New Developmentalism: development macroeconomics for middle-income countries

This article resumes New Developmentalism—a theoretical framework being defined since the early 2000s to understand middle-income countries. It is constituted of a political economy and development macroeconomics and originated in development economics and post-Keynesian macroeconomics. From the start, it is an open and development-oriented economics. New Developmentalism focuses on two macroeconomic accounts, the fiscal and the current accounts, and in five macroeconomic prices which the market is unable to keep ‘right’. It affirms that the exchange rate tends to be cyclically overvalued, thus making the competent companies non-competitive and leading the economy to go from crisis to crisis, to the extent that countries are irresponsible in fiscal terms and search to grow with foreign indebtedness. New Developmentalism has a new definition of Dutch disease, and a means to neutralise it. Counterintuitively, it argues that middle-income countries should reject external finance and balance the current account.

A Proposed Restricting Of Lebanese Public Debt To Promote Economic Growth

The Lebanese economy is subjected to major constraints impeding its growth and its development. Public overborrowing constitutes the main obstacle against this growth. The Lebanese economic situation is briefly presented in this paper. Then, a measurement of the Lebanese public debt dangers is proposed through an econometric model illustrating the snowball effects. After an analysis, a simulation aiming at restructuring this debt, with a valuation of the foreign indebtedness limits, is presented.

Epistemological shell of the econometric findings

The paper is a continuation of the dialogue relating to the study cited as the first item in the reference list to this article. It contains further comments on that study as well as responses to the authors? reply to the previously given comments, published in a special issue of the Ekonomski anali cited as the second item of the reference list. The principal issue of this exchange is the treatment of previous non-econometric work in the field of macroeconomic interrelationships and of the corresponding changes in the economy of Serbia. The postulate advanced in this text is the same as the one in the previous critical review of the study by Arsic et al. (2005a) and consists in the statement that econometric analysis of empirical characteristics of the Serbian economy should respect and incorporate knowledge accumulated through the use of non-econometric techniques before the study was produced. Econometricians should do that by framing appropriately their maintained hypotheses, by selecting structural specification of the various relations in the model and through interpreting the results obtained in the form of econometric estimates. A number of critical observations are reiterated regarding the way some relations are structurally specified. Among such criticized relations are the model?s production function having imports as the only argument and the import function. Imports are judged as inappropriate in the role of the argument in the production function because they not only contribute to production through technological complementarities but also reduce it through the demand segment of the system, by capturing a good deal of domestic demand and stifling a number of sectors of domestic economy. Imports are financed, among other, by several ephemeral, short-lived sources such as donations, foreign indebtedness and privatization receipts. Imports are therefore not sustainable and their enormous increase within a limited time interval boils down to a destructive blow, to a dangerous shock to the domestic economy similar to the Dutch disease. Critical remarks are also given regarding the import function in which the sum of wages and salaries is adopted as a measure of the aggregate demand.

Economic and financial relations of Serbia with foreign countries in the period 2000-2003

The dissolution of the federation, war in the immediate environment, the UN sanctions, scarce investment as well as the NATO air-attacks had disastrous consequences for trade and financial relations of Serbia with foreign countries. Simultaneously, its foreign debt rose sharply due to the accrued interests, being at the end of 2000 substantially higher than Serbian gross domestic product. Thanks to the write-off of 51% of debt towards the Paris club, a windfall of donations and obtaining new favorable medium-term and long-term credits, the condition of Serbia's international financial relations considerably improved in the period 2001-2003, thus enabling it to run a foreign-exchange surplus during this period. Due to the policy of de facto floating exchange rate, sudden and drastic liberalization of imports and the lack of non-tariff protection, exports of goods and services in the last three years, contrary to plans, have increased much more slowly than imports, resulting in a large increase in growth and an enormously high level of trade deficit unsustainable in the long run. Due to new credits euro-denominated and other foreign-currency denominated debts being converted into the increasingly weaker dollar and the accrual of interests Serbian foreign debt increased sharply reaching an all-time high at the end of last year and being twice as high as was officially predicted three years before. The level of foreign debt is very high. Trade deficit and foreign indebtedness have become the most serious problems of Serbian economy and unless appropriate measures are taken, it will soon face a serious debt crisis.

Why Economic Growth Trends Differ So Much across Developing Countries in the Era of Globalisation (The Iqbal Memorial Lecture)

The claim of globalisation critics that the income gap with industrial countries is bound to widen for essentially all developing countries as a consequence of economic globalisation is in conflict with empirical evidence. Economic performance differs tremendously across developing countries. We discuss several factors such as capital accumulation, openness to trade, and foreign indebtedness which may explain the varying experience with globalisation in regard to per capita income growth and income distribution. Economic restructuring is shown to represent an important—though frequently neglected—link between globalisation and country-specific performance. We conclude that national policy-makers continue to have effective leverage to promote economic catching-up and poverty alleviation in the countries they govern.