Is there a differnece between policies in emerging and developed economies?

It is pretty fancy to talk about the differences between emerging economies (EE) and developed economies (DE). We often get to hear the speeches from policymakers of emerging markets talking about how certain frameworks don’t apply/need to be modified to their countries. However, with the recent crisis, one wonders whether any of the differences still apply?

I came across this speech from Dr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand. He says there are two differences between DE and EE.

For emerging markets, there are two stylized facts that are unique to its policy setting. The first is the greater income and consumption volatility that have been observed in emerging markets, both in terms of the level and in terms of growth relative to developed economies. And the second is the fact that economic agents in emerging markets face greater limitations in the ability to smooth consumption in response to shocks.

These two factors lead to different policies. Then he goes on to talk about the different policies needed to manage these two shocks in emerging economies. You can easily replace the problems he associates with emerging economies as problems in developed economies and ask what is this comparison all about?

This point is well taken. I agree EE and DE are different. However, it can’t really be said that the institutions and frameworks in DE are superior to EE as recent crisis has shown. The policymakers have found to be short on every aspect – financial supervision, monetary policy etc. Some might say, the crisis could have been worse if the institutions in DE were like EE. I wonder how much worse? The policies have created a global tremor and it is being seen as the worst crisis since Great Depression in 1929.

I would think it is best to have policies which suit your own country/economy and not ape or compare with the other developed economies.

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One Response to “Is there a differnece between policies in emerging and developed economies?”

  1. » Is there a differnece between policies in emerging and developed economies? Says:

    […] Finance, Economy-Business News, Stock Market wrote an interesting post today onHere’s a quick excerpt It is pretty fancy to talk about the differences between emerging economies (EE) and developed economies (DE). We often get to hear the speeches from policymakers of emerging markets talking about how certain frameworks don’t apply/need to be modified to their countries. However, with the recent crisis, one wonders whether any of the differences still apply? I came across this speech from Dr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand. He says there are two differences between […]

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