EA - Cause area proposal: International Macroeconomic Policy by arushigupta

Link to original articleWelcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Cause area proposal: International Macroeconomic Policy, published by arushigupta on August 12, 2022 on The Effective Altruism Forum. Thanks to the many people who gave us their feedback as we wrote this. This is a very shallow investigation; we have no particular expertise in the topic or in research, and wrote this report over the course of 2 days. We welcome any feedback and hope to see further discussion/investigation from others with more expertise. Introduction: Open Philanthropy should investigate as a new cause area the potential of equitable international/multilateral macroeconomic policy. This would increase the financial resources available to developing countries by allowing them to retain more of the value of their current financial activity, and to then re-invest that value in their economic growth. The negative flow of money from economies in Low and low middle-income countries is well documented— they are estimated to have lost more than $383B in resources in outflows to developed countries in 2012, dwarfing the $68B in aid they took in during that year. The sources of these outflows included: illicit financial flows, tax loss, lending, debt repayments, and profits repatriated by foreign investors. We think that there should be more discussion of international macroeconomic policy and norms within EA— i.e. economic practices that affect/involve multiple countries, or institutions that impose policy multilaterally. These include international trade policies, tax policy, intellectual property policy, and conditions created by the IMF and World Bank and tracked by the WTO. We posit that better economic outcomes might be achieved by researching and advocating for policies that help developing countries retain more financial resources, benefit more from the market value they create through interacting with international markets, and prevent that value from inequitably escaping local markets. How this differs from Open Philanthropy’s existing work: We believe there has been limited consideration for this type of cause within the effective altruism community so far. While there have been ongoing discussions on the forum about macroeconomic policy in developing countries as a potential focus area (perhaps most famously in Hillebrandt and Halstead’s Growth and the case against randomista development, one of the forum’s most popular ever posts), these discussions have primarily focused on changing government & market behavior within the developing countries themselves. The most relevant work includes Open Philanthropy’s funding supporting macroeconomic policy in the US and Europe (which has received recent criticism), and their new program on global aid advocacy, which hasn’t announced any grants yet but is considering, amongst other tactics, “expanding access to capital or helping to reduce debt burdens, e.g. by supporting governments in negotiating more favorable terms from development finance loans.” While we’re very excited about the areas that the global aid advocacy program is considering, they don’t appear to include the work we propose here (ex. they’re considering helping reduce debt burdens by supporting governments to negotiate favorable terms, rather than considering tactics like pushing for IMF reforms). The current problem: According to one report from 2014, low-income countries (LICs) lost 18% of their GDP to extralegal financial flows that year, interest payments on foreign debt, etc. We were only able to conduct shallow research, however we have found some compelling examples of differential market forces: Developing countries lost $16.3 trillion USD to leakages in cross-border financial transactions and payments between 1980 and 2012. Uneven burden of patent licensing and royalty fees between nations— LMICs paid $77 BN in patent licensing fees...