The Great Recession and the Developing World

Ocampo, José Antonio; Griffith‐Jones, Stephany; Noman, Akbar; Ortiz, Ariane; Vallejo, Juliana; Tyson, Judith

doi:10.7312/columbia/9780231159661.003.0002

Cited by 12 publications

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“…The multilateral response was strong (and certainly stronger than during past crises), as reflected in the largest emission of Special Drawing Rights (SDRs) in history, major innovations in IMF programs, some improvement in their conditionality, and rapid increase in lending by the Multilateral Development Banks. However, that response exhibited two major weaknesses (Ocampo et al, 2010). First, it was much weaker than the shock warranted, given the strong contraction in private financial flows, and came with a lag.…”

Section: The Great Recession and The Developing Worldmentioning

confidence: 99%

“…1 1 The article borrows from work by Columbia University’s Initiative for Policy Dialogue for Instituto Complutense de Estudios Internacionales and the Spanish Cooperation (Ocampo et al, 2010). See the extensive analysis of this issue by Milanovic (2005). …”

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confidence: 99%

“…2 2 For a broader analysis, see the different reports by global institutions (IMF, 2009, 2010; United Nations, 2010; World Bank, 2010) and Ocampo et al (2010). …”

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Global Economic Prospects and the Developing World

Ocampo

2011

Global Policy

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This article argues that a large group of developing countries did relatively well during the Great Recession, thanks to the broader room for countercyclical macroeconomic policies, and that the world economy will continue to be more dependent on the developing world than any we have known in history. However, it also claims that major emerging economies cannot serve in the immediate future as a strong enough alternative engine of world economic growth to the old industrial centers. It also raises major questions related to the future of the world trading system, both in relation to its future dynamics and the transformation of its ‘center–periphery’ character. Given the problems underlying world trade, it argues that the best scenario for the world is one in which major economies focus on their domestic demand growth. Finally, it raises a series of questions related to global imbalances and risks associated with the pro‐cyclical pattern of capital flows to developing countries. These problems call for major reforms of the international financial architecture (some now under way), notably reforms of the global monetary system, effective mechanisms of macroeconomic policy coordination and improved regulation of finance, including of cross‐border capital flows. Policy Implications Developing countries should be provided with the appropriate room for maneuver to undertake countercyclical macroeconomic policies. However, policies of ‘self‐insurance’ that they have increasingly used in recent decades, though useful from the point of view of individual countries, can generate adverse global effects, and should be replaced by a better functioning global financial safety net, including fairly automatic balance of payments financing facilities during crises. Under current circumstances, export‐led growth by large industrial or developing countries is a major threat to the world economy. Rather than focusing on trade as such, major economies should pursue a strategy of ‘growth as an engine of trade’, in which the focus should be on how to encourage dynamic domestic markets, rather than following the ‘trade as an engine of growth’ strategy that was in vogue in previous decades. Running current account deficits should be supported by the international community. However, generating these current account deficits the way they are now being pushed by financial markets, through massive pro‐cyclical capital flows, runs the risk of generating future crises. Major reforms of the international macroeconomic and financial architecture are called for, notably reforms of the global monetary system, effective mechanisms of macroeconomic policy coordination and improved regulation of finance, including of cross‐border capital flows.

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Section: The Great Recession and The Developing Worldmentioning

confidence: 99%

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Global Economic Prospects and the Developing World

Ocampo

2011

Global Policy

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“…Ocampo et al [2010] is the most comprehensive survey of counter-cyclical policy responses to the crisis in the developing 13 Some developing country sovereign wealth funds also played a counter-cyclical role outside their borders. For example, some increased their exposure to euro area assets and participated in the European Financial Stability Fund's inaugural bond issue in 2011 [Park and van der Hoorn, 2012].…”

Section: Countercyclical Macroeconomic Policiesmentioning

confidence: 99%

The rebranding of capital controls in an era of productive incoherence

Grabel

2014

Review of International Political Economy

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The re-branding of capital controls has occurred against a broader backdrop of change and uncertainty. This state of affairs-which I have elsewhere termed "productive incoherence"--constitutes the broader environment in which thinking and practice on capital controls is now evolving. The present incoherence is, in my view, productive because it has widened the space around capital controls to a greater and more consistent degree than in the years that followed the East Asian crisis of 1997-98. How are we to account for this extraordinary ideational and policy evolution on capital controls during the current crisis? I examine five factors that, in my view, must appear in any comprehensive account of the evolving re-branding of capital controls during the current crisis. These include: (1) the rise of increasingly autonomous developing states, largely as a consequence of their successful responses to the Asian financial crisis; (2) the increasing self confidence and assertiveness of their policymakers in part as a consequence of their relative success in responding to the current crisis at a time when many advanced economies faltered badly; (3) a pragmatic adjustment by the IMF to an altered global economy in which its influence has been severely restricted; (4) the intensification of the need for capital controls by countries at the extremes-i.e., not just those that faced implosion and thereby threatened cross-national contagion, but also and far more importantly by those that fared "too well" during the current crisis; and (5) changes in the ideas of academic economists and among IMF staff. I conclude by exploring in passing important tensions that have emerged in conjunction with the re-branding of capital controls. Paramount in this regard are the efforts by IMF staff and some academic economists to "domesticate" the discussion and use of capital controls, in part by the implementation of (something akin to) a "code of conduct" to regulate and constrain capital account interventions.--

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“…Dullien uses an approach similar to the one in this study (Dullien, 2010 (Ocampo et al, 2010). The other sample, that of the EU-27 countries, encompasses a more homogenous group of countries located within…”

Section: Introductionmentioning

confidence: 99%

Current-Account Imbalances and Economic Growth During the 2008-2009 Financial Crisis: an Empirical Analysis

Rangelova¹

2014

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The Great Recession and the Developing World

Cited by 12 publications

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Global Economic Prospects and the Developing World

Global Economic Prospects and the Developing World

The rebranding of capital controls in an era of productive incoherence

Current-Account Imbalances and Economic Growth During the 2008-2009 Financial Crisis: an Empirical Analysis

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