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How did US and EU trade policy withstand the Great Recession?

Chad P Bown's picture

Many feared a return of 1930s-style protectionism when recession hit the global economy. But many countries avoided this. In a blog post, co-authored with Meredith Crowley, I focus on US and EU trade policy and discuss how this policy withstood the ‘Great Recession.’ The following is an excerpt from the post which appeared on Vox.

“During the Great Recession, import protection increased around the world (Evenett, 2011). Popular policies included antidumping tariffs, safeguards, and other temporary trade barriers (Bown 2011a,b). Despite this, for high-income economies such as the US and EU, such trade barriers increased much less than initially feared. In this column, we ask how and why.

Prospects Daily: European sovereign credit risk rises to eight-week high

Global Macroeconomics Team's picture

Important developments today:

1. European sovereign credit risk rises to eight-week high following Greek debt swap insurance payouts

2. Italy in recession

How to Ascend after Declining?

Otaviano Canuto's picture

growthThe state of the global economy is now more troubled than what most pundits had predicted. The great recession of 2007-09 has left permanent scars and the global recovery has lost steam. In the industrialized world, the Eurozone is struggling to save its common currency and avert an even larger debt crisis. Across the Atlantic, although things are looking slightly better, the United States still faces damaged household balance sheets, depressed consumption, and persistent unemployment.  In the developing world, the remarkable role that emerging markets have played as alternate engines of global growth is no longer certain. And this is truly worrisome because in the years that followed the recession, developing countries came to the global economy’s partial rescue, helping advanced economies from slipping into an even deeper recession.

In 2010 and 2011, developing countries grew 7.3 and 6 percent respectively, compared to the 3 and 1.6 percent growth of high-income countries, according to the World Bank’s latest Global Economic Prospects. Nevertheless, growth in several major developing countries like Brazil, China and India is significantly slower than earlier in the recovery, mainly reflecting a tightening of monetary policy to combat rising inflationary pressures but also the low-growth path in advanced economies. As a result, developing countries are now expected to grow only 5.4 percent this year.

Latin America’s growth prospects: Made in China?

Tatiana Didier's picture

Latin America's Growth prospects:Made in China?

Global turmoil. Growing prospects of another recession. Crisis in the Eurozone. China’s role as a global growth and recovery engine thrown into question.

The current situation looks worrying enough as it is for Latin America –and the rest of the world for that matter- but the region’s growth prospects should be looked at beyond the current juncture and on the merits of its long-term strengths.
 
Here’s why. The last ten years or so have been very good for many countries in Latin America and the Caribbean. They have witnessed the consolidation of a stable and resilient
macro-financial framework, relatively high growth rates, and advances in the equity agenda.

This new economic face of the region was perhaps most clearly portrayed by a rather robust performance, especially of South American countries, in the context of the recent global crisis. In effect, compared to the middle-income country average, the region’s recession in 2009 was relatively short-lived and, with the notable exception of Mexico, remarkably mild, which helped to make its recovery in 2010-2011 stronger.

The Great Recession – Lessons from 10 Countries

Vamsee Kanchi's picture

How did developing countries fare during the crisis and what are their medium term prospects? These questions are at least partly answered in a new book covering 10 countries. Titled 'The Great Recession and the Developing Countries: Economic Impact and Growth Prospects,’ the book analyzes the  growth before, during and after the crisis of Brazil, China, Ethiopia, India, Malaysia, Mexico, Philippines, Poland, Turkey, and Vietnam.

The book’s editor, Mustapha Nabli, estimates that the average potential growth rate for the ten countries before the financial crisis was about 6 percent.  Unlike the overheated financial sector, pre-crisis trade and remittance levels were sustainable.
Once the crisis hit, however, less diversified countries really felt the heat. Their financial sectors eventually recovered, but trade remained low, thus adversely affecting their growth.  13.6 percent of Turkey’s 2009 GDP, for example, was shaved off during the financial crisis.  Possibly this was due in part to fears left over from past financial crises.

Full Speed Ahead: Internet Traffic Growth Unaffected by Financial Crisis

Joe Qian's picture

Reading about the financial crisis and the effects that have rippled around the world, it’s always heartening to find something positive in the midst of piles of red ink and pessimistic expectations.

Although the majority of industries and economies around the world have suffered due to the downturn, Internet traffic growth accelerated at an increasing rate in 2009 compared to 2008 with no discernible slowdown due to the crisis. According to data released by Telegeography, every single region around the globe registered growth in internet traffic, or flow of data. South Asia has registered over a 100% increase, higher than the 79% posted worldwide, although it must be noted that South Asia had a lower baseline capacity.

Notes from the heartland of industrialization

Christine Cassar's picture

From the little island of Malta, I now blog from Ann Arbor, Michigan—my home for the Northern hemispheric summer… The links between the two distant spots date back to organized emigration programs, where hundreds were encouraged to take the trip to the empire of Henry Ford and other production lines in search of greater and better opportunities.