Speaker 1: But knowledge to work and grow your business with c
Speaker 1: i T from transportation to healthcare to manufacturing. C i
Speaker 1: T offers commercial lending, leasing, and treasury management services for
Speaker 1: small and middle market businesses. Learn more at c i
Speaker 1: T dot com put Knowledge to Work. Welcome to another
Speaker 1: episode of the Odd Lots podcast. I'm Tracy Alloway, executive
Speaker 1: editor of Bloomberg Markets, and unfortunately my normal co host,
Speaker 1: Joe Wisenthal is away this week. He is off globe
Speaker 1: trotting to some very exotic locations on a business trip
Speaker 1: for Bloomberg. So I thought as a sort of protest
Speaker 1: episode that Joe gets to go on an amazing trip
Speaker 1: to some very nice places with very good food and
Speaker 1: very luxurious scenery. We are going to talk about globalization
Speaker 1: and specific quickly, we are going to talk about the
Speaker 1: negative aspects of globalization. And here with me today as
Speaker 1: a replacement co host is Sid Verma. He is one
Speaker 1: of the newest members of the Bloomberg Markets team. Say hello,
Speaker 1: said hi there, So Sid, You're actually the perfect person
Speaker 1: to talk about this because you've done an enormous amount
Speaker 1: of work on globalization and cross border capital flows and
Speaker 1: development over the course of your career. Right, yes. Um.
Speaker 1: For the last couple of years, I've written quite a
Speaker 1: lot about the opportunities and challenges brought by unfettered capital
Speaker 1: flows and the backlash against um, some trade policies that
Speaker 1: have been UM implemented at the behest of Western backed institutions. So, UM, Yeah,
Speaker 1: I'm really excited to have this conversation. It seems like
Speaker 1: it really is the sexy topic of the momentum. We've
Speaker 1: obviously got Brexit votes, the rise of Donald Trump this year,
Speaker 1: declining trade flows, rising income in equality, political populism. It
Speaker 1: all seems to nurture a growing view that globalization isn't
Speaker 1: just out of fashion, it's on life support. And our
Speaker 1: guests today, I actually really like the way you described
Speaker 1: him earlier. Um, it's Danny Roderick. He's an economist. He's
Speaker 1: also a professor of international political economy at Harvard, and
Speaker 1: you kind of said he was the original guy who
Speaker 1: started writing about all the negative aspects of globalization before
Speaker 1: it was cool, right. Yeah. He refused to join in
Speaker 1: the congratulatory party two decades ago, UM, and he argued
Speaker 1: that economists probably overstated the benefits of globalization and that
Speaker 1: policy makers probably risk a backlash if they push ahead
Speaker 1: with unfettered free trade and capital policies. So he's exactly
Speaker 1: the right economist to talk to on this topic, right,
Speaker 1: And in retrospect, it seems like the notion that a
Speaker 1: backlash was coming was very, very imprescient, because here we
Speaker 1: are in two thousand and sixteen and everyone's talking about
Speaker 1: the downsides of globalization on federal trade deals, rightly or wrongly.
Speaker 1: I should say, well, without further ado, Danny Roderick, thank
Speaker 1: you so much for joining us today. Nice to be
Speaker 1: with you. Thank you. Should we maybe start with this
Speaker 1: idea of a backlash, you know, to what extent was
Speaker 1: the criticism that we are seeing now of globalization, To
Speaker 1: what extent was that inevitable based on what's happened over
Speaker 1: the past two decades and beyond. I think it was
Speaker 1: pretty inevitable. I mean it seemed clear to me that
Speaker 1: the deal position was going to be building up. I
Speaker 1: guess I wrote a little monograph um a couple of
Speaker 1: decades ago called has Globalization Gone Too Far? And then
Speaker 1: you know, it was different kinds of characters that were
Speaker 1: sort of uh, it was Pat Buchanan and you know,
Speaker 1: in Europe it was the truckers protesting, and the agriculturalists
Speaker 1: and sort of where you know, sort of other kinds
Speaker 1: of people on the scene. But the general trends were
Speaker 1: pretty easy to see and and and they arose from
Speaker 1: some basic fundamentals that the the kind of overall economic
Speaker 1: benefits of of globalization. You sort of began to be
Speaker 1: swamped by a lot of concerns about redistribution, about what
Speaker 1: was happening to specific communities, about the the elites getting
Speaker 1: sort of uh um uprooted from sort of the national
Speaker 1: setting and the larger gap opening up between the people
Speaker 1: who control the politics and what was happening and the
Speaker 1: ordinary people um and sort of you know, decision making
Speaker 1: moving away from national capitals to uh, weird places like
Speaker 1: Brussels or Geneva or or sort of multinationals and banks
Speaker 1: including unclosed doors and and so historically, of course, this
Speaker 1: was also not the first time we were seeing this.
Speaker 1: That We've had an era of high globalization during the
Speaker 1: Gold Standard, and and it kind it came to a
Speaker 1: rather abrupt end for many of the same reasons. I
Speaker 1: don't think we're up quite the same kind of crisis
Speaker 1: uh at this point. I think the the globe kind
Speaker 1: of globalization we have has much firmer foundations than than
Speaker 1: was the case under the gold gold standard. But I
Speaker 1: do think we have pushed it further than it can go,
Speaker 1: either economically actually or politically. I like the idea that
Speaker 1: we're not necessary early facing a huge crisis when it
Speaker 1: comes to a globalization backlash. What exactly can you spell out?
Speaker 1: What exactly makes it different this time compared to, for instance,
Speaker 1: the end of the gold standard. Yeah, I mean, I
Speaker 1: think we're in a much better you know, despite all
Speaker 1: day the backlash. The fact is that we have much
Speaker 1: stronger institutions um today compared to the nineteen twenties and
Speaker 1: nineteen thirties, the inter war period when the gold standard
Speaker 1: eventually collapse. UM. We have much stronger governments that are
Speaker 1: providing much better safety nets. Uh. We have global institutions
Speaker 1: that provide for much greater global cooperation, the World Trade
Speaker 1: Organization and the IMF with nothing like that in the
Speaker 1: inter war period. And by and large, I think, you
Speaker 1: know that people have incorporated the lessons of the rampant
Speaker 1: protectionism of the nineteen thirties, and and I think even
Speaker 1: the you know, the populist and the way they talk
Speaker 1: about trade policy. It's it's historically speaking, it's it's a
Speaker 1: rather measured kind of protectionism. I don't think smooth and
Speaker 1: holy would be something that that even Donald Trump would
Speaker 1: would bring up as something that that you would like
Speaker 1: to to to reenact. So I think the intellectual consensus
Speaker 1: has actually shifted quite a bit. And even though they're
Speaker 1: a bit more done in dumps than usual, I mean,
Speaker 1: I think the political forces that push for open markets,
Speaker 1: um you know, big multinationals or banks or the trade
Speaker 1: elite date also happened to be much more there's still
Speaker 1: politically quite quite powerful. So I don't see a fundamental
Speaker 1: breaking down of the system and the way that that
Speaker 1: we saw. But that doesn't mean that you know that
Speaker 1: you know, we could you know, seriously mismanaged the situation
Speaker 1: and in fact fuel the rise of the growth of
Speaker 1: populism that I think, you know, the damage will be
Speaker 1: not just to globalization. I think the damage will be
Speaker 1: to our liberal democratic order. Anythink that's that's in fact
Speaker 1: a much bigger price to pay. So, Danny, you mentioned
Speaker 1: the idea that globalization may in some way have been mismanaged.
Speaker 1: Can you spell out exactly what you mean by that
Speaker 1: and give us maybe some examples. I think I I
Speaker 1: time the transition to the ninety nineties where I think
Speaker 1: we began to mosh push for a model of of
Speaker 1: globalization that I call hyperglobalization, which is where gradually globalization
Speaker 1: turned into an end for itself rather than being a
Speaker 1: means to an end. And and we so increasingly governments
Speaker 1: negotiating deals or undertaking changes in policies that that that
Speaker 1: began to constrain um what they could do domestically, began
Speaker 1: to constrain the way that they could address domestic um
Speaker 1: concerns and UH and oversold the benefits of the resulting
Speaker 1: arrangements and didn't pay a whole lot of attention to
Speaker 1: the disruption that those things would cause. And I think
Speaker 1: there are sort of two concrete things. One was the
Speaker 1: creation of the World Trade Organization in the nineties, which
Speaker 1: which went significantly beyond any trade agreement that had been negotiated.
Speaker 1: And what really stands out about the w t O
Speaker 1: is that it reached significantly beyond borders into deep domestic
Speaker 1: territory and economic policy making UH with growth sort of
Speaker 1: restrictions on on what governments could do in the way
Speaker 1: of dealing with subsidies in the area of health and
Speaker 1: safety standards with respect to intellectual property rights. And on
Speaker 1: the financial side, of course, even though this was not
Speaker 1: an international agreement, by and large, complete mobility of capital,
Speaker 1: particularly of short term financial capital, became effectively the norm
Speaker 1: through the workings of the European Union and on and
Speaker 1: on a broader scale through the o e C. D
Speaker 1: UM and I think this this new um sort of
Speaker 1: understandings from the nineteen nineties. On the one hand, you know,
Speaker 1: complete mobility of capital as a norm uh and uh
Speaker 1: and and trade agreements, you know, being no longer about
Speaker 1: tariffs and quotas at the border, but increasingly about domestic
Speaker 1: regulations and how those had to be coordinated and harmonized
Speaker 1: across countries. I think sort of both um made domestic
Speaker 1: economic policy making much more hostage, left it much more
Speaker 1: hostage to uh this sort of you know, this anonymous
Speaker 1: force of globalization uh and and created this this juncture
Speaker 1: between sort of you know where uh, you know, the
Speaker 1: life that the ordinary people were living and their their
Speaker 1: own economic existence and the kind of policy making that
Speaker 1: happened at that sort of international sort of globalization or
Speaker 1: hyper globalization driven sphere. We are going to take a
Speaker 1: quick break for our sponsors. But knowledge to work and
Speaker 1: grow your business with c i T from transportation to
Speaker 1: healthcare to manufacturing. C i T offers commercial lending, leasing,
Speaker 1: and treasury management services for small and middle market businesses.
Speaker 1: Learn more at c I T dot com. Put Knowledge
Speaker 1: to work and we're back, Danny. I'm interested in this
Speaker 1: idea of globalization, hyper globalization, if you will, going too far.
Speaker 1: And I always wonder how did that actually happen? Like
Speaker 1: did politicians just wake up one day and realize that
Speaker 1: there was a lot of opportunity for them personally in
Speaker 1: creating these sort of super national structures that they could
Speaker 1: then have careers in or walk us through this? How
Speaker 1: this actually happened? Um? You know, it's a combination as
Speaker 1: usual of interests and ideas. On the one hand, of course,
Speaker 1: you had very specific interests at work, um, and so
Speaker 1: in in financial globalization, of course, they were you know,
Speaker 1: banks that became bigger and were interested in in in
Speaker 1: removing impediments to capital flows and across borders. You had
Speaker 1: multinationals who wanted to get market access and therefore were
Speaker 1: interested in in in reshaping the regulations of different countries.
Speaker 1: So as to remove impediments in terms of their being
Speaker 1: able to access these markets. You had definitely interests at play,
Speaker 1: but there was also ideas. I mean, there's sort of
Speaker 1: the whole you know, ideational context of how the things
Speaker 1: happened in the ninety nineties had as its background, of course,
Speaker 1: sort of the notion that you know, markets couldn't do
Speaker 1: much wrong, that that governments, when they intervened with on
Speaker 1: these sort of muck things around, and that you know,
Speaker 1: sort of that that trade liberalization in the fifties and
Speaker 1: sixties and seventies had been um, you know, had been
Speaker 1: had produced the booming world economy, and therefore, which by
Speaker 1: the way, is true, but then sort of misleading conclusion
Speaker 1: was the wrong that therefore this was the most important
Speaker 1: thing to keep doing so effectively a good thing was
Speaker 1: taken too far in my view. And third, I would
Speaker 1: add that on top of of you know, sort of
Speaker 1: the general mediational context and the interests of various actors. Um,
Speaker 1: I think there was a political failure on the part particularly,
Speaker 1: I would say, of the sort of you know what
Speaker 1: in the United States context, what would call sort liberals
Speaker 1: or left liberals, and in the United in Europe would
Speaker 1: be the socialists and the social Democrats a sort of
Speaker 1: a certain abdication of their responsibility, and they they bought
Speaker 1: into that whole story of how sort of, you know,
Speaker 1: moving on this hyperglobalization agenda either was something that was
Speaker 1: necessary that they couldn't do much about it, or as
Speaker 1: was the case in many cases, that this is something
Speaker 1: that they should actually back, that they should support. So
Speaker 1: somewhat surprisingly, some of the the most avid supporters of
Speaker 1: financial globalization where the Socialists in France or the Clinton
Speaker 1: Democrats in the United States. So I think, you know,
Speaker 1: sort of the political group that you might have thought
Speaker 1: would have acted as a break in fact, it was
Speaker 1: very much in behind this this push towards hyperglobalization. So
Speaker 1: I think that that's I think it's sort of the
Speaker 1: combination of the forces that brought us to to to
Speaker 1: where we are. So so where do we go going forward? Um,
Speaker 1: the Trans Pacific Partnership and the Transatlantic Trade Partnership deals
Speaker 1: look like they don't have sufficient political backing. The IMF
Speaker 1: has issued a mere culpus saying that they have probably
Speaker 1: overstated the virtues of neoliberalism, which tends to argue for
Speaker 1: the wholesale privatization of companies, as well as a modest
Speaker 1: role for fiscal policy and fully open trade and financial borders.
Speaker 1: At the same time, you know, governments and the IMF
Speaker 1: are more sympathetic to the view that capital controls can
Speaker 1: shield themselves from volatility of international finance. Um. So you
Speaker 1: know what, what where are we going next? Are there
Speaker 1: sufficient number of you know? Um? You know, is there
Speaker 1: a moral leadership on the international stage to try and
Speaker 1: craft a new trading model or is it just a
Speaker 1: model through scenario? Yes? So, as I said earlier, you know,
Speaker 1: I don't think the really bad scenario is one of
Speaker 1: a very high likelihood where we have a complete collapse
Speaker 1: of the world economy and and and globalization with all
Speaker 1: the really terrible political ramifications of the type that we
Speaker 1: saw in the interwar period. But but leaving that aside,
Speaker 1: I think whether we take a relatively good path or
Speaker 1: relatively ugly path depends largely on how the mainstream political
Speaker 1: groups react, um. And and that's both sort of you know,
Speaker 1: center right, center left parties and also the technocratic establishment. Now,
Speaker 1: I think both of these groups have have are sort
Speaker 1: of halfway down the line. I mean, as you say,
Speaker 1: there has been a sort of a couple of sorts
Speaker 1: on a number of different dimensions. Uh. You know that,
Speaker 1: you know, the free mobility of capital. I think sort
Speaker 1: of the consensus around that has dissipated, and even the
Speaker 1: IMF is saying, you know that that we need to,
Speaker 1: you know, accept that there are circumstances which capital controls
Speaker 1: might make sense. Uh. And there's sort of you know,
Speaker 1: wider agreement that you know, maybe we needed kind of
Speaker 1: a different models on trade negotiations, but we're not quite
Speaker 1: there yet. And we see it, for example, in the
Speaker 1: way that you know, an institution like the IMF response
Speaker 1: to where we are. On the one hand, you have
Speaker 1: these sort of um revisions in its thinking. On the
Speaker 1: other hand, you have Christine Lagarde coming out and saying that,
Speaker 1: you know, we need to stay strong on trade and
Speaker 1: the only way that we can progress is by signing
Speaker 1: more trade agreements, and it's it's very important that we
Speaker 1: do that. So I think, you know, the realization hasn't
Speaker 1: kin that the way that you respond to these things
Speaker 1: is not by you know, simply doing a better marketing
Speaker 1: job on the benefits of trade. That's not the issue.
Speaker 1: The issue is is that ordinary people feel that policymaking
Speaker 1: and and and and the technocratic and policy elites are
Speaker 1: pursuing a set of interest which is not theirs, and
Speaker 1: and uh and and and. The main constraint that the
Speaker 1: world economy faces right now is not that it is
Speaker 1: not sufficiently open and so you need to sign new
Speaker 1: trade agreements. The main constraint is that it's lacking the
Speaker 1: legitimacy in the eyes of the ordinary people that you
Speaker 1: need to sustain a moderately open economy. And once you
Speaker 1: realize that the main constraint is legitimacy, not lack of openness,
Speaker 1: then you have to really start thinking that that what
Speaker 1: we should be doing is not pushing for more trade agreements,
Speaker 1: but really fundamentally revisiting what we are negotiating when we
Speaker 1: talk about trade. And we're not there yet. But Danny,
Speaker 1: this is why I get confused, because when people talk
Speaker 1: about reforming trade or better distributing the benefits of free trade,
Speaker 1: it seems like by doing that, by definition, you almost
Speaker 1: go into protectionism, right because you know, improving trade for
Speaker 1: one group is inevitably going to be good from their
Speaker 1: perspective and perhaps bad for someone else. So how do
Speaker 1: you make it better without automatically going backwards and entering
Speaker 1: a sort of protectionist everyone for themselves game. Yeah. I
Speaker 1: think one of the obstacles in thinking creatively and productively
Speaker 1: about the world of trade is that we have this,
Speaker 1: you know, we we think about trade on what we're
Speaker 1: doing in trade as a so moving in this unidirectional
Speaker 1: uh sort of road that goes from you know, more
Speaker 1: open trade to less open trade. So it's you know,
Speaker 1: the battle between protection has been free trade. You know.
Speaker 1: This may have been the battle that we were fighting
Speaker 1: in the fifties and sixties and seventies, and that battle
Speaker 1: has been won, and it's been won by by by
Speaker 1: free traders. But really since the ninety nineties and since
Speaker 1: the World Trade Organization, trade negotiations and trade agreements are
Speaker 1: not about free trade uh and and so you know,
Speaker 1: so what we're really talking about is not protectionism versus
Speaker 1: free trade. Large part of the t PP is really
Speaker 1: about talking about regulations um and and and regulations that
Speaker 1: are fundamental to running in open economy uh and a
Speaker 1: market based system. The question is, you know, where should
Speaker 1: those regulations be designed, and what's the role of international
Speaker 1: agreements or global market forces in shaping those regulations. So
Speaker 1: should corporations, for example, have access to a completely separate
Speaker 1: track in the way that they can pursue their interests
Speaker 1: and impose their own preferences on certain on governments when
Speaker 1: no other group NGOs or labor unions or others have
Speaker 1: a similar ability. So, of course I'm talking about the
Speaker 1: I S d S so called the Investor States Dispute
Speaker 1: Settlement System, which is part of the Transpacific Partnership and
Speaker 1: other trade agreements. Are we talking about now, We're talking about,
Speaker 1: you know, the rules with respect to capital flows and
Speaker 1: capital account regulations and patent and intellectual property rights, and
Speaker 1: you know, what are appropriate rules in those areas for
Speaker 1: a country like Vietnam or her country like Malaysia, And
Speaker 1: should those be designed by international agreement? And should the
Speaker 1: main act so we you know, shaping those regulations be
Speaker 1: banks and and and and and and large amountain national corporations.
Speaker 1: These are not issues that are helpfully discussed in in
Speaker 1: the light of you know, sort of protectionism versus free
Speaker 1: trade kind of a mindset, because they're not about those
Speaker 1: um and so that's why I don't think the issue
Speaker 1: is really love of of you know, if we if
Speaker 1: we don't negotiate T P P or t t I
Speaker 1: P that we're necessarily falling into, um, a protectionist hell hole. Uh.
Speaker 1: The issue is can we have better rules that address
Speaker 1: issues of fairness, of distuputive justice, of equity UM in
Speaker 1: a sense that people want to make sure that the
Speaker 1: rules and regulations that affect their lives are made democratically
Speaker 1: in fluad that they can actually openly participate. And are
Speaker 1: we allowing for democratic deliberation, sufficient democrats deliberation for the
Speaker 1: determination of such rules. So those are the kinds of issues,
Speaker 1: and I think they're certainly are the ones that ought
Speaker 1: to be discussed. I think that brings us quite neatly
Speaker 1: on to kind of two separate topics, whether it's trade
Speaker 1: globalization or financial globalization. But one way of looking at
Speaker 1: slowing globalization is a fact that trade growth has been
Speaker 1: weaker than GDP growth in recent years, UM, and that
Speaker 1: trade elasity, so called trade alasity, is projects to be
Speaker 1: weak again this year. UM. And I know that you
Speaker 1: say that that's a very blunt way of looking at,
Speaker 1: you know, globalization, but it seems that trade volumes are
Speaker 1: weak and there seems to be an existential threat for
Speaker 1: emerging markets in the in the coming decades, given the
Speaker 1: fact that there are new manufacturing techniques that could increase
Speaker 1: UM import, substitution and developed markets. You know what extent
Speaker 1: are you concerned that in emerging markets like the comparative
Speaker 1: advantage from new innovative technologies such as drive list cars,
Speaker 1: three D printing, and new softwares, because traditionally we know
Speaker 1: that for emerging markets to grow, they need to build
Speaker 1: out competitive manufacturing hubs. Yes, I mean, first, I think
Speaker 1: the decline of trade volumes in relation to global output
Speaker 1: um in recent years that I don't think it's much
Speaker 1: to do with the populist backlash so far, So I
Speaker 1: don't think it's really driven through by the rise of protectionism.
Speaker 1: There are much you know sort of there you know,
Speaker 1: supply chains are being sort of brought in home because
Speaker 1: of technological changes um and and the slowing down of
Speaker 1: of of China and is also a very big factor
Speaker 1: in that. So there are you know, what's happening to
Speaker 1: trade recently. I think it's largely driven by by economic
Speaker 1: and technological changes and not by the politics around trade.
Speaker 1: Although I do think that if we mismanage globalization, political
Speaker 1: risks and and uh, political barriers will start the player
Speaker 1: all as well. But going back to the question of
Speaker 1: developing countries in emerging markets, I'm indeed very concerned by
Speaker 1: the fact that manufacturing is increasingly becomes becoming skill and
Speaker 1: technology and intensive and effectively compared to advantage in manufacturing
Speaker 1: is moving away from many low income countries. UH. And
Speaker 1: then the traditional route whereby countries developed very rapidly was
Speaker 1: one of export oriented industrialization. That's of course what China
Speaker 1: did before China, It's what South Korea and Taiwan did
Speaker 1: before them, it was Japan. And what we see around
Speaker 1: the world these days is that that really a process
Speaker 1: of what I've called premature the industrialization in law to
Speaker 1: middle income countries that they're that they are becoming the
Speaker 1: industrialized at very low levels of development in manufacturing isn't
Speaker 1: serving the kind of escalator role that it did. So
Speaker 1: you know, you know, a country like Ethiopia that really
Speaker 1: should in some sense ideally ideally placed to be the
Speaker 1: next sort of low cost source for manufactured exports um
Speaker 1: you know, has received some Chinese investment, but I really
Speaker 1: don't see it developing in quite the same way that
Speaker 1: the station countries before. And I think technology has a
Speaker 1: lot to do with it. UM. You know, when we
Speaker 1: start talking about you know, three D printing of shoes,
Speaker 1: you've suddenly, you know, taken away, you know, one of
Speaker 1: the main mechanisms through which law in gump countries developed. UH.
Speaker 1: And you've taken that, that that escalator away from them,
Speaker 1: you know. So it is it is an issue that
Speaker 1: I think UM will mark developing countries in the decades
Speaker 1: ahead and of course going forward. UM. Financial globalization UM
Speaker 1: is a big question mark. UM. You know, obviously we
Speaker 1: have a dollar driven global financial order, but nothing there's
Speaker 1: nothing new under the sun. UM. And you have been
Speaker 1: warning for years about the risks of boom bust capital
Speaker 1: flow cycles. UM. Are you concerned that maybe emerging markets
Speaker 1: a bit too cautious to impose capital controls or moderate
Speaker 1: the pace of credit growth because there's a perception that
Speaker 1: you know, open financial markets can boost growth when you
Speaker 1: know that that contention isn't necessarily supported wholesale in economic theory.
Speaker 1: I am, You're right that that there is. You know,
Speaker 1: on the one hand, there has been an ideological shift,
Speaker 1: as we talked earlier, that that even the I m
Speaker 1: F is not in favor of complete freedom of capital
Speaker 1: mobility understands that that developing countries may want to use
Speaker 1: capital controls. On the other hand, in terms of practice,
Speaker 1: there is still a certain amount of stigma, a certain
Speaker 1: amount of risks to policymakers um from from using capital controls.
Speaker 1: And I think what and I'm sorry, could you give
Speaker 1: us any examples at all? Well, I mean, most you know,
Speaker 1: sub Southern African countries still maintain a large maintain fairly
Speaker 1: open capital accounts. And and you know what what they
Speaker 1: want to be is they want to be you know,
Speaker 1: seen as as you know, partily promising frontier market economies.
Speaker 1: So you know, you know, we have now this this
Speaker 1: this new notion that we marketing is frontier market economies
Speaker 1: and then that sort of as you know, as the
Speaker 1: recipients of catal inflows and uh. And it doesn't seem
Speaker 1: like the right thing to do if you want to
Speaker 1: be perceived as a frontier economy to actively manage capital flows.
Speaker 1: So these countries are getting very mixed messages from official
Speaker 1: institutions and financial markets. And one thing that you know,
Speaker 1: the IMF could be doing that it's not doing is
Speaker 1: actually provide you know, active, uh technical assistance to how
Speaker 1: capital accounts ought to be managed. UM. So it's one
Speaker 1: thing to say that it's you know, you should do it,
Speaker 1: maybe as a last resort, but it's okay. But you know,
Speaker 1: policymakers in developing world are really concerned that, you know,
Speaker 1: they don't know how to do it. They worry that that,
Speaker 1: you know, it will be very easy to to circumvent
Speaker 1: um controls, that there are not that many good examples
Speaker 1: around them. So I think that you know that it becomes,
Speaker 1: you know, the the relatively less risky thing to do
Speaker 1: for reputational reasons enough to want to do anything. Um
Speaker 1: and uh, and I don't think um the international institutional
Speaker 1: and necessarily helping them all that much. We are going
Speaker 1: to have to leave it there, although I know we
Speaker 1: could keep talking about all of this for much much longer.
Speaker 1: Danny Roderick, thank you so much for joining us today.
Speaker 1: That was a pleasure. So said, that was your debut
Speaker 1: Odd Lots podcast. I feel like we managed to cover, um,
Speaker 1: quite a lot of ground. Uh. Let's see, we talked
Speaker 1: about hyper globalization, technocrats, premature de industrialization. Uh. What kind
Speaker 1: of caught your attention the most? I think I'm a
Speaker 1: bit concerned about the policy prescriptions to try and address
Speaker 1: this big problem, because if you bulcanize regulatory and legal
Speaker 1: policy at national boarders, you're effectively increasing the cost of
Speaker 1: doing business, and you therefore increase costs for goods and services,
Speaker 1: and that just unleash is bad inflation. UM. I'm just
Speaker 1: not sure this idea that supernational but bodies have just
Speaker 1: too much control, um, and therefore we should be responsive
Speaker 1: to democratic concerns. I mean, I guess I've now realized
Speaker 1: that I am a authoritarian um, and I might be
Speaker 1: more right wing than I realized. Yeah. The one thing
Speaker 1: I wish we'd asked is whether or not Professor Roderick
Speaker 1: is happy with the fact that all of these issues
Speaker 1: seem to be getting more attention thanks to the rise
Speaker 1: of populist parties people like Donald Trump or the Brexit
Speaker 1: campaign in the UK, or whether he's concerned about the
Speaker 1: way in which those discussions are actually happening and whether
Speaker 1: the way they justcussions are unfolding ends up being detrimental
Speaker 1: for everyone. I don't know. You know, I haven't seen
Speaker 1: anyone at Donald Trump Rilly hold up a sign arguing
Speaker 1: for control over pharmaceutical company Pharmaceutical legislation. UM. So yes,
Speaker 1: there is a big disconnect between the populist debates and
Speaker 1: the policy debate. UM. I also think China is the
Speaker 1: elephant in the room as well, because you know, everyone
Speaker 1: argues that China should liberalize its capital, currency, and trade
Speaker 1: policies and that can help, UM, you know, rebalance its
Speaker 1: domestic economy and beef up its productivity, and if it does,
Speaker 1: it could boost global aggregate demand and give globalization a
Speaker 1: new lease of life. But it seems that, you know,
Speaker 1: if you are against such liberalization efforts, UM, China should
Speaker 1: continue maybe with its status quo, and it seems like
Speaker 1: that could be quite a controversial stance to hold. I
Speaker 1: feel like we are going to be talking about all
Speaker 1: these issues for quite some time to come, but again
Speaker 1: we're going to have to leave it there for today.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway. And I'm sid Vernon. You can follow me
Speaker 1: on Twitter at under school said Verna, and Danny Roderick
Speaker 1: is also on Twitter. He is at Roderick. Danny, thanks
Speaker 1: for listening. But knowledge to work and grow your business
Speaker 1: with c I T from transportation to healthcare to manufacturing.
Speaker 1: C i T offers commercial lending, leasing, and treasury management
Speaker 1: services for small and middle market businesses. Learn more at
Speaker 1: c i T dot com put knowledge to work