The drop of the Turkish lira and the role of currency speculation Heiner Flassbeck

I presented a detailed analysis of Turkey’s economic problems some time ago (here in German). The situation is now deteriorating dramatically because the Turkish lira continues to be under enormous pressure and has lost more than a third of its value against Western currencies since the beginning of the year. Last Friday alone, the value of the lira slipped by more than ten percent. In view of the economic situation, the president’s current policy, the country’s increasing political tensions with the United States, and a significantly weakening global economic environment, such speculation against a currency of an emerging economy is…

Demonizing State-Owned Enterprises Jomo Kwame Sundaram

Historically, the private sector has been unable or unwilling to affordably provide needed services. Hence, meeting such needs could not be left to the market or private interests. Thus, state-owned enterprises (SOEs) emerged, often under colonial rule, due to such ‘market failure' as the private sector could not meet the needs of colonial capitalist expansion. Thus, the establishment of government departments, statutory bodies or even government-owned private companies were deemed essential for maintaining the status quo and to advance state and private, particularly powerful and influential commercial interests. SOEs have also been established to advance national public policy priorities. Again,…

Changes in the Structure of Employment in India Vikas Rawal

Slow growth of employment has been a remarkable feature of economic change in India during the post-liberalisation period. Economic growth over this period has been highly uneven across different sectors and regions. The rate of growth of agriculture and manufacturing sectors has been sluggish for most part of the postliberalisation period. Growth, even in periods during which it increased, was driven primarily by the service sector. It has been primarily located in urban, particularly metropolitan, areas. Trade and foreign investment have played only a marginal role as drivers of economic expansion. Benefits of economic growth have accrued differently across classes,…

Factory workers in India C. P. Chandrasekhar and Jayati Ghosh

Recent data from the Annual Survey of Industries, covering up to 2015-16, provide some interesting insights into the changing nature of industrial employment in India. In the decade up to 2015-16, there was a significant increase in the number of factory workers, by around 40 per cent. This expansion can be dated from around 2005-06 onwards and especially up to 2011-12. This is to be expected, given that that was the period of India’s economic boom, in which both construction and manufacturing industry showed higher rates of investment and output growth. While the aggregate numbers still remain low for an…

In Memoriam: Samir Amin

IDEAs network mourns the loss of the celebrated Marxist thinker Samir Amin, who was also a Member of our Advisory Board. Samir Amin’s razor-sharp intellect, penetrating analysis, strong anti-imperialism and conviction in the importance of third world solidarity as well as his deep and continuous commitment to progressive causes around the world, will continue to remain an inspiration for us. We publish below an obituary by Prabhat Patnaik. SAMIR AMIN (1931-2018) Prabhat Patnaik Samir Amin, the renowned Marxist thinker and economist, passed away on August 13 in Paris. Born in Cairo on September 3, 1931, to an Egyptian father and…

Crop Insurance: Another dressed up scheme C. P. Chandrasekhar

Among the pro-farmer policies that the NDA government claims to have initiated, one often flagged is the modified crop insurance scheme titled Pradhan Mantri Fasal Bima Yojana (PMFBY). Effective as of kharif season 2016, this scheme is supplemented with the Restructured Weather Based Crop Insurance Scheme (RWBCIS). While in the former crop loss is computed by comparing actual yield in a season based on crop cutting experiments by state government agencies with an indicator of expected or ‘threshold’ yield, in the latter it is computed using leading weather indicators. Together, the schemes promise enhanced and more reliable crop insurance for…

Institutional Investors and Indian Markets C. P. Chandrasekhar and Jayati Ghosh

These are uncertain times for emerging market economies (EMEs) like India. They have been important destinations for investments financed by the cheap liquidity that was pushed into the financial system by developed country central banks attempting to address the financial crisis of 2008 and after. The result has been the accumulation of large sums of portfolio investments in their equity and debt markets. This has generated fears that, as central banks in the US, EU and elsewhere unwind their easy money policies and raise interest rates from their historic lows, this capital will exit the emerging markets. Once access to…

Global Economy Vulnerable a Decade After Jomo Kwame Sundaram and Anis Chowdhury

Ten years ago, deteriorating confidence in the value of US sub-prime mortgages threatened a liquidity crisis. The US Federal Reserve injected considerable capital into the market, but could not prevent the 2008-2009 global financial crisis (GFC). The 2008 meltdown exposed the extent of finance-led international economic integration, with countries more vulnerable to financial contagion and related policy ‘spillovers' exacerbating real economic volatility. It also revealed some vulnerabilities of the post-Second World War (WW2) US-centred international financial ‘architecture' – the Bretton Woods system – modified after its breakdown in the early 1970s. Robert Triffin, the leading international monetary economist of his…

Capitalism’s Discourse on “Development” Prabhat Patnaik

Capitalism’s discourse on “development” which has become quite influential all over the third world in the neo-liberal period proceeds as follows: (i) “development” must consist in shifting the work-force from the traditional (petty production) sector which is overcrowded with low labour productivity, and hence constitutes a repository of poverty,  to the modern (capitalist) sector which has much higher labour productivity. (ii) For this shift to occur, the modern (capitalist sector) must be allowed to grow as rapidly as possible, for which all impediments to capital accumulation must be removed. (iii) Even if, in the process of the modern (capitalist) sector’s…

Argentina: The risk of transforming a currency crisis into a financial crisis Alejandro Vanoli

Despite past experiences, the recent agreement between Argentina and the IMF includes unrealistic projections. On Friday, July 13th, the IMF staff report on its Argentina agreement was released. There, the staff has sought to protect itself, warning of the risks inherent in the dynamics of the Argentine situation. But the tango between the IMF and Argentina is inconsistent and unsustainable  because of the unrealistic projections incorporated in the agreement, the rigidity generated by the limitations in the use of monetary and exchange rate instruments to face the crisis, and the validation of policies that will aggravate the crisis. The agreement…