This work package has started later than many of the other work packages for the FESSUD project. It began to produce its outputs only in late 2013. Its content has also been different from that in many others since the latter have dealt mainly with conditions and policies in Europe. However, this work package has focused on developing countries and their priorities and how the EU could interact with them in order to promote their development.
This work package’s initial three working papers (Financialization in the Developing world: Mapping the Issues, Working Paper Series No. 38; Report on scenarios for future global engagement, Working Paper Series No. 95; The Changing Impact of Finance on Development, Working Paper Series No 124) attempted to map the changes in the global financial and monetary system and the resultant impact on developing countries. They included 1) a review of the literature on the changing impact of finance on development, 2) a mapping of the key issues with regard to the role of finance in promoting development and 3) an identification of the opportunities for positive engagement by both the EU and developing countries on vital issues of financialisation and development.
The main body of research for this work package began to be produced in late 2014 and early 2015. It focused on the general topic of how changes in the global financial and monetary system have affected developing countries and emerging economies.
Within this general topic, the first two working papers (EU Development Policy And The Promotion Of The Financial Sector, Working Paper Series No. 120; Developing Countries’ External Debt and International Financial Integration, Working Paper Series No. 121) focussed on assessing the implications of the financial flows between the EU and developing countries, especially with regard to how monetary policies should be framed. These papers reviewed, for example, the effect of commodity prices, the role of exchange rates and international debt stocks.
These issues have become increasingly important in early 2016 as commodity prices have fallen dramatically, downward pressure has increased on the value of exchange rates and financial instability has intensified. In addition, growth of the global economy is expected to slow appreciably.
Three additional working papers (The potential role of Sovereign Wealth Funds in the context of the EU crisis, Working Paper Series No. 123; Developing and Emerging Countries as Finance Providers: Foreign Exchange Reserves and Direct Investment to the European Union, Working Paper Series No. 129; New Roles that Key Developing Countries Will Have in the Provision of Finance for Europe, Working Paper Series No. 138) have dealt with the novel and important topic of how developing countries and emerging economies could actually increase the provision of finance to Europe. These papers have focused on the specific topics of 1) the financing role of major emerging economies, such as China, Brazil and India, 2) the global role of Sovereign Wealth Funds and 3) the specific roles of exchange-rate reserves, bonds and portfolio finance.
In the future, more working papers for work package #6 will be published. These will cover the general topic of the financial implications of the new relationship between the EU and the developing world. Publications will also take the form of a series of country studies on the impact of financialisation on development. The countries that will be covered are Brazil, China, India, Indonesia, South Africa and Turkey. For some of these country studies a global macro model will be utilized to project economic trends over the next 10 years.
In addition, a series of 10 Research Briefs will be published that will present the main results of the above studies in a shorter, more readable format.
