Scaling up Development Finance Jomo Kwame Sundaram and Anis Chowdhury

The Business and Sustainable Development Commission has estimated that achievement of Agenda 2030 for the Sustainable Development Goals will require US$2-3 trillion of additional investments annually compared to current world income of around US$115 trillion. This is a conservative estimate; annual investments of up to US$2 trillion yearly will be needed to have a chance of keeping temperature rise below 1.5°C. The greatest challenge, especially for developing countries, is to mobilize needed investments which may not be profitable. The United Nations and others have revived the idea of the International Monetary Fund (IMF) issuing Special Drawing Rights (SDRs) to finance…

The Economy: 70 years after Independence C. P. Chandrasekhar

The defining feature of the economic programme of independent India’s first government was to accelerate the transition to a modern economy dominated by industry. Agriculture and related activities at that time accounted for around half of GDP and modern industry in the form of factory establishments for just above 6 per cent. Thus, colonial rule had made India the victim of the barriers to productivity increase typical of predominantly agrarian economies. These circumstances influenced the Nehruvian vision that made rapid diversification in favour of manufacturing the principal economic objective. The ‘big planners’ of that time did recognize that this will…

Why workers lose C.P. Chandrasekhar

A long-acknowledged feature of global development since the 1970s is that in many countries—advanced and poor—those at the bottom of the income pyramid have benefited little, if at all, from whatever growth has occurred. One empirical outcome of that tendency has been a decline in the shares of labour in national income over time. While this has been noted earlier, it has become the focus of attention recently because of evidence of a popular backlash against globalisation as reflected in the Brexit vote in the United Kingdom, the Donald Trump victory in the United States, and the rise of Far-Right…

The Illusion of an Economic Spring C.P. Chandrasekhar

While policy makers, analysts and observers paint a picture of an ongoing global economic recovery, the numbers seem to drag the optimists down. Barely days after IMF Managing Director, Christine Lagarde, declared at the spring meetings of the World Banka and the IMF that, “Spring is in the air and spring is in the economy as well,” came bad news from the US. The advanced economy that was being looked to as the one that would pull the world system out of a decade long period of sluggish growth performed poorly in the first quarter of 2017, growing at an…

Privatization Cure Often Worse Than Malady Jomo Kwame Sundaram and Anis Chowdhury

Privatization of SOEs has been a cornerstone of the neo-liberal counterrevolution that swept the world from the 1980s following the economic crisis brought about by US Fed's sharp hike in interest rates. Developing countries, seeking aid from the International Monetary Fund (IMF) and the World Bank, often had to commit to privatization as a condition for credit support. The World Bank and the IMF then attributed developing countries' inability to adjust to the external shocks of that time, inter alia, to their import-substituting industrial policy initiatives and the inefficiency of the state-owned enterprises (SOEs). Hence, their support came with conditions…

Focus on Inequality Prabhat Patnaik

The World Bank and the IMF have started a new trend of late, of taking “progressive” positions in their publications even while insisting on the same old “conditionalities” in policy negotiations with particular countries. In accordance with this new trend these institutions have now got concerned with issues of poverty and inequality; and the World Bank has just brought out what is supposed to be the first of a series of annual publications tracking progress towards poverty removal and curtailment of inequality. This publication is called Poverty and Shared Prosperity. While I do not wish to review this publication here,…

The IMF in Pakistan C.P. Chandrasekhar

On February 4, after meetings held at Dubai for security reasons, an IMF team arrived at an agreement with officials from Islamabad, which would permit the release of the last-but-one tranche of $497 million out of an SDR 4.393 billion billion loan package (around $6.64 billion in exchange rates prevailing at time of sanction) under its Extended Finance Facility (EFF). The agreement came after the 10th review of economic performance and policy undertaken as part of the 3-year arrangement approved by the IMF Executive Board in September 2013. The IMF in its press release has chosen to be complimentary. Besides…

Infrastructure Financing as Power Politics C.P. Chandrasekhar

Infrastructure lending may sound an innocuous political terrain of interest only to financiers. But it is proving to be the location for the play out of big power politics, involving especially the US and China. As of now, it appears to be one more battle the US will regret having fought. When the deadline for applications to be a founding member of the China-mooted Asian Infrastructure Investment Bank (AIIB) passed on April 1, 2015, 47 countries had expressed an interest, about 30 of whom had already been accepted. The AIIB is a multilateral development bank to be headquartered in Beijing…