New Global Exchange Rate Arrangements Needed
UNCTAD's Trade & Development Report 2007
The world economic situation is more favourable for developing countries than at any time since the early 1970s (see box in article). But a safe correction to the increasing imbalances would be much easier with more appropriate global exchange-rate arrangements, the just published Trade & Development Report (TDR; see reference) of the UN Conference on Trade & Development (UNCTAD) argues. WDEV summarises the report.
Arbitrary exchange-rate shifts should be managed just as tariffs and export subsidies are, and in the absence of such controls regional cooperation may provide developing countries with some security against abrupt corrections. The authors of the TDR say that in recent years there have been several cases – for example in Germany, Japan and Switzerland – where current-account surpluses have been accompanied by a real depreciation of the exchange rate, rather than an appreciation, as conventional theory would predict. Such movements in the "wrong" direction tend to increase rather than reduce the underlying imbalances ...
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Posted: 5 September 2007
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