Venezuela’s problems are self-inflicted and the country will only recover if it mends its ways. However, there is much that the rest of the world could do to help Venezuela out of its current crisis.
How did we get here? Unfortunately the former president Hugo Chávez did not use the massive oil price boom between 2004 and 2013 to put money aside for a rainy day but instead, over-spent and quintupled the public foreign debt. This left the country in a vulnerable position because when the price of oil declined in 2014 the country was...
As Argentina’s protracted and litigious restructuring saga comes to an end, it is natural to ask what lessons the world can draw from this contentious process. While a close look reveals that Argentina’s ordeal has been fairly idiosyncratic, and hence less influential than most people think, the 15-year-long script yields important, albeit unexpected, lessons. Here’s a list.
Super-CACs are great and you should use them (but risks remain) The first lesson has already been learnt and implemented, but it will...
How can we improve the state of the world? How can we make countries more competitive, growth more sustainable and inclusive, and genders more equal?
One way is to have a correct theory of the relationship between actions and outcomes and then to implement actions that achieve our goals. But, in most of the situations we face, we lack such a theory, or if we have one, we are not sure that it is correct. So what can we do? Should we postpone action until we learn about what works? But how will we learn if we do not act? And if we act, how can we learn whether we did the right thing?... Read more about Learning without Theory
With inflation ticking up and strikes on the horizon, critics of Argentina's President Mauricio Macri are sharpening their attacks on his economic policies. The truth is, however, that the new president came into office with few good -- much less easy -- choices, and is so far making the best of them.
When Macri delivers his much-anticipated speech to launch the 2016 session of Congress on March 1, you can expect to hear a lot about "legacy"-- a buzzword that, in the Argentinean context, refers to the economic mess bequeathed to him by his predecessor, Cristina Fernandez de Kirchner. The Kirchner legacy is indeed complex, encompassing important long-term factors such as a run-down infrastructure, a fat and ineffective public sector and lagging public education. But its short-term policy implications could be reduced to a simple trilemma: Correct the exchange rate, reduce inflation, and grow.
CAMBRIDGE – Should a country’s development strategy pay special attention to exports? After all, exports have nothing to do with satisfying their people’s basic needs, such as education, health care, housing, power, water, telecoms, security, the rule of law, and recreation. So why give precedence to satisfying the needs of distant foreign consumers?
CAMBRIDGE – Capitalism gets blamed for many things nowadays: poverty, inequality, unemployment, even global warming. As Pope Francis said in a recent speech in Bolivia: “This system is by now intolerable: farm workers find it intolerable, laborers find it intolerable, communities find it intolerable, peoples find it intolerable. The earth itself – our sister, Mother Earth, as Saint Francis would say – also finds it intolerable.”
But are the problems that upset Francis the consequence of what he called “unbridled capitalism”? Or...
CAMBRIDGE – Following 15 years of hype, a new conventional wisdom has taken hold: emerging markets are in deep trouble. Many analysts had extrapolated rapid growth in countries such as Brazil, Russia, Turkey, and India into the indefinite future, calling them the new engines of the world economy. Now growth is down in almost all of them, and investors are pulling their money out – prompted in part by the expectation that the US Federal Reserve will raise interest rates in September. Their currencies have tumbled, while corruption scandals and other political difficulties have overwhelmed the economic narrative in places like Brazil and Turkey.... Read more about Back to Fundamentals in Emerging Markets
CAMBRIDGE – Many countries have substantial diasporas, but not many are proud of it. After all, people tend not to leave a country when it is doing well, so the diaspora is often a reminder of a country’s darker moments.
El Salvador, Nicaragua, and Cuba, to cite three examples, had more than 10% of their native population living abroad in 2010. And this figure does not take into account...