International Monetary Fund. External Relations Dept.
This paper reports about current mainstream growth projections for the United States and the European Union over the medium term represent a marked slowdown from growth rates in the decades prior to the global financial crisis. Slower growth in Europe and the United States has mixed implications for growth prospects in developing economies. Most obviously, on the negative side, it means less demand for these countries’ exports, so models of development based on export-led growth may need to be rethought. In contrast, for Western Europe the narrative is about catch-up growth rather than the rate of cutting-edge technological progress. From the middle of the 20th century to the recent global crisis, this experience comprised three distinct phases. European medium-term growth prospects depend both on how fast productivity grows in the United States and whether catch-up growth can resume after a long hiatus. Economic historians see social capability as a key determinant of success or failure in catch-up growth.
International Monetary Fund. External Relations Dept.
This article profiles iconoclastic economist Dani Rodrik, the Harvard professor whose warnings about the downsides of globalization proved prescient. Rodrik has spent most of his professional life at Ivy League institutions. He has a bachelor’s degree from Harvard and master’s and PhD degrees from Princeton, followed by a teaching career at Harvard and Columbia. Rodrik’s warnings that the benefits of free trade were more apparent to economists than to others were prescient. His skepticism about the benefits of unfettered flows of capital across national boundaries is now conventional wisdom. His successful attack on the so-called Washington Consensus of policies to generate economic growth has made governments and international organizations like the IMF and the World Bank admit that there are many policy recipes that can generate growth. Rodrik’s caution about financial globalization is now widely shared, including at the IMF.
This 2017 Article IV Consultation highlights that the cyclical recovery in the euro area is firming and becoming broad based. Lower energy prices, supportive policies, stronger labor markets and a recovery in credit growth have boosted domestic demand, especially private consumption. The near-term outlook is favorable, with growth of 1.9 percent expected in 2017 and 1.7 percent in 2018. Although headline inflation picked up in the first half of 2017 owing to higher energy prices, core inflation has remained persistently low. The improving near-term outlook is clouded by significant downside risks, especially in the medium and long term, amid thin policy buffers.
This Selected Issues paper underlies the financial sector developments in Niger. The paper presents an overview of the financial sector of Niger and discusses the recent banking developments. It analyzes the recent trends in key microfinance indicators, and investigates reasons behind Niger’s relatively weak growth performance. It uses a growth accounting framework to assess the contribution to growth by factor inputs and total factor productivity (TFP) during 1963–2003. The paper also presents neoclassical growth model estimates of the role of macroeconomic variables and other factors in determining economic growth in Niger.
This paper discusses South Africa’s recent growth performance and its new growth targets. It analyzes the history of exchange rate volatility, compares it with other countries, and examines the relationship between volatility and trade flows in South Africa. It highlights facts on reserves holding and presents an empirical analysis of a model in assessing the adequacy of South Africa’s reserves. It also analyzes the cyclical balances to determine revenue performance and discusses the penetration of the South African financial conglomerates into State Security Agency and assesses potential vulnerabilities.
This paper describes issues in Korea’s corporate sector, the need for restructuring, and the
authorities’ initiatives and challenges. It then identifies lessons from other countries’
experience and conducts an econometric analysis based on cross-country aggregate data,
compared with previous studies which mostly use firm-level data. This analysis finds that
restructuring episodes, while sometimes challenging in the short term, have typically been
associated with more rapid economic growth afterward. Corporate restructuring could have a
negative effect on the labor and the financial markets in the short term, but is associated with
positive growth through increased investment and capital productivity in the medium term,
outpacing the negative effects.
This paper proposes that international rescue financing should not be provided to a country where a crisis first occurs, but rather to any country that suffers a subsequent crisis. Such a timing-based lending facility can be Pareto-superior to both laissez-faire and existing international crisis lending facilities, when domestic governments have more information on their own economies than does the international lender of last resort. The new facility mitigates moral hazard owing to information asymmetry by not rescuing the first-hit country. At the same time, it limits crisis contagion by rescuing countries in subsequent crises. Even in the presence of common shocks, the timing-based facility can reduce global risks of crisis because it induces countries to undertake greater crisis-prevention efforts so as not to become the first country hit.