Isobel Coleman

Democracy in Development

Coleman maps the intersections between political reform, economic growth, and U.S. policy in the developing world.

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Missing Pieces: China’s Economy, India’s Economy, and More

by Isobel Coleman
January 13, 2012

General view of residential and commercial buildings in Haikou, Hainan Province, China, May 5, 2010 (Courtesy Reuters). General view of residential and commercial buildings in Haikou, Hainan Province, China, May 5, 2010 (Courtesy Reuters).

Charles Landow covers China, India, South Africa, Brazil, and the European Parliament in this week’s Missing Pieces. Enjoy the selection and let us know your thoughts.

  • Wobbling Growth in China…: Robert Samuelson of the Washington Post this week considers the prospect of a major slowdown in China. Ingredients include a potential housing bubble, weak demand for Chinese exports abroad, and rising government debt. A “soft landing,” or modest reduction in GDP growth, is still seen as likely, but a Nomura report cited by Samuelson sees a one-in-three chance of a steeper drop. A recent op-ed by CFR president Richard Haass reviews China’s daunting economic to-do list. The current Foreign Affairs also features a debate over the prospects for China’s continued rise.
  • …and India: Meanwhile, India’s Planning Commission said this week that growth in the current fiscal year will be 7 percent, down from 8.5 percent last year. An Economist blog post from December reported that “expectations for India’s economic growth rate have been sliding inexorably,” blaming such factors as high interest rates, “government drift” that has stymied reforms, and fiscal and current-account deficits. But the Economist this week reviews the government’s case for optimism. Given China’s and India’s blistering recent growth, a modest cooling would hardly mean recession. But given their massive economies and domestic needs, any slowdown holds big implications for their citizens and the world.
  • ANC Centennial: South Africa’s African National Congress (ANC) marked its 100th anniversary last weekend. The party enjoys a formidable legacy as “Africa’s oldest and most successful liberation movement,” as the New York Times reports. But nearly 18 years of ANC rule have left massive problems, from education and HIV/AIDS to violent crime and unemployment. The party itself faces leadership splits, corruption accusations, and a sense that economic gains have accrued mainly to the connected few, as a Time piece explains. CFR’s John Campbell chronicles the ANC’s problems, though he argues it is unlikely to lose power anytime soon.
  • Pacifying Brazil’s Favelas: As Brazil prepares to host the 2014 World Cup and the 2016 summer Olympics, authorities are wresting Rio de Janeiro’s favelas from gang control. The effort is bringing some success for security and economic development, as a Telegraph article and a Knowledge@Wharton piece show. However, an al-Jazeera piece, though generally positive, notes mistrust of the government and fears of rising housing costs. And most ominously, a New York Times article charts the rise of militias—groups “composed largely of active-duty and retired police officers” that “function like a criminal offshoot of the state.” If residents find they have traded gang control for state-connected extortion and violence, pacification seems unlikely to last.
  • Parliamentary Pay: In a new paper from the National Bureau of Economic Research, Raymond Fisman and colleagues explore the effect of salaries on the motivation of members of the European Parliament (MEPs). They exploit a policy change in 2009 that equalized salaries for all MEPs, giving some a raise and others a cut. (Salaries had varied by MEPs’ home country.) Among the authors’ findings: higher salaries increase the chance that MEPs will run for re-election, decrease the chance they will quit during a term, and boost the number of parties that field candidates for office. Interestingly, higher salaries also decrease the chance that an MEP attended a top-ranking college.

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