globalização em perspectiva comparada modulo 1: terceira aula

Globalização em perspectiva comparada

Modulo 1: terceira aula

Modulo 1: Terceira Aula

• Pontos principais de ontem • O tema de hoje: analise estrural do modelo WC

no contexto d’Argentina e na luz da crise financeira

• O caso Argentina e as teorias e conceitos de direito, financas, e o desenvolvimento – Macro-economic and policy perspectives– Comparative legal and institutional perspective

• Conclusoes

Os Pontos Principais de ontem

• A variedade historica das formas principais da organizacao e integracao do mercado financeiro

• O papel das formas heterodoxas nas experiencias do desenvolvimento tanto no seculo 19 quanto no seculo 20

Os Pontos Principais de ontem (cont´d)

• As funcoes das formas heterodoxos nessas experiencias do desenvolvimento financeiro e economico– Elevar o nivel de poupanca interna– Mobilizar os recursos para investimento produtivo

(incluindo a tecnologia)– Estabilizar a economia nacional– Proteger a capacidade do governo de exercer as

funcoes basicas: coordinacao da atividade economica; acelerar o crescimento; proteger o pais das crises financeiras....


• Uma iniciativa deliberada • As vantagens do “modelo”?• As criticas do “modelo”

– Falta da flexibilidade– Impedimento ao livre aceso a economia global– Abuso do poder (potencial)– A forte presenca do estado na organizacao e

desenvolvimento dos mercados financeiras


• Significado deste exemplo no contexto da discusao de hoje– Partindo dos pontos semelhantes, a Asia oriental e o

Argentina desenvolvia modelos financeiros bem diferentes.

– Qual e a relacao entre as formas diferentes e os resultados diferentes?

– Como se explica essas trajetorias tao distintas?– Sera que o Argentina podia ter seguido o modelo

financeiro d’Asia oriental?

O tema de hoje: Analise estrutural do modelo WCUm caso exemplar: Argentina

• Vamos voltar a discutir o modelo dominante no mundo hoje, i.e. o modelo de WC

• Ate agora, a nossa conversa tem sido bastante abstrata

• Vamos tentar agora faze-la mais concreta

Argentina e o modelo WC: um estudo de caso

• Fatos interpretados

Global Markets

Global

Local

Global Architecture

Local Architecture

Domestic PoliticalInstitutions Domestic Fin

Institutions

Savings/Reserves

Real Economy Civil Society

CentralBank

PoliticsValues/Ideals/Conceptions

Alternative models ofInstitutional reform

IMF US Government

Specific policies,Arrangements &Transactions

Argentina e o modelo WC: um estudo de caso

• Three part approach– Legal and institutional background: Argentine

program of market-oriented reform and globalization during the decade of the 1990s

– Key macro-economic and financial developments and concerns

– Alternative approaches to sovereign debt management and restructuring, within a given framework of policies, arrangements and approaches to reform

Argentine program of market-oriented reform

• Basic approach: deep integration with global financial markets – orthodox WC approach

• Key policies and arrangements – global markets

– Convertibility regime: Argentina peso pegged to the dollar and freely convertible into USD on a 1:1 basis

– Full capital account liberalization – Removal of restrictions on foreign investment: loan

capital, portfolio investment, FDI– Close cooperation with global markets and IFIs

Key policies and arrangements – local markets

• Orthodox privatization and liberalization of domestic markets and intermediaries

• Facilitation of access to global markets and foreign investment in local markets – E.g. dual currency issues in both local and global

markets; foreign currency deposits in local banking system

• Acceptance of existing levels of domestic savings, FX reserves, and financial intermediation

Key policies and arrangements – local markets

• Relation of government to financial system

– Monetary, fiscal and exchange rate policy constrained by currency board and convertibility regime

– Limited ability to mobilize domestic savings or channel savings to productive investment

– Increasingly dependent on access to financial markets for financing of government deficits and as a condition of macro-economic stability

Global Markets

Global

Local

Global Architecture

Local Architecture


Institutions

Savings/Reserves


CentralBank



IMF US Government

Argentine ProgramOf deep financialIntegration

Currency BdConvertibilityRegime

B/P Current/Capital Account

Globalization “Trilemma”

Deep EconomicIntegration =

Free global markets

Nation State Democratic Politics

GoldenStraightjacketi.e. WC

BW compromise

Global federalism

Key: Dani Rodrik

Revised D. Rodrik

Key macro-economic and financial developments and concerns

• Foreign investment led boom in the first part of the 1990s (portfolio capital and FDI/privatization)

• Slow-down in growth and financial development in the period following the Tequila crisis – Immediate impact of Tequila crisis: economic

contraction and partial financial collapse – Deteriorating macro-economic and financial situation– Continuing exposure to global shocks: Asian financial

crisis; Brazil devaluation– Increasingly fragile relations between Argentina and

global financial markets

Global Markets

Global

Local

Global Architecture

Local Architecture


Institutions

Savings/Reserves


CentralBank



IMF US Government

Phase 1

Phase 2

Alternative approaches to sovereign debt management and restructuring: Argentine experience of the 1990s

• Sovereign debt management and restructuring – pre-crisis period– Global and domestic debt issues during the decade of

the 1990s– Official financing programs and support– Voluntary restructurings

• Sovereign debt management and restructuring –post-crisis period– Unilateral restructuring of internal and external debt– Collapse of convertibility regime– Emergency banking and currency measures

Global Markets

Global

Local

Global Architecture

Local Architecture


Institutions

Savings/Reserves


CentralBank



IMF US Government

Global Markets

Global

Local

Global Architecture

Local Architecture


Institutions

Savings/Reserves


CentralBank



IMF US Government

Sov defaultCollapse of ConvertibilityAnd 1:1 regime

EmergencyBankingAnd capcontrols

Reserves +Savings +

Banking,Fin, econcollapse

Increase in poverty, inequalityInsecurity all around

Domestic political instability

Rival views: macro-economic and policy perspectives

• IMF/Cavallo – Orthodox strategy is correct; political will is lacking

• Feldstein– Series of basic policy mistakes, orthodox brand – Willing to concede appropriateness of some heterodox

policies – i.e. Chilean-style capital controls; build-up of domestic reserves, domestic sources of debt, domestic financial system

• Gelpern– Inadequacy of traditional legal remedies applied to a

sovereign borrower

Combination of macro-economic and policy explanations

• Summary of key concerns• Underlying legal and institutional assumptions• Criticism of all these views

– Failure to address key structural obstacles and constraints

– Or to consider how a change in the underlying legal and institutional arrangements might contribute to a relaxation of these constraints

Contribution of comparative legal and institutional perspective

• Structural diagnosis: key problems and constraints

• Legal and institutional factors underlying these constraints

• Criticism of conventional WC approach to financial reform, as applied in the context of Argentina

Os proximos passos na analise estrutural

• Alternative approaches to financial crisis resolution and restructuring

• Alternative approaches to the design and development of emerging market financial institutions

Concluding comments and observations

• Nature and contingency of Argentine approach to market-oriented reform

• Supported by leading views of appropriate policy and best practice legal and institutional arrangements

• Basic premise of the whole approach: integration in itself, in accordance with existing rules of the game, creates the conditions for self-sustaining growth, economic development, political autonomy and collective self-government

Concluding comments and observations (cont’d)

• So what happened in Argentina?• Two possible explanations • Conventional view – Argentina couldn’t, wouldn’t

play by the rules– IMF/Cavallo: policy is correct; enforcement is lacking– Feldstein: standard policy prescriptions too rigid; external

imposition of alleged “best practice reform” politically illegitimate and econ/fin self-defeating; creates the wrong incentives

– Economist/Gelpern piece: absence of appropriate legal and institutional framework for supporting creditor rights; sovereign unconstrained by rules of financial contracting


• Alternative view, suggested by Velasco and Argentine experience itself

• Basic problem – new “best practice” approach to economic reform and integration (i.e. o modelo de WC) may be at odds with the political and financial pre-conditions of productive investment, democratic self-government and growth

Global Markets

Global

Local

Global Architecture

Local Architecture


Institutions

Savings/Reserves


CentralBank



IMF US Government

Specific policies,Arrangements &Transactions


• Consider again the key areas in the framework slide;

• and the kinds of arrangements needed to make these areas work

• Little in the conventional wisdom, or in the policies based on this wisdom, address these concerns; or create the kinds of arrangements needed to address these concerns.

• Net result: search in the countries themselves for an alternative approach

globalização em perspectiva comparada modulo 1: terceira aula

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