Read more about the article Commodity Price Cycles

Commodity Price Cycles

Commodity prices go through extended periods during which prices are well above or below their long-term price trend. The upswing phase in super cycles results from a lag between unexpected, persistent, and upward trends in commodity demand, matched with a typically slow-moving supply. Eventually, as adequate supply becomes available and demand growth slows, the cycle enters a downswing phase. The latest super-cycle of commodity prices, starting in the mid-90s, reaching a peak by the time of the global financial crisis, and getting to the bottom by 2015, can be seen as associated to the developments of globalization that we have already dealt with in this series. More recently, some analysts have spoken that we might be on the verge of a new cycle, super-cycle or not.

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Read more about the article Trade globalization

Trade globalization

In the 1990s and 2000s, the world manufacturing production to a substantial extent moved from advanced countries to some developing countries. This was the result of the combination of an increase of the labor supply in the global market economy, trade opening, and technological transformations that allowed for fragmentation of production processes. As a result, foreign trade expanded, and world poverty diminished. Such trade globalization process stabilized in the 2010s and tends to be partially reversed by the new wave of technological changes.

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Read more about the article Climbing a High Ladder – Development in the Global Economy

Climbing a High Ladder – Development in the Global Economy

This book approaches the opportunities and challenges faced by developing countries to raise their per capita income levels during the recent phase of globalization. After dealing with the post-global financial crisis economic landscape in advanced economies, it deals with the windows of opportunity opened by trade and financial globalization for developing countries to climb the income ladder. Domestic preconditions for a developing country to benefit from those windows are then pointed out. China, Brazil, and Sub-Saharan Africa are presented as case studies. The book ends with an assessment of the impact of the coronavirus crisis on the global economy.

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Read more about the article Webinar : Political Economy in the North-South relations amid COVID-19

Webinar : Political Economy in the North-South relations amid COVID-19

The COVID-19 pandemic poses unprecedented challenges to the international community and is due to heavily impact the global economy in the short and long run. The virus has infected over 4 million people and caused almost 300.000 casualties globally. During its spreading, mass production hastily witnessed shutdowns and supply chain disruptions, causing worldwide undulation effects encompassing all economic sectors. A steep contraction in household consumption, rising inflation and unemployment rates, and an abrupt halt in global tourism are some of its most visible consequences. Resilience of national economies vis-à-vis the current situation varies widely depending on many factors, including containment measures’ efficiency and effectiveness as well as the economic support governments consider deploying. Yet, the highly interconnectedness of the world means that fighting the virus – and navigating its economic consequences – must include both national measures and global ones. In this webinar, we reflect on alternative options for economic recovery. Trade agreements, debt relief measures, impact investments, green strategies – these are just some of the instruments available in the toolbox. The panel will address ways in which existing and new channels for cooperation between the global north and south can be leveraged to achieve the best possible way out of the crisis, with a long-term outlook on what kind of global economy we want to rebuild.

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Read more about the article Pour Otaviano Canuto, le coronavirus a plongé les pays en développement “en pleine tempête” (inc. English version)

Pour Otaviano Canuto, le coronavirus a plongé les pays en développement “en pleine tempête” (inc. English version)

Le Covid-19 a précipité l’économie mondiale dans un Grand Confinement, pour reprendre l’expression du FMI. En peu de temps, les pays ont été touchés les uns après les autres par la pandémie, chacun d’entre eux étant confronté à un triple choc : épidémiologique, économique et financier. Les explications de Otaviano Canuto, Senior Fellow au Policy Center for the New South, ex-vice-président de Banque mondiale et ex-directeur exécutif au FMI. Covid-19 has submitted the global economy to a Great Lockdown, as the IMF called it. In a short time, country after country has suffered outbreaks of the new coronavirus, with each facing a three-fold shock: epidemiologic, economic, and financial. In addition to dealing with their own local coronavirus outbreaks, emerging market and developing countries have faced additional shocks from abroad. It may be said that a perfect storm has fallen on them.

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Read more about the article Channels of transmission of coronavirus to developing economies from abroad
Photo by Edwin Hooper on Unsplash

Channels of transmission of coronavirus to developing economies from abroad

In a previous article, we highlighted how developing economies have faced simultaneous shocks from their external environment, as pandemic and recession curves have unfolded abroad. In addition to financial shocks, there have been declines in remittances, tourism receipts, and commodity prices . The combination of these shocks with the hardships related to flattening domestic infection curves has configured what we have called a ‘perfect storm’ for developing countries, brought by COVID-19. Recent World Bank and United Nations World Tourism Organization reports have given us a view of how serious these shocks have been. We assess here the falls in remittances, tourism receipts, and commodity prices, particularly in oil markets (with accompanying video at bottom).

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Read more about the article Coronavirus brought a perfect storm to developing countries

Coronavirus brought a perfect storm to developing countries

Coronavirus brought a perfect storm to developing countries - Flattening coronavirus curves of infection and recession will be harder in developing countries - Developing countries have faced foreign capital outflows - A boosted IMF may provide liquidity buffers for developing countries, but debt relief will be necessary to help vulnerable countries manage the coronavirus crisis

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Read more about the article More than one coronavirus curve to manage: infection, recession and external finance

More than one coronavirus curve to manage: infection, recession and external finance

The global reach of COVID-19 is now clear. In a short time, country after country has suffered outbreaks of the new coronavirus, with each facing a three-fold shock: epidemiologic, economic, and financial. In addition to dealing with their own local coronavirus outbreaks, emerging market and developing countries have faced additional shocks from abroad.

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Read more about the article Lost in Transition – Developing Countries in the Global Economy

Lost in Transition – Developing Countries in the Global Economy

The growth and productivity performance of emerging market and developing economies (EMDEs) in the last 10 years failed to repeat the achievements of the previous decade. Besides frustrating expectations that they might become the new growth pole in the global economy, their convergence to per capita incomes of advanced economies has suffered a setback. Nonetheless, the path of policies and reforms to be pursued in that direction remains the same.

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Read more about the article Natural wealth and economic growth – the case of sub-Saharan Africa

Natural wealth and economic growth – the case of sub-Saharan Africa

This note approaches the relationship between natural wealth and economic growth, using the case of Sub-Sahara African economies as an illustration. Delving into recent World Bank reports, it highlights how a sustained positive correlation between natural capital and GDP growth happens through the transformation of the former into other forms of assets: produced capital, human capital and other intangible assets. Governance features and the quality of macroeconomic policies are of the essence for such a benign trajectory to take place.

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Read more about the article Middle Income Countries and Multilateral Development Banks: Traps on the Way to Graduation

Middle Income Countries and Multilateral Development Banks: Traps on the Way to Graduation

Multilateral Development Banks (MDBs) have two financing windows, with different terms, dedicated to low- and middle-income countries. Countries are presumed to cross those windows as their income per capita rises, with middle-income countries (MICs) eventually “graduating” to a non-client status once they reach some criteria. However, due to what may be called “middle-income traps”, such progression toward graduation has been limited to a small number of countries. In this paper, we suggest areas where the support by MDBs would yield highest results toward “graduation” of MICs. Item 1 reviews the criteria that have been used to justify graduation, whereas item 2 approaches two ways by which the possibility of “middle-income traps” impeding such graduation has been discussed in the literature. Finally, item 3 proposes an interface between MDBs’ support to MICs and the policy agenda to overcome middle-income traps.

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