The financial crisis in South Asia: From jobless growth to jobless slump?
textabstractThis chapter explores the impact of the global financial crisis on South Asia in terms of qualitative and quantitative aspects of employment. South Asia hosts a quarter of the world’s population and a fifth of the global workforce – as well as 40 percent of the global poor (World Bank 2010). This paper therefore contributes to an assessment of the current crisis on the livelihoods of inhabitants of one of the poorest regions in the world. It also provides more general insights about how volatilities in globally increasingly integrated markets translate into opportunities for decent work – or the lack thereof.
The costs of ‘coupling’: the global crisis and the Indian economy
The view that the Indian economy would be less adversely affected by the global economic crisis because of limited integration and other inherent strengths has proved to be wrong. The economic boom in India that preceded the current downturn was dependent upon greater global integration in three ways: greater reliance on exports particularly of services; increased dependence on capital inflows, especially of the short-term variety; and the role these played in underpinning a domestic credit-fuelled consumption and investment boom. These in turn made the growth process more vulnerable to internally and externally generated crises, as is now becoming clear. Copyright The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.
Global Liquidity and Financial Flows to Developing Countries
This paper attempts to examine: (i) the factors responsible for this revival and surge in capital flows into developing countries; (ii) the qualitative changes in financial integration that are accompanying this surge; and (iii) the impact that this surge is having on financial volatility and vulnerability, macroeconomic management and growth, in countries that have been “successful” in attracting such flows. It argues that in the wake of financial liberalization that facilitates cross-border flows of capital, supply-side factors rather than the financing requirements of developing countries, explain the surge. Financial liberalization and the globalization of finance, have also resulted in changes in the financial structure – the markets, institutions and instruments that define the global financial architecture – that are increasing risk and financial fragility. Associated with this increasing risk, are changes in the business practices and motivations of financial firms that reduce the role of finance in ensuring broad-based economic growth.