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Speaker 1: But knowledge to work and grow your business with c

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Speaker 1: i T from transportation to healthcare to manufacturing. C i

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Speaker 1: T dot com put Knowledge to Work. Welcome to another

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Speaker 1: episode of the Odd Lots podcast. I'm Tracy Alloway, executive

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Speaker 1: editor of Bloomberg Markets, and unfortunately my normal co host,

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Speaker 1: Joe Wisenthal is away this week. He is off globe

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Speaker 1: trotting to some very exotic locations on a business trip

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Speaker 1: for Bloomberg. So I thought as a sort of protest

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Speaker 1: episode that Joe gets to go on an amazing trip

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Speaker 1: to some very nice places with very good food and

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Speaker 1: very luxurious scenery. We are going to talk about globalization

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Speaker 1: and specific quickly, we are going to talk about the

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Speaker 1: negative aspects of globalization. And here with me today as

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Speaker 1: a replacement co host is Sid Verma. He is one

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Speaker 1: of the newest members of the Bloomberg Markets team. Say hello,

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Speaker 1: said hi there, So Sid, You're actually the perfect person

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Speaker 1: to talk about this because you've done an enormous amount

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Speaker 1: of work on globalization and cross border capital flows and

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Speaker 1: development over the course of your career. Right, yes. Um.

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Speaker 1: For the last couple of years, I've written quite a

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Speaker 1: lot about the opportunities and challenges brought by unfettered capital

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Speaker 1: flows and the backlash against um, some trade policies that

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Speaker 1: have been UM implemented at the behest of Western backed institutions. So, UM, Yeah,

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Speaker 1: I'm really excited to have this conversation. It seems like

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Speaker 1: it really is the sexy topic of the momentum. We've

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Speaker 1: obviously got Brexit votes, the rise of Donald Trump this year,

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Speaker 1: declining trade flows, rising income in equality, political populism. It

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Speaker 1: all seems to nurture a growing view that globalization isn't

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Speaker 1: just out of fashion, it's on life support. And our

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Speaker 1: guests today, I actually really like the way you described

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Speaker 1: him earlier. Um, it's Danny Roderick. He's an economist. He's

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Speaker 1: also a professor of international political economy at Harvard, and

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Speaker 1: you kind of said he was the original guy who

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Speaker 1: started writing about all the negative aspects of globalization before

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Speaker 1: it was cool, right. Yeah. He refused to join in

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Speaker 1: the congratulatory party two decades ago, UM, and he argued

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Speaker 1: that economists probably overstated the benefits of globalization and that

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Speaker 1: policy makers probably risk a backlash if they push ahead

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Speaker 1: with unfettered free trade and capital policies. So he's exactly

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Speaker 1: the right economist to talk to on this topic, right,

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Speaker 1: And in retrospect, it seems like the notion that a

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Speaker 1: backlash was coming was very, very imprescient, because here we

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Speaker 1: are in two thousand and sixteen and everyone's talking about

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Speaker 1: the downsides of globalization on federal trade deals, rightly or wrongly.

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Speaker 1: I should say, well, without further ado, Danny Roderick, thank

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Speaker 1: you so much for joining us today. Nice to be

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Speaker 1: with you. Thank you. Should we maybe start with this

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Speaker 1: idea of a backlash, you know, to what extent was

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Speaker 1: the criticism that we are seeing now of globalization, To

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Speaker 1: what extent was that inevitable based on what's happened over

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Speaker 1: the past two decades and beyond. I think it was

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Speaker 1: pretty inevitable. I mean it seemed clear to me that

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Speaker 1: the deal position was going to be building up. I

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Speaker 1: guess I wrote a little monograph um a couple of

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Speaker 1: decades ago called has Globalization Gone Too Far? And then

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Speaker 1: you know, it was different kinds of characters that were

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Speaker 1: sort of uh, it was Pat Buchanan and you know,

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Speaker 1: in Europe it was the truckers protesting, and the agriculturalists

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Speaker 1: and sort of where you know, sort of other kinds

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Speaker 1: of people on the scene. But the general trends were

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Speaker 1: pretty easy to see and and and they arose from

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Speaker 1: some basic fundamentals that the the kind of overall economic

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Speaker 1: benefits of of globalization. You sort of began to be

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Speaker 1: swamped by a lot of concerns about redistribution, about what

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Speaker 1: was happening to specific communities, about the the elites getting

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Speaker 1: sort of uh um uprooted from sort of the national

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Speaker 1: setting and the larger gap opening up between the people

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Speaker 1: who control the politics and what was happening and the

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Speaker 1: ordinary people um and sort of you know, decision making

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Speaker 1: moving away from national capitals to uh, weird places like

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Speaker 1: Brussels or Geneva or or sort of multinationals and banks

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Speaker 1: including unclosed doors and and so historically, of course, this

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Speaker 1: was also not the first time we were seeing this.

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Speaker 1: That We've had an era of high globalization during the

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Speaker 1: Gold Standard, and and it kind it came to a

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Speaker 1: rather abrupt end for many of the same reasons. I

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Speaker 1: don't think we're up quite the same kind of crisis

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Speaker 1: uh at this point. I think the the globe kind

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Speaker 1: of globalization we have has much firmer foundations than than

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Speaker 1: was the case under the gold gold standard. But I

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Speaker 1: do think we have pushed it further than it can go,

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Speaker 1: either economically actually or politically. I like the idea that

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Speaker 1: we're not necessary early facing a huge crisis when it

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Speaker 1: comes to a globalization backlash. What exactly can you spell out?

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Speaker 1: What exactly makes it different this time compared to, for instance,

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Speaker 1: the end of the gold standard. Yeah, I mean, I

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Speaker 1: think we're in a much better you know, despite all

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Speaker 1: day the backlash. The fact is that we have much

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Speaker 1: stronger institutions um today compared to the nineteen twenties and

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Speaker 1: nineteen thirties, the inter war period when the gold standard

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Speaker 1: eventually collapse. UM. We have much stronger governments that are

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Speaker 1: providing much better safety nets. Uh. We have global institutions

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Speaker 1: that provide for much greater global cooperation, the World Trade

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Speaker 1: Organization and the IMF with nothing like that in the

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Speaker 1: inter war period. And by and large, I think, you

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Speaker 1: know that people have incorporated the lessons of the rampant

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Speaker 1: protectionism of the nineteen thirties, and and I think even

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Speaker 1: the you know, the populist and the way they talk

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Speaker 1: about trade policy. It's it's historically speaking, it's it's a

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Speaker 1: rather measured kind of protectionism. I don't think smooth and

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Speaker 1: holy would be something that that even Donald Trump would

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Speaker 1: would bring up as something that that you would like

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Speaker 1: to to to reenact. So I think the intellectual consensus

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Speaker 1: has actually shifted quite a bit. And even though they're

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Speaker 1: a bit more done in dumps than usual, I mean,

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Speaker 1: I think the political forces that push for open markets,

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Speaker 1: um you know, big multinationals or banks or the trade

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Speaker 1: elite date also happened to be much more there's still

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Speaker 1: politically quite quite powerful. So I don't see a fundamental

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Speaker 1: breaking down of the system and the way that that

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Speaker 1: we saw. But that doesn't mean that you know that

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Speaker 1: you know, we could you know, seriously mismanaged the situation

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Speaker 1: and in fact fuel the rise of the growth of

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Speaker 1: populism that I think, you know, the damage will be

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Speaker 1: not just to globalization. I think the damage will be

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Speaker 1: to our liberal democratic order. Anythink that's that's in fact

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Speaker 1: a much bigger price to pay. So, Danny, you mentioned

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Speaker 1: the idea that globalization may in some way have been mismanaged.

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Speaker 1: Can you spell out exactly what you mean by that

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Speaker 1: and give us maybe some examples. I think I I

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Speaker 1: time the transition to the ninety nineties where I think

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Speaker 1: we began to mosh push for a model of of

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Speaker 1: globalization that I call hyperglobalization, which is where gradually globalization

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Speaker 1: turned into an end for itself rather than being a

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Speaker 1: means to an end. And and we so increasingly governments

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Speaker 1: negotiating deals or undertaking changes in policies that that that

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Speaker 1: began to constrain um what they could do domestically, began

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Speaker 1: to constrain the way that they could address domestic um

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Speaker 1: concerns and UH and oversold the benefits of the resulting

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Speaker 1: arrangements and didn't pay a whole lot of attention to

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Speaker 1: the disruption that those things would cause. And I think

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Speaker 1: there are sort of two concrete things. One was the

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Speaker 1: creation of the World Trade Organization in the nineties, which

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Speaker 1: which went significantly beyond any trade agreement that had been negotiated.

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Speaker 1: And what really stands out about the w t O

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Speaker 1: is that it reached significantly beyond borders into deep domestic

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Speaker 1: territory and economic policy making UH with growth sort of

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Speaker 1: restrictions on on what governments could do in the way

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Speaker 1: of dealing with subsidies in the area of health and

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Speaker 1: safety standards with respect to intellectual property rights. And on

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Speaker 1: the financial side, of course, even though this was not

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Speaker 1: an international agreement, by and large, complete mobility of capital,

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Speaker 1: particularly of short term financial capital, became effectively the norm

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Speaker 1: through the workings of the European Union and on and

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Speaker 1: on a broader scale through the o e C. D

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Speaker 1: UM and I think this this new um sort of

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Speaker 1: understandings from the nineteen nineties. On the one hand, you know,

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Speaker 1: complete mobility of capital as a norm uh and uh

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Speaker 1: and and trade agreements, you know, being no longer about

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Speaker 1: tariffs and quotas at the border, but increasingly about domestic

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Speaker 1: regulations and how those had to be coordinated and harmonized

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Speaker 1: across countries. I think sort of both um made domestic

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Speaker 1: economic policy making much more hostage, left it much more

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Speaker 1: hostage to uh this sort of you know, this anonymous

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Speaker 1: force of globalization uh and and created this this juncture

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Speaker 1: between sort of you know where uh, you know, the

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Speaker 1: life that the ordinary people were living and their their

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Speaker 1: own economic existence and the kind of policy making that

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Speaker 1: happened at that sort of international sort of globalization or

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Speaker 1: hyper globalization driven sphere. We are going to take a

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Speaker 1: quick break for our sponsors. But knowledge to work and

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Speaker 1: grow your business with c i T from transportation to

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Speaker 1: healthcare to manufacturing. C i T offers commercial lending, leasing,

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Speaker 1: and treasury management services for small and middle market businesses.

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Speaker 1: Learn more at c I T dot com. Put Knowledge

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Speaker 1: to work and we're back, Danny. I'm interested in this

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Speaker 1: idea of globalization, hyper globalization, if you will, going too far.

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Speaker 1: And I always wonder how did that actually happen? Like

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Speaker 1: did politicians just wake up one day and realize that

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Speaker 1: there was a lot of opportunity for them personally in

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Speaker 1: creating these sort of super national structures that they could

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Speaker 1: then have careers in or walk us through this? How

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Speaker 1: this actually happened? Um? You know, it's a combination as

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Speaker 1: usual of interests and ideas. On the one hand, of course,

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Speaker 1: you had very specific interests at work, um, and so

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Speaker 1: in in financial globalization, of course, they were you know,

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Speaker 1: banks that became bigger and were interested in in in

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Speaker 1: removing impediments to capital flows and across borders. You had

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Speaker 1: multinationals who wanted to get market access and therefore were

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Speaker 1: interested in in in reshaping the regulations of different countries.

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Speaker 1: So as to remove impediments in terms of their being

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Speaker 1: able to access these markets. You had definitely interests at play,

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Speaker 1: but there was also ideas. I mean, there's sort of

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Speaker 1: the whole you know, ideational context of how the things

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Speaker 1: happened in the ninety nineties had as its background, of course,

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Speaker 1: sort of the notion that you know, markets couldn't do

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Speaker 1: much wrong, that that governments, when they intervened with on

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Speaker 1: these sort of muck things around, and that you know,

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Speaker 1: sort of that that trade liberalization in the fifties and

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Speaker 1: sixties and seventies had been um, you know, had been

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Speaker 1: had produced the booming world economy, and therefore, which by

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Speaker 1: the way, is true, but then sort of misleading conclusion

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Speaker 1: was the wrong that therefore this was the most important

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Speaker 1: thing to keep doing so effectively a good thing was

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Speaker 1: taken too far in my view. And third, I would

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Speaker 1: add that on top of of you know, sort of

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Speaker 1: the general mediational context and the interests of various actors. Um,

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Speaker 1: I think there was a political failure on the part particularly,

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Speaker 1: I would say, of the sort of you know what

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Speaker 1: in the United States context, what would call sort liberals

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Speaker 1: or left liberals, and in the United in Europe would

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Speaker 1: be the socialists and the social Democrats a sort of

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Speaker 1: a certain abdication of their responsibility, and they they bought

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Speaker 1: into that whole story of how sort of, you know,

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Speaker 1: moving on this hyperglobalization agenda either was something that was

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Speaker 1: necessary that they couldn't do much about it, or as

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Speaker 1: was the case in many cases, that this is something

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Speaker 1: that they should actually back, that they should support. So

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Speaker 1: somewhat surprisingly, some of the the most avid supporters of

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Speaker 1: financial globalization where the Socialists in France or the Clinton

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Speaker 1: Democrats in the United States. So I think, you know,

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Speaker 1: sort of the political group that you might have thought

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Speaker 1: would have acted as a break in fact, it was

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Speaker 1: very much in behind this this push towards hyperglobalization. So

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Speaker 1: I think that that's I think it's sort of the

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Speaker 1: combination of the forces that brought us to to to

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Speaker 1: where we are. So so where do we go going forward? Um,

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Speaker 1: the Trans Pacific Partnership and the Transatlantic Trade Partnership deals

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Speaker 1: look like they don't have sufficient political backing. The IMF

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Speaker 1: has issued a mere culpus saying that they have probably

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Speaker 1: overstated the virtues of neoliberalism, which tends to argue for

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Speaker 1: the wholesale privatization of companies, as well as a modest

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Speaker 1: role for fiscal policy and fully open trade and financial borders.

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Speaker 1: At the same time, you know, governments and the IMF

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Speaker 1: are more sympathetic to the view that capital controls can

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Speaker 1: shield themselves from volatility of international finance. Um. So you

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Speaker 1: know what, what where are we going next? Are there

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Speaker 1: sufficient number of you know? Um? You know, is there

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Speaker 1: a moral leadership on the international stage to try and

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Speaker 1: craft a new trading model or is it just a

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Speaker 1: model through scenario? Yes? So, as I said earlier, you know,

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Speaker 1: I don't think the really bad scenario is one of

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Speaker 1: a very high likelihood where we have a complete collapse

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Speaker 1: of the world economy and and and globalization with all

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Speaker 1: the really terrible political ramifications of the type that we

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Speaker 1: saw in the interwar period. But but leaving that aside,

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Speaker 1: I think whether we take a relatively good path or

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Speaker 1: relatively ugly path depends largely on how the mainstream political

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Speaker 1: groups react, um. And and that's both sort of you know,

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Speaker 1: center right, center left parties and also the technocratic establishment. Now,

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Speaker 1: I think both of these groups have have are sort

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Speaker 1: of halfway down the line. I mean, as you say,

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Speaker 1: there has been a sort of a couple of sorts

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Speaker 1: on a number of different dimensions. Uh. You know that,

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Speaker 1: you know, the free mobility of capital. I think sort

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Speaker 1: of the consensus around that has dissipated, and even the

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Speaker 1: IMF is saying, you know that that we need to,

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Speaker 1: you know, accept that there are circumstances which capital controls

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Speaker 1: might make sense. Uh. And there's sort of you know,

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Speaker 1: wider agreement that you know, maybe we needed kind of

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Speaker 1: a different models on trade negotiations, but we're not quite

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Speaker 1: there yet. And we see it, for example, in the

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Speaker 1: way that you know, an institution like the IMF response

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Speaker 1: to where we are. On the one hand, you have

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Speaker 1: these sort of um revisions in its thinking. On the

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Speaker 1: other hand, you have Christine Lagarde coming out and saying that,

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Speaker 1: you know, we need to stay strong on trade and

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Speaker 1: the only way that we can progress is by signing

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Speaker 1: more trade agreements, and it's it's very important that we

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Speaker 1: do that. So I think, you know, the realization hasn't

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Speaker 1: kin that the way that you respond to these things

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Speaker 1: is not by you know, simply doing a better marketing

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Speaker 1: job on the benefits of trade. That's not the issue.

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Speaker 1: The issue is is that ordinary people feel that policymaking

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Speaker 1: and and and and the technocratic and policy elites are

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Speaker 1: pursuing a set of interest which is not theirs, and

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Speaker 1: and uh and and and. The main constraint that the

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Speaker 1: world economy faces right now is not that it is

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Speaker 1: not sufficiently open and so you need to sign new

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Speaker 1: trade agreements. The main constraint is that it's lacking the

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Speaker 1: legitimacy in the eyes of the ordinary people that you

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Speaker 1: need to sustain a moderately open economy. And once you

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Speaker 1: realize that the main constraint is legitimacy, not lack of openness,

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Speaker 1: then you have to really start thinking that that what

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Speaker 1: we should be doing is not pushing for more trade agreements,

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Speaker 1: but really fundamentally revisiting what we are negotiating when we

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Speaker 1: talk about trade. And we're not there yet. But Danny,

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Speaker 1: this is why I get confused, because when people talk

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Speaker 1: about reforming trade or better distributing the benefits of free trade,

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Speaker 1: it seems like by doing that, by definition, you almost

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Speaker 1: go into protectionism, right because you know, improving trade for

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Speaker 1: one group is inevitably going to be good from their

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Speaker 1: perspective and perhaps bad for someone else. So how do

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Speaker 1: you make it better without automatically going backwards and entering

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Speaker 1: a sort of protectionist everyone for themselves game. Yeah. I

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Speaker 1: think one of the obstacles in thinking creatively and productively

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Speaker 1: about the world of trade is that we have this,

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Speaker 1: you know, we we think about trade on what we're

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Speaker 1: doing in trade as a so moving in this unidirectional

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Speaker 1: uh sort of road that goes from you know, more

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Speaker 1: open trade to less open trade. So it's you know,

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Speaker 1: the battle between protection has been free trade. You know.

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Speaker 1: This may have been the battle that we were fighting

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Speaker 1: in the fifties and sixties and seventies, and that battle

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Speaker 1: has been won, and it's been won by by by

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Speaker 1: free traders. But really since the ninety nineties and since

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Speaker 1: the World Trade Organization, trade negotiations and trade agreements are

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Speaker 1: not about free trade uh and and so you know,

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Speaker 1: so what we're really talking about is not protectionism versus

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Speaker 1: free trade. Large part of the t PP is really

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Speaker 1: about talking about regulations um and and and regulations that

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Speaker 1: are fundamental to running in open economy uh and a

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Speaker 1: market based system. The question is, you know, where should

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Speaker 1: those regulations be designed, and what's the role of international

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Speaker 1: agreements or global market forces in shaping those regulations. So

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Speaker 1: should corporations, for example, have access to a completely separate

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Speaker 1: track in the way that they can pursue their interests

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Speaker 1: and impose their own preferences on certain on governments when

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Speaker 1: no other group NGOs or labor unions or others have

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Speaker 1: a similar ability. So, of course I'm talking about the

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Speaker 1: I S d S so called the Investor States Dispute

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Speaker 1: Settlement System, which is part of the Transpacific Partnership and

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Speaker 1: other trade agreements. Are we talking about now, We're talking about,

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Speaker 1: you know, the rules with respect to capital flows and

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Speaker 1: capital account regulations and patent and intellectual property rights, and

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Speaker 1: you know, what are appropriate rules in those areas for

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Speaker 1: a country like Vietnam or her country like Malaysia, And

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Speaker 1: should those be designed by international agreement? And should the

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Speaker 1: main act so we you know, shaping those regulations be

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Speaker 1: banks and and and and and and large amountain national corporations.

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Speaker 1: These are not issues that are helpfully discussed in in

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Speaker 1: the light of you know, sort of protectionism versus free

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Speaker 1: trade kind of a mindset, because they're not about those

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Speaker 1: um and so that's why I don't think the issue

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Speaker 1: is really love of of you know, if we if

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Speaker 1: we don't negotiate T P P or t t I

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Speaker 1: P that we're necessarily falling into, um, a protectionist hell hole. Uh.

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Speaker 1: The issue is can we have better rules that address

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Speaker 1: issues of fairness, of distuputive justice, of equity UM in

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Speaker 1: a sense that people want to make sure that the

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Speaker 1: rules and regulations that affect their lives are made democratically

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Speaker 1: in fluad that they can actually openly participate. And are

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Speaker 1: we allowing for democratic deliberation, sufficient democrats deliberation for the

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Speaker 1: determination of such rules. So those are the kinds of issues,

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Speaker 1: and I think they're certainly are the ones that ought

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Speaker 1: to be discussed. I think that brings us quite neatly

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Speaker 1: on to kind of two separate topics, whether it's trade

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Speaker 1: globalization or financial globalization. But one way of looking at

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Speaker 1: slowing globalization is a fact that trade growth has been

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Speaker 1: weaker than GDP growth in recent years, UM, and that

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Speaker 1: trade elasity, so called trade alasity, is projects to be

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Speaker 1: weak again this year. UM. And I know that you

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Speaker 1: say that that's a very blunt way of looking at,

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Speaker 1: you know, globalization, but it seems that trade volumes are

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Speaker 1: weak and there seems to be an existential threat for

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Speaker 1: emerging markets in the in the coming decades, given the

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Speaker 1: fact that there are new manufacturing techniques that could increase

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Speaker 1: UM import, substitution and developed markets. You know what extent

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Speaker 1: are you concerned that in emerging markets like the comparative

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Speaker 1: advantage from new innovative technologies such as drive list cars,

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Speaker 1: three D printing, and new softwares, because traditionally we know

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Speaker 1: that for emerging markets to grow, they need to build

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Speaker 1: out competitive manufacturing hubs. Yes, I mean, first, I think

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Speaker 1: the decline of trade volumes in relation to global output

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Speaker 1: um in recent years that I don't think it's much

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Speaker 1: to do with the populist backlash so far, So I

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Speaker 1: don't think it's really driven through by the rise of protectionism.

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Speaker 1: There are much you know sort of there you know,

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Speaker 1: supply chains are being sort of brought in home because

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Speaker 1: of technological changes um and and the slowing down of

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Speaker 1: of of China and is also a very big factor

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Speaker 1: in that. So there are you know, what's happening to

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Speaker 1: trade recently. I think it's largely driven by by economic

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Speaker 1: and technological changes and not by the politics around trade.

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Speaker 1: Although I do think that if we mismanage globalization, political

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Speaker 1: risks and and uh, political barriers will start the player

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Speaker 1: all as well. But going back to the question of

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Speaker 1: developing countries in emerging markets, I'm indeed very concerned by

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Speaker 1: the fact that manufacturing is increasingly becomes becoming skill and

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Speaker 1: technology and intensive and effectively compared to advantage in manufacturing

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Speaker 1: is moving away from many low income countries. UH. And

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Speaker 1: then the traditional route whereby countries developed very rapidly was

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Speaker 1: one of export oriented industrialization. That's of course what China

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Speaker 1: did before China, It's what South Korea and Taiwan did

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Speaker 1: before them, it was Japan. And what we see around

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Speaker 1: the world these days is that that really a process

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Speaker 1: of what I've called premature the industrialization in law to

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Speaker 1: middle income countries that they're that they are becoming the

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Speaker 1: industrialized at very low levels of development in manufacturing isn't

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Speaker 1: serving the kind of escalator role that it did. So

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Speaker 1: you know, you know, a country like Ethiopia that really

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Speaker 1: should in some sense ideally ideally placed to be the

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Speaker 1: next sort of low cost source for manufactured exports um

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Speaker 1: you know, has received some Chinese investment, but I really

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Speaker 1: don't see it developing in quite the same way that

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Speaker 1: the station countries before. And I think technology has a

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Speaker 1: lot to do with it. UM. You know, when we

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Speaker 1: start talking about you know, three D printing of shoes,

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Speaker 1: you've suddenly, you know, taken away, you know, one of

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Speaker 1: the main mechanisms through which law in gump countries developed. UH.

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Speaker 1: And you've taken that, that that escalator away from them,

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Speaker 1: you know. So it is it is an issue that

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Speaker 1: I think UM will mark developing countries in the decades

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Speaker 1: ahead and of course going forward. UM. Financial globalization UM

397
00:27:17,680 --> 00:27:20,639
Speaker 1: is a big question mark. UM. You know, obviously we

398
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Speaker 1: have a dollar driven global financial order, but nothing there's

399
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Speaker 1: nothing new under the sun. UM. And you have been

400
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Speaker 1: warning for years about the risks of boom bust capital

401
00:27:33,000 --> 00:27:38,160
Speaker 1: flow cycles. UM. Are you concerned that maybe emerging markets

402
00:27:38,160 --> 00:27:43,280
Speaker 1: a bit too cautious to impose capital controls or moderate

403
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Speaker 1: the pace of credit growth because there's a perception that

404
00:27:47,440 --> 00:27:51,800
Speaker 1: you know, open financial markets can boost growth when you

405
00:27:51,840 --> 00:27:59,000
Speaker 1: know that that contention isn't necessarily supported wholesale in economic theory.

406
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Speaker 1: I am, You're right that that there is. You know,

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Speaker 1: on the one hand, there has been an ideological shift,

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Speaker 1: as we talked earlier, that that even the I m

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Speaker 1: F is not in favor of complete freedom of capital

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Speaker 1: mobility understands that that developing countries may want to use

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Speaker 1: capital controls. On the other hand, in terms of practice,

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Speaker 1: there is still a certain amount of stigma, a certain

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Speaker 1: amount of risks to policymakers um from from using capital controls.

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Speaker 1: And I think what and I'm sorry, could you give

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Speaker 1: us any examples at all? Well, I mean, most you know,

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Speaker 1: sub Southern African countries still maintain a large maintain fairly

417
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Speaker 1: open capital accounts. And and you know what what they

418
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Speaker 1: want to be is they want to be you know,

419
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Speaker 1: seen as as you know, partily promising frontier market economies.

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Speaker 1: So you know, you know, we have now this this

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Speaker 1: this new notion that we marketing is frontier market economies

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Speaker 1: and then that sort of as you know, as the

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Speaker 1: recipients of catal inflows and uh. And it doesn't seem

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Speaker 1: like the right thing to do if you want to

425
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Speaker 1: be perceived as a frontier economy to actively manage capital flows.

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Speaker 1: So these countries are getting very mixed messages from official

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Speaker 1: institutions and financial markets. And one thing that you know,

428
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Speaker 1: the IMF could be doing that it's not doing is

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Speaker 1: actually provide you know, active, uh technical assistance to how

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Speaker 1: capital accounts ought to be managed. UM. So it's one

431
00:29:36,600 --> 00:29:38,520
Speaker 1: thing to say that it's you know, you should do it,

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Speaker 1: maybe as a last resort, but it's okay. But you know,

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Speaker 1: policymakers in developing world are really concerned that, you know,

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Speaker 1: they don't know how to do it. They worry that that,

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00:29:48,760 --> 00:29:50,880
Speaker 1: you know, it will be very easy to to circumvent

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00:29:51,240 --> 00:29:55,880
Speaker 1: um controls, that there are not that many good examples

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00:29:55,960 --> 00:29:59,160
Speaker 1: around them. So I think that you know that it becomes,

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00:29:59,280 --> 00:30:02,320
Speaker 1: you know, the the relatively less risky thing to do

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00:30:02,480 --> 00:30:07,320
Speaker 1: for reputational reasons enough to want to do anything. Um

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00:30:07,360 --> 00:30:10,880
Speaker 1: and uh, and I don't think um the international institutional

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00:30:10,920 --> 00:30:14,160
Speaker 1: and necessarily helping them all that much. We are going

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Speaker 1: to have to leave it there, although I know we

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00:30:16,480 --> 00:30:19,840
Speaker 1: could keep talking about all of this for much much longer.

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Speaker 1: Danny Roderick, thank you so much for joining us today.

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00:30:23,000 --> 00:30:37,880
Speaker 1: That was a pleasure. So said, that was your debut

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00:30:38,120 --> 00:30:41,360
Speaker 1: Odd Lots podcast. I feel like we managed to cover, um,

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00:30:41,640 --> 00:30:44,560
Speaker 1: quite a lot of ground. Uh. Let's see, we talked

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00:30:44,560 --> 00:30:52,160
Speaker 1: about hyper globalization, technocrats, premature de industrialization. Uh. What kind

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00:30:52,160 --> 00:30:54,560
Speaker 1: of caught your attention the most? I think I'm a

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00:30:54,560 --> 00:30:58,200
Speaker 1: bit concerned about the policy prescriptions to try and address

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00:30:58,280 --> 00:31:02,480
Speaker 1: this big problem, because if you bulcanize regulatory and legal

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00:31:02,520 --> 00:31:06,400
Speaker 1: policy at national boarders, you're effectively increasing the cost of

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00:31:06,440 --> 00:31:11,400
Speaker 1: doing business, and you therefore increase costs for goods and services,

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00:31:11,440 --> 00:31:14,920
Speaker 1: and that just unleash is bad inflation. UM. I'm just

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00:31:15,000 --> 00:31:20,400
Speaker 1: not sure this idea that supernational but bodies have just

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00:31:20,520 --> 00:31:24,320
Speaker 1: too much control, um, and therefore we should be responsive

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00:31:24,400 --> 00:31:27,560
Speaker 1: to democratic concerns. I mean, I guess I've now realized

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00:31:27,600 --> 00:31:31,680
Speaker 1: that I am a authoritarian um, and I might be

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00:31:31,800 --> 00:31:34,960
Speaker 1: more right wing than I realized. Yeah. The one thing

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Speaker 1: I wish we'd asked is whether or not Professor Roderick

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Speaker 1: is happy with the fact that all of these issues

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00:31:43,040 --> 00:31:46,000
Speaker 1: seem to be getting more attention thanks to the rise

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Speaker 1: of populist parties people like Donald Trump or the Brexit

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00:31:50,640 --> 00:31:54,479
Speaker 1: campaign in the UK, or whether he's concerned about the

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00:31:54,560 --> 00:31:58,880
Speaker 1: way in which those discussions are actually happening and whether

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00:31:59,320 --> 00:32:02,760
Speaker 1: the way they justcussions are unfolding ends up being detrimental

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00:32:02,880 --> 00:32:06,120
Speaker 1: for everyone. I don't know. You know, I haven't seen

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00:32:06,160 --> 00:32:09,600
Speaker 1: anyone at Donald Trump Rilly hold up a sign arguing

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00:32:09,720 --> 00:32:16,000
Speaker 1: for control over pharmaceutical company Pharmaceutical legislation. UM. So yes,

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00:32:16,600 --> 00:32:20,640
Speaker 1: there is a big disconnect between the populist debates and

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Speaker 1: the policy debate. UM. I also think China is the

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00:32:24,400 --> 00:32:27,120
Speaker 1: elephant in the room as well, because you know, everyone

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Speaker 1: argues that China should liberalize its capital, currency, and trade

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Speaker 1: policies and that can help, UM, you know, rebalance its

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00:32:35,240 --> 00:32:38,920
Speaker 1: domestic economy and beef up its productivity, and if it does,

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00:32:39,000 --> 00:32:43,440
Speaker 1: it could boost global aggregate demand and give globalization a

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00:32:43,440 --> 00:32:46,479
Speaker 1: new lease of life. But it seems that, you know,

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00:32:46,920 --> 00:32:52,360
Speaker 1: if you are against such liberalization efforts, UM, China should

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00:32:52,400 --> 00:32:55,360
Speaker 1: continue maybe with its status quo, and it seems like

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00:32:55,960 --> 00:32:59,400
Speaker 1: that could be quite a controversial stance to hold. I

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00:32:59,440 --> 00:33:01,600
Speaker 1: feel like we are going to be talking about all

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00:33:01,600 --> 00:33:05,280
Speaker 1: these issues for quite some time to come, but again

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00:33:05,320 --> 00:33:07,000
Speaker 1: we're going to have to leave it there for today.

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Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at

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00:33:11,040 --> 00:33:14,240
Speaker 1: Tracy Alloway. And I'm sid Vernon. You can follow me

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00:33:14,400 --> 00:33:18,040
Speaker 1: on Twitter at under school said Verna, and Danny Roderick

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00:33:18,200 --> 00:33:22,280
Speaker 1: is also on Twitter. He is at Roderick. Danny, thanks

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00:33:22,280 --> 00:33:33,800
Speaker 1: for listening. But knowledge to work and grow your business

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00:33:33,840 --> 00:33:37,920
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