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212. Financial Globalization and Economic Policies
- Author:
- Eswar Prasad, Kenneth Rogoff, M. Ayhan Kose, and Shang-Jin Wei
- Publication Date:
- 04-2009
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- We review the large literature on various economic policies that could help developing economies effectively manage the process of financial globalization. Our central findings indicate that policies promoting financial sector development, institutional quality and trade openness appear to help developing countries derive the benefits of globalization. Similarly, sound macroeconomic policies are an important prerequisite for ensuring that financial integration is beneficial. However, our analysis also suggests that the relationship between financial integration and economic policies is a complex one and that there are unavoidable tensions inherent in evaluating the risks and benefits associated with financial globalization. In light of these tensions, structural and macroeconomic policies often need to be tailored to take into account country specific circumstances to improve the risk-benefit tradeoffs of financial integration. Ultimately, it is essential to see financial integration not just as an isolated policy goal but as part of a broader package of reforms and supportive macroeconomic policies.
- Topic:
- Development, Economics, Globalization, and International Trade and Finance
- Political Geography:
- Global Focus
213. Friends or Foes? The Stock Price Impact of Sovereign Wealth Fund Investments and the Price of Keeping Secrets
- Author:
- Jason Kotter and Uger Lel
- Publication Date:
- 08-2008
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- This paper examines the stock price impact of 163 announcements of Sovereign Wealth Fund (SWF) investments. We document an average positive risk-adjusted return of 2.1 percent for target firms during two days surrounding SWF acquisition announcements. The announcement effect is both statistically and economically significant. A multivariate analysis shows that the degree of transparency of SWF activities is an important determinant of the market reaction, and both the SWF and the existing shareholders of the target firm benefit from improved SWF disclosure. In addition, target firms’ profitability, growth, and governance do not change significantly in the three-year period following the SWF investment relative to a control sample. These results are robust to a battery of tests. Overall, our findings suggest that SWF investments convey a positive signal to market participants about the target firm, increased SWF transparency
- Topic:
- International Trade and Finance, Global Markets, Financial Markets, and Investment
- Political Geography:
- Global Focus
214. 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
215. Globalization and Smallholders: The Adoption, Diffusion, and Welfare Impact of Non-traditional Export Crops in Guatemala
- Author:
- Paul Winters, Angeli Kirk, Benjamim Davis, and Calogero Carletto
- Publication Date:
- 02-2008
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- As developing countries continue on the path of economic liberalization, there is a compelling need to ensure that the benefits of globalization reach poor rural communities. Increased commercialization of agriculture and diversification into nontraditional exports (NTXs) is one strategy that has often been advocated as a way for developing countries to use their comparative advantage in lower labor costs and to achieve growth in the agricultural sector. Given the predominantly rural nature of most developing countries and the preponderance of poor people in these areas, high-value agricultural production is considered the ideal mechanism to extend the benefits of globalization directly to the rural poor:1 Allowing poor farmers to shift into the export sector and take advantage of internationally demand driven prices that are higher relative to traditional crops may reduce inequality while fostering overall economic growth (Nissanke and Thorbecke 2007).
- Topic:
- Agriculture, Development, Globalization, International Trade and Finance, and Poverty
- Political Geography:
- Global Focus
216. Reducing Risks from Global Imbalances
- Author:
- Research and Policy Committee of the Committee for Economic Development
- Publication Date:
- 09-2007
- Content Type:
- Policy Brief
- Institution:
- The Conference Board
- Abstract:
- This report traces the evolution of the current large global trade and financial imbalances, examines their sources, and makes recommendations that, if adopted, will help ensure continued growth in the global economy.
- Topic:
- International Trade and Finance, Economy, Global Political Economy, and Risk
- Political Geography:
- Global Focus
217. Public-Private Partnerships for Development: A Handbook for Business
- Author:
- Suezan C. Lee
- Publication Date:
- 07-2006
- Content Type:
- Policy Brief
- Institution:
- The Conference Board
- Abstract:
- CED partnered with the U.S. Agency for International Development (USAID) on this handbook, published in 2006, which is designed to help businesses operating in developing countries understand how to build public-private partnerships that will benefit their host country populations and the participating firms.
- Topic:
- International Trade and Finance, Partnerships, Business, Public Sector, Economic Development, and Private Sector
- Political Geography:
- Global Focus and United States of America
218. On the Influence of World Religions on International Trade
- Author:
- Matthias Helble
- Publication Date:
- 05-2006
- Content Type:
- Journal Article
- Journal:
- Journal of Public and International Affairs (JPIA)
- Institution:
- School of Public and International Affairs (SPIA), Princeton University
- Abstract:
- As the world economy is integrating, trade between countries is growing rapidly. The exchange of goods not only has an economic, but also a cultural dimension. This paper investigates the possible ways that religion infl uences international trade patterns. It studies the view of the fi ve world religions, namely Hinduism, Judaism, Buddhism, Christianity, and Islam, on economic activity, and trade in particular. Analyzing empirically trade fl ows between 151 countries, the paper fi nds an impact of religion on trade. Furthermore, the results indicate that religious openness boosts trade performance of countries. Given these results, the paper derives several policy recommendations.
- Topic:
- International Trade and Finance, Religion, Culture, and Economy
- Political Geography:
- Global Focus
219. Making Trade Work: Straight Talk on Jobs, Trade, and Adjustment
- Author:
- Research and Policy Committee of the Committee for Economic Development
- Publication Date:
- 06-2005
- Content Type:
- Policy Brief
- Institution:
- The Conference Board
- Abstract:
- This report examines the benefits and challenges of developing an effective adjustment policy for workers who lose their jobs because of outsourcing or any other adverse effects of trade. The statement, approved by CED's Research and Policy Committee states, "The most important next step is to recognize that adjustment policy is vital to achieving free trade - which, in turn, is vital to the nation's economic future." The statement concludes that America needs to develop the national will to devise and fund an adjustment policy that will get to "yes" on trade.
- Topic:
- International Trade and Finance, Labor Issues, and Unemployment
- Political Geography:
- Global Focus
220. Promoting U.S. Economic Growth and Security Through Expanding World Trade: A Call for Bold American Leadership
- Author:
- Research and Policy Committee of the Committee for Economic Development
- Publication Date:
- 06-2003
- Content Type:
- Special Report
- Institution:
- The Conference Board
- Abstract:
- This report presents a leadership vision of a strong and open global trading system, and urges the United States and its trading partners to adopt vital policy reforms, including delinking agricultural subsidies from prices and production while opening agricultural markets everywhere, and eliminating all tariffs and non-tariff barriers in both manufacturing and services.
- Topic:
- Security, International Trade and Finance, Leadership, Economy, and Economic Growth
- Political Geography:
- North America, Global Focus, and United States of America