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Macroeconomic Management

The G20 Pittsburgh Summit Concludes: Main Outcomes and Next Steps

Ihssane Loudiyi's picture

On September 24-25, twenty world leaders met for the third time this year and reiterated their common goal for global cooperation on the road to recovery from the financial crisis. The G20, which includes developed nations and fast-growing emerging economies such as Brazil, China and India, accounts for about 90% of the world’s economic activity; it is quickly replacing the G8 as the leader of world economic management.

The following important points emerged during the Summit:

Microfoundations of Economic Growth

Raj Nallari's picture

Most growth analysis has been primarily a macroeconomic subject with particular emphasis on contribution of capital, education adjusted labor, and total factor productivity to output growth (see Collins and Bosworth 1996, Hu and Khan, 1997, Sarel 1997, Sala-i-Martin 2000, Hall and Jones, 1999, Easterly and Levine 2001). Importance of macroeconomic policies as represented by budget deficits, exchange rate premia, inflation, trade openness and inflow of foreign Investment etc are tagged on in the growth analysis at a macroeconomic level. A few studies have invoked ethnic differences and other exogenous factors to understand cross country differences in total productivity growth and per capita incomes. 

In trying to understand the rapid output growth of East Asian ‘miracle’ countries, Krugman (1994), Young (1995), and others were engaged in an interesting debate on whether capital accumulation or total factor productivity growth best explained the high and sustained output growth of these countries. Their conclusion that capital accumulation was most important was based on macroeconomic data analysis in a factors of production approach to sources of growth. Others have found that the growth of output is strongly correlated with productivity growth in developed and developing economies as reported by Kehoe and Prescott (2002) and Solimano and Soto (2004), and this co-movement appears to be stronger the longer is the time period considered.

The Financial Crisis and its Impact on Developing Countries

Ignacio Hernandez's picture

A new working paper by Stephany Griffith-Jones and José Antonio Ocampo, published by UNDP's International Poverty Centre, looks at the impact that the financial crisis is having on developing countries. The paper identifies three mechanisms that play a key role in spreading the consequences of the financial crisis to the developing world: remittances, capital flows and trade.

Global Dialogues as a Response to the Global Economic Crisis (II)

Ignacio Hernandez's picture

The second global dialogue of this series focused on the impact of the global crisis on the national macro economies and on the financial systems.

Experts from from Argentina, Uruguay, Turkey, Poland, Hungary, Russia, South Africa, Indonesia, Philippines, and South Korea participated in this event. Speakers included Professor Guillermo Calvo of Columbia University, and Dr. Gerard Caprio of Williams College.

Global Dialogues as a Response to the Global Economic Crisis

Ignacio Hernandez's picture

The World Bank Institute launched at the end of last year a global dialogue series geared towards policymakers, with the goal of facilitating real time cross-country discussion on the current global economic crisis.

The first videoconference focused on the impact of the financial crisis on state and local finance. Participants from Brazil, China, India and Russia contributed via satellite.

Watch the discussion.

The Gross Inequalities of Global Imbalances

Ignacio Hernandez's picture

Terry McKinley and Alex Izurieta write about global economic imbalances in UNDP International Poverty Centre's February one pager.


According to this paper, the US is running a deficit about 3.5 times larger than the deficits of all other OECD countries combined. The average US current account deficit in recent years has been one third higher than the total GDP of sub-Saharan Africa.


Why isn't financial deepening happening in the poor countries?

Yan Wang's picture

While global financial integration has been progressing well, financial deepening is not.  Only a handful of emerging market economies are benefiting from large capital inflows in the form of FDI.   In countries like Kenya where the capital account is open and foreign bank entry has long been allowed, capital market remains shallow and real interest rate remains high, hindering the private sector development. 


Shan vs. the World Bank

Ignacio Hernandez's picture

Weijian Shan recently ignited a debate over the profitability of Chinese companies with his essay in the Far Eastern Economic Review “The World Bank’s China Delusion”, which had a reply in World Bank economists Bert Hofman and Louis Kuijs’ “Profits Drive China's Boom."



FEER’s blog told the full story.