Archive for April 25th, 2011

Thinking about capital flows as a Big Fish Small Pond Problem

April 25, 2011

Andrew Haldane of Bank of England is in top form. He along with Lorenzo Bini Smaghi of ECB have emerged as the finds of the crisis amidst policymakers. Their speeches/papers are insightful and force you to think. You may not agree with Smaghi as he has strong pro-European ideas, but still takes you through issues with Europe which no one does.

There are few such problems with Haldane. His speeches have loads of data, graphs and ideas.

In his recent speech he says we need to think about this capital flows issue as Big Fish Small Pond Problem.

  • Big fish is developed econs which are looking to diversify their portfolios. The home bias (investors investing in home countries) has declined over the years
  • Small Pond is developing economies which are looking to deepen their financial markets but this would take time.
  • As big fish moves into small pond, ripples and bubbles are bound to be there. This is what is happening in developing economies which are trying to prevent these fallouts.

His paper looks at this BFSP issue:

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How and Why Does History Matter for Development Policy?

April 25, 2011

Michael Woolcock, Simon Szreter and Vijayendra Rao write this paper exploring how historians/history have basically been ignored in the development process.

They say this idea that history matters for development came to light when people realised institutions matter for development. And as instis depend on historical outcomes hence its importance. However, this is too limited and myopic a view:

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