Hype and Facts on Free Trade C. P. Chandrasekhar

Voices questioning the claim that nations and the majority of their people stand to gain from global trade are growing louder. The one difference now is that the leading protagonist of protectionism is not a developing country, but global hegemon United States under Donald Trump. Free trade benefits big corporations with production facilities abroad, Trump argues, while harming those looking for a decent livelihood working in America. With time Trump has made clear that his words are not mere rhetoric, matching them with tariffs that have frightened European and North American allies and US corporations, besides troubling the likes of…

Who Says Labor Laws Are “Luxuries”? Servaas Storm and Jeronim Capaldo

A Standard recommendation given to late-industrializing economies by the economic advisors of the World Bank and the International Monetary Fund has been to refrain from imposing regulations on the labor market, or if such regulations are already in place, to abolish them. If you are a policymaker in a late-industrializing country, chances are you’ve been told that your problem, what is really holding your economy back, is excessive labor regulation – it is making your exports uncompetitive and chasing away capital. Laws “created to help workers often hurt them,” stated the 2008 World Bank’s Doing Business Report. To avoid any…

More of the Same: World Bank Doing Business Report Continues to Mislead Jomo Kwame Sundaram and Anis Chowdhury

The World Bank's Doing Business Report 2017, subtitled ‘Equal Opportunity for All', continues to mislead despite the many criticisms, including from within, levelled against the Bank's most widely read publication, and Bank management promises of reform for many years. Its Foreword claims, "Evidence from 175 economies reveals that economies with more stringent entry regulations often experience higher levels of income inequality as measured by the Gini index." But what is the evidence base for its strong claims, e.g., that "economies with more business-friendly regulations tend to have lower levels of income inequality"? Closer examination suggests that the "evidence" is actually…

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,…

Economic Forecasts and Reality: Should we believe the World Bank? C.P. ChandrasekhaR & Jayati Ghosh

The World Bank’s latest projections for GDP growth are pessimistic, especially for developing countries. But given its poor track record, how far they are reliable is doubtful. economic_forecasts_reality (Download the full text in PDF format) (This article was originally published in the Business Line print edition dated June 23, 2015  )

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…

The BRICS Bank: Part of a new financial architecture (1) Oscar Ugarteche

The Sixth BRICS Summit took place in Fortaleza, Brazil and on July 15 of 2014 they announced the establishment of a bank dedicated to financing large scale infrastructure, and a contingent reserves agreement (CRA) of some one hundred billion dollars distributed in accounts of the five central banks. With a capital base authorized at 100 billion US dollars, and already paid to the extent of ten billion, the New Development Bank is prepared to issue instruments in dollars and access needed funds in the international capital markets at low rates. The object of the Bank, whose seat is Shanghai, is…