International Economics
- PROGRAM DESCRIPTION
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Globalization, Export-Oriented Growth and Financial Imbalances
The Baker Institute International Economics Program studies the role of financial imbalances in recent and potential crises, with the intent of proposing alternative mechanisms for correcting these imbalances and reducing the tight financial coupling of global markets that leads to contagion and systemic risk. The financial imbalances that distorted credit prices and risk and led to the current financial crisis were a byproduct of the success of globalization, which has been characterized in large part by export-oriented growth. As economies began to recover in late 2009 and 2010, the pursuit of export-oriented growth persisted, and protectionist policies of exchange rate undervaluation continued what Lawrence Summers, director of the U.S. National Economic Council, once called the international “balance of financial terrors” between debtor and creditor countries. The current system is not sustainable; however, alternative international financial architecture that would create an economic soft landing — without destroying the globalized trade and investment trends that have generated growth and reduced poverty — continues to elude the world.
Poverty Alleviation and Mutual Microfinance Structures
The evolution of the middle classes in Western Europe and North America in the late 19th and mid-20th centuries, respectively, reflected the influence of financial institutions such as credit unions and mutual saving banks. An international credit union movement later exported this financial technology to developing countries. More recently, microfinance has emerged as the most prominent financial sector contributing to poverty alleviation, and advances in the securitization of microloans have made microfinance institutions profitable. However, profit motives have encouraged newcomers to aggressively tempt the poor to overextend their credit, often trapping them in debt. Baker Institute researchers are developing microfinance models that borrow lower appetites for risk from the mutualization movement and that support the growth of a stable middle class in developing countries. The institute’s long-term goal is to educate developing nations about financial structures and management, as well as to encourage the development of civil societies and foster international cooperation.
- PUBLICATIONS
- 2008
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The End of the Latin American Boom
Nov 18 2008José Antonio Ocampo
- 2007
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Social Capital, Barriers to Production and Capital Shares; Implications for the Importance of Parameter Heterogeneity from a Nonstationary Panel Approach
May 29 2007Peter Pedroni
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Financial Integration and Cyclicality of Monetary Policy in Small Open Economies
Feb 28 2007Yossi Yakhin
- 2006
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Water in the Israeli-Palestinian Conflict
Aug 31 2006Yossi Yakhin
- 2005
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Regional Income Divergence in China
May 31 2005Peter Pedroni, James Yudong Yao
- 2004
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A More People-Oriented Globalization for the 21st Century
Dec 08 2004Peter Pedroni
