International Monetary Fund. External Relations Dept.
This issue of Finance & Development focuses on how technology is driving growth. The issue looks at “transmission channels.” As with drive-through tellers, ever-more-powerful technology allows us to streamline, replacing less efficient practices (the drive-through teller) with more efficient ones (smartphone deposits). Other articles in this issue cover package chronicle technology’s power to transform: Sanjiv Ranjan Das examines big data’s influence on economics and finance; Aditya Narain documents the rise of a new breed of hybrid financial technology—fintech—firms; and Sharmini Coorey touts distance learning for better policymaking. The issue also examines the impact of remittances on monetary policy, de-dollarization in Peru, and the efficacy of public-private partnerships, among other topics. It also presents profile of Nancy Birdsall, the former head of the Center for Global Development, who has dedicated her career to fighting poverty and inequality through compelling research.
This paper presents a comparative analysis of the macroeconomic adjustment in Chile,
Colombia, and Peru to commodity terms-of-trade shocks. The study is done in two steps:
(i) an analysis of the impulse responses of key macroeconomic variables to terms-of-trade
shocks and (ii) an event study of the adjustment to the recent decline in commodity prices.
The experiences of these countries highlight the importance of flexible exchange rates to
help with the adjustment to lower commodity prices, and staying vigilant in addressing
depreciation pressures on inflation through tightening monetary policies. On the fiscal front,
evidence shows that greater fiscal space, like in Chile and Peru, gives more room for
accommodating terms-of-trade shocks.
Technology is generating a global convergence. A "big bang" of information—and education as well—is improving human lives. And with global interconnectivity growing by leaps and bounds, we are all witness to a rapid spread of information and ideas. But, as we have seen from the prolonged global financial crisis, our interconnectedness carries grave risks as well as benefits. This issue of F&D looks at different aspects of interconnectedness, globally and in Asia. • Brookings VP Kemal Devis presents the three fundamental trends in the global economy affecting the balance between east and west in "World Economy: Convergence, Interdependence, and Divergence." • In "Financial Regionalism," Akihiro Kawai and Domenico Lombardi tell us how regional arrangements are helping global financial stability. • In "Migration Meets Slow Growth," Migration Policy Institute president Demetrios Papademetriou examines how the global movement of workers will change as the economic crisis continues in advanced economies. • "Caught in the Web" explains new ways of looking at financial interconnections in a globalized world. • IMF Managing Director Christine Lagarde provides her take on the benefits of integration and the risks of fragmentation in "Straight Talk." Also in this issue, we take a closer look at interconnectedness across Asia as we explore how trade across the region is affected by China's falling trade surplus, how India and China might learn from each others' success, and what Myanmar's reintegration into the global economy means for its people. F&D's People in Economics series profiles Justin Yifu Lin, first developing country World Bank economist, and the Back to Basics series explains the origins and evolution of money.
This supplement provides background information on various aspects of capacity development (CD) for the main Board paper, The Fund’s Capacity Development Strategy—Better Policies through Stronger Institutions. It is divided into nine notes or sections, each focused on a different topic covered in the main paper. Section A explores the importance of institutions for growth, and the role the Fund can play in building institutions. Section B presents stylized facts about how the landscape for CD has changed since the late 1990s. Section C discusses the difficulties of analyzing CD data because of measurement issues. Section D provides a longer-term perspective on how Fund CD has responded to member needs. Section E contains information on previous efforts to prioritize CD, assesses Regional Strategy Notes (RSNs) and country pages, and suggests ways to strengthen RSNs, including by using the Fund’s surveillance products. Section F compares the technical assistance (TA) funding model proposed in the 2011