{"id":9319,"date":"2026-04-27T21:15:05","date_gmt":"2026-04-27T21:15:05","guid":{"rendered":"https:\/\/staging.openvaluefoundation.org\/?p=9319"},"modified":"2026-04-27T21:15:06","modified_gmt":"2026-04-27T21:15:06","slug":"blog-post-68","status":"publish","type":"post","link":"https:\/\/openvaluefoundation.org\/en\/2026\/04\/27\/blog-post-68\/","title":{"rendered":"Blog post 68"},"content":{"rendered":"

While rich countries debate how to \u201cgo big\u201d on economic stimulus during the pandemic, emerging markets are having a different conversation. It's about the intensity of the reform measures<\/strong>, and they are likely to fare better.<\/p>\n\n\n\n

Emerging countries don't have sufficient financial resources to match the incentive spending of more powerful nations. But during the 2008 financial crisis, emerging countries offered aid measures almost as generous as those from richer countries. They could afford it because, after years of spectacular growth, they had money to spend. However, all that spending only produced a brief growth spurt, and during the 2010s these countries struggled to pay down debt as growth slowed.<\/p>\n\n\n\n

When the pandemic broke out last year, many emerging countries were still struggling. Now, With a lack of money to reactivate their economies through stimulus, they have no choice but to push for reforms that improve productivity.<\/strong><\/p>\n\n\n\n

Research by investor Ruchir Sharma during the pandemic reveals that some emerging economies increased their total stimulus \u2013 including fiscal and monetary measures, as well as credit guarantees \u2013 from 6% of gross domestic product (GDP) in 2008 to 9% of gross domestic product (GDP) in 2020. But that was small change compared with developed countries, which more than tripled their spending, rising from 10% to 33% of GDP over the same period. Indeed, Developed countries spent almost four times more on economic incentives in 2020 than emerging countries.<\/strong><\/p>\n\n\n\n

Instead of debating larger stimulus packages, Emerging countries are driving a series of reforms to increase productivity and boost growth.<\/strong>. India is in the news for farmer protests against the end of agricultural protections, but this is only part of a broader effort to promote private competition and shift public spending away from subsidies and towards infrastructure. Indonesia last year cut taxes and regulation, and relaxed labour rules; it is now moving to open up its financial sector. The Philippines has just reduced its relatively high corporate tax rate to more competitive levels.<\/p>\n\n\n\n

Egypt, Saudi Arabia and the United Arab Emirates are imposing new restrictions on public spending; the latter two are allowing foreigners to buy local companies and homes for the first time. Even Brazil, a big-spending country, is trying to regain control of its budget by, among other things, cutting pensions and making it easier to sack public workers and reduce their benefits.<\/p>\n\n\n\n

The biggest change has taken place in China. Although its spending on economic stimulus in 2008 was widely applauded for \u201csaving\u201d the global economy, the resulting debts contributed to a sharp slowdown in growth. Beijing is now responding very differently. Whilst all the major developed countries rolled out far more stimulus in 2020 than in 2008, China committed less: around 9% of GDP, compared with 13.5% in 2008.<\/p>\n\n\n\n

Instead of promising endless injections of easy money, China's central bank is starting to dial back its monetary stimulus, citing the dangers of rising debt and financial bubbles. Meanwhile, Beijing is proposing new and ambitious economic reforms, including greater opening of its financial markets to the outside world.<\/strong><\/p>\n\n\n\n

This story two responses to the pandemic are a notice that emerging regions have their own ideas about economic survival<\/strong>. In the 1990s, when financial crises hit these countries, from Russia to Turkey and Thailand, the International Monetary Fund (IMF), a pillar of Western consensus thinking, called for them to maintain spending restraint and high real interest rates, alongside structural reform to promote growth. Emerging market leaders opposed these brutal austerity programmes.<\/p>\n\n\n\n

Now the tables have turned. Reflecting the prevailing neo-Keynesian consensus in Western capitals, the IMF now advises rich and poor nations alike to worry less about deficits and spend generously. Except that none of the major emerging nations are seeking IMF assistance, and many are engaged in structural reform campaigns very similar to those the fund would have proposed in the 1990s. Financial markets are celebrating their progress. After a lost decade, emerging stock markets are starting to outperform their more established counterparts. Reform is not the only reason, but it is one of them.<\/p>\n\n\n\n

When the pandemic passes and the stimulus fever subsides, the effect will not be perceived in the same way. Emerging countries are likely to continue improving their growth prospects. Developed countries, by spending intensely and postponing reforms, are destined for slower growth, burdened by debt.<\/strong>. They are likely to face the same harsh lesson that emerging countries witnessed after the 2008 crisis: Hurry incentives and you will regret it at your leisure.<\/strong><\/p>\n\n\n\n

\n\n\n\n

Source: interview\u00a0Financial Times<\/a>\u00a0\u2018Emerging nations are better equipped to survive the pandemic\u2019s economic shock.<\/p>","protected":false},"excerpt":{"rendered":"

Mientras los pa\u00edses ricos debaten c\u00f3mo “triunfar a lo grande” en cuanto a la aplicaci\u00f3n de est\u00edmulos econ\u00f3micos durante la pandemia, los pa\u00edses emergentes mantienen una conversaci\u00f3n diferente. Se trata de la intensidad de las medidas de reforma, y es probable que salgan mejor parados. Los pa\u00edses emergentes no tienen los recursos financieros suficientes para igualar […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[23],"tags":[],"class_list":["post-9319","post","type-post","status-publish","format-standard","hentry","category-blog-post"],"acf":[],"_links":{"self":[{"href":"https:\/\/openvaluefoundation.org\/en\/wp-json\/wp\/v2\/posts\/9319","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/openvaluefoundation.org\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/openvaluefoundation.org\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/openvaluefoundation.org\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/openvaluefoundation.org\/en\/wp-json\/wp\/v2\/comments?post=9319"}],"version-history":[{"count":1,"href":"https:\/\/openvaluefoundation.org\/en\/wp-json\/wp\/v2\/posts\/9319\/revisions"}],"predecessor-version":[{"id":9321,"href":"https:\/\/openvaluefoundation.org\/en\/wp-json\/wp\/v2\/posts\/9319\/revisions\/9321"}],"wp:attachment":[{"href":"https:\/\/openvaluefoundation.org\/en\/wp-json\/wp\/v2\/media?parent=9319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/openvaluefoundation.org\/en\/wp-json\/wp\/v2\/categories?post=9319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/openvaluefoundation.org\/en\/wp-json\/wp\/v2\/tags?post=9319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}