Otaviano Canuto

• Economics, PhD
• Head of Faculty at Center for Macroeconomics and Development

As the US-China rivalry intensifies, both powers are courting mineral-rich African countries in an effort to secure critical raw materials. Translating Africa's vast natural-resource wealth into lasting development requires an infrastructure-led strategy that delivers long-term value for local communities

So, this session really is about what's happened to global trade in the last couple of decades, of course, really since the global financial crisis, trade dependency has levelled off, peaking at around 60% in 2008, 2009.

Across the globe, populations are aging as declining fertility rates and increased longevity reshape demographic landscapes. While longer life expectancy is a testament to medical and public health advancements, the persistent decline in birth rates presents an economic challenge of immense proportions. Age pyramids are shrinking at the base while...

This paper aims to demonstrate how certain transformations in the international economy since the 1980s-notably the globalization of firms and industries-combined with a set of domestic challenges, disrupted the path of industrial and technological development that Brazil had pursued since the 1930s. In essence, growth strategies based on the scale...

The journey to decarbonise the planet is closely tied to the energy transition, with the shift from fossil-fuelled cars to renewable energy vehicles playing a central role. This shift is creating a revolution in the automotive industry, reshaping markets and sparking new dynamics.

In November, US voters will decide who will control the White House, the Senate, and the House of Representatives. Kamala Harris, Donald Trump, and their respective parties differ significantly on key economic policies that will affect not only the US but the global economy. Here, we examine the candidates’ positions on trade, tax, energy, and immi...

The digital revolution is bringing about a dramatic shift in power, from labor to capital. We assess what the impact of this transformation might be on land as a factor of production. The digital revolution is not happening in a historical vacuum. It unfolds within a framework of confrontation or collusion between market forces and government force...

Six challenges can be identified for China’s economic growth. This year, the official target has again been set at five percent. The challenges approached here notwithstanding, the macro-economic performance in the first quarter of 2024 has been in sync with such a target.

Africa has a wealth of natural resources, including minerals, agriculture, and energy commodities, which provides an opportunity for the financialization of these commodities on the continent, a concept that has gained global attention and sparked debate on the potential benefits and drawbacks. Although the financialization of commodities has been...

What effect will AI have on productivity and economic growth, and on social inclusion and income distribution? The impact on work processes and the labor market will be a key element in answering these questions.

Judging by announcements and initial investments, the effect of incentives on US supply chains has been intense. Mexico, a beneficiary of the IRA, replaced China as the largest exporter to the US last year. That was a first time since 2006 that China has not been top dog. A realignment of global trade is under way.

This report issues specific and urgent calls for reform, including more representative global governance, increasing the World Bank’s operational and financial capacity, prioritizing programs that would integrate Africa into the global economy, connecting the continent’s critical infrastructure and trade routes, and increasing participation and col...

Most high-income countries will experience declines in their populations over the next few decades. Some negative consequences of aging are on the horizon: greater fiscal imbalances and risks of economic stagnation. Immigration may be a way for those countries to mitigate the tendency. On the source side of immigration flows, brain drain is a risk....

Based on observable facts, this policy paper explores some of the less-acknowledged yet critically important ways in which artificial intelligence (AI) may affect the public sector and its role. Our focus is on those areas where AI's influence might be understated currently, but where it has substantial implications for future government policies a...

This paper examines Brazil's economic growth patterns over the last three decades and identifies a missed opportunity for the country to attain high-income status by the mid-2010s. Instead, Brazil has suffered from low productivity growth, and has made little progress in transforming its production and export structures in favor of higher value-add...

When countries face external financial shocks, they must rely on financial buffers to counter such shocks. The global financial safety net is the set of institutions and arrangements that provide lines of defense for economies against such shocks. From any individual country standpoint, there are three lines of defense in their external financial s...

Multiple shocks faced by the global economy over the past three years have apparently shaken the conventional wisdom on gains from economic integration, and have sparked widespread calls for protectionist and nationalist policies. Is there already evidence of some 'deglobalization', or do the factors that underlie globalization remain strong enough...

Estuda o modelo de regimes monetáriocambiais de currency board para as economias emergentes, proposto como solução simultânea aos problemas de volatilidade macroeconômica e crises bancárias freqüentemente encontrados nessas economias. Aborda os fatores macroeconômicos mais apontados como causa ou reflexo das crises bancárias. Após revisita ao debat...

If we want to understand the implications for growth—particularly the costs—of moving towards a fractured trading system, we can use as a benchmark what happened during the period of what is usually called hyper-globalization or globalization 2.0. Here, I'll try to highlight the relevant aspects, to use them as a benchmark to shine a light on the c...

The growing use of local currencies in external payments will be part of what we have already called a “slow and bounded de-dollarization”. If a local currency is not fully convertible, remaining subject to regulations restricting liquidity and asset availability, as it is the case for the RMB, it will not fulfill the function of an external store...

The global economic environment has changed as the U.S.—and to a less confrontational degree, the European Union—have clearly established a context of technological rivalry with China. Hindering China’s progress in the sophistication of semiconductor production has become a centerpiece of current U.S. foreign policy. While the U.S. is clearly winni...

The Brazilian economy is stuck in a so-called middle-income trap-growth that stalled long before Brazil caught up with the living standards of the highly industrialized countries. After exhibiting a stellar performance in the decades before the 1980s, the economy has since been unable to sustain growth for long periods. The predicament can be summa...

Base erosion and profit shifting (BEPS) involving multinational companies is a complex, multi-dimensional problem resulting from loopholes and inconsistencies between countries' tax systems. Addressing it requires coordinated action at the international level. Several organizations have taken initiatives in this direction, including the Organizatio...

When serious debt difficulties emerged worldwide in the 1980s, a decade of poor growth, increased poverty, and political instability followed. There is a concern that the looming debt crisis could create similar challenges and result in even more severe consequences. However, the current economic climate differs in many ways from that of the 1980s,...

The COVID-19 pandemic and the war in Ukraine have reignited the debate on efficiency versus resilience in international trade and global value chains (GVCs). This policy brief (i) explains the contrasting perspectives of the private sector (primarily seeking efficiency) and the public sector (aiming for resilience); (ii) demonstrates that GVCs are...

Recent initiatives and policy moves by China and other countries to extend the reach of use of the renminbi in the international monetary system, while the U.S. dollar share in global reserves has slightly shrunk in relative terms, have sparked frequent discussions about a hypothetical "de-dollarization" of the global economy. We approach here what...

This paper explores the impact of commodities financialization on crude oil prices and volatility. Commodities have always been a subject of interest as an integral part of the global economy, with various their sources. While some commodities have been market movers for centuries, the introduction of others, such as oil, to the financial markets i...

Gender disparities in the labor market persist as a serious challenge, resulting in lower participation rates for women than men. This gender gap in labor force participation varies considerably across regions, with female participation rates consistently lagging men. After some progress during the last few decades, the multiple crises faced by the...

Three significant changes in the macroeconomic policy regime in advanced economies relative to the post-global financial crisis period have unfolded in the last two years. First, fears of a chronic insufficiency of aggregate demand as a growth deterrent prevailing after the 2008 global financial crisis have been superseded by supply side shocks and...

The US dollar has risen dramatically in value against other currencies recently. Three channels through which factors affecting bilateral exchange rates operate have been pulling up the U.S. dollar: yield differentials, liquidity differentials, and growth differentials. The strong appreciation of the US dollar against other currencies recently rein...

There is an international movement to tighten monetary and fiscal policies as a response to the global inflation phenomenon. Accordingly, global economic growth projections for 2022 and 2023 have been revised downward. As inflation will decline only gradually, given the price stickiness of its core components, there is likely to be momentarily a si...

Chinese economic figures released since August’s beginning have shown a slowdown in its growth. New Omicron coronavirus outbreaks in the context of the Covid-zero policy, the housing slump and heat waves have been, decelerating the economy’s pace. China’s current growth slowdown is an additional step in the trajectory of gradually declining rates t...

O trabalho aborda algumas consequências duráveis da pandemia sobre as economias, ou seja, impactos da crise pandêmica com desdobramentos no futuro em economias nacionais em todo o mundo. Para além de perdas permanentes de produto e de um legado em termos de dívidas públicas mais elevadas, a pandemia deixará cicatrizes no mercado de trabalho, com ef...

In its May 15th meeting, the Federal Open Market Committee of the U.S. Federal Reserve (Fed) lifted its benchmark policy rate by 0.75% to 1.50%–1.75%, the biggest increase since 1994. The central bank also signaled an additional increase of 0.75% ahead. FOMC members also raised the median projection for the Fed funds rate to a range between 3.25% a...

Last March, a proposal of dollarizing Argentina's economy arrived at its Congress. We summarize here the potential consequences of such a route in case the bill succeeds in getting approval. First, we point out the broad implications of dollarizing an economy. Then, we set out some cases of Latin American experiences with dollarization. Finally, we...

Emerging market and developing economies (EMDE) face a common set of external shocks: rising energy and food prices; tightening in global financial conditions caused by the prospect of sharper interest rate hikes and anticipation of "quantitative tightening"; and return of restrictions on mobility in China, on account of the Covid zero policy, lead...

The war in Ukraine is bringing substantial financial, commodity price, and supply chain shocks to the global economy. Sanctions on Russia are already having a significant impact on its financial system and its economy. Price shocks will have a global impact. Energy and commodity prices-including wheat and other grains-have risen, intensifying infla...

A obra aborda por que o Estado e o mercado das sociedades contemporâneas são resultados históricos de instituições socialmente e economicamente construídas. Esse enfoque é usado para analisar as duas reformas sociais mais relevantes do Brasil deste segundo decênio do século XXI. O uso da abordagem institucionalista para analisar essas reformas soci...

Accelerating the transition toward low or net-zero carbon emissions is necessary to keep global warming at theoretically safe levels. That will likely bring price shocks associated with rising metal prices, energy costs, and carbon taxes – what has been called “greenflation”. Greening the economy will also require public spending and redistributive...

The decade after the Great Financial Crisis of 2007–09 brought significant changes in the volume and composition of capital flows in the global economy. Portfolio investments and other non-bank financial intermediaries are responsible for an increasing share of foreign capital flows, while banking flows have shrunk in relative terms. This paper con...

Commercial transactions and reserves of central banks and other global public investors could strengthen the position of the renminbi as an alternative to the dollar, euro, yen and pound sterling. But the qualitative leap towards the internationalisation of the Chinese currency as a full reserve currency will happen only when confidence in its conv...

SDRs do not constitute money thrown from a helicopter, as in the famous image used by Nobel Prize-winning economist Milton Friedman in 1969. But one cannot deny that this allocation came at a good time for economies struggling with a shortage of reserves and immediate needs for external financing.

Countries with excessive current account balances should seek to shrink their budget deficits over the medium term, and to implement reforms that increase their competitiveness. Economies with excessive current account surpluses and some fiscal space should adopt policies to strengthen recovery and growth over the medium term, including greater pub...

The transition to zero emissions will involve three simultaneous economic processes: change in the relative prices of goods and services, with prices starting to reflect the intensity of emissions of carbon; labour relocation; and asset value scrapping. The socioeconomic return from decarbonisation must include preventing heatwaves, hurricanes, dro...

Macroeconomic dynamics in the U.S. economy has increasingly become associated with asset price fluctuations in the past few decades. Financial conditions have increasingly become an influential factor shaping the cyclical pace of the macroeconomy. There has been a mismatch between rising financial wealth and the pace of creation and incorporation o...

Some analysts have started to speak of the possibility of a new commodity price ‘super-cycle’ after the downturn that started in 2010. There is an expectation that Chinese growth will eventually return to the levels of its ‘rebalancing’, below those rates that sustained the global demand for commodities in the previous long price upswing. However,...

Brazil can expect significant benefits from joining the Organization for Economic Cooperation and Development (OECD). The organization has shown to effectively promote better policies and institutions among its members countries, with significant positive effects. Considering the evidence that institutions are behind a large share of long-term incr...

O texto apresenta uma análise abrangente sobre a relação entre o Brasil e a Organização para a Cooperação e Desenvolvimento Econômico (OCDE), abordando diversos aspectos, desde o desempenho econômico até as políticas setoriais e as condições de acesso à organização. São discutidos temas como comércio exterior, investimento externo, políticas públic...

Brazil can expect significant benefits from joining the Organization for Economic Cooperation and Development (OECD). The organization has shown to effectively promote better policies and institutions among its members countries, with significant positive effects. Considering the evidence that institutions are behind a large share of long-term incr...

Brazil can expect significant benefits from joining the Organization for Economic Cooperation and Development (OECD). The organization has shown to effectively promote better policies and institutions among its members countries, with significant positive effects. Considering the evidence that institutions are behind a large share of long-term incr...

This book approaches the opportunities and challenges faced by developing countries to raise their per capita income levels during the recent phase of globalization. After dealing with the post-global financial crisis economic landscape in advanced economies, the book deals with the windows of opportunity opened by trade and financial globalization...

The pandemic will not reverse globalisation, but it will reshape it. Here we take a bird's eye view on global trade during the pandemic, relate it to previous trends, and guess how global value chain managers and governments' trade policymakers are likely to react.

There was a significant inflow of funds in Brazil's external financial account in October and November for investments in both stocks and fixed income instruments. The bulk of the recent inflow has come in a “passive” way, and it did not include considerable volume on the side of “active” investors. For the wave to unfold in the availability of ext...

“This time was different” in terms of the monetary policy responses to capital outflow shocks felt by emerging market economies (EMEs), as pointed out by a November 12 Bank for International Settlements bulletin. The pandemic-related global financial shock that hit in March and April led to close to $100 billion leaving EMEs. This was answered by l...

Brazil is one of the most severely hit countries as far as the Covid-19 pandemic is concerned. Apart from the dramatic health implications, Covid-19 will also leave scars in the Brazilian economy, including a jump of its already high public-sector debt-to-GDP ratio in 2020. Moving forward – or not – with structural reforms aiming at lifting private...

Multilateral Development Banks (MDBs) have two financing windows, with different terms, dedicated to low- and middle-income countries. Countries are presumed to cross those windows as their income per capita rises, with middle-income countries (MICs) eventually “graduating” to non-client status once they reach certain criteria. However, due to what...

China’s bounce back from the deep COVID dive is at full. Focus will increasingly turn back to its economic rebalancing previously on the way.

With Latin America and the Caribbean potentially facing years of difficulties due to the pandemic and related economic crises, attention has shifted to what multilateral institutions like the International Monetary Fund (IMF) might do to help. There's no doubt they can play a crucial role in preventing another lost decade in the region. But these i...

The “middle-income trap” has captured many developing countries: they succeeded in evolving from low per capita income levels, but then appeared to stall, losing momentum along the route toward the higher income levels of advanced economies. Such a trap may well characterize the experience of Brazil and most of Latin America since the 1980s. Conver...

Success in crossing the coronavirus crisis will be measured by the proximity - but not return - to the previous GDP trajectory. Thereafter, the task will be to deal with structural unemployment created by changing consumption patterns, increased levels of poverty in much of the world, the concentration of income, the challenges posed by digitalizat...

The International Monetary Fund (IMF) released, on August 4th, its ninth annual External Sector Report, where current account imbalances and asset-liability stocks of 30 systemically large economies are approached. This time the report went beyond looking the previous year and tried to anticipate what will be some of the impacts of the still on-goi...

In a previous article, we highlighted how developing economies have faced simultaneous shocks from their external environment, as pandemic and recession curves have unfolded abroad. In addition to financial shocks, there have been declines in remittances, tourism receipts, and commodity prices. The combination of these shocks with the hardships rel...

OTAVIANO CANUTO | JULY 2, 2020 AMERICAS QUARTERLY Latin America's largest economy entered the pandemic before it could heal from its worst recession in decades. As the pandemic unfolds, Brazil is paying a huge human cost, with the number of victims rising quickly. The scar of COVID-19 will take a long time to heal. And the country will also have to...

OTAVIANO CANUTO | JULY 2, 2020 AMERICAS QUARTERLY Latin America's largest economy entered the pandemic before it could heal from its worst recession in decades. A command center in São Paulo monitors the spread of the new coronavirus in Brazil.Jonne Roriz/Bloomberg via Getty Images As the pandemic unfolds, Brazil is paying a huge human cost, with t...

South Korea has climbed the income per capita ladder up to high levels, while Brazil may be considered a case of a “middle-income trap”. Such divergence of economic growth performances can be related to their distinctive approaches to global value chains and trade globalization, as well as to domestic accumulation of technological and organizationa...

A Covid-19 submeteu a economia global a uma parada súbita, provocando choques de oferta e de demanda por onde tem passado. A partir de janeiro, país após país sofreu surtos do novo coronavírus, cada um enfrentando cho-ques epidemiológicos que repercutiram no sistema econômico e financeiro com consequências imprevisíveis. Com que rapidez e intensida...

OVID-19 brought the global economy to a sudden stop, causing shocks to supply and demand. Starting in January 2020, country after country suffered outbreaks of the new coronavirus, with each facing epidemiological shocks that led to economic and financial shocks as a consequence. How quickly and to what extent will national economies recover after...

The growth and productivity performance of emerging market and developing economies (EMDEs) in the last 10 years failed to repeat the achievements of the previous decade. Besides frustrating expectations that they might become the new growth pole in the global economy, their convergence to per capita incomes of advanced economies has suffered a set...

There are three possible justifications for central banks to engage with climate change issues: financial risks, macroeconomic impacts, and mitigation/adaptation policies. Regardless of the extent to which individual central banks take action in each of the three areas, they can no longer ignore climate change. Last year, extreme weather events ass...

Brazil is in dire need of more and better infrastructure investments A recent Ipsos survey found the Brazilian population to be the most dissatisfied with infrastructure services (transportation, energy, water and telecommunications) among the 28 countries covered by the work. Not surprising if we observe the lack of infrastructure investments in B...

Brazil’s economy has endured a difficult few years: after a deep recession in 2015-2016, GDP grew by just over 1 percent annually in 2017-2019. But things are finally looking up, with the International Monetary Fund forecasting a 2.2-2.3 percent growth in 2020-21. The challenge now is to convert this cyclical recovery into a robust long-term expans...

New technology has the power to drastically improve the financial landscape for underserved populations throughout Latin America and the Caribbean. But for “fintech’s” potential in the region to be fully realized, national governments will need to adapt regulatory environments to keep up with the times. The good news is that some policymakers are s...

China's economy has come to a sudden stop. Outside of China, the impact of the slowdown has already been felt. For Latin America, which counts China as its largest trade partner overall, the risks are also piling up. We approach here four main channels through which the shock to China’s economy may be felt in Latin America

The hike in tariffs imposed by the United States against its major trading partners since early 2018 has been unprecedented in recent history. President Trump alluded to, among others, the goal of revitalizing jobs in the country’s manufacturing industry by protecting it from unfair trade practices of other countries, particularly China. However, a...

Over the past two years, with the US-initiated war, investors from Taiwan, Japan and the US have already accelerated the transfer of assembly lines and supply contracts in their ITC value chains from China to Vietnam, Thailand, Indonesia and, to a lesser extent, Mexico. On the other hand, the leap to the top of the technology ladder is what seems t...

Recent events in Argentina and Ecuador have raised the question of whether the talk of IMF change was just that – talk. Both countries agreed to IMF packages in the past 13 months, and Argentina’s was the biggest in the organization’s history at $57 billion. But Ecuador saw civil unrest that forced one of the package’s key conditions, an end to fue...

As the world enters the 10-year countdown to making good on mutual commitments on behalf of a sustainable future for the planet, achieving Goal 5 of gender equality and the empowerment of women and girls is on the front burner of most governments, the business sector and civil society. Indeed, as stated in the 2019 SDG Report, gender equality is a...

Any positive short-term effects of the confrontation should also take into account its negative medium- and long-term impacts on the region and on global growth. And the fact is that the overall trade and GDP destruction effects of trade wars tend to outweigh gains from shifts in trade activity. Even from the standpoint of those Latin American econ...

This note approaches the relationship between natural wealth and economic growth, using the case of Sub-Sahara African economies as an illustration. Delving into recent World Bank reports, it highlights how a sustained positive correlation between natural capital and GDP growth happens through the transformation of the former into other forms of as...

Brazil's economic recovery after the deep 2015-16 recession has been the slowest on record, with GDP per capita last year remaining more than 9% below its pre-crisis peak. The IMF's annual reporton the country's economy, released two weeks ago, estimated current GDP to be nearly 4% below its potential level, which suggests insufficiency of aggregat...

Unless fears of a return to policies prevailing before Macri are assuaged, the market rout tends to deepen as a negative feedback loop happens between that preference shift and the underlying debt dynamics in Argentina. Gross financing needs ahead – before elections and next year – are high and, given the large share of public and corporate debt in...

The “middle-income trap” has become a broad designation trying to capture the many cases of developing countries that succeeded in evolving from low- to middle-levels of per capita income, but then appeared to stall, losing momentum along the route toward the higher income levels of advanced economies. Such a trap may well characterize the experien...

Multilateral Development Banks (MDBs) have two financing windows, with different terms, dedicated to low- and middle-income countries. Countries are presumed to cross those windows as their income per capita rises, with middle-income countries (MICs) eventually “graduating” to a non-client status once they reach some criteria. However, due to what...

China’s economic growth has been in a downslide trend since 2011, while its economic structure has gradually rebalanced toward lower dependence on investments and current-account surpluses. Steadiness in that trajectory has been accompanied by rising levels of domestic private debt, as well as slow progress in rebalancing private and public sector...

This note outlines two different ways in which the concept of a middle-income trap has been approached since its first use 12 years ago by Gill and Kharas (2007). One has been empirical, where search is made to identify – or deny - breaks or turning points in time-series data exhibiting “growth traps” for middle-income economies. The other one, clo...

By referring to a "loss of momentum" in the global economy, Christine Lagarde this week indicated a further drop in the IMF growth forecasts to be released next week. Lagarde called the current moment of the global economy as "delicate", referring to the scenario of revitalization in the second half as "precarious" due to the presence of high risks...

In their 75 years of existence, the twin institutions born at the Bretton Woods Conference have undergone adaptation and transformation in response to the evolution of the world economy and the challenges it has posed to them. More recently, three changes in the international order have imposed a new round of challenges to those institutions: the e...

Chinese financing in Latin America is changing. The profile of Chinese investment in the region tracks the evolution of China’s economy as it moves toward a higher reliance on services and domestic consumption.

China's economic growth has been in a downslide trend since 2011, while its economic structure has gradually rebalanced toward lower dependence on investments and current-account surpluses. Steadiness in that trajectory has been accompanied by rising levels of domestic private debt, as well as slow progress in rebalancing private and public sector...

The US-China trade truce will become a time-out or an armistice pending on China's response regarding technology policy

The goal of this article is to examine the economic effects of some provisions on the Federal Constitution of Brazil. The Constitution of Brazil is one of the longest and most detailed constitutional texts in the world. We find that both because of the specific provisions of the text, but also by the political economy implications of the sheer leng...

A parallel can be made between Islamic Finance and ESG investments with a performance below non-ESG portfolios

Daron Acemoglu and James Robinson caught policymaker’s attention to the critical role of institutions for development. Their work gives too much emphasis to the prospects of revolution, however. A reading of the World Bank’s World Development Report of 2017 points to directions that all actors involved in the process, whether domestic or internatio...

Given the weight of global and commodity-specific factors on commodity prices, as well as differences in countries’ commodity-dependence, better keep your parrot close by.

If I were to synthesize the current situation of the Brazilian economy in one sentence, I would say: "it is suffering from a combination of 'productivity anemia' and 'public sector obesity'". On the one hand, the mediocre performance of productivity in Brazil in recent decades has limited its GDP growth potential. On the other, the gluttony for exp...

Latin America is up against a momentous year on multiple fronts. On one hand, game-changing national elections in six countries, including three of its largest-Brazil, Mexico and Colombia-are poised to reshape the political scenario in the region. In parallel, the economic agenda is front and center of countries' efforts to overcome imbalances, imp...