What role for IMF surveillance?

This paper reviews two recent reports on the international monetary system, one by the Group of 10 (industrial countries) and the other by the Group of 24 (developing countries). It contrasts their recommendations for improving policy surveillance by the International Monetary Fund. Its own recommendations include the strengthening of “enhanced surveillance” to make it more formal without making it more onerous, the introduction of “shadow conditionality” to give guidance to governments about their eligibility to draw on the Fund, and the further development of multilateral surveillance along lines proposed at the Tokyo Summit. It would broaden that process, however, by shifting the focus from policy compatibility, defined with reference to exchange-rate behavior, to policy quality, defined with reference to the behavior of global aggregates such as the growth rate of world trade. The paper examines the use of target zones to manage exchange rates and argues that it would not weaken the case for multilateral surveillance, which is needed not only in setting the zones but also to make sure that policies adopted by participating countries do not impart an inflationary or deflationary bias to the international economy.     

WTO框架下的国家金融安全和金融风险可控性分析

金融安全已成为国家经济安全最为重要的内容之一。金融服务贸易开放对发展中国家产生了一些负面效应和巨大的经济效益。由于WTO框架下的成员国在其国内政策实施的独立性和资金流动的可控性方面仍然能行使主权国家的功能,金融风险是可控的。     

Do Supermarkets Change the Food Policy Agenda?

Policy makers want supermarkets to serve the interests of important groups in society, especially small farmers and the owners of traditional, small-scale food wholesale and retail facilities. But consumer issues are also important, including “internalizing” the full environmental costs of production and marketing, and helping supermarkets be part of the solution to the health problems generated by an “affluent” diet and lifestyle. This paper places the supermarket debate in the broader evolution of food policy analysis, a framework for integrating household, market, macro, and trade issues as they affect hunger and poverty. Increasingly, supermarkets provide the institutional linkages across these issues.     

Foreign exchange regimes and industrial growth in Bangladesh

Foreign exchange regimes have been found to play an important role in implementing trade and industrial development strategies in many developing countries. The economic incentives provided to export-oriented and import-substituting industries can be measured by the real effective exchange rate (REER) for imports and exports. Such measures are developed for Bangladesh. The REER for exports and imports increased by around 72 and 82%, respectively, over the period 1973–1974 to 1976–1977. From 1976–1977 to 1984–1985, the REER for imports fell by nearly 10% while the REER for exports declined by 6%, although the exchange rate for non-traditional exports fared somewhat better. The REER for both imports and exports appears to have recovered somewhat since 1984–1985, but the paper concludes that while trade and industry policies in Bangladesh have become less “inward-looking,” the exchange regime is still biased in favor of import-substituting industrialization. Substantially stronger export incentives than exist at present would be necessary to remove this bias.     

Estimating the economic cost of China's new desulfur policy during her gradual accession to WTO: The case of industrial SO2 emission

To understand the potential impacts of China's accession to WTO on her new desulphur policy (gradual reduction of 10% of annual SO₂ emission by 2005 with respect to that of 2000), we construct a CGE model in which SO₂ emission is directly linked to energy input consumption in production. The model equally considers the substitution possibility between energies of different SO₂ effluent ratios by including energy as labor and capital in the constant elasticity of transformation production function. The positive externality of trade in China's economy is also included. This model is then calibrated into a 55-sector Chinese SAM for the year 1997. Four policy simulations (Business as Usual, Openness policy only, desulfur policy only, and the combination of openness and desulfur policy) are made for the period from 1997 to 2005. The results show that the environmental impact of trade, though proven to be “negative”, stays rather modest. This is owing to the industrial composition transformation that deviates the specialization of the Chinese economy towards labor-intensive sectors under the new trade liberalization process. We do not find evidence for the “pollution haven” hypothesis. Seemingly ambitious, the new desulphur policy will only bring small economic growth loss. The pollution reduction objective will be realized mainly by substitution between polluting and less or non-polluting energies. The combination of trade liberalization and pollution control policy seems to give China more flexibility in adapting her economy to the new desulphur objective. Considering these different aspects together, the total economic loss due to the new desulphur policy will be limited to only − 0.26% under the presence of trade liberalization.     

Adjustment with a human face: Still relevant or overtaken by events?

This paper describes the extent to which the policy recommendations of “Adjustment with a Human Face” have been accepted. The concept has been accepted in principle, but large gaps remain in actual implementation. Some policy recommendations, such as the need for compensatory programs, have been more fully accepted and implemented than others, such as the need to stimulate productivity by poor households and to involve different social groups in policy making. The paper concludes that adjustment policies should be part of a long-term development strategy which emphasizes structural changes for countries to grow out of structural poverty. As such, the policy recommendations of “Adjustment with a Human Face” still remain valid, albeit with changes in emphasis on their various components.     

An impact of economic integration through trade: on business cycles for 10 East Asian countries

Many recent studies about East Asian countries discussed “natural” economic integration through trade, but there are few rigorous empirical studies on how their economies were affected by the evolution of economic integration within the region. This paper investigates the effect of bilateral trade dependence on the co-movement of business cycles for 10 East Asian countries. We find that economic fluctuations tend to be more synchronized within the region as trade interdependence among them deepens. This finding suggests the necessity of cooperative efforts to prevent or adjust unfavorable future economic crisis in East Asia.     

Extent and evaluation of protection in developing countries

Tariff protection and nontariff barriers are higher in developing countries than in industrial nations. The tendency of protection to decline with a higher level of development can be explained by the role of import taxes in government revenue, by export pessimism, and by differential treatment of developing countries under GATT.Protection against imports is a burden on the export sector. Trade liberalization has important effects on economic growth and factor productivity. Recent programs of trade liberalization are implemented together with complementary macroeconomic policies to enhance the possibility of sustaining trade policy reforms to be sustained.     

Stability and Growth Pact: issues and lessons from political economy

The paper analyses the EU fiscal rules from a political economy perspective and derives some policy lessons. Following a literature survey, the paper stresses the importance of appropriate incentives for rule compliance in an environment where national fiscal sovereignty precludes the option of centralised enforcement. In addition, the paper stresses the importance of clear and simple rules and in particular the 3% deficit limit in anchoring expectations of fiscal discipline and facilitating public and market monitoring of public finances. This, in turn, strengthens incentive for rule compliance. Moreover, the paper discusses the interests of the most important players in European fiscal rule formation and the importance of choosing the appropriate time for initiating a reform debate.Non-technical summary The EU fiscal framework as laid down in the Maastricht Treaty and the Stability and Growth Pact (SGP, the Pact) aims to preserve fiscal sustainability while allowing room for automatic fiscal stabilisation. These two objectives are also at the heart of the ECB’s interest in the EU fiscal framework because their attainment facilitates monetary policy making in the short and long run.The paper analyses the EU fiscal rules from a political economy perspective and derives some policy lessons. The literature review of the first part reveals that fiscal rules can help solve deficit/debt biases and time inconsistency problems by constraining the behavior of policy makers. But rules can also mitigate biases if they facilitate financial market and public scrutiny of fiscal policies.Thereafter, the paper analyses the institutional environment in which EU fiscal rules are applied. It argues that EU rules reflect a “contract” amongst countries that retain sovereignty on fiscal policies. Enforcement, therefore, ultimately has to be undertaken by the contracting parties. Due to this constraint, the rules can also be characterised as “soft” law (with the 3% limit being nevertheless a much “harder” constraint than the other elements). But this does not necessarily imply that the rules are ineffective (or “dead”). Soft law reduces political transaction costs (by improving transparency and providing a forum for peer pressure). Moreover, if well-designed, such law can boost incentives towards making the rules “self-enforcing”. Evidence speaks in favour of this view: while EU fiscal rules were bent in a number of cases and compliance is undeniably of concern, major and rapid fiscal balance deteriorations have been largely prevented since the start of EMU.The paper also looks at potential trade-offs between “complex” rules where a “fine-tuned” economic rationale may boost acceptance of the rules versus simple and clear rules that allow easy monitoring. It is argued that clarity and simplicity of rules are important especially when formal enforcement is limited (“soft law”) and public monitoring becomes more important. By facilitating public and market monitoring of compliance, clear and simple rules are also more costly to breach.The benefits of “complexity”, and in particular the use of administrative discretion to fine tune the rules to country situations have limits, in particular when it comes to the excessive deficit procedure (EDP). It is argued that the 3% deficit limit and the time frame for correcting excessive deficits already provide some room to accommodate economic circumstances. The 3% limit must be clear, simple and strictly implemented to anchor expectations of fiscal discipline and to facilitate public and market monitoring. Further discretion and relaxation would conflict with this need. From this angle, other risks (e.g., efforts not materializing, structural reforms producing surprise costs etc) are hard to justify as a reason for extending deadlines to correct excessive deficits.The preventive arm of the Pact with its requirement of close-to-balance-or-in-surplus budgetary positions defines sound medium term budget positions and adjustment paths. This may be appropriately fine-tuned to address concerns about the Pact’s underlying economic rationale. For example, a symmetric application in good and bad times and less time inconsistency would be desirable.Finally, the timing of a debate on fiscal rules needs to be carefully chosen. In the EU context (and perhaps in other contexts as well), there seems to be much inherent pressure to make the rules more “complex”. Moreover, for the debate initiated in summer 2004, there was also no willingness by countries to give up sovereignty nor was there a sense of urgency to strengthen public finances via tighter rule implementation and enforcement. In such an environment, it is likely that changes to fiscal rules make them more complicated, discretionary and, thereby, potentially less enforceable.The views expressed are those of the author and not of the ECB. Comments by Vitor Gaspar, Mark Hallerberg, Steven Keuning, Jose Marin, Richard Morris, Gilles Noblet, Hedwig Ongena, Luca Onorante, Rolf Strauch, Juergen von Hagen, an anonymous referee and valuable assistance by Anna Foden are much appreciated.     

Telecommunications and the local economy: Some emerging policy issues

This paper provides a brief overview of the issues which surround local economic development and telecommunications. The implications of telecommunications for urban and regional development in the present “information-based” era are outlined and the seven basic features of this development are described. Some necessary steps and conceptual approaches to developing specifically local development policies in this new area are then expounded by way of the development of a “framework for the local policy maker”. Finally, several leading attempts at developing locally controlled telecommunications infrastructures in the UK, as agents of economic and social development, are briefly analysed.     

Adjustment with a human face: A UNICEF record and perspective on the 1980s

In the early 1980s UNICEF became increasingly concerned with the setbacks in health, education and child nutrition arising in many developing countries. This article records the developments of UNICEF's concerns with international and national policy to offset these setbacks, the development of its policy of “adjustment with a human face” and the major steps taken to encourage the IMF and the World Bank to give more attention to poverty and human concerns in the making of adjustment policy.     

Business Cycles in Developing Countries: Are They Different?

This paper demonstrates that developing countries differ considerably from their developed counterparts when focus is on the nature and characteristics of short-run macroeconomic fluctuations. Cycles are generally shorter, and the stylized facts of business cycles across countries are more diverse than those of the rather uniform industrialized countries. Supply-side models are generally superior in explaining changes in output, but a “one-size fits all” approach in formulating policy is inappropriate. Our results also illustrate the critical importance of understanding business regularities as a stepping-stone in the process of designing appropriate stabilization policy and macroeconomic management in developing countries.     

Toward a global effort to protect the earth's biological diversity

The preservation of biological diversity is discussed from a global perspective, with a focus on tropical deforestation. Economic issues in tropical deforestation, market failure, and the costs and benefits of preserving biological diversity are surveyed. It is found using a straightforward economic model based on the cost-benefit criterion that industrialized countries can realize “gains-from-trade” by financing preservation of biological diversity in tropical developing countries. This provides a strictly economic rationale for the introduction of an international system to transfer funds for the protection of biological diversity in developing countries.     

IMF conditionality: Conceptual problems and policy alternatives

This paper argues that the main issue damaging relations between developing countries and the International Monetary Fund is the latter's position that external disequilibria are always a consequence of excess aggregate domestic demand, caused by excessive credit expansion. As a result, Fund sponsored stabilization programs center on demand contraction through a credit crunch and may establish stricter domestic performance criteria than necessary to attain the balance-of-payments objectives. The author suggests that the IMF establish a two-tier conditionality system, which he calls the “hands-off” approach, with one tier composed exclusively of balance-of-payments or foreign exchange denominated variables, and the other of domestic currency denominated variables. The two-tier system would allow more flexibility in compliance assessment and might reduce substantially the number of breakdowns of Fund programs.A revised “hands-on” approach for the Fund is also suggested. The author critiques the recessive biases of the currently used financial analytical exercises and makes specific proposals to introduce “growth exercises” to establish the foreign credit requirements of a growth-oriented stabilization program and thus to introduce performance criteria for creditor countries and banks — a form of “reciprocal conditionality.”     

新冠疫情全球扩散对中国开放经济和世界经济的影响

在巩固新冠肺炎疫情防控成效的同时,中国经济在努力复工复产复市。因疫情防控导致境内外交通运输联系不同程度被阻断,商品运输成本提高、交货日期延长,中间品与劳动力供应不足,中国进出口贸易和国际直接投资增长面临很大压力。中国企业复工复产受到全球价值链运行态势影响,疫情全球扩散正在引发全球范围内经济结构、财政政策、货币政策、贸易政策调整。疫情在全球范围扩散,使企业经营压力上升,造成金融恐慌并引起全球经济深度衰退的可能性增加;为抗击疫情增加财政补贴和实施宽松货币政策,增加了各国财政负担,带来全球范围内的通货膨胀压力加大;部分国家试图借口疫情防控,发动新的贸易摩擦的可能性增加。     

Are Environmental Social Movements Socially Exclusive? An Historical Study from Thailand

Environmental social movements in developing countries are often portrayed as democratizing but may contain important social divisions. This paper presents a new methodology to analyze the social composition and underlying political messages of movements. Nearly 5 000 newspaper reports during 1968–2000 in Thailand are analyzed to indicate the participation of middle and lower classes, and their association with “green” (conservationist) and “red-green” (livelihoods-oriented) environmental values. Results show middle-class “green” activism has dominated forests activism, but lower-class “red-green” activism has grown for forests and pollution. Newspapers, however, portray all environmentalism as “democratization,” suggesting that the possible exclusiveness of some environmental norms is unacknowledged.     

Europe and East Asia in the context of regionalization: Theory and economic policy

Much academic interest has recently centered on economic regionalism as a framework of international economic relations. The European Community (EC) has been a focal point. Other regional economic organizations (APEC, NAFTA), have been subjects of debate.This paper discusses three principal arguments: (1) the “natural”/“optimal” regional grouping, (2) transaction cost advantage in a regional model, and (3) the balancing of intraregional and extra-regional economies. Indeed, the argument is most certainly for an international regime of an “open,” not a “fortress” economic regionalism.This paper examines the subject relative to economic theory and policy.     

The third world and the CMEA Group in the world economy of raw and basic materials

This article traces the evolution of international trade flows in raw and basic materials in order to draw some conclusions about such issues as comparative advantage, dependence and interdependence, self-sufficiency, etc. It looks particularly at the relationships among various categories of developing countries and the CMEA countries. The first part of the discussion concludes that any argument that developing countries may be increasing their bargaining power in commodity markets is illusory. The author argues that the oversupply of raw materials in the world market and the consequent depressed prices will continue indefinitely. He concludes with some consideration of the future options for CMEA raw materials export policy in light of the broader prospects and policies of the OECD and developing country groups.     

全球金融危机下的贸易保护主义——理论与实证分析

本文分析了全球金融危机下贸易保护主义的未来发展趋势以及实施的影响因素。通过运用非期望效用的进化博弈理论,指出全球金融危机下,国家是有限理性的,从世界整体看,合作和自由是最终的趋势;从具体各国来看,贸易保护主义的实施不仅仅由实施政策的收益和损失决定,与各国对政策决策权重的判断和程度也有密切的关系。通过美国对中国反倾销的实证分析证明了上述观点,并发现各因素与贸易保护主义实施的可能性均有正的相关性,其中收支函数的影响最大,两国之间的交互作用影响最小。在此基础上,本文提出了中国应对贸易保护主义的对策。