Yet people around the world--young and old, of all education levels, from Sweden to Japan to Brazil to the US--struggle to make sound decisions about even the simplest financial matters. This lack of financial savvy threatens to undercut DC plans' promise. For this reason we have a duty to support greater financial literacy--but how? We asked Mitchell about her research on financial literacy worldwide

Posted on Mon, 4 Feb 13:

Steven Pearlstein: 'After the music stopped'--Blinder on the financial crisis, Washington Post, 25 Jan 13:
Princeton's Blinder can take credit for having been early to see the housing bubble for what it really was--part of a larger credit bubble--and putting forward numerous good ideas for dealing with it once it burst. Unfortunately for him, his book is a bit late to the game. My shelves already groan under the weight of fine books on the crisis by journalists and other economists (Everyone hates TARP and the stimulus. Blinder thinks everyone's wrong, WP (blog) | Bk excerpt: How to worry about the deficit) [courtesy Atlantic]

Exported knowledge fuels development, but doesn't travel far, Harvard Univ, 3rd Qtr '12:
Understanding how tech and knowledge hop across borders is vital in explaining how nations develop economically and why they develop at different speeds. There are various theories about how tech moves. Some hold that it is embedded in products, such as machines, so it spreads quickly. Others hold that knowledge can be acquired or copied from one firm by another through a variety of channels. But a growing body of economists believe that tech is to be found not simply in a machine or in blueprints or manuals

The 'middle-income trap'--Comparing Asian and Latin American experiences, OECD Policy Insight, May '12 [PDF, 1.6MB]:
The experience of Latin America has been very different from that of Taiwan; Hong Kong, Korea and Singapore. While the latter group was able to surpass middle-income status in a relatively brief period of time, Latin American nations have remained in the middle-income zone for decades. This contrast can serve as an illustrative basis for comparison for new countries entering the middle-income group

Posted on Fri, 1 Feb 13:

Emerging innovators, OECD Observer, 4th Qtr '12:
Making strides in scientific innovation is no longer an initiative of just a few select high-income nations. Research and innovation have become increasingly democratized; indeed, Asia's emerging economies are now gaining prominence as world hubs of scientific research. While the US remains at the top in terms of the volume of scientific publications produced and collaborations made, these nations are eager to develop their own innovation capabilities, and strengthen their research and academic partnership (Trading in facts)

Christopher Wilson: The Mexican connection in US competitiveness, Issues in Sci/Tech, 3rd Qtr '12:
A 'giant sucking sound' was the memorable description made by pres'l candidate Ross Perot during the '92 campaign of the impact that NAFTA (North Amer Free Trade Agreement) would have, as businesses and jobs moved from the US to Mexico. Today, as China and other Asian nations have emerged as major econ challengers, expanding econ cooperation with Mexico is one of the best ways for the US to improve its global competitiveness, writes Woodrow Wilson Int'l Ctr assoc

C-Suite/Boardroom: The most common strategy mistakes, Harvard Univ, Dec '11:
In a new book, Understanding Michael Porter: The essential guide to competition and strategy (2011), Business School's Senior Assoc Joan Magretta distills Porter's core concepts and frameworks into a concise guide for business practitioners. She begins her book on the work of Harvard's Porter by noting that, from the start of his career, he has been asking a big question when it comes to understanding everything from the free enterprise system to the individual motivations of managers (Porter, Lorsch & Nohria: The 7 things that surprise new CEOs)

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