Brazil

CommGAP Launches "Accountability Through Public Opinion"

CommGAP is delighted to announce the publication of its third edited volume, "Accountability Through Public Opinion: From Inertia to Public Action." The book is edited by CommGAP's Program Head Sina Odugbemi and Taeku Lee, Professor of Political Science and Law at the University of California, Berkeley. Authors from development practice and academia discuss in 28 chapters how citizens can hold their governments accountable, and how genuine demand for accountability can be created.

The idea for the book was born at a CommGAP workshop in 2007 in Paris on "Generating Genuine Demand with Social Accountability Mechanisms." A few years later, we proudly present a compilation of essays that are relevant for current events in the Middle East and in North Africa as much as for any efforts to strengthen citizen's agency vis a vis their governments.

Although capital flows to developing countries were up 45 % in 2010, most of the increase was concentrated in a few middle-income countries. Flows to developing Europe and Central Asia remain sharply compressed. Developing countries continue to grow as a source of FDI to both high-income and other developing nations. Importantly, the recovery in developing country GDP has reflected growing domestic demand and occurred despite weak import demand from high-income countries.
Capital flows to developing countries rebounded strongly in 2010, but remain well below their 2007 peaks – especially as a percent of developing-country GDP. Total net capital flows to low and middle-income countries in 2010 amounted to $510 billion—up 45% from the $353 billion registered in 2009, but still almost 50 percent lower than the $1.1 trillion received in 2007. As a percent of developing country GDP, the increase was less striking, from 3.7 percent of GDP in 2009 to 4.4 percent in 2010, versus 8 percent in 2007. The rebound was concentrated among a few economies (Brazil, China, India, Indonesia, Malaysia, Mexico, South Africa, Thailand and Turkey). These countries saw flows rebound from 3.2 to 4.3 percent of their GDP. Flows elsewhere also rebounded in value terms, but less strongly, from $167 billion to an estimated $230 billion in 2010. Although flows to developing Europe and Central Asia picked-up in 2010, at 3.5 percent of GDP they remain sharply depressed compared with their pre-crisis levels of 14 percent of GDP.
Developing countries are a growing source of FDI inflows to other developing countries. FDI inflows emanating from developing countries reached 34% of all FDI received by developing countries in 2010, up from 28% in 2004. FDI originating in developing countries now represents an estimated 13% of the FDI received by high-income countries, versus 8% in 2004. Developing countries have also come to represent a key source of funding for high-income sovereigns. For instance, as of late 2010 developing countries held over a third of all outstanding US government securities, although this share was down somewhat from their 40 percent share in late 2009. China was responsible for over 60% of this total.
The economic recovery in developing countries mainly reflected a rebound in their own demand levels. Outside of developing Europe and Central Asia, most developing countries have recovered or are close to closing output gaps and are growing at close to pre-crisis rates. This is a remarkable achievement particularly as the recovery in high-income countries has been weak. The upturn in developing economies mainly reflects a rebound in their own domestic demand. Their exports remain some 7% below pre-crisis trends. In contrast, strong demand in developing countries has contributed to the recovery in high-income countries, with developing country imports some 8% higher than pre-crisis trends. Overall developing countries were responsible for almost half of global growth in 2010.

Table – Net worth and net national Income (NNI) in Brazil, 2005, $million
Produced capital	1,909,259
Natural capital	1,713,939
Net financial assets	-117,221

Net worth	3,505,978

Adjusted NNI	636,356
Implicit rate of return	18.2%
Source: The Changing Wealth of Nations World Bank (2011)

Following a period of weak growth mid-year, advanced indicators for industrial production are mixed. Purchasing manager’s indexes point to increased strength, but export order-books remain weak. The dollar value of global remittances is estimated to have increased 6 percent in 2010, regaining the $325 billion level recorded in 2008. Remittances are expected to expand a further 6.2 percent next year and 8.1 percent in 2012. Low interest rates in high-income countries are placing upward pressure on exchange rates in some developing countries. Some affected countries have reacted by accumulating reserves and taking steps to limit inflows and liberalize capital outflows.
Advanced indicators for fourth quarter industrial production are mixed. Some indicators suggest that the near stalling of global industrial production mid-year may be coming to an end. The pace of growth in industrial production in China, which came close to zero during the two months ending June 2010, is now back to more than 12 percent. While momentum growth rates in the U.S. and Europe remain weak and some smaller economies continue to suffer from post-crisis restructuring, forward-looking purchasing manager’s indexes for the globe’s largest economies point to an expansion of output. This result is consistent with indicators of strengthening retail sales, but is countered by data pointing to continued weakness in export order books.
The dollar value of remittances rose 6 percent in 2010, reaching $325 billion — the same level as in 2008¹. After falling 5.5 percent between 2008 and 2009, remittances to developing countries are estimated to have rebounded by 6%. The rebound has brought remittances to countries in the East Asia & Pacific and South Asia regions above their 2008 levels, but has left them broadly unchanged in the Middle-East and North Africa and Sub-Saharan Africa regions. Remittances to Europe and Central Asia and Latin America remain relatively depressed, partly reflecting persistent economic weakness in high-income Europe and the United States — major sources for these two regions. The real local currency values of remittances generally rose by less because of dollar depreciation. Corrected for inflation and exchange rate movements the population-weighted real value of remittances is still down 4.6 percent since 2008.
Some countries facing upward exchange rate pressure are taking steps to limit disruptive and potentially destabilizing capital inflows and currency movements. China, Brazil, South Africa and Turkey are among countries enduring the strongest pressure on their currencies (proxied by real-effective exchange-rate appreciation, changes in reserve to GDP ratios, and interest rate differentials). Countries have responded by accelerating the accumulation of foreign currency reserves (China, Colombia, Turkey, South Africa ), taxing or quarantining short-term flows (Brazil, Indonesia, Thailand), reducing limits on outflows (Chile, China, South Africa) and other administrative measures (Russia). ¹Migration and Development Brief #13, November 2010

Industrial production in some developing countries is close to or exceeds full-capacity, which has led them to adopt more restrictive policy measures and begin to emphasize more structural supply-oriented policies to support sustainable long-term growth. As monetary policy in some of these countries tightens, the growing gap between their interest rates and those in high-income countries (where monetary policy remains very accommodative) is prompting an increase in potentially destabilizing short-term capital flows. Despite recent market concerns about long-term fiscal sustainability in some high-income European countries, foreign bond sales in developing countries have reached a record $143bn in 2010 so far.
Industrial production spare capacity varies markedly across developing regions and income groups. It remains elevated in many high-income countries and in Europe and Central Asia. In contrast, output in many developing countries, notably those in Asia, is close to or exceeds full capacity. In these countries policy is being tightened and focus is shifting from demand-stimulus to supply-creation. Even in countries where backward-looking estimates of spare capacity remain high, a transition toward more supply-augmenting rather than demand-stimulating policy may be in order. Such a transition would be particularly desirable, if a significant proportion of the decline in output reflected a crisis-induced destruction of capacity, as is often observed following a financial crisis.
Rising interest rates following the tightening of monetary policy in some developing countries are creating tensions. Short-term financial assets are becoming more attractive to foreign investors in several developing countries following policy rate hikes. This is leading to higher and potentially destabilizing capital inflows in countries such as Brazil, Indonesia, Turkey and South Africa. Although pressures have been contained so far, if such flows were to build they could prompt currency appreciation, an expansion of domestic credit and a widening of current account deficits (or lower surpluses). Monetary policy is often powerless to neutralize these effects, as interest rate hikes may prompt more inflows. In some cases, tighter fiscal policy and capital controls may be required.
Despite the intensification of market concerns about long-term fiscal sustainability in some high-income European countries, bond flows to developing countries have reached record levels. So far this year, $143bn in bonds have been issued by developing countries on international financial markets, 48% more than during the same period in 2007. These flows partly reflect a demand-side effect, as firms in developing countries seek to compensate for weak bank lending by going to the bond market. Private-sector bond issues accounted for 48% of sales in 2010 (Q1-Q3), compared with 39% in 2008 and 37% in 2009 (Q1-Q3). Among other international capital flows, IPOs and new share offerings have nearly recovered to pre-crisis boom levels, partly because of world-record deals in China and Brazil. However, total capital inflows remain 27% below the peak of $479bn posted in 2007 (Q1-Q3), as ongoing balance-sheet consolidation continues to impede bank lending, which is likely to be negative in net terms this year.

Brazil

Pages

You are here

RESOURCES FOR