Jamus Lim's blog
In an earlier post, we highlighted a feature of the global pattern of investment in recent times: that since 2000, developing countries have gradually increased their share of global investment, moving from around 20 percent through much of the second half of the last century, to around 46 percent by 2010. The rapidity of this rise notwithstanding, the natural question is whether this trend will continue into the future.
Two recent op-eds, one by Gordon Brown and another by Zhu Min, made the call for a global growth compact: one where the asymmetric growth patterns of the West and the emerging world need to be coordinated, to mutual benefit; the failure of which would be due to a prisoner's dilemma outcome of self-defeating coordination failure.
Beginning in 2000, the world experienced a dramatic shift in the pattern of global investment.
In 1999, Zimbabwe initiated a series of economic reforms that were designed to greater empower the indigenous population of the country, as well as correct for inequities in the distribution of the economic resources held by the population. Whereever one may stand on the broader merits of the policy, the economic consequences are amply clear: Beginning in 2000, output and investment contracted sharply.
While the world remains largely fixated on the series of unfortunate events playing out in Europe, it may be worthwhile stepping back a little from the immediate crises and thinking about the longer-term consequences of austerity plans in the developed world for the world economy.
The Swiss National Bank (SNB) recently announced (PDF) that it would be pursuing a price floor on the Swiss franc of EUR/CHF 1.20.