US Demands a Secure, Complaint Hemisphere Janette Habel

"The key question about the defence of the American hemisphere is: what is the threat? In the past, the Americas faced a relatively well-defined threat that the average American could understand (1). Today that threat has become infinitely more complex and more difficult to define." That was Professor Lewis Arthur Tambs, diplomat, historian, professor at Arizona State University and the author of a report on the future of the Americas, summarised in nine points the nine Ds the guiding principles for the hemisphere's security before 11 September. (They are defence, drugs, demography, debt, deindustrialisation, populist post-cold war democracy, destabilisation, deforestation…

Trade Rout Dani Rodrik

Argentina's default on its $132 billion public debt on December 23 hardly came as a surprise to its foreign creditors, who had anticipated it for many months. It had been clear to most outside observers that the country's currency-board regime, which locks in the Argentinean peso's value one-to-one with the U.S. dollar, had held the peso at an unsustainable level vis-à-vis other currencies. It was also evident that Argentina's political system would be unlikely to deliver the belt-tightening needed to service foreign creditors ahead of domestic payments on wages, pensions, and other obligations. So, when President Fernando de la Rúa…

Argentina’s Collapse Incited the Largest Default in History Joseph Stiglitz

Pundits agree this is merely the latest in a string of bail-outs, led by the International Monetary Fund (IMF), that squandered billions of dollars and failed to save the economies they were meant to help. Some claim the IMF was too lenient while others say it was too tough. And some see the problem as self-inflicted through profligate and corrupt spending by Argentina .Such attempts at blame-shifting are misguided: The default can be seen as the result of economic mistakes made over a decade. Understanding what went wrong provides important lessons. The problems began with the hyper-inflation of the 1980s.…

Argentina : A cautionary tale from South America Jayati Ghosh

The comprehensive mess in Argentina today almost defies belief. At the turn of the year, the financial and economic collapse was near total, with banks closed, the state of the currency (and even its very existence) in some doubt, rapidly increasing unemployment, decline in almost all public services and shortages of liquidity that threatened access to basic food and necessary goods for survival for much of the population. cautionary_tale (Download the full text in PDF format)

Tackling the World Recession John Grieve Smith

Few now doubt that the turbulent international situation has exacerbated and economic slowdown already underway across the advanced economies. The threat of recession has also led some to suggest that the pendulum might be ready to swing back from the monetarist and neoliberal consensus of the late twentieth century to a modernised and internationalist Keynesianism for the twenty-first. John Grieve Smith takes stock of these shifts, arguing that while the US has shown encouraging signs, EU and UK policymakers are still too wedded to the deflationary bias of the past. Furthermore, the paper argues, the mood for "re-ordering the world"…

Multilateral Agreement on Investment: A Briefing on the Investment-Related Disciplines and the WTO Ajit Singh

Three years after the OECD abandoned its controversial Multilateral Agreement on investment (MAI), a group of advanced countries, including the EU and Japan are again attempting to establish a similar agreement, this time at the WTO. From the submissions made by these countries at the WTO's Investment and Trade Working Group, it would seem that they would like an agreement which would provide investors with high standards of protection as well as free dom to invest anywhere and in any activity (subject to the usual exceptions for defence, culture etc.). One important difference between the OECD's MAI and the advanced…

IMF Program in Turkey Erinc Yeldan

The Turkish crisis, which came in the aftermath of an exchange rate-based disinflation attempt, comes as no surprise to anyone who is somewhat-informed about the international literature on country experiences of macroeconomic stabilization. In fact, the observed growth-crisis path of the Turkish economy is well in line with the main empirical regularities associated with exchange rate-based disinflation. turkish_crisis (Download the full text in PDF format)

Post-Crisis Korea James Crotty & Kang-Kook Lee

This paper evaluates the neoliberal economic restructuring process implemented in Korea following the 1997 Asian financial crisis. A detailed analysis of the macro economy, labor markets, financial markets, and nonfinancial firms in Korea in the past three and one-half years shows that neoliberal restructuring has created a vicious cycle in which a perpetually weak financial sector fails to provide the capital needed for real sector growth, investment and financial robustness, while real sector financial fragility continuously weakens financial firms. post_crisis_korea (Download the full text in PDF format)