Multilateralism Undermined by Globalization’s Discontents Anis Chowdhury and Jomo Kwame Sundaram

On 24 October 1945, the world's most inclusive multilateral institution, the United Nations, was born to "save succeeding generations from the scourge of war, ... reaffirm faith in fundamental human rights, … establish conditions under which justice and respect for the obligations arising from treaties and other sources of international law can be maintained, and to promote social progress and better standards of life in larger freedom" (UN Charter: Preamble). Thus, one major purpose of the UN is to foster international cooperation to resolve the world's socio-economic problems and to promote human rights and fundamental freedoms (UN Charter: Article 1.3).…

Inequality undermines democracy Jomo Kwame Sundaram and Anis Chowdhury

Economic inequality – involving both income and wealth concentration – has risen in nearly all world regions since the 1980s. Gross economic inequalities moderated for much of the 20th century, especially after World War Two until the 1970s, but has now reached levels never before seen in human history. No more inclusive prosperity The World Inequality Report 2018 found that the richest 1% of humanity captured 27% of world income between 1980 and 2016. By contrast, the bottom half got only 12%. In Europe, the top one percent got 18%, while the bottom half got 14%. OXFAM's Reward Work, Not…

Improving Infrastructure Planning In Developing Countries Jomo Kwame Sundaram and Anis Chowdhury

Infrastructure investment is necessary, but hardly sufficient to enable developing countries to transform their economies to achieve sustainable prosperity, according to this year's UNCTAD Trade and Development Report: Power, Platforms and the Free Trade Delusion (TDR 2018), released in late September. For various reasons, infrastructure projects in developing countries are receiving broad endorsement. Multilateral financial institutions – such as the Asia Infrastructure Investment Bank – are scaling up investment, and several international initiatives – such as the Belt and Road Initiative of China – prioritize infrastructure. Yet, such efforts may still not accelerate industrialization. Nevertheless, most recent discussions still tend…

Trade War Due To Deeper Malaise Anis Chowdhury and Jomo Kwame Sundaram

The world economy remains tepid and unstable a decade after the 2008 financial crisis, while growing trade conflicts are symptoms of deeper economic malaise, according to a new United Nations publication. While the global economy has picked up since early 2017, growth remains hesitant, with many countries operating below potential. The year ahead is unlikely to see much improvement as the world economy is under stress again, with rising tariffs and volatile financial flows. Underlying such threats to global economic stability is the failure to address fundamental weaknesses in global economic governance which have been fostering global economic inequities and…

Another Global Financial Crisis for Developing Countries? Anis Chowdhury and Jomo Kwame Sundaram

George Soros, Bill Gates and other pundits have been predicting another financial crisis. In their recent book, Revolution Required: The Ticking Bombs of the G7 Model, Peter Dittus and Herve Hamoun, former senior officials of the Bank of International Settlements, warned of ‘ticking time bombs' in the global financial system waiting to explode, mainly due to the policies of major developed countries. Recent events vindicate such fears. Many emerging market currencies have come under considerable pressure, with the Indonesian rupiah, Indian rupee and South African rand all struggling since early this year. Brazil's real fell sharply in June, and Argentina…

Great Recession, Greater Illusions Anis Chowdhury and Jomo Kwame Sundaram

In 2009, the world economy contracted by -2.2%. Growth in all developing countries declined from around 8% in 2007 to 2.6% in 2009 as the developed world contracted by -3.8% in 2009. The collapse of the Lehmann Brothers investment bank in September 2008 symbolized the US financial crisis that triggered the Great Recession of 2008-2009. Demise of Keynesian consensus In its immediate aftermath, a new consensus reversed the neoliberal Washington Consensus of the last two decades of the 20th century. Proclaimed by the G20's London Summit of 2 April 2009, it envisaged return to Keynesian macroeconomic policies, including large-scale fiscal…

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…

Will Trump’s Trade War Make America Great Again? Jomo Kwame Sundaram and Anis Chowdhury

The United States has had the world's largest trade deficit for almost half a century. In 2017, the US trade deficit in goods and services was $566 billion; without services, the merchandise account deficit was $810 billion. The largest US trade deficit is with China, amounting to $375 billion, rising dramatically from an average of $34 billion in the 1990s. In 2017, its trade deficit with Japan was $69 billion, and with Germany, $65 billion. The US also has trade deficits with both its NAFTA partners, including $71 billion with Mexico. President Trump wants to reduce these deficits with protectionist…

Agricultural Trade Liberalization Undermined Food Security Jomo Kwame Sundaram and Anis Chowdhury

Agriculture is critical for achieving the Sustainable Development Goals (SDGs). As the Food and Agriculture Organization (FAO) notes, ‘From ending poverty and hunger to responding to climate change and sustaining our natural resources, food and agriculture lies at the heart of the 2030 Agenda.' For many, the answer to poverty and hunger is to accelerate economic growth, presuming that a rising tide will lift all boats, no matter how fragile or leaky. Most believe that market liberalization, property rights, and perhaps some minimal government infrastructure provision is all that is needed. The government's role should be restricted to strengthening the…

Blending Finance Not SDG Financing Silver Bullet Jomo Kwame Sundaram and Anis Chowdhury

After largely failing to provide 0.7 per cent of their Gross National Income (GNI) in aid to developing countries for almost half a century since making the commitment, donor countries have recently promoted blended finance (BF) as a solution to the financing for development challenge. Blending refers to combining public development funds (in the form of grants, technical assistance or interest indemnification) with loans from private lenders. Following adoption of Agenda 2030 for the Sustainable Development Goals (SDGs), the OECD and the World Economic Forum (WEF) claimed that "blended finance represents an opportunity to drive significant new capital flows into…