China’s gross domestic product (GDP) grew by 14%. Since then, its growth rate has declined by more than half to 6.6% in 2018. The five-year moving average growth rate is at its lowest since reforms began in 1978, although annual growth briefly fell lower during 1989, the year of the Tian An Men incident.
Much recent unrest, such as the ‘yellow-vest’ protests in France and the US ‘Abolish the Super-Rich’ campaign
, is not against inequality per se, but reflects perceptions of changing inequalities. Most citizens resent inequalities when it is not only unacceptably high, but also rising.
Historically, most social security systems have developed in the formal sector of rich economies. However, most of the poor and hungry in the world live in rural areas, surviving in the informal economy.
After years of austerity, a number of Eurozone countries are now considering expansionary
fiscal policies. And in the UK, government spending is set to return to levels last seen in the 1970s
. But austerity abounds elsewhere in the world, including in some of the poorest countries.
Almost nine decades ago, newly elected US President Franklin Roosevelt introduced the New Deal
in 1933 in response to the Great Depression. The New Deal consisted of a number of mutually supportive initiatives, of which the most prominent were: a public works programme financed by budget deficits; a new social contract to improve living standards for all working families, including creation of the US social security system; and financial regulation to protect citizens’ assets and channel financial resources into productive investments.
The International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO), all dominated by rich countries, have long promoted trade liberalization as a ‘win-win
’ solution for “all people—rich and poor—and all countries—developed and developing countries”, arguing that “the gains are large enough to enable compensation to be provided to the losers”.
Industrial policy refers to the promotion of new investments and technology by governments to encourage the growth and development of specific economic sectors. However, scepticism
persists about the feasibility and desirability of using industrial policy, especially of the ability to ‘pick winners’, often accused of leading to ‘propping-up failing industries’.
Public or state development banking will be vital to achieving the Sustainable Development Goals, argues UNCTAD’s Trade and Development Report 2019
Ongoing World Bank led efforts
seek to leverage private finance via shadow banking by using public money to guarantee handsome returns managed by giant investment houses
. Such financialization introduce new costs and risks
to financing investments for sustainable development, decent work and renewable energy.
Headwinds are blowing amid IMF warnings of a “synchronised slowdown” in global economic growth, yet Africa’s investment drive is still gathering pace, supported by intense international competition in development finance.
The OECD Secretariat published its proposed ‘unified approach
’ to reform international tax rules to address tax challenges posed by digitalization on 9 October 2019.
Under current rules, there is little chance of a company being taxed without its physical presence in the country concerned. But digitalization enables many businesses to remotely conduct economic activities affecting a national economy without a direct physical presence.
While this week Ministers of Finance and economists meet in Washington to confront global economic challenges at the IMF and World Bank Annual Meetings
, the majority of the world population lives with austerity cuts and see their living standards deteriorating. World leaders must reverse this trend.
According to official statistics, Luxembourg, a country of 600,000 people, hosts as much foreign direct investment (FDI) as the United States and much more than China. Luxembourg’s $4 trillion in FDI comes out to $6.6 million a person.
A conjuncture of developments, short- and medium-term, have conspired to further slow the world economy. In recent months, the International Monetary Fund (IMF), among others, has acknowledged that global economic prospects are worsening, forcing it to make not one, but at least five consecutive growth forecast revisions, all downward.
Increasing economic inequality is a defining challenge of our time. In recent years, it has triggered analysis and reflection by many scholars, politicians and others on its causes and consequences on economic growth and efficiency, politics and democracy, human rights, individual behaviors, access to health, social cohesion and environmental degradation. The perception that the top 1% of income earners are gaining at the expense of the other 99% has resulted in widespread public debates in many countries on the social and political repercussions of inequality
Rapid financial globalization is due not only to financial innovations, but also to choices made by national policymakers, often with naïve expectations, trusting promoters’ promises of steady net inflows of financial resources.
Large transnational corporations (TNCs) are widely believed to be paying little tax. The ease with which they avoid tax and the declining corporate tax rates over the decades have deprived developing countries of much needed revenues besides undermining public faith in the tax system.
The US-China trade war has flared up again less than two weeks after US President Donald Trump delayed new tariffs of US$160 billion on Chinese imports until December, purportedly to avoid harming the holiday shopping season.
Recently, Christine Lagarde
, outgoing Managing Director of the International Monetary Fund (IMF), argued that developing ‘countries need a seat at the table’ to design rules governing international corporate taxation.
This acknowledges recent IMF findings
that developing countries lose approximately USD200 billion in potential tax revenue yearly, about 1.3 per cent of their GDP, due to companies shifting profits to low-tax locations. Oxfam estimated
in 2018 that extreme poverty could be eradicated for USD107 billion annually, i.e., about half the lost revenue.
According to their own internal evaluations, both the World Bank (WB) and the International Monetary Fund (IMF) have huge credibility deficits due to the policy conditionalities and advice they have dispensed to developing countries in recent decades.
The migrant and refugee crisis has become a serious test for the unity of Europe as a political project. The inflow of destitute migrants and refugees has tested Europe’s political unity to an unprecedented extent. With a long-term solution to the migrant and refugee crisis nowhere in sight, the adverse impact of the current situation has the potential to unfold further and to give rise to a broader crisis with long-term implications, affecting Europe and the MENA region alike.
July 2019 saw the 75th anniversary of the historic conference of 44 countries held at the Bretton Woods (BW) resort in New Hampshire during July 1-22, 1944.
At BW, John Maynard Keynes, representing the UK, and Harry Dexter White, for the USA, both sought a new international monetary system following the Great Depression, which many attributed to the functioning of the gold standard before World War II.