Inclusive Growth or Else

Sergei Guriev is Chief Economist at the European Bank for Reconstruction and Development.

Danny Leipziger, Professor of International Business at George Washington University and Managing Director of the Growth Dialogue, was a vice president of the World Bank and served as Vice Chair of the Spence Commission on Growth and Development.

Jonathan Ostry is Deputy Director of the IMF’s Research Department.

Feb 5, 2018 Sergei Guriev ,  Danny Leipziger ,  Jonathan D. Ostry, Project Syndicate

The decision to place inequality at the center of the discussion at Davos this year was a promising development. But actual solutions remain undeveloped, and concern about widening economic disparities within many countries remains inadequate, which must change if the current global economic recovery is to continue.

LONDON/WASHINGTON, DC – At this year’s World Economic Forum meeting in Davos, Switzerland, participants did not question the basic building blocks of growth in today’s global economy: free markets, good governance, and investment in human capital and infrastructure. But they did criticize how unfairly the benefits of growth are being distributed. Rightly so: without a strong policy response aimed at building a more inclusive growth model, rising populism and economic nationalism will impair the functioning of markets and overall macroeconomic stability – potentially cutting short the current global recovery.

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A New Growth Model for Europe’s Neighborhood

Sergei Guriev is Chief Economist at the European Bank for Reconstruction and Development.

Dec 18, 2017 Sergei Guriev, Project Syndicate

Countries in Europe and its broader neighborhood cannot base long-term growth on their low-wage comparative advantage. Instead, they must lay the foundations of future-oriented growth models, including by improving governance, investing in infrastructure, and promoting environmental sustainability.

LONDON – More than ten years after the global financial crisis, the world economy is finally enjoying a broad-based recovery. Europe and its broader neighborhood are no exception: economic growth in almost every country in Central and Eastern Europe, Central Asia, the Middle East, and North Africa, as well as in Russia and Turkey, has accelerated in the last year, and is projected to remain robust. Yet new challenges loom. If not addressed, these regions’ prospects will dim.

As the European Bank for Reconstruction and Development’s new Transition Report shows, before the Great Recession, the countries of Europe and its broader neighborhood were outperforming comparable emerging economies elsewhere. In recent years, however, the tables have turned – and the gap is growing.

The Art of European Integration

Sergei Guriev

Sergei Guriev is Chief Economist at the European Bank for Reconstruction and Development.

FEB 6, 2017 Project Syndicate

LONDON – The past year has been full of watershed developments. Aside from Donald Trump’s victory in the United States’ presidential election, some of the European Union’s weaknesses were fully revealed, with the United Kingdom’s vote to leave casting the bloc in a particularly harsh light. But Brexit does not have to spell the Union’s demise. Instead, it can serve as a wake-up call, spurring action to address the EU’s problems.

Some European leaders are attempting to heed that call, by urging EU member states to “complete the Union.” Without the UK, they argue, it will be easier to advance integration, as the remaining members are somewhat less heterogeneous, and therefore more likely to agree on steps that Britain might have opposed.

One such step – and a constant focus of attention since the euro crisis began – is a banking union. While substantial progress has already been made on this front, European banking integration is far from complete. Unfinished business includes a deposit-insurance scheme, as well as the creation of a senior tranche of safe sovereign assets, or eurozone-wide risk-free securities.

The Pitfalls of Strongman Populism

Sergei Guriev

Sergei Guriev is Chief Economist at the European Bank for Reconstruction and Development.

JAN 6, 2017

LONDON – The year 2016 showed that the durability of liberal democracy can no longer be taken for granted, even in the West. In fact, Harvard University political scientist Yascha Mounk’s analysis of World Values Survey data shows that, in many Western countries, public confidence in democracy has been declining for quite some time.

What explains this trend? The political upheavals of 2016 suggest that many people are frustrated with democratic inaction. Slow income growth, unemployment, inequality, immigration, and terrorism are supposedly not being tackled decisively enough. Democratic countries’ political establishments seem to be in a permanent state of torpor, fueling voter demand for strong leaders who promise to smash through political gridlock and sweep away bureaucratic resistance to bold new policies.

These leaders – who assert that they alone can fix their countries’ problems – are often sought, and found, in the corporate world. Many people regard a successful CEO as someone who can deliver on well-defined objectives, so they conclude that a businessman can solve social problems that a politician cannot.

Six questions about China’s rise from 1953

Anton Cheremukhin, Mikhail Golosov, Sergei Guriev, Aleh Tsyvinski 02 September 2015, voxeu

Anton Cheremukhin

Research Economist, Federal Reserve Bank of Dallas

Mikhail Golosov

Professor of Economics, Princeton University

Sergei Guriev

Professor of Economics, Sciences Po Paris; and CEPR Research Fellow

Aleh Tsyvinski

Arthur M. Okun Professor of Economics, Yale University

 

Economists tend to focus on reforms that came after 1979 when explaining China’s soaring economic growth. This column argues that they shouldn’t. Mao’s policies also had a huge effect and should not be ignored. Economists and policymakers would do well to look further back in history. A long-term perspective might also help them bust a few myths along the way.

The recent turmoil in the stock market and the ongoing growth slowdown does not lessen the importance of China’s economic growth as one of most remarkable episodes of economic history. The rise of China has received much less attention from macroeconomists than it deserves.¹ Moreover, most academic studies of China’s success story start with the 1978 reforms. Mao’s era is either omitted or mentioned only in the context of the disaster of the Great Leap Forward and the turmoil of the Cultural Revolution.² This is unfortunate, as the pre-1978 period was not only one of the largest economic policy experiments and development programmes in modern history, but also an important benchmark against which the success of post-1978 reforms should be measured.

Putin’s Dilemma

Date: 12-08-2014
Source: Project Syndicate

SERGEI GURIEV

Sergei Guriev, a visiting professor of economics at Sciences Po, is Professor of Economics and former Rector at the New Economic School in Moscow.

PARIS – Many critics argue that the sanctions imposed on Russia for its actions in Ukraine are ineffective, because they are too limited in scale and scope. Moreover, sanctions are seen as allowing President Vladimir Putin to blame the West for Russia’s internal problems. Indeed, some of Putin’s supporters within Russia welcome the sanctions as a means to compel Russian autarky – and thus strategic independence from the West.

These arguments are wrong. Though the sanctions are not backed by China, they are already having a powerful effect, and the expectation that they will be tightened further is a huge concern for investors and the Russian government. Full autarky, meanwhile, would imply a dramatic decline in Russian living standards – the foundation of Putin’s domestic support.

The latest sanctions are unprecedented. The European Union went even further than the United States. Exposure to Russian markets varies widely among EU countries – and between the EU and the US. But, after the downing of Malaysia Airlines Flight 17, Russia can no longer pursue a divide-and-rule strategy that leverages these differences.

Russia’s New Stagnation

Date: 15-11-2013
Source: Project Syndicate

SERGEI GURIEV

Sergei Guriev, a visiting professor of economics at Sciences Po, is Professor of Economics and former Rector at the New Economic School in Moscow.

PARIS – In early November, the Russian government released its latest macroeconomic forecast. It could not have been an easy decision: Whereas President Vladimir Putin and his government campaigned in 2012 on a promise that the Russian economy would grow at 5-6% per year during his six-year term, the growth rate is now expected to average just 2.8% from 2013 to 2020.

Minister of Economic Development Alexei Ulyukaev explicitly acknowledged that achieving the targets set by Putin “will take longer.” In some cases, that means much longer. For example, in May 2012, Putin promised to increase Russia’s labor productivity by 50% by 2018; the current forecast does not envision this outcome even by 2025.

For independent observers, the ministry’s grim forecast comes as no surprise. Judging by low stock prices and high capital outflows, investors were already betting against high growth rates. Now Putin and Prime Minister Dmitry Medvedev are pessimistic as well. Medvedev, who had been publicly forecasting 5% annual growth as recently as January, told foreign investors in October that this year’s growth rate would not exceed 2%.