Economics of G20. Группа авторов
at a much lower rate. However, in the recent past (2014–2015), growth rates in Asia have been diverging from the other two as Asia exhibits a much faster rate of growth. The reason for this can be attributed to emerging market economies like India and China who have a high growth rate and have been reasonably successful in surviving the crisis.
Table 2. Average Annual Changes in Key Variables
Individual Country Analysis
We now discuss the behaviour of individual countries and try to analyse how their behaviour after the crisis is related to their behaviour before the crisis. We calculate the average pre-crisis and post-crisis values for the individual countries and see whether the means are significantly the same before and after the crisis (Table 3).
The countries present a mixed picture (Table 4). But by and large, the countries have a higher investment ratio. Only one country, Guatemala, has a significantly lower investment rate; all the other countries who have a significantly different mean have a higher mean. The only African country which has a significantly different export share has a higher share of exports in GDP and an improved CAB. Most of the other countries which show a significantly different export share after the crisis show an increase except for Guatemala and Pakistan. Only three countries have significantly different growth rates: Bolivia has a higher growth rate and Pakistan and South Africa have a lower one. It seems that these large countries have weathered the crisis without a significantly lower growth. Since the overall growth rates of developing countries have fallen, this suggests that the brunt of the adjustment burden has fallen on smaller countries. Also, there is a good relation between export performance and growth rate. Bolivia’s export share increased and its growth rate increased. The two countries in which the growth rate fell also saw a decrease in export share.
Table 3. Preand Post-crisis Behaviour of Indicators
Note: Change is with respect to pre-crisis figures. *indicates significance.
Post crisis only Indonesia has a significantly lower money supply; in the other countries where there was a significant change, the money supply is higher. The interest rate behaves accordingly. While the change in M1 is usually in the same direction as the change in reserves for Asian and African countries, this is not the same in Latin American countries, suggesting significant central bank intervention.
Table 4. Preand Post-crisis Performance
Note: *indicates significance.
Spearman’s Rank Correlation
The relationship between the variables is unknown and Spearman’s rank correlation (ρ) is calculated to analyse the relationship among the variables before and after the crisis. Only those ρ which are significant at 5% level are considered.
H0: ρ = 0 which means ρ is insignificant.
H1: ρ ≠ 0 which means ρ is significant.
We reject null if p-value is <0.05, which means ρ is significant.
The analysis shows that the countries with the highest average GDP growth rates before the crisis had the lowest average GDP growth rate in the post-crisis period. This can be attributed to the fact that countries which grew relatively faster during the boom period prior to the crisis had access to easy credit from the US. After the crisis, as there was a huge liquidity crunch and credit dried up, growth rates of these countries declined drastically.
Pre-crisis average export share is positively related to post-crisis average export share. This means that those countries, which had a higher share of exports in the pre-crisis period, had a higher export share in the post-crisis period. If we consider the region-wise ranks, we see those regions that had a higher export share pre-crisis had a lower export share post crisis. However, this is not reflected in ρ. Therefore, the regional decline was more for countries with a higher export share. This may be because demand for imports by other countries declined due to a decrease in world demand due to the crisis.
Countries with higher average CAB in the pre-crisis period had higher CAB in the post-crisis period. This can be attributed to the fact that countries usually had a higher CAB initially because of better export performance, and in general, they were able to maintain their export performance as noted above and so continued to have a better CA position. CAB declined regionally, but it declined more for those countries that had a lower balance initially.
Countries with a higher average foreign exchange in the pre-crisis period had a higher foreign exchange in the post-crisis period. The build-up in reserves was generally because of better export performance, and since this was maintained post crisis, the reserves of these countries did not decline much.
Countries with a higher GFCF in the pre-crisis period had a higher GFCF in the post-crisis period. This can be because post crisis, interest rates declined, and governments also undertook expansionary fiscal policies particularly increasing investment as part of the recovery package due to the crisis.
The ρ values calculated to check the relationship between the other variables were found to be insignificant.
Comparative Analysis: Correlations
Spearman’s rank correlation gives a weaker result than correlation. Thus, this chapter analyses these results further using correlations. Correlations for the same variable (averages) in the pre-crisis and the post-crisis periods for all the countries are calculated. They are found to be significant, re-enforcing the results of the Spearman’s rank correlations.
The correlation between two variables is examined before and after the crisis, to check whether they are significant. Then a t-test is performed at 95% confidence inter val. This is to see if the correlations are statistically significant and whether the relationship among the variables in the precrisis period holds even in the post-crisis period. The results are discussed below.
There is a positive correlation between average GDP growth rate and average GFCF in the pre-crisis and post-crisis periods. However, the correlations are not statistically equal. So, the same relation is not maintained after the crisis. Average export share has a positive correlation with CAB, foreign exchange and total reserves in both the pre-crisis and post-crisis periods. This reinforces the conclusion in the previous section. However, the pre-crisis period correlation is not statistically equal to the correlation in the post-crisis period.
There is significant positive correlation between the average foreign exchange and average total reserves in the pre-crisis and post-crisis periods. The average interest rate and average money stock have a significant negative correlation in the pre-crisis and post-crisis periods. This relationship is maintained in the post-crisis period as well — as interest rate increases, people invest more (or save more, expecting future returns) and thus money stock decreases. This did not change in spite of the crisis.
There is a positive correlation between pre-crisis average foreign exchange, pre-crisis average GFCF and average total reserves with post-crisis average GDP growth rate. While the aforementioned correlations are backed by economic logic, there are other correlations that seem spurious. Not all results are discussed here.
Conclusions
The broad trends in the countries of the three regions are similar.