Jomo Kwame Sundaram’s Blog

As the epicentre of the COVID-19 pandemic shifts from China to the developed West, all too many rich countries are acting selfishly, invoking the ‘national interest’, by banning exports of vital medical supplies. US President Donald Trump has reportedly gone further by seeking exclusive rights to a future coronavirus vaccine, although the report has been denied by a German drug company and some investors believed to be involved. Europe First Following France, Germany, the Czech Republic and Poland now also want to ban the export of certain types of protective equipment and gear, prompting Stella Kyriakides, the EU Health Commissioner, to contradict them,…

The economic impact of the coronavirus pandemic is hard to predict as events are still unfolding, and estimates vary dramatically. UNCTAD estimates lost output in the order of US$1 trillion, just over a third of Bloomberg’s expectation of US$2.7 trillion in losses. The OECD expects global economic growth to halve from already anaemic levels. Dire consequences for achieving the already failing Agenda 2030 for the Sustainable Development Goals (SDGs) are inevitable. Developing countries are particularly vulnerable, with meagre resources available for the new threat and its consequences. As resources are urgently needed to cope with the pandemic, their ability to spend on other development priorities will be…

‘Getting government out of the way’, the neoliberal ‘free market’ mantra, was supposed to boost private investment. Instead, business investment has declined as a consequence. Many economies now seem incapable of making much needed investments to sustain growth, apparently due to ‘capital allocation’ problems. Neoliberal policies—including tax cuts, trade liberalization, deregulation, worker casualization—have greatly boosted returns, which have not been re-invested productively, as promised. Unsurprisingly, neoliberal economists’ claims have been discredited by their policies’ failure to significantly increase investments in the real economy in recent decades. As William Lazonick’s Profits without Prosperity has argued, the outcome has been ‘predatory value extraction’, rather…

The US is currently still in a stock market bubble which, if history is any guide, is likely to end, perhaps soon due to Covid19. President Trump would, of course, like to sustain it to strengthen his November re-election prospects. Meanwhile, US business investment has declined for many years. As shares of GDP, corporate profits or even market capitalization, such investment has been in decline for at least four decades. Clearly, ‘neo-liberal’ economic policies have failed to decades-long trend. Financialization ‘unreal’ Although focused on the US, William Lazonick’s seminal 2014 Harvard Business Review article, Profits without Prosperity, and Lazonick and Shin’s new…

As the outbreak of the novel coronavirus COVID-19 threatens a global pandemic, major stock markets around the world have suffered their worst performance since the 2008 financial crush. Growth disruption The OECD has warned that the coronavirus outbreak could halve global economic growth this year to 1.5%, the slowest rate since 2009. It has cut its 2020 growth forecast for China to a 30-year low of 4.9%, down from 5.7% in November. The IMF downgraded its growth forecast for China to 5.6% in 2020, its lowest since 1990. Economists, polled by Reuters during 7-13 February, expected China’s economic growth to slump to 4.5% in the…

In an annual ritual early in the year, most major economic organizations have released forecasts for the global economy in 2020. Incredibly, almost as a reminder of where financial power resides in this day and age, the International Monetary Fund (IMF) released its forecasts at the World Economic Forum’s 50th annual meeting in Davos. Although the IMF revised its global economic growth prognosis slightly downwards from its October 2019 forecast, it still offers the most optimistic prospect of 3.3% growth in 2020. The World Bank’s forecast of 2.5% – identical to the United Nations (UN) estimate – is the lowest, with the OECD’s at 2.9%. The…

Many medicines and medical tests are unaffordable to most of humanity owing to the ability of typically transnational pharmaceutical giants to abuse their monopoly powers, enforced by intellectual property laws, to set prices to maximize profits over the long-term. Most basic research is funded by government grants, and in recent years, by philanthropic initiatives. When a profitable opportunity presents itself, venture capitalists fund ‘last leg’ efforts to patent an innovation and ‘take it to market’, as the patent holder ‘takes all’. Patents, a form of intellectual property rights (IPRs), are believed by many to be necessary to incentivise innovation, and…

Financialization has worsened inequality through various channels, including macroeconomic policies. For example, quantitative easing and low, if not negative interest rates have fuelled credit and asset price bubbles, while fiscal spending cuts have adversely affected those depending on government assistance. Unequal gains Inequalities have increased due to financialization. The rich benefit from more rentier options and government efforts to protect the value of financial assets. The main gains of financialization tend to go to those who most successfully speculate at low cost, and to the asset management and investment firms involved. Financial globalization has been accompanied by increased income inequality…

One mercantilist view is that exchange rate undervaluation – e.g., via accumulation of foreign exchange reserves in China’s case – is ‘industrial policy’ to promote export-led growth, benefiting producers of exports while discouraging imports. Taxes and subsidies are tools of selective industrial policy for which an efficient and clean bureaucracy is needed to successfully use them for growth-promotion. By discouraging imports and promoting exports, exchange rate undervaluation enhances cost competitiveness, e.g., by keeping wage costs down. Currency undervaluation is equivalent to import duties on all tradables and export subsidies. But exchange rate undervaluation automatically boosts all production and export of ‘tradables’ without…

If well planned, coordinated and implemented, a government funded school feeding programme for all primary school children can be progressively transformative. Such a programme, involving government departments and agencies working together, can benefit schoolchildren, their families, farmers and public health, now and in the future. Such a scheme should comprehensively supply adequate food for all, especially schoolchildren, and improve their nutrition, thus overcoming hunger and malnutrition besides improving the children’s physical and mental development, and school learning, attendance, participation and performance. School meals, well planned by nutritionists and dieticians familiar with local food practices and alternatives, using safe food grown…