4 results
Irreparable ignorance, protean power, and economics
- George F. DeMartino, Ilene Grabel
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- Journal:
- International Theory / Volume 12 / Issue 3 / November 2020
- Published online by Cambridge University Press:
- 13 August 2020, pp. 435-448
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The ongoing crisis in mainstream economics has opened the door to recognition of true uncertainty. Economists are increasingly embracing uncertainty and tracing its implications for responsible economic practice and policy design that foregrounds rather than dismisses the limits to knowledge. Protean Power (PP) promotes a similar shift in international relations. PP advances a key distinction between operational and radical uncertainty. We argue that a complementary and perhaps more productive way to theorize the epistemic insufficiency facing agents as they map and implement strategies is to distinguish between ‘reparable’ and ‘irreparable’ ignorance, which leads to ‘Hirschmanian’ pragmatism.
6 - Capital Management Techniques in Developing Countries
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- By Gerald Epstein, University of Massachusetts, Ilene Grabel, University of Denver, Ks Jomo, University of Malaya
- Edited by Ariel Buira
- Foreword by Dani Rodrik
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- Book:
- Challenges to the World Bank and IMF
- Published by:
- Anthem Press
- Published online:
- 05 March 2012
- Print publication:
- 06 June 2003, pp 141-174
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Summary
Abstract
We examine the experiences of five developing countries that employed various capital management techniques during the 1990s. By ‘capital management techniques’ we refer to policies of prudential financial regulation and controls that affect international capital flows to achieve national economic goals. One key finding is that by employing a diverse set of capital management techniques, policymakers in Chile, Colombia, Taiwan Province of China, Singapore and Malaysia were able to achieve critical macroeconomic objectives. These included the prevention of maturity and locational mismatch; attraction of favored forms of foreign investment; reduction in overall financial fragility, currency risk, and speculative pressures in the economy; insulation from the contagion effects of financial crises and enhancement of the autonomy of economic and social policy. We also examine the structural factors that contributed to these achievements and consider the costs associated with the capital management techniques employed. We conclude by considering the policy lessons of these experiences and the political prospects for other developing countries that wish to apply them.
Introduction
Developing countries can use capital management techniques to strengthen financial stability, support good macroeconomic and microeconomic policies and boost investment. Countries have, in fact, employed these techniques during the 1990s; and so we consider the experiences of five such countries.
We use the term capital management techniques (CMTs) to refer to two complementary (and often overlapping) types of financial policies: policies that govern international private capital flows, called capital controls, and those that enforce prudential management of domestic financial institutions.
6 - Capital Management Techniques in Developing Countries
- Ariel Buira
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- Book:
- Challenges to the World Bank and IMF
- Published by:
- Anthem Press
- Published online:
- 10 September 2020
- Print publication:
- 06 June 2003, pp 141-174
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- Chapter
- Export citation
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Summary
Abstract
We examine the experiences of five developing countries that employed various capital management techniques during the 1990s. By ‘capital management techniques’ we refer to policies of prudential financial regulation and controls that affect international capital flows to achieve national economic goals. One key finding is that by employing a diverse set of capital management techniques, policymakers in Chile, Colombia, Taiwan Province of China, Singapore and Malaysia were able to achieve critical macroeconomic objectives. These included the prevention of maturity and locational mismatch; attraction of favored forms of foreign investment; reduction in overall financial fragility, currency risk, and speculative pressures in the economy; insulation from the contagion effects of financial crises and enhancement of the autonomy of economic and social policy. We also examine the structural factors that contributed to these achievements and consider the costs associated with the capital management techniques employed. We conclude by considering the policy lessons of these experiences and the political prospects for other developing countries that wish to apply them.
1. Introduction
Developing countries can use capital management techniques to strengthen financial stability, support good macroeconomic and microeconomic policies and boost investment. Countries have, in fact, employed these techniques during the 1990s; and so we consider the experiences of five such countries.
We use the term capital management techniques (CMTs) to refer to two complementary (and often overlapping) types of financial policies: policies that govern international private capital flows, called capital controls, and those that enforce prudential management of domestic financial institutions. A strict bifurcation between capital controls and prudential regulations often cannot be maintained in practice. Policymakers frequently implement multifaceted regimes of capital management, as no single measure can achieve the diverse objectives.
Moreover, the effectiveness of any single management technique magnifies the effectiveness of other techniques and enhances the efficacy of the entire regime of capital management. For example, certain prudential financial regulations magnify the effectiveness of capital controls (and vice versa). In this case, the stabilizing aspect of prudential regulation reduces the need for the most stringent form of capital control. Thus, a program of complementary CMTs reduces the necessary severity of any one technique and magnifies the effectiveness of the regime of financial control.
Comment by Ilene Grabel
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- By Ilene Grabel
- Edited by Dean Baker, Economic Policy Institute, Washington DC, Gerald Epstein, University of Massachusetts, Amherst, Robert Pollin, University of Massachusetts, Amherst
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- Book:
- Globalization and Progressive Economic Policy
- Published online:
- 04 August 2010
- Print publication:
- 05 November 1998, pp 215-218
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Summary
Marc Schaberg's paper is an interesting and useful contribution to the prescriptive project to which this volume is devoted. Schaberg's paper addresses two critically important questions: (1) how precisely has globalization transformed the terrain on which monetary policy operates? and (2) how – in this changed environment – can progressive policy makers nevertheless be expected to influence economic outcomes?
Let me begin by reviewing the principal arguments and policies put forth in the chapter. Schaberg maintains that the globalization and liberalization of financial systems in the OECD has caused monetary authorities to rely on indirect as opposed to direct policy instruments. Globalization and liberalization have also brought about a near convergence in the structure of national financial systems, and it is this structural convergence that has given rise to a convergence in the tools utilized by monetary policy makers. Since, according to Schaberg, the instruments of financial control have been transformed by globalization and liberalization, progressives need to look for new means by which the financial system can be put in the service of a progressive policy agenda. Toward this end, Schaberg proposes that monetary authorities increase their control over the lending activities of banks and nonbank institutions; that a system of differential asset reserve requirements be put in place; and that a tax on financial transactions be imposed. I endorse these policies; the imposition of any or all of them would go some distance toward resolving the concerns that motivate Schaberg's paper.