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Begin New Search Topic Political Economy Content Type Policy Brief Publication Year within 25 Years

1. Climate versus trade? Reconciling international subsidy rules with industrial decarbonisation

Author:
David Kleimann
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The vast environmental subsidies that may be required for the transition to net-zero greenhouse gas emissions are starting to generate international trade and political frictions between the world’s largest economies. This puts (supra-)national industrial decarbonisation efforts on a collision course with international subsidies rules and national countervailing duty (ie anti-foreign subsidy) laws and regulations. International cooperation will be essential to defuse such tensions before they escalate and impede effective climate policy rollouts, and before they lead to economic countermeasures that create new barriers to trade in environmental goods. This requires agreement on permissible environmental subsidy practices that minimise distortions. Meanwhile, it will be crucial to provide financial transfers to assist poorer economies with industrial decarbonisation at the same time as those poorer economies are suffering from the cross-border negative economic impacts of otherwise net-global-welfare enhancing environmental subsidies paid out by wealthy countries. Various forums can host the technical and political negotiations necessary to set the parameters of net global-welfare enhancing subsidies. These include the G7, the G20, the Organisation for Economic Co-operation and Development, the World Trade Organisation’s Trade and Environment Committee and WTO Trade and Environmental Sustainability Structured Discussions, and the Coalition of Trade Ministers on Climate.
Topic:
Climate Change, Political Economy, Trade, Carbon Emissions, Subsidies, and Decarbonization
Political Geography:
Global Focus

2. The Political Economy of Anti‐​bribery Enforcement

Author:
Lauren Cohen and Bo Li
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
A level playing field for firm competition is a fundamental requirement for any market to maximize its potential and achieve productive efficiency. When government favors a set of firms or individuals over others, distortions arise that reverberate throughout entire industries, affecting sales, production, innovation, and more. This is not to say that barriers to firms may not sometimes naturally arise, but if a finger is placed on the scale by government to allow certain firms to gain some unerodable advantage, this can have large implications on allocation and overall economic development.
Topic:
Corruption, Political Economy, Law Enforcement, Accountability, and Bribery
Political Geography:
Global Focus

3. Trading short-term gains for long-term costs: the Egyptian political economy under al-Sisi

Author:
Matteo Colombo
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
Egypt’s political economy has been operating on the basis of three core principles over the last few decades. First, the country’s political authorities set strategic economic objectives in a top-down manner. Second, the power elite supports the political authorities and, in exchange, tightly supervises homegrown and foreign investment to generate revenues and job opportunities, as well as private benefits. Third, Egyptian citizens acquiesce, willingly or unwillingly, in this division of power that mostly benefits the political authorities and power elites in exchange for improvements in their livelihoods. Since 2014, President al-Sisi has held closely to these principles but relied increasingly on Egypt’s military networks (part of the power elite) to boost economic growth. This strategy has produced short-term gains – informal jobs and an array of consumer goods – at the expense of long-term economic prospects. In particular, the military’s economic influence has deepened some of Egypt’s structural problems: low productivity, inequality, informal unemployment and a suppressed private sector. This limits the future sustainability of the current economic model. Improving Egypt’s economic prospects requires reducing the role of the state – especially the military – in the economy in terms of decreasing the number of associated enterprises and lightening the regulatory framework. However, this is nearly impossible to realise in sectors in which the military already has a dominant profile, such as construction and extractives, because its support is essential for al-Sisi to maintain power. A more promising alternative for European policy makers to consider is influencing the Egyptian government to limit military influence in sectors with growth potential where the military is largely absent, such as manufacturing and Information and Communications Technology (ICT). A government strategy that prevents further military involvement in these sectors, crafts a regulatory framework conducive to private investment and invites foreign funding, can help Egypt realise greater economic growth and higher fiscal revenues.
Topic:
Development, Political Economy, Economy, and Abdel Fattah el-Sisi
Political Geography:
Middle East and Egypt

4. Pay Day Loans and Backroom Empires: South Sudan’s Political Economy since 2018

Author:
Joshua Craze
Publication Date:
10-2023
Content Type:
Policy Brief
Institution:
Small Arms Survey
Abstract:
Though elections are now postulated for next year, South Sudan remains in crisis. Conflict continues to scar the country, and climatic shocks exacerbate already acute resource scarcity, leaving approximately 76 per cent of South Sudan’s population surviving on humanitarian assistance. The regime of South Sudanese President Salva Kiir survives by diverting revenues in three key areas—oil production, humanitarianism, and loans from international financial institutions—to the benefit of an elite class in Juba, but at the cost of the immiseration of the people of South Sudan. Pay Day Loans and Backroom Empires: South Sudan’s Political Economy since 2018—a Briefing Paper from the Small Arms Survey’s Human Security Baseline Assessment for Sudan and South Sudan (HSBA) project—analyses this predatory political economy in South Sudan, and charts a shift from the use of wages to reward loyal appointees to a more obscure system based on the dispensations of favours.
Topic:
Security, Corruption, Political Economy, Elections, Conflict, and Revenue
Political Geography:
Africa, Sudan, and South Sudan

5. Xi Jinping’s Vision for the Middle East

Author:
Yair Albeck
Publication Date:
07-2023
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
Chinese leader Xi Jinping clearly aspires to establish a new global economic order centered around Beijing, not Washington. However, a new global economic order cannot be built in a day. The immensity of this challenge has forced Xi to set his sights on a set of interim goals. These include cementing the Communist Party’s control of the Chinese economy and shielding supply chains, capital flows, and strategic bilateral and multilateral relationships from hostile American policies. These goals equate to the creation of a Sinocentric global economic subsystem. This would be partially integrated into the current Western-led system but would be sufficiently decoupled from the West to protect the pillars of the Chinese Communist Party’s political economy. In Beijing’s grand design, the Middle East plays an indispensable role. But Western analysts have often misjudged China’s interests in the region as purely commercial. While Xi values the region for its economic potential, he sees it as one of the most important arenas of competition with the United States. Yet when United States National Security Advisor Jake Sullivan recently discussed American leadership of the global economy, he focused on Europe and the Indo-Pacific and mentioned Africa and Latin America. He did not mention the Middle East once.1 Washington’s persistent blind spot in the Middle East has obscured its view of Beijing’s global ambitions. If the US does not rectify this mistake, it risks losing more influence in the region and aiding China’s effort to supplant the US atop the global economic order.
Topic:
Foreign Policy, National Security, Political Economy, Foreign Direct Investment, and Xi Jinping
Political Geography:
China and Middle East

6. Processing Trade and Global Supply Chains: Towards a Resilient “GVC 2.0” Approach

Author:
Lucian Cernat
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
In the current global context marked by economic fragility, growing uncertainty and geopolitical conflicts, ensuring the smooth functioning of global supply chains becomes more important than ever. Supply shortages, higher freight costs, higher commodity prices and strong demand increase will trigger inflationary pressures for all economic sectors dependent on global value chains (GVCs). As part of global efforts to enhance the resilience of GVCs, this paper makes the case for a broader discussion about the untapped potential of processing trade, a relatively unknown trade facilitation option available in many countries around the world. Processing trade has been credited with stimulating China’s participation in GVCs, in combination with foreign direct investment (FDI) attraction and industrial upgrading. However, processing trade is not just a Chinese phenomenon. In the EU, significant trade flows (over 200 billion euros in 2021 alone) benefitted from a double-digit trade cost reduction, thanks to the EU processing trade provisions. Different types of processing trade arrangements exist in over 70 countries worldwide (including in the EU), as a way to facilitate the integration of developing countries in global production chains. However, these unilateral schemes have different requirements and co-exist without any attempt to facilitate their inter-operability along complex global supply chains. This paper argues that there is a pressing need for a global reflection on how best to promote a better integration between these national processing trade schemes. One option is to promote a “GVC 2.0” approach that offers key recommendations and best practices for processing trade along GVCs. Such a coordinated “GVC 2.0” trade facilitation initiative would not only make GVCs more resilient for countries that depend on global sourcing for their critical economic activities, but it will also reduce the inflationary effect generated by the unnecessary trade costs associated with GVC activities.
Topic:
Political Economy, European Union, Trade, Resilience, and Supply Chains
Political Geography:
Europe, Asia, and Global Focus

7. Policy Experimentation in China: The Political Economy of Policy Learning

Author:
Shaoda Wang and David Y. Yang
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Determining what policies to implement and how to implement them is an essential government task. Policy learning is challenging, as policy effectiveness often hinges on the nature of the policy, its implementation, the degree that it is tailored to local conditions, and the efforts and incentives of local politicians to make the policy work.
Topic:
Political Economy, Politics, Policy Implementation, and Economic Policy
Political Geography:
China and Asia

8. Diversifying Supply Chains: The Role of Development Assistance and Other Official Finance

Author:
Conor M. Savoy and Sundar R. Ramanujam
Publication Date:
06-2022
Content Type:
Policy Brief
Institution:
Institute for Security and International Studies (ISIS)
Abstract:
The Issue: The international political economy has undergone significant transformation since March 2020, profoundly impacting global supply chains and bringing to light the risks supply chains pose to economic development around the world. This brief explores some of these risks in detail and lays out the role foreign assistance can play in de-risking and diversifying supply chains by building capacity in new partner countries.
Topic:
International Cooperation, Political Economy, Foreign Aid, and Supply Chains
Political Geography:
Global Focus

9. Will corporate debt choke the post-COVID-19 recovery?

Author:
Frederico Mollet
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
Europe’s economic recovery is threatened by the corporate debt overhang created in the wake of the pandemic. Even as vaccines roll out, Europe faces the prospect of a prolonged retrenchment as indebted firms pull back investments and repair their balance sheets. Insolvency procedures have gradually improved over the past decade in Europe, but decisive and swift public action is needed to take advantage of these reforms. Given the scale of the crisis, Frederico Mollet argues in favour of a comprehensive European restructuring strategy. EU member states and the Commission must step in to provide the resources, guidance, and coordination necessary to push through this monumental restructuring. This strategy would furthermore benefit from common European guidelines and criteria for creditors and debtors. It will not only increase the likelihood of success but also protect the level playing field. Lack of a clear strategy and coordinated approach will result in a drawn-out restructuring process that pushes too many viable firms into liquidation and permanently hampers the economic recovery. Centring on private restructurings would also minimise the use of public funds at a time when governments have to deal with multiple competing fiscal pressures.
Topic:
Debt, Political Economy, and Economic Recovery
Political Geography:
Europe

10. Updating the European industrial strategy for the post-pandemic world

Author:
Marta Pilati and Frederico Mollet
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
On 27 April, the European Commission is expected to publish an update to their 2020 Industrial Strategy, a blueprint for an assertive European industrial policy that drives the digital and green transitions. While the current strategy’s broad principles continue to hold, it must now adapt to the post-pandemic world’s challenges. Furthermore, the original strategy only provided a high-level roadmap, with many areas requiring further development. Frederico Mollet and Marta Pilati break down European industry’s weaknesses and potential areas of success, the effects of COVID-19 this past year, key points of the 2020 Industrial Strategy and its relevance for Europe and beyond. They outline 16 recommendations which would strengthen the design and implementation of the programmes outlined in the current strategy, across four themes: finance, industrial ecosystems and alliances, technology transfer, and strategic autonomy.
Topic:
Development, Political Economy, European Union, Digital Economy, Green Technology, Industry, COVID-19, Strategic Autonomy, and European Commission
Political Geography:
Europe