aftermath accelerated this transition. although many emerging market economies contracted sharply following the peak of the financial crisis in late 2008, economic activity in the emes has since rebounded powerfully. in contrast, the recovery for the developed economies has been anemic. economic output for the brics this year will be about 31 percent higher than it was in 2007 ; for the g7 just 1 percent higher. 2 the rapid rebound of the emes occurred mainly because the locus of the financial crisis was elsewhere and that helped limit the damage to their financial system and balance sheets. but many emes also recovered quickly because they had the capacity and credibility to pursue countercyclical policies in response to large external shocks to aggregate demand for the first time. on many fiscal metrics, some economies in the emerging world now look in better shape than many of those in the advanced world. this challenges the traditional distinction between developed country and emerging market sovereign creditworthiness. where the developed world still stands apart is in the quality of its institutions, legal and policy frameworks, and the sophistication of its technologies and markets. but even here the gap is narrowing. the story of the emes has generally been an extraordinarily positive one for the world as hundreds of millions of people have lifted themselves out of poverty. nevertheless, even before the crisis, it was evident that the relationship between developed and emerging economies was becoming strained and needed to be adjusted ; the status quo would clearly be unsustainable. consider, for example, the economic relationships between the united states and china that prevailed over the past decade or so. some experts have summarized the arrangements as follows. the united states bought chinese exports at low prices, which bolstered u. s. living standards and held down u. s. inflation. the united states did not take extreme steps to try to force china to revalue the renminbi upward against the dollar, and china, in turn, invested its trade surplus and capital figures are real gdp - weighted indexes for each group. brics include brazil, russia, india and china. bis central bankers ’ speeches inflows into u. s. treasuries in order to keep the renminbi from appreciating too rapidly. the u. s. terms of trade improved as the cost of imported goods dropped, and u. s. interest rates stayed relatively low as china recycled its trade surpluses back into u. s. financial assets. for

william c dudley : fostering economic growth in the bronx remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the 17th annual bronx bankers breakfast, bronx, new york city, 8 may 2015. * * * i am very pleased to have the opportunity to join you today at the 17th annual bronx bankers breakfast. i would like to thank bronx borough president ruben diaz, jr., the business initiative corporation of new york and the bronx overall economic development corporation for the opportunity to speak about the economic outlook for the bronx. this is my second visit to the bronx in the past five months. when i was here last december, i had the opportunity to hear from various community and business leaders about what they were seeing and the issues they were facing. such visits are an important part of the new york fed ’ s outreach efforts to keep apprised of key developments in the second district, and to identify areas where we should be directing our attention. in my remarks today, i will focus on the outlook for the bronx, the important role that community banks play in the local economy, as well as specific challenges facing local small businesses. it is important to recognize that small businesses play a vital role in any economy, so fostering economic and financial conditions that allow these businesses to flourish is important to the health of the local economy. in light of recent developments, i am optimistic about the economic prospects for the bronx and local small businesses. i also believe that community banks and community development organizations have an important role to play in paving the way forward. as always, my comments today reflect my own views and not necessarily those of the federal open market committee or the federal reserve system. 1 the economic outlook for the bronx to appreciate where we are, we need to remember where we ’ ve been. those of you who are long - time bronxites know that starting in the 1950s, but especially during the 1970s, the bronx endured a massive economic slump. in that one decade, the 1970s, the borough ’ s population fell by 20 percent – and by even more in many well - established neighborhoods. as people moved out in droves, buildings were abandoned, crime increased and jobs vanished – all in a vicious cycle, creating an atmosphere of despair. yet, the borough persevered and conditions began to stabilize and then to even improve a bit in the 1980s. today, while there is still much progress to be made, the bronx is in dramatically better shape on