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Trade

Drifting Toward Plutocracy: Inexorable Concentration of Capital Undermines the Drive for 'Shared Prosperity'

Christopher Colford's picture

Like seismic waves rippling outward after a tectonic shift, reverberations are roiling the economic-policy landscape after the U.S. launch of the groundbreaking new analysis by Thomas Piketty, the scholar from the Paris School of Economics whose landmark tome – “Capital in the Twenty-First Century” – has newly jolted the economics profession.

Any Washingtonian or World Bank Group staffer who somehow missed the news of Piketty’s celebrated series of speeches and seminars last week – in Washington, New York and Boston – received an unmistakable signal this week about what an important intellectual breakthrough Piketty has achieved. President Jim Yong Kim on Tuesday cited Piketty while putting the issue of economic inequality at the top of his list of priorities during his review of the Spring Meetings of the Bank and the International Monetary Fund. Noting that he was already about halfway through reading Piketty’s “Capital,” President Kim sent a clear message that the skewed global distribution of wealth, as analyzed by Piketty and emphasized by many officials at the Bank and Fund's semiannual conference, should be top-of-mind for policy-watchers at the Bank and beyond – indeed, at every institution that hopes to promote shared prosperity.

Piketty’s scholarship is now receiving widespread acclaim as a landmark in economic analysis, and is being recognized both for its “exhaustive fact-based research” and its sweeping historical perspective. More of a patient dissection of hard data than a political roadmap, Piketty’s book has quickly become the subject of multiple praiseworthy reviews, notably in the New York Times and the Financial Times. One usually level-headed Bloomberg View analyst, recoiling from the “rapturous reception” accorded to the book, may have gone slightly overboard this week in asserting that Piketty's insights had been greeted by American liberals with “erotic intensity.”

Predictably, Piketty's book has also quickly become the target – “Piketty Revives [Karl] Marx,” blared a Wall Street Journal headline; “Marx Rises Again,” warned the New York Times’ lonely conservative scold – of the whack-a-mole ideological purists in laissez-faire Op-Ed columns, who forever seem tempted to equate modern-day liberalism with long-gone Leninism. Eager to publish denunciations of any idea, however modest, that might justify (heaven forfend) tax increases on stratospheric income-earners and the top-fraction-of-the-One Percent, the free-market fundamentalists on the Wall Street Journal’s editorial board – unabashed cheerleaders for plutocracy – have opened up one of their trademark barrages via their Op-Ed columns (“This book is less a work of economic analysis than a bizarre ideological screed”; “The professor ought to read ‘Animal Farm’ and ‘Darkness at Noon’ ”). The Journal's jihad clearly aims to demean or discredit anyone who might flirt with such Piketty-style notions as restoring greater progressivity to the tax code. (Egad: Progressive taxation? Next stop: Bolshevism.)

WITS Trade Data Site: Five New Features

Siddhesh Kaushik's picture

Where can you find the top trading partners for your country? Where can you find the top products exported to and imported from Indonesia? Where can you find just about any type of trade data?

The answers to these questions (and more) are available at our recently revamped World Integrated Trade Solution (WITS) site: wits.worldbank.org.  In previous versions of the site, users needed to login and query the data themselves. You still can.  And many still do to conduct much more detailed and sophisticated research and analysis on trade. But if you want to quickly look up or browse trade statistics like total exports, tariffs applied, top export, and import partners, the data has been pre-calculated and made available as Open Data.

“Thanks to the data I found on WITS, I successfully completed my PhD.  Really easy-to-use site and great upgrades.”
                              – User in India
We have tried to make the new site more intuitive and accessible to the site’s users.  Our team – the Development Data Group (DECDG), the Poverty Reduction and Economic Management Network (PREM), and other World Bank units – worked in consultation with partners, including the United Nations Conference on Trade and Development (UNCTAD), the United Nations Statistics Division (UNSD) and others, to produce this site.  We hope you find the new site as useful as we do.

EU-Turkey Customs Union: Unique, Pioneering, and Still Beneficial

Ian Gillson's picture

Source - World BankThe EU-Turkey customs union (CU) has been a key catalyst in the economic transformation of Turkey over the past two decades and an effective mechanism for deeper integration between the two parties, according to a new World Bank evaluation of the CU.

While its supporters and critics may continue to debate in the political arena, this much is now clear: the CU has brought enormous benefits to Turkey and has done more to facilitate trade than a free trade agreement (FTA) would have. But more can still be done to both modernize the agreement and deepen trade integration between the parties.

From farm to chopsticks: Improving food safety in China

Garo Batmanian's picture
A challenge for Chinese businesses is to re-capture the vast domestic market owing to the recent food scares that have seriously undermined the domestic brands.

After several high-profile food safety incidents, according to one recent survey, around 64% of Chinese consider food safety as the number one priority that affects their daily lives and requires immediate action by the government.

The Chinese government is taking these concerns very seriously and has launched important reforms in its system of food control. It promulgated a new Food Safety Law in 2009, and created a new food safety authority in 2013 to deal with these issues. These reforms are now rolling out to provincial and local levels. These reforms will eventually affect more than one million state officials, restructure more than a dozen government ministries, and revise more than 5,000 regulations. The reforms will result in a complete overhaul of the food control system and introduction of new global best practice policies for food safety.

Guns, Drugs and Development

Laura Ralston's picture

Trafficking in West Africa



Trafficking is not new to West Africa, but its magnitude is
. From Northern Mali to The Gambia, smugglers have traded fuel, cigarettes and staple food for decades. Longstanding trade routes and interregional tribal connections have allowed illegal cross-border trading to grow alongside traditional commercial practices.

Assessing Services Policies in Developing Countries

Sebastián Sáez's picture

Empirical literature confirms the significant contribution that services trade can play in developing economies. High-quality and low-cost services can enhance competitiveness, connect countries to the global economy, and help diversify their exports.

The question is how to foster the development of the services trade in these countries. Research shows that the liberalization of services barriers can increase the performance of manufacturing and agricultural exports, for example, and help boost quality and cut costs, as well as increase service exports.

But liberalization alone is insufficient for successful reform. Services liberalization requires that a country design a careful liberalization process that takes into account its specific conditions. Many countries which have acceded to the WTO and have adopted significant liberalization commitments have not fully reaped the benefits of those reforms. One of the explanations is probably that their process was incomplete. In general, liberalization needs to be complemented by strong and solid regulatory frameworks. Without these conditions in place--- contestable markets, strong regulatory governance, and enforcement capacity--- liberalization will not provide the expected benefits.

Why is it so difficult to create the necessary conditions for successful services trade reforms?

What will happen to the Middle East and North Africa region if the Ukraine crisis escalates?

Lili Mottaghi's picture
 Arne Hoel

Following Russia’s annexation of Crimea after the popular voting in early March, the European Union and recently the U.S. and Canada have imposed their first round of sanctions—an asset freeze and travel ban on some officials in Russia and Crimea. This week NATO's foreign ministers, warning that Russian troops could invade the eastern part of Ukraine swiftly, ordered an end to civilian and military cooperation with Russia. Should the crisis escalate, potential fallout on Middle East and North Africa (MENA) countries is likely. The effects would be transmitted directly through trade and indirectly through commodity prices.

Indonesia’s investment in flux

Alex Sienaert's picture

Can Indonesia’s economy move from a situation of investment in flux to an investment influx? This is one of the questions posed by the World Bank’s March 2014 edition of the Indonesia Economic Quarterly.

Why is Indonesia’s investment growth in flux? First, there has been a slowdown in fixed investment, due to lower terms of trade and tighter external financing conditions. This has helped narrow Indonesia’s external imbalances.

Second, while foreign direct investment—an important source of investment financing—has remained solid so far, the rapid growth of FDI inflows seen in recent years shows signs of plateauing.

Third, Indonesia remains reliant on external financing from portfolio investment inflows. These have surged in recent months, but they can be volatile.

Finally, recent policy developments have increased regulatory uncertainties. Add to that the usual difficulty of predicting policy ahead of elections, which may impact on investment of all kinds.

Given uncertain prospects for global investment flows to major emerging market economies like Indonesia, the good news is that Indonesia’s external balances are adjusting. The current account deficit shrank significantly in the fourth quarter of 2013, to $4.0 billion, or 2% of GDP. This is a welcome reduction from the record high of $10.0 billion in the second quarter of 2013—that’s 4.4% of GDP. The stock market rallied, gaining 9% in local currency terms, bond yields fell, and the Rupiah climbed back by 7% against the USD, year-to-date, recouping some of last year’s significant losses. Banking and portfolio inflows also rose in the final quarter of 2013*.

But some caution is warranted. The adjustment has been narrowly based on tighter monetary policy and currency depreciation over the second half of 2013, and slower investment growth. Indonesia remains vulnerable to a renewed deterioration of global market conditions.

A Portal to Greater South/South Cooperation

Richard Record's picture

 Kingdom of LesothoHere at the World Bank we put great effort into facilitating South-South exchanges. But the truth is that developing tangible results and sustainable partnerships are still tremendous challenges. That’s why when a genuine, substantive example of South-South cooperation comes along—as is the case with the new Lesotho Trade Portal (LTP)—this effort should rightly be praised.

The LTP—billed as “the first trade portal in Africa”—was developed through a bilateral agreement between the Kingdom of Lesotho and the government of Lao People’s Democratic Republic, with the assistance of the World Bank Group. The LTP is a single, online source for all trade-related laws, regulations, and procedures for importing and exporting. It was officially launched on March 26, 2014, immediately establishing a new standard in Africa for communication with traders.
 

Have 'Special Economic Zones' Entered the 21st Century Yet? A Tale of Two Cities

Martin Norman's picture

At the World Free Zone Convention in Izmir, Turkey, which I attended in December, an important question was asked:  Have "Special Economic Zones" entered the 21st Century?  Evidence shows that, in many ways, they have – but in many instances we are still seeing across the globe the same isolated economic enclaves with few linkages to the local market and little economy-wide impact.

More than ever, special economic zones (SEZs) are on the defensive, despite the fact that the more than 3,500 SEZs worldwide have provided employment for more than 60 million people.

I believe that two zones, in particular, can shed light on the factors of success and failure in SEZs today:  Shenzhen, China, which is almost universally considered to be a success story, and the Calabar Free Trade Zone in Nigeria, which has failed to live up to its original projections. 
 


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