Monday, January 30, 2006
World Economic Forum Annual Meeting 2006
“The IMF is in something of a funk and its current malaise has been described by some like a rudderless ship adrift in a sea of liquidity." – Nouriel Roubini, Professor of Economics, Stern School of Business, New York University.
Due partially to the emergence of easily accessible private bank loans, the IMF is in need of major reforms, including flexibility of exchange rates and changes to their governance. Professor Roubini recommends a shift in the voting powers within the IMF to include more votes for emerging Asian economies, less European votes, and an additional vote for Africa. He suggests that the IMF should serve as a last resort for lending, leaving the bulk of loans to private banks, which are better equipped to provide lower interest rates for developing countries. The IMF should serve more of a surveillance role, and a referee of exchange rates, to ensure that there is global balance.
The main concern of the IMF should be to address global markets and their efficiency. Measuring market efficiency is an issue undertaken by the G-20 once a year. The G-20 is an informal forum for developing and industrialized countries to discuss issues relating to global economic stability, such as national policies, international cooperation, and international economic and financial institutions. The members of the G-20 include the finance ministers and central bank governors of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea,Turkey, the United Kingdom and the United States of America. Together these countries amount to 90% of global GNP, 80% of world trade, and two-thirds of the world population.
The G-20 cooperates with several other international organizations in order to develop positions and solutions to complex issues. This year the G-20 is likely to hear several issues on IMF reform and take a position on what functions they believe the IMF should perform.
For more information on potential IMF reform see:
For more information on the G-20 see:
World Economic Forum Annual Meeting 2006
The following is a summary of table discussions regarding the rising economic power of Brazil and Mexico, in comparison to China and India. The discussions took place at the World Economic Forum Annual Meeting. The World Economic Forum is a “an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas.”
Brazil and Mexico are similar in size when it comes to economic power: both are worth approximately USD $600 billion. These countries have the benefit of low foreign investment, but both are feeling pressure from China and India in terms of trade and capital investments.
In order to attract the types of investments that are profitable for Brazil and Mexico, there must be political stability and developed financial markets within the country. José Natividad González Parás, Governor of the State of Nuevo Leon, Mexico, believes that people in Latin America lack the drive and ambition to change their current economic situation. Unfortunately, stability is not always enough; economic growth must be the focus of Brazil and Mexico, both countries that are approximately equal to India in economic size, but very much behind them in terms of investment success and potential.
Although Mexico and Brazil can’t compete with China and India in terms of labor cost, there is a need for investment in human capital, in terms of education, research, and technology. Mexico and Brazil both dominate the same region, and thus would stand to gain by cooperating as opposed to competing. These countries offer several benefits to investors, such as peace with neighboring countries, one national language, democracy and energy self-sufficiency. In spite of these benefits, there is still the problem of wealth distribution. There is a very high discrepancy between the rich and the poor in Mexico and Brazil, and thus there is an imbalance of between education and industry needs.
In order to safeguard future success, Brazil and Mexico need to refine worker’s skills in order to develop a more attractive labor force, as well as achieving greater productivity. These are lofty goals, and are likely to be complicated by the upcoming 2006 elections in both countries; however, there is hope that the new administrations will continue the work that has already been done.
For more information on this topic see:
For more information on the World Economic Forum see:
Friday, January 27, 2006
Brussels, 25 January 2006
The Commission approved today 7 new thematic programmes in the framework of the reform of its External Actions. With the EU’s country and regional programmes, the new thematic programmes will form the backbone of the Commission’s external cooperation activities from 2007 onwards. The 7 new thematic programmes regroup the 15 current thematic programmes. The aim is to simplify the delivery of foreign assistance and achieve more and better results with the resources available. Thematic programmes are set up to achieve policy objectives that are not geographically limited and where the goal cannot be fully achieved through country and regional programmes. The decision is part of a larger reform of the Community’s external cooperation for the new financial period until 2013 under which the Commission will deliver foreign assistance more effectively and more efficiently, under a reduced number of budget lines. The financial allocations for the new thematic programmes await final agreement.
The programmes approved today include: the programme on Human Rights and Democracy, on “Investing in People”, on Environment and Sustainable Management of Natural Resources, including Energy, on Food Security, on Non-state actors in Development, on Migration and Asylum and on Cooperation with Industrialised Countries.
To learn more about each programme http://europa.eu.int/rapid/pressReleasesAction.do?
Civil society can play a key role in helping to close the gap between policy and practice when it comes to poverty reduction, according to a new study published by UNDP Serbia and Montenegro and the European Agency for Reconstruction.
Poverty Reduction in Serbia: The Role of Civil Society aims to strengthen the role of the third sector in poverty reduction, and through case studies demonstrate how civil society organizations can engage more assertively in poverty reduction initiatives.
"Through cooperation between all sectors of society, new development opportunities are created," argue the report authors. "…All actors can contribute to poverty reduction, especially the poor themselves, who should not be viewed merely as beneficiaries of aid, but rather as actors who have rights and opportunities and as people with potential that needs to be recognized and nurtured."
The product of cooperation between UNDP and the Civil Society Advisory Committee (CSAC), the report follows on the priorities and commitments laid out in the government's Poverty Reduction Strategy in Serbia.
The report "represents a timely reminder to all actors in society that coordinated efforts and cross-sector partnerships are needed to achieve greater quality of life for all members of society," said Rastislav Vrbensky, UNDP Deputy Resident Representative.
To see full report http://europeandcis.undp.org/files/uploads/_rbec%20web/poverty_reduction_in_Serbia.pdf
Monday, January 23, 2006
Fri Jan 20, 2006
By Mike Dolan
World economy grows, faces dangerous balancing act
By David J. Lynch
Challenges ahead for US economy
By Steve Schifferes
Many experts fear our nation’s trade deficit is dangerously high, threatening the stability of the world economy. “The USA's fat current account deficit could sink the dollar. As it plummets, emerging markets' exports dry up and oil prices, which are denominated in dollars, rise. In no time, what starts as one country's difficulty becomes a global contagion,” writes David J. Lynch of USA Today.
U.S. current account deficit in goods, services and investment income is almost $800 billion, or more than 6 percent of national output, according to Mike Dolan of Reuters. These growing deficits need to be funded by overseas investment. Net increases in overseas inflows of almost $3 billion are needed every working day in the case of the United States.
So, while world growth remains strong, it is increasingly being financed by investors sending ever-larger proportions of their capital and savings overseas.
Rising trade surpluses in developing Asia and the major oil exporters, meanwhile, has led to a boom in governments' foreign currency reserves to more than $4 trillion. World currency markets alone now turn over almost $2 trillion in trading volumes daily. Emerging markets could be most vulnerable.
As the deficit keeps growing, fears are growing that there will be a run on the dollar, which would force the Fed to intervene. It will interesting to watch the new Federal Reserve Chairman, Ben Bernanke, handle this situation. (Mr. Bernanke will succeed Alan Greenspan at the end of this month.)
Mr Bernanke's plan is to change the way the US central bank does business. He is a leading advocate of "inflation targeting", the idea that central banks should set a target for inflation (in the UK for example it is 2%) and stick to it. Steve Schifferes of BBC News notes that Mr Bernanke's approach is widely adopted in Europe, by both the Bank of England and the European Central Bank, and supporters say it has helped to lower expectations of inflation among the public.
This approach was opposed by Mr Greenspan, who believed central banks needed to keep the markets guessing on how tough they would be on inflation.
Protests, many of them. Korean farmers went all the way to Hong Kong to show their discontent, while WTO delegates and leaders consumed coffee throughout the night in their meeting rooms trying to settle ongoing negotiations.
John Tsang, the Secretary of Industry and Technology of Hong Kong and also chairman of the Ministerial conference, highlighted the following accomplishments at the conference:
"We have secured an end date for all export subsidies in agriculture, even if it is not in a form to everybody’s liking." (End date being 2013, quite some while to go before then).
“We have an agreement on cotton." (All export subsidies on cotton to be eliminated by developed countries by 2006; quota and duty-free access to cotton export markets from least developed countries (LDCs); more ambitious elimination of domestic subsidies than previously agreed).
“We have a very solid duty-free, quota-free access for the 32 least-developed country members." (
“In agriculture and NAMA (non-agricultural market access), we have fleshed out a significant framework for full modalities." (special and differential treatment principle to be implemented, and less than full reciprocity in reduction commitments in enhancing market access for both agricultural and non-agricultural goods).
“And in services, we now have an agreed text that points positively to the way forward.” (States can make regulations for service sectors, but committed to gradually increasing market access, and taking into account concerns and priorities raised by the Least Developed Countries).
The world awaits real progress to be made in the coming years. But are we waiting too long for changes be made to assist developing countries, so that poverty disparity vis-a-vis the world will be reduced through gains in trade?
Sunday, January 22, 2006
Sunday, January 22, 2006
Bolivia inaugurated its first Indian President, Evo Morales. As he was sworn into office, Morales vowed to end the discrimination against Bolivia’s impoverished Indian majority. Morales compared Bolivia’s history of race relations with that of “apartheid-era” South Africa.
Morales vowed that his five-year term would mark the beginning of his leftist movement toward socialism. Morales also announced his plans to consolidate control over Bolivia’s natural gas reserves. He called free market policies a “neo-liberal economic model” and criticized their failure to end poverty in Bolivia. Whether he will maintain free-market policies remains an open question.
An area of potential concern for the U.S. is Morales’ desire to increase the acreage allotted to grow coca in Bolivia. Coca is the raw material used for cocaine. Some Bolivians have traditionally chewed coca leaves to battle hunger and the effects of high altitude. U.S. Assistant Secretary of State Thomas Shannon expressed concern that an increase in acreage would also lead to increases in drug trafficking.
Bolivia is one of several Latin American nations to have elected leftist presidents wary of free-market within the past few years. In attendance at the inauguration were leftist presidents Nestor Kirchner of Argentina, Luiz Inacio Lula da Silva of Brazil, Ricardo Lagos of Chile, and Hugo Chavez of Venezuela.
"We've been discriminated against for 500 years, but now we have Evo and a
government that will represent us,"Aymara Indian Zenoino Perez outside the
Wednesday, January 18, 2006
By: Tom Fawthrop
BBC News, Tuesday, January 17, 2006
Cuba’s growing $1 billion tourism industry may soon be overtaken by its healthcare sector, including biotechnology joint ventures, vaccine reports, and the provision of health services to other countries.
Cuba is arguably the world leader in cancer research and treatment. Biotech firms in Germany and the U.S. (after Washington made an exception to its trade embargo) are currently conducting clinical trials of Cuban anti-cancer drugs.
Cuba earns income from the fees of foreign patients and by exporting medical supplies and equipment. Also, in 2005, Cuba and China opened a joint venture technology plant in China, with Cuba providing the transfer of cancer treatment technology.
Since 1980, Cuba has seen the health care sector as a potential source of income. During the 1990s, Cuba became the first country to market and develop a vaccine for meningitis B. The exportation of its meningitis B vaccine and its hepatitis B vaccine has sent Cuba’s medical export earnings soaring.
Approximately 25,000 Cuban doctors are abroad in 68 countries operating humanitarian missions, including earthquake and tsunami relief. Some missions, such as in South Africa where Cuba is assisting the national health care system, bring in revenue to Cuba’s health ministry. Under a recent agreement, Cuba sent 14,000 doctors to provide free health care to Venezuela’s poor, in exchange for Venezuela decreasing its oil bill to Cuba by up to a quarter over a 15-year period. In addition, last year 1,800 doctors from 47 developing countries graduated in Cuba.
According to the World Health Organization, Cuba provides a doctor for every 170 residents, where the U.S. ration is 1 to 188. Nevertheless, some Cubans who have become accustomed to a free comprehensive healthcare system have felt an impact from the huge outflow of doctors.
"I want to see all Cuban cancer patients receive free treatment, so we need money to finance our health service and to improve our living standards ... Our science is part of the economy." – Dr. Rolando Perez, cancer specialist at the Center for Molecular Immunology.
Wednesday, January 18, 2006
A criminal probe into a high-profile Japanese Internet company (Livedoor) and weaker-than-expected U.S. technological earnings (Yahoo, Intel) caused panic selling in Tokyo. As a result, the Tokyo Stock Exchange (TSE) suspended trading for 20 minutes in the world’s second largest market. The TSE halted all transactions due to the large number of transactions that threatened to overwhelm its computerized system. The system is capable of handling 4.5 million transactions, but has been experiencing technical difficulty in recent months.
The sell-off in Tokyo and the disruption in trading spooked investors worldwide, and lowered financial markets in Europe and the United States. The New York Stock Exchange was down nearly 60 points in early afternoon trading.