Papers by Jonathan Sanford
The International Monetary Fund (IMF) and World Trade Organization (WTO) approach the issue of "c... more The International Monetary Fund (IMF) and World Trade Organization (WTO) approach the issue of "currency manipulation" differently. The IMF Articles of Agreement prohibit countries from manipulating their currency for the purpose of gaining unfair trade advantage, but the IMF cannot force a country to change its exchange rate policies. The WTO has rules against subsidies, but these are very narrow and specific and do not seem to encompass currency manipulation. Several options might be considered for addressing this matter in the future, if policymakers deem this a wise course of action. To date, while the issue remains a topic of concern, governments have not taken action to address the different ways the IMF and WTO address this topic.
In recent years, the United States and other countries have expressed considerable concern that C... more In recent years, the United States and other countries have expressed considerable concern that China's national currency (the yuan or renminbi) is seriously undervalued. Some analysts say the yuan needs to rise by as much as 40% in order to reflect its equilibrium value. Critics say that China's undervalued currency provides it with an unfair trade advantage that has seriously injured the manufacturing sector in the United States. Chinese officials counter that they have not pegged the yuan to the dollar in order to gain trade advantages. Rather, they say the fixed rate promotes economic stability that is vital for the functioning of its domestic economy. On July 21, 2005, China announced a new foreign exchange system which is intended to allow more flexibility and to permit the international value of the yuan to be established by market forces. The yuan was increased in value by 2% and a "managed float" was introduced. However, the value of the yuan has changed little since then. Despite the publication of many studies, scholars do not agree whether or by what percent the yuan is undervalued. The wide range of estimates suggests that there is no reason to believe that any particular figure is correct. It is not clear that the U.S. trade deficit would be lower or U.S. manufacturers would benefit if China raised the value of the yuan. In the short run, U.S. producers might be able to sell higher-priced products to U.S. consumers if the inflow of Chinese goods were reduced. In the long run, though, as long as the United States is a net importer of capital, it will have a trade deficit and other countries will ultimately replace China as suppliers of low-cost goods to the U.S. market. The Treasury Department has strongly urged China in recent years to adopt procedures that would allow the yuan to rise in value. Congress is considering legislation that would penalize China if its currency is not revalued. The United States has pursued the yuan-dollar exchange rate issue as a bilateral U.S.-China issue. Other countries are also affected by the presumably undervalued yuan-some more than the U.S.-but they have allowed the United States to take the lead. There are at least five ways the United States could deal with the yuan exchange rate issue. Some of these would involve other countries more explicitly in the process. First, the United States could continue pressing China publicly to raise the value of the yuan on the assumption that change will not occur without foreign pressure. Second, it could stop pressing China publicly, on the expectation that China might move more rapidly towards reform if it is not pressured. Third, the United States could restrict imports from China pending action to revalue the yuan. Fourth, the U.S. could ask the IMF to declare that China is manipulating its currency in violation of IMF rules. Fifth, the United States could refer the issue to the World Trade Organization (WTO), asserting that the United States has been injured by unfair trade practices linked to the undervaluation of China's currency. The WTO, in turn, could authorize trade remedies (tariffs on Chinese goods, for example) aimed at correcting this abuse. This report will be updated as new developments arise.
World Development, Jul 1, 1988
This article outlines a scheme whereby the World Bank could make an extra $5.5 billion in concess... more This article outlines a scheme whereby the World Bank could make an extra $5.5 billion in concessional-rate loans available in 19813 and substantial amounts available annually for the following decade, at no direct cost to the donor or the borrower countries. The scheme would use the stream of repayments from old IDA loans, receivable in the next 40 years. to pay the costs for borrowing money which could be relent now to deal with urgent development and adjustmrnt needs. Several possible objections to the scheme are noted and answered.
The American Journal of Economics and Sociology, Apr 1, 1975
... Kaj Areskoug also reaches the pessimistic conclusion that "it is highly questionable whe... more ... Kaj Areskoug also reaches the pessimistic conclusion that "it is highly questionable whether the steady flow of long-term, but repayable, capital ... Cline studied this proposition and rejects it, arguing instead that income level rather than income origin determines savings rates (A6). ...
This report discusses previous efforts to cancel debt owed by low-income countries. It summarizes... more This report discusses previous efforts to cancel debt owed by low-income countries. It summarizes the Jubilee debt reduction proposal and provides an overview of House and Senate action. It assesses the likely cost of a possible Jubilee debt reduction program. Finally, the report examines some possible implementation and policy issues.
On May 2, 2010, the Eurozone member states and the International Monetary Fund (IMF) announced an... more On May 2, 2010, the Eurozone member states and the International Monetary Fund (IMF) announced an unprecedented €110 billion (about $145 billion) financial assistance package for Greece. The following week, on May 9, 2010, EU leaders announced that they would make an additional €500 billion (about $636 billion) in financial assistance available to vulnerable European countries, and suggested that the IMF could contribute up to an additional €220 billion to €250 billion (about $280 billion to $318 billion). This report answers frequently asked questions about IMF involvement in the Eurozone debt crisis.
In recent years, the United States and other countries have expressed considerable concern that C... more In recent years, the United States and other countries have expressed considerable concern that China's national currency (the yuan or renminbi) is seriously undervalued. Some analysts say the yuan needs to rise by as much as 40% in order to reflect its equilibrium value. Critics say that China's undervalued currency provides it with an unfair trade advantage that has seriously injured the manufacturing sector in the United States. Chinese officials counter that they have not pegged the yuan to the dollar in order to gain trade advantages. Rather, they say the fixed rate promotes economic stability that is vital for the functioning of its domestic economy. On July 21, 2005, China announced a new foreign exchange system which is intended to allow more flexibility and to permit the international value of the yuan to be established by market forces. The yuan was increased in value by 2% and a "managed float" was introduced. However, the value of the yuan has changed little since then. Despite the publication of many studies, scholars do not agree whether or by what percent the yuan is undervalued. The wide range of estimates suggests that there is no reason to believe that any particular figure is correct. It is not clear that the U.S. trade deficit would be lower or U.S. manufacturers would benefit if China raised the value of the yuan. In the short run, U.S. producers might be able to sell higher-priced products to U.S. consumers if the inflow of Chinese goods were reduced. In the long run, though, as long as the United States is a net importer of capital, it will have a trade deficit and other countries will ultimately replace China as suppliers of low-cost goods to the U.S. market. The Treasury Department has strongly urged China in recent years to adopt procedures that would allow the yuan to rise in value. Congress is considering legislation that would penalize China if its currency is not revalued. The United States has pursued the yuan-dollar exchange rate issue as a bilateral U.S.-China issue. Other countries are also affected by the presumably undervalued yuan-some more than the U.S.-but they have allowed the United States to take the lead. There are at least five ways the United States could deal with the yuan exchange rate issue. Some of these would involve other countries more explicitly in the process. First, the United States could continue pressing China publicly to raise the value of the yuan on the assumption that change will not occur without foreign pressure. Second, it could stop pressing China publicly, on the expectation that China might move more rapidly towards reform if it is not pressured. Third, the United States could restrict imports from China pending action to revalue the yuan. Fourth, the U.S. could ask the IMF to declare that China is manipulating its currency in violation of IMF rules. Fifth, the United States could refer the issue to the World Trade Organization (WTO), asserting that the United States has been injured by unfair trade practices linked to the undervaluation of China's currency. The WTO, in turn, could authorize trade remedies (tariffs on Chinese goods, for example) aimed at correcting this abuse. This report will be updated as new developments arise.
Congress has been concerned, for many years, with the possible impact that currency manipulation ... more Congress has been concerned, for many years, with the possible impact that currency manipulation has on international trade. The International Monetary Fund (IMF) has jurisdiction for exchange rate questions. The World Trade Organization (WTO) is responsible for the rules governing international trade. The two organizations approach the issue of "currency manipulation" differently. The IMF Articles of Agreement prohibit countries from manipulating their currency for the purpose of gaining unfair trade advantage, but the IMF cannot force a country to change its exchange rate policies. The WTO has rules against subsidies, but these are very narrow and specific and do not seem to encompass currency manipulation. Recently, some have argued that an earlier ruling by a WTO dispute resolution panel might be a way that currency issues could be included in the WTO prohibition against export subsidies. Congress is currently considering legislation to amend U.S. countervailing duty law, based on this precedent, that the proponents believe is consistent with WTO rules. Others disagree as to whether the previous case is a sufficient precedent. Several options might be considered for addressing this matter in the future, if policymakers deem this a wise course of action. The Articles of Agreement of the IMF or the WTO Agreements could be amended in order to make their treatment of currency manipulation more consistent. Negotiations might be pursued, on a multilateral as well as a bilateral basis, to resolve currency manipulation disputes on a country-by-country basis without changing the IMF or WTO treatment of this concern. Some countries might argue that the actions of another violate WTO rules and seek a favorable decision by a WTO dispute resolution panel. Finally, the IMF and WTO could use their interagency agreement to promote better coordination in their treatment of this concern. .
Public reporting burden for the collection of information is estimated to average 1 hour per resp... more Public reporting burden for the collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Washington Headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington VA 22202-4302. Respondents should be aware that notwithstanding any other provision of law, no person shall be subject to a penalty for failing to comply with a collection of information if it does not display a currently valid OMB control number.
This paper shows how much the United States has contributed to these international agencies in re... more This paper shows how much the United States has contributed to these international agencies in recent years. It also shows how much the international agencies budget (and the source of those funds) for their administrative expenses and their operational budgets. This report will be updated periodically.
World Development, 2004
IDA is in trouble. The World Bank's long-term plans presume that IDA will need all the loan repay... more IDA is in trouble. The World Bank's long-term plans presume that IDA will need all the loan repayments currently scheduled just to keep its program from shrinking in future decades. Yet the IDA grant and HIPC debt reduction programs are cutting the flow of repayments, foreshadowing major future cuts in IDA aid. Unless the donor countries agree on a plan to offset those costs, poor countries will suffer. Meanwhile, the efficiency and effectiveness of the grant and debt cancellation programs have been seriously questioned. These programs are evaluated and changes in the Bank's future plans for IDA are proposed.
SSRN Electronic Journal, 2004
The International Monetary Fund (IMF), conceived at the Bretton Woods conference in July 1944, ha... more The International Monetary Fund (IMF), conceived at the Bretton Woods conference in July 1944, has become the focal point of the international monetary system. Created in 1946 with 46 members, it has grown to include 184 countries. The IMF has six purposes that are outlined in Article I of the IMF Articles of Agreement. They are the promotion of international monetary cooperation; the expansion and balanced growth of international trade; exchange rate stability; the elimination of restrictions on the international flow of capital; insuring confidence by making the general resources of the Fund temporarily available to members; and the orderly adjustment of balance of payment (BOP) imbalances. At the Bretton Woods conference, the IMF was tasked with coordinating the system of fixed exchange rates to help the international economy recover from two world wars and the instability in the interwar period caused by competitive devaluations and protectionist trade policies. From 1946 until 1973, the IMF managed the 'par value adjustable peg' system. The U.S. dollar was fixed to gold at $35 per ounce, and all other member countries' currencies were fixed to the dollar at different rates. This system of fixed rates ended in 1973 when the United States removed itself from the gold standard. Floating exchange rates and more open capital markets in the 1990s created a new agenda for the IMF-the resolution of frequent and volatile international financial crises. The Asian financial crisis of 1997-8 and subsequent crises in Russia and Latin America revealed many weaknesses of the world monetary system. To better help it achieve its overall goal of promoting a stable international monetary system, the IMF's format has changed dramatically since it was created in 1945. Designed initially to provide short-term balance of payments (BOP) lending and monitor member countries' macroeconomic policies, the IMF has steadily incorporated microeconomic factors such as institutional and structural reforms into its activities. These had been seen previously as the exclusive province of the World Bank and other development agencies. The IMF found that, in order to pursue its core responsibilities in the changed world economy, it needed to pay greater attention to "second generation" reforms, as economists call these sorts of issues. IMF member countries agreed on a quota increase in 1997. The U.S. Congress subsequently appropriated additional funding for the IMF in October 1998 in the midst of the Asian financial crises, a decision that engendered considerable debate in light of growing criticism of the IMF and its lending practices. In 2002, the IMF did not request any additional increase in funding. Although appropriations of new funds for the IMF is not pending, Congress exercises oversight authority over U.S. policy at the IMF and over its lending practices. This report supports congressional oversight of the IMF by providing an understanding of its organization, functions, and role in the world economy. This report will be updated only if major events and new developments require.
World Development, 1988
This article outlines a scheme whereby the World Bank could make an extra $5.5 billion in concess... more This article outlines a scheme whereby the World Bank could make an extra $5.5 billion in concessional-rate loans available in 19813 and substantial amounts available annually for the following decade, at no direct cost to the donor or the borrower countries. The scheme would use the stream of repayments from old IDA loans, receivable in the next 40 years. to pay the costs for borrowing money which could be relent now to deal with urgent development and adjustmrnt needs. Several possible objections to the scheme are noted and answered.
World Development, 2002
On July 17, 2001, President Bush proposed that the World Bank implement a plan where half of all ... more On July 17, 2001, President Bush proposed that the World Bank implement a plan where half of all its assistance to the world's poorest countries would be grants rather than low-interest loans. He said this would enable the Bank increase its levels of assistance for education, health, and other programs aimed at poverty alleviation. It would also keep poor countries from falling further into debt. The increased funding would be tied, he said, to clear and measurable results. The International Development Association (IDA) is the part of the Bank that currently makes low-cost loans (long repayment periods, very low service charge) to poor countries. IDA loans are funded with money contributed annually by donor countries.
World Development, 1997
This paper discusses the present method and three alternative ways the International Development ... more This paper discusses the present method and three alternative ways the International Development Association (IDA)-the World Bank's concessional loan facility-might he financed. All cost the donors less than the present system, while providing borrowers with the same amount of aid. The alternatives also have drawbacks however, that may limit IDA's future capabilities in certain respects. The paper also discusses a way IDA's funds might be supplemented temporarily if the donors have difficulty implementing the pending 1 lth IDA replenishment plan.
What is a developing country? How does one know whether a country is actually developing or not? ... more What is a developing country? How does one know whether a country is actually developing or not? This report looks at this issue from several perspectives. Using a series of reports by various organizations, it shows how countries rank in their levels of development according to different criteria. Countries ranking high according to one measure may rank lower according to another. It was once commonly believed that raising a country's average per capita income level would lead to improvements in most other areas. Time and experience have shown, however, that social conditions and the general well-being of people may not necessarily improve when a country's average income level increases. Countries with relatively high levels of per capita income may rank lower in their social and structural development. By contrast, some poor countries rank with the advanced countries in their governance and levels of individual and economic freedom. This report examines four criteria which are often used today to rank and assess countries' levels of development. They are: (1) per capita income; (2) economic and social structure; (3) social conditions; and (4) the prevailing level of economic and political freedom. Specific indices or quantitative studies are explained and applied to each criteria and the differences among the various measures are explained. Jan Tinbergen, the Dutch economist and Nobel laureate (1969), argued that a separate tool or instrument is needed to achieve individual economic objectives. Two goals cannot be achieved effectively with the same policy tool. When applied to the field of development, the Tinbergen rule suggests that one needs a separate program or procedure for each objective if one wants to achieve multiple goals. There is little evidence, despite the claims of some authors, economic growth will lead by itself to improvements in social indicators, economic freedom, governance, or political and civil liberty. Likewise, though many argue that strong emphasis needs be placed on improving social indicators and basic human needs, there is little evidence that improvements in these areas will lead necessarily to increased economic growth or improved governance. According to Tinbergen's rule, one likely needs a variety of programs, each targeting a particular objective, if one wants to successfully pursue a variety of different goals. Balancing the costs of achieving these various goals-maintaining or increasing expenditures for programs targeting social goals, conserving and improving infrastructure and capital facilities and avoiding macroeconomic instability through prudent monetary, fiscal and foreign exchange policies-is one of the great challenges facing developing countries today. Congress will consider major bills dealing with development issues in the coming year. Some of the controversy on these issues comes from different views about U.S. interests and goals. However, much of the debate about the goals and effectiveness of development aid stems from different concepts about the development process itself. This report seeks to provide background and information which may be of use to Congress in that context.
International Organization, 1975
The existence of quasi-sovereign international institutions raises important questions regarding ... more The existence of quasi-sovereign international institutions raises important questions regarding the level of national influence and the degree of democratic control over international political decisions which can be exercised within a multilateral political framework. Karl Kaiser suggests that “as the number and activities of international organizations expand, an area grows in which major decisions are made without much democratic control by the peoples and institutions which are affected or which support these activities financially. Because the national government is still the basic unit of political organization in contemporary world politics, it is necessary that national governments oversee the operations of the international institutions if the principle of public control over those who make the major political decisions is to be retained. For oversight to be effective, and for the principle of public control over the makers of political decisions to be retained, oversight ...
Development Policy Review, 2004
The World Bank is to forgive $12.24 billion in IDA debt payments from HIPC borrowers. It has rece... more The World Bank is to forgive $12.24 billion in IDA debt payments from HIPC borrowers. It has received $1 billion from the HIPC Trust Fund to help offset these losses, but still has a $11.6 billion unfunded liability. The IMF has gold worth $38 billion on hand for which it has no actual use. This article proposes that a small portion of IMF gold be sold annually, just enough to offset IDA's annual HIPC deficit, over the next twenty years. The new money would be additional and predictable, and would eliminate the prospect that IDA would have to cut back its future flow of aid because the HIPC programme had drained its resources.
The American Journal of Economics and Sociology, 1989
. The World Bank's loan patterns in recent years are examined to see if there is any empirica... more . The World Bank's loan patterns in recent years are examined to see if there is any empirical evidence of a diminution of interest in poverty alleviation programs. Four very different concepts on what poverty alleviation is are used to categorize the international agency's loans: the share of lending going to (1) poor countries; (2) programs targeting direct aid to poor individuals; (3) certain sectors deemed to be intrinsically beneficial in meeting basic human needs, and (4) overall country programs which make poverty a key element of their goals. Each of the concepts has different criteria and standards. Analysis of the data indicates that the Bank seems to be doing at least as well today in the struggle against poverty as in previous decades. In some ways the Bank's current program is more poverty‐oriented than are bilateral aid programs financed by the United States and other major donor countries.
The American Journal of Economics and Sociology, 1988
. Since the early 1980s, the World Bank has taken on new tasks in addition to its regular develop... more . Since the early 1980s, the World Bank has taken on new tasks in addition to its regular development finance function: preventing economic collapse in borrower countries, helping heavily indebted countries cope with their international payments difficulties, and encouraging basic economic policy reform and structural adjustment in developing countries. Many critics worry that, as the World Bank has taken on these new responsibilities, it has lessened its concern about poverty. The Bank and its friends argue that poverty alleviation remains a central element of the Bank's agenda, but the world situation is different than it was during the 1970s and new kinds of action are needed today. The Bank believes that economic reform and structural adjustments are crucial elements of a modern anti‐poverty program. Many critics believe that structural adjustment programs may seriously hurt the poor. Exploring the arguments and reporting the ways the World Bank has sought to respond to this controversy, the author concludes that the issue is a fundamental disagreement about whether the new modes of Bank lending and the Bank's new policy emphasis will have a positive or negative effect on the poor.
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Papers by Jonathan Sanford