Research Topics

There is no disputing Germany’s dominant economic role within the eurozone (EZ) and the broader European Union. Economic leadership, however, entails responsibilities, especially in a world system of monetary production economies that compete with each other according to political and economic interests. In the first section of this paper, historical context is given to the United States’ undisputed leadership of monetary production economies following the end of World War II to help frame the broader discussion developed in the second section on the requirements of the leading nation-state in the new system of states after the war. The second section goes on further to discuss how certain constraints regarding the external balance do not apply to the leader of the monetary production economies. The third section looks at Hyman P. Minsky’s proposal for a shared burden between the hegemon and other core industrial economies in maintaining the stability of the international financial system. Section four looks at Germany’s leadership role within the EZ and how it must emulate some of the United States’ trade policies in order to make the EZ a viable economic bloc. The break up scenario is considered in the fifth section. The last section summarizes and concludes.

The Case of Colombia

In recent years, Colombia has grown relatively rapidly, but it has been a biased growth. The energy sector (the “locomotora minero-energetica,” to use the rhetorical expression of President Juan Manuel Santos) grew much faster than the rest of the economy, while the manufacturing sector registered a negative rate of growth. These are classic symptoms of the well-known “Dutch disease,” but our purpose here is not to establish whether or not the Dutch disease exists, but rather to shed some light on the financial viability of several, simultaneous dynamics: (1) the existence of a traditional Dutch disease being due to a large increase in mining exports and a significant exchange rate appreciation; (2) a massive increase in foreign direct investment, particularly in the mining sector; (3) a rather passive monetary policy, aimed at increasing purchasing power via exchange rate appreciation; (4) and more recently, a large distribution of dividends from Colombia to the rest of the world and the accumulation of mounting financial liabilities. The paper shows that these dynamics constitute a potential danger for the stability of the Colombian economy. Some policy recommendations are also discussed.