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**Due to space restrictions, this event has reached capacity and we will no longer be taking RSVPs. Everyone is still welcome to attend but please plan to arrive early as seating is on a first come, first serve basis.**

Under the Hu-Wen leadership, China announced a shift in its development policy from a policy program that mainly emphasizes economic growth to one that pursues a “harmonious society.” The harmonious society program was a response to rapid increases in inequality during the 1990s, and its aim has been to ensure that the benefits from growth are widely shared.    

In recent years have the benefits from growth been widely shared? Has income inequality increased or decreased during the Hu-Wen era?

Drawing on recent findings from the China Household Income Project, a collaborative survey research project monitoring changes in incomes and inequality, Professor Terry Sicular will discuss recent trends in inequality and poverty in China. 

Terry Sicular is professor of economics at the University of Western Ontario. She received her doctorate at Yale and has taught at Stanford and Harvard. She is a specialist on the Chinese economy, speaks Mandarin, and has been studying and travelling to China for more than 30 years. Her recent research examines incomes and inequality in China, as well as related topics such as educational attainment and its intergenerational transmission, and the impact of housing reforms on household income and wealth. She has published widely in scholarly journals and books, and is as a contributor to and co-editor of Inequality and Public Policy, published by Cambridge University Press (2008). She has served as a consultant to international donor organizations, and is a leader in the ongoing, China Household Income Project, a collaborative research project that conducts a nationwide household survey and monitors trends in China’s incomes and inequality.

This event is part of the China's Looming Challenges series

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Terry Sicular Professor Speaker Department of Economics, University of Western Ontario
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Throughout the developing world, people are dying at alarming rates because they don't have basic necessities we often take for granted: enough food, clean water and health care.

Political instability and weak institutions are often to blame. Corruption, violence and lack of accountability keep the world’s poorest people from the chance to prosper.

Even as countries like China and India revel in their economic booms, the gap between rich and poor in those countries has never been wider. And those left behind often struggle on less than a dollar a day.

Researchers at Stanford's Freeman Spogli Institute for International Studies are focusing on how to improve the quality of lives for those in the greatest need – the people caught in places of chronic underdevelopment.

“Our job is to take intellectual ideas and push them out into the real world where they can be tested and refined – or discarded. The impact of that can be transformational."

-Coit Blacker
They're helping children in rural China get the food they need to do well in school and land competitive jobs. They’re using cell phone technology to make sure people living in one of Africa’s largest slums have access to clean drinking water. They’re working with local governments in Latin America to improve medical care and educational opportunities for children.

FSI: Where disciplines come together

The success they have in fighting poverty takes more than a lone researcher focusing on a particular topic. It comes from economists working with doctors, political scientists collaborating with environmentalists and engineers sharing ideas with lawyers. And it comes from putting academic findings into the hands of policy makers.

As Stanford’s primary forum for research on international issues, FSI fosters the multidisciplinary match-ups that influence policy worldwide and make a difference in people’s lives. It provides the glue and the space for academics across Stanford’s campus to come together and develop ideas.

“Unless and until we can offer profound answers as to why such a large a portion of the world’s population lives on less than a dollar day, we won’t be able to help countries develop institutions for reliable self-governance,” says FSI Director Coit D. Blacker. “And we won’t have building blocks for stability in place. If you can’t feed your people, you can’t educate your people and you can’t sew together a social and governing structure to help them break from chronic underdevelopment.”

Action Fund grants: Sparking research, shaping policy

FSI’s Global Underdevelopment Action Fund provides seed grants to help faculty members design research experiments and conduct fieldwork in some of the world’s poorest places.

The program awards up to $40,000 to researchers creating projects that tackle issues like hunger, poverty and poor governance.  Since it was established last year, the Action Fund has awarded $436,000 to nine researchers who have designed at total of 11 programs. 

With fresh findings, FSI researchers are in a unique position to influence global policy. Drawing on the FSI’s network of faculty and alumni who came from and are now working with governments around the world, scholars have the opportunity to direct their research to those who are able to affect change.

“Our job is to take intellectual ideas and push them out into the real world where they can be tested and refined – or discarded,” Blacker says. “The impact of that can be transformational.”

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The team of leaders who will take the helm in China beginning next year—the so-called “Fifth Generation”—will be better educated, have greater exposure to the outside world, and extensive experience implementing policies that have facilitated sustained economic growth and growing international influence. They may view issues somewhat differently than their predecessors but have risen to the top by going along to get ahead and are unlikely to propose radical policy initiatives.  But they must confront a growing number of challenges fueled by China’s past success and recent behavior and will be constrained by structural features of the Chinese system and integration into the global market.

Thomas Fingar is the Oksenberg-Rohlen Distinguished Fellow at the Freeman Spogli Institute for International Studies (FSI). In 2009, he was the Payne Distinguished Lecturer at FSI. From May 2005 through December 2008, he served as the first deputy director of national intelligence for analysis and, concurrently, as chairman of the National Intelligence Council.

This event is part of the China's Looming Challenges series

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Freeman Spogli Institute for International Studies
Stanford University
Encina Hall, C-327
Stanford, CA 94305-6055

(650) 723-9149 (650) 723-6530
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Shorenstein APARC Fellow
Affiliated Scholar at the Stanford Center on China's Economy and Institutions
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Thomas Fingar is a Shorenstein APARC Fellow in the Freeman Spogli Institute for International Studies at Stanford University. He was the inaugural Oksenberg-Rohlen Distinguished Fellow from 2010 through 2015 and the Payne Distinguished Lecturer at Stanford in 2009.

From 2005 through 2008, he served as the first deputy director of national intelligence for analysis and, concurrently, as chairman of the National Intelligence Council. Fingar served previously as assistant secretary of the State Department’s Bureau of Intelligence and Research (2000-01 and 2004-05), principal deputy assistant secretary (2001-03), deputy assistant secretary for analysis (1994-2000), director of the Office of Analysis for East Asia and the Pacific (1989-94), and chief of the China Division (1986-89). Between 1975 and 1986 he held a number of positions at Stanford University, including senior research associate in the Center for International Security and Arms Control.

Fingar is a graduate of Cornell University (A.B. in Government and History, 1968), and Stanford University (M.A., 1969 and Ph.D., 1977 both in political science). His most recent books are From Mandate to Blueprint: Lessons from Intelligence Reform (Stanford University Press, 2021), Reducing Uncertainty: Intelligence Analysis and National Security (Stanford University Press, 2011), The New Great Game: China and South and Central Asia in the Era of Reform, editor (Stanford University Press, 2016), Uneasy Partnerships: China and Japan, the Koreas, and Russia in the Era of Reform (Stanford, 2017), and Fateful Decisions: Choices that will Shape China’s Future, co-edited with Jean Oi (Stanford, 2020). His most recent article is, "The Role of Intelligence in Countering Illicit Nuclear-Related Procurement,” in Matthew Bunn, Martin B. Malin, William C. Potter, and Leonard S Spector, eds., Preventing Black Market Trade in Nuclear Technology (Cambridge, 2018)."

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On October 20, the SPRIE-Stanford Project on Japanese Entrepreneurship (STAJE) hosted a panel discussion featuring venture capitalists and a group of U.S.-Japan experts. The discussion with the title, "U.S.-Japan VC Cooperation and the Fly Over Phenomenon" was moderated by SPRIE Researcher, Robert Eberhart and held at the Stanford Graduate School of Business.

Panelists included Michael Alfant, CEO of Fusion Systems, Martin Kenney, Professor at UC Davis, Allen Miner, Founder of SunBridge, Scott Ellman, CEO of USAsia Venture Partners, Quaeed Motiwala, Managing Director at DFJ JAIC, and William F. Miller, Co-director of SPRIE. They discussed the tendency of U.S. based venture capital firms to fly from Silicon Valley, over Japan, and invest into China.

The panel noted that the reasons usually given by U.S. venture capitalists for the flyover phenomemon is that Japan has obscure accounting, uncertain relief in courts, and too far away to monitor. But since those risks are much larger in China other explanations were needed.  The lack of innovation - i.e. copycat firms -  that flourish in new niches in China are more attractive for VCs than the highly competitive and risky new technologies in Japan. Panelist also suggested that investing cycles are dominated by "fashion" with Japan being out of fashion, and noted the late stage investing pattern in China versus earlier stage investing in Japan and the U.S.  Finally, the panel posed an interesting question for STAJE research that perhaps under certain circumstances protected markets that are now in China might reduce the risks and increase returns for venture capitalists.

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Jorge Olarte is a senior at Stanford University majoring in Political
Science and pursuing the Research Honors Track Program. At Stanford he
has been involved with the Freeman Spogli Institute for International
Studies through the Rural Education Action Program (REAP) and CDDRL’s
Program on Poverty and Governance. His areas of interest include
criminal violence, authoritarian regimes, democratization, governance,
and state building. He is currently studying the patterns of violence
in Mexico throughout the democratization period and the effects of
government interventions on drug trafficking networks. Other research
projects have involved fieldwork in China and Guatemala. During 2010
he studied at Peking University through Stanford’s Bing Overseas
Studies Program.

In 2012, he co-founded the Forum for Cooperation Understanding and
Solidarity (FoCUS), a student-run organization headquartered at
Stanford University and at the Instituto Tecnológico Autónomo de
México (ITAM). Through this partnership, students from both
universities are attempting to develop and strengthen a network of
young leaders committed to improving the academic, cultural and
diplomatic exchange between the United States and Mexico.

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In the last two decades there has been a sharp growth in the numbers of people that have been “expelled,” numbers far larger than the newly “incorporated” middle classes of countries such as India and China. I use the term “expulsion” to describe a diversity of conditions: the growing numbers of the abjectly poor, of the displaced in poor countries who are warehoused in formal and informal refugee camps, of the minoritized and persecuted in rich countries who are warehoused in prisons, of workers whose bodies are destroyed on the job and rendered useless at far too young an age, able-bodied surplus populations warehoused in ghettoes and slums. One major trend is the repositioning of what had been framed as sovereign territory, a complex conditions, into land for sale on the global market – land in Sub-Saharan Africa, in Central Asia and in Latin America to be bought by rich investors and rich governments to grow food, to access underground water tables, and to access minerals and metals. My argument is that these diverse and many other kindred developments amount to a logic of expulsion, signaling a deeper systemic transformation in advanced capitalism, one documented in bits and pieces but not quite narrated as an overarching dynamic that is taking us into a new phase of global capitalism. The paper is based on the author’s forthcoming book Expulsions.


Saskia Sassen is the Robert S. Lynd Professor of Sociology and Co-Chair, The Committee on Global Thought, Columbia University (www.saskiasassen.com). Her recent books are Territory, Authority, Rights: From Medieval to Global Assemblages (Princeton University Press 2008), A Sociology of Globalization (W.W.Norton 2007), both translated into Spanish by Editorial Katz (Madrid y Buenos Aires), and the 4th fully updated edition of Cities in a World Economy (Sage 2012). Among older books is The Global City (Princeton University Press 1991/2001). Her books are translated into over 20 languages. She is the recipient of diverse awards and mentions, ranging from multiple doctor honoris causa to named lectures and being selected as one of the 100 Top Global Thinkers of 2011 by Foreign Policy Magazine.

Recommended readings:

 

Sponsored by The Europe Center, the Abassi Program in Islamic Studies, and the Mediterranean Studies Forum

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Saskia Sassen Robert S. Lynd Professor of Sociology and Co-Chair of the Committee on Global Thought Speaker Columbia University
David Palumbo-Liu Professor and Director of Comparative Literature and Director of the Asian American Studies Program Speaker Stanford University
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Ronald I. McKinnon is an applied economist whose primary interests are international economics and economic development-with strong secondary interests in transitional economies and fiscal federalism. Understanding financial institutions in general, and monetary institutions in particular, is central to his teaching and research. His interests range from the proper regulation of banks and financial markets in poorer countries to the historical evolution of global and regional monetary systems. His books, numerous articles in professional journals, and op-eds in the financial press such as The Economist, The Financial Times, and The Wall Street Journal reflect this range of interests.

 

 

Event Summary

Professor McKinnon first outlines the two major assumptions behind his paper (available on this page). First, that from December 2008 to August 2011, an inflow of "hot money" to emerging economies resulted from low U.S., European, and Japanese interest rates. Since then, the trend has reversed in the wake of the European banking crisis and bank lending has fallen. Second, the dollar remains the widespread central bank reserve currency despite instability in the U.S. system. 

 

McKinnon voices concern about Federal Reserve Chairman Ben Bernanke's zero interest rate policy, calling it an overreaction to the crisis and a "lose-lose" policy as it deters investment in the U.S. while simultaneously spurring destabilizing hot money flows to surrounding emerging markets. These countries are in turn forced to suppress interest rates to mitigate the inflows, and to build up dollar reserves to keep exchange rates in check. The zero interest rate policy also stimulates carry trades in commodities by speculators.

 

The belief that under a zero interest rate regime, inflation will stimulate the economy by bringing real interest rates to negative levels, is misplaced in McKinnon's view. He argues that this simply adds uncertainty and interferes with efficient bank intermediation, as banks hold high excess reserves and tighten lending, causing a procyclical contraction as has been seen in the United States and Europe. He contrasts this approach with China, which stabilized its economy following the “dot-com” bust by expanding rather than contracting bank credit. He criticizes U.S. pressure on China to appreciate or float its currency, asserting that these strategies would fail to reduce China's trade surplus.

 

McKinnon suggests that international reforms should target interest rates instead of exchange rates.  He recommends coordination between central banks of the major industrialized countries, especially the United States, European countries, and Japan - to collectively raise interest rates to approximately 2%. This would improve overall bank intermediation, and would benefit both central and peripheral countries in Europe.

 

A question and answer session following the talked addressed topics including: the likelihood of a coordinated effort between central banks; the potential effects of Kucinich's monetary reform proposal; the potential negative effects on real growth from carry trades, and whether this is a cause for concern; and the effects of bank borrowing trends in Europe on the European monetary system.

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Shorenstein APARC
Stanford University
Encina Hall, Room E301
Stanford, CA 94305-6055

(650) 723-9741 (650) 723-6530
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William D. Eberle Professor of International Economics
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Ronald McKinnon is the William D. Eberle Professor of International Economics at Stanford University. Currently, he is researching trade and financial policy in less-developed countries, the transition from socialism in Asia and Eastern Europe, the foreign exchange market and U.S.-Japan trade disputes, European monetary unification and international monetary reform, and the economics of market-preserving federalism.

Recent books by McKinnon include The Order of Economic Liberalization: Financial Control on the Transition to a Market Economy, 2nd edition (1993); The Rules of the Game: International Money and Exchange Rates (1996); and Dollar and Yen: Resolving Economic Conflict between the United States and Japan (with K. Ohno, 1997). Recent (1997) articles include "Credible Liberalizations and International Capital Flows: The Overborrowing Syndrome" (with H. Pill); "The East Asian Dollar Standard, Life after Death?" (1999); and "The Syndrome of the Ever-Higher Yen: American Mercantile Pressure on Japanese Monetary Policy" (with K. Ohno and K. Shirono, 1999). McKinnon teaches international trade and finance, economic development, money and banking, and financial control in developing and transitional socialist economies.

Ronald I. McKinnon William D. Eberle Professor of International Economics (Emeritus) Speaker Stanford University
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