This collection empirically and conceptually advances our understanding of the intricacies of emerging markets' financial and macroeconomic development in the post-2008 crisis context. Covering a vast geography and a broad range of economic viewpoints, this study serves as an informed guide in the unchartered waters of fundamental uncertainty as it has been redefined in the post-crisis period. Contributors to the collection go beyond risks-opportunities analyses, looking deeper into the nuanced interpretations of data and economic categories as interplay of developing world characteristics in the context of redefined fundamental uncertainty. Those concerns relate to the issues of small country finance, the industrialization of the developing world, the role of commodity cycles in the global economy, sovereign debt, speculative financial flows and currency pressures, and connections between financial markets and real markets. Compact and comprehensive, this collection offers unique perspectives into contemporary issues of financial deepening and real macroeconomic development in small developing economies that rarely surface in the larger policy and development debates.

The 2008 financial crisis has highlighted the challenges associated with global financial integration and emphasized the importance of macro financial linkages. Specifi cally it has shown how the real sector (business cycles) can interact with and be amplifi ed by the fi nancial sector, resulting in high procyclicality and a buildup of systemic risk in the fi nancial sector that manifests itself during economic downturns. Although boom-bust cycles in asset prices and credit were observed prior to the recent global crisis, they did not seriously challenge the prevailing paradigm. In the macro arena, the general view was that keeping monetary policy focused on price and output stability would deliver the best feasible outcome, although some proponents argued in favor of 'leaning against the wind.' In the financial sector, prudential policies in most economies focused narrowly on the soundness of individual financial institutions. The policy debate is currently taking place largely, if not exclusively, in the context of the advanced industrial countries. However, emerging markets face different conditions and have key structural features that can have a bearing on the relevance and effi cacy of the measures being discussed. Also important, because they suffered earlier fi nancial crises, many emerging markets have had greater experiences with macro prudential and other policies aimed at ensuring financial stability. As such, emerging markets can offer valuable lessons. The chapters in this volume discuss the challenges of dealing with macro fi nancial linkages and explore the policy toolkit available for dealing with systemic risks with particular reference to emerging markets.

With decentralization and urbanization, the debts of state and local governments and of quasi-public agencies have grown in importance. Rapid urbanization in developing countries requires large-scale infrastructure financing to help absorb influxes of rural populations. Borrowing enables state and local governments to capture the benefits of major capital investments immediately and to finance infrastructure more equitably across multiple generations of service users. With debt comes the risk of insolvency. Subnational debt crises have reoccurred in both developed and developing countries. Restructuring debt and ensuring its sustainability confront moral hazard and fiscal incentives in a multilevel government system; individual subnational governments might free-ride common resources, and public officials at all levels might shift the cost of excessive borrowing to future generations. This book brings together the reform experiences of emerging economies and developed countries. Written by leading practitioners and experts in public finance in the context of multilevel government systems, the book examines the interaction of markets, regulators, subnational borrowers, creditors, national governments, taxpayers, ex-ante rules, and ex-post insolvency systems in the quest for subnational fiscal discipline. Such a quest is intertwined with a country s historical, political, and economic context. The formal legal framework interacts with political reality to influence the dynamics of and incentives for reform. Often, the resolution of a subnational debt crisis unfolds in the context of macroeconomic stabilization and structural reforms. The book includes reforms that have not been covered by previous literature, such as those of China, Colombia, France, Hungary, Mexico, and South Africa. The book also presents a comprehensive review of how the United States developed its debt market for state and local governments, through a series of reforms that are path dependent, including the reforms and lessons learned following state defaults in the 1840s and the debates that shaped the enactment of Chapter 9 of the Bankruptcy Code in 1937. Looking forward, pressures on subnational finance are likely to continue from the fragility of global recovery, the potentially higher cost of capital, refinancing risks, and sovereign risks. This book is essential reading for anyone wanting to know the challenges and reform options in debt restructuring, insolvency frameworks, and public debt market development."

The Great Recession of 2009-11 was not simply a severe business cycle slowdown or even a combined credit, housing, and asset market collapse. It left permanent scars, especially on the advanced economies. In its wake, policy makers must navigate uncharted economic territory where 'business as usual' no longer applies and deep structural changes mark the global economic landscape. Fundamental questions about the daunting task of 'regrowing growth' have now taken center stage for economists, politicians, and policy makers alike: Will international capital flows be encouraged or discouraged? How open will export markets be, given the structural changes and their implications for employment? How much reliance will there be on market solutions when governments--now overly indebted and wary of additional relief expenditures--are expected to deliver on the promise of economic growth? Without a resurrection of strong economic growth in major economies, the likelihood of rapid economic development in poor developing countries is dampened. The nature of that ascent is the subject of this volume. In Ascent after Decline, more than a dozen distinguished contributors scan the economic horizon, spell out the new fiscal reality, and highlight the policy choices on which economic regrowth will depend. If the Great Recession has taught one lesson, it is that when fundamental shifts occur, the outcomes will entail new elements that shape future directions and affect policy. How these pressing policy questions are answered will, in large measure, determine the future face of globalization.

The 2008 09 Global Finanical Crisis shook the ground under the conventional wisdom that had guided mainstream development economics. Much of what had been held as true for decades is now open to reexamination from what the role of governments should be in markets to which countries will be the engines of the world s economy, from what people need to leave poverty to what businesses need to stay competitive. Development economists look into the future. They do not just ask how things work today, but how a new policy, program, or project would make them work tomorrow. They view the world and history as a learning process past and present are inputs into thinking about what is coming. It is that appetite for a vision of the future that led the authors of 'The Day after Tomorrow: A Handbook on the Future of Economic Policy in the Developing World' to invite some 40 development economists, most of them from the World Bank s Poverty Reduction and Economic Management Network an epicenter of the profession to report what they see on the horizon of their technical disciplines and of their geographic areas of specialization. The disconcerting but exciting search for a new intellectual compact has begun. To help guide the discussion, 'The Day after Tomorrow: A Handbook on the Future of Economic Policy in the Developing World' puts forth four key messages: While the developed world gets its house in order, and macroeconomics and finance achieve a new consensus, developing countries will become a (perhaps the) growth engine for the world. Faster technological learning and more South-South integration will fuel that engine. Governments in developing countries will be better they may even begin to earn the trust of their people. A new, smarter generation of social policy will bring the end of poverty within reach, but the attainment of equality is another matter. Many regions of the developing world will break out of their developing status and will graduate into something akin to newly developed. Africa will eventually join that group. Others, like Eastern Europe, have a legacy of problems to address before such a transition. While some regions will do better than others, and some technical areas will be clearer than others, there is no question that the horizon of economic policy for developing countries is promising risky, yes, but promising. The rebalancing of global growth toward, at the very least, a multiplicity of engines, will give the developing world a new relevance."