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The International Economy Program

The International Economy program aims to explain developments in the international economy, and influence policy. It does so by undertaking independent analytical research.

The International Economy program contributes to the Lowy Institute’s core publications: policy briefs and policy analyses. For example, the program contributed the Lowy Institute Paper, John Edwards’ Beyond the Boom, which argued that Australia’s transition away from the commodities boom will be quite smooth.

 

Experts

Latest Publications

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The tide is turning against US financial regulation

For most of the decade since the global financial crisis, financial regulation has been strengthened. Now the tide is turning in America. Reform has come up against the combined forces of Wall Street lobbying and Donald Trump’s deregulation agenda. It is beyond dispute that the financial crisis
By Stephen Grenville
07 Feb 18
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China’s economic gloom merchants

Markedly slower growth and imminent financial crisis have been the common dual predictions for China over the past decade. China’s growth has indeed slowed from its unsustainable breakneck pace in the two decades before the 2007–08 global crisis, but since then has settled down to a steady 6–7
By Stephen Grenville
02 Feb 18
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Don’t renegotiate the Trans-Pacific Partnership

Australia was quick to welcome US President Donald Trump's casual comment that the US might be prepared to join the Trans-Pacific Partnership if a "substantially better" deal could be struck. Yet while making it clear that we would welcome US participation on the terms already negotiated,
By Stephen Grenville
29 Jan 18
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Behind the Australia–Canada ‘wine war’

Australia has formally lodged a complaint against restrictions some Canadian provinces have placed on the sale of imported wine in grocery stores, in what has been described, somewhat dramatically, as a 'wine war'. Australia's action was described in the Ottawa Sun under the headline&
By Mike Callaghan
19 Jan 18
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Rethinking macro-economics: Fiscal policy

My recent post on rethinking macro-economics argued that monetary policy did all it could (and maybe was overstretched) during the weak recovery from the 2007-2008 crisis. The blame for the failure to achieve a robust recovery lies elsewhere, mainly with fiscal policy. The background for this
By Stephen Grenville
12 Dec 17
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The Bitcoin bubble

With Bitcoin trading at more than US$10,000 and suggestions it is not just a technological breakthrough, but also an exemplar of how to get around the failings of the nation state, it's time to try to sort out the various claims. Is it the next Amazon or tomorrow's Ford Edsel – a dismal flop? Is
By Stephen Grenville
04 Dec 17
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Converging approaches on Chinese investment

This article is part of a series for the Australia-UK Asia Dialogue, co-hosted by the Lowy Institute and Ditchley Foundation, and supported by the Department of Foreign Affairs and Trade and the Foreign and Commonwealth Office. Although both have been very open to foreign investment, Australia and
By John Edwards
01 Dec 17
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Rethinking macro-economics: Monetary policy

For the countries affected by the 2007-08 financial crisis, the recovery has been lacklustre. There was no self-equilibrating 'V'-shaped return to the pre-crisis GDP growth trajectory (see the familiar graph below, or here). Nearly a decade on, the recovery may be more assured, but the performance
By Stephen Grenville
09 Nov 17
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The first global supply chain

The city of Ternate in eastern Indonesia seems forgotten by time. Its quiet bustle is confined to the coastal fringes of Mount Gamalama, with its imperious presence. The most prominent building in the low-slung city is a monumental new mosque, minus two of its four minarets that fell down in a
By Stephen Grenville
03 Nov 17
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Central banks and the inflation conundrum

Inflation in the UK hit 3% for the year to September, but elsewhere it remains quite low, despite a strengthening global economy. Consumer price inflation in the US, for example, is sitting around 1.7%, yet output growth in the year to September was the strongest since 2015 and the unemployment
By John Edwards
02 Nov 17
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The future role of international financial institutions

The role of the multilateral development banks (MDBs) and other international financial institutions (IFIs) is back in the policy spotlight. The latest attention comes via the G20 Eminent Persons Group (EPG) on Global Financial Governance, formed by G20 Finance Ministers at their meeting
By Mike Callaghan
25 Oct 17
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Global growth: Choppy forecasts, but smooth sailing

It's been tough for those writing the IMF's World Economic Outlook in recent years. 'Is the Tide Rising?', the report asked in 2014, only to conclude later that same year that 'Legacies, Clouds and Uncertainties' still surrounded the global outlook. The next year there were 'Cross Currents', and
By John Edwards
04 Oct 17
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Politics slows Saudi reform plans

Even to the Saudi leaders looking at the consultants' PowerPoint presentation last year, Saudia Arabia's 2020 'National Transformation Plan' must have looked improbable. Unemployment to be cut by a fifth in just three years, 1.2 million additional jobs in five years, half of the Saudi workforce
By John Edwards
28 Sep 17
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‘Choosing Openness’ grapples with the big questions

In Choosing Openness, Andrew Leigh makes an important and timely intervention in the Australian debate about globalisation, free trade and immigration. This is, of course, a debate raging around the world, one that has seen Britain exit the EU, Donald Trump elected US President, Marine Le Pen
By Richard Holden
28 Sep 17
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Using economic diplomacy to reduce financial risks in Asia

If Australia’s economic future lies in Asia, then managing the risk of financial crises in the region should be a top concern. Especially as any crisis could also have significant geopolitical consequences. In an analysis for the Lowy Institute, Barry Sterland looks at what Australia can do
By Roland Rajah
18 Sep 17
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Ten years after the GFC, are we safe?

Ten years ago this month, Northern Rock experienced the first depositors' run on a British bank for 150 years and failed shortly afterwards. This was not the first manifestation of the global financial crisis: French bank BNP Paribas had frozen withdrawals from mortgage funds the month before; US
By Stephen Grenville
05 Sep 17
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Addressing global capital flows

International capital flows present serious policy challenges. In textbook economics, such flows are unambiguously beneficial. But volatile flows were a key cause of the 1997 Asian crisis, cross-country financial linkages exacerbated the 2008 global crisis, and capital flows were once again central
By Stephen Grenville
31 Aug 17
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Taxing global capital

Over the past quarter-century, global capital has become far more mobile and some foreign investors have become more sensitive to company tax issues. Much ingenious effort has been devoted to shifting company profits to tax jurisdictions with low rates and to avoiding company tax entirely. Perhaps
By Stephen Grenville
14 Aug 17
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How the IMF evaluates the Asian financial crisis

With this month marking the 20th anniversary of the forced floating of the Thai baht, the IMF has joined the numerous commentaries looking back on the Asian crisis and the lessons learned. The tone of a recently published blog post by IMF Deputy Managing Director Mitsuhiro Furusawa is one
By Stephen Grenville
19 Jul 17
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Safeguarding competition in a cyber economy

The European Commission in Brussels has fined Google €2.4 billion for using its dominant position in search to advantage the Google price-comparison service. The internet giant has yet to give a substantive response, but this case illustrates the challenges that new technology poses for
By Stephen Grenville
12 Jul 17
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A new era of leadership by the G19?

US President Donald Trump arrived in Hamburg for the G20 leaders meeting no friend of globalisation and multilateralism. Most of the analysis so far has focused on Trump himself and the uncertain future of the US-led international economic order. Yet the summit should also bring into sharper focus
By Roland Rajah
10 Jul 17
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Trump’s slow adjustment to global trade realities

The most striking message of the Hamburg G20 leaders meeting is not that the US did not lead the discussion but that it clearly didn’t even wish to. President Trump is most comfortable as a belligerent outsider, not only in Washington but also among his fellow global leaders. His only friend on
By John Edwards
10 Jul 17
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Is the US economy at full employment?

After the painfully slow recovery from the 2008 great Recession, US unemployment is now 4.4%, well below the level commonly regarded as 'full employment'. This would suggest that the economy has reached capacity, with some arguing that the current lacklustre rate of growth is in fact 
By Stephen Grenville
30 May 17
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Capital flows to emerging economies: Still unresolved

This year marks the 20th anniversary of the Asian Financial Crisis. Many factors were involved in that disaster, but grossly excessive foreign capital inflows were the key macro-economic problem during the boom years preceding the crisis. These flooded out when 'euphoria turned to panic without
By Stephen Grenville
23 May 17
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China’s financial concerns

The China bears have been around for years, continuously predicting the end of China's stellar growth story. In 2012 Michael Pettis expected annual growth to average 3% over this decade and in 2015 Tyler Cowen warned of an imminent disastrous financial collapse. So far, so good. China's
By Stephen Grenville
11 Apr 17
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Convention likely to win out in Trump-Xi meeting

Of all the startling events of the Trump Administration's first three months, the one most consequential for the rest of the world is quite likely the meeting between Trump and China's President Xi Jinping at Mar-a-Largo, beginning Thursday. The importance of this meeting is not any likely outcome
By John Edwards
06 Apr 17
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Infrastructure: How Indonesia could shift up a gear

Next year Indonesia will host the annual meetings of the International Monetary Fund and World Bank in Nusa Dua, Bali. This is a big deal: these meetings leave Washington only once every third year and involve thousands of high-level participants. In announcing that Indonesia would host the 2018
By Stephen Grenville
28 Mar 17
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The global economy: Surviving Trump just fine

Two months into the Trump Administration, is it overturning the ‘liberal world order’, as widely feared? By now we ought to have some idea. My conclusion: no, it isn’t. If there was a liberal world order in the global economy on 20 January, 2017, it is still there today. The Administration has
By John Edwards
16 Mar 17
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Time for ADB members to rethink their approach

The Lowy report by Annmaree O’Keeffe, Jonathan Pryke and Hannah Wurf on Strengthening the Asian Development Bank in the 21st Century is an important document. It is one of the best, independent reports on the Asian Development Bank currently available in Australia.  Unfortunately that is easy
By Mike Callaghan
23 Feb 17
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Why Asia still needs a development bank

It is easy to forget that Asia still hosts most of the world’s poor people given the region's remarkable economic success in recent years. Yet almost half of the world’s extremely poor people (326 million out of a global total of 766 million) still live in South and East Asia, according to the
By Annmaree O’Keeffe
13 Feb 17
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The limitations of framing North Korea as a risk

Last week the Lowy Institute's International Security Program, supported by the Korea Foundation, hosted the Australia-Republic of Korea (ROK) Emerging Leaders International Security Forum in Sydney and Canberra, bringing together scholars and future policymakers focused on the bilateral
By Danielle Chubb
07 Feb 17
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What’s ahead for the global economy?

January is the month for new resolutions and economic forecasts and, sometimes, a bit of soul-searching over past inaccuracies. The International Monetary Fund, the chief forecaster for the global economy, just published an update on its October forecast. As usual, the IMF's central
By Stephen Grenville
23 Jan 17
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Why is it so hard for the IMF to accept criticism?

The IMF's Independent Evaluation Office (IEO) was set up in 2001; since then it has produced 26 thoughtful and substantial reports on a wide range of IMF activities. Now the head of the IEO has co-authored a book with the key recommendation that the IMF should use the IEO evaluations to enhance its
By Stephen Grenville
17 Jan 17
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