The Great Debate UK

from The Great Debate:

The next emerging market: A billion women

You would never dream of not investing in India. You would never dream of not investing in China. So why wouldn’t you invest in women? That question was posed by Beth Brooke of Ernst & Young at the launch on Wednesday of a campaign called The Third Billion that aims to empower women as a means to drive economic growth. The campaign is based on the notion that there are a billion women not participating in the global economy who should be.

“Every country, every company in the world is looking for growth wherever they can find it,” Brooke said at a panel discussion (which I moderated) at Thomson Reuters headquarters in New York. “Where is the growth coming from? It’s coming from the emerging markets … We historically think of those emerging markets as India and China and many others. But it is clear that women are an emerging market.”

DeAnne Aguirre, senior vice-president at Booz & Company, said the concept of the “Third Billion” comes from the notion that if China and India each represent 1 billion emerging participants in the global marketplace, then a third billion is made up of women around the world whose economic lives have been “stunted, underleveraged or suppressed.”

The figure is based on a Booz & Company analysis of International Labor Organization data on women in the global workforce that showed some 860 million women were excluded for one reason or another, a number forecast to rise to 1 billion in the next decade. (Many of those women are in India and China, of course, so there is overlap with the first and second billions.)

La Pietra Coalition, the global alliance behind the campaign, has identified five factors that contribute to keeping women from playing a more productive role: access to finance; legal and social status; barriers to entrepreneurship; lack of education and training; and labor policy and practice.

The group wants to bring together corporations, governments, NGOs and institutions such as the World Bank to address each of those issues.

Among those that have already partnered with La Pietra are Coca Cola, Wal-Mart, Goldman Sachs and Standard Chartered Bank. Brooke, who is global vice-chair for public policy at Ernst & Young, said a key goal of the campaign is to enlist more big companies.

from The Great Debate:

The great global rebalancing and its implications

Manoj Pradhan, left, a global EM economist, is an executive director at Morgan Stanley. Alan M. Taylor, right, a senior advisor at Morgan Stanley, is a professor of economics at the University of California, Davis. The opinions expressed are their own.

Policymakers have fretted about global imbalances for nearly a decade, but little consensus or clarity has emerged. Some saw problems created by surplus countries, others deficit countries. Many feared a fiscal-cum-balance of payments crisis in the U.S., but the crisis we got reflected private/financial failures. G20 proposals for collective action remain a work in progress. Uncoordinated policy actions triggered talk of currency wars.

As these debates drone on, there may be less cause for concern about global imbalances. Emerging market-developed market (EM-DM) relationships may revert to a more typical historical pattern. We highlight key areas of global adjustment in this scenario: shifts in capital flows, exchange rates and real interest rates.

The peculiar global macro configuration of the last 15 years was unprecedented. Capital flowed “uphill” from poor to rich countries --- EMs saved more than they invested, the excess showing up as current account surpluses (net exports of EM goods) and financial outflows (net acquisition of DM assets). But digging deeper exposed a crucial fact: private capital still flowed “downhill” to EM economies in line with intuition, but offset by even larger “uphill” official flows, the reserves bought by EM central banks and sovereign wealth funds.

Despite allegations of strategic undervaluation, mercantilism, and the like, EMs had good reason to accumulate reserves as a precautionary measure. They had learned painful lessons from past crises. A loss of capital market access or sudden stop, or a bank/currency run or sudden flight, could trigger a vicious risk spiral linking currency crashes, banking panics and default.

In the 1997 Asian crisis, IMF help was seen as slow, limited, expensive and laden with unpleasant policy conditionality; economies, and their political leaders, suffered heavy damage. Reserve war chests were a “self insurance” response, obviating the need to rely on the kindness of strangers.

Pranab Bardhan on the economic rise of China and India

In its May economic outlook, the Organisation of Economic Cooperation and Development projected upward growth outlooks for BRIC countries Brazil, Russia, India and China — the world’s four largest emerging economies.

Strong growth in those economies is helping to pull other countries out of recession, the OECD said. The Paris-based organisation projects that China’s GDP growth will exceed 11 percent for 2010, and anticipates that India’s real GDP growth will be 8.3 percent. Russia‘s GDP growth is expected to be 5.5 percent, and Brazil‘s is projected at 6.5 percent. By comparison, the OECD projects that the Euro area will see 1.5 percent real GDP growth, while the UK will see a 2.2 percent growth.

The “BRIC” acronym was created by Goldman Sachs economist Jim O’Neill in 2001 to mark a shift of economic power from the West. In June 2009, the BRIC leaders met in Yekaterinburg, Russia, for a summit, which was seen as the beginning of a geopolitical alliance, although their economies are very different: Brazil’s economy is based on agriculture; Russia’s on energy exports; India’s on services and China’s on manufacturing. At that time, the BRIC countries accounted for 40 percent of the world’s population and about 15 percent of its economy.

In a new book titled “Awakening Giants, Feet of Clay: Assessing the Economic rise of China and India“, Pranab Bardhan, a professor of economics at the University of California, Berkeley, dissects some generally accepted beliefs about the economies of China and India — arguing that they are oversimplified — to provide a new perspective on what to expect from the two countries in the future.

He examines the impact of economic growth on politics, people and the environment within China and India.

Bardhan spoke to Reuters about his book at his office at the London School of Economics where he is serving as BP Centennial Professor for 2010 and 2011. Watch the video here: