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Esther Dweck Chief Economist , Ministry of Planning and

LAC-EU ECONOMIC FORUM 2013 Globalization, International Trade and the Welfare State at Crossroads: Converging Views in European and Latam countries? Session 2 Real imbalances: trade, industrial development and environmental issues. Esther Dweck

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Esther Dweck Chief Economist , Ministry of Planning and

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  1. LAC-EU ECONOMIC FORUM 2013Globalization, International Trade and the Welfare State at Crossroads:Converging Views in European and Latam countries?Session 2 Real imbalances: trade, industrial development and environmental issues Esther Dweck ChiefEconomist, Ministry of Planning and Professor of Economics, Universidade Federal do Rio de Janeiro SANTIAGO, 21 – 22 DE ENERO DE 2013

  2. Fiscal Problem might be a Crisis Problem International Monetary Fund, World Economic Outlook Database, October 2012

  3. FromPrivate to PublicDebt The Economist, ???

  4. NewMonetary Standard: Dollar Standard Source: BEA

  5. Global Imbalances

  6. Global Imbalances Important argument in UNCTAD TDR 2012 (ch. 4): • There was an important change in strategy chosen by developed country enterprises : • During the 1990s: productivity growth and output expansion through investment in innovation • During the 2000: greater emphasis on becoming more competitive internationally through wage restraints and reduced employment opportunities, combined with attempts to boost profits through financial investments • This strategy was facilitated by the deregulation of financial markets and greater flexibility of the labourmarket

  7. Global Imbalances International Monetary Fund, World Economic Outlook Database, October 2012

  8. Global Imbalances Source: Un Statistics

  9. Global Imbalances

  10. Global Imbalances Some authors (e.g. Bibow, 2008 and Blecker, 2011) argument: • Economic conditions and policies in the surplus makes some sense if interpreted as reflecting “deficient demand”in the global economy • The real issue is why consumption and investment have been systematically depressed in the surplus countries, relative to their national incomes. • The core reason why consumption is repressed in most of the surplus countries is the phenomenon of wages lagging behind productivity (von Arnim, 2010; Cripps et al., 2011)

  11. Global Imbalances Source: IMF

  12. Global Imbalances Source: IMF

  13. Global Imbalances Source: Blecker, 2011

  14. Global Imbalances “the object of the new system must be to require the chief initiative from the creditors countries” “nothing is more certain than that he movement of capital funds must be regulated; - which in itself will involve far-reaching departures from laissez faire arrangements”

  15. NewMonetary Standard: Dollar Standard Source: BEA

  16. Exchange Rate Mismatch Source: Un Statistics

  17. Convergence? International Monetary Fund, World Economic Outlook Database, October 2012

  18. Convergence among advanced economies International Monetary Fund, World Economic Outlook Database, October 2012

  19. Divergence among developing economies International Monetary Fund, World Economic Outlook Database, October 2012

  20. China is the main new player Share in Wolrd Industrial Production (US$ ppp) Source: World Bank

  21. Brazil – leakage of Domestic Demand Source: IBGE

  22. Brazil – Worsening Trade Balance Imports and Exports Volume Index and Real Effective Exchange Rate 25

  23. Brazil – Worsening Trade Balance 26

  24. Brazil:capitalcontrol measures

  25. Brazil –capital control measures

  26. Brazil – leakage of Domestic Demand

  27. Brazil – leakage of Domestic Demand

  28. Brazil – New Macroeconomic Setting? Source: IBGE

  29. Brazil – Import Coefficient and Exchange rate Exchange Rate HighandMedian-HighTechnology Manufacturing LowandMedian-LowTechnology Fonte: Marconi e Rocha (2012).

  30. Brazil – New Macroeconomic Setting? Share of Imported Vehicules in new liscensing Source: IBGE

  31. Brazil – Industrial Policy • Exchange Rate Policy • Tax Measures • Payroll Tax, IPI and Infraestructure • Public Procurement Measures • Funding for International Trade • Trade Defence Mechanisms • Incentives to ICT sector • Broad Band Plan and Semiconductors (PADIS) • Funding for the private sector investment (BNDES) • More credit, Lowering interest rates and Longer Term • Vehicles Regime

  32. Brazil – Lower External Vulnerability

  33. Regional Integration Source: Un Statistics

  34. Brazil – Worsening Trade Balance 37

  35. Brazil – Worsening Trade Balance 38

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