IDEAs conference, the third of a series at Muttukadu, Chennai, featured a set of papers and open discussions on the impact of international trade and financial liberalization on macroeconomic policies at country levels, with special emphasis on the developing world. The conference was primarily concerned with how a selected set of industrialising countries have negotiated their relationship with the global economy given sweeping changes in the international context, and how these policy changes in turn affected the possibilities and potential for development for the world at large and developing countries in particular.(The papers are in PDF format)

• Financial Flows and Open Economy Macroeconomics
  Prabhat Patnaik (Size : 138 Kb, App. Download Time : 1 mins @ 28 kbps)
  In this article, the author argues that apart from creating volatility and in turn to a contraction of the economy, free capital flows create an additional but lesser known impact that in addition to the contractionary effect of volatility, such exposure even in the absence of any inflows or outflows has a contractionary effect on the economy by imposing on it an expenditure deflation, especially a deflation of government expenditure.
    
  
• Reforming the IMF : Back to the Drawing Board
  Yilmaz Akyüz (Size : 324 Kb, App. Download Time : 3 mins @ 28 kbps)
  This paper discusses extensively how the IMF must substantially reform itself to be able to ensure its legitimacy as a genuinely multilateral institution, and one that can effectively prevent crises. A genuine reform of the IMF would require as much a redirection of its activities as improvements in its policies and operational modalities. It must cease to depend on a few countries for resources and there should be a clear separation between multilateral and bilateral arrangements in debt and finance.
    
  
• Globalisation, economic volatility and insecurity
  Sonja Fagernas and Ajit Singh (Size : 295 Kb, App. Download Time : 3 mins @ 28 kbps)
  This paper is concerned with variations in economic growth rather than the average rate of growth which is not often studied, particularly in relation to developing countries. The paper hopes to fill this gap to some extent by documenting and establishing some stylised facts about economic instability in rich and poor countries alike and reviews some of the available hypotheses for explaining these facts and uses India as a case study. The specific issues discussed are whether economic instability increased or decreased over time in the two groups of countries and second, whether developed countries are more stable than developing countries.
      
  
• Potential and Limitations of Pro-Poor Macroeconomics:An Overview
  Giovanni Andrea Cornia (Size : 131 Kb, App. Download Time : 1 mins @ 28 kbps)
  A convergence has not yet been reached among economists for a set of macroeconomic policies that can help to achieve pro-poor growth and consequently, the millennium development goals. This paper briefly reviews the problems of unsustainable packages, macroeconomic populism and liberal policies, and then proposes the elements of an intermediate approach that can achieve the objective of promoting growth and poverty alleviation in a sustainable way. The search for an innovative PPM is even more pressing in the current situation as macro imbalances are caused now by the policies followed in the major industrialized countries, and the development of international financial markets that have drastically narrowed the policy space of national governments.
    
  
• The Policy Space Question: An Alternative Approach to Trade and Industrial Policies;Implications for the World Trading System
  S.M. Shafaeddin (Size : 117 Kb, App. Download Time : 1 mins @ 28 kbps)
  The purpose of this paper is to present an alternative framework for trade and industrial policies bearing in mind the failure of the traditional strategies through the across-the-board trade liberalization of 1980 by drawing on the experience of developing countries. While introducing a development oriented, flexible and dynamic trade and industrial policy framework, the author also briefly argues for the need for corresponding changes in the international trading system, replacing the current one where developing countries are subjected to a one-size-for all policies designed at the international level by international financial institutions and the WTO.
    
  
• Financial Imbalances in the World Economy: Facts, Sustainability and Scenarios
  Alex Izurieta (Size : 259 Kb, App. Download Time : 3 mins @ 28 kbps)
  The current account deficit of the US is by far the largest that the world has ever seen and is financed by large capital inflows into the US. But the concentration of investment in the highest-income regions of the world is socially damaging, destabilising and prejudicial to the effective development of resources in the world as a whole. The US deficit can be contained in a less damaging manner only if the rest of the world contains its own surpluses and boosts investment in other regions.
    
  
• China and India: From where? Where to? A preliminary investigation
  Amiya Bagchi (Size : 254 Kb, App. Download Time : 3 mins @ 28 kbps)
  In this paper, the author has done a comparative analysis of the economic development processes of India and China. He argues that China has overall fared better in achieving more people oriented growth objectives compared to India in the post reform period and that China has a number of lessons to teach Indian policy-makers. He also points out the common concerns that both countries must address in the current global conjuncture which includes the challenges of operating under a multilateral trading system under the umbrella of the WTO and the threats posed by the global finance capital.
   
  
• Industrial Policy, Globalization and India's Pharmaceutical Industry
  Sudip Chaudhuri (Size : 142 Kb, App. Download Time : 1 mins @ 28 kbps) Power Point Presentation
  In this presentation, the author discusses the impact of globalization on India's pharmaceutical industry. He argues that the current stage of amendment of Product Patents Acts in accordance with TRIPs will have an adverse impact on Indian generic drug exports for patent expired drugs because of secondary patents and stiff competition from country pharmaceutical companies and that the current government estimation of this market size is highly inflated. Indian companies will also suffer in terms of their domestic growth in the absence of new drugs. The author finally argues the case for a comprehensive and easily implemented national compulsory licensing policy.
   
  
• Trade Liberalisation and Economic Restructuring: Can India skip the Industrial Phase?
  Jayati Ghosh (Size : 192 Kb, App. Download Time : 2 mins @ 28 kbps)
  This paper takes a detailed look at the nature and implications of trade liberalisation for the Indian economy. After describing its broad pattern and macroeconomic effects, the paper goes on to analyse the impacts on different sectors of the economy and examines critically the argument that the adverse effects on other sectors can be effectively and more than countered by India's revealed comparative advantage in tradeable services.  
    
  
• Financial Liberalization and Macroeconomic Policy in India
  C.P. Chandrasekhar (Size : 440 Kb, App. Download Time : 6 mins @ 28 kbps)
  This paper provides a description and analysis of the process of financial liberalization in India and argues that though the liberalization years has witnessed increasing buoyancy in the financial markets with high FII presence and an unprecedented and extended stock market boom especially in the last few years, this 'engineered' buoyancy has led to increasing volatility and fragility. This process also amplifies dependence on FIIs and other financial interests as well as the effects on domestic policy regime and effects significant changes in the structure of the domestic banking sector.
   
  
• Trade Liberalization in Mexico: Some Macroeconomic and Sectoral Impacts and the Implications for Macroeconomic Policy
  Alicia Puyana & José Romero (Size : 394 Kb, App. Download Time : 6 mins @ 28 kbps)
  This paper is an analytical effort to explore the impact of trade reforms on the performance of the Mexican economy. The paper considers the policies adopted to manage the exchange rate and the long term tendency to engineer an appreciation of the Mexican peso as a tool to control inflation. It goes on to provide a detailed analysis of foreign trade policy changes and the effects of such changes for the Mexican economy and suggests policy changes in the concluding section.
    
  
• Impact of Financial Liberalisation on Macroeconomic Performance and Implications for Development Policy in Mexico
  Guadalupe Mántey & Noemí Levy (Size : 166 Kb, App. Download Time : 2 mins @ 28 kbps)
  This paper analyses the rationale for the successful central bank financial strategy inbuilt in the stabilizing development model and attempts to explain, on the same grounds, the contradictory outcomes from the implementation of the Washington Consensus guidelines in the Mexican financial market. In this way, the paper aims to identify the elements needed for designing effective monetary policies for economic development. In the concluding section, the paper summarises its findings and their relevance for the pursuit of effective development policies.
     
  
• Lessons from the Financial Liberalization Experience of Turkey, 1990 - 2005
  Erinc Yeldan (Size : 490 Kb, App. Download Time : 6 mins @ 28 kbps) Power Point Presentation
  In this presentation on financial liberalization and its impacts on the Turkish economy, the speaker discusses the sources of the many crises that the economy has witnessed since the capital account liberalization of 1989, where the mode of financing and the dependence on the international capital market and a lack of regulation have, among other factors, led to major vulnerabilities in the economy.
     
  
• Macro Economic Constraints in Developing Nations : The case of Turkey
  Türkel Minibas (Size : 146 Kb, App. Download Time : 2 mins @ 28 kbps) Power Point Presentation
  Using Turkey as a case study, this presentation draws attention to the macroeconomic constraints faced by developing nations under the current neo liberal regime that emerge as a result of the crisis of the capitalist system itself. The regime tries to solve this crisis by globalizing capital and by integrating less developed economies through the system of structural adjustment which aims at increasing dependency of developing nations and the development of a new world order.
   
  
• Crises and Firm Level Upgrading/ Downgrading Practices in Turkey
  Ahmet Alpay Dikmen (Size : 2.37 Mb, App. Download Time :12 mins @ 28 kbps) Power Point Presentation
  This paper discusses trends, features and the economic conditions which facilitate upgrading and downgrading practices of Turkish firms, in the historical context of the Anatolian project and its crucial role in the story of Turkish industrialization and the roles of different players as well as their changing power in that history, with significant impact also on the current globalization project. Moreover, the place of middle and small producers in that project are also debated.
   
  
• The Reform of China's State-owned Banks: From Recapitalization to IPO
  Cui Zhiyuan (Size : 150 Kb, App. Download Time : 1 mins @ 28 kbps) Power Point Presentation
  This presentation provides a descriptive analysis of the Banking sector reforms in China and its relation vis a vis other economic variables in terms of international trade and exports, as well as indicators of well being in terms of distribution of income.
   
  
• China in Global Finance
  Sunanda Sen (Size : 77.3 Kb, App. Download Time : less than 1 mins @ 28 kbps)
  This paper deals with China's financial sector reforms and their future in the context of its entry to global finance and provides a brief account of the institutional set up relating to the financial sector. It also provies an analysis of China's current financial status including its exchange rate policy, and ends with a commentary on China's path to 'development' as distinct from its 'growth performance'.

March 29, 2006.