Ahead of the Curve: Insights for the International NGO of the Future

International NGOs have a unique and important role to play in addressing today's complex global challenges. But few of them are living up to their full potential. With support from the Hewlett Foundation, FSG researched how the most innovative INGOs are adapting to the disruptions in the global development sector and embracing four approaches to create greater impact

At the Heart of the Matter: Household Debt in Contemporary Banking and the International Crisis

This paper considers the nature and role of household indebtedness in contemporary banking and the current financial and economic crises. It offers a concise empirical exposition of the centrality of household lending and related financial services to leading banking institutions and to the credit systems of a number of advanced and middle-income economies. It also offers socioeconomic characterizations of this debt and its macroeconomic significance from the standpoint of Marxist political economy, affording two distinctive insights. First, the concrete social content of household debt over the past two decades has helped ensure this lending remained highly profitable to lenders, making it a natural vehicle for destabilizing capital-market competition. Second, a crisis characterized by record levels of over-indebted wage-earning households is likely to pose distinctive difficulties to a process of market-based recovery. While the destruction of capital values during a crisis lays the basis for the eventual restoration of profitability and solvency for some enterprises, over-indebted wage-earning households face no analogous opportunity. Without new speculative asset-price bubbles, the restoration of their financial stability hinges on reductions in consumption or increases in wages, both of which present obstacles to a market-based process of economic recovery.

Complementarity and coordination of macroeconomic and financial policies to tackle internal and external imbalances.

Policy responses to the global crisis have helped stabilise the economies and contained the threat of financial instability. But growing sovereign indebtedness, a weakened financial system and uneven economic growth prospects at the global level pose risks of new imbalances and vulnerabilities. To limit those risks it is essential to address both macroeconomic and fi nancial market failures. Important changes in financial market regulation and banking supervision are already being introduced. In the macroeconomic area, an effort is being made to strengthen the coordination of economic policies in the context of the G20. New institutions, such as macroprudential authorities, are being set up in many countries to monitor and contrast the emergence of systemic risk. There are, however, several areas where policy frameworks need to be further strengthened. At the international level we need surplus and deficit countries to rebalance global demand and ensure a return to sustained global growth, without conflicting policy actions leading to potential instability. Effective acroprudential policies require a clear definition of responsibilities, and need to be consistent with the conduct of monetary policies. In Europe, more effective economic governance is needed to proceed on the route towards greater economic integration and to fortify the euro, including tighter rules on fiscal policies, a broader surveillance over macroeconomic imbalances and an effective mechanism for crisis management.

Supporting enterprise development and SME in Europe

Small and Medium Enterprises (SME) are the backbone of Europe’s economy: there are 23 million SMEs in Europe representing around 99% of all undertakings, and 57% of them are sole proprietorships. They provide two thirds of total private-sector employment, represent 80% of the total job creation and produce more than half of the EU added value. This article examines the main as well as the latest elements of EU policy and programmes in favour of supporting enterprises and SMEs in particular. It starts by looking at the SME policy framework and then focuses on the financial aid within the EU financial perspectives in 2007-2013 such as the research budget or the structural funds. The article describes the different measures for SMEs in terms of financial instruments and support programmes and services, addressing in each case strengths, weaknesses, trends and possibilities. It also looks at the changes to policies and programmes following the financial and economic crisis

High-Tech Competition Puzzles. How Globalization Affects Firm Behavior and Market Structure in the Electronics Industry

This paper addresses two puzzles related to industrial dynamics and competition. The first of these puzzles is that a high degree of globalization may well go hand in hand with increasing concentration. I show that one of the most globalized sectors of the electronics industry, hard disk drives (HDD), also displays one of the highest degrees of concentration: multinational corporations, after all, may not be such effective “spoilers of concentration”, as claimed by Richard Caves (1982). 4 The second puzzle that I address in this paper is that, despite an extremely high degree of concentration, this industry fails to act like a stable global oligopoly. So far, market share volatility has been restricted to the oligopoly members. There are however indications that this may change and that market contestability may improve. The paper is organized as follows: I start with a discussion of the first puzzle, presenting evidence on globalization and concentration. I then address the second puzzle, linking high concentration to high volatility. Some possible explanations are reviewed in the third part of the paper, building on a conceptual framework introduced by G.B. Richardson ( 1996 and 1997). I analyze how globalization affects competition and distinguish forces that foster concentration and forces that are conducive for market disruption. I conclude with a few observations on what this implies for future research on the determinants of market structure and firm behavior.competition; industrial dynamics; globalization; concentration; firm behavior; contestable markets; entry barriers; capabilities.

Analysis of operational risk of banks – catastrophe modelling

Nowadays financial institutions due to regulation and internal motivations care more intensively on their risks. Besides previously dominating market and credit risk new trend is to handle operational risk systematically. Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. First we show the basic features of operational risk and its modelling and regulatory approaches, and after we will analyse operational risk in an own developed simulation model framework. Our approach is based on the analysis of latent risk process instead of manifest risk process, which widely popular in risk literature. In our model the latent risk process is a stochastic risk process, so called Ornstein- Uhlenbeck process, which is a mean reversion process. In the model framework we define catastrophe as breach of a critical barrier by the process. We analyse the distributions of catastrophe frequency, severity and first time to hit, not only for single process, but for dual process as well. Based on our first results we could not falsify the Poisson feature of frequency, and long tail feature of severity. Distribution of “first time to hit” requires more sophisticated analysis. At the end of paper we examine advantages of simulation based forecasting, and finally we concluding with the possible, further research directions to be done in the future