The debt crises in emerging market countries over the past decade have given rise to renewed debate about crisis prevention and resolution. In Debt Defaults and Lessons from a Decade of Crises, Federico Sturzenegger and Jeromin Zettelmeyer examine the facts, the economic theory, and the policy implications of sovereign debt crises. They present detailed case histories of the default and debt crises in seven emerging market countries between 1998 and 2005: Russia, Ukraine, Pakistan, Ecuador, Argentina, Moldova, and Uruguay. These accounts are framed with a comprehensive overview of the history, economics, and legal issues involved and a discussion from both domestic and international perspectives of the policy lessons that can be derived from these experiences.Sturzenegger and Zettelmeyer examine how each crisis developed, what the subsequent restructuring encompassed, and how investors and the defaulting country fared. They discuss the new theoretical thinking on sovereign debt and the ultimate costs entailed, for both debtor countries and private creditors. The policy debate is considered first from the perspective of policymakers in emerging market countries and then in terms of international financial architecture. The authors' surveys of legal and economic issues associated with debt crises, and of the crises themselves, are the most comprehensive to be found in the literature on sovereign debt and default, and their theoretical analysis is detailed and nuanced. The book will be a valuable resource for investors as well as for scholars and policymakers.
Despite significant gains in promoting economic growth and living conditions (or "human progress") globally over the last twenty-five years, much of the developing world remains plagued by poverty and its attendant problems, including high rates of child mortality, illiteracy, environmental degradation, and war. In Growth and Empowerment, Nicholas Stern, Jean-Jacques Dethier, and F. Halsey Rogers propose a new strategy for development. Drawing on many years of work in development economics—in academia, in the field, and at international institutions such as the World Bank—the authors base their strategy on two interrelated approaches: building a climate that encourages investment and growth and at the same time empowering poor people to participate in that growth. This plan differs from other models for development, including the dogmatic approach of market fundamentalism popular in the 1980s and 1990s. Stern, Dethier, and Rogers see economic development as a dynamic process of continuous change in which entrepreneurship, innovation, flexibility, and mobility are crucial components and the idea of empowerment, as both a goal and a driver of development, is central. The book points to the unique opportunity today—after 50 years of successes and failures, and with a growing body of analytical work to draw on—to pursue new development strategies in both research and action.
Over the past three decades the developing world has seen increasing devolution of political and economic power to local governments. Decentralization is considered an important element of participatory democracy and, along with privatization and deregulation, represents a substantial reduction in the authority of national governments over economic policy. The contributors to Decentralization and Local Governance in Developing Countries examine this institutional transformation from comparative and interdisciplinary perspectives, offering detailed case studies of decentralization in eight countries: Bolivia, Brazil, China, India, Indonesia, Pakistan, South Africa, and Uganda.
Some of these countries witnessed an unprecedented "big bang" shift toward comprehensive political and economic decentralization: Bolivia in 1995 and Indonesia after the fall of Suharto in 1998. Brazil and India decentralized in an uneven and more gradual manner. In some other countries (such as Pakistan) devolution represented an instrument for consolidation of power of a nondemocratic national government. In China local governments were granted much economic but little political power. South Africa made the transition from the undemocratic decentralization of apartheid to decentralization under a democratic constitution. The studies provide a comparative perspective on the political and economic context within which decentralization took place, and how this shaped its design and possible impact.
Contributors: Omar Azfar, Gianpaolo Baiocchi, Pranab Bardhan, Shubham Chaudhuri, Ali Cheema, Jean-Paul Faguet, Bert Hofman, Kai Kaiser, Philip E. Keefer, Asim Ijaz Khwaja, Justin Yifu Lin, Mingxing Liu, Jeffrey Livingston, Patrick Meagher, Dilip Mookherjee, Ambar Narayan, Adnan Qadir, Ran Tao, Tara Vishwanath, Martin Wittenberg
The determinants of economic growth and development are hotly debated among economists. Financial crises and failed transition experiments have highlighted the fact that functioning institutions are fundamental to the goal of achieving economic growth. The growth literature has seen an abundance of empirical studies on the influence of institutions and the mechanisms by which institutions affect development. This CESifo volume provides a systematic overview of the current scholarship on the impact of institutions on growth.The contributors, all internationally prominent economists, consider theoretical and empirical relationships between institutions and growth. Concepts covered include "appropriate institutions" (the idea that different institutional arrangements are appropriate at different stages of economic development); liberalized credit markets; the influence of institutions on productivity; institutional and regulatory reforms in the OECD; how innovation and entrepreneurship influence growth (including an analysis of patent activity in the United States from 1790 to 1930); the endogeneity of institutions as seen in the recruitment of elites by higher education institutions; the effect of economic development on transitions to democracy; and technology adoption in agriculture.Contributors:Philippe Aghion, Costas Azariadis, Elise S. Brezis, Matteo Cervellati, François Crouzet, David de la Croix, Theo S. Eicher, Piergiuseppe Fortunato, Cecilia García-Peñalosa, Thorvaldur Gylfason, Murat Iyigun, B. Zorina Khan, Giuseppe Nicoletti, Dani Rodrik, Stefano Scarpetta, Kenneth L. Sokoloff, Uwe Sunde, Utku Teksoz, Gylfi Zoega
The question of convergence, or under what conditions the per capita income levels of developing countries can catch up to those found in advanced economies, is critical for understanding economic growth and development. Convergence has happened in many countries and appears to be taking place now in China and India--yet in general per capita income levels in the poorer countries do not converge towards those of richer countries as uniformly as the analytical models predict. Living Standards and the Wealth of Nations, which grew out of a 2003 conference on convergence hosted by the National Bank of Poland, offers detailed theoretical and empirical examinations of what makes for successful convergence.After general discussions of the theoretical requirements for "rapid catch up" and the possible link between democracy and growth, the book presents global case studies of both non-EU and EU countries, including a provocative comparison of growth in the transition economies of the CEE (Central and Eastern Europe) nations and the 12 non-Baltic states of the former Soviet Union. It then considers nominal as opposed to real convergence in the European Monetary Union. Taken together, the chapters present a consistent argument that reliance on market forces within an open economy in a stable macroeconomic environment, with assured property rights, is the key to rapid economic growth.Contributors:Anders Åslund, Leszek Balcerowicz, Manuel Balmaseda, Iain Begg, John Bradley, Vittorio Corbo L., Stanley Fischer, Leonardo Hernández T., Philip E. Keefer, Olle Krantz, Abel Moreira Mateus, Thomas O'Connell, Stephen L. Parente, Edward C. Prescott, Jacek Rostowski, Isaac Sabethai, Miguel Sebastián, Diarmaid Smyth, Athanasios Vamvakidis, José Maria Viñals, Wing Thye Woo, Nikolai Zoubanov
In this book Ernest Wilson provides a clear, nuanced analysis of the major transformations resulting from the global information revolution. He shows that the information revolution is rooted in societal dynamics, political interests, and social structure. Using the innovative Strategic ReStructuring (SRS) model, he uncovers links between the big changes taking place around the world and the local initiatives of individual information activists, especially in developing countries. Indeed, Wilson shows that many of the structural changes of the information revolution, such as shifts from public to private ownership or from monopoly to competition, are driven by activists struggling individually and collectively to overcome local apathy and entrenched opposition to reform.
Wilson applies his SRS model to the politics of Internet expansion in Brazil, China, and Ghana to illustrate the real-world challenges facing policy-makers and practitioners. Examples of such challenges include starting Internet companies, reforming regulatory laws, and formulating NGO strategies for dealing with the digital divide. Wilson identifies the tremendous possibilities for innovation and advancement in developing countries while acknowledging the structural, institutional, and cultural constraints that work against their realization.
Since the mid-1990s, emerging market economies have been hit by dramatic highs and lows: lifted by large capital inflows, then plunged into chaos by constrained credit and out-of-control exchange rates. The conventional wisdom about such crises is strongly influenced by the experience of advanced economies. In Emerging Capital Markets in Turmoil, Guillermo Calvo examines these issues instead from the perspective of emerging market economies themselves, taking into account the limitations and vulnerabilities these economies confront.A succession of crises -- Mexico in 1994-5, East Asia in 1997, Russia in 1998, and Argentina in 2001 -- prompted an urgent search in economic policy circles for cogent explanations. Calvo begins by laying the groundwork for a new approach to these issues. In the theoretical chapters that follow, he argues that financial crisis theory regarding emerging markets has progressed from focusing on such variables as fiscal deficits, debt sustainability, and real currency devaluation to stressing the role of the financial sector -- emphasizing stocks rather than flows as well as the role credibility plays in containing financial crises. He then returns to a more empirical analysis and focuses on exchange-rate issues, considering the advantages and disadvantages of flexible exchange rates for emerging market economies. Coming after a decade of ongoing crises, Calvo's timely reassessment of the importance of external factors in making emerging market economies safer from financial turmoil offers important policy lessons for dealing with inevitable future episodes of financial crises.
Stanley Fischer served as First Deputy Managing Director of the International Monetary Fund from 1994 to 2001. IMF Essays from a Time of Crisis collects sixteen essays written for the most part during his time at the IMF, each updated with Fischer's later reflections on the issues raised. The IMF drew much criticism for some of its actions during Fischer's tenure, and he vigorously defends the "battlefield medicine" practiced by the IMF during a series of economic crises, which included the problems of economic transition in the former Soviet bloc and the Asian financial crisis. Fischer addresses the subsequent calls for reform of the international financial system and makes the case for the IMF as an international lender of last resort.
The first section of essays, "The Role of the IMF and the Reform of the International Financial System," considers the IMF's role in the international financial system in light of the crises of the 1990s. The second section, "Macroeconomic Policy, Stabilization, and Transition," examines such topics as exchange rate regimes, inflation, and Eastern Europe's relation to the European Union. The final section, "Poverty and Development," reflects Fischer's basic belief that economic policies should explicitly target poverty reduction. These engaging and accessible essays will appeal not only to economics students, economists, and policymakers but also to the general reader interested in the international monetary system.
This wide-ranging review of some of the major issues in development economics focuses on the role of economic and political institutions. Drawing on the latest findings in institutional economics and political economy, Pranab Bardhan, a leader in the field of development economics, offers a relatively nontechnical discussion of current thinking on these issues from the viewpoint of poor countries, synthesizing recent research and reflecting on where we stand today.
The institutional framework of an economy defines and constrains the opportunities of individuals, determines the business climate, and shapes the incentives and organizations for collective action on the part of communities; Pranab Bardhan finds the institutional framework to be relatively weak in many poor countries. Institutional failures, weak accountability mechanisms, and missed opportunities for cooperative problem-solving become the themes of the book, with the role of distributive conflicts in the persistence of dysfunctional institutions a common thread.
Special issues taken up include the institutions for securing property rights and resolving coordination failures; the structural basis of power; commitment devices and political accountability; the complex relationship between democracy and poverty (with examples from India, where both have been durable); decentralization and devolution of power; persistence of corruption; ethnic conflicts; and impediments to collective action. Formal models are largely avoided, except in two chapters where Bardhan briefly introduces new models to elucidate currently under-researched areas. Other chapters review existing models, emphasizing the essential ideas rather than the formal details. Thus the book will be valuable not only for economists but also for social scientists and policymakers.
India's economy over the last decade looks in many ways like a success story; after a major economic crisis in 1991, followed by bold reform measures, the economy has experienced a rapid economic growth rate, more foreign investment, and a boom in the information technology sector. Yet many in the country still suffer from crushing poverty, and social and political unrest remains a problem. These essays by leading academics, policymakers, and industrialists—including one by Amartya Sen, the 1998 winner of the Nobel Prize in economics for his work on poverty and inequality—examine the facts of India's recent economic successes and their social and cultural context.
India's rate of economic growth after the 1991 reforms were instituted reached a remarkable 7 percent for three consecutive years, from 1994 to 1997. Several contributors to India's Emerging Economy ask what this means for the nation as a whole. In his essay "Democracy and Secularism in India," Amartya Sen argues that economic progress is not the only way to measure a nation's performance. Other essays examine the actual effect India's economic growth has had on reducing poverty and recommend policies to empower the poor. Essays also address such issues as globalization and the vulnerabilities and opportunities it creates, India's experience with monetary and fiscal reform, the rapid growth of the information technology sector (including a case study of India's software industry), and India's grassroots economy.