Category: Asia

Demonetisation in India: From Financial Inclusion to Digital Financialisation

sudeep85Leave a comment

31530585646_0a0e070353_o.jpgOn 8th November, 2016, the Indian government announced that it was banning the use of 500 and 1000-rupees currency notes from midnight, effectively scrapping 86% of India鈥檚 currency notes by value. The Indian public would have to change the outlawed currency notes for new ones at bank counters by the end of the year.

In the following months and years, the move, which came to be known as demonetisation, caused immense suffering to the Indian public and damage to the Indian economy. So, why was it carried out? In an upcoming paper, Daniela Gabor and I seek to demystify demonetisation by locating it within wider changes in the Indian economy鈥攃hanges that started in the financial inclusion space but are now reverberating across the entire financial sector. We refer to this process of change as digital financialisation.Read More »

Financial Education in Malaysia: A Driver of Nation-Building or Inequality?

syahirahabdulrahman3 Comments

Moonrise_over_kuala_lumpur.jpgA decade has passed since the Global Financial Crisis (GFC) which seems an apt time to begin talking about the event that has pushed the concept of financial education to the core of global policymaking debates. Despite its growing popularity today, financial education has existed in the premise of global policymaking for the past few decades. The benefits of financial education seem endless; poor national financial literacy levels have been blamed for adverse socioeconomic effects such as high national household debt and/or a general irrational exuberance in financial consumption behaviour (see e.g. ). Along the same lines, low national financial literacy rates have been seen as indicative of overall financial instability, the types that have been argued and blamed as causal mechanisms of the GFC. Thus, financial education is held as an empowering dogma, its dissemination seen as providing citizens with the knowledge that would empower them to access financial services in a sustainable and meaningful manner. Read More »

If India gave minimum support incomes to the rich before, it can do the same for the poor. Rahul Gandhi can do it.

Rishabh KumarLeave a comment

rahulghandi.jpgIndia鈥檚 opposition leader has recently floated聽minimum income support. The 1.5% GDP equivalent it requires can be financed through a 3% tax on the richest 3000. It is not just an idealized safety net for the poor 鈥� it has been done before, for the super elites. If it works, it can be a model for adoption in other emerging democracies. Read More »

Neoliberalism or Neocolonialism? Evaluating Neoliberalism as a Policy Prescription for Convergence

Rahul Menon6 Comments

Melton_Prior_-_Illustrated_London_News_-_The_Transvaal_War_-_General_Sir_George_Colley_at_the_Battle_of_Majuba_Mountain_Just_Before_He_Was_Killed.jpgBradford deLong has recently argued that neoliberalism provides a way for former colonies to close the gaps with their erstwhile colonial masters. But this argument ignores the fact that several economic policies of colonial times were explicitly laissez-faire in nature.

The recognition of the dangers of allowing finance a free hand in the economy has led to a rethink of the soundness of neoliberalism as an economic and policy doctrine, from . has attacked the theoretical foundations of neoliberalism itself, judging that its insistence on allowing for unhindered market activity is bad economics itself, for economic models that make a theoretical case for markets cannot be easily transplanted into the real world in the way that advocates of neoliberalism believe.

Yet this is not to say that the concept is dead and buried. As Harvey (2007) points out, neoliberalism is a political economic process that ostensibly seeks to organise society and economies around the principle of free market activity, while primarily attempting to shift the balance of power towards dominant economic classes that control capital. Seen in this light, neoliberalism is still a powerful force shaping political and economic changes in much of the world today.

, first published in 1998 and re-published now shows that the term 鈥渘eoliberalism鈥� still carries intellectual currency. His is a curious argument; neoliberalism provides the only suitable path for countries of the developing world to close the gap with their former colonial powers. Access to the latest goods and technology allows developing economies 鈥� with low levels of productivity 鈥� to boost productivity and output growth, and consequently incomes. The reason the State should stay away from the economic sphere in the developing world is because democratic institutions have not been established yet, and hence the political sphere is vulnerable to capture by elites.Read More »

Historicising the Aid Debate: South Korea as a Successful Aid Recipient

Farwa Sial4 Comments

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鈥楾he principal enemy is orthodoxy: to use the same recipe, administer the same therapy, to resolve the most various types of problems; never to admit complexity and try to reduce it as much as possible, while ignoring that things are always more complicated in reality.
Albert O. Hirschman (1998:110)

It鈥檚 clear from last week鈥檚 blog posts by Duncan Green that he is tired of academic critique against aid which have not been translated into concrete solutions (see and ). However, the problem with his approach to addressing very complex problems is that it leads to reductive debates which are more symptomatic of the problem than constructive ways of finding solutions. Following Pablo Yanguas鈥� of research approaches I thought of taking a step back and analyzing the case of a successful aid recipient, South Korea. 聽I do this in hope of moving away from the 鈥榣iterature鈥� – which Duncan finds overbearing – as well as getting away from the linearity of the contemporary monitoring and evaluation approach used by the aid sector. Read More »

Revisiting Hirschman鈥檚 Tunnel Effect and Its Relevance for China

Wannaphong durongkaveroj4 Comments

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As within-country inequality is on the rise worldwide, considering how people actually perceive inequality in their societies and how they respond to it is a question worth asking. In 1973 Albert Otto Hirschman proposed an explanation of changing tolerance for inequality associated with different 鈥榮tages鈥� of the development process. In this post I鈥檒l revisit Hirschman鈥檚 theory and link it to emerging studies of how inequality is perceived in China. The Chinese people generally seem to be satisfied with rising inequality, yet it is unclear how long this tolerance will last.Read More »

Not just r > g but r + q >> g: Piketty meets Ricardo in the long run of Indian history

Rishabh Kumar3 Comments

Wealth-income ratios are rising everywhere 鈥� they are not cyclical but rather unambiguously upward trending for the past three decades. Put simply, the accumulation of wealth is outpacing economic growth. This is true in America, Europe and Japan (Piketty and Zucman 2014), as well as China and Russia (Novokmet, Zucman & Yang 2018). , I found this same trend to persist in the world鈥檚 largest democracy – Indian wealth-income ratios have been rising since the 1970s. Why are these trends so similar in countries with such deep structural differences and distinct economic trajectories? By themselves, high wealth-income ratios are not necessarily a social dilemma 鈥� they may imply more wealth for everyone. But in general, there is a tendency for wealth to be more concentrated than income. As a result, a rise in wealth over income tends to increase wealth inequality. in most economies today. Thus, these trends and the mechanisms behind them need to be understood with careful attention.

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The BRICS and a Changing World

Sanjay G ReddyLeave a comment

This July and August, I led an international group of experts in preparing an Economic Report on the role of the BRICS countries (Brazil, China, India, Russia and South Africa) in the world economy and international development. 聽The was commissioned as an input to the that took place in early September 2017 in Xiamen, China.

It surveys the BRICS countries鈥� sizable contribution to global growth, trade and investment, evaluates the prospects for this to continue in the future, and explores the possible role that these countries can play in bolstering the global economy, in reshaping international economic arrangements and in contributing to the and to international development generally. An important conclusion in the report is that continued BRICS growth as well as policy initiatives can substantially benefit other developing countries (the report uses the IMF category of Emerging Market and Developing Countries, or EMDCs) 鈥� and developed countries too. 聽I will 聽be pleased if the report will be circulated widely, and welcome all reactions.Read More »