What to watch out for this autumn

September 6, 2007

Slowly but steadily the world’s decision-makers are coming back from their summer breaks. While the summer remained busy in terms of trends and events that are related to this blog, the hot economic globalisation topics for this autumn will probably be the following:/font>

  • World financial markets, what next? The subprime mortgage crisis in the US has had interesting ramifications. Hedge fund and investment vehicles bankrupt or in crisis, German banks stumbling, central bank interventions on money markets including a big one by the European Central Bank today, etc. After several years of relative calm and buoyant growth, the current turbulences could still become a hurricane. I am not a specialist, and it seems that for the moment the crisis is being weathered not too badly. Yet who knows? 
  • World trade – growth trends. China continues growing, EU economies, except France’s are still doing well, commodity markets boom. The autumn will see the release of new world trade figures by the WTO (here the latest available). We’ll see what is really happening on the ground. 
  • World trade – Doha round and future of the multilateral system. Sounds incredible, but Doha talks are still going ahead (the ICTSD newsletter confirming this will soon be online). Can anybody believe that people still believe it’s going to happen? One never knows after all. 
  • World trade – EU policies. The EU is changing tack in many areas, and especially Asia. It is going further down the bilateral path and launched negotiations with South Korea, ASEAN, India. (Here a post, here more on the strategy on EU Commission’s website), Economic Partnership Agreements with African and Caribbean Countries should normally be concluded by the end of the year to replace the preferential Cotonou-Agreements. The negotiations are in dire straits. For nerds, to note, the EU is changing its anti-dumping policies. Very important in terms of clarification of how it deals with its imports from poor countries and namely China. The first time I actually started to understand something about is was when I read this paper.
  • World trade – US policies. The US isn’t giving in on agricultural subsidies. Hillary Clinton does not want to extend the Trade Promotion Authority to the Bush administration which could help finalise the Doha Round. US-Americans and the Democrats are trade-sceptics at best. The climate in the US is one of anti-China, anti-trade, and anti-immigration hysteria (not only France, hey, is having its crisis..!). As it is a pre-election year things will not be getting better.
  • Geopolitical consequences of globalisation – emerging powers. China and Russia. This blog has written quite extensively on the matter, to be monitored closely. The German Die Zeit had an interesting analysis last week-end on the matter. Turkey – Turkey’s recent election and the rise of Abdullah Gul as president with an Islamist background is actually very good news: a new prosperous if very conservative middle-class has emerged as Turkey integrates with Europe and the world and plays by the rules of democracy, the role of the military is dwindling. This bodes well in many ways: integration into world markets and economic growth is good for democracy and stability in appears in the case of Turkey, and Islam can be compatible with democracy and modernity. Let’s see where things will ultimately be heading in this crucial country. Maybe Sarkozy will end up wanting Turkey into the EU (he he)?
  • The global economic fuel – Energy geopolitics. The EU is revising its strategy and integrating energy into its Neighbourhood policy. Oil countries are tightening their grip on their oil reserves (see Kazakhstan recently. Russia, Venezuela have received coverage in the blog), and generally also on their populations.
  • Global institutions and globalisation – the controversies over the successions of Wolfowitz at the World Bank and of De Rato at the IMF reflect a profound malaise over the discrepancies between a changing economic power balance and the institutional setting governing the economy based on a post-1945 order. The malaise is going to last. Will anything happen? Surely not this autumn, but the debate will need to be followed closely.
  • Europe’s political, economic policy, social and welfare systems adapting to globalisation – watch out for reforms (or not) happening in France. Will Germany and Italy ever be able to shake themselves up? EU-level policis. In 2008 – i.e., in a few months, we will celebrate ten years of the so-called Lisbon agenda that pledged to make Europe the world’s most competitive economy by 2010. Anybody seeing it happening?
  • Keeping open minds, borders and political systems – the current globalisation backlash in the rich countries, and the revisionist trends within the rich-country-based economics profession (even Paul Krugman is going down the path of pop-antiglobalism…!) are a sign of the deeper sense of crisis of a part of the world that feels it no longer is in control. There is no reason to think one is doomed. It is about reinventing oneself. On the other side of the spectrum, the current emerging nations could go down a dangerous path of militarisation, and reversal of political democratisation. Russia comes to mind. But China isn’t reassuring either. The middle-income countries haven’t found yet a way out of their impasse. There must be shrewd methods to climb up the economic ladder. In Latin America especially: Chavismo, US-FTA-“ismo”, or a Chileanismo (the most effective so far) – what will prevail? A book I am currently enjoying reading at the moment for the description of the political mental state and a turn to pragmatism in economic policies in Latin America is Santiso’s Latin America’s Political Economy of the Possible published last year at the MIT press.
  • Africa – it will certainly not join the global era this autumn. But its marginalisation needs to be tackled. Urgently.  
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