Economy: August 2007 Archives

This article will be published in an Asia Program, Woodrow Wilson International Center for Scholars, publication entitled The Tenth Anniversary of the Asian Financial Crisis: Lessons Learned, Critical Assessments, and Charting the Path Forward.

The article argues that the most important long-term impact of the East Asian financial crisis, a decade later, has been that it began a process that led to the collapse of the International Monetary Fund's (IMF's) influence over middle-income countries. This was partly a result of the Fund's role in the crisis, detailed in the article, which was widely seen as a major failure. Partly as a result of this experience, the middle-income Asian countries have accumulated large reserve holdings and largely removed themselves from IMF influence. The IMF's authority and credibility was further undermined in the Argentine crisis of 1998-2003. In recent years the availability of alternative sources of credit, especially in Latin America, have led to the collapse of the IMF's "creditors' cartel" in that region and among middle-income countries generally. The author argues that this is the most important change in the international financial system since the breakdown of the Bretton Woods system in 1973. For the foreseeable future, any positive financial reforms will be made at the national and regional level - e.g., with the extension of such arrangements of the Chiang Mai Initiative. This is because the high-income countries are not significantly closer to supporting reforms at the level of the international financial system or institutions than they were a decade ago. It will also be important for low-income countries, where the IMF still retains its role as "gatekeeper" for official credit, to become independent from the Fund so they can pursue more effective macroeconomic and development policies.

RIO DE JANEIRO (IPS) - The largest movement fighting for the distribution of unproductive rural property to landless peasant farmers in Brazil complains that the "euphoria" over the production of biofuels from sugar cane and other crops is aggravating the concentration of land ownership and driving up land prices.

The Movimento dos Trabalhadores Rurais Sem Terra or Landless Workers Movement (MST) argues that the biofuel boom is just another manifestation of the growing strength of agribusiness in Brazil, Latin America's giant.

Joao Pedro Stedile, a member of the MST national leadership, told IPS that biofuel production forms part of the "agricultural model of the dominant classes, the big capitalists who have built up an alliance of vested interests, comprised of transnational corporations on one hand and large Brazilian landowners on the other."

This alliance, he said, is based on export-oriented production on vast tracts of land, and heavy use of toxic agrochemicals that damage the environment.

The MST advocates a different model, one that is "focused on the needs of the people, and is based on keeping peasant farmers in the countryside and on multi-crop production that puts a priority on food production, without the use of agrotoxics," said the activist.

MOSCOW (IPS) - The industrialised nations of the Group of Eight are failing on the promises made in their previous summits to help Africa's economic development and to push for poverty alleviation for those struggling to survive on less than a dollar per day, say World Bank experts and development activists.

"It's obvious to the whole world that G8 member countries are not fully delivering on their promises to Africa and nobody holds them accountable for those lapses," Eric Kilongi Mgendi, regional spokesperson for the development campaign group ActionAid, told IPS in an interview from Nairobi, Kenya.

"African countries badly need technology and investment capital to help them adapt to all kinds of environmental hazards, including the changing climate. It needs the G8 to steer development to an appreciable level for the growing population," he said.

While aid would help develop much of the infrastructure, harness energy resources and improve social services, African leaders should also take progressive steps to strengthen intra-regional trade, said the activist.