Perhaps it is not surprising that trade with emerging economies is often more complicated, time consuming, and costly than one would want. In addition to lacking some of the necessary physical infrastructure to transport goods, emerging economies frequently have complex and opaque regulatory requirements that create additional delays and increase transaction costs at their borders.
In 2009, an EU-based chemical manufacturer opened a plant inside one of FYR Macedonia’s recently-established special economic zones. The plant began production of catalysts, a type of emissions-control component used in automobiles. Two years later, this investment drove chemical products to the third-highest spot on Macedonia’s export list, lessening the country’s reliance on metals and textiles.
In Nicaragua, low labor costs and high security compared to its neighbors have led zonas francas to expand dramatically, attracting producers of electronic wires and medical devices and expanding the country’s exports beyond an already-strong apparel sector. Between 2006 and 2008, for example, ignition wiring sets for vehicles were the country’s fourth biggest export.
These two examples demonstrate a new trend in small economies. Increasingly, as global value chains grow in importance,
In over 70 countries, from financial centers in Malaysia to the Middle East, Islamic finance has been growing rapidly around the world. In fact, Shariah-compliant financial assets have increased from about US$5 billion in the late 1980s to about US$1 trillion in 2010.
As we mark International Women’s Day this week, let’s not be complacent. Over the past century, we have come a long way in increasing women’s voice, participation, and agency in societies around the world.
In a world in economic turmoil, calls for greater fiscal austerity, leaner social entitlements, and smaller government expenditures are seemingly ubiquitous. From the United States to the Euro Zone, the size and role of government are being questioned. Yet, at the same time, the recent financial crisis has highlighted the importance of the state as a regulator of the financial system.
The 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.
Is the landscape of innovation, traditionally concentrated in a handful of OECD countries, shifting worldwide? To what extent has the recent economic crisis affected this change? And what may be the implications of this shift for global growth?
It was to tackle some of these pressing questions that a high-level symposium, bringing together policymakers from developing and developed countries including from Vietnam, Brazil and China; leading academics including Harvard University’s Philippe Aghion; and experts met in Paris in January 2012 at the invitation of the OECD and the Growth Dialogue, in partnership with the World Bank Institute.
Innovation has long been identified as central to sustained economic growth. With 2012 real GDP growth forecast globally at
After the Second World War, advanced economies began an ambitious process toward capital account liberalization, which prioritized the liberalization of trade, the maintenance of fixed exchange rates, and a commitment to current account convertibility.
Persistently high unemployment rates continue to trouble policymakers in developed and developing countries alike—but the recent Job Trends report brings some good news. After successive years of disappointing labor market performance, several countries in Eastern Europe may finally be turning the corner. These countries suffered most during the financial crisis, so the recovery in job creation is much needed to boost family incomes. In the rest of the developing world, the headlines are positive even while we see some moderation in employment and wage growth in Latin America and East Asia.
I have two concerns at this stage. I suspect most observers of the world economy share my first concern that the incipient recovery is fragile, given the continuing economic turmoil in Europe. But I am also concerned with what’s happening with specific groups, such as youth and women. I have a hunch that the recovery is and will be uneven with youth, women and the less skilled having a harder time finding jobs—even if aggregate numbers show steady gains. The crisis hit young workers hard, particularly young men, and countries are dealing with long-term consequences. Unfortunately, few countries know what’s happening with groups of workers because the data are not collected routinely or if they are, the results are available only with a relatively long lag time.
Where recent data are available, the story is mixed. Although youth unemployment remains alarmingly high at 20-30 percent,