Posts tagged under currency war
Who should take the lead in getting international trade and the Multilateral trading system back on track?
In an article in the Daily Star earlier this week Dani Rodrik, professor in Political Economy at Harvard University’s John F. Kennedy School of Government, discuss the role of the developing countries in the world economy after the downturn.
Can developing countries carry the world economy? Yes; few developing countries are as indebted as the G3, they are headed for strong growth, the quality of policy making is improving significantly in many developing countries and tech transfer as a consequence of inclusion in international production networks is spurring development. Developing countries already (or still) experiencing growth should not be held back and have to wait around for the developed world to get back on track and take the lead in the world economy.
However, although quality of policy is improving many developing countries still lack a sustainable growth strategy. As an example Rodrik mentions China and the ongoing “currency war”. The world has put up with China’s subventions of their exports through an undervalued currency and this fact has largely been the reason to China’s unmatched growth rates. It is however unlikely that the world will put up with these subventions much longer and force an appreciation of the renminbi. An appreciation of the renminbi might effectively put a halt to China’s enormous growth.