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World Economic and Social Survey 2001

Trends and Policies in the World Economy

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Part one. State of the World Economy: chronicles how the very positive developments in output and international trade, with reasonably buoyant levels of international finance for emerging markets for the first half of 2000, turned into retrenchment. The ongoing downturn in the business cycle in developed countries has been unusual in a number of respects when contrasted with previous downturns in the post-war period. Part two. A Globalizing World: Risks, Vulnerability and Opportunity: looks at some examples of vulnerability in the context of globalization, with the discussions focusing on how the liberalization of financial markets can bring benefits to individual countries; how trade shocks can be absorbed and whether the risk of such shocks reduces the potential gains from trade; how three small landlocked transition economies survived the shocks arising from the collapse of the centrally planned system; and how a country can cope with a recurrent and, to some extent predictable, natural disaster, and flooding. The insights from these chapters should help the international community as it confronts the issues of vulnerability and globalization.

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Overview

Part two of the World Economic and Social Survey, 2001 discusses various aspects of vulnerability at the level of the country. Vulnerability may be defined as the “risk of being negatively affected by shocks”. There are shocks that come from nature, such as cyclones, earthquakes, droughts and locust invasions, and economic shocks that are outside a country’s control, such as the rapid decline in the price of a major export, changes in interest rates on international capital markets and reduced access to credit. At the level of the country, vulnerability has been one of the criteria used, within the United Nations system, in determining whether a country should be classified as “least developed”.

English

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