Two recent investigations of the 1967 devaluation of the pound sterling concluded that the benefits of that devaluation were delayed in timing and were relatively small in magnitude. If confirmed, their conclusion would clearly tend to undermine the case for exchange rate changes as a means of promoting current account adjustment; it would also refute the previous consensus on the size of international trade elasticities. It is therefore of the greatest importance to scrutinize the devaluation experience of the United Kingdom more closely, so that the right lessons may be drawn from it. A further and more detailed investigation of the U. K. devaluation is presented here. Its conclusion differs sharply from that reached in the recent investigations by the National Institute of Economic and Social Research (NIESR, 1972) and the London Business School (LBS, by Ball, Burns, and Miller, 1972). It is estimated in the present study that positive benefits from the devaluation occurred relatively rapidly and were large in their magnitude.
The industrialization of developing countries is transforming patterns of production and trade throughout the world. The authors outline the national and international policy implications embodied in these changes.
Mr. Arvind Panagariya, Razeen Sally, Mr. Mohamed A. El-Erian, and Manmohan S. Kumar
Crisis Stalls Globalization: Reshaping the World Economy" examines the multiple facets of the recession-from the impact on individual economies to the effect on the global payments imbalances that were partially at the root of the crisis-and offers a variety of suggestions for supporting a recovery and averting future crises. Several IMF studies shed light on the depth of the crisis-including a survey of the sharp drop in trade finance, along with quantitative findings about the direct and indirect costs of the financial turbulence-and debate what is to be done from several angles, including the redesign of the regulatory framework and ways to plug large data gaps to prevent future crises and aid in the creation of early warning systems. Opinion pieces discuss the shifting boundaries between the state and markets, the agenda for financial sector reform, and the governance of global financial markets. The issue also includes a historical perspective to see when restructuring the global financial architecture actually succeeds. "People in Economics" profiles Nouriel Roubini; "Back to Basics" looks at what makes a recession; and "Data Spotlight" examines Latin America's debt.
The September 2007 issue of F&D looks at the growth of cities and the trend toward urbanization. Within the next year, for the first time in history, more than 50 percent of the world's population will be living in urban rather than rural areas. What are the economic implications of this urban revolution? Economists generally agree that urbanization, if handled well, holds great promise for higher growth and a better quality of life. But as the lead article tells us, the flip side is also true: if handled poorly, urbanization could not only impede development but also give rise to slums. Other articles in this series look at poverty as an urban phenomenon in the developing world and the development of megacities and what this means for governance, funding, and the provision of services. Another group of articles discusses the challenge of rebalancing growth in China. 'People in Economics' profiles Harvard economist Robert Barro; 'Country Focus' looks at the challenges facing Mexico, and 'Back to Basics' takes a look at real exchange rates.
This paper describes modernization of ports in Peru. With the sea so predominant in the life of the country, modern ports are vital in Peru. A program has been undertaken to abandon the numerous obsolete ports served by barges and to establish a few strategically situated ports—modern, mechanized, and with terminals having direct mooring facilities. At the same time, Callao, the country’s chief port, has been improved, and specially equipped ports are being planned for fishing products.
Two years ago, citizens in the Arab world—fired by their ideals and visions of a better life—ignited a social movement that inspired people around the globe. In Egypt, Jordan, Libya, Morocco, Tunisia, and Yemen—the so-called Arab countries in transition—people embraced change, ushering in a new era. This issue of F&D looks at the difficulties of this transition, focusing on long-standing forces that shape the region’s economy and offering options for moving ahead to achieve strong, inclusive growth. • Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department, maps out an agenda for modernizing and diversifying the region’s economies in “Toward Prosperity for All.” • In “Freedom and Bread Go Together,” Marwan Muasher addresses the intersection of economic progress and political change. • Vali Nasr, in a Point of View column, underscores the vital role small and medium-sized enterprises play in a successful democratic transition. Elsewhere in this issue, we look at how surging oil and gas production in the United States could shake up global energy markets; the effect of uncertainty on economic growth; and Mexico’s competitiveness rebound. F&D's People in Economics series profiles Christina Romer, former chair of the U.S. Council of Economic Advisers and an architect of the U.S. stimulus package; and the latest installment in our Back to Basics series explains how structural policies help to both stabilize and strengthen economies.
This paper uses a Ricardian framework to clarify the role of micro–economic and macroeconomic factors governing the time–series and cross–sectional behavior of sectoral trade balances. Unit labor costs and trade balances are calculated for several sectors for the seven major industrial countries. The time–series and cross-sectional variation in sectoral unit labor costs is decomposed into relative productivity, wage differentials, and exchange rate variations. The main findings are that changes over time in sectoral trade balances, especially for the United States and Japan, are quite well explained by the evolution of unit labor cost, suggesting that trade patterns conform to comparative advantage. The cross–sectional results are, however, less conclusive.
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