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3351. Occasional Analysis

Publication Date:
10-2008
Content Type:
Journal Article
Journal:
Comparative Connections
Institution:
Center for Strategic and International Studies
Abstract:
With the presidential elections in the U.S. scheduled for Nov. 4, the candidates' views of relations with Asia are of great interest to the foreign policy community in the U.S. and throughout Asia. In an effort to provide some insight into the policies of Sen. John McCain and Sen. Barack Obama, we have surveyed both campaigns' statements to answer a series of questions regarding their Asia policy stances as the basis of this quarter's Occasional Analysis. Overall priorities for East Asia Senator Obama America's future prosperity and security are closely tied to developments in Asia. Our relations with Asia's diverse countries and economies have been stable but stagnant these past few years. Our narrow focus on preventing the spread of weapons of mass destruction and prosecuting a war on terrorism have earned us some cooperation, but little admiration. The war in Iraq has lost us good will among both allies and adversaries and has distracted our attention and policy initiatives from Asia's issues. Our preoccupation with Iraq has given a strategic advantage to China in the region, with as yet uncertain consequences. Barack Obama believes that the U.S. needs to strengthen our alliances and partnerships and engage more broadly in the regional trend toward multilateralism in order to build confidence, maintain regional stability and security, restore our international prestige, and promote trade and good governance in this crucial region.
Topic:
Security and Economics
Political Geography:
United States, America, and Asia

3352. The End of Monetary Dominance? How Crises Can Influence Monetary Policy Decisions and Institutions

Author:
Pierre L. Siklos
Publication Date:
11-2008
Content Type:
Policy Brief
Institution:
Centre for International Governance Innovation
Abstract:
Has the global financial crisis made monetary policy more powerful, or it has exposed its limitations? For the most part, the answer is the former, at least today, but the outlook may not be so rosy. When the former British Prime Minister, Harold Macmillan, was asked what were the greatest challenges he faced, he replied: “Events, my dear boy, events.” We have certainly witnessed in the last year a series of events that are challenging policy makers as well as their beliefs about how monetary policy ought to be conducted in future. Indeed, these same events may come to haunt the monetary authorities, and we may well see a return to a period when monetary policy was subservient to a fiscal policy that steps in, ostensibly to impose order on an apparently unruly private sector. Central banks, among other players, appear to have unwittingly put in place the conditions necessary for what we can now confidently call the perfect storm of 2008. There were several observers who predicted that a train wreck was looming on the horizon. Indeed, perhaps most stunning of all, the Bank for International Settlements (BIS), created from the ashes of World War I and which quickly became the forum for central bank cooperation, a role it continues to fill to this day, had repeatedly warned about the troubles that lay ahead. “…these facts also suggest that the magnitude of the problems yet to be faced could be much greater than many now perceive” (BIS Annual Report, 2008: 9). The failure of central banks to act on these warnings may come back to haunt them in the near future.
Topic:
Economics, International Cooperation, International Trade and Finance, Monetary Policy, and Financial Crisis
Political Geography:
Britain

3353. Anatomy of a Train Wreck: Causes of the Mortgage Meltdown

Author:
Stan J. Liebowitz
Publication Date:
10-2008
Content Type:
Policy Brief
Institution:
Independent Institute
Abstract:
Why did the mortgage market melt down so badly? Why were there so many defaults when the economy was not particularly weak? Why were the securities based upon these mortgages not considered anywhere as risky as they actually turned out to be? This report concludes that, in an attempt to increase home ownership, particularly by minorities and the less affluent, virtually every branch of the government undertook an attack on underwriting standards starting in the early 1990s. Regulators, academic specialists, GSEs, and housing activists universally praised the decline in mortgage-under- writing standards as an “innovation” in mortgage lending. This weakening of underwriting standards succeeded in increasing home ownership and also the price of housing, helping to lead to a housing price bubble. The price bubble, along with relaxed lending standards, allowed speculators to purchase homes without putting their own money at risk. The recent rise in foreclosures is not related empirically to the distinction between subprime and prime loans since both sustained the same percent- age increase of foreclosures and at the same time. Nor is it consistent with the “nasty subprime lender” hypothesis currently considered to be the cause of the mortgage meltdown. Instead, the important factor is the distinction between adjustable-rate and fixed-rate mortgages. This evidence is consistent with speculators turning and running when housing prices stopped rising.
Topic:
Economics, Government, Markets, Financial Crisis, and Minorities
Political Geography:
United States

3354. China's Economic Fluctuations: Implications for its Rural Economy

Author:
Albert Keidel
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Since market reforms began in 1978, China's economy has shown cyclical fluctuations. These cycles of change appear in obvious statistical patterns-faster growth and then slower growth, higher price inflation and then lower inflation, stronger investment flows and then weaker investment-and all are accompanied by other cyclical fluctuations in a range of variables and policy initiatives. Most of these fluctuations tend to move together. Their beauty is that they allow analysis of which fluctuations influence others and, by extension, which policies might make a difference in managing China's economy. In this regard, the cyclical interaction between China's formal urban economy and its rural economy is particularly relevant for the issues facing Chinese policy makers today.
Topic:
Economics, International Trade and Finance, and Governance
Political Geography:
China and Asia

3355. India's Trade Policy Choices

Author:
Sherman Robinson, Sandra Polaski, Scott McDonald, Manoj Panda, and A. Ganesh-Kumar
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
India's economic growth has accelerated in recent years, and its share of world trade has expanded. These are welcome developments for the country and, given India's large share of the world's population, for the global economy. Yet, despite these recent positive trends, India faces daunting challenges and policy decisions if it is to maintain high economic growth rates, employ its burgeoning population, and raise incomes across the full range of households, skill levels, sectors, and regions. India remains the largest reservoir of poverty in the world. Its recent high growth has been driven mainly by its modern services sector, which accounts for only a small proportion of overall employment and household incomes. Its agricultural sector is in a deep crisis, whether measured by slow growth rates, persistent rural poverty, or widespread farmer suicides.
Topic:
Agriculture, Economics, International Trade and Finance, and Treaties and Agreements
Political Geography:
India

3356. U.S.-China Energy Security Cooperation Dialogue

Publication Date:
03-2008
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The 2007 U.S.-China Energy Security Cooperation Dialogue was held in a period when a broad range of activities and policy recommendations have been proposed to address global energy security and environmental issues. The Dialogue identifi ed a number of further steps that China and the United States could cooperatively undertake to accelerate developments.
Topic:
Economics, Energy Policy, Environment, and Bilateral Relations
Political Geography:
United States, China, Asia, and North America

3357. U.S.-China Cooperation on Clean and Efficient Transportation

Publication Date:
05-2008
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Because of their significant contribution to global demand for improved living standards, meaningful actions by the United States and China on transportation and energy will be important in any effort to reduce global consumption of traditional energy sources. Together the United States and China consume 40% of the world's energy and are responsible for 50% of the world's greenhouse gas emissions. Given their economic size and impact on global markets, it is imperative that the U.S. and China join in a mutually beneficial process.
Topic:
Economics, Energy Policy, Environment, and Bilateral Relations
Political Geography:
United States, China, Asia, and North America

3358. Perspectives on Peace and Security in Korea and Northeast Asia

Author:
Patrick Degategno and Joseph Snyder
Publication Date:
03-2008
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
The Atlantic Council of the United States published a report entitled A Framework for Peace and Security in Korea and Northeast Asia in April 2007. The report was the culmination of deliberations of a working group of distinguis hed American scholars and practitioners with a wide range of experience on Korea and Northeast Asia and chaired by Ambassador James Goodby and General Jack Merritt. It laid out a program for resolving the North Korean nuclear issue as part of a comprehensive s ettlement of a range of fundamental security, political and economic issues on the Korean peni nsula. The working group first met in June 2006, shortly before the North Koreans test fire d a series of missiles and about three months prior to the time Pyongyang exploded its firs t, and so far only, nuclear weapon on October 9. At the time the project began, the Six-P arty talks were suspended and prospects for a peaceful solution to the North Korean nuclear issue looked dim.
Topic:
Security, Economics, Nuclear Weapons, and Authoritarianism
Political Geography:
United States, Asia, North Korea, and Korea

3359. Globalization and the Great Divergence: Terms of Trade Booms and Volatility in the Poor Periphery 1782-1913

Author:
Jeffrey G. Williamson
Publication Date:
02-2008
Content Type:
Working Paper
Institution:
Weatherhead Center for International Affairs, Harvard University
Abstract:
W. Arthur Lewis argued that a new international economic order emerged between 1870 and 1913, and that global terms of trade forces produced rising primary product specialization and de-industrialization in the poor periphery. More recently, modern economists argue that volatility reduces growth in the poor periphery. This paper assess these de-industrialization and volatility forces between 1782 and 1913 during the Great Divergence. First, it argues that the new economic order had been firmly established by 1870, and that the transition took place in the century before, not after. Second, based on econometric evidence from 1870-1939, we know that while a terms of trade improvement raised long run growth in the rich core, it did not do so in the poor periphery. Given that the secular terms of trade boom in the poor periphery was much bigger over the century before 1870 than after, it seems plausible to infer that it might help explain the great 19th century divergence between core and periphery. Third, the boom and its de-industrialization impact was only part of the story; growth-reducing terms of trade volatility was the other. Between 1820 and 1870, terms of trade volatility was much greater in the poor periphery than the core. It was still very big after 1870, certainly far bigger than in the core. Based on econometric evidence from 1870-2000, we know that terms of trade volatility lowers long run growth in the poor periphery, and that the negative impact is big. Given that terms of trade volatility in the poor periphery was even bigger during the century before 1870, it seems plausible to infer that it also helps explain the great 19th century divergence between core and periphery.
Topic:
Economics, Globalization, International Trade and Finance, and Poverty
Political Geography:
Global Focus

3360. Globalization and Formal Sector Migration in Brazil (Revised)

Author:
Marc-Andreas Muendler, Jennifer Pamela Poole, and Ernesto Aguayo-Tellez
Publication Date:
03-2008
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Comprehensive linked employer{employee data allow us to study the relationship between domestic formal sector migration in Brazil and globalization. Considerable worker flows in the formal labor market between 1997 and 2001 are directed toward lower income regions|the reverse flows of those often posited for informal labor markets. Estimation of the worker's multi-choice migration problem shows that previously unobserved employer covariates are significant predictors associated with migration flows. These results support the idea that globalization acts on internal migration through job stability at exporting establishments and employment opportunities at locations with a concentration of foreign owned establishments. A 1% increase in exporter employment predicts a 0.3% reduced probability of migration. A 1% increase in the concentration of foreign owned establishments at potential destinations is associated with a 0.2% increase in the migration rate.
Topic:
Economics, Globalization, Markets, Migration, and Labor Issues
Political Geography:
Latin America