www.tradove.com While countries overall benefit from global supply chains, the move of low-skill jobs from advanced economies is one reason, along with technological change, that income inequality is at historic highs. In – Who Let the Gini Out? – IMF economists Davide Furceri and Prakash Loungani conclude that two other factors contributing to suppliers increased inequality are the opening up of capital markets to foreign entry and competition (-capital account liberalization-) and policy actions by governments to lower their budget deficits (-fiscal consolidation-). Both these policy actions confer benefits, the authors stress, and governments do not undertake them on a whim.
Also in this issue, Ake Lonnberg, recently retired IMF currency reform expert, explains in – New Money – how a country introduces a new currency. Oxford professor Paul Collier writes in – Under Pressure – about the importance of communications and managing expectations after a big resource discovery. And we profile Peter Blair Henry , dean of New York University’s Stern School of Business. As a child in Jamaica, Henry experienced firsthand what happens when leaders pursue misguided economic policies. Today, he continues to study why some countries are rich and others are poor-and how business can help.
But the deal reached last weekend in Bali, Indonesia has once again reinstated belief in effective purchasing manager negotiations. While all of the Doha Round’s issue areas were not addressed, the deal will greatly help promote trade facilitation, cutting red tape in customs procedures through global coordination. An often-cited U.S. think tank report has estimated that trade facilitation alone will provide over $1 trillion in global export gains, or an increase of around 5% to global trade. The WTO’s decision will also ensure that the least developed countries have full access to more lucrative developed countries’ markets, helping to promote greater equality in global trade.