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Though capital controls are generally disliked by economists, they remain popular among countries, as both emergency measures and part of longer-term strategies. If designed correctly, they do not pose a threat to country welfare or to the global economy.
Global trade imbalances result from national policies that stimulate high or low saving or consumption rates, rather than from cultural predispositions to save or spend, making coordinated policy reform crucial to rectifying those imbalances.
Although regional institutions have proliferated in East Asia in recent years, their ability to provide a cohesive governance structure for the region is limited by mutual mistrust among their member states.
Although China has taken positive steps to address the debt burdens of local governments, it remains to be seen how it will repay that debt. Meanwhile, the increase in international trade denominated in RMB is likely being driven largely by speculative demand.
In the years to come, the rise of emerging economies will reshape the global economic landscape. This monumental shift will enhance prosperity but also create great tensions that could stop progress in its tracks.
While the character of the U.S.-China relationship will have great implications for global political and economic stability, mistrust plagues the bilateral relationship and is evident in public discourse and in the Chinese and American media.
Although World Trade Organization policies helped limit the increase in protectionist measures during the recent financial crisis, a mutually reinforcing set of legal and structural changes in the world economy played a larger role in keeping global markets open.
The forces that kept protectionism at bay during the financial crisis—chief among them, national laws, regional agreements, and structural economic shifts—should be the focus of future trade negotiations.
One of the remarkable features of the recent global financial and economic crisis is that few countries resorted to protectionism. What economic and political factors account for the lack of protectionism?
The leadership of the International Monetary Fund should be open to any qualified candidate from anywhere in the world and the selection process should be inclusive, transparent, and based on no other considerations than the candidate’s professional merits, experience, and integrity.
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