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3511. Russia's Shrinking Role in the South

Publication Date:
03-1999
Content Type:
Working Paper
Institution:
EastWest Institute
Abstract:
The perception that the disintegration of the Soviet Union constituted a major challenge to Russia's security is of a political and psychological, rather than an economic nature. The countries of the Caucasus and Central Asia—Georgia, Armenia, Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Kyrgyzstan, and Tajikistan—are neither an irreplaceable resource base for the Russian economy nor the only available market for its non-competitive products. Any efforts to see it otherwise will induce the region to strengthen its economic and military security with the help of outside powers as a buffer against Russia's ambitions for greater control.
Topic:
Security and Economics
Political Geography:
Russia, Europe, Kazakhstan, Asia, Kyrgyzstan, Tajikistan, Uzbekistan, Soviet Union, Armenia, Azerbaijan, Georgia, and Angola

3512. IMF Model and Resource-Abundant Transition Economies: Kazakhstan and Uzbekistan

Author:
Richard M. Auty
Publication Date:
11-1999
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The IMF model of the economic transition stresses the role of macro policy reform. It concludes that rapid reform to a market economy is preferable to slow reform because late reformers experience very steep transition recessions and severe contractions in government revenues. However, the predictive power of the IMF model has weakened through the late-1990s. This is because it under-estimates the role of initial conditions that include the natural resource endowment as well as institutional capital and the legacy of produced capital. This paper demonstrates how the predictive power of the IMF model can be improved by taking account of the impact of natural resource abundance for the transition. Resource abundance can feed corruption and diminish the urgency of reform, thereby intensifying the adverse effect of a retarded transition. It can also amplify the contraction of the non-booming tradeable sector due to Dutch disease effects. These adverse features are likely to be more severe where the resource endowment creates point source socio-economic linkages, as in mining, as opposed to the diffuse linkages associated with crop production by yeoman farmers. The detrimental effects of resource abundance are also likely to be more severe where institutional capital is deficient. Consistent with such a resource-constrained variant of the IMF model; resource-abundant Kazakhstan and Uzbekistan both delayed their reforms and both exhibit high levels of corruption relative to the transition economies as a whole. Also, economic recovery in Kazakhstan is slower than the original IMF model predicts because investment in minerals strengthened the exchange rate and retarded economic diversification. In the case of Uzbekistan, a natural resource endowment that yielded especially buoyant crop revenues (that eased the foreign exchange constraint) helps to explain why the growth collapse is less than the unadjusted IMF model predicts for such a slow reformer. This explanation is still too simple, however. Uzbekistan also benefits from robust social capital and limited obsolete industry, both of which retard the decline in government revenue. Finally, the resource-constrained IMF model suggests that the Uzbek policy of gradual reform represses exports and intensifies economic distortions. This will lock the economy into a staple trap and lead to a growth collapse, as the experience of many resource-abundant developing market economies testifies
Topic:
Emerging Markets, Environment, and International Organization
Political Geography:
Kazakhstan, Asia, Uzbekistan, and Dutch

3513. Wage Reform, Soft Budget Constraints and Competition

Author:
Jian Sun
Publication Date:
02-1999
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Since the beginning of the Chinese economic reforms in 1978, there has been a series of effort to reform the labour compensation practice in state-owned enterprises to strengthen the link between pay and productivity. Despite the reforms, however, rapid increases in wage rates occurred in state-owned enterprises. Moreover, although state-owned enterprises have much lower productivity gains than non-state enterprises, they pay substantially higher wages and have faster wage growth.
Topic:
Economics, Globalization, Industrial Policy, and International Political Economy
Political Geography:
China and Asia

3514. The Asian Currency Crisis: Origins, Lessons and Future Outlook

Author:
Abdur Chowdhury
Publication Date:
02-1999
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
What started in the summer of 1997 as a regional economic and financial crisis in East and Southeast Asia had developed into a global financial crisis within the span of a year. This crisis followed the crisis in the European Monetary System in 1992–3 and the Mexican peso crisis in 1994–5. However, unlike the previous two crises, the scale and depth of the Asian crisis surprised everyone. One obvious reason for this is East and Southeast Asia's track record of economic success. Since the 1960s, no other group of countries in the world has produced more rapid economic growth or such a dramatic reduction in poverty. Given so many years of sustained economic performance the obvious question is: how could events in Asia unfold as they did?
Topic:
Economics and International Political Economy
Political Geography:
Europe, Asia, and Southeast Asia

3515. Will the EU use Northern Dimension to solve its Kaliningrad dilemma?

Author:
Lyndelle Fairlie
Publication Date:
08-1999
Content Type:
Working Paper
Institution:
Danish Institute for International Studies
Abstract:
A Northern Dimension for the European Union is now taking shape. Originally a Finnish initiative, it tries to take a regional view of the Baltic area which includes member states, EU applicants such as Poland and the Baltic states and Russia. The Northern Dimension specifically mentions the Russian oblast of Kaliningrad. There is very little time left to develop an Action Plan which the EU Council can adopt at the December Helsinki summit. This essay addresses the question of whether or not the EU will use Northern Dimension to solve its Kaliningrad dilemma.
Topic:
International Relations, International Organization, and Sovereignty
Political Geography:
Russia, Europe, Eastern Europe, and Asia

3516. U.S. Assistance for Market Reforms: Foreign Aid Failures in Russia and the Former Soviet Bloc

Author:
Janine R. Wedel
Publication Date:
03-1999
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Since the fall of the Berlin Wall in 1989 and the subsequent breakup of the Soviet Union in 1991, the governments of the United States and other Western countries have provided massive aid to promote a transition to the free market in Central and Eastern Europe and the former Soviet Union. But aid for market reforms in the region has been largely ineffective. Whether provided in the form of technical assistance, grants to political groups or nongovernmental organizations, loans and guarantees to the private sector, or direct financial aid to post-communist governments, that aid has been plagued by a number of problems. The failed $22.6 billion bailout of Russia by the International Monetary Fund in July 1998 only confirmed the flawed nature of the aid-for-reform approach.
Topic:
Economics and Emerging Markets
Political Geography:
Russia, United States, Europe, Eastern Europe, Asia, and Soviet Union

3517. Hazards and Precautions: Tales of International Finance

Author:
Gary Clyde Hufbauer and Erika Wada
Publication Date:
09-1999
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In the wake of financial crises in Mexico (1994-95), Asia (1997-98), Russia (1998) and Brazil (1998-99), respected observers have questioned the benefits of wide-open international capital markets (Bhagwati, 1998; Krugman, 1998; Rodrik, 1998; Eichengreen, 1999). Our purpose is to identify true hazards and suggest appropriate precautions.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
Russia, Asia, Brazil, and Mexico

3518. State Power and the Asian Crisis

Author:
Linda Weiss
Publication Date:
11-1999
Content Type:
Working Paper
Institution:
Institute on Globalization and the Human Condition, McMaster University
Abstract:
The Asian financial crisis has re-opened the debate about the role of the state in the region's industrialisation. Just when there seemed to be growing acknowledgment across the economic and political disciplines that certain kinds of state involvement were vital to the rapid upgrading of the Northeast Asian economies and that understanding what made states effective or ineffective was a crucial issue, along came the financial hurricane. Profound disarray of an economic and social nature has been the most immediate and important consequence of this watershed event. Theoretical disarray has followed closely in its path. This paper seeks to inject some theoretical rigour into the discussion of the Asian crisis. State power in the Asian setting - whether and in what way the state's transformative capacity is weak or robust - and how it relates to the impact of international markets is central to the argument that follows.
Topic:
Development, Economics, and Government
Political Geography:
Asia and Northeast Asia

3519. The Case for a Russian Currency Board System

Author:
Steve H. Hanke
Publication Date:
10-1998
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The devaluation of the Russian ruble this year was predictable, especially considering Russia's poor monetary history. State-manipulated money has been a Russian hallmark since the time of Peter the Great and shows that the country's money problems are endemic and do not depend on who controls the central bank. Czarist, Soviet, and post-Soviet governments have used the central bank printing press to finance deficit spending, resulting in high inflation, confiscation of savings, capital controls, or a combination of the three.
Topic:
Economics and International Political Economy
Political Geography:
Russia, Europe, Asia, and Soviet Union

3520. Time to Terminate the ESF and the IMF

Author:
Anna J. Schwartz
Publication Date:
08-1998
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The International Monetary Fund and the U.S. Treasury Department's Exchange Stabilization Fund are undemocratic institutions unaccountable for their actions. Their current functions have little to do with their original missions. The ESF is used by the executive branch to circumvent Congress in the provision of foreign aid. Its foreign exchange interventions have, in any event, always been wasteful and ineffective at controlling the relative price of the U.S. dollar. The IMF has also been used to provide massive bailouts in the cases of Mexico in 1995 and of Asian countries since 1997. Defenders of the IMF as an international lender of last resort are misinformed since the IMF does not and cannot serve that purpose. Both institutions should be abolished, not reformed, because they are not needed to resolve currency crises and they preclude superior solutions.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States, Asia, and Mexico