Analysis

The Electric Vehicle Developmental State

The rise of the Chinese EV industry has been enabled not only by generous government subsidies but also by profound changes in strategy and organization, and in particular by a distinctive revival of vertical integration—at both individual firm and national levels. The approach is perfectly exemplified by BYD, which has sought to bring virtually all aspects of the value chain under its control: from battery technology—which was its initial core business—to microchips and even expanding to ownership of lithium mines and car carrier ships.

Inflation as Distributive Struggle

On January 24, 2024, Argentina’s General Confederation of Labor (CGT) called for a twelve-hour general strike—the first in almost five years—just forty-five days into President Javier Milei’s term. This action was a direct response to the first measures proposed by the new administration which threatened to dismantle the pillars of workers’ rights. A week after the strike, one of the main union leaders, Pablo Moyano, warned of future intensified actions in response to debate around the “Omnibus Law” in Congress. The CGT is “more united than ever” after the strike, he stated, signaling a strengthened and highly alert unionism.

The Debt Poor

The 2008 financial crisis was an unprecedented demonstration of financialization in capitalism today. In the US, the collapse of real estate values revealed how formal credit channels—imagined as mechanisms of wealth creation—had brought unsustainable levels of household indebtedness down into new layers of American society. But if the experience showed how central household credit had become for low-income families to access housing in the US, it serves as just one example of how credit and debt shape not only business but household life globally. This is particularly evident in Brazil, where the cost of debts and debt service make up a growing share of annual household income. 

The Visible Hand

China has transformed into a leading force in science, technology, and innovation (STI). With rapidly rising research and development (R&D) expenditure, a larger and increasingly high-quality talent pool, and impressive scientific publication and patenting statistics, the country is set to become a global STI superpower.  

The First New Deal

The National Industrial Recovery Act is commonly counterposed to antitrust. But at the time, the antitrust camp had little truck with the self-coordinating market ideal. Resistance to public price coordination experiments, meanwhile, particularly among conservative jurists, was also not based on a preference for unplanned markets but on ideas of freedom of contract—which were in many respects inconsistent with unplanned markets. And the Supreme Court’s ultimate rejection of the NIRA as unconstitutional was not even based upon freedom of contract (much less an embrace of unplanned markets), but instead upon the conclusion that the scheme did not involve enough planning.

Offshore Treasure

Since the discovery of some of the world’s largest oil reserves in 2015, Guyana has entered a period of economic and geostrategic reconfiguration. According to the Energy Information Administration (EIA), Guyana holds the sixth-largest oil reserves in the Americas and the nineteenth largest in the world. With high quality product, below average production costs, and low local consumption, the reserves have enormous export potential—per capita, Guyana has quickly become the highest producer of oil in the world. 

100 Days of Milei

Javier Milei’s election to the Argentine presidency in November sent shockwaves throughout the country. While the media personality was not altogether an outsider, his party La Libertad Avanza (LLA), formed in 2021, fundamentally lacked political experience. Until Milei’s inauguration in December, the LLA had no governors or representatives in the Senate, and only three seats in the Chamber of Deputies. 

Egyptian Leverage

Cairo’s role in a US-backed regional security architecture makes the military dictatorship a regional giant too big to fail. The Sisi regime, like its predecessors, is keenly aware of this status and leverages it to secure the acquiescence of creditors and allies. The size of the IMF agreement—more than double the $3 billion originally on the table—recognizes this fact. 

Oil Linkages

Oil and gas producers in Africa face unique challenges in pursuing state-led development. The resource curse, and specifically the phenomenon of “Dutch disease”, which inflates the value of the local currency, makes exporting local products abroad difficult. As long as oil remains a valuable commodity, however, the opportunities for development will remain.      

Total Peace?

Gustavo Petro’s presidency marks a turning point in Colombia’s democratic history. Not only is Petro the first leftist in government, but he has also made achieving peace a central objective of his progressive agenda. The Colombian armed conflict has been the most violent conflict in Latin America in both the twentieth and twenty-first centuries: it has left over 450,000 dead, 50,000 kidnapped, and 8 million displaced. Beginning in the mid-1960s with roots dating back to the 1950s, it is also the region’s longest running conflict. Dozens of guerrilla groups, dissidents, and factions have emerged within this landscape, alongside paramilitary structures, drug cartels, and state-led violent actors.

The G20 in the South

In December 2023, Brazil began presiding over the G20. The one-year presidency, which will culminate in the annual summit being hosted in Rio de Janeiro in November 2024, is the third of four terms from the global South—following Indonesia in 2022 and India in 2023, and preceding the already decided South African presidency in 2025. When India’s Narendra Modi formally handed over the presidency to Brazil last November, Lula announced three priorities to “place the reduction of inequalities at the center of the international agenda: (i) social inclusion and the fight against hunger (ii) energy transition and sustainable development in its three aspects (social, economic and environmental) and (iii) reform of global governance institutions.” The proposals were well received internationally; now is the time for concrete agendas to build toward the November summit.

Red Sea Rivalries

Every few years, a crisis in the Red Sea makes global headlines. In 2014, the Yemeni Civil War spilled into the Red Sea after the Houthis captured the capital Sana‘a and dissolved the parliament. As a warning, the Houthis allegedly conducted two missile strikes on US Navy ships, prompting a swift but limited retaliation from a US warship. In 2019, a malfunctioning commercial vessel was left stranded in the Suez Canal for six days, obstructing the trade of an estimated $9 billion in commercial goods passing through the Red Sea each day. The scale of the economic impact was so severe that the Egyptian government, which profits from tolls on Suez transport, initially demanded close to a billion-dollar settlement from the Japanese owner of the vessel.

The Falling Lira

Since late 2021, the Turkish economy has been shattering conventional economic expectations. With deeply negative real interest rates, high inflation, a large and persistent current account deficit, an external debt stock exceeding 50 percent of GDP, and a central bank with net foreign exchange reserves estimated around -$50 billion, the economy has seemed permanently poised for crisis. 

Miracle in Reverse

The South Korean economy has widely been recognized as the paragon of the East Asian miracle, with rapid economic growth and a fairly equal income distribution. The country continued its upward growth trajectory even in the aftermath of the 1997 financial crisis, emerging as a global leader in manufacturing semiconductors, automotive, and batteries.

External Imbalance

In August 2023, a week after winning Argentina’s primary elections, now-president Javier Milei, publicly stated that the Argentine peso was “worth less than excrement.” In the next two days, the dollar-peso parallel exchange rate climbed almost 20 percent, intensifying the already rapid devaluation of the currency. Such extreme proclamations were common for Milei, who as a candidate combined libertarianism with global right-wing extremism and placed proposals to abolish the central bank and dollarize the national economy at the center of his campaign. 

Anarcho-Capitalism

Since the early 2000s, Argentine development finance has undergone a profound transformation. Amid cyclical debt defaults and endless negotiations with Western investors and the IMF, Chinese overseas investment loans have slowly crept to the fore. Between 2007 and 2020, Argentina received $10.65 billion in investment from Chinese companies, concentrated in the  energy,  mining and finance sectors.

Constitutional Odysseys

On September 11, 1980—seven years after Augusto Pinochet seized power from democratically elected Salvador Allende in a brutal American-backed military coup—the dictatorship passed a constitution that laid the groundwork for one of the world’s earliest and most enduring neoliberal experiments. The results of this experiment have been well documented: with the privatization of education, pensions, health, public transportation, and essential natural resources like water, the country became one the most economically unequal countries in the OECD. 

Climate Divergence

Ten years ago, the current predicament of central bankers would seem unthinkable: to what extent should they contribute to society’s response to climate change? As the impacts of climate change have escalated, most central banks have begun to appreciate the wide-ranging economic and financial consequences relevant to their work. These include the economic damages from heat waves, storms, floods, and droughts, as well as rising sea levels, species extinction, and other environmental shifts. These physical impacts also set the stage for a disruptive societal transformation, which will have consequences for central banks’ ability to maintain monetary and financial stability. How central banks should respond to these new challenges remains hotly contested. What is the appropriate role for institutions with unrivaled power—and high levels of political independence—to shift the financial conditions that are critical for a response to climate change?

Sectoral Strategy

Industrial policy in Africa is back. Beginning last January, Nigeria moved forward with the second phase of  its “Sugar Master Plan,” a flagship industrial policy that began in 2013 to stimulate domestic production. It does this by offering numerous incentives to investors and prohibiting refined sugar imports for retail. Last month, Ghana extended a zero VAT policy on locally manufactured textiles, while Kenya announced plans to impose a 25 percent levy on imported clothes to revive its textile sector. And over the past decade, Benin’s investment in the Glo Djigbé Industrial Zone, a textile industrial park, has helped transform the nation into the continent’s leading cotton producer.