Deshpande nurse (eds ) the global economic crisis and the developing world; implications and prospects for recovery and growth (2012)

The Global Economic Crisis and the Developing World The world economy is currently in the throes of a global economic crisis reminiscent of the great depressions of the 1930s and the 1870s As back then, the crisis has exposed the major structural imbalances in financial and credit markets in addition to global trade, forcing many governments, developed and developing, to impose debilitating austerity measures that are exacerbating the structural weaknesses that caused the crisis in the first place This crisis has erupted at a time when the global economy is integrated, intertwined and interdependent as perhaps never before in history Thus, the impact of this crisis which originated in the advanced industrial countries can be felt sharply in the developing world, which is already grappling with its own internal constraints and structural barriers to sustained development Emergent debates about resurgent protectionism, currency wars and alternative reserve currencies suggest that the global economy has entered a phase of heightened geo-­economic and political change which will transform the development “equation” in varied and diverse ways Indeed, the economic and financial crisis is but one element of the global transition, given what is referred to as the “triple crisis” of finance, development and environment with challenges like climate change that underscore the limits of the global economy It is imperative at this time that development economists and policy-­makers should engage with two crucial points: the implications of these changes for the developing world, and the prospects for “development” for the majority of people in the developing world This volume offers historical insights into the origins of the contemporary crisis, as well as detailed analyses of the financial and trade dimensions, and an assessment of the technological and innovation context along with perspectives on the implications for unemployment and gender imbalances The volume also looks at the scenario for big developing countries, with a focus on South Africa, in addition to small developing states, with reference to the Caribbean The volume provides a wide variety of angles and approaches with which the discussion on the global economic crisis and its impact on the developing world can be approached in a methodologically and analytically rigorous manner Ashwini Deshpande is Professor of Economics at the Delhi School of Economics, University of Delhi, India Keith Nurse is Director of the Shridath Ramphal Centre for International Trade Law, Policy and Services at the Cave Hill Campus (Barbados) of the University of the West Indies Routledge studies in development economics   Economic Development in the Middle East Rodney Wilson   Monetary and Financial Policies in Developing Countries Growth and stabilization Akhtar Hossain and Anis Chowdhury   New Directions in Development Economics Growth, environmental concerns and government in the 1990s Edited by Mats Lundahl and Benno J Ndulu   Financial Liberalization and Investment Kanhaya L Gupta and Robert Lensink   Liberalization in the Developing World Institutional and economic changes in Latin America, Africa and Asia Edited by Alex E Fernández Jilberto and André Mommen   Financial Development and Economic Growth Theory and experiences from developing countries Edited by Niels Hermes and Robert Lensink   The South African Economy Macroeconomic prospects for the medium term Finn Tarp and Peter Brixen   Public Sector Pay and Adjustment Lessons from five countries Edited by Christopher Colclough   Europe and Economic Reform in Africa Structural adjustment and economic diplomacy Obed O Mailafia 10 Post-­apartheid Southern Africa Economic challenges and policies for the future Edited by Lennart Petersson 11 Financial Integration and Development Liberalization and reform in sub-­Saharan Africa Ernest Aryeetey and Machiko Nissanke 12 Regionalization and Globalization in the Modern World Economy Perspectives on the Third World and transitional economies Edited by Alex E Fernández Jilberto and André Mommen 13 The African Economy Policy, institutions and the future Steve Kayizzi-­Mugerwa 14 Recovery from Armed Conflict in Developing Countries Edited by Geoff Harris 15 Small Enterprises and Economic Development The dynamics of micro and small enterprises Carl Liedholm and Donald C Mead 16 The World Bank New agendas in a changing world Michelle Miller-­Adams 17 Development Policy in the Twenty-­First Century Beyond the post-­Washington consensus Edited by Ben Fine, Costas Lapavitsas and Jonathan Pincus 20 Contemporary Issues in Development Economics Edited by B.N Ghosh 21 Mexico Beyond NAFTA Edited by Martín Puchet Anyul and Lionello F Punzo 22 Economies in Transition A guide to China, Cuba, Mongolia, North Korea and Vietnam at the turn of the twenty-­first century Ian Jeffries 23 Population, Economic Growth and Agriculture in Less Developed Countries Nadia Cuffaro 24 From Crisis to Growth in Africa? Edited by Mats Lundal 25 The Macroeconomics of Monetary Union An analysis of the CFA franc zone David Fielding 26 Endogenous Development Networking, innovation, institutions and cities Antonio Vasquez-­Barquero 18 State-­Owned Enterprises in the Middle East and North Africa Privatization, performance and reform Edited by Merih Celasun 27 Labour Relations in Development Edited by Alex E Fernández Jilberto and Marieke Riethof 19 Finance and Competitiveness in Developing Countries Edited by José María Fanelli and Rohinton Medhora 28 Globalization, Marginalization and Development Edited by S Mansoob Murshed 29 Programme Aid and Development Beyond conditionality Howard White and Geske Dijkstra 30 Competitiveness Strategy in Developing Countries A manual for policy analysis Edited by Ganeshan Wignaraja 31 The African Manufacturing Firm An analysis based on firm surveys in sub-­Saharan Africa Dipak Mazumdar and Ata Mazaheri 32 Trade Policy, Growth and Poverty in Asian Developing Countries Edited by Kishor Sharma 33 International Competitiveness, Investment and Finance A case study of India Edited by A Ganesh Kumar, Kunal Sen and Rajendra R Vaidya 34 The Pattern of Aid Giving The impact of good governance on development assistance Eric Neumayer 35 New International Poverty Reduction Strategies Edited by Jean-­Pierre Cling, Mireille Razafindrakoto and Franỗois Roubaud 36 Targeting Development Critical perspectives on the millennium development goals Edited by Richard Black and Howard White 37 Essays on Balance of Payments Constrained Growth Theory and evidence Edited by J.S.L McCombie and A.P Thirlwall 38 The Private Sector After Communism New entrepreneurial firms in transition economies Jan Winiecki, Vladimir Benacek and Mihaly Laki 39 Information Technology and Development A new paradigm for delivering the internet to rural areas in developing countries Jeffrey James 40 The Economics of Palestine Economic policy and institutional reform for a viable Palestine state Edited by David Cobham and Nu’man Kanafani 41 Development Dilemmas The methods and political ethics of growth policy Melvin Ayogu and Don Ross 42 Rural Livelihoods and Poverty Reduction Policies Edited by Frank Ellis and H Ade Freeman 43 Beyond Market-­Driven Development Drawing on the experience of Asia and Latin America Edited by Makoto Noguchi and Costas Lapavitsas 44 The Political Economy of Reform Failure Edited by Mats Lundahl and Michael L Wyzan 52 The New Famines Why famines exist in an era of globalization Edited by Stephen Devereux 45 Overcoming Inequality in Latin America Issues and challenges for the twenty-­first century Edited by Ricardo Gottschalk and Patricia Justino 53 Development Ethics at work Explorations – 1960–2002 Denis Goulet 46 Trade, Growth and Inequality in the Era of Globalization Edited by Kishor Sharma and Oliver Morrissey 47 Microfinance Perils and prospects Edited by Jude L Fernando 48 The IMF, World Bank and Policy Reform Edited by Alberto Paloni and Maurizio Zanardi 49 Managing Development Globalization, economic restructuring and social policy Edited by Junji Nakagawa 50 Who Gains from Free Trade? Export-­led growth, inequality and poverty in Latin America Edited by Rob Vos, Enrique Ganuza, Samuel Morley, and Sherman Robinson 51 Evolution of Markets and Institutions A study of an emerging economy Murali Patibandla 54 Law Reform in Developing and Transitional States Edited by Tim Lindsey 55 The Assymetries of Globalization Edited by Pan A Yotopoulos and Donato Romano 56 Ideas, Policies and Economic Development in the Americas Edited by Esteban Pérez-Caldentey and Matias Vernengo 57 European Union Trade Politics and Development Everything but arms unravelled Edited by Gerrit Faber and Jan Orbie 58 Membership Based Organizations of the Poor Edited by Martha Chen, Renana Jhabvala, Ravi Kanbur and Carol Richards 59 The Politics of Aid Selectivity Good governance criteria in World Bank, US and Dutch development assistance Wil Hout 60 Economic Development, Education and Transnational Corporations Mark Hanson 61 Achieving Economic Development in the Era of Globalization Shalendra Sharma 62 Sustainable Development and Free Trade Shawkat Alam 63 The Impact of International Debt Relief Geske Dijkstra 64 Europe’s Troubled Region Economic development, institutional reform and social welfare in the Western Balkans William Bartlett 65 Work, Female Empowerment and Economic Development Sara Horrell, Hazel Johnson and Paul Mosley 66 The Chronically Poor in Rural Bangladesh Livelihood constraints and capabilities Pk Md Motiur Rahman, Noriatsu Matsui and Yukio Ikemoto 67 Public–Private Partnerships in Health Care in India Lessons for developing countries A Venkat Raman and James Warner Björkman 68 Rural Poverty and Income Dynamics in Asia and Africa Edited by Keijiro Otsuka, Jonna P Estudillo and Yasuyuki Sawada 69 Microfinance: A Reader David Hulme and Thankom Arun 70 Aid and International NGOs Dirk-­Jan Koch 71 Development Macroeconomics Essays in memory of Anita Ghatak Edited by Subrata Ghatak and Paul Levine 72 Taxation in a Low Income Economy The case of Mozambique Channing Arndt and Finn Tarp 73 Labour Markets and Economic Development Edited by Ravi Kanbur and Jan Svejnar 74 Economic Transitions to Neoliberalism in Middle-­Income Countries Policy dilemmas, crises, mass resistance Edited by Alfedo Saad-­Filho and Galip L Yalman 75 Latecomer Development Innovation and knowledge for economic growth Banji Oyelaran-­Oyeyinka and Padmashree Gehl Sampath 76 Trade Relations between the EU and Africa Development, challenges and options beyond the Cotonou Agreement Edited by Yenkong Ngangjoh-­Hodu and Francis A S T Matambalya 77 The Comparative Political Economy of Development Africa and South Asia Edited by Barbara Harriss-­White and Judith Heyer 85 Assessing Prospective Trade Policy Methods applied to EU–ACP economic partnership agreements Edited by Oliver Morrissey 78 Credit Cooperatives in India Past, present and future Biswa Swarup Misra 86 Social Protection for Africa’s Children Edited by Sudhanshu Handa, Stephen Devereux and Douglas Webb 79 Development Economics in Action (2nd edition) A study of economic policies in Ghana Tony Killick 80 The Multinational Enterprise in Developing Countries Local versus global logic Edited by Rick Molz, Cătălin Ratiu and Ali Taleb 81 Monetary and Financial Integration in West Africa Temitope W Oshikoya 82 Reform and Development in China What can China offer the developing world? Edited by Ho-­Mou Wu and Yang L Yao 83 Towards New Developmentalism Market as means rather than master Edited by Shahrukh Rafi Khan and Jens Christiansen 84 Culture, Institutions, and Development New insights into an old debate Edited by Jean-­Philippe Platteau and Robert Peccoud 87 Energy, Bio Fuels and Development Comparing Brazil and the United States Edited by Edmund Amann, Werner Baer and Don Coes 88 Value Chains, Social Inclusion and Economic Development Contrasting theories and realities Edited by A.H.J (Bert) Helmsing and Sietze Vellema 89 Market Liberalism, Growth, and Economic Development in Latin America Edited by Gerardo Angeles Castro, Ignacio Perrotini-­Hernández and Humberto Ríos-Bolivar 90 South–South Globalization Challenges and opportunities for development Edited by S Mansoob Murshed, Pedro Goulart and Leandro A Serino 91 Trade Infrastructure and Economic Development Edited by Olu Ajakaiye and T Ademola Oyejide 92 Microcredit and International Development Contexts, achievements and challenges Edited by Farhad Hossain, Christopher Rees and Tonya Knight-­Millar 93 Business Regulation and Non-­State Actors Whose standards? Whose development? Edited by Darryl Reed and Peter Utting and Ananya Mukherjee Reed 94 Public Expenditures for Agricultural and Rural Development in Africa Edited by Tewodaj Mogues and Samuel Benin 95 The Global Economic Crisis and the Developing World Implications and prospects for recovery and growth Edited by Ashwini Deshpande and Keith Nurse The Global Economic Crisis and the Developing World Implications and prospects for recovery and growth Edited by Ashwini Deshpande and Keith Nurse 350   J Jones model for Diaspora engagement, with more potential for a sustained contribution to development India has progressively adopted a more robust engagement with the Diasporas, moving away from a stance of “disapproving indifference” (Newland, 2004) Previously, India’s Diaspora engagement manifested in the links between US and Indian high-­tech firms was more a feature of the support provided by higher eduction institutions and general macroeconomic reforms Private sector initiatives in tandem with government initiatives have succeeded in making a dent in India’s poverty, and, while much work remains, it is important to note that “without the growth generated by India’s Diaspora-­led entry into the global economy (particularly the information economy) it would seem little more than a mirage” (Newland, 2004) In addition to brain circulation (return migration and investment), there is also the potential for Diasporic tourism, given the propensity of Caribbean populations to migrate (see Table 15.1) In fact, heritage tourism is one of the fastest-­ growing niches in the industry For 2004, 85 per cent of the stay-­over visitors to Guyana were Guyanese on short visits from their adopted countries Diasporic tourists are a significant proportion of the consumers of festival tourism This is borne out in the case of Trinidad and Tobago, where as much as 70 per cent of the visitors for the carnival are from the Diaspora (Nurse, 2004) Potential benefits from Diasporic tourism include: diversification beyond traditional tourism target markets; Diasporic tourists investing more in indigenous goods and services; the potential for higher levels of capital to be retained and circulate within the local economy, as compared with other tourism business models including all-­inclusive hotels and cruise ships; increase in trade in services as more small and medium-­sized business are incorporated into the tourism sector The fall-­off in international migration flows, and general economic and employment uncertainty, negatively impact the capacity of a household to mitigate the impact of the crisis via remittances and migration Fortunately, remittances are not the only way for the Diaspora to assist in the development of their home countries There is clearly scope for broader Caribbean Diasporic participation and contribution to both their home and host economies What is important is to recognise the challenges but also the opportunities posed by the global economic crisis, to in effect broaden the Caribbean’s development response towards a strategic approach to engage the Diaspora on a multitude of levels Importantly, there is a need to look beyond remittances and implement programmes to build Diaspora networks in order to benefit more from return migration and Diaspora tourism and investment Notes 1 The Caribbean Community (CARICOM) is made up of several small island developing states of the Caribbean: Antigua and Barbuda, the Bahamas, Barbados, Belize, Crisis response: beyond Caribbean remittances   351 ­ ominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, D St Vincent and the Grenadines, Suriname, and Trinidad and Tobago For a rather detailed study of the Suriname–Netherlands remittance corridor, see the Unger and Siegel (2006) study The Organisation of Eastern Caribbean States is made up of Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines, which are also members of the Caribbean Community (CARICOM), as well as Anguilla Bibliography Agarwal, R and Horowitz, A (2002) ‘Are international remittances altruism or insurance? 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economic development since independence 66–70; investment 104; trade with China 58 African Development Bank (AfDB) 235–6 Agarwal, R 336 Aglietta, M 268 Agreement on Subsidies and Countervailing Measures 30 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) 30 Agreement on Trade-Related Investment Measures (TRIMS) 30 agricultural sector: Africa 63, 65, 66–7; Argentina 138; Brazil 147, 153–62; Britain 25, 26; South Asia 240; SubSaharan Africa 236–7; Turkey 205–6; vulnerability to global demand 53–4, 55–6 Aguirre, D 302 Agunias, D 327 air quality and ethanol production 157–8 Akyüz, Y 40 Amsden, A.H 41 Anglo American Corporation 260 anhydrous ethanol 154, 157 Antonopoulos, R 233, 234, 236 apartheid, South Africa 258, 291 Arbex, M.A 156, 157–8 Arellano, M 85 Argentina: economic expansion (2003–2008) 117–21; future prospects 123–4; impact of crisis 121–3; industrial structure 170–2; positive external shocks and domestic adjustment 133–9; structuralist CGE model 124–32 Arida, P 149 Ariyoshi, A 79 Asia: investment 104; migration 329–30 Asian Financial Crisis (1997) 75, 79, 83, 99, 328 Atkinson, A.B 278 Austen, R 64 austerity measures 4, 6, 50, 57 Australia, trade impacts 246 Bagchi, A.K 27 Bairoch, P 27, 29 Baltagi, B.H 84 Banerji, S 297, 299, 302 Bangladesh, trade impacts 239–40 bankruptcies 149, 185 Barbados Facilitation Unit for Returning Foreign Nationals (FURN) 344 Barbados, migration and remittances 340–2 Başlevent, C 213 Bastos, P 79 Beattie, A 109 Becker, G.S 203 Berges, M 132, 135 Berman, B 63, 65 Bernanke, B.S Berton, H 155 between-groups income inequality 286–7, 288–9 Bhagwati, J 24 Bielschowsky, R 35 Index   355 bilateral trade agreements 26–7, 29 biotechnologies 186, 187 Björklund, A 282 Blecker, R.A 28 Blinder, A.S 282 Blundell, R 83 Bond, S 83, 85 Borio, C 115 Boshoff, W.H 299, 306 Brahmbhatt, M 124 brain drain 328–9, 337, 338, 343–4, 347 Branstad, P 301, 302 Brazil: capital controls 91–2; ethanol and cost-benefit analysis 150–3; ethanol production 153–4; ethanol and missing aspects relating to environment 154–61; industrial structure 170–2; industrial trade balance 179; structural change and productivity 180–1 Breton, R 268 Britain: as first industrializer 25–6; imposition of trade liberalization on colonies 26–7 Brookshire, D.S 151 Brown, L.R 158 Bryceson, D 66 buffer hypothesis, women’s employment 202, 209–15 business response capacity, effect of commodity prices 176 business responses to early warning signs: data 307–8; econometric model 306–7; Jamaica 301–5; study methodology 308–9; research findings and analysis 309–20 Calabi, A 153, 158 Calloway, L.J 297, 298, 301 Canada, migration 328, 329–30, 337, 340, 343–4, 346 Canuto, O 2, 124 capabilities, stickiness in 173–4, 175–7 Capéau, B 278 capital controls: appendices 93–5; Argentina 119; definitions, types and instruments of 80–2; empirical results 85–91; methodological issues 82–5 capital flight 76, 89, 92, 241, 260–1, 273, 274 capital flows: defence of restrictions on 76–80; need for toolkit to manage 92; South Africa 255–6, 264–5; SubSaharan Africa 237–8 capital formation, South Africa 265–8 capital inflow controls 80–2, 92 capital management techniques (CMTs) 78 capital outflow controls 80–2, 92 capital stock changes 2, 267, 272 Cardarelli, R 83 Caribbean: country case studies in migration and remittances 332–42; gendered impact of crisis 241–5; impact of crisis on remittance flows 342–4; investment 104–5; policy recommendations 344–50; scenario for 15–16; trade with China 57–9; trends in migration and remittances 329–32 Carvalho, F.C 77, 78, 82 Casellas, K 132, 135 Catao, L 132 Chang, H.-J 8, 29 Chenery, H.B 32 Chile: capital controls 79; industrial trade balance 179 China: capital controls 79–80; Diaspora strategy 348, 349; inequality 278; GDP growth 345; migration 328, 344; role of government in capability development 38–9; stimulus support 240; trade liberalization 34–7; trade with Latin America and Caribbean countries 57–9 Cimoli, M 168, 179, 188 Clegg, P 244 Clements, B 80 Coelho, B 79 coffee exports 236 Collier, P 68 Colombia, capital controls 80 Colonial Development Act 64 colonialism 26–7, 62–5 commodities, financialization of 102–3 ‘commodity currencies’ 106 commodity prices: core and peripheral economies 55; as disincentive to structural change 175–7; flip side of rises in 178; impact on Africa 66; impact on Argentina 133–6; impact on Sub-Saharan Africa 235–6; negative impacts of falls in 101, 102–3; 104, 106, 121–2; rebound of 116–17, 119, 124, 138, 139; volatility of 190–1 comparative advantage 23, 32, 35, 179, 188–9 competitiveness: effects of firms knee-jerk reactions 302; impact of exchange rate volatility 105–6; Latin American economies 168–9, 174, 175, 176, 179–80, 182, 184, 187; non-price factors 356   Index competitiveness continued 126–8, 132, 135; policy challenges 190–2; price factors 124, 126–8, 133–4; South Asian economies 57–9, 179, 240 consumer demand 28, 51–4, 59, 123 consumption: Argentina 117–18, 123, 126–9, 133, 135, 138–9; South Africa 254, 256–7, 263, 264, 265, 266, 270–1, 273, 274, 278–9; use of remittances 346 contagion 77, 79, 167–8, 244, 274, 303 contingent valuation method (CVM), externalities 151, 152–3 Corazza, R.I 155 Corden, W.M 23 core economies, and economic downturns 51–4, 59 Corn Laws, Britain 25, 26 corporate restructuring, South Africa 258–63 Correa, P 298 cost reduction, businesses 302–3, 305 cost-benefit analysis, ethanol fuel 150–3 ‘COU-Ps-INs’ 41 creative destruction 28, 148–50, 173–5, 186, 187 credit rating agencies 104, 299 crisis management literature 298–9 crisis plans, businesses 301–2, 321 Crotty, J 258, 268, 269 Crowder, M 63 currency crisis (2001), South Africa 255, 265, 272 current account balances 3, 5–6, 78, 86, 87, 100, 103, 104, 135, 256, 340 Curtis, M 29 cut-flower exports Da Silva, J.G 161 Davis, M 70 de-agrarianization, Africa 66–7 de-industrialization: Africa 14, 66; effects of trade liberalization 21, 27, 30–4; Mexico 58–9; South Africa 269–73 Deane, P 26 debt sustainability measures 103–4 Decoster, A 278 Dedeoğlu, S 207 Delbeke, J 48, 49 democratic transition, South Africa 258, 260, 261–2 derivatives market futures contracts, South Africa 273 developed countries, trade policy towards developing countries 26–7, 29–30 development finance, trade as tool for 111 development options, peripheral economies 55–7 development policy implications, trade liberalization 39–42 developmental state 64–5 Di Maio, M 41 Diaspora strategy, Caribbean 347–50 Dikbayir, G 207 direct instruments, capital controls 80–2 ‘discouraged worker’ effect 202, 208, 209, 211, 212, 213, 214 Dobbs, R 105, 106 Docquier, F 329, 337, 338 domestic adjustment, Argentina 133–9 domestic demand 128–9, 133, 179 dotcom bubble 255 downsizing 101, 173–4, 302–3, 305 Duménil, G 268 Dutch disease 76, 117, 119, 135–6, 138, 139 dynamic decomposition, earnings inequality 287–9 earnings inequality and employment: conclusions 289–91; global trends 277–82; methodology 291–2; South Africa 282–9 Economic Commission for Latin America and the Caribbean (ECLAC) 104–5 Economic Commission on Africa 70 economic downturns: analysis of impact on gendered employment patterns 209–15; and peripheral economies 50–4; theoretical background on impact of gendered employment 202–3 economic expansion, Argentina 117–21 economic growth, emerging economies as drivers of 57–9 Economic Partnership Agreements (EPAs) 24, 29–30, 41 economic performance indicators, Jamaica 299–300 economic power, shift in economic recovery, prospects for 2–6 economic upswings and peripheral economies 51–4 education, Caribbean 242–3 Edwards, S 79 efficiency-seeking investment 104–5 emerging economies, as drivers of growth 2–6, 57–9 employment: Argentina 133–4, 138; Caribbean 241–5; gendered structure of Index   357 233–5; Pacific 246–8; South Africa 290; South Asia 238–41; Sub-Saharan Africa 235–8 energy cost, ethanol production 160–2 energy crops versus food crops 158–60 ‘engine of growth’ thesis 49, 51–4, 57–9 environmental aspects, ethanol production: air quality effects 157–8; cost–benefit analysis 150–3; ethanol production as substitute for energy 160–2; food security effects 158–60; water quality effects 154–5; water shortage effects 156–7 Epstein, G.A 78 Eritrea, Diaspora strategy 349 Esaki, H.Y 282 ethanol fuel: cost-benefit analysis 150–3; energy cost of 160–2; energy crops versus food crops 158–60; production of 153–4; production effects on air quality 157–8; production effects on water 154–7 Europe, migration 329–30, 337, 338, 340, 346 European Union (EU), trade policy 29 exchange rate volatility 105–6 exchange rates: Argentina 116, 117, 119, 122, 124, 127–8, 130, 131, 133–7; impact of capital flows 75–91; Jamaica 299; South Africa 265, 274 export demand 117–19, 127, 233 export diversification 24, 58, 100–2, 103, 106, 116–17, 119, 123, 138, 139, 237 export processing zones 32, 35 export projections 103–4 export sectors, Argentina 136–9 export taxes, Argentina 136 export-oriented investment 104–5 Fair Trade League Act (1881) 29 Falcetti, E 132 Farber, S 151 feminisation of labour 202–3, 206, 215, 238–9 Ferraz, J.C 176, 181 Ferreira, L.R 152–3 Fidler, S 106 finance dimension 9–11 financial assets acquisition, South Africa 267–8 financial liberalization, Turkey 201, 205, 215–16 financial markets, influence on nonfinancial corporations 268–9 financial sector: Caribbean 244–5; Jamaica 303–4; South Africa 67, 69, 256–7, 264; Sub-Saharan Africa 237–8 financial stability, trade as tool for 111 financialization: commodities 102–3; South Africa 256–9, 263–73 Fine, B, 258 Finnoff, K 273 fisheries exports 236 ‘flex’ technology 148, 154 food crops versus energy crops 158–60 food prices 2, 101, 232–3, 235, 237, 241, 246, 247, 248 Forbes, K 76, 78, 82, 299, 306 foreign aid 29, 66, 67, 68, 233, 237, 241, 247; see also Official Development Assistance (ODA) foreign direct investment (FDI): Caribbean 331, 333, 338, 339, 340, 341, 342, 344; falls in 233; Latin America 179; trends in 104–5 Freund, B 64, 66 Freund, C 3, 64, 66 Froud, J 269 G20 Summit Declarations 109–10 Gallagher, K.P 37, 38, 58, 79 Galväo, L.E 156–7 Gamberoni, L 110 gendered employment dimension 12–14 gendered employment, Turkey: appendices 217–28; empirical analysis 209–15; structural characteristics of labour market and women’s employment 203–8; theoretical background on impact of recessions 202–3 gendered impacts of crisis: Caribbean 241–5; international trade 232–5; Pacific 246–8; South Asia 238–41; Sub-Saharan Africa 235–8 General Agreement of Tariffs and Trade (GATS) 35 General Agreement on Trade in Services (GATS) 30 Generalized Method of Moments (GMM) 76, 83–7, 89 Gerschenkron, A 28 Ghana, exports 31 Gibson, W 129 Giles, C 111 Gitau, C.W 58 global economy, prospects for 123–4 global political economy, transformations of 49–51 358   Index global production chains 101, 59–60, 109 global trade imbalances Global Value Chain (GVC), Latin American positioning 179–80, 182 gold standard 5–6, 64 Goldstein, A 262 González, M 282 ‘good governance agenda’, Africa 66 Gottschalk, P 281 Gourevitch, P.A 2, government demand, Argentina 136–9 government role, domestic capability development 38–9 Grabel, I 77 Great Depression 278; impact in Africa 62–5 gross domestic profit (GDP): Africa 67–8; Argentina 117–18, 138; Caribbean 345; global shares 2, 123; Latin America 170–1, 178; South Africa 253–4, 255 growth effect, women’s employment 209–10, 212, 213 Guthrie, J 107 Guyana, migration and remittances 333–6 Haiti, migration and remittances 337–8 Hansen, S 58 Heavily Indebted Poor Countries Initiative (HIPC) 103 heavy industrial sectors 233 Heckmann, P 297, 301, 302 Hespanhol, I 156 Higginson, J 63 high-tech sectors: industrial value added 180–3; policies for 191–2 historical perspective, global economic crisis 49–51 history, insights from 7–9 Hopkins, A.G 63, 64, 65 Hopkins, T 65 Horowitz, A 336 human development, Caribbean 327–8 Humphries, J 204 hydrous ethanol 154, 157 impatient capital 269 imperial preference arrangements 64–5 import substitution 22–3, 30, 32 40 import tariffs 23, 25, 26–7, 29, 30, 34, 40, 282 imports: Africa 58, 63; Argentina 117–18, 121, 123, 126, 128, 132; Brazil 158–9, 180–1; Jamaica 303–4, South Africa 256, 274 income inequality: global trends 277–82, research methodology 291–2; South Africa 282–9 incomes: Africa 66; changes in 127–9, 132–7; redistribution of 5; used for debt service 104, 123; see also remittances India: diaspora strategy 348, 349–50; inequality 278; GDP growth 345; migration 328, 344 indirect instruments, capital controls 80–2 Industrial Development Corporation, South Africa 263 industrial policies, need for 189–92 industrial specialization 169–72 industrial structural weaknesses, South Africa 257, 258–63 industrial upgrading, peripheral economies 55–7 industrialization: connection with exchange rate stability 106; core/ peripheral economies 51–4; see also trade liberalization and industrialization infant-industry protection 22–3; late industrializers 27–9; successful industrializers 24–6 innovation dimension 11–12 input rationalization, businesses 306, 310–202 institutional investors, rise of 258–9 interest rates: impact of capital flows 77, 80, 82–91; Jamaica 299, 315, 316, 318; South Africa 255, 265, 274; Turkey 205 International Labor Organization (ILO) 298, 301–3 International Monetary Fund (IMF) 29, 76, 103, 105–6, 108, 111 international monetary system, flaw in 5–6 internationalization, South African corporations 258–63 investment demand 51–4, 108, 135 investment risk 28–9, 31–2, 35 investment: Africa 62; Argentina 117–18, 123, 135, 138–9; Latin America 183–4; re–adaptation of strategies 173–4; South Africa 264, 265–7, 271–2; use of remittances 346; see also foreign direct investment (FDI) IT industry 38–9, 186 Izdeş, Ö 206–7 Jamaica: migration and remittances 338–40, 342–3; responses to early warning signs of crisis 301–5; study of Index   359 factors influencing responses to early warning signs of crisis 306–20 Jamal, V 66 Jha, S 328, 329 Jones, J 347 Kamil, H 80 Kaplinsky, R 58 Kasnakoğlu, Z 207 Katz, J 179 Keen, P.G.W 297, 298, 301 Kenya: colonial economy 63, 64, 65; trade impacts 237 Kirton, C.D 333, 336 knowledge curve 187–8 Kondratieff, N 48, 49, 53 Korea: industrial structure 170–2; trade policy 22 Kotte, D 105 Kregel, J 102–3 Krueger, A.O 23, 24 Krugman, P 8, 47 labour demand 129–30, 210, 240, 281–2, 290–1 labour force participation, Turkey 205–6, 208, 209–15 labour force, Africa 63 labour market structure: and inequality 281–2, 285–9; Turkey 203–8 labour-intensive sectors, industrial value added 180–3 land use conflict, Brazil 158–60 large developing states, scenario for 14–15 Latibeaudiere, D 305 Latin America: effects of financial market conditions 102–3; industrial and technology policies 189–92; investment 104–5; migration 329–30; new productive arrangements 183–5; new technological paradigms 186–9; stylized facts 178–83; trade liberalization 32; trade with China 57–9; unemployment and inequality 291 Lazonick, W 28, 269 learning processes, re-adaptation of 173–5 Least Developed Countries (LDCs): investment 104; production growth 56–7; trade liberalization 32–4 Leo, B 104 Leon-Ledesma, M 127 Lévy, D 268 Lewis, A 49, 51–4, 55–7, 59–6 Lewis-Bynoe, D 245 Li, S 38 light industrial sectors 233 limited liability companies 307, 309–10, 316, 318, 320–1 Little, I.M.D 22 long-wave theories 47–9; macroeconomic impacts 51–4 Lootty, M 298 Loser, C.M 57 low-skilled labour 58, 69, 242, 244, 281–2, 290 low-tech sectors, policies for 191 Ma, G 80 McCauley, R.N 80 Maginot Plan 64 Magud, N 77, 79 Malaysia, capital controls 79 managerial relations adjustments, businesses 306, 310–22 Mandel, E 5, 47–8 Mandelson, P 29 manufacturing value added (MVA) 24, 31–5, 39 Marfouk, A 329, 337, 338 Marjotta-Maistro, M.C 152, 154, 156, 157 market access 29, 41, 109–11, 127–8 market diversification 100–2, 116–17, 123, 138, 306–7, 310–22 market structure and ‘firms’ demography’, Latin America 184–5 market-based hedging instruments 105–6 market-seeking investment 105 Marseille, J 65 Marshall, A 25 Martinez-Alier, J 151, 160–1 medium-tech sectors, policies for 191 Menard, S 308–9 Menendez, A 282 mergers and acquisitions (M&A) 185, 258–63 metropole-colony link 62–5 Mexico: development compared to China 38–9; Diaspora strategy 349; export trade 57–8, 31; trade liberalization 34–7 microcredit, availability of 234 Middle East, migration 240 migrant workers, vulnerability of 233–4 migration-development nexus: country case studies 332–42; impact of crisis on remittance flows 342–4; policy recommendations 344–50; trends in migration and remittances 329–32 migration, Bangladesh 240 360   Index Milkman, R 203 mineral production, Africa 63–4, 67–8, 69, 70 minerals and energy complex (MEC), South Africa 237, 257, 258–63, 269–70, 273–4 Mishra, P 327 Mocan, H.N 282 Moguillansky, G 35 Mohamed, S 265, 273 Mohapatra, S monetary policy 105–6, Argentina 133–9; expansionary policies 38–9, 116, 117; impact of capital flows on autonomy of 77–80, 82–91; Jamaica 299, 304–5, 315 monopoly 28, 50, 149 Montenegro, C 132 Mookherjee, D 287 mortgage lending 100, 254, 257, 263 Morris, M 58 Motta, R 152–3, 159 Mullan, F 337, 338 multi-polarity, shift to 9, 68–9 Multilateral Dent Relief Initiative 103 nanotechnologies 186, 187 national innovation system, China 36, 37 natural resource sector, industrial value added 180–3 natural resource-seeking investment 104 Naude, W 298 neo-colonialism 66 neoliberalism 22–3, 30, 32, 33, 35, 39, 58, 70, 205–6, 255, 257, 274 new firms, barriers to entry 28–9 new technologies, incentives for adoption of 189–92 new technology paradigms, Latin America 186–9 New Zealand, trade impacts 246 Newfarmer, R 110 Newitt, M 65 Newland, K 349, 350 Nguyen, H Nieves, C 344 Nigeria, colonial economy 62–3 Nolan, P 259 non-commercial demand, commodities 102–3 non-financial corporations (NFCs) financialization, South Africa 268–9 non-price factors, industrialization 40–1 non-staff costs, reducing 302, 305, 316 North American Free Trade Agreement (NAFTA) 35 Nurse, K 2, 50, 347, 350 Nyberg, D 103 O’Sullivan, M 269 Oakley, D 104 Ocampo, J.A 172 Official Development Assistance (ODA): Caribbean 331–2, 333, 336, 337, 338, 339, 340, 341, 342, 344 offshore listing, South African corporations 260–1 oil demand 67–8 oil prices 152 Olukoshi, A 298 Onaran, Ö 213 Oreiro, J.L 77, 78, 82 Orhangazi, O 269 Orozco, M 336, 338 Ostry, J.A 139 out-of-crisis roadmap: capability-building and commodity prices 175–7; Latin America facing the crisis 178–83; new productive arrangements 183–5; new technology paradigms 186–9; role of the state 189–92; self-enforcing role of productive structure 169–72; technological learning and re-adaptation 173–5 Özar, Ş 206 Özdemir, A.R 216 Pacific region, gendered impact of crisis 246–8 Palma, G 278 Papua New Guinea, crisis effects 247–8 patenting 188–9 Pereira, R.R 161 Peres, W 169 Perez, C 147, 149, 150 periphery economies: development options 55–7; and economic downturns 51–4; south as new engine of growth 57–9 Perrings, C 63 Philippines, Diaspora strategy 349 Phimister, I 64, 65 Piketty, T 278 Pizarro, J 35, 38 policy space, developing countries 29–30 Porcile, G 168 Post, L 302 poverty, Pacific region 247–8 priced instruments, capital controls 80–2 Index   361 private sector credit extension, South Africa 263, 265–6 privatization 23, 30–1, 205, 237 Proalcool programme, Brazil 153–5, 158–9, 160–1 product diversification 24, 70, 100–2, 116–17, 123, 138, 168–9, 174–6, 176, 178, 189, 190 production capabilities: measures to avoid destruction of 189–92; stickiness in 175–7 production rationalization, businesses 306, 310–22 production strategies, re-adaptation of 173–5 productive arrangements, Latin America 183–5 productive structure: disarticulation of 184–5; re-adaptation of 173–5; selfenforcing role of 169–72 productivity and structural change, Latin America 180–3 Raddatz, C 107 Raghavan, A 297 Ramalho, R 298 Ratha, D 329, 331, 343–4 rationalization, businesses 306–7, 310–22 raw materials demand 51, 119, 124, 178 Razmi, A 28 real economy, network and domino effects 1757 Rebouỗas, A.C 157 Red Queen effect 168, 182 Reinhart, C.M 77, 79 remittances: country case studies 332–42; impact on remittance-receiving countries 233, 234, 237, 240, 242, 244, 342–3; impact on remittance-sending countries 343–4; policy recommendations 344–50; trends in 329–32 research and development (R&D): Caribbean 347; China/Mexico 37, 38–9; Latin America 183–4 reverse migration 240, 328–9, 343–4, 346; economic benefits from 347–50 Rhodesia, colonial economy 63, 64, 65 Rigobon, R 79 Rivera Vargas, M.I 38 Roberts, S 261, 263 Rocha Filho, J.P 152–3 Rodrik, D 41, 106 Rothman, H 153, 155, 161 Roux, A 263 Rubery, J 209, 210 Rustomjee, Z 258 Sadeq, H.T 156 Sagoff, M 151, 152 scale effect, women’s employment 210–11 Schumpeter, J.A 28, 148–50, 186 sectoral change and productivity 180–3 sectoral composition, productive structure 169–72 sectoral dynamics 190–1 sectoral employment, Turkey 206–7 segmentation hypothesis, women’s employment 203, 206–7, 209–15 Senhadji, A 132 Serino, L 119, 126, 128, 135 Serven, L service sectors 70, 126, 233, 241, 243, 272 Shafaeddin, M 25, 26, 28, 29, 30, 31, 32, 33, 34, 35, 37, 38, 40, 41, 42 share effect, women’s employment 209–10, 212, 213, 214–15 shareholder value movement 67, 258–9, 261, 269 Shilaro, P 64 Shorrocks, A 287 Sicsú, J 77, 78, 82 Silva, G.A 155 Silva, M.A.M 160 Simoes, R.A.G 155 skilled labour 242–3, 247, 281–2, 290, 302 skilled migration 328–9, 337, 338, 343–4, 347 Slater, J 106 small and medium-sized enterprises (SMEs): access to credit 185; Jamaica 303, 318 small developing states, scenario for 15–16 Smeeding, T.M 281 Smith, A 25 social safety nets 247–8, 291 sole proprietorships 307, 316, 318, 321 South Africa, unemployment and inequality 280: conclusions 289–91; data 283; decomposition analysis 285–9; earnings inequality 283–5 South Africa: scenario for 14–15; socioeconomic development 68–70 South African economy: colonial period 63–4; economic crisis 269–73; industrial structural weaknesses and corporate restructuring 258–63; financialization 67, 263–73 362   Index South as new engine of growth 57–9 South Asia, gendered impact of crisis 238–41 speculative capital flows 32, 68, 80, 82, 83, 84, 87, 91–2, 119, 187, 190 Spitz, P 159 Spooner, J.G 39 Sri Lanka, trade impacts 241 Stabilization Programmes (SPs) 23, 29 Stacey, K 107 staff relations adjustments, businesses 306, 310–22 Stanford, S 338, 340, 341–2 Stiglitz, J.E 21, 30–1, 99 ‘stimulus’ programmes 233, 234, 238, 240, 320, 321, 344 Stockhammer, E 268–9 Streeten, P.P 41 Structural Adjustment Programmes (SAPs) 23, 29, 203–5 structural change and productivity, Latin America 180–3 structural transformation experiments, Africa 66 structuralist Computable General Equilibrium (CGE) model, Argentina: appendices 140; domestic demand 128–9; external sector 127–8; macroeconomic balances, system constraints and closure rules 130; material balance equation and demand components 126–30; model parameters 130–2; production and labour demand 129–30 Studart, R 109 Sub-Saharan Africa, gendered impact of crisis 235–8 subsistence activities 56, 209, 235, 247 substitution hypothesis, women’s employment 202–3, 209–15 sugarcane production, Brazil 147, 153–62 Syrquin, N 32 Taiwan, Diaspora strategy 349 Tansel, A 206, 216 Tarling, R 209, 210 Taỗi, M 216 Taylor, L 149 technological capabilities, measures to avoid destruction of 189–92 technological capability-building: commodity prices as disincentive to 175–7; Latin America 179–80 technological change, core/peripheral economies 51–7 technological learning and re-adaptation 173–5 technological paradigms, Latin America 186–9 technologies, stickiness in 173–4, 175–7 technology dimension 11–12 technology frontier 173, 174–5, 180, 182, 186, 188, 190 technology gap 28, 54, 192 technology policies, need for 189–92 technology transfer 30, 38–9 technology-intensive sectors, growth elasticity 169–72 Tennant, D 304 textiles exports: Caribbean 242; South Asia 239–40, 241 Thailand, capital controls 79 Tignor, R 49 Tolmasquim, M.T 158 tourism sector: Caribbean 243–4, 331, 332–3, 336, 337, 350; Kenya 237; Pacific region 246–7, 248 trade dependence: Africa 62–5; Jamaica 299, 303, 306, 310–22; peripheral economies 55–7 trade dimensions of crisis impact: access to trade finance 107–9; debt sustainability measures 103–4; financialization and commodities 102–3; foreign investment 104–5: G20 Summit Declarations 109–11: limited diversification of export base and markets 100–2; monetary policy and exchange rate volatility 105–6; overview 9–11; role of trade in impacts of global crisis 100; trade as tool for development finance and financial stability 111 trade finance: access to 107–9, 183, 184–5; G20 commitments on 110–11; Jamaica 304, 306, 310–22 trade imbalances, Latin America 178–9 trade insurance 107 trade integration: Argentina during golden years 117–24; positive external shocks and domestic adjustment in Argentina 133–9; structuralist CGE model 124–32 trade liberalization: effects on competitiveness and growth 182; elements and features of 23; philosophy behind 24 trade liberalization and industrialization: characteristics during recent years 29–30; comparative experience of China and Mexico 34–9; experience of Index   363 successful industrializers 24–6; impact of forced liberalization on colonies 26–7; need for infant-industry support in late industrializers 27–9; policy implications for developing countries 39–42; recent experience 30–4; Turkey 203, 205 trade protection: Africa 64–5; G20 Summit Declaration on 109–10; see also infantindustry protection trade, gender effects of crisis: country studies 235–48; overview 232–5 transhipment industry, Bangladesh 241 transnational corporations, cooperation with Chinese companies 38–9 Turkey, gendered employment: appendices 217–28; empirical analysis 209–15; structural characteristics of labour market and women’s employment 203–8; theoretical background on impact of recessions 202–3 Tzannatos, Z 205 Uganda, trade impacts 236–7 unemployment and inequality: conclusions 289–91; global trends 277–82; research methodology 291–2; South Africa 282–9 unemployment: Africa 238; Argentina 130, 132, 133; global trends 207–8; Jamaica 320–1; and migration 328, 344, 347; Pacific region 247; South Africa 253, 254, 255; Turkey 211–16 urban migration, Brazil 159 US: firm survival 185; institutional investors 258–9; Jamaican trade dependency 299, 303; migration 328, 329–30, 336, 337, 338, 340, 343–4, 346; stimulus policies 234; structural change and productivity 180–2; technological leadership 187; unemployment and inequality 278, 280, 281, 282 van Beusekom, M 65 van Seventer, D 129 Van Wagner, M.J 202 Vandersmissen, M.H 308–9 vinasse disposal 154–5 Vos, R 132 Voyvoda, E 207 Wade, R 30 Wadhwa, V 344 wages: Argentina 128, 132–9; cuts in 299, 305, 318; South Africa 281 Wallerstein, I 5, 48, 51 Walsh, K 38, 39 Washington Consensus 23, 30–1, 68 water quality and ethanol production 154–5 water security and ethanol production 156–7 weight effect, women’s employment 210–11, 212, 213, 214–15 Wheatley, J 106 Williamson, G.J 54 Williamson, J 23 willingness-to-pay approach, externalities 151 willingness to work 208, 211, 213 within-groups income inequality 286–7 women, socio-cultural myths on role of 234 Woo, G 38 workforce, energy cost of 161 World Bank 24, 29, 103, 107, 110 world output 3–4 world trade contraction, impact on Argentina 121–3 world trade expansion, impact on Argentina 136–9 World Trade Organization (WTO) 24, 30, 35, 41–2, 107–8, 109–11; Doha Round 30, 41, 67, 110, 111 Wucker, W 344 Xia, J 38 Yang, J 103 Yang, X 37 Yeldan, E 207 Yifu Lin youth unemployment 247 Zambia, trade impacts 237 Zhong, X 37 ... Edited by Ashwini Deshpande and Keith Nurse The Global Economic Crisis and the Developing World Implications and prospects for recovery and growth Edited by Ashwini Deshpande and Keith Nurse First... for Agricultural and Rural Development in Africa Edited by Tewodaj Mogues and Samuel Benin 95 The Global Economic Crisis and the Developing World Implications and prospects for recovery and growth. . .The Global Economic Crisis and the Developing World The world economy is currently in the throes of a global economic crisis reminiscent of the great depressions of the 1930s and the 1870s