Africa's Debts and Economic Recovery

A substantial reduction of external debt burden of many African countries is needed, for four reasons. First, the present debt burden of Africa is extremely heavy. Africa's debts are equivalent to more than 100% of its GNP, compared to less than 50% in Latin America – another heavily indebted region – and even less elsewhere. The weight of Africa's burden is exacerbated by its lower per capita income than elsewhere in developing regions. Secondly, Africa is experiencing adverse effects of falling commodity prices more than any other region because of its greater dependence on primary products than other regions. Over the last forty years, export commodity prices other than oil have fallen by 50% in real terms, a staggering development with far-reaching adverse effects on many producers. Between May 1989 and January 1991, commodity prices other than oil fell 23% in SDR terms – speed of decline similar to that experienced in the great price fall 1980-82 which marked the beginning of the debt crisis of the 1980s. Cocoa and coffee, two major exports of Sub-Saharan Africa, were particularly badly hurt. Thirdly, while debt in other debt-affected areas has stabilized in recent years, that of Africa has continued to grow as interest is charged on interest and capitalized. Many African countries have been compelled to suspend their debt service payments; according to World Bank calculations, less than one half of Africa's debt service due is now being paid. Even so, debt service which is still being paid absorbs 27% of Africa's shrunken exports – a proportion which severely curtails Africa's capacity to import and to grow. Fourthly, debt settlement is needed to clear the way for resumption of Africa's economic development, now virtually stagnant for a decade in aggregate terms and falling in per capita terms. Africa has the capacity to modernize and grow, and this has been proven in one critical area and against all odds. Between 1980 and 1987, exports of manufactures from Sub-Saharan African countries rose 42% in U.S. dollar terms or 5.7% per year. In 1988, out of 33 countries for which data are available, exports of manufactures rose in 28, and the overall increase for the 33 was 15.8 %. In 1988, eleven Sub-Saharan countries exported manufactures in excess of US $100 million each, compared to seven countries in 1980; and in 1989, there was none. There also have been setbacks, for various reasons. But taking Sub-Saharan as a whole, to achieve a 60% increase in exports of manufactures to US $4 billion on a non-negligible base of US $2.5 billion in 1980, over an eight-year period marked by a commodity collapse, droughts, debt crisis, wars and policy disasters, is a remarkable achievement by any standard. In North Africa, exports of manufactures more than doubled between 1980 and 1987, and then accelerated at 18% per year in 1988-89. North African exports of manufactures are now running at US $5 billion per year. This diversification and growth of African exports must be sustained. For this purpose, African countries must have realistic exchange rates, undistorted product prices across the economy, sufficient supply of industrial inputs and hence adequate growth of agricultural and mineral output, and they must reconstruct the existing capital stock, in many places obsolete, and add new facilities. Their investment, a crucial element for further growth, has fallen sharply in the last decade of the debt crisis in Sub-Saharan Africa: the fall has been so severe that some countries have not even been able to fully replace depreciating capital. At the present level of domestic savings and international commodity prices, most of Africa cannot undertake the reconstruction, modernization and expansion out of domestic ressources to any significant extent. Foreign capital inflow is needed to initiate the recovery and to help sustain it thereafter. But such capital inflow will not take place until the present debt situation is cleared up. This is a necessary condition, even though it is not sufficient: it must be supported by domestic efforts single-mindedly dedicated to economic recovery and social justice. Past efforts at the solution of the debt problem, some of them imaginative and generous, have proven insufficient and uncoordinated. A new deal is needed, attacking the core of the Sub-Saharan problem: debts held by some multilateral financial institutions and debts held by the private sector, in addition to a further shrinking down of service on official bilateral debt or its total cancellation in an imaginative proposal. In North Africa, the acute liquidity squeeze of Algeria – debt service absorbing almost 70% of exports of goods and services per year – needs to be alleviated through debt rescheduling over the long term, thus releasing resources for needed economic recovery. Algeria's debt outstanding is relatively low; it is the service structure which needs radical change. While Africa's commodity problem is not on the agenda of the Abidjan Roundtable, one specific commodity situation can perhaps be handled: the cocoa crisis which affects severely a large part of West Africa and for which remedy seems relatively easily in hand. It is proposed that a consortium of international financial institutions be organized to finance, through loans of, say, 15 years duration, the sale of surplus cocoa stocks to Eastern Europe, thus contributing to cocoa price recovery and hopefully stabilization, and improvement of food supply in Eastern Europe. The operation would be no more risky than other balance-of-payments structural adjustment lending. Cocoa producing countries in parts of Latin America, the Caribbean and Asia would be also beneficiaries. Adjustment and development programmes should be prepared, and seen to be prepared, by national authorities of African countries rather than by foreign advisers and international organizations. Otherwise commitment will be lacking.     

银行个人信贷中单位出具不实收入证明的赔偿责任

在商业银行的个人信贷业务中,单位为银行客户向银行出具不实的个人收入证明,银行客户无法清偿债务后银行的损失为纯粹经济损失的一种。尽管在不同的国家其法律处理的路径不同,但其处理结果均为单位应承担相应的赔偿责任。根据法经济学的分析与我国的现行立法,我们认为单位应当向银行承担补充赔偿责任。     

Foreign aid as a promotional strategy

Developed countries are motivated by several forces when allocating aid to developing countries. The forces could be humanitarian in one country, and commercial self-interests in another. The principal objective of this study was to determine the effectiveness of aid as a promotional strategy for trade, and to investigate whether major donor countries are optimally allocating their aid resources to increase their export and total trade. Models were developed to explore the effectiveness of aid as a promotional instrument for exports and total trade. Donor exports and total trade were expressed as functions of aid, per capita GNP of the recipient country, and aid from competing donors. The study showed that exports and total trade responded to total expected aid contributions and per capita GNP of the recipient countries. Also, all donors, but one, were maximizing the returns to aid, given the level of trade with recipient countries and will be reluctant to increase aid flows, given the current trade level.     

出口多样性对新兴经济体出口绩效的影响——基于跨国数据的实证分析

全球经济的发展出现了多极化的趋势,新兴经济体的经济发展尤为令人瞩目。近十年,新兴经济体的出口增长显著,本文尝试从出口多样性角度来解释出口的快速增长。本文首先回顾了出口多样性和出口绩效的理论背景,介绍了出口多样性的衡量方法,并利用广义边际法计算出中国及其他新兴经济体、发展中国家及地区、发达国家的出口多样性,对其发展趋势进行了国际比较。最后,利用跨国面板数据进行实证分析,得出了本文结论:出口多样性对出口绩效有显著的正的影响。     

How Aid Tying Can Impose Additional Cost on Aid Recipients: Evidence on Ghana

Abstract: This study investigates the prices of tied foreign aid imports by estimating the price differentials between tied aid imports and non‐aid imports from bilateral sources to Ghana. The study finds a significant mark‐up on the prices of tied aid imports relative to non‐aid imports, which translates into substantial cost to Ghana. Several reasons, both in Ghana and in the donor countries, could be found for the estimated price differentials. Ghana needs to take steps to improve its investment climate, as a way of reducing investment risk, which in turn will enhance the confidence of export financiers to reduce the incentive to mark up prices of tied commodities. On the part of donor countries, there may be need to examine the market for the supply of aided commodities towards the liberalization of such markets. It is suggested that although the higher costs on tied imports may be a necessary price Ghana had to pay to obtain aid, the associated cost provides a case for the cancellation of the bilateral aid debt to Ghana.     

The Global Setting and African Economic Growth

This paper reviews the evidence on the importance of the globalsetting for the economic growth of African economies, particularlyin the light of the increasing salience of globalisation. Althoughexport promotion strategies are found to be growth enhancingfor African economies, available evidence suggests that it isthe manufacturing component that really seems to matter. Theglobal-related factors with adverse effects include terms oftrade deterioration, economic instabilities of capital (investment)and imports, high world interest rates, real exchange rate misalignment,diminishing external aid flows into countries with sound policies,large external debt and high export taxes. The World Trade Organisationframework also matters for the growth prospects of African countries.The current time-bound exemptions accorded most African countriesunder the framework are steps in the right direction.     

'Don't owe,won't pay!': A critical analysis of the Jubilee SA position on South African government debt

Jubilee 2000 (SA) supports the cancellation of South African national government (and other) debt on the grounds that it is odious debt from the apartheid years. The organisation has called for foreign creditors to cancel the debt voluntarily and has threatened to call for debt repudiation if such cancellation is not forthcoming. However, unlike voluntary debt cancellation, debt repudiation would probably have serious consequences for investment and growth. Furthermore, as most government debt has accumulated after the end of apartheid, and as most is domestic and marketable, the moral argument for repudiation is problematic. Jubilee 2000 (SA) is also calling for the government pension scheme (which owns a large proportion of the domestic government debt) to be restructured. Contributions to the pension fund may be excessive (as argued by Jubilee 2000), but the case is not clear. South Africa should publish a dual set of accounts in line with how other countries report their liabilities so as not to overstate the deficit in the eyes of investors.     

Nonlinear Exchange Rate Pass-Through: The Role of National Debt

This study uses the panel smooth transition regression model with a debt ratio as the transition variable to evaluate the level of exchange rate pass-through. This model can investigate the threshold effect of the debt ratio on the pass-through. To perform the empirical estimation, we choose the 22 Organization for Economic Co-operation and Development member countries during 1994–2013 as sample objects. The empirical results show that the exchange rate pass-through displays a nonlinear and smooth transition process, depending on each period of debt ratio of the export country in different regimes. That is, the pass-through is nonlinear and varies with time and across countries. The larger the debt ratio is, the lower the pass-through would be. The threshold for the pass-through to generate smooth regime switching is 36.62% of debt ratio.     

Interest-Rate Spread and Public-Debt Dynamics in a Two-Country Monetary-Union Portfolio Model

Tracking, monitoring and steering the evolution of public debt over time will be a major policy challenge for almost all governments in the advanced countries in the years to come, in particular for those belonging to the European Monetary Union. In this paper I study public debt dynamics in a two-country monetary union where a representative, risk-averse wealth-owner optimizes his/her portfolio of sovereign bonds issued in the common currency. I obtain two main results with respect to the standard country-by-country approach. First, the interest-rate spread between the two countries is endogenized as the higher-debt country pays a risk premium which is proportional to the level of its own debt with respect to the debt of the other. Second, its debt dynamic path becomes nonlinear and dependent on the evolution of the other country’s debt. The most important policy implication is that “dynamic interdependence” is not fully considered in the implementation of EMU fiscal rules, but it may may jeopardize their goal of convergence and stability of debt stocks.     

Effects of the current world recession on the welfare of children: The case of Korea

The remarkable growth of Korea's GNP during 1963–1978 was achieved through export-led industrialization. The accelerating rate of growth in labour-intensive export industries provided job opportunities to the growing labour force. However, during the last years of the 1970s the Korean economy experienced bottlenecks and strong inflationary pressures which eroded its export competitiveness. As a response to these problems, the government implemented stabilization and restructuring programmes which did not affect the expansion of social welfare programmes for the poor and the vulnerable.     

中国靠什么实现了对美国出口的迅速增长——基于产品广度产品价格和产品数量的分解

本文利用HS编码六分位贸易数据,扩展了Hummels和Klenow(2005)的分解方法,将中国对美国出口的增长分解为产品广度增长、产品价格增长和产品数量增长。结论发现:中国对美国出口增长的70%归结为产品数量的增长;随着产品技术升级,数量增长的贡献度逐渐增加;中国的出口增长途径并不具有普遍性;中国出口的数量高于大多数国家,价格低于大多数国家,实现贸易增长模式从"以量取胜"到"以质取胜"的转变成为当务之急。     

自由贸易抑或贸易保护——国际贸易的经济增长效应再考察

全球经济复苏过程中,发达国家与新兴经济体之间关于自由贸易的争议也变得空前激烈。国际贸易是否有利于全球经济增长?这实际上是长期以来国际经济学与发展经济学领域颇具争议的问题之一,而在当下对这一问题进行重新审视更具有重要的现实意义。传统贸易理论对贸易合理性的探究尽管触及了经济增长问题,但在贸易静态收益理论的框架下,国际贸易究竟是否会促进一国经济增长,既取决于各个国家在各个发展阶段的经济增长究竟偏向于出口部门还是进口部门,也取决于各种贸易政策对各个部门的相对供给和相对需求的影响。本文对现有针对国际贸易与经济增长关系所做的实证研究作了系统回顾和分析总结,明确指出了目前各种看似矛盾的实证证据背后的理论和技术根源。在此基础上,运用两阶段最小二乘估计(2SLS)和GMM动态面板回归技术,对1960～2006年期间全球各国面板数据进行分析,对不同收入水平的国家组别分别就其贸易占GDP比重与GDP增长之间的关系进行实证检验。文章发现,上述实证研究证明国际贸易对经济增长的促进作用与一国经济发展阶段相关,但对不同收入水平的国家而言则存在差异,同时进口和出口在经济增长中的表现也存在差异性。总体来看,对中等收入国家而言,贸易占GDP比重与GDP增速之间的关系最强,进出口均有较强带动作用;高收入国家贸易占GDP比重与GDP增速之间关系较弱,进口的作用甚至大于出口;低收入国家贸易占GDP比重与GDP增速之间的关系最弱,进口甚至有抑制作用。     

Recession, inflation and the international monetary system

The difficult circumstances being faced by the world economy and its uncertain prospects for the 1980s make it necessary to take a new look at the present financial mechanisms and international institutions for monetary cooperation, with a view to adapting them to current needs and to developments in the near future. The industrial countries will have more modest rates of growth than in earlier decades, and this will have significant consequences for the developing countries: (a) stagnation of official development aid flows; (b) possible intensification of protectionist trends; (c) slow growth of producers of raw materials whose export markets will be seriously limited; (d) gradual shift of world economic and political activity toward oil-producing developing countries and, to a lesser extent, toward the exporters of manufacturers; (e) industrial countries and raw materials producers will become increasingly interdependent; (f) oil-producing and other higher income developing countries will increase their participation in regional economic cooperation and official development aid efforts. Some of the more specific problems which require attention from the international community are inflation and recession; structural disequilibria, recycling and external debt; adjustment process; creation of liquidity and transfer of resources; and participation of the developing countries in the monetary system.     

Indonesian Foreign Debt: Headed for A Crisis or Financing Sustainable Growth?

This paper examines the build-up in Indonesia's foreign debt between 1981 and 1993, and explores the potential for a debt crisis during Repelita VI. It concludes that Indonesia is not headed toward a crisis in the immediate future- Borrowed funds have generally financed productive investments, contributing to rapid growth in GDP and exports since the late 1980s. If recent trends continue, debt should ease gradually; if not, the economy could withstand a substantial balance of payments shock, at least for a while. A debt servicing problem, although unlikely, is conceivable by the end of the decade. Short-term debt is growing rapidly, non-oil export growth has slowed, and debt service remains high. Appropriate government actions to reduce the potential for a crisis include further deregulation to support growth in non-oil exports, discouraging implicit government guarantees for private sector projects, and reducing government exposure to yen-denominated debt.     

Strategic export subsidies and reciprocal trade agreements: The natural monopoly case

Why do governments seek restrictions on the use of export subsidies through reciprocal trade agreements such as GATT? In this paper, we emphasize that subsidy competition between governments can serve to coordinate the entry decisions of firms, finding that consumers in the importing countries may suffer if the coordination afforded exporters by government subsidy programs does more to prevent entry than to promote it. In such circumstances, we show that the existence of export subsidy programs can lead to inefficiencies, and importing countries and the world as a whole can be better off when such programs are banned.     

PROBLEMS IN EXPANDING JAPAN'S IMPORTS OF MANUFACTURES FROM DEVELOPING ECONOMIES: A SURVEY*

The Japanese economy is now the second largest market economy, with a large trade surplus. And yet, Japan's imports of manufactures have long been very low relative to its GNP, when compared with other industrial countries; its ratio of manufactured imports to GNP was in the range of 2.1–2.7% in the 1980-87 period, as compared with 8.5–10.3% for the industrial countries as a whole or 4.7-7.2% for the United States. The share of developing economies in total imports of manufactures in Japan is about the same as, if not higher than, those for most other industrial countries. If Japan's ratio of manufactured imports to GNP were to rise in the future to approach closer to those of other industrial countries, Japan's imports of manufactures from developing economies could be two to three times what they are today, even if Japan's GNP does not increase at all and the share of developing economies in Japan's manufactured imports does not increase. This paper is an attempt to probe the potential of the Japanese market for imports of manufactures from developing economies in terms of rising ratio of such imports to GNP. The paper explores the reasons why Japan's ratio is exceptionally low, on the basis of existing literature. (a) Japan's ratio of manufactured imports to GNP has remained exceptionally low compared with those for other industrial countries. (b) Japan's ratio of manufactured imports from developing economies to GNP has remained distinctly low despite the recent surge in such imports. (c) If a part of the reason for the low ratio for Japan was a market access problem as often alleged, the problem is not with formal import barriers such as tariffs and formal non-tariff barriers because these barriers in Japan are no higher than in other industrial countries. As for informal import barriers, evidence found indicates that: (i) Administrative guidance and flexibly managed competition policy, which in the past had considerable effects of limiting imports, appear to have declined-in importance, but they still have import-limiting effects in certain areas. (ii) Market access difficulties involving import procedures, product standards, testing and certification requirements, which were enormous in the past, may have also decreased in severity over the last decade, but problems in these areas persist. (iii) There are aspects of the Japanese distribution system and practice that seem to make foreign access to the Japanese market significantly more difficult than the access by Japanese exporters to the markets in other industrial countries. Distribution in Japan suffers from overregulation. (iv) Users of manufactured products in Japan are sensitive to quality, perhaps more so, on the average, than in other industrial countries. Does the recent upsurge in Japan's imports of manufactures suggest that the traditional import behavior of Japan is changing? Japan's manufactured imports measured in yen increased by 18 and 27 percent in 1987 and 1988, respectively, and those coming from developing economies increased even more rapidly. There is also some evidence that price and income elasticities of demand for manufactured imports may have increased recently. These are encouraging, but it remains to be seen whether the trends will continue far enough into the future to bring Japan's import behavior more into line with those of other industrial countries. If they do, implications for the market prospects of manufactured exports from developing economies could be far-reaching. Outstanding questions are: (i) How much of the recent increase in manufactured imports is attributable to the appreciation of the yen (price effect)? How much is attributable to the increase in income or industrial output (income effect)? How much is attributable to removal of formal and informal import barriers effected so far (structural change)? Has consumer taste changed? (ii) Why have Latin American countries not been successful in promoting their exports of manufactures to Japan, when Asian exporters have been so successful? (iii) Up until now, the share of developing economies in Japan's manufactured imports has not been particularly low compared with those for other industrial countries, but is this share likely to fall or rise in the future? (iv) What is the likely impact of recently increased direct investment (DFI) by Japanese manufacturers in developing economies on the imports of their products into Japan?     

美国国债危机的根源及出路

虽然美国债务危机还没有爆发,但目前的财政赤字和国债规模过大、财政收支结构的刚性特征均阻碍了其财政赤字状况的改善、美元的国际货币地位也非可以永久持续,这使美国国债的可持续性问题面临挑战。在解决方案上,短期内美国政府可以通过技术性违约或者债务货币化将政府债务延后或者隐性处理,但是其代价是巨大的。因此美国应当从中长期根本上解决债务问题,中期需要建立严格的财政制度;长期上则需要协调好各个产业的发展,寻找新的经济增长点。     

The delicate balance for jointly pursuing economic growth in Latin America and China

This paper examines the sources of economic growth for a group of Latin American countries in relation to their export performance in China. The analytical framework is based on an extended normalized quadratic profit function. The ensuing econometric results confirm that a favorable export record with China represents a positive source of growth for Latin America. However, it also creates long-run dependability conditions in terms of reduced prices and thinner profits that weaken its growth capacity. Latin American countries must seek product diversification away from their current commodity base and aggressively climb up the value chain to remain competitive worldwide.

Managerial Relevance: identify the sources of economic growth for a group of Latin American countries in relation to their export performance in China; the weakness of this economic growth model; how to seek product diversification away from their current commodity base with emphasis on value chain.     

Analysis of Chinese Manufacturing Export Duration

This paper studies the duration of Chinese manufacturing exports and its determinants, using disaggregated 6‐digit level Harmonized System product trade data from 1995 to 2007. Cox proportional hazard, Weibull and exponential models are used to examine the effects of various factors on export duration. It is revealed that export duration tends to be rather short‐lived. It is also found that GDP and GDP per capita of the export destination have positive effects on export duration, while trade relationships with distant and landlocked countries are generally of shorter duration. In addition, export duration is longer for differentiated and parts and components products, as well as products with large initial trade values. WTO membership is also important for longer export duration. Our empirical analysis suggests that developed markets, such as the USA and the EU, are important to China, and should still be the major sources for Chinese export growth in the long run. Moreover, technical innovation of firms and free trade agreement negotiations will be helpful for sustainable export growth.