The collapse in developing country exports C. P. Chandrasekhar and Jayati Ghosh

If there has been one big change in the nature of the global economy in the second decade of this century, it is in global trade. In the first decade of this century, especially in the period 2002-08, cross-border trade grew much more rapidly than total world output, and the integration of countries through greater exchange of goods and services essentially became the primary engine of growth. It is true that the explosion of financial activity that has become such a prominent feature of contemporary capitalism also added substantially to income growth – and indeed generated the bubbles that were…

Trump’s Trade War C. P. Chandrasekhar

After a year of huffing and puffing, President Donald Trump has launched, since January this year, what some are terming a trade war—fought in scattered industrial and selected locations. It started with quotas and tariffs on solar panel and washing machine imports, but then moved menacingly to steel and aluminium. Tariffs on these two products have been imposed under a WTO clause relating to imports that threaten national security, even while Trump’s rhetoric refers to competition from "cheap metal that is subsidized by foreign countries", which amounts to a completely different ‘dumping’ charge. With the tariff hike on steel at…

The True Face of the Global Recovery C. P. Chandrasekhar and Jayati Ghosh

Optimistic assessments of the synchronised recovery across the world economy ignore the factors driving the weak upturn that make it fragile. True_Face_Global_Recovery  (Download the full text in PDF format) (This article was originally posted in the Business Line on April 10, 2018.)

The imperial intentions of Trump’s trade war babble Andrew M. Fischer

Trump’s trade tirades are being vigorously disputed by liberal economists the world over, although the riposte is usually in defence of free trade and existing trade deals. However, many of these same economists have promulgated the underlying idea that US trade deficits are the result of some sort of disadvantage or decline. For instance, as I discussed in 2009, 2010, 2011 and 2012, many prominent economists such as Paul Krugman argued then (and many still do now) that China’s undervalued currency gave it an unfair advantage, causing deficits and even financial bubbles in the US. Many economists on the left…

The Economic Survey 2017-18 Prabhat Patnaik

Like the person on the proverbial tiger, the Indian economy is currently riding a precarious course. The Government of India’s Economic Survey for 2017-18 recognizes this frankly, but its panacea is to keep one’s fingers crossed and hope that the ride continues. The macroeconomic data it presents are closer to those of the IMF’s World Economic Outlook Update prepared for the Davos meet than to the figures of the Indian government’s own Central Statistical Office. Its GDP growth estimate for the current fiscal year is 6.75 percent (compared to the IMF’s 6.7 percent and the CSO’s 6.5); and in the absence of anything untoward,…

The Saudi palace coup, the oil market, China and the US Ali Kadri

Trouble has been brewing in Saudi Arabia, the jewel of the US empire, under the very eyes of the imperialists. Since circa 1980, the socially stabilising economic redistribution mechanisms, the objective pillars holding society together, were neoliberally eroded. As for the subjective grounds, or the political US-backing that the Saudi monarchy enjoys, it so happens that until about 2011, the timing of the Arab Spring, the Saudi-comprador class’ surreal social and political practice received low-key criticism. Oil_Market (Download the full text in PDF format)    

Arming Poor Countries Enriches Rich Countries Anis Chowdhury and Jomo Kwame Sundaram

Although the Cold War came to an end over a quarter century ago, international arms sales only declined temporarily at the end of the last century. Instead, the United States under President Trump is extending its arms superiority over the rest of the world. The five biggest importers were India, Saudi Arabia, the United Arab Emirates (UAE), China and Algeria. Indian arms imports increased by 43 per cent. Its imports during 2012–2016 were far greater than those of its regional rivals, China and Pakistan, as Pakistan’s arms imports declined by 28 per cent compared to 2007–2011. UAE imports increased by…

Do Purchasing Power Parity exchange rates mislead on incomes? The case of China C.P. Chandrasekhar and Jayati Ghosh

Ever since Robert Summers and Alan Heston produced what become known as the “Penn World Tables” comparing prices and thereby the purchasing power of currencies across countries, the urge to use some deflator of market exchange rates to compare incomes across countries has been strong. The economic theory behind this is that exchange rate comparisons of less-developed economies consistently undervalue the non-traded goods sector, especially labour-intensive and relatively cheap services, and therefore underestimate real incomes in these developing economies. In some cases, this can be quite significant. In larger emerging markets like China and India, the conversion factors have been…

Shopping Frenzy in the New China C. P. Chandrasekhar

In an otherwise gloomy world economic environment, a new kind of record given the media bizarre cause to cheer: the value of online sales notched up by Chinese e-commerce giant Alibaba on a single discount sales day. Global business headlines screamed that in its annual sale on Singles’ Day, 11 November 2017, Alibaba had registered a record sales value of 168.2 billion yuan or $25.3 billion.  Singles’ Day, or 11 November, was, because of its 11/11 aspect, reportedly chosen around 25 years ago by students of Nanjing University to celebrate the fact of being single. Using what has evolved to…

How China is Managing Capital Flows – and why Jayati Ghosh

The global financial media are always on the lookout for signs of an impending financial crisis in China – and the dark prognostications about the future made by several external observers relate to both internal and external financial flows. But there are reasons to believe that both concerns may be overplayed, and that what is occurring especially with respect to cross-border flows is a much more complex process reflecting a medium-term plan of the Chinese state, in accordance with its much more assertive role in the global scene. There has been much discussion on rising internal debt levels, with analysts…