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Views from the Center

CGD experts offer ideas and analysis to improve international development policy. Also check out our Global Health blog and US Development Policy blog.

 

Crisis a Set Back for Accountability and Good Governance in Developing World (Development Impacts of Financial Crisis)

I think the behavior of both public officials and private sector managers over the past decade is at direct odds with our message to the developing world regarding transparency and accountability. For example, my research shows that influence peddling is a serious impediment to growth in Africa, and that the development community needs to devise solutions that recognize and overcome such problems.

Microfinance Likely to Weather the Storm (Development Impacts of Financial Crisis)

If the worst happens, all bets are off; otherwise I expect the "macrofinance" convulsions will have minimal repercussions for microfinance. In Indonesia during its crisis in 1997, while large companies and rich people defaulted left and right, the 2.6 million microcredit borrowers of the Bank Rakyat Indonesia hardly skipped a beat. And few at this point are predicting that the U.S. seize-up will trigger a recurrence of such severe economic trauma for developing countries.

Crisis? Not If We Take a Long View (Development Impacts of Financial Crisis)

When you’re done reading today’s news stories about the crisis, take a deep breath. Media coverage is focused on the very short term, as usual. Speculation abounds that we live in a different world now. I’m reminded of portentous claims after the Asian Financial Crisis that “the miracle was over”, claims which look very overwrought in hindsight. In historical perspective, many of the most worrisome recent crises are small bumps on a very long road.

Middle Income and Emerging Markets May Be Most at Risk (Development Impacts of Financial Crisis)

As with all financial disasters -- whether it's your neighbor’s lost job or a macroeconomic shock -- the first thing people want to know is "will it hit me?" This question must be on the minds of ordinary people and macroeconomic policymakers across the world, including those in developing countries. The policymaker's answer will depend on two things: (1) how closely is her country integrated in the international financial markets; and (2) how vigilant have her country's regulators been in regulating and supervising its capital markets?

Thoughts on the Financial Crisis and the Other Kind of Contagion (Development Impacts of Financial Crisis)

Relatively short-lived ups and downs like this are far less important than the long term trends: the growth of emerging economies, the impact of global warming, the changing age structure and disease patterns across the world. Like a hurricane, a financial crisis reminds us of how vulnerable we are, and how the most vulnerable are the least well protected. But just as a single hurricane doesn't tell us much about the climate, this episode of financial crisis doesn't tell us much about the longer term forces that, in the end, shape our collective destiny.

Poor in Developing Countries are Victims of Our Mistakes (Development Impacts of Financial Crisis)

I suspect that the fallout from this crisis will remind us all that rich world growth and macro policy still matter for developing countries and for the poor within them, even though some of these economies are very large and have been growing very rapidly. The growing interconnectedness of the world -- globalization -- means that they are victims of our mistakes just as we are increasingly vulnerable to theirs.

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