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1. Freeing the Global Market: How to Boost the Economy by Curbing Regulatory Distortions

Author:
Shanker A. Singham
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
The U.S. economy faces major challenges competing internationally. One of the most worrisome is the growing use in China and other advanced developing countries of anticompetitive market distortions (ACMDs)—including regulatory protection that privileges specific companies—which put foreign competitors at a disadvantage. ACMDs are government actions that give certain business interests artificial competitive advantages over their rivals, be they foreign or domestic, to the detriment of consumer welfare. These market distortions are especially damaging to the industries in which the United States enjoys the greatest comparative advantages, but they are also harmful to the long-term prosperity of developing economies and cost the global economy trillions of dollars. To combat ACMDs, the conventional trade policy approach of focusing on the The U.S. economy faces major challenges competing internationally. One of the most worrisome is the growing use in China and other advanced developing countries of anticompetitive market distortions (ACMDs)—including regulatory protection that privileges specific companies—which put foreign competitors at a disadvantage.1 ACMDs are government actions that give certain business interests artificial competitive advantages over their rivals, be they foreign or domestic, to the detriment of consumer welfare. These market distortions are especially damaging to the industries in which the United States enjoys the greatest comparative advantages, but they are also harmful to the long-term prosperity of developing economies and cost the global economy trillions of dollars.
Topic:
Economics, Emerging Markets, Globalization, International Trade and Finance, and Markets
Political Geography:
Russia, United States, China, India, and Brazil

2. Arms Away

Author:
Ethan B. Kapstein and Jonathan Caverley
Publication Date:
10-2012
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
For two decades, the United States has dominated the global arms trade, reaping a broad range of economic and geopolitical benefits in the process. But shortsighted decisions to produce expensive, cutting-edge weapons systems, rather than cheaper, more practical ones, are squandering this monopoly and letting other countries get into the market.
Topic:
Markets
Political Geography:
United States

3. U.S. Trade and Investment Policy

Author:
Matthew J. Slaughter, Edward Alden, Andrew H. Card, and Thomas A. Daschle
Publication Date:
09-2011
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
The growth of global trade and investment has brought significant benefits to the United States and to the rest of the world. Freer trade and investment, facilitated by rules the United States led in negotiating and implementing, have alleviated poverty, raised average standards of living, and discouraged conflict.
Topic:
Economics, International Trade and Finance, Markets, Labor Issues, and Financial Crisis
Political Geography:
United States

4. The Evolving Structure of the American Economy and the Employment Challenge

Author:
Michael Spence and Sandile Hlatshwayo
Publication Date:
03-2011
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
This paper examines the evolving structure of the American economy, specifically, the trends in employment, value added, and value added per employee from 1990 to 2008. These trends are closely connected with complementary trends in the size and structure of the global economy, particularly in the major emerging economies. Employing historical time series data from the Bureau of Labor Statistics and the Bureau of Economic Analysis, U.S. industries are separated into internationally tradable and nontradable components, allowing for employment and value-added trends at both the industry and the aggregate level to be examined. Value added grew across the economy, but almost all of the incremental employment increase of 27.3 million jobs was on the nontradable side. On the nontradable side, government and health care are the largest employers and provided the largest increments (an additional 10.4 million jobs) over the past two decades. There are obvious questions about whether those trends can continue; without fast job creation in the nontradable sector, the United States would already have faced a major employment challenge.
Topic:
Economics, Markets, Labor Issues, and Financial Crisis
Political Geography:
United States and America

5. Prime Brokers and Derivatives Dealers

Publication Date:
04-2010
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
Runs by prime-brokerage clients and derivatives counterparties were a central cause of the World Financial Crisis. Worried about potential losses, many hedge funds withdrew their assets from brokerage accounts at Bear Stearns and Lehman Brothers in the weeks before these banks failed. Although Morgan Stanley did not fail, it also suffered from the withdrawal of prime brokerage assets. These runs, together with runs by short-term creditors, precipitated Bear Stearns' and Lehman's demise. Even if these firms would have failed anyway, the runs made their failures much more sudden and chaotic, and made coherent policy responses much harder.
Topic:
Economics, Markets, and Financial Crisis
Political Geography:
United States

6. The Gloomy Prospects for World Growth

Author:
Steven Dunaway
Publication Date:
09-2009
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
The seeds of the current economic and financial crisis were sown by economic policies of the major countries that fostered the growth of global imbalances during the 2000s. Consequently, an essential element in any assessment of prospects for world economic recovery and the pace of future growth has to factor in exactly how these imbalances are likely to unwind—or fail to be resolved—in the period immediately ahead.
Topic:
Economics, Markets, and Financial Crisis
Political Geography:
United States

7. Credit Default Swaps, Clearinghouses, and Exchanges

Publication Date:
07-2009
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
As its name suggests, the payoff on a credit default swap (CDS) depends on the default of a specific borrower, such as a corporation, or of a specific security, such as a bond. The value of these instruments is especially sensitive to the state of the overall economy. If the economy moves toward a recession, for example, the likelihood of defaults increases and the expected payoff on credit default swaps can rise quickly. The Depository Trust and Clearing Corporation (DTC C) estimates that in April 2009, the notional amount of credit default swaps outstanding was about $28 trillion. As a result of the overall size of the CDS market and the sensitivity of CDS payoffs to economic conditions, large exposures to credit default swaps can create substantial systemic risk.
Topic:
Economics, Markets, and Financial Crisis
Political Geography:
United States

8. Trade Liberalization: Cordell Hull and the Case for Optimism

Author:
Douglas A. Irwin
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
The news from Geneva of the breakdown of the Doha Round after seven years of effort has generated a great deal of pessimism about the future of multilateral trade agreements. America's troubles with the World Trade Organization (WTO) are of course only the beginning. There are also domestic problems when it comes to trade policy, an issue that ties together America's economic prosperity and its global political influence. Recent public opinion polls in the United States reveal increased skepticism about the benefits of globalization and diminished support for free trade policies. The post–World War II bipartisan consensus in favor of open trade has broken up, leading to gr eater resistance to new trade agreements in Congress, as reflected in the House's recent decision to postpone consideration of the Colombia free trade agreement (FTA). Despite efforts in the Doha Round to limit agricultural subsidies, Congress recently showered domestic farmers with more cash in the recently passed Farm Bill, even at a time when commodity prices are soaring.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
Geneva, United States, America, and Colombia

9. The Case for Wage Insurance

Author:
Robert LaLonde
Publication Date:
06-2007
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
An important component of U.S. productivity growth and economic competitiveness is a flexible labor market that shifts workers quickly into the jobs where they are most needed. Much of the time, this job shifting is fairly painless: Workers quickly find new positions that pay at least as much as their previous ones, often without an intervening spell of unemployment. But prime-aged and older workers can sometimes suffer large, long-term income losses. Such workers' well-founded fears about job displacement lead them and their advocates to resist policies such as free trade that are sometimes blamed for the job shifting. This resistance harms the majority of households because trade helps to lower prices, raise real incomes and promote economic growth. It also has foreign policy consequences since it threatens the United States' ability to play its traditional post–World War II role as the bulwark of a relatively open international trading system. And by reducing the dynamism of the U.S. economy, resistance to trade and other pro-growth policies can weaken the nation's long-term ability to exert global leadership.
Topic:
Economics, Government, and Markets
Political Geography:
United States

10. Reforming U.S. Patent Policy: Getting the Incentives Right

Author:
Keith E. Mascus
Publication Date:
11-2006
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
America's robust economic competitiveness is du e in no small part to a large capacity for innovation. That capacity is imperiled, however, by an increasingly overprotective patent system. Over the past twenty-five years, American legislators and judges have operated on the principle that stronger patent protection engenders more innovation. This principle is misguided. Although intellectual property rights (IPR) play an important role in innovation, the recent increase in patent protection has not spurred innovation so much as it has impeded the development and use of new technologies.
Topic:
Development, Economics, and Markets
Political Geography:
United States, China, and America