Does a global growth target make sense for the G20?

G20 trade ministers from industrialised and emerging economies gather for a one-day meeting in Sydney, Australia, 19 July 2014. (Photo: AAP)

Author: David Vines, University of Oxford

The global recovery is strengthening but remains weak. A global growth target, pursued by the G20, could significantly strengthen this recovery process. But such a macroeconomic target needs to be supported by microeconomic reforms.

In advanced economies, demand is now growing more rapidly than in the previous three years, but output remains below potential. And the growth of potential output itself is low, due to reduced investment, low profitability and low demand. Read more…

China’s recipe for higher consumption and steady economic growth

Chinese customers buy snacks at a supermarket in Fuyang city, in the eastern Chinese province of Anhui, 16 July 2014. (Photo: AAP)

Authors: Wang Xiaolu, NERI, and Zhou Yixiao, ANU

The slowdown of economic growth in China, since the global financial crisis, is obvious. The average growth rate dropped from above 10 per centto 9.3 per cent between 2008–2011, and then to 7.7 per cent in both 2012 and 2013, according to China’s National Bureau of Statistics. In the first half of 2014, the growth rate was 7.4 per cent. Read more…

Moving Modi beyond Gujarat

Indian Prime Minister Narendra Modi addressing the nation in his first Independence Day speech from the Red Fort in New Delhi. (Photo: AAP).

Author: Rajiv Kumar, CPR

With the Modi government less than 3 months old, it is surely too early to make any assessments. But high expectations and his track record have generated an impatience for results even among Modi’s supporters. News trickles out mentioning an indefatigable prime minister driving from the front, changing the tenor and temper of the entire bureaucracy.
Read more…

Time for a new approach to Indonesia’s energy subsidies

A State Oil Company (Pertamina) employee checks a tank at an oil pump station in Jakarta, Indonesia. Indonesian energy subsidies will constitute a quarter of total government spending this year. (Photo: AAP).

Authors: Stephen Howes and Robin Davies, ANU

Indonesia’s new president, Joko Widodo (Jokowi), will face many challenges but none more pressing and immediate than dealing with Indonesia’s energy subsidies, which this year will constitute a quarter of total government spending. Everyone agrees that these subsidies are wasteful, but their persistence is striking. They were 20 per cent of expenditure when President Yudhoyono (SBY) came to power, and they will be almost 25 per cent when he leaves office later this year. Read more…

President SBY’s second-term development scorecard

Indonesian president Susilo Bambang Yudhoyono has a mixed policy scorecard at the end of his second and final term of office. (Photo: AAP).

Authors: Stephen Howes and Robin Davies, ANU

The recent election of Indonesia’s next president, Joko Widodo (Jokowi), provides an opportunity to reflect on the legacy and performance of Indonesia’s outgoing president Susilo Bambang Yudhoyono (SBY).

A useful starting point is to compare Indonesia’s performance against the targets SBY set in his 2010–14 National Medium-Term Development Plan. Read more…

After joining the WTO, what’s next for Laos?

Author: Buavanh Vilavong, ANU

Earlier this year Laos celebrated the first anniversary of its WTO membership. Laos’ accession to the WTO has been less talked about than that of its neighbours China and Vietnam, who joined the organisation in 2001 and 2007, respectively. This is partly due to Laos being a small, landlocked economy whose accession would not be expected to make a big impact on international trade.

But Laos’ clout is more than may first appear. Read more…

Can Jokowi offer a new hope for the poor?

A woman takes a nap outside her hut in a slum in Jakarta, Indonesia, 4  April 2014. Around 40 per cent of the Indonesian population still live on less than US$2 a day. (Photo: AAP)

Authors: Arief Anshory Yusuf, CEDS, and Andy Sumner, IDI

As Joko Widodo (Jokowi) was declared president, new research revealed that the gap between Indonesia’s richest and poorest has never been so great. So will the new president — with his reputation for clean governance and modesty — be able to build on his progressive track record to deliver change for the poor and address rising inequality? Read more…

Modi’s operandi: a few steps forward but where’s India’s budget going?

Indian Bharatiya Janata Party (BJP) prime minister Narendra Modi flashes the victory sign as he arrives at a public rally after his victory in Vadodara on 16 May 2014. The triumphant Hindu nationalists declared a new era after hardline leader Narendra Modi propelled them to the biggest win in 30 years on promises to revitalise the economy. (Photo: AAP).

Author: Ashima Goyal, IGIDR

The election win of Indian prime minister Narendra Modi earlier this year brought hopes of an economic revival for the country. Yet, while the new government’s first budget, handed down in early July, aims for higher growth, employment, better amenities, infrastructure and governance, how the new budget measures are expected to achieve these aims is unclear. There is some alignment between the overall strategy and the rhetoric, but the various measures are not integrated well enough to tell a coherent story, and the changes announced are not quantitatively significant. Read more…

The BRICS are back, with a bank

Chinese President Xi Jinping reviews the guard of honour upon his arrival at Planalto Palace on 17 July 2014 in Brasilia. China has already chosen a site for the future Shanghai headquarters of the BRICS development bank, state media said Thursday just two days after its creation. (Photo: AAP).

Authors: Geethanjali Nataraj and Richa Sekhani, ORF

The BRICS countries met for their sixth annual summit in Brazil this month, setting out to establish a counterweight to Western-dominated global financial institutions.

The summit’s key achievement was the establishment of the long-awaited BRICS New Development Bank. The bank will press for a bigger say in the global financial order — which is centred on the IMF and the World Bank. Read more…

What happens in China, doesn’t stay in China

Chinese President Xi Jinping speaks before the Congress in Brasilia, on 16 July 2014. The BRICS group of emerging powers met on Wednesday with South American presidents as they justified the creation of a development bank seen as an alternative to Western-dominated global financial organisations. (Photo: AAP).

Author: Yizhe Daniel Xie, Waseda University

The experience that Chinese leaders gain in domestic politics has a big impact on how they view and handle international issues. Many China watchers and political analysts often overlook these domestic roots of Chinese foreign policy, particularly in China’s push to reform the international financial system. Read more…

Modi should use future budgets to build, build, build

An Indian labourer works at a construction site in Mumbai, India, 18 July 2014. Infrastructure was a key sector addressed in the first budget of Finance Minister Arun Jaitleythe and the Modi government. (Photo: AAP).

Author: Geethanjali Nataraj, Observer Research Foundation

Expectations of the Modi government’s first budget were high. But, in the face of difficult fiscal circumstances and volatility in oil and food prices, the new government and Finance Minister Arun Jaitley had limited options. Seen in this light, this year’s budget is balanced and gives a sense of direction to the economy. In fact, it has laid the base for a whole set of reform measures that will be put into the place around the next budget. Read more…

Cementing the BRICS together

The heads of BRICS member states pose for a picture during the 6th BRICS summit in the city of Fortaleza, Brazil, 15 July 2014. BRICS (Brazil, Russia, India, China and South Africa) member states discuss political coordination issues and global governance problems. (Photo: AAP).

Authors: Garima Sahdev and Geethanjali Nataraj, Observer Research Foundation

India’s Prime Minister Narendra Modi is in Brazil for his first major international summit, the sixth annual BRICS summit. Before his departure, the leader put forward his vision that the vitality of the BRICS group would cut across the geographical and ideological divides of not only the five countries of the group but also of the global economy. Read more…

BCIM Corridor a game changer for South Asian trade

A vender weights corn for a customer at a market in Yingjiang, near the Myanmar border, Yunnan Province, China, 26 May 2012. (Photo: AAP).

Authors: Pravakar Sahoo and Abhirup Bhunia, Institute of Economic Growth

The Bangladesh–China–India–Myanmar (BCIM) Economic Corridor will increase socioeconomic development and trade in South Asia. The initiative seeks to improve connectivity and infrastructure, energy resources, agriculture, and trade and investment. It will connect India’s Northeast, Bangladesh, Myanmar, and the Chinese province of Yunnan through a network of roads, railways, waterways, and airways under a proper regulatory framework. The current focus of BCIM talks is on an inter-regional road network. This makes sense, as roads are the cheapest route of trade. Read more…

G20 must shape a new world trade regime

The G20 meeting at the IMF/World Bank Spring Meetings 11 April 2014 at the IMF Headquarters in Washington, DC. (Photo: AAP).

Authors: Mari Pangestu and David Nellor, Indonesia

Over the past decade global trade and investment discussions have moved far away from the formal global trade regime. The multilateral system has been mired in the Doha Development Round — defined by a single undertaking and a fixed agenda that is increasingly out-of-date. In the meantime, most countries have devoted their energies to regional trade and investment discussions. Read more…