Countries will start a new chapter in their development this year with the United Nation’s Sustainable Development Goals. Designed to replace the Millennium Development Goals, these new goals will broaden the vision of development to embrace economic, social, and environmental issues. To achieve these goals, two elements are critical: money and the right policies to use the money. The IMF, along with many others in the global community, will partner with countries to bring these two elements together.
By Min Zhu
(version in Español)
The growth story for frontier economies isn’t the same as China’s in the last two decades, or the United States a hundred years ago. These fast growing, low-income countries have their own story, and it’s not what you might think.
In May of this year, I wrote about who they are and how they are different, and now I want to go into a bit more detail about how their economies have been on the rise and how they have moved themselves to the frontier.
By Doris Ross
Three months ago African leaders and policymakers assembled in Mozambique under an “Africa Rising” banner to assess the continent’s strong economic performance. But while the outlook for the continent remains strong, individual countries have faced problems and the uncertain global outlook continues to pose risks. Against this backdrop, what are the policies that Africa should pursue to sustain the positive momentum for the continent?
In reality, Africa Rising has never been about unbridled optimism; it has been a tale of strong growth tempered by serious challenges. And rising in economic terms is as much about sustaining expansion as about the dimensions of growth itself. The extended process of African development also requires increased resilience to shocks, and it is this resilience that may be tested by economic problems in some African nations.
Strong growth—and increased resilience—were the focus of the Africa Rising conference organized in May by the IMF and the government of Mozambique in Maputo. The nearly 1,000 officials, corporate executives, civil society representatives, and journalists who gathered for the two-day event discussed the difficult issues that must be addressed if Africa is to maintain its upward trajectory of the past two decades.
(Version in Español)
Low-income countries have spent a lot of time thinking about how they can achieve faster growth, and we have done some research to help them. We found that pursuing export diversification is a gateway to higher growth for these economies. Using a newly constructed diversification toolkit, our empirical analysis shows that both the range and quality of the goods a country produces has a direct impact on growth
Low-income countries have historically depended on a narrow range of primary products and few export markets for the bulk of their export earnings.
But export diversification is associated with higher per capita incomes, lower output volatility, and higher economic stability—relationships that can be tracked using our new publically available dataset, which gives researchers and policymakers access to measures of export diversification and product quality for 178 countries from 1962-2010.
We have looked at two measures of export diversification and their impact on economic growth. One measure captures diversification into new product lines, the other development of a more balanced mix of existing products. Analysis using these measures shows that export diversification in low-income countries is indeed among the most effective drivers of economic growth.
By Min Zhu
There is a group of fast-growing low-income countries that are attracting international investor interest—frontier economies. Understanding who they are, how they are different, and how they have moved themselves to the frontier matters for the global economy because they combine huge potential with big risks.
Get to know them
The first thing to note is that some of these countries already have moved to the lower-middle income group. While a working definition of frontier economies is subject to further discussion, broadly speaking, these countries have been deepening their financial markets, such as Bangladesh, Kenya, Nigeria, Mozambique, and Vietnam.
From billionaires Bill and Melinda Gates and Warren Buffett to Aliko Dangote and George Soros, the titans of capitalism are backing good causes with their cash. By financing new vaccines, championing maternal health, supporting learning, building libraries, or buying up Amazon rain forest to protect the environment, philanthropists are backing innovations and new approaches that are changing lives and building dreams. The new issue of Finance & Development magazine looks at the world of targeted giving and social entrepreneurship.
The world is now in a much better situation than six months ago when it comes to policy solutions, according to Tharman Shanmugaratnam, Singapore's Deputy Prime Minister and Minister for Finance , who is Chair of the IMF's policy-setting committee, the IMFC, speaking about the outcome of the IMF-World Bank annual meetings in Tokyo.
The world economic recovery continues, but it has weakened further. In advanced countries, growth is now too low to make a substantial dent in unemployment. And in major emerging countries, growth that had been strong earlier has also decreased. Relative to the IMF's forecasts last April, our growth forecasts for 2013 have been revised down from 1.8% to 1.5% for advanced countries, and from 5.8% down to 5.6% for emerging and developing countries.The downward revisions are widespread.
The 2012 annual meetings of the IMF and the World Bank are being held this year in Tokyo at a crucial time for the world economy. Key reports out this week are the closely watched World Economic Outlook, the Fiscal Monitor, and the Global Financial Stability Report.
The IMF blog has helped stimulate considerable debate about economic policy in the current crisis, on events in Europe and around the world, on fiscal adjustment, on regulating the financial sector, and the future of macroeconomics, as economists learn lessons from the Great Recession. As readers struggled to understand the implications of the crisis, our most popular post by far was IMF Chief Economist Olivier Blanchard's Four Hard Truths, a look back at 2011 and the economic lessons for the future.