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57382. Can International Capital Standards Strengthen Banks in Emerging Markets?
- Author:
- Liliana Rojas-Suarez
- Publication Date:
- 11-2001
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- Who should determine banks' capital standards: authorities or markets? What is the right definition of core capital: equity only or equity plus subordinated debt? Can the assessment of banks' individual credit risks by external rating agencies be of equal or better quality than the assessments derived from banks' own internal rating systems? These are some of the key financial regulatory issues currently being discussed by analysts in industrial countries, especially in the context of the proposed modification to the Basel Capital Adequacy Accord: Basel II is expected to replace the original 1988 Accord.
- Topic:
- Economics, International Trade and Finance, and Political Economy
57383. Macroeconomic Implications of the New Economy
- Author:
- Martin Neil Baily
- Publication Date:
- 09-2001
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- Together with many policymakers and economists, I see in the 1990s expansion signs that new technologies that had been emerging for some time were finally paying off in stronger economic performance. I will use the expression 'new economy' to describe this period, although I recognize the pitfalls in this name. New economy is probably too broad a term and implies both more change and more permanent change than actually took place. But 'information economy' seems too narrow a term to describe the set of interrelated forces bringing about change in the economy, that include increased globalization, a more intense pressure of competition, the rapid development, adoption and use of information and communications technology (IT) and a favorable economic policy environment.
- Topic:
- Economics, Government, International Trade and Finance, and Political Economy
57384. Finance and Changing US-Japan Relations: Convergence Without Leverage—Until Now
- Author:
- Adam S. Posen
- Publication Date:
- 08-2001
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- In the postwar era, US-Japan economic relations have been characterized by substantial tensions, yet this has not damaged the underlying security relationship or critically harmed the multilateral economic framework. In fact, these two economies have become more integrated over time even as these tensions played out. These tensions, however, have required an enormous expenditure of political capital and officials' time on both sides of the Pacific and have led to foregone opportunities for institution building and policy coordination. They have deepened since Japan “caught up” with the United States around 1980, and Japanese and US firms began increasingly to compete for profits and market share in the same sectors. Moreover, as both the US and Japanese economies continue to mature – both in terms of the age of their populations and their industrial mix – they will likely face even greater tensions between them over allocating the management and costs of industrial adjustment.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- United States, Japan, Israel, and East Asia
57385. Beyond Bipolar: A Three-Dimensional Assessment of Monetary Frameworks
- Author:
- Adam S. Posen and Kenneth N. Kuttner
- Publication Date:
- 07-2001
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- A great deal of attention has been focused recently on the impact of exchange rate regimes, just as previous empirical research examined central bank autonomy and announced targets for domestic monetary policy. To date, however, these three elements of monetary frameworks have been assessed in isolation from one another, and all have been viewed in terms of a unidimensional spectrum of fixity versus flexibility. Using a newly-constructed dataset, this paper jointly analyzes and compares all three elements' effects on inflation and exchange rate behavior. The results show that each of the three elements has independent and distinct effects on nominal outcomes. Key findings include: (1) although hard pegs do tend to reduce inflation and attenuate exchange rate fluctuations within some range, they are clearly characterized by large devaluations; (2) central bank autonomy is associated with a more stable exchange rate and lower inflation; and (3) explicit inflation targeting reduces both inflation and its persistence, consistent with the view that inflation targeting increases flexibility through transparency. These results raise the possibility that a combination of central bank autonomy, inflation targeting, and a free float might offer the same benefits as any intermediate exchange rate regime on its own, without the proclivity to occasional large depreciations.
- Topic:
- Economics, International Trade and Finance, and Political Economy
57386. Rating Banks in Emerging Markets: What Credit Rating Agencies Should Learn From Financial Indicators
- Author:
- Liliana Rojas-Suarez
- Publication Date:
- 05-2001
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- The rating agencies' and bank supervisors' records of prompt identification of banking problems in emerging markets has not been satisfactory. This paper suggests that such deficiencies could be explained by the use of financial indicators that, while appropriate for industrial countries, do not work in emerging markets. Among the conclusions, this paper shows that the most commonly used indicator of banking problems in industrial countries, the capital-to-asset ratio, has performed poorly as an indicator of banking problems in Latin America and East Asia. This is because of (a) severe deficiencies in the accounting and regulatory framework and (b) lack of liquid markets for bank shares, subordinated debt and other bank liabilities and assets needed to validate the “real” worth of a bank as opposed to its accounting value.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- East Asia and Latin America
57387. Unchanging Innovation and Changing Economic Performance in Japan
- Author:
- Adam S. Posen
- Publication Date:
- 05-2001
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- The Toyota Commemorative Museum of Industry and Technology gives its visitors much to ponder. Established at the site in Nagoya where in 1911 Sakichi Toyoda founded his automatic loom factory (the basis of the family fortune, which later funded his son Kiichiro's development of automobile production), the museum was opened on June 11, 1994, the 100th anniversary of Toyoda's birth. It is a popular stop on field trips for Japanese schoolchildren, who are required to study in the 3rd grade the automobile industry. The messages, which Toyota wishes to instill in its young visitors, are the importance of “making things” and of “creativity and research.” And confronting all museum visitors upon entry, having central place in the vast and largely empty first room of the exhibits, is Sakichi Toyoda's one-of-a-kind vertical circular loom.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- Japan, Israel, and East Asia
57388. IMF Structural Conditionality: How Much Is Too Much?
- Author:
- Morris Goldstein
- Publication Date:
- 04-2001
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- “...detailed conditionality (often including dozens of conditions) has burdened IMF programs in recent years and made such programs unwieldy, highly conflictive, time consuming to negotiate, and often ineffectual.” “The IMF should cease lending to countries for long-term development assistance (as in sub-Saharan Africa) and for long-term structural transformation (as in post-Communist transition economies)...The current practice of extending long-term loans in exchange for member countries' agreeing to conditions set by the IMF should end.”
- Topic:
- Economics, International Organization, and International Trade and Finance
- Political Geography:
- Africa
57389. Foreign Direct Investment in China: Effects on Growth and Economic Performance
- Author:
- Edward M. Graham and Erika Wada
- Publication Date:
- 04-2001
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- By almost all accounts, foreign direct investment (FDI) in China has been one of the major success stories of the past 10 years. Starting from a base of less than $19 billion in 1990, the stock of FDI in China rose to over $300 billion at the end of 1999. Ranked by the stock of inward FDI, China thus has become the leader among all developing nations and second among the APEC nations (only the United States holds a larger stock of inward FDI). China's FDI consists largely of greenfield investment, while inward FDI in the United States by contrast has been generated more by takeover of existing enterprises than by new establishment, a point developed later in this paper. The majority of FDI in China has originated from elsewhere in developing Asia (i.e., not including Japan). Hong Kong, now a largely self-governing “special autonomous region” of China itself, has been the largest source of record. The dominance of Hong Kong, however, is somewhat illusory in that much FDI nominally from Hong Kong in reality is from elsewhere. Some of what is listed as Hong Kong-source FDI in China is, in fact, investment by domestic Chinese that is “round-tripped” through Hong Kong. Other FDI in China listed as Hong Kong in origin is in reality from various western nations and Taiwan that is placed into China via Hong Kong intermediaries. Alas, no published records exist to indicate exactly how much FDI in China that is nominally from Hong Kong is in fact attributable to other nations.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- United States, Japan, China, Israel, East Asia, Asia, and Hong Kong
57390. Subsidies, Market Closure, Cross-Border Investment, and Effects on Competition: The Case of FDI in the Telecommunications Sector
- Author:
- Edward M. Graham
- Publication Date:
- 02-2001
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- Telecommunications long was a sector where sellers of services operated in protected local markets, where law and government regulation created and enforced barriers to entry, especially by foreign firms. In many nations, in fact, the provision of telecommunications services was reserved for state-owned monopoly suppliers. During the late 1980s and through the 1990s, however, many of these barriers have been removed while formerly state-owned firms have been partially or wholly privatized. This has in turn engendered some cross entry by telecom service providers; firms that once were purely domestic in the scope of their operations thus have become multinational.
- Topic:
- Economics, Government, Political Economy, and Science and Technology
57391. Price Level Convergence and Inflation in Europe
- Author:
- Gary Clyde Hufbauer, Erika Wada, and John H. Rogers
- Publication Date:
- 01-2001
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- Consumer price inflation in the euro area declined steadily during most of the 1990s. However, in the last two years, both headline and core inflation have risen throughout the area, and sizable cross-country differences in inflation have re-emerged. This is illustrated by Figure 1, which shows the headline consumer price inflation rate for the euro area as a whole and for select member countries. As of October 2000, all euro area countries had headline inflation rates above the European Central Bank's 2 percent medium-term ceiling, with rates ranging from 2.1 percent in France and Austria to 6 percent in Ireland. In Greece, which will join the euro area on 1 January 2001, inflation was 3.8 percent.
- Topic:
- Economics and Political Economy
- Political Geography:
- Europe, Greece, France, and Austria
57392. The Bulgarian Defense Industry
- Author:
- Curtis M. Coward and Jeffrey P. Bialos
- Publication Date:
- 07-2001
- Content Type:
- Policy Brief
- Institution:
- Atlantic Council
- Abstract:
- This Report identifies strategic options available to the Bulgarian government and its defense industry, as well as the United States and its NATO partners, for transforming and repositioning the industry for the 21st century and facilitating its integration into the NATO and European Union industrial base. Since other Partnership for Peace (PfP) countries that are aspirants to NATO membership face similar difficulties concerning their defense industries, many of the recommendations herein apply to these countries as well. The report is based on numerous interviews with officials of government entities, private sector firms, and nongovernmental organizations and a review of pertinent governmental and private reports and original documents. A number of the members of the Atlantic Council's working group visited Bulgaria and several of its defense firms in April 2001. Given limitations of time and access to information, the report does not, however, attempt to set forth a thorough review of each firm in the Bulgarian industry.
- Topic:
- Security and Foreign Policy
- Political Geography:
- United States and Eastern Europe
57393. Thinking Beyond the Stalemate in U.S. - Iranian Relations, Volume I - Policy Review
- Author:
- Brent Scowcroft, C. Richard Nelson, Lee H. Hamilton, and James Shlesinger
- Publication Date:
- 05-2001
- Content Type:
- Policy Brief
- Institution:
- Atlantic Council
- Abstract:
- The current stalemate between the United States and Iran, while emotionally satisfying to many Americans, does not serve overall U.S. interests well. It hinders the achievement of several key U.S. geopolitical interests, especially over the longer term. These interests include, but are not limited to, regional stability, energy security, and the broader and evolving geopolitical relationships between the United States and China and Russia in the Persian Gulf and Caspian basin. Furthermore, the leading industrial countries are moving to improve relations with Iran.
- Topic:
- International Relations and Foreign Policy
- Political Geography:
- Russia, United States, China, and Middle East
57394. Permanent Alliance? NATO's Prague Summit and Beyond
- Author:
- C. Richard Nelson, Chas W. Freeman Jr., Wesley K. Clark, Max Cleland, Gordon Smith, and Robert L. Hutchings
- Publication Date:
- 05-2001
- Content Type:
- Policy Brief
- Institution:
- Atlantic Council
- Abstract:
- With U.S. leadership, the Alliance has undertaken an impressive transformation over the past decade: from the July 1990 London Summit, which heralded a “Europe whole and free,” to the April 1999 Washington Summit, which welcomed three former Warsaw Pact members as new allies, even as NATO forces were engaged in combat for the first time. But the Alliance has not yet realized its full potential as an institution embracing all democratic nations of Europe dedicated to collective defense and embodying the interests and values of the transatlantic community. Moreover, the allies still confront important challenges to their shared goal of bringing lasting security to the European continent as a whole, as well as to the overall vitality of the transatlantic relationship.
- Topic:
- Security, NATO, and Economics
- Political Geography:
- United States, Europe, and London
57395. Changing Terms of Trade: Managing the New Transatlantic Economy
- Author:
- David L. Aaron and Donald L. Guertin
- Publication Date:
- 04-2001
- Content Type:
- Policy Brief
- Institution:
- Atlantic Council
- Abstract:
- The economic relationship between the United States and the European Union (EU) is in the midst of a significant transition. In the past, the dominant element of that relationship was trade. This was only natural, given their large share of the global trading system: the United States generates 19 percent of world trade, and the European Union 20 percent. Moreover, the United States is the EU's largest trading partner, while the EU is the single largest importer into the United States and the second largest market for U.S. exports. But in recent years, several new elements have become more prominent in the transatlantic economic relationship, bringing with them both challenges and opportunities.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- United States and Europe
57396. Governance and Politics of the Internet Economy–Historical Transformation or Ordinary Politics with a New Vocabulary?
- Author:
- Steven Weber and John Zysman
- Publication Date:
- 08-2001
- Content Type:
- Working Paper
- Institution:
- Berkeley Roundtable on the International Economy
- Abstract:
- Driven by two fundamental processes, rapid technological change as well as social innovation and reorganization, a new digital economy, the E-conomy, is emerging. Rather than merely adding an Internet sector to the economy, the E-conomy has brought about tools for thought, tools that transform every sector of the economy by amplifying brainpower the way steam engines amplified muscle power during the Industrial Revolution. For analytic purposes, the rise of the E-conomy can be told as a story composed of 1) networks and tools, 2) e-business and e-society, 3) the productivity dilemma resolved, and 4) governance and politics. In the short run, the transformative processes unleashed by the E-conomy are likely to lead to new bargains among existing coalitions and interest groups. In the long run, the changes underway promise to fundamentally alter the political sociology of vast communities, give rise to new interests and coalitions, and transform the institutional foundation of social, economic and political life.
- Topic:
- Economics, Government, Political Economy, Politics, and Science and Technology
57397. The Growth and Development of the Internet in the United States
- Author:
- Martin Kenney
- Publication Date:
- 06-2001
- Content Type:
- Working Paper
- Institution:
- Berkeley Roundtable on the International Economy
- Abstract:
- Rarely does a new technology emerge that galvanizes a dramatic rethinking of the nature of commerce. The Internet is such a technology. At this early stage, it is difficult to appreciate fully the importance of the Internet, but some speculate it might be as momentous as the arrival of the telegraph (Cohen et al. 2000; Standage 1999). Radically new communication technologies such as the Internet have multiple applications and often become ubiquitous. As such, the adoption, diffusion, and development of this new technology provide an especially penetrating view of how different national innovation systems have responded to and shaped the commercial possibilities inherent in the Internet. Of course, such an assessment for an economy as large as that of the U. S. is difficult. It is further complicated by the peculiar way in which communications technologies permeate and facilitate connections and relationships. Often the action of such technologies is imperceptible to most of the actors involved and even to aggregate statistics; e. g., better information transfer between customers and suppliers is not manifested in the finished good, though it is embodied in the good in terms of lower cost and/ or higher quality. Given the diffuse nature and the speed of the Internet's evolution, any analysis can only be tentative.
- Topic:
- International Political Economy, International Trade and Finance, and Science and Technology
- Political Geography:
- United States
57398. The Internet and E-commerce Development in Mexico
- Author:
- Martin Kenney, James Curry, and Oscar Contreras
- Publication Date:
- 05-2001
- Content Type:
- Working Paper
- Institution:
- Berkeley Roundtable on the International Economy
- Abstract:
- The Internet is by all accounts one of the most important innovations of the late twentieth century. As yet the Internet's impact on the economies of developed countries is not obvious, and the economic implications for developing countries are even more unclear. Already much has been written about a supposed "digital divide" within nations and between nations, but no one has a clear understanding of the exact dimensions or implications of this divide. This paper does not take any position on whether Mexico is suffering from a digital divide or is likely to do so in the future; rather, it focuses on the recent rise of Internet sites and e-commerce in Mexico.
- Topic:
- International Political Economy, International Trade and Finance, and Science and Technology
- Political Geography:
- Mexico
57399. Creating an Environment: Developing Venture Capital in India
- Author:
- Rafiq Dossani and Martin Kenney
- Publication Date:
- 04-2001
- Content Type:
- Working Paper
- Institution:
- Berkeley Roundtable on the International Economy
- Abstract:
- In the last decade, one of the most admired institutions among industrialists and economic policy makers around the world has been the U. S. venture capital industry. A recent OECD (2000) report identified venture capital as a critical component for the success of entrepreneurial high-technology firms and recommended that all nations consider strategies for encouraging the availability of venture capital. With such admiration and encouragement from prestigious international organizations has come various attempts to create an indigenous venture capital industry. This article examines the efforts to create a venture capital industry in India.
- Topic:
- International Political Economy, International Trade and Finance, and Science and Technology
- Political Geography:
- United States and India
57400. The Role of the State in the Labour Market: Its Impact on Employment and Wages In Portugal as Compared with Spain
- Author:
- José Da Silva Lopes
- Publication Date:
- 11-2001
- Content Type:
- Working Paper
- Institution:
- Minda de Gunzburg Center for European Studies, Harvard University
- Abstract:
- The role of the State in the economy and in the social arena was deeply transformed in the second half of the 1970s, on account of the change of the political regime. The integration into the European Union since 1985 has brought new radical changes in that role. The paper describes the most important of those changes, putting a special emphasis on social policies and on the labour market, and on the challenges that have to be faced because of European Monetary Union.
- Topic:
- Government and International Trade and Finance
- Political Geography:
- Europe