Economics

Poor Economics

Poor Economics: The Challenges of Defining Development

By Simon Halliday

We all agree that development is a good thing, but how do we know if or when a given policy works? Poor Economics enters the debate by detailing how randomised controlled trials (RCTs) help us to evaluate microeconomic development policy, while simultaneously underselling the benefits of alternative methods. Nevertheless, the book is insightful and provides a more nuanced picture of the issues of poverty and development than is typical of the popular literature on aid and development.

Deficit

The Deficit in Current Economic Thinking

By Roland Bensted and Christian Nicholson

The recent financial crisis has stimulated a justifiable interest in the future of developed economies. Since the 2008 Lehman Brothers collapse the economics discipline has been forced to confront its failings. As Dominic Lawson has noted, it has partially undergone a much needed shift towards behavioural economics rather than the cold “rational” mathematical economics that failed so spectacularly. However, as this article describes, there remains enormous scope for a more fundamental rethinking of the political economy of the developed world.

China_LatAm

The Dragon’s Appetite for Latin America

By Antonio Sampaio

For decades a generation of Latin American thinkers criticized the unequal relationships between the region and developed countries - especially the US. Their preferred weapon was Dependency Theory, which focuses on the pattern of poor countries providing cheap labour and natural resources to rich ones, and receiving in exchange manufactured goods in a way that perpetuates the backwardness of Third World economies. In the last decade, the rise of another developing economy, China, has made the old theory resurface. 

Keynes

The Return of Keynes?

By Roland Bensted and Christian Nicholson

The financial crises since 2007 have led to a resurgence in the stock of John Maynard Keynes. Recognised as one of the giants of economics, Keynes had been overtaken and largely forgotten by the neo-classical economics that had dominated public policy since the 1980s.  Yet, Keynes’ concept of government stimulus spending became the go-to policy for a number of world governments desperate to avoid economic catastrophe. As Robert Lucas, a prominent member of the neo-classical orthodoxy, has dismissively remarked, “Everyone is a Keynesian in a foxhole”. Is this the limit to which Keynes is of use to us in the present? 

Libya Protests

Eyes Wide Shut: Italy and the Libyan Revolt

By Sebastiano Sali

Since the beginning of the revolt in Libya, the Italian government has been under pressure for its role in the management of the crisis. Its behaviour has been assiduously scrutinised by international observers. The shared history of Italy and Libya has bound the two countries in a special relationship, sometimes positive, other times negative. Libya’s grudge towards its colonial past has tarnished Italy’s image in the country. For this reason, Italian governments have progressively increased the level of bilateral cooperation with Tripoli in recent decades. Moreover, both left and right-wing Italian governments have supported Colonel Gaddafi’s re-entering the international political stage, gaining him some credibility and legitimisation as a “not-as-bad-as-the-others” African dictator.  The apogee of that policy has been the signature of Italy-Libya treaty in Benghazi on 30 August 2008.

AP Photo/Thibault Camus

Can the Euro Survive?

By Roland Bensted

When Estonian Prime Minister Andrus Ansip marked his country’s adoption of the Euro on 1 January 2011, by withdrawing cash from a specially installed ATM in Tallinn, not all of his compatriots shared his enthusiasm. Many people, both within Estonia and further afield, question why the Baltic state would wish to join the troubled single European currency and, indeed, whether the Euro can even survive.

AP Photo/Alex Brandon

Taming the Dragon

By Jacob Hershey

The Third Annual US-China Strategic and Economic Dialogue (S&ED), a round of bilateral talks that are meant to improve relations and cooperation between the two largest economies in the world, was held on 9-10 May 2011 in Washington, DC. For as much lip service as has been given to China as the nation to restore bipolarity to the world order, it seems more and more that the two countries are far too economically co-dependent to truly be opposite forces outside of their own bilateral relations. What was most interesting about this year’s round of talks was China’s open concern for its significant investment in the US Treasury, and how willing it is now to use its influence.