Middle-Income Countries and the International Monetary System

2020 ◽  
pp. 318-342
Author(s):  
José Antonio Ocampo
Keyword(s):  
Sovereign Debt ◽  
International Monetary System ◽  
External Financing ◽  
Macroeconomic Policies ◽  
Middle Income ◽  
Middle Income Countries ◽  
Crisis Prevention ◽  
Monetary System ◽  
System P ◽  
Reserve System

This chapter looks at the problems that middle-income countries (MICs) face in the international monetary and financial system, some of which can contribute to the generation of a middle-income trap. It looks at their dependency status in the global reserve system, the need to self-protect against crises by accumulating large amounts of foreign exchange reserves, and how they would fare in eventual reforms of the system. It then analyzes the significant volatility of external financing that these countries face, which generates risks of macroeconomic and financial crises and constrains the adoption of counter-cyclical macroeconomic policies; capital account regulations are seen in this regard as a crucial crisis-prevention tool. Among the instruments put in place internationally to manage those risks, there have been partial advances in balance of payments financing, but significant underdevelopment of sovereign debt workout mechanisms. Finally, the chapter considers the inadequate representation of middle-income countries in the governance of the system.

Introduction

2020 ◽  
pp. 1-20
Author(s):  
Michael Schiltz
Keyword(s):  
Transaction Cost ◽  
Sovereign Debt ◽  
Network Effects ◽  
International Monetary System ◽  
Late Nineteenth Century ◽  
Financial Policy ◽  
Policy Makers ◽  
Monetary System ◽  
Long Run ◽  
Currency Competition

This chapter lays out the conceptual framework needed to grasp the challenges facing exchange bankers in late nineteenth-century Asia. It borrows from the transaction cost literature underlying the study of the structure of the international monetary system; and it subscribes to the notion that such structure is the product of international currency competition. In the historical literature, applications of these insights are surprisingly scarce. Yet it is demonstrated that, by (1) settling on the existence of a distinction between ‘center’ and ‘periphery’ and (2) the existence of ‘network effects’, the transaction cost approach may explain the persistence of monetary arrangements in the long run. Remarkably, seemingly ‘retreating’ currencies retain a degree of superiority that would not be warranted in case network effects were absent; vice versa, non-liquid currencies have only a very small chance at climbing the ladder of currency prestige—they are structurally disadvantaged. It is argued that the distinction between center and periphery is real, not just analytical, and has had tangible implications for monetary and financial policy makers in the fields of sovereign debt and trade finance.

scholarly journals Le système monétaire européen à la lumière de l’expérience et de la théorie monétaires

2005 ◽  
Vol 12 (3) ◽  
pp. 465-474 ◽  
Author(s):  
Roger Dehem
Keyword(s):  
Gold Standard ◽  
International Monetary System ◽  
Macroeconomic Policies ◽  
Monetary Policies ◽  
Bretton Woods ◽  
The Past ◽  
Monetary System ◽  
The Sixties ◽  
History Of ◽  
The One

In the light of monetary experience and theory, the EMS appears to be unsustainable. Monetary history of the past sixty years shows that every attempt to stabilise the international monetary System has been frustrated as a consequence of divergent egocentric monetary policies. The breakdown of the rules of the gold standard game in the twenties, as well as the use of money as an instrument in national macroeconomic policies under the Bretton Woods regime have ultimately led to the demise of the fixed exchange rates System. In the sixties, European views on monetary policies were quite divergent, but in the seventies institutional attempts were made to bring them apparently into line. The "snake" arrangements, initiated in 1972, soon degenerated. The more ambitious attempt of 1979, the institutionally more elaborate EMS, suffers from the same basic weakness as all the previous ones. It lacks a common monetary standard, such as the one proposed in the 1975 Ail-Saints Manifesto. Such a standard is a necessary and a sufficient condition for a sustainable common monetary System.

scholarly journals Remittances in Russia and Caucasus and Central Asia

2020 ◽  
Vol 20 (128) ◽  
Author(s):  
Tigran Poghosyan
Keyword(s):  
Central Asia ◽  
External Financing ◽  
Middle Income ◽  
Middle Income Countries ◽  
Exchange Rate Movements ◽  
Global Shocks ◽  
Output Losses ◽  
Remittance Flows ◽  
Age Dependency Ratio ◽  
The Impact

Remitances are an important source of external financing in low- and middle-income countries. This paper uses the gravity model to analyze remittance flows in Russia and Caucasus and Central Asia (CCA) countries. Standard gravity determinants, such as GDP in sending and recieiving countries, bilateral distance, existence of common borders and common official language, fit remittance flows well. Remittances also react to inflation and exchange rate movements in recipient countries to sustain their purchasing power. In line with the altruism hypothesis, remittances flow to countries with higher age dependency ratio. Remittances are countercyclical and help stabilize outputs in recipient countries. However, global shocks resulting in sharp output losses of sending countries would lead to large volatility and decline of remittance inflows in recipient countries. The results of the analysis can be used to assess the impact of the COVID-19 shock on projected remittance flows into CCA.

scholarly journals Presentation: pay for performance, formulation, implementation and policy success: in low, middle and high income countries

2018 ◽  
Vol 21 (2) ◽  
Author(s):  
Fabiana Da Cunha Saddi ◽  
Stephen Peckham ◽  
Pedro Santos Mundim
Keyword(s):  
Health Systems ◽  
Pay For Performance ◽  
High Income ◽  
External Financing ◽  
Middle Income ◽  
Middle Income Countries ◽  
Policy Success ◽  
Systems Research ◽  
Performance Based Financing

Low and middle income countries (LMICs), as well as high income countries (HICs), with different politicaleconomic contexts, varying dependence on external financing, as well as in differentiated stages of development of primary health care (PHC), have adopted payment for performance or performance-based financing programs (P4P/PBF). Addressing the reality of different health systems and contexts, in LMICs and HICs, the rational basedassumptions supporting the design of P4P/PBF programmes have been theoretically questioned by more realistic political, organizational and motivational assumptions. Empirically, they have been challenged by alternative logics and processes arising from comparatively distinctive implementation and (re)formulation processes, diverse unexpected effects/evidence and a recognitionof the need to consider adaptations and long-term (sustainable) impacts on health systems. Consequently, P4P/PBF programs have been subject to social sciences, public policy, health policy and health systems research. These analyses have the potential to significantly enrich the debate and knowledge on the operation and impact of P4P/PBF programs and how they could be more effectively designed to support health system performance and strengthening, producing effective/real-world or long-term improvements. 

The Disruptive Role of MICs in the Development Cooperation System

2020 ◽  
pp. 273-296
Author(s):  
José Antonio Alonso ◽  
Jonathan Glennie
Keyword(s):  
International System ◽  
Development Cooperation ◽  
Middle Income ◽  
Poor Countries ◽  
Middle Income Countries ◽  
Development Agenda ◽  
System P ◽  
Cooperation System ◽  
To Receive

The emergence of middle-income countries (MICs) has increased the complexity of the international system and opened the space to a more comprehensive and universal development agenda. Additionally, through their role as providers of South–South cooperation (SSC), MICs have broken the strict donor/recipient duality that has characterized development cooperation policy and have widened the options for poor countries to receive international support. The chapter discusses the new theoretical foundations on which the development cooperation system should be based, as well as the new boundaries in which this policy should be deployed. Based on these changes, the chapter sheds some light on the role that MICs can play in the new development cooperation system, considering their dual role, as recipients and providers, as well as the implications that this engagement has for the rules, standards, and governance of the cooperation system.

Reforming the (Non)System

2017 ◽  
Author(s):  
José Antonio Ocampo
Keyword(s):  
Sovereign Debt ◽  
Global Economy ◽  
Rate System ◽  
Financial Architecture ◽  
Bretton Woods ◽  
Special Drawing ◽  
System P ◽  
Exchange Rate System ◽  
Special Drawing Rights ◽  
Reserve System

This chapter proposes a comprehensive yet evolutionary reform of the global monetary non-system that evolved out of the breakdown of the original Bretton Woods arrangement in the early 1970s. The recent North Atlantic financial crisis showed how dysfunctional the current international monetary and financial architecture is for managing today’s global economy, and led to calls to reform it. Proposals for reform in this chapter include: (i) a global reserve system that mixes the multi-currency arrangement with an active use of the International Monetary Fund’s Special Drawing Rights; (ii) stronger mechanisms of macroeconomic policy cooperation, including management of the exchange rate system and capital account regulations; (iii) additional automatic balance-of-payments financing facilities, and the complementary use of swap and regional arrangements; (iv) a multilateral sovereign debt workout mechanism; and (v) major reforms of the system’s governance.

The Provision of Global Liquidity

2017 ◽  
Author(s):  
José Antonio Ocampo
Keyword(s):  
International Monetary System ◽  
Currency Reserve ◽  
Mixed System ◽  
Asymmetric Adjustment ◽  
Monetary System ◽  
Special Drawing ◽  
Global Liquidity ◽  
Special Drawing Rights ◽  
Alternative Routes ◽  
Reserve System

This chapter starts by analysing three major problems of the current international monetary system: the asymmetric-adjustment problem, dependence on the monetary policy of the main reserve-issuing country, and the large demand for self-insurance by developing countries. It then explores two basic alternatives to reform the system: one route would involve a fully-fledged multi-currency reserve system; the alternative route would be to design an architecture based on the IMF’s Special Drawing Rights (SDRs), the world’s only truly global reserve asset. These two alternative routes could be mixed in a number of ways, and in fact their complementary use may be the only possible way forward. Under such a mixed system, SDRs would become a major global reserve asset and the source of financing for IMF lending, but national/regional currencies would continue to be used as international means of payment and stores of value.

The 1960s

2018 ◽  
Author(s):  
Samuel Wangwe ◽  
Hiroshi Kawamura
Keyword(s):  
Economic Growth ◽  
Creative Thinking ◽  
Global Climate ◽  
International Monetary System ◽  
Developed Countries ◽  
Monetary System ◽  
System A ◽  
Development Decade ◽  
System P ◽  
The 1960S

The global climate in the 1960s was one of excitement and hope brought by the independence of many countries from colonialism, the UN declaration of the First Development Decade, and unprecedented economic growth. Against this background, the Survey reminded developed countries about their responsibilities to assist broader economic growth and industrialization in developing countries in support of social development. The Survey contributed to identifying development challenges and to enhancing creative thinking to development policy and practices. It also provided analytical rationale for establishing specialized UN entities such as UNCTAD and UNIDO. Behind the excitement, however, the Survey expressed concerned about the sustainability of the international monetary system, a prelude to the turbulent 1970s and 1980s following the collapse of the Bretton Woods system.

scholarly journals Structural Change in South Africa

2021 ◽  
pp. 28-52
Author(s):  
Nimrod Zalk
Keyword(s):  
South Africa ◽  
Structural Change ◽  
Industrial Policy ◽  
Structural Transformation ◽  
Industrial Restructuring ◽  
The Political ◽  
Macroeconomic Policies ◽  
Middle Income ◽  
Middle Income Countries ◽  
Political Settlement

This chapter traces how policies and institutions flowing from the post-apartheid political settlement in South Africa gave rise to a range of rents and rent-like transfers, which have not, however, been adequately invested to advance structural transformation. Rather, corporate and industrial restructuring has been associated with a ‘high-profit and low-investment’ economy and deindustrialization. Low investment, job losses, and limited black participation in the ‘commanding heights’ of the economy from the mid-1990s spurred the political impetus for a stronger role for the state during the 2000s. The formal introduction of industrial policy in 2007 has had some successes and helped to avert even deeper deindustrialization. However, it has been undermined by unsupportive macroeconomic policies and a weak articulation between policies to advance black ownership and structural transformation. Rising corruption and maladministration have further undermined structural transformation. Implications are drawn from South Africa’s experience for middle-income countries more generally.

scholarly journals The Governance of the International Monetary System

2017 ◽  
Author(s):  
José Antonio Ocampo
Keyword(s):  
Developing Countries ◽  
Ad Hoc ◽  
International Monetary System ◽  
Developed Countries ◽  
Regional Institutions ◽  
Layered Architecture ◽  
Monetary System ◽  
System P ◽  
Regulatory Bodies ◽  
Bretton Woods Institutions

The governance of international financial institutions has been a subject of debate for decades. The major issues have been the control of existing institutions by the major developed countries, the associated exclusion of developing countries from decision-making, and the tendency of major decisions to be taken by ad hoc groupings of major developed countries outside the framework of treaty-based organizations. This chapter therefore proposes a reformed architecture of the international monetary system based on three pillars. The first is a representative apex organization, which can be understood as a transformation of the G20 into a representative international institution. The second is the continuous reform of ‘voice and participation’ of developing countries in the Bretton Woods institutions and global regulatory bodies. The third is the design of a dense, multi-layered architecture, with the contribution of regional and sub-regional institutions, mirroring the denser architecture that characterizes the system of multilateral development banks.

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