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JACQUES R. ARTUS

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.

Jacques R. Artus

This paper reviews the increasing private capital flows to less developed countries. The share of developing countries in the foreign direct investment is small, perhaps less than 30 percent of the total. The effects of this decline in the volume of foreign investment and the continued problem of capital flight have been aggravated by the serious fall in commercial bank lending to developing countries as a group and by a decline in official development assistance.

International Monetary Fund. Western Hemisphere Dept.

Barbados’ economy is estimated to have contracted by 0.7 percent in 2013, with weakness across both the traded and non-traded sectors. The 2013 Article IV Consultation highlights that long stay tourist arrivals, which are highly dependent on the U.K. and North American markets, were down by 5.2 percent in 2013. Inflation dropped sharply to 1.9 percent by end-November, although unemployment rose to 11.7 percent. Foreign reserves declined during 2013 to close out the year at US$578 million. The financial system appears to be well capitalized, but credit quality and profitability have suffered with the prolonged downturn.

International Monetary Fund

This Selected Issues paper for Canada presents comprehensive and broad-based analysis of the role of domestic and external shocks. Canada’s economic history illustrates the important role played by external as well as domestic macroeconomic disturbances. Canada’s economy slowed in 2001 because of the global slowdown, although by less than in many other countries. In 2003, the recovery has been interrupted by a series of shocks that moderated growth. Fluctuations in Canadian real GDP are explained by external and domestic cycles.

Mary Amiti Caroline Freund

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.

International Monetary Fund

This paper describes economic developments in Denmark during 1990–96. After a prolonged period of stagnation in the second half of the 1980s and early 1990s, GDP rose by 4¼ percent in 1994, reflecting a surge in domestic demand and recovery in export markets. The expansion of GDP slowed to a 2¾ percent pace in 1995 as domestic demand moderated and as exports decelerated sharply. The slowing of external markets intensified in the course of 1995 with the result that GDP in the fourth quarter was barely above its first quarter level.

International Monetary Fund. Research Dept.

Abstract

World economic growth quickened during 1996 following widespread deceleration of activity in 1995 (Chart 1). Economic and financial conditions are generally propitious for the global expansion to continue in 1997 and the medium term at rates at least matching those seen in the past three years (Chart 2). There are few signs of the tensions and imbalances that usually foreshadow significant downturns in the business cycle: global inflation remains subdued, and commitments to reasonable price stability are perhaps stronger than at any other time in the postwar era; fiscal imbalances are being reduced with increasing determination in many countries, which should help contain real long-term interest rates and foster higher investment; and exchange rates among the major currencies appear to be generally consistent with broader policy objectives.

International Monetary Fund. Research Dept.

Abstract

World output growth is expected to increase further, to about 4½ percent, in 1997 and to remain at this rate in 1998, projections that arc slightly higher than those in the October 1996 World Economic Outlook. Relatively solid growth is expected in the United States and the United Kingdom, although in both countries there is a risk of inflationary pressures emerging. In Canada, where there is considerable economic slack, the expansion is expected to gain momentum. In Japan, recovery is expected to continue at a moderate pace. Declines in interest rates over the past two years and the return of exchange rates to more competitive levels are expected to support recovery in Germany, France, and elsewhere in continental Europe, although continuing fiscal consolidation and weaknesses in consumer and business confidence pose downside risks. Growth in the newly industrialized economies of Asia should also pick up slightly in 1998, as exports recover from the recent slowdown.

International Monetary Fund. Research Dept.

Abstract

Globalization refers to the growing economic interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology. It presents economies and policymakers with both new opportunities and new challenges. On a broad level, the welfare benefits of globalization are essentially similar to those of specialization, and the widening of markets through trade, emphasized by classical economists. By enabling a greater international division of labor and a more efficient allocation of savings, globalization raises productivity and average living standards, while broader access to foreign products allows consumers to enjoy a wider range of goods and services at lower cost. Globalization can also confer other benefits by, for instance, allowing a country to mobilize a larger volume of financial savings (as investors have access to a wider range of financial instruments in various markets) and increasing the degree of competition faced by firms.

International Monetary Fund
Strong policies, resilient markets, and an improved external environment have helped Singapore tide over the recession. Singapore has a strong track record of proactive and forward-looking economic policymaking. Fiscal policy has regained its traditional medium-term orientation. Official reserve accumulation has to be kept under review. Social safety nets are well placed. Singapore’s exchange rate regime continues to serve the economy well, and the Monetary Authority of Singapore’s exchange-rate-centered monetary framework has been an important source of stability in times of economic turbulence.