Jomo Kwame Sundaram’s Blog

Western financial policies have been squeezing economies worldwide. After being urged to borrow commercial finance heavily, developing countries now struggle with contractionary Western monetary policies. Central Banks ‘Unconventional monetary measures’ in the West helped offset the world economic slowdown after the 2008 global financial crisis. Higher interest rates have worsened contractions, debt distress, and inequalities due to cost-push inflation triggered by ‘geopolitical’ supply disruptions. Western central bank efforts have tried to check inflation by curbing demand and raising interest rates. Higher interest rates have worsened contractionary tendencies, exacerbating world stagnation. Despite major supply-side disruptions and inappropriate policy responses since 2022,…

Despite earlier income convergence among nations, many low-income countries (LICs) and people are falling further behind. Worse, the number of poor and hungry has been increasing again after declining for decades. After the post-Second World War ‘Golden Age’ ended over half a century ago, the world has seen unequal and uneven economic growth, industrialisation, and poverty reduction. Income divergence and convergence have involved inequalities within and among countries. While some national-level income inequalities have fallen, North-South disparities have trended unevenly, partly due to the quantitative influence of China’s and India’s large economies. Dividing Billions Paul Collier’s original ‘Bottom Billion’ included…

New institutional economics (NIE) has received another so-called Nobel prize, ostensibly for again claiming that good institutions and democratic governance ensure growth, development, equity and democracy. Daron Acemoglu, Simon Johnson, and James Robinson (AJR) are well known for their influential cliometric work. AJR have elaborated earlier laureate Douglass North’s claim that property rights have been crucial to growth and development. But the trio ignore North’s more nuanced later arguments. For AJR, ‘good institutions’ were transplanted by Anglophone European (‘Anglo’) settler colonialism. While perhaps methodologically novel, their approach to economic history is reductionist, skewed and misleading. NIE caricatures AJR fetishises property rights as crucial for economic…

After 2.5 years, US President Joe Biden’s Indo-Pacific Framework for Prosperity (IPEF) is increasingly irrelevant due to its own limitations and broader US foreign policy shifts. IPEF pillars Unlike free trade agreements (FTAs), IPEF does not offer better market access by reducing tariff or non-tariff barriers. Instead, it has been styled as a standards agreement involving four ‘pillars’: • Fair and resilient trade: This imposes ‘high standard’ rules, particularly for the digital economy, labour and the environment. Enforcing such standards is now widely seen as protectionist. • Supply chain resilience: This seeks to establish reliable supply chains bypassing China. Many…

Net zero emissions by 2050 prioritise mitigation for climate stabilisation. Pledges to achieve this still distant target have grown but inadvertently delay urgently needed climate action in the near term. Net Zero The 1992 United Nations Framework Convention on Climate Change (UNFCCC) committed to “the stabilization of greenhouse gas [GHG] concentrations in the atmosphere at a level that would prevent dangerous anthropogenic [or human-caused] interference with the climate system”. Consequently, climate negotiations are supposed to focus on stepping up mitigation efforts. But thus bringing the target forward will not prevent global temperatures from rising 1.5°C above pre-industrial levels well before 2050.…

Marginalised and dominated economically by the Global North, developing countries must urgently cooperate to better strive for their shared interests in achieving world peace and sustainable development. Cold War Rivalry During the first Cold War between the US, NATO, and other allies, on the one hand, and the Soviet Union and its allies, the former prided itself on sustaining economic growth, especially during the post-war Golden Age. Since the 2008 global financial crisis (GFC), successive governments – led by Obama, Trump and Biden – have all strived to sustain full employment in the US. However, real wages and working conditions…

Oxfam expects the world’s first trillionaire within a decade and poverty to end in 229 years! The wealth of the world’s five richest men has more than doubled from 2020, as 4.8 billion people became poorer. The 2024 Oxfam report entitled Inequality Inc. warned, “We’re witnessing the beginnings of a decade of division” as billions cope with the “pandemic, inflation and war, while billionaires’ fortunes boom”. “This inequality is no accident; the billionaire class is ensuring corporations deliver more wealth to them at the expense of everyone else”, noted Oxfam International’s Amitabh Behar. Driving inequality Summarising the report, Tanupriya Singh noted gaps between rich and…

Many low-income countries (LICs) continue to slip further behind the rest of the world. Meanwhile, people in extreme poverty have been increasing again after decades of decline. Falling further behind World output more than doubled from $36 trillion in 1990 to $87 trillion by 2021 (in constant US dollars), but this growth has not been evenly distributed, causing most LICs to fall further behind. Many of the world’s poorest economies have had meagre growth since the 1960s. As most developing countries have made progress, income gaps among nations have declined. World economic stagnation adversely affects most countries and people, especially…

For some time, most multilateral financial institutions have urged developing countries to borrow commercially, but not from China. Now, borrowers are stuck in debt traps with little prospect of escape. More debt, less growth since 2008 The last decade and a half has seen protracted worldwide stagnation, with some economies and people faring much worse than others. The 2008 global financial crisis and Great Recession have recently been worsened by the Covid-19 pandemic, US Federal Reserve Bank-led interest rate hikes and escalating geopolitical economic warfare. Following Reagan-inspired tax cuts, ostensibly to induce more private investments, budget deficits have loomed larger.…