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42. India and APEC: Charting a Path to Membership
- Author:
- Anubhav Gupta
- Publication Date:
- 03-2016
- Content Type:
- Policy Brief
- Institution:
- Asia Society
- Abstract:
- India’s membership in APEC would mitigate two significant problems: 1) India’s relatively poor integration into the global economy; and 2) the emergence of a divisive trade agenda in the Asia-Pacific. This issue brief outlines these challenges and highlights the obstacles and opportunities related to India’s inclusion in APEC. It concludes that this is the right time to start considering India’s membership in the forum and that a strategy is needed to chart a pathway for the country’s eventual accession to APEC.
- Topic:
- International Trade and Finance and Global Political Economy
- Political Geography:
- India
43. Space for Local Content Policies and Strategies
- Author:
- Columbia Centre on Sustainable Investment
- Publication Date:
- 10-2016
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- This paper explores both the role that local content measures can play in advancing sustainable development, and the impact that trade and investment treaties concluded over the past 20 years have had and will continue to have on the ability of governments to employ those tools. Certain local content measures had been restricted under the WTO due to wide agreement by negotiating parties that their costs outweigh their benefits. But the WTO also left a number of local content measures in governments’ policy toolboxes. As is discussed in this paper, however, that is changing, with the range of permissible actions for many countries being significantly smaller than it was even a decade ago. This narrowed policy space, in turn, can limit the steps governments can take to make progress on the universally adopted Sustainable Development Goals.
- Topic:
- International Trade and Finance and International Affairs
- Political Geography:
- Global Focus
44. The Future of Afghanistan-Pakistan Trade Relations
- Author:
- Ishrat Husain and Muhammad Ather Elahi
- Publication Date:
- 08-2015
- Content Type:
- Policy Brief
- Institution:
- United States Institute of Peace
- Abstract:
- Pakistan and Afghanistan are among each other’s largest trading partners. Though an agreement was signed in 2010 to strengthen trade relations and facilitate Afghan transit trade through Pakistan, implementation has been mixed, with many on both sides of the border complaining of continued barriers to exchange. Both nations need to improve trade facilitation through streamlined payments settlement and improved insurance mechanisms, the use of bonded carriers, visa issuance, trade financing, tax collection, and documentation.
- Topic:
- Economics, Foreign Exchange, International Trade and Finance, and Bilateral Relations
- Political Geography:
- Pakistan and Afghanistan
45. What Next for the IMF?
- Author:
- Edwin M. Truman
- Publication Date:
- 01-2015
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- After the Obama administration's four failed attempts to win congressional approval of the 2010 quota and governance reform for the International Monetary Fund (IMF), it is time to recognize that implementation of the agreement may be indefinitely delayed. The international community must therefore prepare for the likelihood of a new world order in which the IMF augments its funding and reforms its governing structure without US participation. This Policy Brief examines four options for the IMF: First, wait for the US Congress to pass the necessary legislation. Second, complete a new, augmented IMF quota and governance package and again wait for the United States to give its formal approval. Third, bypass the US Congress and risk losing the US veto over a few important decisions on the structure of the IMF. Fourth, let the Fund adopt a reform and financing package within a structure that potentially excludes US participation and eliminates the US veto in the new entity.
- Topic:
- Economics, International Trade and Finance, International Monetary Fund, Governance, and Reform
46. Service Sector Reform in China
- Author:
- Ryan Rutkowski
- Publication Date:
- 01-2015
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Faced with slowing economic growth, Chinese policymakers now recognize that the service sector of the economy—transportation, communications, finance, and health care—could spur economic activity and employment. The catch is that China must reform these and other areas to accomplish this goal. Chinese leaders have outlined an ambitious agenda for reform, but myriad vested interests could slow or block their plans. This Policy Brief evaluates the steps taken so far and the difficulties that lie ahead in implementing them. If policymakers fail to reform and open up the service sector, they run the risk of seriously impairing China's growth prospects.
- Topic:
- Economics, International Trade and Finance, Labor Issues, Financial Crisis, and Reform
- Political Geography:
- China
47. How Not to Regulate Insurance Markets: The Risks and Dangers of Solvency II
- Author:
- Avinash D. Persaud
- Publication Date:
- 04-2015
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Solvency II, which the European Parliament adopted in March 2014, codifies and harmonizes insurance regulations in Europe to reduce the risk of an insurer defaulting on its obligations and producing dangerous systemic side effects. The new directive tries to achieve these aims primarily by setting capital requirements for the assets of insurers and pension funds based on the annual volatility of the price of these assets. Persaud argues that these capital requirements will impose an asset allocation on life insurers and pension funds that does not serve the interests of consumers, the financial system, or the economy. The main problem with Solvency II is that the riskiness of the assets of a life insurer or pension fund with liabilities that will not materialize before 10 or sometimes 20 years is not well measured by the amount by which prices may fall during the next year. Solvency II fails to take account of the fact that institutions with different liabilities have different capacities for absorbing different risks and that it is the exploitation of these differences that creates systemic resilience. To correct this problem, Persaud offers an alternative approach that is more attuned to the risk that a pension fund or life insurer would fail to meet its obligations when they come due and less focused on the short-term volatility of asset prices.
- Topic:
- Economics, International Trade and Finance, and Budget
48. : From Rapid Recovery to Slowdown: Why Recent Economic Growth in Latin America Has Been Slow
- Author:
- Jose De Gregorio
- Publication Date:
- 04-2015
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Latin America's recent economic performance has been disappointing. After a very strong recovery from the Great Recession, growth has slowed considerably, and prospects for 2015 are dim. Among the seven largest economies in the region, output is expected to contract in Argentina, Brazil, and Venezuela, and Chile, Colombia, Mexico, and Peru are projected to grow by only about 3 percent. The decline was not caused by external factors but was mostly cyclical in nature and a result of low productivity. Although monetary and fiscal policies may still have a role in supporting demand in some instances, the main problem in the region is not a lack of demand but low productivity growth. Efforts must be made to foster productivity. Institutional weakness must be addressed and inequality reduced if sustainable high growth is to resume.
- Topic:
- Economics, International Trade and Finance, Monetary Policy, and Financial Crisis
- Political Geography:
- Latin America
49. Quantity Theory of Money Redux? Will Inflation Be the Legacy of Quantitative Easing?
- Author:
- William R. Cline
- Publication Date:
- 05-2015
- Content Type:
- Policy Brief
- Abstract:
- Since the onset of the Federal Reserve's unconventional program of large scale asset purchases, known as quantitative easing (QE), some economists and financial practitioners have feared that the consequent buildup of the Fed's balance sheet could lead to a large expansion of the money supply, and that such an increase could cause a sharp rise in inflation. So far fears about induced inflation have not been validated. This Policy Brief examines the basis for the original concerns about inflation in terms of the classic quantity theory of money, which holds that inflation occurs when the money supply expands more rapidly than warranted by increases in real production. The Brief first reviews the US experience and shows that whereas rapid money growth might have been a plausible explanation of inflation in the 1960s through the early 1980s, subsequent data have not supported such an explanation. It then shows that the quantity theory of money has not really been put to the test after the Great Recession, because a sharp increase in banks' excess reserves and corresponding sharp decline in the "money multiplier" has meant that the rise in the Federal Reserve's balance sheet has not translated into increased money available to the public in the usual fashion. The most likely aftermath of quantitative easing remains one of benign price behavior. However, if nascent inflationary conditions materialize, the Federal Reserve will need to manage adroitly the large amounts of banks' excess reserves that have accumulated as a consequence of QE in order to limit inflationary pressures.
- Topic:
- Economics, International Political Economy, International Trade and Finance, and Federal Reserve
- Political Geography:
- United States
50. Too Much Finance, or Statistical Illusion?
- Author:
- William R. Cline
- Publication Date:
- 06-2015
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- For nearly three decades, the dominant view on the role of the financial sector in economic development has been that greater financial depth facilitates faster growth. However, the Great Recession has shaken confidence in that view because of the contributing role of high leverage and such financial innovations as collateralized subprime mortgage-backed assets and derivatives on them. Recent studies from the International Monetary Fund and Bank for International Settlements have argued that "too much finance" reduces growth. In an environment of new doubts about finance following the Great Recession, these studies finding that there can be too much of it seem to have struck a responsive chord. Cline warns that these findings should be viewed with considerable caution. He first shows that correlation without causation could similarly lead to the conclusion that too many doctors spoil growth, for example. He the demonstrates algebraically that if the variable of interest, be it financial depth, doctors, or any other good or service that rises along with per capita income, is incorporated in a quadratic form into a regression of growth on per capita income, there will be a necessary but spurious finding that above a certain point more of the good or service in question causes growth to decline. In some situations, finance can become excessive; the crises of Iceland and Ireland come to mind. But it is highly premature to adopt as a new stylized fact the recent studies' supposed thresholds beyond which more finance reduces growth.
- Topic:
- Economics, International Trade and Finance, International Monetary Fund, and Financial Crisis