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Publication(World Bank, Washington, DC, 2010-01) Brahmbhatt, Milan ; Canuto, OtavianoRecent events have rekindled interest in the role of primary commodities in development. Was the boom in commodity prices from around 2003 through 2008 just a cyclical event, or does it suggests that prices have entered on a period of secular strength, driven by factors such as demand in big, fast growing developing countries like China? It is notable that, while commodity prices fell sharply from their peak in 2008 with the onset of the global recession, they generally remained much higher than previous recession lows, often as high as in 2005-07, a period of robust world growth. Furthermore, prices have also rebounded smartly over the course of 2009. If a period of sustained commodity strength is imminent, what are the implications for development policies? Development economists have long debated the problems associated with the traditionally high specialization in production and export of primary commodities of most developing countries. Many argue that dependence on primary commodities has proved to be a poisoned chalice or curse for development, which, given this view, necessarily entails structural change and rapid industrialization. Others, however, suggest that sustained high commodity prices could reduce the relevance of an industrialization-focused development strategy for commodity-dependent, low-income countries (LICs). In this note authors briefly review four questions: how dependent are developing countries on primary commodity exports? What is the outlook for primary commodity prices? Is there a natural resource "curse" (or blessing)? What policies can help poor countries best manage commodity resources for long-run development?
Publication(World Bank, Washington, DC, 2009-08) Brahmbhatt, Milan ; Da Silva, Luiz PereiraA recent paper has highlighted some close correspondences between economic performance during the present world recession and that during the early months of the great depression that began in late 1929. World industrial production from April 2008 to April 2009 fell as rapidly as during the first year of the great depression, while stock market prices and world trade volumes have fallen more rapidly than in the comparable period. These comparisons lead Eichengreen and O'Rourke to draw the alarming conclusion that 'it's a depression alright.' They note, however, that fiscal and monetary policies are likely to be much more supportive of economic activity in the next 1-2 years than they were during the first few years of the great depression. The first part of this note outlines some other important structural differences between the world economy today and in the 1930s that are likely to affect how the present recession plays out relative to the great depression. The second part of the note discusses possible recovery paths out of the current crisis.
Publication(World Bank, Washington, DC, 2008-08) Brahmbhatt, MilanThis PREM note provides some perspectives on the ongoing financial turmoil and the present complicated situation in the world economy. Two unifying themes can help to organize the discussion. First, the world economy is working its way through the aftershocks of a major global credit boom-and-bust cycle. A second cross-cutting theme is the emergence of developing countries as major players in the world economy. The combination of these trends could, over time, undermine existing structures of international economic cooperation.
Publication(World Bank, Washington, DC, 1999-05) Aiyar, Swaminathan S. ; Brahmbhatt, MilanThe growth prospects of developing countries have worsened over the past six months, world trade growth has slowed, capital flows are unlikely to recover to pre-crisis levels in the near term, and, commodity prices are weak. This note reviews the reduced access to international capital flows by most emerging countries, as a result of the financial crises, while dollar export prices for developing countries fell eleven percent in 1998, with both primary commodities, and manufactures suffering. As a result, world trade fell one percent in current dollars in 1998, the first decline since 1993, while global trade volume in goods, grew only four to five percent in 1998, the slowest advance since 1992, barely half the performance in 1997. The note provides an outlook for developing regions, with expected differences in performance between regions, noting significant downside risks to even this somber outlook, and, predicts potential revival of protectionist sentiments in the United States, and Europe, should economic activity contract.