How Trade with China Boosts Productivity

By JaeBin Ahn and Romain Duval

May 24, 2017

Versions  عربي (Arabic),  中文 (Chinese), Français (French), 本語 (Japanese), Русский (Russian), and Español (Spanish)

Container port, Qingdao city, China. Trade with China has helped improve living standards in advanced economies through higher productivity (photo: Imagine China/Newscom)

Advocates of protectionist policies in advanced economies blame job losses on growing trade with China, and influential researchers have provided some empirical backing for their claims. Yet the benefits of trade with China are often overlooked. Among them is faster growth in productivity—the key driver of improved living standards. This suggests that rather than erecting new barriers to trade, advanced economies should continue to open up—while doing much more to help those who have lost their jobs to overseas competition. Continue reading “How Trade with China Boosts Productivity” »

Chart of the Week: Central and Eastern Europe Close the Gap

By IMFBlog

May 22, 2017

Version in Русский (Russian)

Most of the countries of Central, Eastern, and Southeastern Europe will see their economies humming away at a strong growth rate in 2017. A measure of their success at fully utilizing their economic machine is the output gapthe difference between what the economy is currently producing, and what it can produce when it is at full capacity.

Our Chart of the Week from a recently published report on the Central, Eastern, and Southeastern European region shows how close these economies come to performing at full potential. Continue reading “Chart of the Week: Central and Eastern Europe Close the Gap” »

By | May 22nd, 2017|Economic research, Europe, growth, IMF, inflation, Investment, jobs, labor markets, trade, wages|

The Economics of Trust

By IMFBlog

May 10, 2017

Trust in other people—the glue that holds society together—is increasingly in short supply in the United States and Europe, and inequality may be the culprit.

In surveys over the past 40 years, the share of Americans who say that most people can be trusted has fallen to 33 percent from about 50 percent. The erosion of trust coincides with widening disparities in incomes. Continue reading “The Economics of Trust” »

Chart of the Week: Conflict’s Legacy for Growth

By IMFBlog

Versions in عربي (Arabic)

May 8, 2017

Conflict has been on the rise since the early 2000s given the wars in Afghanistan, Iraq, and Syria.

 Conflict leads not only to immeasurable human costs, but also to substantial economic losses with consequences that can persist for years. The tragic rise in conflict has weighed on global GDP growth in recent years, given the increasing number of countries experiencing strife, the severe effect on economic activity, and the considerable size of some of the affected economies.

The IMF’s most recent World Economic Outlook (Box 1.1) takes a closer look through the lens of conflict’s impact on economic growth and migration.  Continue reading “Chart of the Week: Conflict’s Legacy for Growth” »

Productivity, Technology, and Demographics

By IMFBlog

May 5, 2017

Hal Varian, chief economist at Google, says that if technology cannot boost productivity, then we are in real trouble.

In a podcast interview, Varian says thirty years from now, the global labor force will look very different, as working age populations in many countries, especially in advanced economies, start to shrink. While some workers today worry they will lose their jobs because of technology, economists are wondering if it will boost productivity enough to compensate for the shifting demographics—the so-called productivity paradox.

Continue reading “Productivity, Technology, and Demographics” »

Chart of the Week: The Cost of Asia’s Aging

By IMFBlog

May 1, 2017

Versions in 中文 (Chinese), Bahasa (Indonesia), and 本語 (Japanese) 

When it comes to tackling demographic change in Asia, there’s no one-size-fits-all strategy for policymakers. In some countries, like Japan, the population is aging rapidly, and the labor force is shrinking. In others, like the Philippines, young people are flooding the job market in search of work.

As our chart shows, the impact of aging could potentially drag down Japan’s average annual GDP growth by 1 percentage point over the next three decades. While in India and the Philippines, which have some of the youngest populations in the region, a growing workforce could potentially increase GDP by that same amount. Continue reading “Chart of the Week: The Cost of Asia’s Aging” »

IMF Spring Meetings 2017: Keeping Growth on Track

By IMFBlog

April 28, 2017

Panelists, including IMF Managing Director Christine Lagarde, discuss global gender challenges.

The world’s economic leaders and stakeholders came together at the 2017 IMF and World Bank Spring Meetings amid a more positive outlook on the global growth, which is forecast to hit its fastest pace in five years. A clear theme running through the meetings was the need to protect the growth momentum, given policy and political uncertainties, and to help ensure that everyone has the opportunity to share in the fruits of global integration and technological progress.

More than 10,000 people took part. In addition to central bankers, finance ministers and other officials, the meetings drew around 650 journalists, 160 parliamentarians from 68 countries, and a record 850 civil society representatives, who gathered to learn, listen, and share their points of view. Continue reading “IMF Spring Meetings 2017: Keeping Growth on Track” »

Chart of the Week: Sharing the Fruits of Growth

By IMFBlog

At last week’s Spring Meetings of the IMF and World Bank, economists and policymakers discussed ways to maintain the momentum of the global economic expansion—while also ensuring that the fruits of growth are shared more widely within their countries. Fiscal policy—government’s ability to tax and spend—has an important role to play.

The effectiveness of fiscal policy in mitigating inequality varies widely by country, as seen in our Chart of the Week. The chart shows the redistribution effect of fiscal policy before and after taxes, as measured by the change in the Gini coefficient. A Gini of zero expresses perfect equality, while a Gini of one expresses maximum inequality. Continue reading “Chart of the Week: Sharing the Fruits of Growth” »

Five Keys to a Smart Fiscal Policy

By Vitor Gaspar and Luc Eyraud

Versions in عربي (Arabic), 中文 (Chinese), Français (French), 日本語 (Japanese), Русский (Russian), and Español (Spanish)

We live in a world of dramatic economic change. Rapid technological innovation has fundamentally reshaped the way we live and work. International trade and finance, migration, and worldwide communications have made countries more interconnected than ever, exposing workers to greater competition from abroad. While these changes have brought tremendous benefits, they have also led to a growing perception of uncertainty and insecurity, particularly in advanced economies.

Today’s conditions require new, more innovative solutions, which the IMF calls smart fiscal policies. By smart policies we mean policies that facilitate change, harness its growth potential, and protect people who are hurt by it. At the same time, excessive borrowing and record levels of public debt have limited the financial resources available to government. So, fiscal policy must do more with less. Fortunately, researchers and policy makers are realizing that the fiscal tool kit is broader and the tools more powerful than they thought. Five guiding principles sketch the contours of these smart fiscal policies, which are described in chapter one of the IMF’s April 2017 Fiscal Monitor. Continue reading “Five Keys to a Smart Fiscal Policy” »

Services Exports Open a New Path to Prosperity

By Prakash Loungani, Chris Papageorgiou, and Ke Wang

Versions in 中文 (Chinese), Français (French), 日本語 (Japanese), and Русский (Russian)

Services, which already account for 50 percent of world income and 70 percent of employment, are also becoming an important part of international trade. Services exports—accounting for nearly one fourth of total exports—have come to play a central role in the global economy, thanks in large part to advances in technology. Continue reading “Services Exports Open a New Path to Prosperity” »

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