Foreign Policy - metered paywall - 16 Jul 2018
This article puts forward the argument of “premature deindustrialization” that every investor in emerging markets should carefully consider: for two centuries, countries have used low-wage labor to climb out of poverty, but what will happen when robots take those jobs? If automation prevents today’s poor nations from developing the kind of manufacturing that would allow them to increase urbanization, train low-skilled workers, and accumulate capital, the long-term economic impact could be disastrous (reads in 6-8 min).
Published in Weekly selection 20 July 2018
Foreign Affairs (metered paywall) - 3 Jul 2018
We’ve addressed this issue on many occasions, but it’s of such fundamental importance that it’s worth re-emphasizing it. The US has the loosest fiscal stance of any of the G7 countries; but the effects of the US deficit go beyond the US. Thanks to the dollar’s outsize global role, the first casualties are likely to be emerging economies that have used the dollar to denominate their debts, not the US itself. The reason is dead simple, but fundamental: a stronger dollar and rising US interest rates are increasing the burden of paying all dollar-denominated debts around the world (reads in 7-8 min).
Published in Weekly selection 7 July 2018
Project Syndicate - 6 Jun 2018
The Harvard economist thinks that a full-blown global debt crisis is unlikely to erupt. In his opinion, the recent softening of European performance is a concern, but the overall global economic picture remains strong. Although it is true that several emerging-market firms have piled up worrisome quantities of dollar-denominated external debt, many foreign central banks are brimming with dollar assets, especially in Asia. The most important reason for optimism is that global long-term real interest rates are still extremely low (reads in 6-7 min).
Published in Weekly selection 9 June 2018