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The New Normal? South Asia Looks East

Dipak Dasgupta's picture

The world South Asia will face after this crisis is not going to be the same as in the past. The trend that is accelerating after the financial crisis is that of the “new normal”: the shift in traditional engines of growth from industrial countries to emerging markets.

The crisis is accelerating this fundamental change in economic order in which developed countries have to save more and spend less, while emerging markets, such as China, India, Indonesia, Brazil, Russia, and South Africa begin to play much bigger roles in driving the global recovery. According to our estimates, by 2020, in just ten years---Asia may see its share of world GDP (in nominal dollars) climb to over one-third, replacing North America and the European Union as the biggest region. Underlying this is an expected sharp rise in shares of China and India, and indeed, that of all emerging markets may climb to nearly one-half of global output.

Recoupling or Switchover

Otaviano Canuto's picture

The current recovery in advanced economies is now exhibiting several signs of fragility. Their medium term growth prospects also look difficult. In this environment two questions arise: Will developing economies experience a renewed downward “recoupling” as a result of a low-growth scenario in advanced economies?

Re-thinking Trade Policy

Ravindra A. Yatawara's picture

Trade theory has always been lagging behind reality. From Ricardo ‘s (1817) explanation of trade based on relative productivity/technology differences among nations, it took over a century for Eli Heckscher and Bertil Ohlin (1933) to formalize a model that would explain inter- industry trade patterns based on a countries ’natural resources or factor endowments.

Iraq: Meaningful Reconstruction and Development

Louis Bedoucha's picture

I recently represented MIGA in a special working group of the OECD focused on Iraqi reconstruction.  It was an interesting and useful gathering, attended by Iraqi civil servants from across the administration, export credit agencies, and of course private sector representatives interested in doing business in the country.

South Asian Youth Showcase Economic Ideas with the World

Joe Qian's picture

I had the opportunity to be a part of the launch of "Economic Challenges to Make South Asia Free from Poverty and Deprivation" in Washington and was truly inspired by the talent and knowledge of the students and the ideas and enthusiasm generated by the event across the region.

The event, coordinated across the region through video conference was moderated by Economic Adviser Shekhar Shah, who authored the foreward, and was exceptionally encouraging of the students and the issues discussed in the volume and organized by Hema Balasubramanian who heads the Public Information Center in New Delhi.

The unique student initiative that created the book, South Asia Economics Students’ Meet (SAESM), edited by Meeta Kumar and Mihir Pandey promotes budding economists to foster intellectual discourse with other students from the region. The annual conference, since 2004, has provided an opportunity for exceptional economic students to write, present, and share their academic papers on economic issues critical to the region.

Varieties of African successes

Shanta Devarajan's picture

Tolstoy notwithstanding, the 20 African success stories described in the booklet “Yes, Africa Can” show that success comes in many different forms.  Broadly speaking, the cases fall into three categories:

- Success from removing an existing, major distortion.  The best example is Ghana’s cocoa sector, which was destroyed by the hyperinflation and overvalued exchange rate in the early 1980s.  When the exchange rate regime was liberalized and the economy stabilized, cocoa exports boomed (and continue to grow).  Similar examples include Rwanda’s coffee sector and Kenya’s fertilizer use.  Africa’s mobile phone revolution, too, is an example of the government’s stepping out of the way—in this case by deregulating the telecommunications sector—and letting the private sector jump in. 

When More Roads Mean More Congestion

Zahid Hussain's picture
More congestion follows more roads. Photo Copyright of The Daily Star

Basic transport economics teaches us that changes in roadway supply have an effect on the change in traffic congestion. Additional roadways reduce the amount of time it takes travelers to make trips during congested periods. As urban areas come closer to matching capacity growth and travel growth, the travel time increase is smaller. In theory, if additional roads are the only solution used to address mobility concerns, growth in facilities has to be slightly greater than travel growth in order to maintain constant travel times.

Adding roadway at about the same rate as traffic growth will only slow the growth of congestion. But all these assume “other things equal”. No, I am not referring to “induced demand” that could potentially make the cure (road) worse than the disease (congestion). I am referring to the competence, or lack thereof, of those who design, build, and operate the facilities in the public sector.

Paul Collier and his Plundering Planet: When Both Economists and Environmentalists Don’t Get it Right

Otaviano Canuto's picture

Do you remember The Bottom Billion, Paul Collier’s 2007 book which became a classic? If you do, you will certainly like his latest work, The Plundered Planet. He came to launch his new book to the Bank this week, and I found it both fascinating and provocative. Let me give some examples of why.

Professor Collier, now the Director of the Centre for the Study of African Economies at Oxford University, declares a two-front war on economists and environmentalists at the same time. He is against what he calls “utilitarian economists,” because if left on their own, they would end up plundering the planet. But Collier also takes on “romantic environmentalists,” who would be unable to eradicate hunger in case they’re given the chance to rule the world. So as you can see, the book’s premises don’t really fit into the script of the blockbuster, Oscar-winning movie Avatar.

For Collier, who also worked as the Bank’s Research Director some years ago, Nature is the lifeline for the countries of the bottom billion – and thus cannot remain untouched. With a strong faith in the power of well-informed ordinary citizens, Collier proposes a series of international standards that would help poor countries rich in natural assets better manage those resources. Technology, which enlarges the capacity of ordinary citizens, is also necessary to turn Nature into assets. But of course, in order to be effective and benefit the bottom billion instead of just the few at the top, regulation, which requires governance, is another seminal element of the equation to create prosperity. If you leave regulation out of the equation, as some Libertarians do, the result is nature plundered. But if you end up with too much regulation – curbing the use of Nature – and thus preventing technology, then the result is hunger. And I’m certainly not one of those radical, romantic environmentalists who can imagine a bottom billion who is hungry but happy.

Ushering in New Era of Openness and Transparency

Isabel Guerrero's picture

data.worldbank.org

The doors to the largest depository of development data in the world were just thrown open. Starting today, all our statistics are available online free of charge for all. The Open Data Access builds on the success of Data.Gov adopted by the US and UK and lets the global community create new applications and solutions to help poor people in the developing world.

Data, until now available through subscriptions only, is now accessible at data.worldbank.org. This is an important milestone for the World Bank, which complements the Access to Information reform. For many data is power. It is more than just numbers as it creates the space for dialogue based on facts and helps to foster new ideas.


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