BRICs and Mortar—Building Growth in Low-Income Countries

By Dominique Desruelle and Catherine Pattillo

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The so-called BRIC nations—Brazil, Russia, India and China—could be a game changer for how low-income countries build their economic futures.  

The growing economic and financial reach of the BRICs has seen them become a new source of growth for low-income countries (LICs).

LIC-BRIC ties—particularly trade, investment and development financing—have surged over the past decade. And the relationship could take on even more prominence after the global financial crisis, with stronger growth in the BRICs and their demand for LIC exports helping to buffer against sluggish demand in most advanced economies.

The potential benefits from LIC-BRIC ties are enormous.

But, so too are challenges and risks that must be managed if the LIC-BRIC relationship to support durable and balanced growth in LICs. Continue reading “BRICs and Mortar—Building Growth in Low-Income Countries” »

Weekend in Washington: Cooperating Our Way Out of Crisis

This past weekend in Washington DC, as the economic leaders of 187 countries gathered for the Annual Meetings of the IMF and World Bank, the mood was tense. The world’s finance ministers and central bank governors were concerned because the global recovery is fragile. And, on top of the risks to the outlook, there is concern that the strong international cooperation that was shown during the crisis is in danger of receding. So, after the meetings, was the atmosphere less tense? Yes...and no. The world made some progress over the weekend. But we shouldn’t be too self-congratulatory. We are not yet out of the woods. The IMF’s analysis indicates that improved economic policy coordination, over the next five years, could increase global growth by 2.5 percent, create or save 30 million jobs, and lift 33 million more out of poverty. With such high potential returns, can we really afford each to go our own way?

The Two Rebalancing Acts

Achieving a “strong, balanced, and sustained world recovery”—to quote from the goal set in Pittsburgh by the G-20—was never going to be easy. It requires much more than just going back to business as usual. It requires two fundamental and complex economic rebalancing acts: internal and external rebalancing. These two rebalancing acts are taking place too slowly. As the latest World Economic Outlook reveals, the result is a recovery which is neither strong, nor balanced, and runs the risk of not being sustained.

Making up for Lost Time: Getting Back on Track to the Millennium Development Goals

With only five years to go until the deadline for the Millennium Development Goals, the global financial crisis struck a blow to the poverty reduction agenda. All is not lost, however. Reducing poverty on a massive scale is do-able—the number of people living in extreme poverty fell by a staggering 400 million from 1990 to 2005. The question is, how do we regain the momentum? It won’t be easy and, as a global problem, it will require a shared effort between the developing countries themselves, the advanced economies, and the international organizations.

A Problem Shared Is a Problem Halved: The G-20’s “Mutual Assessment Process”

The Group of Twenty industrialized and emerging market economies (G-20) has broken new ground over the past year or two. It has embraced the type of collaborative approach to policy design and review that is well suited to today’s interdependent world, where policies in one country can often have far-reaching effects on others. In this spirit, the backbone of the G-20’s “Framework for Strong, Sustainable, and Balanced Growth” is a multilateral process that includes a ‘mutual assessment’ of their progress toward meeting shared objectives. But, what exactly will this G-20 Mutual Assessment Process—or “MAP”—imply in terms of prospective actions? And what have we learned so far?

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