Rethinking Free Trade Agreements in Uncertain Times Jomo Kwame Sundaram

After US President Donald Trump withdrew from Obama's Trans-Pacific Partnership (TPP), involving twelve countries on the Pacific rim, on his first day in office, Japan, Australia and their closest allies proposed and promoted the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) to draw the US back into the region to counter China's fast-growing power and influence. Geostrategic deal to re-engage US in East Asia The modest projected gains claimed by the most popularly used trade models are based on dubious methodologies. President Obama had explicitly promoted the TPP for geostrategic reasons even though both US government cost-benefit analyses found very modest…

External Balance Sheets of Emerging Economies: Low-Yielding Assets, High-Yielding Liabilities Yilmaz Akyuz

The new millennium has witnessed a rapid expansion of external balance sheets and significant changes in the capital, currency and sectoral compositions of foreign assets and liabilities of emerging economies. While foreign lending and investment in these economies have reached unprecedented levels, even deficit emerging economies have acquired sizeable amounts of foreign assets thanks to large inflows of capital. These changes in the size, composition and leverage of external balance sheets have created new channels of transmission of global financial shocks through their effects on international capital flows. They have also amplified the susceptibility of outstanding stocks of foreign assets…

To be Bravely Critical of Reality: An interview with Tamás Szentes

Tamás Szentes, Professor Emeritus of the Corvinus University of Budapest (the former Karl Marx University), elected full member of the Hungarian Academy of Sciences, is ‘one of the grand old men of development economics.’[1] His first celebrated book in English, The Political Economy of Underdevelopment (published first in 1971, republished in nine languages and ten different countries, totalling altogether 16 editions in the first fifteen years of publication) was praised in ROAPE in 1974 as ‘a serious and comprehensive attempt at providing a true political economy of underdevelopment.’ For a while he was one of the contributing editors of ROAPE, and between 1967 and 1971…

The furore over farm debt C. P. Chandrasaekhar

The decision of the newly elected Congress-led governments in Chattisgarh, Madhya Pradesh and Rajasthan to implement the manifesto promise to waive farm debt has set off a controversy. Opposition to the move comes not just from opposing parties. In fact, the political leadership has been sensible enough not to oppose the policy per se. For example, the BJP that had gone the same route in Uttar Pradesh and Maharashtra, has only said that these governments are not doing things the right way, and are deceiving farmers with mere platitudes. The opposition comes from the neoliberal advocates, who paint this decision…

Are Global Oil prices the culprit for India’s burgeoning Trade Deficit? C. P. Chandrasekhar and Jayati Ghosh

India’s external account has once again emerged as a source of concern, as the current account deficit widened to reach 2.4 per cent of GDP over April-June 2018. This increase was driven entirely by the trade deficit, which grew rapidly in 2017-18. Since 2014, as Figure 1 shows, exports have been mostly stagnant (after a period of healthy increases before then) but total imports came down and then increased sharply in 2017-18. This was reflected in the total merchandise trade deficit, which declined for several years from the large deficit observed in 2013-14, and only rose sharply once again in…

Criticism and Criticism Prabhat Patnaik

Former Reserve Bank Governor Raghuram Rajan has come out openly against the Indian government’s measure of demonetizaton of currency notes in November 2016, in a speech delivered recently at the University of California at Berkeley. Since Rajan is an economist of repute, and has been an important economic decision-maker in the country, his criticism of demonetization is to be welcomed: it adds considerable weight to the voices that have been raised against this wanton and despotic measure of the Modi government. At the same time however it provides an occasion to draw an important distinction. Since there can be no…

Do ‘Markets’ talk sense? C. P. Chandrasekhar

As the state election results trickled in on December 11, to the surprise of many, the Sensex after a hiccup rose and closed 190 points above its previous end-of-day level. The following day too, the Sensex moved upwards. This was a surprise to many, since the impression had spread that influential players in the market favoured a return of a Modi government in 2019. To the extent that the defeat of the BJP in three important states was a signal of a possible defeat next year, they expected investors to walk out, triggering a market collapse. That did not happen.…

Taking Away the Ladder Jomo Kwame Sundaram and Anis Chowdhury

The notion of the BRICS (Brazil, Russia, India, China, and later, South Africa) was concocted by Goldman Sachs' Jim O'Neill. His 2001 acronym was initially seen as a timely, if not belated acknowledgement of the rise of the South. But if one takes China out of the BRICS, one is left with little more than RIBS. While the RIBS have undoubtedly grown in recent decades, their expansion has been quite uneven and much more modest than China's, while the post-Soviet Russian economy contracted by half during Boris Yeltsin's first three years of ‘shock therapy' during 1992-1994. Unsurprisingly, Goldman Sachs quietly…

Tackling the Crisis of Conformity in Economic Thinking Henry Leveson-Gower

The conformity in economics teaching in many ways is the most damaging aspect of our current economics discipline. Thousands of graduates all round the world enter work each year with the impression that there is only one way of thinking about organising our economies. These are of course the people who dominate the likes of the World Bank, IMF and the Treasuries in countries around the world.  Innovative and critical thinking is crushed just when we need it most given our current social, environmental and economic crises. We believe we can’t wait for the mainstream to change. We want to…

Remittances as Saviour C. P. Chandrasekhar and Jayati Ghosh

Once again, the World Bank has released a Brief declaring India to be the largest recipient of remittances from abroad. According to the Bank, remittances to India that totaled $65 billion in 2017, are likely to touch $80 billion this year, way ahead of China, the second largest recipient with $67 billion. The rise is in keeping with longer term trends, despite short periods when it appeared that remittance volumes were on the decline. Official Indian balance of payments data provide information on private transfers (which include (i) remittances for family maintenance, (ii) local withdrawals from Non-Resident Rupee Accounts (NRE…