lifestyle leader

Some stuff I've read over the weekend has been swimming around in my head and I think it needs to be written down to help me identify, if not the right answers, at least some of the right questions. I'll try to be as coherent as possible:

- Looking ahead at 2009, Dani Rodrik writes that he is more worried "about growth in advanced countries than in the developing world." I wonder why that might be. Could it be the fact that aid flows to the poorest of the developing world drop during periods of economic downturn? Probably not, since aid flows account for only small amounts of growth - although it is worth noting that official development assistance is even more volatile than GDP or fiscal revenue, so a recession in the rich world is not good news for the truly impoverished.

Maybe it's because the developing world depends upon advanced country markets as a source of their exports and growth? That seems more likely (I'm skeptical of the decoupling thesis), but that's nothing compared to the damage caused by the commodity bust to developing country growth prospects. Because of those two factors, I - unlike Mr. Rodrik - am definitely less worried about the North Atlantic economies' capacity to recover from this crisis and stay in one piece. Certainly Rodrik agrees with me in so far as it concerns...

- China. He writes:

"China is a country of enormous tensions and cleavages beneath the surface.... The question is whether policy actions to date will do enough to stem a socially and politically dangerous slowdown in the economy. Whichever way the Chinese leadership responds, future generations may remember 2009 less for its global economic and financial crisis than for the momentous transformation it will have caused in China."

Indeed. On this topic I turn to two articles, the first by John Kemp. Kemp looks at how the economic slowdown has affected Guangdong province - China's manufacturing hub - and how a slowdown in the region will affect global markets, particularly for energy and raw materials. There's much more in there, so give it a read.

Dan Drezner also raises a number of excellent points concerning China, as well as several other "known unknowns" from the current financial mess. He thinks we can expect countries like China to begin de-coupling by using their fiscal stimulus plans to target domestic firms and encourage the growth of domestic markets to offset declining demand abroad. That's a roundabout way of suggesting that protectionism in on the rise and the gains in political cooperation that come from economic interdependence are on the decline. I would argue that this situation, along with the macroeconomic imbalances problem, calls for more international cooperation, not less, but is Drezner's prediction more likely?

- Russia and the Ukraine have signed a deal to resume gas flows under the supervision of international authorities. Is Russia's plummeting ruble going to make the country more or less aggressive over its energy supply policies. Or maybe: is Russia's weakening economic situation going to embolden countries like the Ukraine to provoke them even further?