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Globalization & Sustainable Development Program

February 2013 Newsletter
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GDAE Helps IMF Take “Half Step” on Capital Flows

Kevin P. GallagherThe International Monetary Fund issued new guidelines on the use of capital account regulations, and GDAE’s co-sponsored Task Force on Regulating Capital Flows has continued to track and engage with the process. In a widely syndicated piece for the Project Syndicate, Gallagher called the reforms an important “half step,” important for acknowledging the value of such tools for developing countries to prevent damaging swings in currency values and contagion from international financial markets. His Pardee Policy Brief, “The IMF’s New View on Financial Globalization: A Critical Assessment,” goes into more detail. His Financial Times piece circulated widely, as did a piece on the issue by The Globalist, which appeared in China Daily, Valor Econômico (Brazil), The Financial Express (India). Gallagher also authored a provocative article in Global Policy, Social Costs of Self-Insurance” that shows that the another way to regulate capital flows—by accumulating foreign exchange reserves—can be quite costly for emerging market and developing countries.

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GDAE released new analysis of the incompatibilities between the new recognition of the validity of capital regulations and most U.S. trade agreements, which prohibit them. Gallagher teamed with the co-chair of a Pardee Task Force Leonardo E. Stanley to publish a policy brief, “Global Financial Reform and Trade Rules: The Need for Reconciliation,” in advance of the full Task Force Report, slated for release in March. Gallagher reiterated the contradictions in meetings with congressional leaders, and published his perspective in Al Jazeera, “Trade rules should not constrain fixing global finance.” While GDAE continues its work on Capital Flows and Development, Gallagher has been awarded a grant from the Institute for New Economic Thinking (INET) to collect some of his analysis on capital flows into a book.

Pushing for Progress in Resolving the Food Crisis

Fueling the Food Crisis CoverTimothy A. Wise has been following up on his report of one year ago, “Resolving the Food Crisis,” with a new assessment and new research. He and co-author Sophia Murphy published in Al Jazeera a one-year assessment of progress – and the lack thereof – in addressing the root causes of the food crisis: biofuels expansion, financial speculation, low public food reserves, climate change, and weak investment in smallholder agriculture at a time with foreign investors continue to gobble up land in developing countries. The assessment followed Wise’s earlier analysis in World Politics Review, “Global Food Security in a Volatile World.” He presented his research at the U.N. Committee on World Food Security in October, participating in the institution’s civil society discussions and in an expert panel on food reserves. In November, GDAE hosted U.N. Special Rapporteur on the Right to Food Olivier De Schutter. (Watch his presentation here.)
Mexico Maize CoverIn October, Wise released new studies on two of the drivers of high and volatile food prices. In Mexico, he presented “Achieving Mexico’s Maize Potential,” a comprehensive review, with co-authors Antonio Turrent and Elise Garvey, of Mexico’s potential to reduce its import dependence by investing in smallholders. The paper, which was also released in Spanish by the Woodrow Wilson Center, was widely covered in the Mexican press and in an IPS wire story, “Mexico Could Say Goodbye to Imported Maize.” Wise presented the main findings in a Triple Crisis Blog post. The work is part of Wise’s research on Revaluing Smallholder Farms.

Wise also released the new paper and report, with ActionAid, “Fueling the Food Crisis,” which estimated the seven-year costs to developing countries of U.S.TRNN Fueling the Food Crisis ethanol expansion at more than $9 billion from higher import prices. The report was featured in a New York Times article, “As Biofuel Demand Grows, So Do Guatemala’s Hunger Pangs” and presented in Wise’s own Al Jazeera article and interview on Real News Network.

Major Initiative on China’s Growing Role in Latin America

New Banks Spanish CoverGDAE has launched a new initiative on “China in Latin America: Environmental and Developmental Dimensions,” with a generous grant from the Charles Stewart Mott Foundation. Built on Kevin Gallagher’s longstanding work on China and Latin America and his book The Dragon in the Room, the project will disseminate GDAE research on the issue in Latin America and China and develop further data and analysis, in close collaboration with researchers and non-governmental groups in the region. The initiative already has great momentum. In January, GDAE collaborated with the Mexico-based Center for the Study of China and Mexico (CECHIMEX) to publish an updated and translated Spanish version of “New Banks in Town: Chinese Finance in Latin America.” The report, which finds that China contributes more financial support to Latin America than the World Bank, Inter-American Development Bank, and U.S. Export-Import Bank combined, received mentions from outlets such as the New York Times, the Financial Times, and the Wall Street Journal. The Spanish version was covered in the region, including by Ecuador’s La Hora. Portuguese and Chinese translations of the report are planned for later this year.
On November 5, 2012, GDAE hosted CECHIMEX’s Enrique Dussel Peters, who discussed his new Working Group on Latin America Discussion Paper, “Chinese FDI in Latin America: Does Ownership Matter?” This discussion paper finds that Chinese state involvement in the country’s foreign direct investment has important implications for its impact in the region. In December, the Inter-American Dialogue published Gallagher’s policy brief, “Capitalizing on the China Cycle: Time is Running Out for Latin America.” The same week, Amos Irwin and Gallagher released their co-authored paper, “Chinese Investment in Peru: A Comparative Analysis,” examining environmental and social performance of Chinese and U.S. mining firms in Peru.

Program updates

Timothy A. Wise is coordinating a collaborative research project with Jayati Ghosh of Jawarahal Nehru University and Biswajit Dar of the Delhi-based Research and Information Systems for Development Countries (RIS) on "Food Crisis: Trends and Policy Responses." Wise will write on " Understanding the links between food, fuel, and financial markets." Other contributors include Sophia Murphy and Benoit Daviron.

Kevin P. Gallagher conducted an interview with The Guardian's Larry Eliot just prior to the Presidential election. Watch Mitt Romney's five-point economic plan divides Massachusetts voters. Also read his thoughts on Romney’s Latin American Trade Plan, published by Americas Quartely.

In recent months, the Triple Crisis Blog has published three opinion pieces by Timothy A. Wise on US biofuels policy and its impact on developing countries. Kevin P. Gallagher authored a post entitled “IMF May Be on Collision Course with Trade Policy” and a tribute to Alice Amsden.

March 7th: Leontief Prize to go to Hirschman and Stewart

Albert O. HirschmanGDAE will award the 2013 Leontief Prize to two of the world's leading development economists: Frances Stewart and the late Albert O. Hirschman (pictured at right). We will live stream the lectures by Dr. Stewart and Dr. Jeremy Adelman, Dr. Hirschman’s biographer.  Visit our website to learn more about the recipients and read a collection of tributes to Dr. Hirschman.

Recent Publications:

Resolving the food crisis: The need for decisive action, Timothy A. Wise and Sophia Murphy, Al Jazeera, Jan 30, 2013
¿Un mejor trato? Análisis comparativo de los préstamos chinos en América Latina, Kevin P. Gallagher, Amos Irwin, and Katherine Koleski, Centro de Estudios China-México UNAM, Jan 2013
The IMF’s New View on Financial Globalization: A Critical Assessment, Kevin P. Gallagher, Pardee Center Issues in Brief, No. 26, Dec 2012
Chinese Investment and Sustainable Development in Peru: A Comparative Analysis, Amos Irwin and Kevin P. Gallagher, Working Group Discussion Paper DP34, Dec 2012
Capitalizing on the China Cycle: Time is Running out For Latin America, Kevin P. Gallagher, Inter-American Dialogue Policy Brief, Dec 2012
The Social Cost of Self-Insurance: Financial Crisis, Reserve Accumulation, and Developing, Countries, Kevin P. Gallagher and Elen Shrestha, Global Policy Journal, Nov 2012
Global Food Security in a Volatile World, Timothy A. Wise, World Politics Review, Nov 6, 2012
Chinese FDI in Latin America: Does Ownership Matter? Enrique Dussel Peters. Working Group Discussion Paper DP33, Nov 2012
Achieving Mexico’s Maize Potential, Antonio Turrent Fernández, Timothy A. Wise, and Elise Garvey, GDAE Working Paper 12-03, Oct 2012
Fueling the Food Crisis: The Cost to Developing Countries of US Corn Ethanol Expansion Timothy A. Wise and Marie Brill, ActionAid Policy Report, Oct 2012.
The Cost to Developing Countries of U.S. Corn Ethanol Expansion, Timothy A. Wise, GDAE Working Paper 12-02, Oct 2012
Global Financial Reform and Trade Rules: The Need for Reconciliation, Kevin P. Gallagher and Leonardo E. Stanley, Pardee Center Issues in Brief, No. 24, Sept 2012

Coming Soon:

“Climate Impacts on Agriculture: A Challenge to Complacency?” Frank Ackerman and Elizabeth A. Stanton, GDAE Working Paper
“Capital Account Regulation and the Trading System: A Compatibility Review” Kevin P. Gallagher, Task Force on Regulating Global Capital Flows for Long-Run Development
A database of Chinese Development Bank projects in Latin America, Kevin P. Gallagher, Inter-American Dialogue
“Is there a Chinese Model of Development Finance?” Kevin P. Gallagher, Inter-American Dialogue Policy Brief
 “Can we feed the world in 2050? An assessment of the evidence,” Timothy A. Wise, GDAE Working Paper
Spanish & Chinese translations of “Regulating Global Capital Flows for Development” Task Force on Regulating Global Capital Flows for Long-Run Development
“Understanding the links between food, fuel, and financial markets,” Timothy A. Wise, RIS Report
The Globalization and Sustainable Development Program examines the economic, social and environmental impacts of economic integration in developing countries. The goal of the program is to identify policies and international agreements that promote sustainable development. 
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