Opinion

The Great Debate

from Breakingviews:

Ecuador economic “miracle” meets maturity

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Turn on state television here, and within an hour or so a public service message will appear extolling the “Ecuadorean miracle” of President Rafael Correa. The advertisements highlight big new infrastructure projects and endorsements by experts, even an American or two.

Coming on one of the many formerly private channels that Correa tucked under government control during his seven years in office, it’s easy to dismiss this as propaganda. Yet here’s the thing: nearly every ordinary Ecuadorean I met during a recent stay was able to answer the Reaganesque question, “Are you better off now?” in the resounding affirmative.

To the amazement of Correa’s critics, Ecuador has undergone a relatively sustained period of economic progress since he took office in 2007. Annual growth in gross domestic product has averaged 4 percent. Unemployment is below 5 percent. Wages are up. Inflation is a tame 3.1 percent thanks to the dollarization of the economy before his accession. The percentage of Ecuador’s 16 million people living below the poverty line has dropped to 25 percent from some 45 percent before Correa became president.

The infrastructure improvements are evident everywhere, from the shiny new Quito airport and the highway that leads to the capital, to the 95 new bridges spanning the jungle chasms of the Amazon region. Regional hospitals are being built, and universal education has been made more accessible to everyone, its quality improving. Infant mortality rates shrink every year.

What to expect from the IMF, World Bank meetings

By Ian Bremmer
The opinions expressed are his own.

The IMF and World Bank meet this week at a delicate moment for the global economic recovery. First, the good news: Expectations for success won’t be tough to manage, because turmoil in the Arab world, the triple disaster in Japan, and Europe’s ongoing struggles have kept the meetings from grabbing much public attention. That’s a good thing, because as capital and liquidity return to the global economy and as emerging market powers begin to assert themselves with greater confidence on the international stage, the IMF and World Bank have lost some of their prominence.

In particular, the IMF is finding it increasingly difficult to play its traditional role of global surveillance body and lender of last resort, because multinational coordination is just not that effective these days. Newly enhanced voting leverage for leading emerging powers intended to better reflect the world’s true balance of power will only add to the institution’s dysfunction, as members increasingly disagree on whether and how to correct global imbalances. Expect to hear more calls from China, India, Brazil and Russia for an end to US and European dominance of these institutions, but don’t expect any “rebalancing” of rights and responsibilities to make international consensus any easier to achieve.

For example, in advance of the meetings, the IMF has produced a framework of policy options for countries now coping with large capital inflows. Several emerging states — including Brazil, South Korea, and Indonesia — have enacted capital controls in recent months. The IMF has endorsed the use of capital controls in cases where measures to strengthen banking systems and lower interest rates have already been adopted — a fundamental reversal of previous IMF policy.

from The Great Debate UK:

Asia’s exchange rates set for centre stage

JaneFoley.JPG-Jane Foley is research director at Forex.com. The opinions expressed are her own.-

November meetings of leaders from the Group of 20 industrialized nations may not have had exchange rates on the agenda, but the notes prepared by the International Monetary Fund included some meaty foreign exchange references.

The first is the view that although the dollar has moved closer to medium-term equilibrium it “still remains on the strong side”.  The second is the (widely held) view that the dollar “is now serving as the funding currency for carry trades” which has contributed to upward pressure on the euro.

Awakening Africa’s sleeping agricultural giant

Hans Binswanger is the former senior adviser to the World Bank on rural development in Africa. He is currently an independent agriculture and development consultant based in South Africa. The opinions expressed are his own.

The World Bank’s recent study of the prospects of commercial agriculture in Africa focused primarily on the Guinea Savannahs that cover some 600 million hectares, of which about 400 million can be used for agriculture. Less than 10 percent of this area is currently cropped, making it one of the largest underused agricultural land reserves in the world.

During the past four decades, two similar, backward, landlocked, and largely rain-fed agricultural regions developed rapidly and became international agricultural powerhouses: The Cerrado of Brazil and Northeast Thailand. The difficult agro-ecological conditions, remoteness, and poverty levels of the two regions were successfully overcome, and the same should happen in the Guinea Savannahs.

An unhealthy privilege

jamessaft1–James Saft is a Reuters columnist. The opinions expressed are his own.–

When the U.S. dollar ultimately loses its status as the world’s premier reserve currency it will be painful for all involved, almost certainly disorganized, and very possibly a very good thing.

World Bank President Robert Zoellick outlined the risks to the dollar’s status in a speech in Washington on Monday.

Migration statistics: our biggest weak spot

gurria-birdsallcomposite– Angel Gurría is Secretary-General of the Organization for Economic Cooperation and Development; Nancy Birdsall is President of the Center for Global Development. The views expressed are their own. —

All financial crises end. The question is not if we will recover, but how we can build a resilient global economy to speed and bolster that recovery. While many immediate dangers remain, now is the time to look beyond the exigencies of today.

We must take a hard look at weaknesses in the international system that might stand in our way as we rebuild. There are several, but we take this opportunity to highlight one weakness in our ability to build a resilient global economy for the future: the inadequate state of comparable data on international migration.

World Bank’s Zoellick responds to bloggers

Robert Zoellick

World Bank President Robert Zoellick spoke at a Thomson Reuters Newsmaker on March 31st  in front of an invited audience and announced a $50 billion programme to counter a decline in global trade.

Zoellick, who once called for a  “Facebook for multilateral economic diplomacy”, also agreed to answer questions from bloggers, which our social media team had collected via Twitter and on this blog ahead of the Newsmaker.

You can watch video of the social media session here and follow the Newsmaker chatter on our Great Debate Twitter channel.

What Asia needs from the G20 meeting

stanchartJaspal Bindra is Chief Executive, Asia, for Standard Chartered Bank. The views expressed are his own.

Asia has come of age. When leaders from the Group of 20 nations converge in London, Asia’s rising powers – China, India,  Korea and Indonesia – will be sitting at the global high table to decide on ways to reshape the world’s financial and economic order.

There are expectations that the meeting will include concrete steps to revive economic growth, a boost in funding for the International Monetary Fund, and an understanding on the new financial architecture to restore trust in the financial system.

Reform the IMF and World Bank

Johannes Linn- Johannes Linn is a Senior Fellow and the Executive Director of the Wolfensohn Center for Development at the Brookings Institution. The views expressed are his own. —

One of the tasks for the G20 Summit in London is the reform of the IMF and the World Bank, key global institutions to help address the current crisis and to prevent the occurrence of future crises. Reform of the IMF is more urgent both in the short and medium term while reform of the World Bank, although equally important, is less pressing.

The G20 faces a few immediate priorities related to the IMF:  First, G20 leaders should agree to triple IMF resources from the current level of $250 billion to $750 billion to help meet the financing needs of developing countries. This is critical because the World Bank has estimated that these countries may face a shortfall of up to $700 billion in 2009 alone.  Second, G20 leaders should request that the IMF monitor and report transparently on the commitments and implementation of G20 national stimulus plans and efforts to repair their banking sectors. Third, G20 leaders should commit to a far-reaching reform of the IMF by 2010.

Ask the World Bank President

Robert ZoellickRobert Zoellick, President of the World Bank, and a man who believes that 2009 will be a “dangerous year”, will be speaking on March 31st and has agreed to take questions from Reuters readers.

Zoellick has been outspoken during the current economic crisis predicting the first shrinking of the economy since the ’30s, warning that increased government spending will simply create a ‘sugar high‘ until banks’ toxic assets are dealt with properly, and urging a tougher stand against protectionism.

But the World Bank’s primary focus is on helping developing nations and alleviating  poverty. Earlier this month it published research showing that the spreading crisis will push 46 million more people into poverty in 2009 on top of 130-155 million pushed into poverty in 2008.

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