When $262 Billion Is Not Enough: Rethinking Reserve Accumulation in South Korea

In the wake of the 2008 global financial crisis, South Korea was hit hard by a sudden reversal in capital flows, a severe credit crunch and extreme exchange-rate instability. Despite having accumulated large holdings of reserves in a self-help strategy to hedge against such capital account shocks, the government was ultimately forced to abandon its defensive position and ask for external assistance. This article provides a critical examination of the broader forces behind Korea’s reserve accumulation and its problematic consequences. In addition to explaining reserve accumulation as a financially induced phenomenon, the economic costs of reserve hoarding are estimated and its efficacy evaluated in light of the crisis. It is shown that Korea’s reserve accumulation, undertaken as a costly form of self-insurance, was neither sufficient nor efficient in guarding against the volatility of global financial markets. To navigate the pitfalls of financial globalisation more successfully and cost-effectively, Korea needs to go beyond focusing exclusively on the asset side of its vulnerable international liquidity position by blindly hoarding more reserves at ever-escalating costs. It needs to also tackle the liabilities side of the ledger by reducing its heavy exposure to short-term, flight-prone foreign capital.     

俄罗斯卢布汇率安排的经济效应分析

俄罗斯转型时期的宏观经济波动与汇率制度安排之间存在着密切的关系.本文在评述新兴市场经济国家汇率制度选择困境和概述俄罗斯汇率制度演变的基础上,从汇率与通货膨胀、汇率与对外贸易、汇率与资本流入、汇率与外债规模结构变动等方面分析了汇率制度安排及汇率变动的宏观经济效应,并简要总结了俄罗斯的实践对中国的启示.     

BRICS corporates: In collaboration or in competition in Africa? Case studies from the South African mining industry

Framed by the 5th BRICS Summit in South Africa in March 2013, this analysis examines economic ‘South-South’ linkages on a company level. A qualitative case study focuses on a small number of private corporations operating in the South African mining and minerals sector. It looks at their reactions to increasingly competitive markets in the regions of Southern and West Africa, thus on their agency, defined as the ability to act in complex uncertainty. Findings present how the South African cases' engagements with strategically selected partner companies from the other BRICS economies can succeed. This contribution attempts to examine entrepreneurial rationale that can be taken as anecdotal evidence of a new ‘economic diplomacy’ at corporate level. The examples illustrate how agency enables certain adaptations of strategies for creating competitive synergies from collaboration with new actors from the other BRICS economies in Africa.     

South Africa’s Inclusion in BRICS: Challenges and Prospects for Development in Africa

Abstract

The forming of alliances on the international scene has reflected a provisional arrangement in the world economy. Amongst such alliances was the formation of BRICS by the five world economies—Brazil, Russia, India, China, and South Africa into what is commonly known as BRICS. BRICS is considered a joint initiative, aimed at shifting conventional norms in international economic and political cooperation to create a new trans-continental platform for these actors. Each member country in BRICS has, in one way or another, reflected growth either through its economy foreign policy, and developmental pursuit. However, South Africa is portrayed by some researchers as lagging behind, when compared to the other member countries. Hence, this study sought to analyse the potential mediumand long-term implications of South Africa's inclusion in BRICS. The study also aimed to underscore the benefits and risks associated with South Africa's membership in the alliance in the area of development; specifically poverty reduction, foreign policy, trade, and global partnership. The researchers collected secondary data to analytically critique the inclusion of South Africa in the BRICS alliance, its benefits, and shortcomings for development in South Africa, and in Africa as a whole. We argue that as a global player under BRICS, South Africa has opened a new vista of opportunities, including transnational gateways to Brazil, Russia, India, and China, with the attendant inflow of infrastructural and developmental investments, enriching educational exchanges and technology transfers. The article concludes by stressing the need for South Africa and other African countries to formulate policies that will drive meaningful development in their respective countries. The authors recommend that African leaders should come up with innate policies that are Africa-centred, that would incite development internally.     

The emerging role of sovereign wealth fund as an economic growth avenue for Nigeria: lessons from the Singapore experience

In 2011, Nigeria legally established a sovereign wealth fund (SWF) with a view to find a lasting solution to the frequent short-fall of funds needed for key budgetary and infrastructural developments in the country. This is as a result of the volatility in the price of crude oil which is Nigeria’s major source of foreign exchange revenue. This article examines the role that Nigeria’s SWF could play in the economic growth of the country. Importantly, as Nigeria continues to struggle with its first economic recession in decades, the article suggests it needs to adopt lessons from Singapore’s SWF experience.     

Cape Verde and the risks of tourism specialisation: the tourism option for Africa’s small states

ABSTRACT

Tourism is a viable, but risky, option for many small island countries to integrate and compete in the world economy. This article examines tourism in the small island economy of Cape Verde. It assesses the risks to its long term development posed by the industry. The country has one of the fastest growing tourism industries in the world. However, this rapid growth is a dual-edge sword. Tourism-led growth results in real economic gains. However, the type and organisation of Cape Verde’s tourism industry magnifies the country’s already high structural vulnerability. Given its current structure and pace of growth, tourism increases macroeconomic risks and vulnerability. It is reproducing the same monoculture dependency that traditionally hampered development in African economies. The policy lessons are clear. Cape Verde must foster economic diversification while simultaneously engaging in strategies to mitigate the risks that accompany its biggest and fastest growing sector and export.     

One global deal from Paris 2015: Convergence and contestations on the future climate mitigation agenda

This article analyses the 2015 Paris Agreement of the UN Framework Convention on Climate Change, with a focus on mitigation. The history of climate negotiations and the mitigation agenda shows the divide between developed and developing countries, with the latter insisting that the former, having caused the problem, need to do more to reduce carbon emissions to address climate change. However, as some emerging economies had continued to emit more carbon, there were calls to treat these as developed countries, requiring increased mitigation measures. The article examines the record of these emerging economies, and establishes that there was some convergence in Paris, a positive element that resulted in a single global climate treaty. However, the Paris negotiations also witnessed contestations, with the final agreement insufficient to keep global warming within advised limits, and in any case only partly legally binding, leaving its implementation success to good will.     

Main-streaming the climate change and green growth agenda into development visions: A narrative from selected sub-Sahara African countries

Abstract

Primary commodities continue to play a critical role in the economic development of many economies in Africa. However, the climate change phenomenon is threatening the role of these commodities through two routes. First, through its demand for a development trajectory that mitigates and adapts to climate change by following a less primary commodities-intensive development agenda, and second, climate change induced extreme weather events such as floods and drought that threaten the production of some of these commodities, Through a case study of four primary commodities-intense African economies: South Africa, Kenya, Nigeria and Cameroon, this article examines the degree and intensity of the articulation of the climate change and green growth agenda in the policy documents that shape the development agendas of these countries. The findings indicate a paucity of discussions on the green growth agenda in the development visions of all the countries except South Africa. In contrast, there is a general discussion of the challenges that climate change poses to the development efforts and articulation of the need to mitigate and adapt to these challenges. The need for mitigation and adaptation is proactively articulated in the post-2007 development visions of South Africa, Nigeria and Cameroon and retrospectively discussed through complementary policy documents supporting the pre-2007 development vision of Kenya. What remains to be determined, is how these visions will be translated into specific policies and implemented in order to enable these economies to adapt to and mitigate climate change in a manner that allows them to sustainably exploit some of their primary commodities and to compete in a world that in the future will increasingly demand green products and services.     

Jihad: a South African perspective

The India, Brazil and South Africa Dialogue Forum (IBSA) established in 2003 brings together three like-minded, democratic, market economies of multi-cultural and multi-ethnic character, sharing a broadly similar economic, political and development situation. At the time of its formation IBSA was widely regarded as representing a novel form of South-South cooperation, transcending older models rooted in the logic of North-South confrontation in the post-colonial, Cold War world. However, now, as the respective countries prepare for their tenth anniversary summit in India, the forum seems to face a growing sense of irrelevance, perhaps even an existential crisis. There has been a proliferation of other forums—notably BRICS and the G20—which means that IBSA needs to differentiate itself if it is to endure. This paper suggests a common vision for IBSA, based on the concept of international liberalism, implying an open international market, well-regulated capital markets and tailored domestic policies such as social policy, health policy and education policy, may well increase the weight IBSA can gain in different international forums.     

The future of coastal development in the Yellow Sea Rimlands

With its strategic location in East Asia, the Yellow Sea Rim is becoming an important economic region, where the socialist economies of China and North Korea and the market economies of Japan and South Korea interact and exchange for their mutual benefit. In light of the recent rapprochement among Northeast Asian countries, the article describes the emerging pattern of development in the Yellow Sea Rim. It assesses the potential gains of opening up the region by assuming a complete or partial removal of political barriers. Anticipating the future of cooperative regional development in the Yellow Sea Rimlands, the article discusses regional strategies and key issues involved in cooperation, in particular between China and South Korea.     

The Rescaling of the Chinese State and Sino-North Korean Relations: Beyond State-Centrism

While Beijing has repeatedly signed up to multilateral sanctions against North Korea, it is widely regarded as having failed to enforce them. Indeed, China’s deepening economic engagement with the country has led observers to debate the causes of this seemingly duplicitous approach. Constructivist and realist approaches have relied on state-centric frameworks that serve to reduce Sino-North Korean relations to the high politics of Beijing-Pyongyang diplomacy in the context of broader geopolitical dynamics. This article argues that such approaches pay insufficient attention to the profound rescaling of the Chinese state in recent years and the implications this process has for bilateral relations. This article sheds light on how Sino-North Korean relations are being driven by actors at multiple scales and by a multitude of objectives as a result of decentralisation and marketisation alongside increasing geographical unevenness within China and new challenges to continued capital accumulation. North Korea has come to play an increasingly important role in efforts to facilitate economic recovery in the northeastern border regions through serving as spatial fix for Chinese manufacturing capital. These new cross-border flows of capital and labour suggest an emerging pattern of Sino-North Korean relations that is by no means static but in considerable flux.     

Institution Building and Spillovers

This paper investigates the importance of institution building for economic growth in transition economies of Eastern Europe and CIS‐States. Using recent data, it shows that even in a Guardian State, institutions like property rights protection, administration efficiency, and general rule of low matter. They appear to be even more crucial for economic take‐off than standard economic factors like for example macroeconomic policy. Moreover, this paper finds that there are important spillover effects in institution building, and that countries which get one specific institution right, have also better chances to succeed in making other specific institutions work properly.     

Are the BRICS reformers,revolutionaries, or counter-revolutionaries?

This article argues that the five-nation BRICS group has played a significant role in pressing for reforms in the Western-dominated global order, as well as mounting some revolutionary (and as yet unresolved) challenges to that order. However, it also maintains that there is another (underestimated) aspect to the BRICS' role, viz, their conservative or counter-revolutionary challenges to liberal trends towards democracy, human rights and the progressive evolution of international law. It then discusses how ‘the West’ has responded to these pressures from the BRICS, and other rising powers, and points to uncertainties raised by the recent growth of ‘populist’ pressures within the West itself against aspects of the liberal economic, political and cultural order.     

Multilateral resource cooperation among Northeast Asian countries: Energy and mineral joint venture prospects

Northeast Asia is one of the world’s richest regions in energy and mineral resources. The tremendous reserve base is enhancing prospects for multilateral economic cooperation in the region, including the exploration, development, trade, and utilization of hydrocarbons and precious metals. This article examines the emerging opportunities for regional cooperation in resources within Northeast Asia, while also reviewing historical cooperation in the energy and minerals industry. Potential obstacles to multilateral resource cooperation are also identified. The authors conclude that small- to medium-scale joint venture projects involving energy and minerals have a more reasonable chance of being established in Northeast Asia than do mega-projects.     

From the Claw to the Lion: A Critical Look at Capitalist Globalization

ABSTRACT

This article argues that capitalist globalization is largely responsible for creating or intensifying many of our most serious economic and social problems. It first describes the forces that drove core country transnational corporations to create a complex system of cross-border production networks. It then maps the resulting new international division of labor, in which Asian countries, especially China, import primary commodities from Latin American and sub-Saharan African countries to produce exports for core countries, especially the United States. In core countries, globalization has led to the destruction of higher paying jobs, financialization of economic activity, and stagnation. While the new international division of labor has boosted third world rates of growth, especially in Asia, it has also left the third world with unbalanced and inequitable economies. Moreover, contradictions in the globalization process point to the spread of core country stagnation to the third world. Capitalist globalization has increased third world dependence on core country consumption while simultaneously undermining core country purchasing power. The article ends by discussing a process and program of transformation that highlights the feasibility of an alternative to global capitalism as well as the organizational capacities and institutional arrangements that must be developed if we are to realize it.     

OECD and Asia in the globalizing world economy

In the globalizing world economy, the economic performance of Organization for Economic Cooperation and Development (OECD) economies is being increasingly shaped by dynamic and emerging economies in Asia and other areas. This fact makes it a priority for the OECD to chart a path for how countries—both OECD and non‐OECD—can best work together and meet the challenges of globalization, says Kumiharu Shigehara, deputy secretary‐general of the OECD. A primary key to that strategy is for the OECD to expand its dialogue and cooperation with economies from the Asian region, he argues.     

China’s Response to the Ebola Virus Disease in West Africa

This article examines the Chinese response to the Ebola outbreak in West Africa, first surveying Chinese interests in Guinea, Liberia and Sierra Leone. Many Chinese workers have been evacuated and projects postponed. For the first time, China has extended humanitarian aid to countries facing a public health emergency. China is under pressure to ‘do something’ but faces its own developmental challenges as well as problems of logistics. Chinese knowledge of Africa is still relatively weak and uninformed. Although China’s assistance dwarves that from the other BRICS, the Ebola crisis has revealed problems in Sino-African relations, not least the gap between rhetoric and reality.     

National Competitiveness in Comparative Perspective: Evidence from Latin America

The term competitiveness is widely applied as a catch‐all for investor‐friendly policies and institutions. This article argues that sloppy applications of the term ignore the possibilities of policy tradeoffs and varieties of institutional choices. Popular conceptualizations of the term describe three discernible clusters of economic policies and institutions. One cluster captures openness to international trade; a second gauges regulatory impediments to private sector competition; a third refers to public sector investments in human capital, security, and infrastructure. This essay develops three empirical indexes to operationalize these clusters and shows that these concepts are not only theoretically but also empirically distinct. In particular, the correlation between these measures is not especially high in a sample of Latin American countries. The larger economies in the region tend to be more competitive on the regulatory and public goods dimensions but fall well behind smaller economies in terms of external competitiveness, broadly conceived.     

A critique of the ‘Bureaucratic authoritarian state’ thesis: The case of the Philippines

The article reviews characteristic patterns of domestic resource mobilization, investments and foreign capital inflows in developing Asia and identifies the emerging issues in resource mobilization. It finds that high levels of investments and savings have been an important reason that developing Asia has had better growth performance than other regions of the world. The pattern of resource mobilization has been different across countries depending upon their development stage. Low-income countries tend to rely on concessional official sources as their debt-servicing capacity is limited and their domestic resource mobilization capacity is weak, while higher income countries rely on domestic resource mobilization as well as competitive financing from international capital markets and foreign direct investment.

Development challenges in Asia continue to be high in the 1990s and will require substantial resources. The challenges will in principle have to be met by domestic resources, indicating the need for strengthening the resource mobilization effort. However, the role of external resources will remain important because of limited domestic resource mobilization in developing Asia. Potential shortage in the global capital market implies that developing countries will have to improve their investment environment to induce more foreign private capital, including foreign direct investment. The possible shortage also indicates the need to strengthen the role of multilateral financial institutions.     

Russia’s economic policy in 2015–2016: the imperative of structural reform

In the aftermath of the global economic crisis, we have seen uneven development in the leading advanced and emerging economies, new models of economic growth that vary from country to country, uncertain prospects for globalization and challenges of “regional globalization,” looming currency re-configurations, as well as shifting energy price dynamics and their influence on political and economic prospects of particular states. This paper discusses current challenges for social and economic policy in the context of the history of the past 30 years. With reference to Russia, it focuses on a new growth model, structural transformation (including import-substitution issues), economic dynamics, fiscal and monetary concerns, and social issues. It concludes by addressing the priorities of economic policy.