Submerging Markets: The Impact of Increased Financial Regulations on the Future Growth Rates of BRICS Countries

204 Pages·2013·2.803 MB·English

by  Rich Marino (auth.)

Submerging Markets
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Submerging Markets
The Impact of Increased
Financial Regulations on the Future
Growth Rates of BRICS Countries
Rich Marino
© Rich Marino 2013
All rights reserved. No reproduction, copy or transmission of this
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The author has asserted his right to be identified as the author of this work
in accordance with the Copyright, Designs and Patents Act 1988.
First published 2013 by
PALGRAVE MACMILLAN
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registered in England, company number 785998, of Houndmills, Basingstoke,
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Palgrave Macmillan in the US is a division of St Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Palgrave Macmillan is the global academic imprint of the above companies
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ISBN 978-1-349-34862-6 ISBN 978-1-137-29650-4 (eBook)
DOI 10.1057/9781137296504
This book is printed on paper suitable for recycling and made from fully
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country of origin.
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10 9 8 7 6 5 4 3 2 1
22 21 20 19 18 17 16 15 14 13
This book is dedicated to the memory of Dr S. R. ‘Larry’
Epstein, Professor of Economic History at the London School
of Economics. In the very short time that I had the privilege
of knowing him, he was my professor and my graduate super-
visor, but more importantly he taught me that even an old dog
like me can learn new tricks.
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Contents
List of Figures viii
List of Tables ix
Acknowledgments xi
Part I The Need for Increased Regulation
1 I ntroduction 3
2 Overview of Regulations: Historical and Current 18
Part II Capital Flows and Growth Rates Revisited
3 C apital Flows from the 1990s to the Current Dayy 33
4 G DP Growth Rates for Advanced Economies and Selected
Emerging Markets including the BRICS 51
Part III The BRICS: Capital Flows Analyses
5 A n Analysis of Brazil’s Economy Relative to Its Capital Flows 71
6 A n Analysis of Russia’s Economy Relative to Its Capital Flows 86
7 A n Analysis of India’s Economy Relative to Its Capital Flows 102
8 A n Analysis of China’s Economy Relative to Its Capital Flows 118
9 An Analysis of South Africa’s Economy Relative to Its
Capital Flows 134
Conclusions
10 C onclusion 151
Notes 180
Index 193
vii
List of Figures
1.1 The inconsistent trinity 12
3.1 Net financial flows to emerging and developing countries 35
3.2 Composition of financial flows 36
3.3 Common factors underlying the variation of
net capital flows 38
3.4 Net private capital inflows to emerging markets 41
3.5 Commodity boom spurs capital flows 49
5.1 Credit to Brazilian households y/y percentage 74
5.2 Brazil’s fiscal accounts as a percentage of GDP 83
5.3 Brazil’s inflation rate forecast y/y percentage 84
5.4 Brazilian labor market unemployment rate y/y 85
6.1 CPI inflation Russia 2011 92
6.2 Energy trajectory 95
6.3 World Bank peak oil prices 97
7.1 India’s balance of payments (nine components) 104
7.2 India’s GDP growth by specific sectors, 2007–12 111
8.1 The evolution of China’s pattern of growth –
what do investment patterns suggest? 129
8.2 China’s inflation rate 130
9.1 G DP growth by specific sectors,
2007–11 137
9.2 G ross domestic expenditures as a percentage of
GDP, South Africa, by component, 2007–11, Q1 139
viii
List of Tables
3.1 Emerging market economies in Europe:
capital flows 45
3.2 Asian emerging market economies: capital flows 4 6
3.3 Latin America: capital flows 48
3.4 Africa and Middle East: capital flows 49
4.1 The global outlook in summary 52
4.2 The global outlook, 2009–13 53
4.3 I nternational capital flows to developing countries
rebound surpassing 2008 levels 58
6.1 Net capital flows, 2006–11 87
6.2 Russia’s GDP growth rate by main sectors, 2006–10 8 8
6.3 Labor, productivity, disposable income, wages
and unemployment, 2008–11 89
6.4 Regional unemployment in Russia, 2009–11 90
6.5 Inflation in Russia (CPI 2011) 92
6.6 Amendment to 2011 federal budget 94
6.7 Outlook for Russia, 2011–12 94
6.8 World Bank average oil price range 96
6.9 Russia’s economic growth 99
7.1 Condensed balance of payments 105
7.2 India’s GDP growth rate by specific sectors 111
7.3 Current account balance as percentage of GDP 115
8.1 Sources of foreign exchange build-up 121
8.2 China: main economic indicators 123
8.3 China’s trade volumes exports and imports 124
8.4 Prices and exchange rates 126
8.5 The global environment 127
8.6 China’s headline government spending 132
9.1 P redicted changes in savings rates in
South Africa (percentage points) 136
9.2 S outh Africa’s GDP growth rate by specific sectors,
2007–11 (annual percentage) 138
9.3 Macroeconomic indicators (percentage rates) 1 42
9.4 Public finances (percentage of GDP) 143
9.5 Current account (percentage of GDP) 144
ix