Latin America provides an interesting lesson about trade preferences and their complex link with economic development. This paper evaluates the claim that Latin America has adopted restrictive trade policies and highlights a double paradox. First, the region is particularly protectionist despite relatively high levels of GDP per capita and exports. Second, economic development and import dependence have little impact on trade openness in the region. The cross-country evidence for this paradox relies on a sample of industrialised and developing economies, including twelve Latin American states. The paper also identifies three factors that could explain protectionism in the region: political economy, recent economic history, and politics and ideology. It then briefly evaluates the impact of restrictive policies on recent economic performance. In particular, it demonstrates that high tariffs and economic growth can coexist.
Due to Germany’s weight in the Eurozone, it has an outsized role in policy prescriptions for the region. It is imposing a reform package that it itself passed in the early 2000s, which is widely credited with turning around the German economy. However, these reforms are suited for the export-driven economy of Germany, not the demand-driven economy of Greece. In Greece, the reforms have led to a massive drop in GDP, high youth unemployment, and a rise in debt to GDP. Meanwhile, the Greek government is becoming less capable of enacting the reforms demanded of them. As a result, citizens are turning towards more extremist political parties that want to end austerity. All of this will make it harder for Greece to pay back its debt and remain in the Eurozone at an acceptable cost to society. If things do not change soon, the troika may be creating conditions for the same Greek exit that it has been trying to prevent.
The ILO revised its strategy in a meaningful way when the soft law-based Declaration on Fundamental Principles and Rights at Work was introduced in 1998. In the same time frame, other spheres of international regulation, such as extractive industries, have accumulated a handful of regulatory successes and failure during the last decade. Extractive industry regulation is a salient example of soft law-based regulation where various private companies, such as firms and NGOs, have developed a form of non-centralized regulation with limited state authority and intervention that increasingly resembles the case of the ILO’s global labor regime. By analyzing these developments through the scope of rational choice theory, this paper examines the lessons the ILO global labor regime may learn from the practices of extractive industry regulation.
With global development aid budgets on the decline, impact investing offers a cost-effective alternative to financing international development without deficit spending. The U.S. Government recently became an active participant in this space, investing in new funds and taking steps to clarify the tax code, but can and should do more to expand the global impact economy.
As the European Union emerges from an economic crisis that caused deep internal tensions and at times threated to undermine its very existence, it is also growing in size and engaging with the international community in new capacities. During this period of rebuilding and transformation, Sir Michael Leigh, senior advisor at the German Marshall Fund, tells the Journal why he believes that EU cooperation will prevail in the coming years. Europe’s unity in the 21st century is a hard-won victory for a region that has a long history of conflict and division, he says, and the continuation of this peaceful partnership is crucial to the success of its member states and to the larger global community as well.
In the last two decades, emerging markets have become important global economic players. This paper evaluates the implications of the structural economic changes and increased participation of emerging markets in the global trade and the financial system for growth dynamics and economic interactions of the world economy. Furthermore, the effects of the current crises and the role of the emerging markets in the global economic recovery are analyzed in conjunction with the areas of multilateral policy coordination that have to be fostered to manage an increasingly multi-polar world economy. The article concludes with a discussion of the reforms necessary to sustain the growth performance of the emerging markets in the future.
In the last quarter century, Brazil has undergone structural economic changes. This article aims to help the reader understand how Brazil overcame the discouraging scenario of the mid-1980s and early 1990s to become a major global economic power. A unique story of a lively economic policy laboratory is told by laying out eight economic idiosyncrasies that need to be examined in order to grasp the country’s past and future challenges and analyze whether or when it will emerge as an economic superpower.
Europe urgently needs effective economic leadership to address its trade imbalances, shaky Eurobond markets, and diminishing trust in European integration. The European Union (EU)’s fiscal rules are neither strict enough nor comprehensive enough to hold the currency union together. The status quo is not sustainable. Already wobbly economies in Europe’s periphery face punishing, unaffordable interest rates as private creditors back away from their debt, and the European partners kick away successive chances to devise a comprehensive and feasible debt workout plan. Unfortunately, none of its present political leaders seems capable of meeting the challenge, in particular, German Chancellor Angela Merkel, the leader of the EU’s biggest economy, biggest exporter and biggest paymaster. Leaders overly focused on narrow perceptions of national advantage endanger the future of European economic integration and the benefits it has brought all member states.
Argentina’s public sector spending has consistently outpaced tax revenues—opening up a gap that could only be filled by massive deficits, official currency manipulations, inflation underreporting and other fiscal and monetary hocus pocus. But even that hasn’t worked for current president Cristina Fernández—forcing her to smear opponents and silence critics at the expense of creating sustainable policies. This paper looks at increased export taxes on soy and the privatization of national pensions as examples of fundamental argentine fiscal policy. Through first person interviews with a politician, government worker, businessman and academic, it also aims to imbue the issues with the local politics that shape Argentina’s political realities and that typically fail to make it to the international press.
This paper charts the failure of the post-war British governments to adequately acknowledge and adapt to the changing world order, in which the United States (U.S.) was in ascendancy and Britain, with its Empire, was in decline. Characterized by the deliberate preservation of sterling’s prestige on the international stage, fueled by a lingering nostalgia for the halcyon days of international British supremacy, the argument put forward describes the punishing and painful damage inflicted upon the domestic British economy in an effort to achieve successive governments’ international agenda. The conclusion is, therefore, that a strong element of dynamic self-awareness should be promoted when an international power is faced with decline, in order to better facilitate a controlled and measured descent, rather than an abrupt and precipitous deterioration.
The heart of Brazil’s recent rise in international relations lies in its growing influence in the global economic arena. This article evaluates one aspect of economic activity – the emergence of Brazilian transnational corporations. The article argues that an important legacy of decades of state intervention in the market fostered the successful internationalisation of big business in Brazil, impacting on Brazil’s international profile. However, this legacy also hampered its systemic competitiveness as evidenced by various international competitiveness rankings. The article concludes with some remarks on the long-run sustainability of Brazil’s current economic performance.
In 1959, one of the largest natural gas fields in the world was discovered in the Netherlands. This article describes the impact these reserves have had on the political economy of the Netherlands, and some of the challenges associated with managing the “wealth effect.” Integrating the revenues accrued into the national budget has proven troublesome because of the highly volatile nature of commodity prices. Moreover, the management of the wealth accrued from the reserves has been subject to rent-seeking behaviour, imposing substantial losses on Dutch society. The case of the Netherlands serves as a reminder that rich resource-rich countries stand to lose if the wealth of a natural resource is not treated with the appropriate prudence.
In handling the current financial crisis, policymakers are seemingly blind to the opportunity to re-fashion the financial sector into a more efficient and competitive form. This failing is due to three major erroneous lessons: that it is better for banks to be big than to be bust; that securitization is without social value; and that investment banking is dead. Large commercial banks pose both a systemic risk and a risk to competition. Securitization is necessary to reduce the concentration of risk in smaller banks. Investment banking is a necessary activity, and should be made up of smaller market participants.
Michel Rocard was Prime Minister of France from 1988 to 1991, under President Françoise Mitterrand. Previously, he was French Minister of Planning, of Town and Country Planning and of Agriculture. He was First Secretary of the French Socialist Party (1993–1994), then Socialist deputy to the European Parliament from 1994–2009. He currently chairs the Scientific Committee of Terra Nova, a think tank for the intellectual revival of the Left. In March 2009, President Nicolas Sarkozy nominated him French ambassador for international negotiations relating to the Artic and Antarctic poles. This interview was conducted in Paris in February 2008. In the course of the discussion, Michel Rocard identifies three phenomena at the heart of this transformation: the drift away from the capitalism of “les Trente Glorieuses” that has been brought about by deregulation, the replacement of traditional values of work and thrift with those of profit and fortune, and, finally, the potentially criminal practices of the banking and financial sectors.