After a series of crises with severe economic and social consequences in the 1990s and early 2000s, emerging and developing economies (EDEs) have become even more closely integrated into what is widely recognized as an inherently unstable international financial system. Both policies in these countries and a highly accommodating global financial environment have played a role.
Not only have their traditional cross-border linkages been deepened and external balance sheets expanded rapidly, but also foreign presence in their domestic credit, bond, equity and property markets has reached unprecedented levels. New channels have thus emerged for the transmission of financial shocks from global boom-bust cycles. Almost all EDEs are now vulnerable irrespective of their balance-of-payments, external debt, net foreign assets and international reserve positions although these play an important role in the way such shocks could impinge on them.
Stability of domestic banking and asset markets is susceptible even in countries with strong external positions. Those heavily dependent on foreign capital are prone to liquidity and solvency crises as well as domestic financial turmoil. The new practices adopted in recent years including more flexible exchange rate regimes, accumulation of large stocks of international reserves or borrowing in local currency would not provide much of a buffer against severe external shocks such as those that may result from the normalization of monetary policy in the US. And the multilateral system is still lacking adequate mechanisms for an orderly and equitable resolution of external financial instability and crises in EDEs.
Today, the Directorate General for Competition of the European Commission has published a first analysis of Amazon´s tax deals in Luxembourg. The Commission has started an investigation to determine whether these practices have led to illegal state aid for the company.
If this assessment is confirmed, the Commission could claw back such unjustified subsidies.
The campaign against the supposed dangers of SYRIZA is aimed at intimidating Greek voters into renouncing their right to change. It is also intended, in the event of a SYRIZA victory, to cause part of European public opinion to reject the Greek Coalition of the Radical Left in order to avoid Podemos winning the autumn 2015 Spanish elections in its wake. Other surprises could be in store from countries such as Cyprus, Portugal and Slovenia if their citizens considered that it would be worth trying to replace disastrous ultraconservative policies by left-wing measures. European leaders and the large private corporations that support them are aware that the majority of the Eurozone population has a negative opinion of the policies that have been implemented in recent years, and would be ready to vote for change. A SYRIZA victory would represent a major threat to the mainstream parties, whether conservative or “socialist”, fearing that the contamination could spread to Spain.
A proposal from the Greens/EFA group for a full European Parliament inquiry committee into tax evasion and dumping following the Luxembourg Leaks revelations today received the required support of 25% of the European Parliament (1). The Greens/EFA group welcomed the cross- political support from all parliamentary groups and called on the Parliament and its president to move to set up the committee without delay. Announcing the development, Greens/EFA co-president Philippe Lamberts said:
"We welcome the cross-political support for an inquiry committee into tax avoidance and dumping in Europe. This broad support confirms that such a committee is indeed the most appropriate and significant tool available to the European Parliament to investigate the Luxembourg Leaks revelations and ensure a comprehensive response at EU level. The European Parliament and its president must now move swiftly and take the relevant steps to ensure the committee is set up, so no more time is lost."
Thanks to China, Christine Lagarde of the International Monetary Fund, Jim Yong Kim of the World Bank and Takehiko Nakao of the Asian Development Bank may no longer have much meaningful work to do.
Beijing's move to bail out Russia, on top of its recent aid for Venezuela and Argentina, signals the death of the post-war Bretton Woods world. It’s also marks the beginning of the end for America's linchpin role in the global economy and Japan's influence in Asia.
This report provides the most comprehensive review of the quantity of different financing sources available to developing countries, and how they have changed over the past decade.
They have analysed the best available data produced by international institutions, both from the point of view of developing countries as a whole, and for low-income (LICs), lower-middle-income (LMICs) and upper-middle-income countries (UMICs) separately. The report provides figures in absolute terms in US dollars, and also as percentages of Gross Domestic Product (GDP) – a much better indicator of how important they are to the developing country in question.
The Bretton Woods conference of 1944 put in place the institutional framework to rebuild the financial and economic system destroyed by the Great Depression and the War, spawning two of the most influential institutions of global economic governance of the post war period, namely the International Monetary Fund (IMF) and the World Bank (WB). The international monetary system was repaired by pegging the dollar to gold, and other international currencies to the dollar.
It is exactly fifty years ago that Oscar Lewis’ famous book on poverty ‘The Children of Sanchez’ was published in Mexico. It created huge problems, not only because the children of Sanchez openly spoke of sexuality in a very conservative country, but also because ‘a foreigner’ had shown there was real poverty in a ‘modern’ and ‘developing’ city like Mexico’s capital.
One anthropologist then wondered: is poverty research subversive?
The world’s 48 Least Developed Countries (LDCs) – a special category of developing nations created by the General Assembly in 1971 but refused recognition by the World Bank – have long been described as “poorest of the poor” in need of special international assistance for their economic survival.
But only three – Botswana, Cape Verde and the Maldives – have so far “graduated” from being classified as an LDC to a developing nation, based primarily on their improved social and economic performance.
Read this excellent article of Paul Cammack on the latest World Development Report of the World Bank. Global Social Justice also referred to this report in its newsletter of last month.
In his message on the International Day, Ban said this year’s observance comes as the world shapes a new sustainable development agenda to succeed the Millennium Development Goals (MDGs), the largest anti-poverty campaign in history, by 2015.
Member States, the UN system, experts, representatives of civil society, business executives and millions of individuals from all corners of the globe, have come together with a shared sense of purpose to make the most of this once-in-a-generation opportunity.