ECONOMICS OF DEVELOPMENT

The New Wealth of Nations

Michael Spence

Will an open world economy survive today’s financial crisis? Are the old strategies for growth still viable, or must countries radically alter their policies? Can climate-sensitive growth be achieved? Are big income inequalities inevitable?

RECENT COMMENTARIES

FEATURED COMMENTARIES

Mind over Market

Michael Spence Series: The New Wealth of Nations

2012-01-13

Most societies have important economic and other objectives that markets and competition are not designed to achieve. In today’s rapidly globalizing world, the most important of these objectives – expressed in various ways through the political and policymaking process in a wide range of countries – are stability, distributional equity, and sustainability.... read

Comments: 6 Recommended: 2 Read: 19074

The Exchange-Rate Delusion

Michael Spence Series: The New Wealth of Nations

2011-12-19

The emerging economies would like nothing more than the restoration of sustainable patterns of growth in the advanced economies, and are prepared to be cooperative players in that process. But focusing on these countries’ exchange rates is not the right way to go about it.... read

Comments: 10 Recommended: 2 Read: 14876

Can Italy Be Saved?

Michael Spence Series: The New Wealth of Nations

2011-11-21

As the economist Mario Monti assembles Italy’s next government, much is at stake for the country, for Europe, and for the global economy. Only bold commitments by both the EU and Italy can prevent an extremely bad outcome – and ensure a relatively favorable one.... read

Comments: 4 Recommended: 1 Read: 14779

The Global Jobs Challenge

Michael Spence Series: The New Wealth of Nations

2011-10-17

Over the past three decades, hundreds of millions of new workers have entered the global economy, bringing tremendous growth in income levels, opportunities, and the size of the global economy. But these new workers have also brought more employment competition, which has had profound distributional effects.... read

Comments: 11 Recommended: 1 Read: 17198

Closing America’s Growth Deficit

Michael Spence Series: The New Wealth of Nations

2011-09-21

As the US economy continues to sputter three years after the financial crisis erupted with full force, it has become clear that the US cannot recover strongly without a change in the mix of domestic and foreign components of total aggregate demand. That requires structural change and greater competitiveness in an expanded tradable sector.... read

Comments: 9 Recommended: 0 Read: 18041

Stagnant and Paralyzed

Michael Spence Series: The New Wealth of Nations

2011-08-08

The recent dramatic declines in equity markets worldwide are a response to the interaction of two factors: economic fundamentals and policy responses – or, rather, the lack of responses. Too many countries seem to be focused more on political outcomes than on economic performance.... read

Comments: 3 Recommended: 1 Read: 22280

Adapt or Die

Michael Spence Series: The New Wealth of Nations

2011-07-14

The major emerging economies have succeeded by focusing not only on macro and monetary stability, but also on adaptation, guided by a forward-looking (though inherently imperfect) assessment of coming micro and macro structural shifts and the measures needed to support them. Can the major developed countries do the same?... read

Comments: 2 Recommended: 2 Read: 28261

A Post-Crisis World of Risk

Michael Spence Series: The New Wealth of Nations

2011-06-15

The global economy’s most striking feature nowadays is the magnitude and interconnectedness of the macro risks that it faces. That is because the post-crisis period has produced a multi-speed world, as the major advanced economies struggle with low growth and high unemployment, while the main emerging economies have restored growth to pre-crisis levels.... read

Comments: 3 Recommended: 0 Read: 18172

Asia’s New Growth Model

Michael Spence Series: The New Wealth of Nations

2011-06-01

Emerging markets’ share of the global economy has risen steadily, led by Asian economies – home to almost three-fifths of the world’s population. If these economies take roughly the same route as their predecessors to advanced-country status, the impact on natural resources and the environment would be enormous – and probably disastrous.... read

Comments: 0 Recommended: 1 Read: 19505

Changing China’s Growth Path	Michael Spence
The goal of China's new Five-Year Plan is to recompose (not expand) aggregate demand, in order to sustain growth and avoid the diminishing-returns trap that is the principal risk of the current investment pattern. But changing that pattern will require many simultaneous transitions.... read

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The End of Fiscal Sovereignty in Europe

Michael Spence Series: The New Wealth of Nations

2010-05-18

The current crisis in the eurozone vividly underscores the importance of fiscal discipline – a point that the common currency's creators understood well. Today, EU leaders and member states must recognize that achieving the combination of discipline and flexibility needed to protect the collective interest and sustain the eurozone implies a loss of full fiscal sovereignty.... read

Comments: 3 Recommended: 0 Read: 35780

Investment Strategy after the Crisis

Michael Spence Series: The New Wealth of Nations

2009-12-21

Investors have been hit hard by the current crisis, and lessons are being learned and strategies revised. But the central lesson for investors is that they should not assume that all times are “normal” times, and that risks to the system as a whole are abnormal.... read

Comments: 0 Recommended: 0 Read: 28633

Achieving Growth in a Rebalanced World

Michael Spence Series: The New Wealth of Nations

2009-10-21

Although the financial crisis is winding down, prospects for growth in the global economy are unlikely to pick up. While this is, in part, inevitable, it is also the result of poor coordination between governments as the global economy rebalances.... read

Comments: 2 Recommended: 1 Read: 28785

Achieving Growth in a Rebalanced World

Michael Spence Series: The New Wealth of Nations

2009-10-21

Comments: 2 Recommended: 1 Read: 28785

Investment Strategy after the Crisis

Michael Spence Series: The New Wealth of Nations

2009-12-21

Comments: 0 Recommended: 0 Read: 28633

Can We Regulate Systemic Risk?

Michael Spence Series: The New Wealth of Nations

2010-08-13

In the past two years, we have had two dangerous episodes of financial instability and sudden change in market dynamics. More are likely, because the global economy is out of balance in several respects as we emerge from the crisis, particularly in terms of the distribution of sovereign debt and the structure of global demand.... read

Comments: 1 Recommended: 1 Read: 28540

Adapt or Die

Michael Spence Series: The New Wealth of Nations

2011-07-14

Comments: 2 Recommended: 2 Read: 28261

Escaping the Fossil Fuel Trap

Michael Spence Series: The New Wealth of Nations

2009-11-20

The world’s major challenge in combating climate change is to devise a strategy that encourages growth in the developing world, but on a path that approaches safe global carbon-emission levels by mid-century. The way to achieve this is to decouple the question of who pays for most mitigation efforts from the question of where, geographically, these efforts take place.... read

Comments: 1 Recommended: 0 Read: 27106

Why an American Recovery Matters

Michael Spence Series: The New Wealth of Nations

2010-02-03

It is a difficult moment to be optimistic about the future of the world economy. A policy agenda in the US that is overloaded, largely domestically focused, and partially paralyzed will mean a lack of attention to global issues that require cooperation and compromise, including the international dimensions of financial reform. ... read

Comments: 0 Recommended: 1 Read: 26958

In Finance We Distrust	Michael Spence
It now seems universally accepted that government should establish the structure and rules for the financial system, with participants then pursuing their self-interest within that framework. But in a complex system in which expertise, insight, and real-time information are widely dispersed – and trust is lacking – reliance on such a framework seems deficient and unwise. ... read
Jobs and Structure in the Global Economy	Michael Spence and Sandile Hlatshwayo
All countries, including the successful emerging economies, have addressed issues of inclusiveness, distribution, and equity as part of the core of their growth and development strategies. Morally, pragmatically, and politically, that is the right course.... read

AUTHOR INFO

Michael Spence

Michael Spence, a Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Academic Board Chairman of the Fung Global Institute in Hong Kong, and Senior Fellow at the Hoover Institution, Stanford University. His latest book is The Next Convergence – The Future of Economic Growth in a Multispeed World (www.thenextconvergence.com).

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