Jomo Kwame Sundaram’s Blog

Developing country debt has continued to grow rapidly since the 2008-2009 global financial crisis (GFC). Warnings against debt have been reiterated by familiar prophets of debt doom such as new World Bank chief economist, Carmen Reinhart, once dubbed the ‘godmother of austerity’. Growing debt burden Falling commodity prices, dwindling foreign reserves, slower global growth and weakening currencies have made it harder for developing countries to meet external debt payments. This has involved economies of all income categories, reaching historical highs even before the pandemic. By early May, more than 100 countries had asked the International Monetary Fund (IMF) for help. Developing countries’ government debt is likely to…

The Trans-Pacific Partnership (TPP) Agreement should be dead and buried after President Trump announced US withdrawal immediately after his inauguration in January 2017. After all, most major US presidential candidates in the last election, including Hillary Clinton, had opposed the TPP. Encircling China with trade pact However, the Japanese, Australian and Singaporean governments have kept the TPP alive, first by mooting TPP11, i.e., minus the USA, later pretentiously relabelled the Comprehensive and Progressive TPP (CPTPP), with the hope that the US will rejoin later. Other governments have remained ‘on board’ for various reasons, mainly foreign policy considerations, rather than with…

International Monetary Fund (IMF) Managing Director Kristalina Georgieva has warned that developing countries would need more than the earlier estimated US$2.5 trillion to provide relief to affected families and businesses and expedite economic recovery. With their limited fiscal capacities, developing countries will need to borrow more, increasing their often already high public debt burdens. Developing country debt has grown rapidly since the 2008-2009 global financial crisis (GFC), reaching historical highs even before the pandemic. A deep pandemic induced depression may also require governments to take over huge private debt liabilities. All this has increased calls for urgent debt relief, cancellation and restructuring, and for…

The 2020 State of Food Security and Nutrition in the World, issued by the Food and Agriculture Organization and its United Nations partners in mid-July, reports that chronic hunger continued to increase to 690 million worldwide in 2019, 60 million more than in 2014. Some two billion people worldwide were already experiencing some food insecurity during 2019, a number likely to spike upward due to Covid-19. Although headline hunger numbers have been significantly revised down retrospectively with better official data, the uptrend remains alarming. The 2020 UN report continues to expand its coverage of malnutrition, going beyond the old narrow…

Covid-19 is expected to take a heavy human and economic toll on developing countries, not only because of contagion in the face of weak health systems, but also containment measures which have precipitated recessions, destroying and diminishing the livelihoods of many. Limited fiscal space Developing countries generally have limited fiscal capacities to finance relief and liquidity provision in the short-term while rebuilding economic life on a more sustainable basis in the longer-term. The 2020 Financing for Sustainable Development Report shows debt vulnerability growing in many developing countries well before the pandemic. For example, public sector borrowings of commodity exporters increased substantially after prices collapsed…

GDP has been increasingly challenged on many grounds as a measure of economic and social progress. Clearly, GDP does not take account of other dimensions of wellbeing, natural resource depletion or environmental damage. What increases GDP? There is a humourous economic fable instructive about money-metric measures of economic progress. Two economic professors find a dead rat while on a long stroll. In disgust, the older don dares his younger colleague: “if you eat it, I’ll pay you $10,000”. The younger economist makes a quick cost-benefit analysis in his head, then accepts the challenge, to his colleague’s surprise. Sometime later, realizing the…

Announcing an independent evaluation of the global Covid-19 response on 9th July, World Health Organization (WHO) Director-General Dr Tedros Adhanom Ghebreyesus asked why it has been “difficult for humans to unite and fight a common enemy that is killing people indiscriminately?”. He warned: “The greatest threat we face now is not the virus itself. Rather, it is the lack of leadership and solidarity at the global and national levels… we cannot defeat this pandemic as a divided world”, highlighting inter-governmental conflicts over the pandemic and its containment. Solidarity desperately needed With more than 600,000 acknowledged deaths, almost 13 million are believed to…

The recent explosion of private finance has nursed the hope, dream or illusion that it can be mobilized for the public good, e.g., to achieve the Sustainable Development Goals, associated with Agenda 2030. However, such hopes ignore how changes in financial investing have deeply transformed corporations, national economies and prospects for the world economy and social progress. Private finance boom Private capital has exploded with financial deregulation from the late 20th century. Global finance increased 53% from 2000 to 2010, reaching some US$600 trillion (ten times annual world output), and was projected to reach US$900 trillion by the end of this…

The 1971 Bretton Woods (BW) system collapse opened the way for financial globalization and transnational financialization. Before the 1980s, most economies had similar shares of trade and financial openness, but cross-border financial transactions have been increasingly unrelated to trade since then. Although Covid-19 recessions have rather different causes and manifestations from the financially driven crises of recent decades, financialization continues to constrain, shape and thus stunt government responses with deep short-, medium- and long-term consequences. It is thus necessary to revisit and contain the virus of financialization wreaking long-term havoc in developing, especially emerging market economies. No one is financing…

In his early February annual State of the Union address, US President Donald Trump typically hailed his own policies for increasing wages and jobs to achieve record low US unemployment. Directly appealing to labour for a second term, Trump claimed exclusive credit for the US “blue-collar boom”. ‘Blue-collar boom’ During his previous two State of the Union speeches, Trump also directly appealed to blue-collar Americans who put him in the White House in November 2016. As Trump claims manufacturing workers have been the main beneficiaries of his economic policies, including his trade and other policies, this seemed likely to dominate…