Mr. Eduardo Borensztein, Mr. Peter Wickham, Mr. Mohsin S. Khan, and Ms. Carmen Reinhart
This paper analyzes global commodity trends and concludes that the marked decline in real commodity prices of the past decade should be regarded as largely permanent and irreversible. The authors contend that the analysis of commodity prices should be extended to include the role of the breakdown of major international commodity agreements. In addition, the authors analyze how developments in the former Soviet Union have affected commodity supply conditions.
This chapter discusses principles and consequences of the common agricultural policy (CAP) of the European Community (EC). It shows that agricultural pricing policies aimed at supporting farm incomes were already in place in EC member countries before the inception of the CAP; indeed, in the presence of these policies, the CAP was a logical consequence of the extension of the common market to the agricultural sector. Thus, the flaws of the CAP can be traced back to national policies and attitudes toward agriculture. Recognition of the burden of agricultural support on the rest of the economy, as well as the growing budgetary costs, has elicited a greater public interest in the CAP. Equally, the trade frictions caused by export subsidies have underlined the CAP's international implications. For these reasons, the member states appear more determined than hitherto to bring agricultural expenditure under control. Given the wider effects of the CAP both on EC economies and the international community, it is to be hoped that current efforts at reform will be successful.
Ms. Naheed Kirmani, Mr. Lorenzo L. Pérez, Mr. Shailendra J. Anjaria, and Mr. Zubair Iqbal
This paper contains further work by the Fund staff on trade issues and developments following the pattern of the surveys prepared in 1978 and 1981, mainly focusing on commercial policies of the major trading nations. It also includes a discussion of agricultural protection and issues relating to international trade in agricultural products.
Mrs. Ruby Randall, Mr. Jorge Shepherd, Mr. Frits Van Beek, Mr. J. R. Rosales, and Ms. Mayra Rebecca Zermeno
The Eastern Caribbean Central Bank is one of just a few regional central banks in the world and the only one where the member countries have pooled all their foreign reserves, the convertability of the common currency is fully self-supported, and the parity of the exchange rate has not changed. This occasional paper reviews recent developments, policy issues, and institutional arrangements in the member countries of the Eastern Caribbean Currency Union, and looks at the regional financial system, its supervision, and the central bank's initiatives to establish a single financial space. The paper includes a large amount of statistical information that is not readily available elsewhere from a single source.
Mr. Joachim Harnack, Mr. Sérgio Pereira. Leite, Ms. Stefania Fabrizio, Ms. Luisa Zanforlin, Mr. Girma Begashaw, and Mr. Anthony J. Pellechio
This chapter explores the key relationships between participatory democracy and successful economic development and reviews the early steps of participatory decision making in Ghana. More generally, it sets the stage for a discussion of Ghana's main achievements and failures since 1992 in raising the standard of living of its population and reducing poverty. The high-profile political process that launched constitutional democracy in the 1990s and generated Ghana—Vision 2020 placed poverty reduction at the center of economic policy. Based on a set of price and unit labor cost indicators, Ghana's competitiveness improved in the early 1990s through 1994. The evidence for 1995–98 is quite strong. The Bank of Ghana is suspected to have used administrative means and moral suasion to influence the exchange rate, resisting the cedi's depreciation. The terms-of-trade shock forced the Bank of Ghana to focus more clearly on maintaining adequate foreign reserves. The depreciation may then have helped make the foreign exchange market more active and the nominal exchange rate more representative of market conditions.
Mrs. Anne C Jansen, Mr. Donald J Mathieson, Mr. Barry J. Eichengreen, Ms. Laura E. Kodres, Mr. Bankim Chadha, and Mr. Sunil Sharma
Hedge funds are collective investment vehicles, often organized as private partnerships and resident offshore for tax and regulatory purposes. Their legal status places few restrictions on their portfolios and transactions, leaving their managers free to use short sales, derivative securities, and leverage to raise returns and cushion risk. This paper considers the role of hedge funds in financial market dynamics, with particular reference to the Asian crisis.
Mr. Mauricio Villafuerte, Mr. Rolando Ossowski, Mr. Theo Thomas, and Mr. Paulo A Medas
Oil-producing countries have benefited from rising oil prices in recent years, with important implications for their external and fiscal balances. The average price of oil tripled from US$18 a barrel in 1999 to US$53 a barrel in 2005, and rose further in 2006–07. The associated increase in oil exports and fiscal oil revenues had major macroeconomic and fiscal implications for oil-producing countries heavily dependent on oil revenues. External current accounts and fiscal balances have strengthened in many oil-producing countries. Moreover, policymakers conducted fiscal policy in a context where markets and observers increasingly came to expect a significant portion of the rise in oil prices to be long-lasting.
In 1971–73 an average of only eight countries a year had Fund-supported adjustment programs. The world economy had just emerged from a decade (1963–72) in which the volume of world trade had grown at an average annual rate of 8½ percent and in which economic growth in industrial and developing countries was close to, or in excess of, 5 percent a year, respectively. Against such a background of very modest Fund program activity and generally favorable economic performance, the global effects of Fund programs were hardly discussed.
Not unpredictably, there is a complex energy bind as we approach the end of the twentieth century. The oil importing industrial countries have anchored their industries, their means of transportation, their home comfort—in short, their whole energy-dependent lifestyle—largely to hydrocarbon fuels. For most of these countries, as well as the majority of the oil importing developing countries, domestic oil (and gas) needs must be supplied partly or largely from abroad. The major international hydrocarbon suppliers, in turn, are limited to a relatively small group of oil exporting developing countries, most of whom are members of the Organization of Petroleum Exporting Countries (OPEC).