The Astana Consensus

Transcription

1 The Astana Consensus Almaty, March 20, 2015 The Astana Consensus and where it s taking us Anuar D. Ushbayev Central Eurasia Leadership Alliance Almaty Reunion Almaty, March 20, 2015 a.ushbayev@tengripartners.com

2 The Astana Consensus Almaty, March 20, 2015

3 The Astana Consensus Almaty, March 20, 2015 There is enormous inertia a tyranny of the status quo in private and especially governmental arrangements. Only a crisis actual or perceived produces real change. The greatest advances of civilization, whether in architecture or painting, in science and literature, in industry or agriculture, have never come from centralized government. Milton Friedman ( )

4 The Astana Consensus Almaty, March 20, 2015 Economic Freedom and the Size of Government The traditional liberal-economic argument states that the size of government reduces economic freedom: 1 As taxes and government economic activity grow, the motivation of the private sector falls (Hayek, 1978). 2 Government expansion accompanies a rise in corruption and regulation (Heritage, 2009), as well as the weakening of property rights (Brennan and Buchanan, 1980).

5 The Astana Consensus Almaty, March 20, 2015 James E. Mahon, Jr. (2015). Economic Freedom and the Size of Government, working paper, Williams College. The article explores the relationship between economic size of the public sector and the degree of economic freedom, using the data of OECD countries (excluding Norway) on the size of tax revenues and expenditures of the central government, as well as indicators of economic freedom published by the Fraser Institute, ICRG, Heritage Foundation and the World Bank. As it turns out, the choice of the measure of the size of government between the size of tax revenues and government spending makes a difference. The author suggests that these patterns are are consistent with the fiscal contract model of politics (Timmons, 2005), by which taxpayers receive, in effect, policy or institutional concessions in exchange for their contributions.

6 The Astana Consensus Almaty, March 20, Central government spending (using the above data) seems to have no relation to the indicators of economic freedom. 2 There seems to be a robust positive relationship between initial levels of taxation and subsequent changes in economic freedom.

7 The Astana Consensus Almaty, March 20, 2015 The Washington Consensus 1 Fiscal discipline. 2 Priority of primary healthcare, education and infrastructure in govt. spending. 3 Tax reforms, moderate taxes and broadening the tax base. 4 Financial and money markets liberalization. 5 Exchange rate liberalization. 6 Privatization. 7 Deregulation. 8 Trade liberalization. 9 Liberalization of FDI. 10 Security of private property rights. John Williamson. (1989). What Washington Means by Policy Reform. Peterson Institute for International Economics

8 The Astana Consensus Almaty, March 20, 2015 The Beijing Consensus 1 No single solution for the tasks of all emerging countries. 2 GDP/capita should not be the single measure of progress. 3 Self-determination and financial sovereignty are key in state development. Joshua C. Ramo. (2004). The Beijing Consensus. Foreign Policy Centre. 1 Incremental, instead of radical reform. 2 Innovation and experimentation. 3 Export-led growth. 4 State capitalism (as opposed to socialist planning or free market capitalism). 5 Authoritarianism (as opposed to democracy or autocracy). John Williamson. (2012). Is the Beijing Consensus Now Dominant?, Asia Policy.

9 The Astana Consensus Almaty, March 20, 2015 The Washington Consensus assigns central focus to the development of a country s GDP and the development of market liberalism, while financial independence becomes a by-product of the general liberal development. It is often criticized for the fact that rapid liberalization may lead to economic instability in the context of global capital transactions. The Beijing Consensus focuses on more sustainable growth and equitable distribution of resources, as well as financial independence. However, the Beijing Consensus is silent on issues such as the role of exploitation of human labor in China, as a significant factor in the development of China. As The Economist ("Beware the Beijing model", May 26, 2009) put it, that instead of strong government, China s success comes from it s "vast, cheap labour supply and attractive internal market for foreign investment".

10 The Astana Consensus Almaty, March 20, 2015 KZ Sectoral Financial Balances