Unanswered Questions on Financialisation in Developing Economies

April 5, 2018April 4, 2018 Carolina Alves2 Comments

The discussions of the processes behind the growing importance of finance, financial transactions and financial motives, as well as the sustainability of the financial systems, have been located in the critical political economy debate of financialisation and neoliberalism (Crotty, 2003; Epstein, 2005; Fine, 2013; Lapavitsas, 2013; Palley, 2016; Sawyer, 2013; Stockhammer, 2004).

The analysis of financialisation in developing and emerging economies (DEEs) is relatively novel (Bonizzi, 2013). It is rooted in earlier discussions about the risks of financial globalisation and liberalisation (Akyuz & Boratav, 2005; Barbosa-Filho, 2005; Crotty & Lee, 2005; Frenkel & Rapetti, 2009; Grabel, 2003; O’Connell, 2005; Palma, 1998; Taylor, 1998), including the Latin American Structuralist literature on the hegemonic role of the US dollar and its financial and monetary implications for DEEs (Belluzzo, 1997; Braga, 1997; Fiori, 1997; Miranda, 1997; Tavares, 1997); the debate on capital account liberalisation and capital market integration (Cohen, 1996; Rodrik, 1998; Stiglitz & Ocampo, 2008; Strange, 1994); and the Minsky-inspired currency and boom bust dynamics of financial crisis in developing economies (Arestis & Glickman, 2002; de Paula & Alves, 2000; Dymski, 1999; Kregel, 1998; Schroeder, 2002).Read More »

Market Forecasting: A Sensitive Practice at the Heart of Neoliberal Capitalism

March 30, 2018March 29, 2018 stefanleinsLeave a comment

This article was originally posted on The Economic Sociology and Political Economy community blog.

Since the emergence of modern financial markets, financial analysts have played a critical role in producing visions of “the economy” and its future development. As experts, they analyze market developments and predict future scenarios that enable other financial market participants to speculate on the rise or fall of stock prices, the success or failure of particular investment products, and the growth or decline of entire national economies. The substance of the analysts’ valuation and forecasting practices is, however, heavily disputed among economists. In neoclassical economic theory, the assumption that markets are informationally efficient has challenged the legitimacy of the work of financial analysts since the establishment of the efficient market hypothesis as a central paradigm in the mid 1960s. Alternative schools of thoughts – such as new institutional or behavioral economics – have criticized this paradigm. However, they have also argued that the degree of uncertainty, which is inherent to financial markets, makes prediction impossible.Read More »

How We Learned Not to Say No to Gold… In International Reserves

March 12, 2018March 13, 2018 Aleksandr V. GevorkyanLeave a comment

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By Aleksandr V. Gevorkyan (St. John’s University) and Tarron Khemraj (New College of Florida)

In May 2016, economist Kenneth Rogoff argued that central banks in emerging markets should add gold to their reserves. Rogoff stated “that a shift in emerging markets toward accumulating gold would help the international financial system function more smoothly and benefit everyone.” Despite initial disagreement, we find there may actually be some justification for this view in a recent paper coming out in Emerging Markets Finance and Trade.Read More »

Pitfalls of the Developmental State: The Fate of the Sudanese Economic Model

February 26, 2018February 26, 2018 tinashenyamundaLeave a comment

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I have lately been grappling with the question of how African states came into being, not just as political, but especially economic territorial units. Connected to this are questions of how experts, especially economists came to influence and account for what became national economies. At the center of the state, economy and society are critical question of development and welfare. How did independent African countries make sense of their inheritance and what mechanisms did they deploy to transform themselves into coherent nations of multiple but entangled identities with disparate circumstance but common material goals united by the logic of a national economy? As I grappled with these issues, a great new monograph informed by an impressive historiography has arrived. The author grounds his work in an archivally based history of the transformation of the Sudan into an economic unit between the 1940s and the 1960s. Alden Young’s new book: Transforming the Sudan: Decolonization, Economic Development, and State Formation (Cambridge: Cambridge University Press, 2017) is centred on addressing these question using the history of a territory that transformed from being an Anglo-Egyptian Sudan condominium into the independent state of Sudan.Read More »

From Addis to Davos: International Development Finance gets Conspicuous

February 11, 2018February 11, 2018 Rose WordenLeave a comment

The theme of the 2018 World Economic Forum was, “Creating a Shared Future in a Fractured World.” Its six richest attendees each boasted an estimated net worth of $5.2 billion or more, or the same amount as the total burden of Somalia’s outstanding debt, which, amid the splendor of the event, Somali Prime Minister Hassan Ali Khayre met with IMF Managing Director Christine Lagarde to discuss clearing. In this era of extreme global inequality, it is estimated that the United Nations agenda of seventeen sustainable development goals (SDGs) known as Agenda 2030, will require 4.5 trillion dollars of investment per year to be realized, or more than twice the amount expected to be available from traditional official development assistance (ODA) alone. Due to the increasing concentration of private wealth in the global economy, discussions around development finance have focused on private sector engagement, rather than more traditional, ODA from predominantly Western donor governments and multilateral institutions.Read More »

Not just r > g but r + q >> g: Piketty meets Ricardo in the long run of Indian history

February 2, 2018 Rishabh Kumar3 Comments

Wealth-income ratios are rising everywhere – they are not cyclical but rather unambiguously upward trending for the past three decades. Put simply, the accumulation of wealth is outpacing economic growth. This is true in America, Europe and Japan (Piketty and Zucman 2014), as well as China and Russia (Novokmet, Zucman & Yang 2018). In recent research (Kumar 2018), I found this same trend to persist in the world’s largest democracy – Indian wealth-income ratios have been rising since the 1970s. Why are these trends so similar in countries with such deep structural differences and distinct economic trajectories? By themselves, high wealth-income ratios are not necessarily a social dilemma – they may imply more wealth for everyone. But in general, there is a tendency for wealth to be more concentrated than income. As a result, a rise in wealth over income tends to increase wealth inequality. This is certainly the situation in most economies today. Thus, these trends and the mechanisms behind them need to be understood with careful attention.

Consuming development: Capitalism, economic growth and everyday life

January 11, 2018January 11, 2018 Arve Hansen2 Comments

With the consumption patterns in rich countries being more unsustainable than ever and the consumption of the ‘emerging middle classes’ increasing rapidly, it is about time ‘consumption and development’ becomes a field of study. Such a field would necessarily be interdisciplinary and combine analyses of everyday life and the structures of capitalist development. A useful starting point could be found at the intersection of theories of practice and systems of provision.Read More »

Developing Economics

A Critical Perspective On Development Economics