One of the main points of contention surrounding globalization is whether the flow of technology, skills, culture, ideas, news, information, entertainment, and people across borders consigns many parts of the world to grinding poverty. On February 18, Jagdish Bhagwati (Professor, Columbia University), in discussing his new book, In Defense of Globalization, took on the skeptics, arguing that, when properly managed, globalization is the most powerful force for social good in the world today. The venue was an IMF Economic Forum moderated by Raghuram Rajan (Economic Counsellor and Director of the IMF’s Research Department) and with commentary by Daniel Yergin (Chair, Cambridge Energy Research Associates and author of The Commanding Heights: The Battle for the World Economy).
In 1996, the IMF and the World Bank introduced the Heavily Indebted Poor Countries Initiative—a comprehensive debt relief program aimed at reducing the external debt burden of eligible countries to sustainable levels, provided they carry out strong programs of macroeconomic adjustment and structural reforms designed to promote growth and reduce poverty. Now that the HIPC Initiative is nearly completed, this paper investigates whether the initiative managed to spur growth, either directly or indirectly through investment. In contrast to earlier studies, we conclude that there is some evidence of positive effects of the HIPC Initiative on growth. Such evidence suggests that the HIPC Initiative and MDRI have helped HIPC-eligible countries to reach higher growth, but it remains unclear whether this is through higher investment or another channel. Also, the analysis illustrates that it is hard to disentangle pure debt-relief effects from other concurrent factors.
International Monetary Fund. External Relations Dept.
The authorities of eight Pacific island countries—Federated States of Micronesia, Fiji, Republic of the Marshall Islands, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu—have agreed to the final text of a declaration on cooperation, intended to foster confidence in their financial sectors and in that of the region as a whole. The declaration was jointly drafted by staff from the Pacific Financial Technical Assistance Centre (PFTAC) and the Reserve Bank of Fiji, together with supervisory agencies that participate in the Pacific Islands Prudential Regulation and Supervision Initiative (PIPRSI), according to a press release issued by the PFTAC on March 1.