United Nations – World Investment Report 2013

Global Value Chains: Investment and Trade for Development

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The Division on Investment and Enterprise of UNCTAD is a global centre of excellence, dealing with issues related to investment and enterprise development in the United Nations System. It builds on four decades of experience and international expertise in research and policy analysis, intergovernmental consensusbuilding, and provides technical assistance to over 150 countries.
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The terms country/economy as used in this Report also refer, as appropriate, to territories or areas; the designations employed and the presentation of the material do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. In addition, the designations of country groups are intended solely for statistical or analytical convenience and do not necessarily express a judgment about the stage of development reached by a particular country or area in the development process. The major country groupings used in this Report follow the classification of the United Nations Statistical Office.
These are:
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Developed countries: the member countries of the OECD (other than Chile, Mexico, the Republic of Korea and Turkey), plus the new European Union member countries which are not OECD members (Bulgaria, Cyprus, Latvia, Lithuania, Malta and Romania), plus Andorra, Bermuda, Liechtenstein, Monaco and San Marino.
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Transition economies: South-East Europe, the Commonwealth of Independent States and Georgia.
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Developing economies: in general all economies not specified above. For statistical purposes, the data for China do not include those for Hong Kong Special Administrative Region (Hong Kong SAR), Macao Special Administrative Region (Macao SAR) and Taiwan Province of China.
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Reference to companies and their activities should not be construed as an endorsement by UNCTAD of those companies or their activities.
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The boundaries and names shown and designations used on the maps presented in this publication do not imply official endorsement or acceptance by the United Nations.
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The following symbols have been used in the tables:
  • Two dots (..) indicate that data are not available or are not separately reported. Rows in tables have been omitted in those cases where no data are available for any of the elements in the row;
  • A dash (–) indicates that the item is equal to zero or its value is negligible;
  • A blank in a table indicates that the item is not applicable, unless otherwise indicated;
  • A slash (/) between dates representing years, e.g., 1994/95, indicates a financial year;
  • Use of a dash (–) between dates representing years, e.g., 1994–1995, signifies the full period involved, including the beginning and end years;
  • Reference to “dollars” ($) means United States dollars, unless otherwise indicated;
  • Annual rates of growth or change, unless otherwise stated, refer to annual compound rates; Details and percentages in tables do not necessarily add to totals because of rounding. The material contained in this study may be freely quoted with appropriate acknowledgement.
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UNITED NATIONS PUBLICATION
Sales No. E.13.II.D.5
ISBN 978-92-1-112868-0
eISBN 978-92-1-056212-6
Copyright © United Nations, 2013
All rights reserved
Printed in Switzerland

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PDF – [264 Seiten]

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TABLE OF CONTENTS

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PREFACE
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ACKNOWLEDGEMENTS
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ABBREVIATIONS
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KEY MESSAGES
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OVERVIEW
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CHAPTER I. GLOBAL INVESTMENT TRENDS
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A. GLOBAL TRENDS: THE FDI RECOVERY FALTERS
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1. Current trends
a. FDI by geographical distribution
b. FDI by mode and sector/industry
c. FDI by selected types of investors
d. FDI and offshore finance
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2. Global FDI prospects in 2013–2015
a. General FDI prospects
b. FDI prospects by sector/industry
c. FDI prospects by home region
d. FDI prospects by host region
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B. INTERNATIONAL PRODUCTION
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1. Overall trends
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2. Repositioning: the strategic divestment, relocation and reshoring of foreign operations
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C. FDI INCOME AND RATES OF RETURN
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1. Trends in FDI income
a. General trends
b. Rates of return
c. Reinvested earnings versus repatriated earnings
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2. Impacts of FDI income on the balance of payments of host countries
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3. Policy implications
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CHAPTER II. REGIONAL TRENDS IN FDI
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INTRODUCTION
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A. REGIONAL TRENDS
1. Africa
2. East and South-East Asia
3. South Asia
4. West Asia
5. Latin America and the Caribbean
6. Transition economies
7. Developed countries
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B. TRENDS IN STRUCTURALLY WEAK, VULNERABLE AND SMALL ECONOMIES
1. Least developed countries
2. Landlocked developing countries
3. Small island developing States
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CHAPTER III. RECENT POLICY DEVELOPMENTS
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A. NATIONAL INVESTMENT POLICIES
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1. Overall trends
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2. Industry-specific investment policies
a. Services sector
b. Strategic industries
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3. Screening of cross-border M&As
4. Risk of investment protectionism
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B. INTERNATIONAL INVESTMENT POLICIES
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1. Trends in the conclusion of IIAs
a. Continued decline in treaty-making
b. Factoring in sustainable development
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2. Trends in the negotiation of IIAs
a. Regionalism on the rise
b. Systemic issues arising from regionalism
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3. IIA regime in transition
a. Options to improve the IIA regime
b. Treaty expirations
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4. Investor–State arbitration: options for reform
a. ISDS cases continue to grow
b. Mapping five paths for reform
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CHAPTER IV. GLOBAL VALUE CHAINS: INVESTMENT AND TRADE FOR DEVELOPMENT
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INTRODUCTION
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A. GVCS AND PATTERNS OF VALUE ADDED TRADE AND INVESTMENT
1. Value added trade patterns in the global economy
2. Value added trade patterns in the developing world
3. FDI and the role of TNCs in shaping GVCs
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B. GVC GOVERNANCE AND LOCATIONAL DETERMINANTS
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1. GVC governance: the orchestration of fragmented and internationally dispersed operations
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2. Locational determinants of GVC activities
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C. DEVELOPMENT IMPLICATIONS OF GVCS
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1. Local value capture
a. GVC contribution to GDP and growth
b. Domestic value added in trade and business linkages
c. Foreign affiliates and value added retention for the local economy
d. GVCs and transfer pricing
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2. Job creation, income generation and employment quality
a. GVC participation, job creation and income generation
b. GVCs and the quality of employment
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3. Technology dissemination and skills building
a. Technology dissemination and learning under different GVC governance structures
b. Learning in GVCs: challenges and pitfalls
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4. Social and environmental impacts
a. CSR challenges in GVCs
b Offshoring emissions: GVCs as a transfer mechanism of environmental impact
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5. Upgrading and industrial development
a. Upgrading dynamically at the firm level
b. Upgrading at the country level and GVC development paths
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D. POLICY IMPLICATIONS OF GVCS
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1. Embedding GVCs in development strategy
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2. Enabling participation in GVCs
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3. Building domestic productive capacity
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4. Providing a strong environmental, social and governance framework
a. Social, environmental and safety and health issues
b. Transforming EPZs into centres of excellence for sustainable business
c. Other concerns and good governance issues in GVCs
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5. Synergizing trade and investment policies and institutions
a. Ensuring coherence between trade and investment policies
b Synergizing trade and investment promotion and facilitation
c Regional Industrial Development Compacts
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CONCLUDING REMARKS: GVC POLICY DEVELOPMENT – TOWARDS A SOUND STRATEGIC FRAMEWORK
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REFERENCES
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ANNEX TABLES
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TRADE AND DEVELOPMENT REPORT, 2011

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT – GENEVA

Contents

Explanatory notes
Abbreviations
OVERVIEW

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Chapter I

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Current Trends and Issues in the World Economy

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A. R ecent trends in the world economy
1. Global growth
2. International trade
3. Recent developments in commodity markets

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B. Incomes policies and the challenges ahead
1. The role of wages in economic growth
2. Incomes policy and inflation control
3. The E uropean crisis and the need for proactive incomes policies

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C. Progress towards global rebalancing, growth and development:
an assessment of global cooperation

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Notes
References

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Chapter II

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Fiscal Aspects of the Financial Crisis and its Impact on Public Debt

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A. Introduction

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B. Fiscal aspects of the global crisis
1. Fiscal balances and global imbalances before the crisis
2. The evolution of fiscal accounts and the impact of the crisis
3. Fiscal responses to the crisis

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C. The evolution of public debt
1. Recent trends in public debt in developed and developing countries
2. The contribution of non-fiscal factors to debt crises

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D. Conclusions

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Notes
References

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Chapter III

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Fiscal Space, Debt Sustainability and Economic Growth

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A. Introduction

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B. Fiscal policy challenges
1. Exit strategies and the shift to fiscal tightening
2. Fiscal tightening without a previous stimulus: the rationale for procyclical fiscal policies
3. The special case of natural-resource-rich countries

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C. Qualitative and quantitative aspects of fiscal space
1. A dynamic and comprehensive view of fiscal space
2. Interest rates and fiscal space
3. Functional finance and fiscal multipliers

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D. Dealing with public debt crises
1. Preventing debt crises
2. Responding to debt crises
3. Debt restructuring

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E. Conclusions: growing out of debt

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Notes
References

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Chapter IV

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Financial Re-Regulation and Restructuring

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A. Introduction

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B. What went wrong?
1. Creation of risk by the financial sector
2. Deregulation and shadow banking
3. The role of lender of last resort at stake

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C. Unresolved issues in financial regulation
1. Self-regulation and endogenous risk
2. Systemically important financial institutions
3. Volatility of capital flows and the need for capital controls
4. Liberalization of services and prudential regulation

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D. The unfinished reform agenda and policy recommendations
1. Re-regulation and endogenous risk
2. Beyond re-regulation: towards a restructuring of the banking system
3. The need for a more balanced banking sector: public and cooperative banks
4. Building a firewall between commercial and investment banking

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Notes
References

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Chapter V

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Financialized Commodity Markets:

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Recent Developments and Policy Issues

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A. Introduction

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B. Trends and developments in financialized commodity markets

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C. Commodity price formation: the roles of information and herd behaviour
1. Information and uncertainty in commodity markets
2. Herd behaviour

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D. Financialized markets: overall impact on commodity price developments
1. Trader positions and commodity prices
2. Price effects of financial investors across different asset markets

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E. Policy considerations and recommendations
1. Improving transparency in physical commodity markets
2. Improving transparency in commodity futures exchanges and O TC markets
3. Tighter regulation of financial investors
4. Schemes for dealing with speculative bubbles

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Notes
References

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Annex to chapter V

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Reform of Commodity Derivatives Market Regulations

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Chapter VI

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The Global Monetary Order and the International Trading System

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A. Introduction

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B. New thinking on global economic governance

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C. Destabilizing private capital flows: back to business as usual
1. Appetite for risk and carry-trade speculation
2. The Japanese yen and the United States dollar as funding currencies
3. The cost of leaning against the wind of appreciation

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D. Real exchange rate misalignment in the European Economic and Monetary Union

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E. Rules-based managed floating as a possible solution
1. Flexibility of the nominal exchange rate
2. Towards greater stability of the real exchange rate
3. Exchange rate adjustment according to uncovered interest rate parity

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F. Limitations and effectiveness of managed floating
1. Effectiveness of intervention in foreign exchange markets
2. The scope and cost of sterilization of foreign exchange market intervention

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G. International cooperation on exchange rate management

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H. Economic policy and the role of intervention

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Notes
References

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List of tables

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Table Page
List of boxes
Box Page

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1.1 World output growth, 2003–2011
1.2 Export and import volumes of goods, selected regions and countries, 2007–2010
1.3 World primary commodity prices, 2005–2011
1.4 Real wage growth, selected regions and economies, 2001–2010
2.1 Evolution of fiscal indicators, selected regions, 1997–2010
2.2 Fiscal stimulus packages, as announced in selected economies, 2008–2010

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List of boxes
3.1 Fiscal stimulus and crowding out
3.2 Fiscal multipliers
5.1 Views of commodity market participants: results of an UNCTAD survey
5.2 The interplay between physical and financial markets
5.3 Sources of information on commodity market fundamentals
6.1 Slovenia – a case of successful managed floating
6.2 Sterilized intervention and the balance sheet of the Chinese central bank

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List of charts
Chart Page
1.1 Real GDP at market prices, 2002–2011
1.2 World trade volume, January 2000–April 2011
1.3 Net barter terms of trade, 2000–2010
1.4 Monthly evolution of commodity prices, exchange rate and world industrial production, January 2002–May 2011
1.5 Share of wages in national income, selected economies, 1980–2010
1.6 Total wage bill and private consumption at constant prices, selected countries, 1996–2010
1.7 Current-account balances, selected countries and country groups, 2005–2011
1.8 Real effective exchange rate, selected countries, January 2000–May 2011

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2.1 Gross capital formation, current-account balance and national savings in selected countries, 1990–2010
2.2 Government revenues and expenditure and fiscal balance in selected regions, 1997–2010
2.3 Ratio of public debt to GDP in developing countries, by income group, 1970–2010
2.4 Ratio of total, domestic and external public debt to GDP in developing countries, 1970–2010
2.5 External debt in developing countries, by type of debt, 1970–2009
2.6 Contributions to growth of debt-to-GDP ratio, 1985–2004

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3.1 Relationship between public debt as a percentage of GDP and real long-term interest rates in Germany, Japan and the United States, 1981–2010
3.2 Comparison between forecasts of GDP growth, fiscal balances and current-account balances in IMF-sponsored programmes and actual values for selected countries
3.3 Real interest rate and real GDP growth, selected countries, 1991–2010

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5.1 Financial investment in commodities and equities as a share of global GDP, 1998–2010
5.2 Financial investment in commodities as a proportion of global oil production, 2001–2010
5.3 Different types of herd behaviour
5.4 Prices and net long financial positions, by trader category, selected commodities, June 2006–June 2011
5.5 Money manager positions and crude oil prices, January 2009–June 2011
5.6 Correlation between commodity and equity indexes, 1986–2011
5.7 Dynamics of world industrial production after the peaks of four business cycles
5.8 Evolution of commodity and equity prices before and after troughs of selected business cycles
5.9 Correlation between financial investments in commodities and selected exchange rates, January 1986–June 2011

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6.1 Short-term interest rate developments, January 1996–February 2011
6.2 Inflation and short-term interest rates in emerging market and transition economies, January 1996–February 2011
6.3 Changes in exchange rates and reserves, and net portfolio investments, third quarter 2005–third quarter 2010
6.4 Net private financial flows (excluding FDI): emerging market and developing economies, 1990–2010
6.5 Net positions of non-commercial traders on Australian dollar and Japanese yen futures, January 2005–April 2011
6.6 Carry-to-risk ratio, 2005–2010
6.7 Inflation differential and nominal and real exchange rates in Brazil, January 1996–February 2011
6.8 Unit labour costs and GDP deflator in E MU, 1999–2010
6.9 Current-account balances in E MU, 1991–2010
6.10 Evolution of CPI- and ULC-based real effective exchange rates, selected countries, 1991–2010
6.11 Exchange rates of selected currencies: actual values and simulated PPP and UIP paths

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Explanatory notes

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Abbreviations

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PDF – [224 pages]

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