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Global Imbalances and Adjustment Scenarios

Yan Wang's picture

How will global external imbalances adjust? Economists have vastly diverse views. The IMF presented two adjustment scenarios using its Global Economic Model, a benign baseline and a more abrupt adjustment. Depending on views regarding the probabilities of various adjustment scenarios, proposed policy responses differ. This note provides a survey of recent literature and summarizes diverse views on various assessment of the probability of a hard landing, and the proposed policy responses.

Growth, penny by penny

John Lancaster profiles how companies and entrepreneurs are targeting the untapped market potential of India’s rural poor.

A 30-year-old mother of two, Kadem is part of a novel Hindustan Lever initiative that enlists about 20,000 poor and mostly illiterate women to peddle such products as Lifebuoy soap and Pepsodent toothpaste in villages once considered too small, too destitute and too far from normal distribution channels to warrant attention.

Bright spots in water privatization

New IDB President Luis Alberto Moreno writes about the current Latin American landscape for water privatization in the WSJ (subscription required). He points out that while the industry’s past has been turbid, this should not cloud the lessons from recent successful private ventures.

De Ferranti reflects on the World Bank’s future

Recently-retired World Bank Vice President David de Ferranti believes that the World Bank must remain engaged in middle-income countries. Rather than disengagement, he preaches modernization. His prescription would include: (i) modern financial products, such as more structured finance; (ii) reducing the hassle of at-times unnecessary safeguards; (iii) more performance-based lending; (iv) changing the loan terms for richer countries; and (v) expanding intellectual partnerships.

He goes on:

Conflict resolution meets Xbox

Can a computer game teach how to fight real-world adversaries—dictators, military occupiers and corrupt rulers, using methods that have succeeded in actual conflicts—not with laser rays or AK47s, but with non-military strategies and nonviolent weapons? Such a game, A Force More Powerful (AFMP), is now available. A unique collaboration of experts on nonviolent conflict working with veteran game designers has developed a simulation game that teaches the strategy of nonviolent conflict.

Like a Cart with Two Wheels

At a high-level conference in Washington recently, World Bank President Paul Wolfowitz recollected an experience he had visiting a small town in Pakistan last summer.

“…development is like a cart with two wheels - one man and one woman. If one of the wheels isn’t moving, the cart won’t go very far,” one woman described to Wolfowitz.