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  • Author: Yehuda Shaffer, Stefan D. Cassella
  • Publication Date: 02-2020
  • Content Type: Special Report
  • Institution: Georgetown Journal of International Affairs
  • Abstract: In the past few years, a number of European banks have been implicated in money laundering scandals in countries such as Cyprus, Malta, Latvia, and, most recently, Scandinavia. Although European and international voices are putting pressure to take further action by all including the banks against this, the issue continues to emerge in the continent. In this short article, we attempt to explain this trend and how might it be resolved.
  • Topic: Crime, Economics, Finance, Business , Financial Crimes, Banks, Currency
  • Political Geography: Russia, Soviet Union, Latvia, Scandinavia, Cyprus, Malta
  • Author: David Smith
  • Publication Date: 01-2020
  • Content Type: Special Report
  • Institution: Georgetown Journal of International Affairs
  • Abstract: Civilian governance in Pakistan has never lasted longer than eleven years. 2019 is the eleventh year since General Pervez Musharraf resigned the presidency and fears of a coup may exist, but one is not probable—at least not in the near-term future. In fact, two recent Chiefs of Army Staff (COAS)—Generals Kayani and Raheel in 2009 and 2014, respectively—considered taking, but decided not to take, direct control of the government. These decisions demonstrate that military rule is no longer necessary because the Army has already attained its major goals of de facto control of the country’s nuclear and missile programs, key foreign relationships, the military budget, and national security decision-making. In effect, the military has achieved what I have previously termed a “coup-less coup.” Instead of the traditionally fraught civil-military relationship, it seems that, for the first time in Pakistan’s turbulent history, the government and military agree on the three major issues facing Pakistan: domestic politics, the economy, and India. However, key variables, such as economic stability, could quickly change the course of this relationship.
  • Topic: Security, Economics, Governance, Conflict, Civilians, Military Government
  • Political Geography: Pakistan, South Asia, India
  • Author: Michael A. Carrier
  • Publication Date: 01-2020
  • Content Type: Special Report
  • Institution: Georgetown Journal of International Affairs
  • Abstract: Big Tech is in the news. At the center of our political and economic dialogue is the effect that Amazon, Apple, Facebook, and Google have on our lives and what, if anything, governments should do about it. In this article, I explain how Big Tech has come under scrutiny, the antitrust implications of the industry’s behavior, and the potential remedy of breaking up the companies.
  • Topic: Economics, Government, Science and Technology, Regulation, Internet, Social Media, Business
  • Political Geography: Global Focus, United States of America
  • Author: Oula A. Alrifai
  • Publication Date: 01-2020
  • Content Type: Policy Brief
  • Institution: The Washington Institute for Near East Policy
  • Abstract: Besides highlighting Assad’s financial mismanagement, the recent unrest gives the international community a genuine opportunity to push for transition while bolstering the more prosperous local administration in the northeast. Since mid-January, shop owners, government employees, students, and even children have been gathering in the streets of various Syrian communities to express their frustration with the Assad regime’s economic policies and untruths. Although the protests remain small for now, the fact that they have persistently carried on in the middle of regime-controlled territory highlights Bashar al-Assad’s potential vulnerability on these issues. In Suwayda, a Druze-majority province in the south, residents have protested the sharp drop in the value of the Syrian pound/lira and the deteriorating economic situation in general. In the central-western town of Salamiya, protestors were seen chanting “we want to live.” And in the Suwayda town of Shahba, demonstrators raised loaves of bread in the air while openly criticizing Bouthaina Shaaban, Assad’s political and media advisor. The latter protest was partly spurred by a recent interview on the pro-Assad television network al-Mayadeen, where Shaaban not only claimed that the country’s current economy is “fifty times better than what it was in 2011,” but also declared that “Syrians are self-sufficient in everything.” In response, protestors sarcastically noted that her comments referred to her own household’s economy, not Syria’s. Elsewhere, former agriculture minister Nour al-Din Manna described Shaaban’s remarks about the war-torn country as “hard to believe,” and a closer look at the country’s finances supports this disbelief.
  • Topic: Foreign Policy, Economics, Syrian War, Currency
  • Political Geography: Middle East, Lebanon, Syria, United States of America
  • Author: Judit Fabian
  • Publication Date: 03-2020
  • Content Type: Policy Brief
  • Institution: Urban Institute
  • Abstract: International trade is often framed in starkly divergent terms: either countries choose multilateral trade agreements (MTAs) and advance the cause of global economic liberalization, or they choose preferred trade agreements (PTAs) and put the entire system at risk. Canada has a long track record of pursuing PTAs and with the Trump administration’s opposition to multilateralism, and longstanding opposition in elements of the Republican and Democratic parties, this trend will likely continue. The question is whether progress will come at the expense of the global trade system. Some economists believe PTAs to be trade-diverting, reducing trade with more efficient producers outside the agreement. Others insist that PTAs can create trade by shifting production to lower-cost producers in one of the participating countries. One prominent contrary argument holds that PTAs lead to discontinuities in tariff regimes between countries and regions, increasing transaction costs, disrupting supply chains, creating opportunities for corruption and harming global welfare, especially in developing nations. While debate continues about the effects of PTAs, a closer examination suggests that worries are overblown about their negative impacts on global trade flows. Evidence indicates that they support rather than harm the international trading system. Countries shut out of PTAs are more motivated to seek out agreements in new markets, increasing liberalization overall. They may also seek a reduction in most-favoured nation (MFN) tariffs, which would deprive PTAs of their major tariff benefits. Studies have found complementarity between preferential and MFN tariffs, revealing that PTAs promote external trade liberalization. Even if a PTA reduces a given country’s incentive to push for multilateral liberalization, it raises the odds of that country liberalizing its trade to avoid getting left behind. PTAs are a response to the difficulties of securing sweeping multilateral agreements. The World Trade Organization (WTO) Agreements authorize them under GATT Article XXIV, GATS Article V, and the enabling clause, and the WTO facilitates a degree of governance over PTAs through its dispute settlement process. Over the past 25 years, countries have adopted these deals at a rapid pace. Between 1994 and 2005, the number of PTAs increased from 50 to 200. By April 2018, 336 were in effect. At the same time, global trade has increased significantly. Between 1994 and 2010, the volume of world merchandise exports more than doubled. The proliferation of PTAs has resulted in a rise in international trade governance, because the countries involved shape their relationships in line with the WTO agreements. This juridification makes PTAs subordinate to the international system rather than giving them room to dissolve it. Canada should therefore have no fear of pursuing PTAs within the larger framework of the effort to achieve multilateral trade liberalization.
  • Topic: Economics, International Trade and Finance, Governance, Trade, Donald Trump
  • Political Geography: Canada, North America, United States of America
  • Author: Sujata Ashwarya
  • Publication Date: 01-2020
  • Content Type: Special Report
  • Institution: Georgetown University Press
  • Abstract: Despite substantial efforts and investments in rebuilding Iraq’s infrastructure since the overthrow of Saddam Hussein in 2003, the country is still struggling to deliver on public services. Years of destruction in conflict, as well as alleged mismanagement and neglect, have taken a heavy toll on the country’s power infrastructure. Severe power cuts and rolling blackouts are endemic in Iraq today. Between 2014 and 2018, Islamic State terrorism inflicted billions of dollars in damage on the already dilapidated electricity infrastructure, causing a cumulative potential and actual loss of a whopping 7GW in generation and transmission capacities.
  • Topic: Economics, Energy Policy, Infrastructure, Business , Conflict, Services, Electricity
  • Political Geography: Iraq, Iran, Middle East
  • Author: Rawi Abdelal, Aurélie Bros
  • Publication Date: 01-2020
  • Content Type: Policy Brief
  • Institution: Institut français des relations internationales (IFRI)
  • Abstract: Sanctions have become the dominant tool of statecraft of the United States and other Western states, especially the European Union, since the end of the Cold War. But the systematic use of this instrument may produce unintended and somewhat paradoxical geopolitical consequences. The sanctions imposed on the Islamic Republic of Iran and the Russian Federation in the field of energy are particularly illustrative of this phenomenon.
  • Topic: Economics, Energy Policy, Sanctions, Geopolitics, Secondary Sanctions, Transatlantic Relations
  • Political Geography: Russia, Iran, Middle East, North America, United States of America
  • Author: Trevon Logan, Peter Temin
  • Publication Date: 01-2020
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: This paper records the path by which African Americans were transformed from enslaved persons in the American economy to partial participants in the progress of the economy. The path was not monotonic, and we organize our tale by periods in which inclusiveness rose and fell. The history we recount demonstrates the staying power of the myth of black inferiority held by a changing white majority as the economy expanded dramatically. Slavery was outlawed after the Civil War, and blacks began to participate in American politics en masse for the first time during Reconstruction. This process met with white resistance, and black inclusion in the growing economy fell as the Gilded Age followed and white political will for black political participation faded. The Second World War also was followed by prosperity in which blacks were included more fully into the white economy, but still not completely. The Civil Rights Movement proved no more durable than Reconstruction, and blacks lost ground as the 20th century ended in the growth of a New Gilded Age. Resources that could be used to improve the welfare of whites and blacks continue to be spent on the continued repressions of blacks.
  • Topic: Economics, Race, History, Capitalism, Slavery
  • Political Geography: United States, Global Focus
  • Author: Tchinda Kamdem Eric Joel, Kamdem Cyrille Bergaly
  • Publication Date: 01-2020
  • Content Type: Research Paper
  • Institution: African Economic Research Consortium (AERC)
  • Abstract: Cameroonian farmers face two tenure systems: a modern regime and a customary regime. These two regimes are perpetually confronting each other, putting farmers in a total uncertainty as to the regime to adopt to ensure the sustainability of their ventures. This study aims to assess the influence of land tenure security on agricultural productivity through credit access. To achieve this goal, a two-stage sampling technique was applied to data from the third Cameroon Household Survey (ECAM 3). The number of farmers selected for the analysis was 602. These data were analysed using descriptive and three-step recursive regression models. The results of the analysis reveal that land tenure security improves agricultural productivity through the credit access it allows. A proof of the robustness of this result has been provided through discussion of the effects of land tenure security in different agro-ecological zones and through a distinction between cash crops and food crops. The overall results confirm that land tenure security positively and significantly influences agricultural productivity. The regression has also shown that the size of the farm defined in one way or another, the perception of farmers on their level of land tenure security and therefore indicates the intensity with which land tenure security influences agricultural productivity. The recorded productivity differential indicates that smallholder farmers, because they keep small farms, feel safer and produce more than those who keep medium-sized farms. The results also show that land tenure security significantly improves the value of production per hectare of food products that are globally imported into Cameroon. Therefore, we recommend that the public authorities promote land tenure security by reinforcing the unassailable and irrevocable nature of land title, but also by easing the conditions of access to it.
  • Topic: Agriculture, Development, Economics, International Political Economy, Economic structure, Economic Policy
  • Political Geography: Africa, Cameroon
  • Author: Lewis Landry Gakpa
  • Publication Date: 01-2020
  • Content Type: Research Paper
  • Institution: African Economic Research Consortium (AERC)
  • Abstract: The aim of this study is to examine the consequences of interaction between political instability and foreign direct investment (FDI) on economic growth of 31 countries in Sub-Saharan Africa in order to analyse one of the channels through which political instability affects economic growth. To achieve this objective, the study relies on a dynamic panel procedure and the Three Stage Least Squares Method to estimate a model of simultaneous equations over the period 1984-2015. The empirical results indicate that political instability affects economic growth directly and indirectly through its impact on foreign direct investment. We also highlight the simultaneous character of the relationship between political instability and the level of economic development in Sub-Saharan African countries. The results of the study then corroborate the idea that political instability hinders growth and thus calls for measures to improve the quality of political climate, which is one of the conditions necessary for a country’s economy to benefit from foreign direct investment.
  • Topic: Economics, Foreign Direct Investment, Political stability, Economic Policy, Macroeconomics
  • Political Geography: Africa, South Africa, Angola, Namibia, Botswana
  • Author: Kouassi Yeboua
  • Publication Date: 01-2020
  • Content Type: Research Paper
  • Institution: African Economic Research Consortium (AERC)
  • Abstract: For a long time, the West African Economic and Monetary Union (WAEMU) countries have been experiencing persistently high budget and current deficits. This study was undertaken to empirically test the “Twin Deficits Hypothesis” in these countries. The analysis was conducted within the framework of the Panel Vector autoregressive (VAR) approach over the period 1975–2013. In contrast to the conventional view which claims a one-way relationship between budget and current account deficits, the results show that budget deficits lead to a deterioration in the current account balance, and vice versa (bilateral relationship). We also found that budget deficits have an impact on current account balance mainly through imports.
  • Topic: Economics, Monetary Policy, Budget, Economic Policy, Macroeconomics
  • Political Geography: Africa, West Africa
  • Publication Date: 01-2020
  • Content Type: Research Paper
  • Institution: African Economic Research Consortium (AERC)
  • Abstract: This study sets out to estimate the determinants of household economic wellbeing and to evaluate the relative contributions of regressed-income sources in explaining measured inequality. In particular, a regression-based decomposition approach informed by the Shapley value, the instrumental variables econometric method, and the 2007 Cameroon household consumption survey, was used. This approach provides a flexible way to accommodate variables in a multivariate context. The results indicate that the household stock of education, age, credit, being bilingual, radio and electricity influence wellbeing positively, while rural, land and dependency had a negative impact on wellbeing. Results also show that rural, credit, bilingualism, education, age, dependency and land, in that order, are the main contributors to measured income inequality, meanwhile, the constant term, media and electricity are inequality reducing. These findings have policy implications for the ongoing drive to scale down both inequality and poverty in Cameroon.
  • Topic: Development, Economics, Poverty, Inequality, Economic Inequality, Economic Policy
  • Political Geography: Africa, Cameroon
  • Author: Ebaidalla M. Ebaidalla
  • Publication Date: 01-2020
  • Content Type: Research Paper
  • Institution: African Economic Research Consortium (AERC)
  • Abstract: Despite the importance of non-farm income in the livelihood of the rural population in Sudan, information available on its size and determinants is scanty. This study examined the patterns and determinants of decisions to participate in non-farm activities in rural Sudan. It also investigates whether the determinants of participation in non-farm activities vary across agriculture sub-sectors and income groups as well as among males and females. The data for this study was sourced from the Sudanese National Baseline Household Survey (NBHS) conducted by Sudan’s Central Bureau of Statistics in 2009. The results show that non-farm income is a crucial source of livelihood, contributing about 43% to household income in rural Sudan. The results of multinomial logit and probit estimation methods indicate that educational level, mean of transportation, lack of land and lack of access to formal credit are the most significant factors that push rural farmers to participate in non-farm activities. Surprisingly, the effect of household income was positive and significant, implying that individuals from rich households have higher opportunity to engage in non-farm activities compared to their poor counterparts. Moreover, the analysis revealed some symptoms of gender and location disparities in the effect of factors that influence participation in non-farm activities. The study concluded with some recommendations that aim to enhance the engagement in non-farm activities as an important diversification strategy to complement the role of the agriculture sector in improving rural economy in Sudan.
  • Topic: Agriculture, Development, Economics, Rural
  • Political Geography: Sudan
  • Author: Reuben Adeolu Alabi, Oshobugie Ojor Adams
  • Publication Date: 01-2020
  • Content Type: Research Paper
  • Institution: African Economic Research Consortium (AERC)
  • Abstract: This study examined the impacts of the e-wallet fertilizer subsidy scheme on quantity of fertilizer use, crop output and yield in Nigeria. The study made use of the Nigeria General Household Survey (GHS)-Panel Datasets of 2010/2011 and 2012/2013 which contain 5,000 farming households in each of the panel. We applied relevant evaluation techniques to analyse the data. The results of the impact analysis demonstrate that the scheme has generally increased the yield, crop output and quantity of fertilizer purchase of the participating farmers by 38%, 47%, and 16%, respectively. The study concludes that increased productivity, which the scheme engenders, can help to reduce food insecurity in Nigeria. Provision of rural infrastructure, such as good road network, accessibility to mobile phones, radio, etc., will increase accessibility of the small-scale farmers to the scheme or any other similar agricultural schemes in Nigeria.
  • Topic: Agriculture, Development, Economics, Income Inequality, Economic growth, Rural
  • Political Geography: Africa, Niger
  • Author: Dongue Ndongo Patrick Revelli
  • Publication Date: 01-2020
  • Content Type: Research Paper
  • Institution: African Economic Research Consortium (AERC)
  • Abstract: Understanding how domestic prices adjust to the exchange rate enables us to anticipate the effects on inflation and monetary policy responses. This study examines the extent of the exchange rate pass-through to the Consumer Price Index in Cameroon and Kenya over the 1991-2013 period. The results of its econometric analysis shows that the degree of the exchange rate pass-through is incomplete and varied between 0.18 and 0.58 over one year in Kenya, while it varied between 0.53 and 0.89 over the same period in Cameroon. For the long term, it was found to be equal to 1.06 in Kenya and to 0.28 in Cameroon. A structural VAR analysis using impulse-response functions supported the results for the short term but found a lower degree of pass-through for the exchange rate shocks: 0.3125 for Kenya and 0.4510 for Cameroon. It follows from these results that the exchange rate movements remain a potentially important source of inflation in the two countries. Variance decomposition shows that the contribution of the exchange rate shocks is modest in the case of Kenya but significant in that of Cameroon.
  • Topic: Development, Economics, Monetary Policy, Exchange Rate Policy, Economic Policy, Inflation
  • Political Geography: Kenya, Africa, Cameroon
  • Author: Albert Makochekanwa
  • Publication Date: 01-2020
  • Content Type: Research Paper
  • Institution: African Economic Research Consortium (AERC)
  • Abstract: The main objective of the study was to investigate the impact of policy regulations on investments in mobile telecommunications network infrastructure in all the 15 member countries of the Southern African Development Community (SADC) region. The research employed panel data econometrics to achieve its stated objective. Estimated results shows that the coefficient of gross domestic product (GDP) per capita is positive and statistically significant, implying that an increase in this variable results in increase in demand and this in turn motivates infrastructure investment in mobile telephone. The coefficient on the previous level of mobile telephone infrastructure investment variable (Invkt-1) was found to be positive and statistically significant. This means that there is a systematic positive association between the previous level of mobile telephone infrastructure investment and the current. The coefficient of the main variable of interest representing mandatory unbundling (Regkt) was found to be positive and statistically significant. This implies that, overall, mandatory unbundling access regulation boost infrastructure investment in mobile telecommunication. Regression estimates shows that the coefficient on one of the variable of interest, political constraint (POLCON) has a negative and statistically significant impact on determining the level of mobile telephone infrastructure investment in SADC countries. Whilst this result is against expectations, one possible explanation may be presence of high level of rent seeking behaviour.
  • Topic: Development, Economics, Regulation, Economic growth, Economic Policy
  • Political Geography: Africa, South Africa
  • Author: Negou Kamga Vincent de Paul, Nda’chi Deffo Rodrigue
  • Publication Date: 01-2020
  • Content Type: Research Paper
  • Institution: African Economic Research Consortium (AERC)
  • Abstract: Despite free basic vaccines administered by the Expanded Programme on Immunization (EPI), there is still a fairly high death rate of children aged 0-5 worldwide due to vaccine-preventable diseases. Sub-Saharan Africa is the most affected region due to low levels of vaccination. This study analyses the effect of birth order on the immunization status of children in Cameroon, considering the contribution of cultural, economic and community factors. To do this, it uses data from the Demographic and Health Surveys of 1991, 1998, 2004 and 2011 produced by the National Institute of Statistics with the support of UNFPA, UNICEF, the World Bank and USAID. The EPI module was administered to 3,350, 2,317, 8,125 and 25,524 children under five in 1991, 1998, 2004 and 2011, respectively. The multinomial probit model makes it possible to find that birth order has a negative and highly significant effect on the full and timely immunization of children under five and the impact increases with birth order. Moreover, the impact of birth order increases after adjusting for cultural factors. This increase indicates that, beyond the effect of birth order, cultural factors are at the root of prejudices leading to the abandonment of children. Considering children under two years of age, and vaccines taken during the first four months, the corresponding birth order effect points to the benefits of routine immunization and response campaigns in promoting immunization of children under five.
  • Topic: Economics, Health, Health Care Policy, Children
  • Political Geography: Africa, Cameroon
  • Author: Nathan Nunn
  • Publication Date: 01-2020
  • Content Type: Policy Brief
  • Institution: Economics for Inclusive Prosperity (EfIP)
  • Abstract: In this brief, I discuss the current state of economic development policy, which tends to focus on interventions, usually funded with foreign aid, that are aimed at fixing deficiencies in developing countries. The general perception is that there are inherent problems with less-developed countries that can be fixed by with the help of the Western world. I discuss evidence that shows that the effects of such ‘help’ can be mixed. While foreign aid can improve things, it can also make things worse. In addition, at the same time that this ‘help’ is being offered, the developed West regularly undertakes actions that are harmful to developing countries. Examples include tariffs, antidumping duties, restrictions on international labor mobility, the use of international power and coercion, and tied-aid used for export promotion. Overall, it is unclear whether interactions with the West are, on the whole, helpful or detrimental to developing countries. We may have our largest and most positive effects on alleviating global poverty if we focus on restraining ourselves from actively harming less-developed countries rather than focusing our efforts on fixing them.
  • Topic: Development, Economics, International Political Economy, Developing World, Economic Development
  • Political Geography: United States, Global Focus
  • Author: Julia Pomares, María Belén Abdala
  • Publication Date: 01-2020
  • Content Type: Special Report
  • Institution: Center for the Implementation of Public Policies for Equity and Growth (CIPPEC)
  • Abstract: We are living in an era of unprecedented changes. Mature democracies, emerging polities and the least electorally competitive countries are now facing new challenges in a globalized world. They are all dealing with technological breakthroughs, changes in global economic power, ageing populations and urbanization of their territories. Today’s picture shows that social inclusion seems to be an unfulfilled promise, and social cohesion is weakening. Some citizens are disenchanted, and political systems are having trouble adapting and responding to new demands. According to Edelman’s Trust Barometer (2017), one in every two countries does not have faith in the system, and we still do not know how this picture is going to evolve. In democracies, pro-democracy attitudes coexist with openness to nondemocratic forms of governance, such as rule by experts (49 per cent), strong leaders (26 per cent) or the military (24 per cent). This picture might be part of a transition period or indicating that polities are not being able to cope with some of the new challenges. It is why we need to think about the future of politics and how these trends will shape global governance in the next 10 to 20 years. Are political systems ready to govern a digital economy? How should political leaders evolve to address radical changes in an automated world? What will the consequences be for global governance and for the role of G20? This paper analyzes current global trends in domestic politics and the prospective scenarios on the future of politics. To do so, the paper presents a brief description on three forces we know will forge the future: technological breakthroughs, demographic changes and shifts in global economic power. Later, it turns to the uncertainty of the future. We live in nation states, so we first attempt to devise how these forces will shape domestic politics. We then look at global governance and the way these trends will impact upon it. The final stop of this journey is an analysis of the implications of these scenarios for the role of the G20.
  • Topic: Economics, International Cooperation, Governance, Democracy, Geopolitics
  • Political Geography: Global Focus
  • Author: Bradley O. Babson
  • Publication Date: 04-2019
  • Content Type: Special Report
  • Institution: Georgetown Journal of International Affairs
  • Abstract: Since his first-annual New Year’s speech in 2012 setting North Korea’s policy priorities, Kim Jong Un has emphasized his commitment to economic development, notably promising his people that they will never have to tighten their belts again. The Byunjin policy of equally prioritizing economic development and security through nuclear and missile programs reflects Kim’s desire to assure regime stability by delivering broad-based economic development while establishing a security environment that deters external threats and potential domestic unrest. While United States policy has used sanctions and other pressures to stymie Kim’s ambitions, the Kim regime has nonetheless modestly furthered economic development and significantly advanced security through its nuclear and missile testing programs.
  • Topic: Security, Development, Economics, Human Rights, Sanctions
  • Political Geography: Asia, North Korea, North America, United States of America
  • Author: Stephen Grenville
  • Publication Date: 07-2019
  • Content Type: Commentary and Analysis
  • Institution: Lowy Institute for International Policy
  • Abstract: Recognition of the need for greater government intervention in the economy is increasingly shaping the US political debate, with this shift paralleled among prominent economists. The surprising success of Bernie Sanders’ 2016 presidential campaign has emboldened Democratic presidential hopefuls to advocate bold platforms involving larger government. Coincidentally, some prominent economists are advocating greater government expenditure to address ‘secular stagnation’. This is unlikely to result in a radical shift away from the post-Reagan small-government policies, but the centre of gravity has shifted towards recognising a role for more government intervention.
  • Topic: Economics, Politics, Elections, Fiscal Policy
  • Political Geography: North America, United States of America
  • Author: Roland Rajah
  • Publication Date: 01-2019
  • Content Type: Commentary and Analysis
  • Institution: Lowy Institute for International Policy
  • Abstract: East Asia is no longer reliant on US or Western markets to fuel its growth, giving it more room to manage amid global trade tensions. Heightened global trade tensions and the US desire to ‘decouple’ from the Chinese economy for national security reasons pose significant risks to East Asia’s export-driven growth model. However, the latest data suggests East Asia is no longer so dependent on exporting to the West, with China in particular eclipsing the United States as the leading source of ‘final demand’ for the rest of the region’s exports. This gives East Asia much greater room to manoeuvre, as regional integration is now a more viable platform for growth while US decoupling efforts will likely struggle to find traction in the region.
  • Topic: Economics, International Trade and Finance, Global Markets, Exports
  • Political Geography: China, East Asia, Asia, North America, United States of America
  • Author: Arvind Subramanian
  • Publication Date: 07-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: My recent research paper “India's GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications,” (hereafter “GDP paper”) and the associated op-ed in the Indian Express on June 11, 2019 have generated considerable debate. This is encouraging because serious argument and counter-argument are the basis for good policy-making. Since the issue itself is of great importance, the counter-arguments to my analysis warrant a considered response. That is the aim of this note, which is a complement to the original paper, addressing both the larger issues and some of the specific points that have been raised. The note is structured as follows. Section II describes my engagement with India’s GDP estimation when I was Chief Economic Adviser. Section III elaborates on the framework/approach underlying the GDP paper. Section IV makes explicit the key puzzle surrounding India’s growth estimates, and addresses the possible explanations for it. Section V explores the puzzle in greater detail. Section VI provides additional cross-country evidence on growth and price deflators, which support the findings of the original paper, namely that growth during 2011-16 was likely overestimated by a significant margin. Section VII addresses two broad objections to the main findings. Section VIII discusses some of the methodological critiques of the paper. Section IX offers some thoughts on the way forward.
  • Topic: Economics, Political Economy, International Development, Economic growth
  • Political Geography: South Asia, India
  • Author: Alice Evans
  • Publication Date: 06-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Support for gender equality has risen, globally. Analyses of this trend focus on individual and/or country-level characteristics. But this overlooks sub-national variation. Citydwellers are more likely to support gender equality in education, employment, leadership, and leisure. Why is this? This paper investigates the causes of rural-urban differences through comparative, qualitative research. It centres on Cambodia, where the growth of rural garment factories enables us to test theories that female employment fosters support for gender equality: potentially closing rural-urban differences; or whether other important aspects of city-living accelerate support for gender equality. Drawing on this rural and urban fieldwork, the paper suggests why social change is faster in Cambodian cities. First, cities raise the opportunity costs of gender divisions of labour – given higher living costs and more economic opportunities for women. Second, cities increase exposure to alternatives. People living in more interconnected, heterogeneous, densely populated areas are more exposed to women demonstrating their equal competence in socially valued, masculine domains. Third, they have more avenues to collectively contest established practices. Association and exposure reinforce growing flexibility in gender divisions of labour. By investigating the causes of subnational variation, this paper advances a new theory of growing support for gender equality.
  • Topic: Economics, Gender Issues, Urbanization, Women, Inequality
  • Political Geography: Cambodia, Southeast Asia
  • Author: Alice Evans
  • Publication Date: 03-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: This paper shows that countries may reduce labour repression if they perceive this as conducive to export growth. This paper traces what happened before, in the presence of, and then following the withdrawal of international economic incentives for pro-labour reforms in Vietnam and Bangladesh. The Government of Vietnam announced it would allow independent trade unions, in order to join the Trans-Pacific Partnership (TPP) and increase market access. Similarly, the Government of Bangladesh rescinded restrictions on unions, following global condemnation of Rana Plaza and fear of buyers leaving en masse. Both governments reduced labour repression to promote export growth. With high-level authorisation, Vietnamese and Bangladeshi activists and reformists became less fearful, and mobilised for substantive change. However, these economic incentives were short-lived: after Trump’s election, the USA withdrew from TPP; buyers continued to source from Bangladesh, and squeezed prices (without requiring labour reforms). Both governments then amped up labour repression - notwithstanding private regulation, economic upgrading, industry growth, and mass strikes.
  • Topic: Economics, Labor Issues, Reform, Economic growth, Trans-Pacific Partnership
  • Political Geography: Bangladesh, South Asia, Vietnam
  • Author: Simon Henderson
  • Publication Date: 12-2019
  • Content Type: Policy Brief
  • Institution: The Washington Institute for Near East Policy
  • Abstract: The ailing Sultan Qaboos bin Said al-Said, now seventy-nine years old, has no children and no announced successor, with only an ambiguous mechanism in place for the family council to choose one. This study considers the most likely candidates to succeed the sultan, Oman’s domestic economic challenges, and whether the country’s neutral foreign policy can survive Qaboos’s passing.
  • Topic: Foreign Policy, Economics, Domestic politics, Succession
  • Political Geography: Middle East, Oman, Gulf Nations
  • Author: Anne De Tinguy, Annie Daubenton, Olivier Ferrando, Sophie Hohmann, Jacques Lévesque, Nicolas Mazzuchi, Gaïdz Minassian, Thierry Pasquet, Tania Sollogoub, Julien Thorez
  • Publication Date: 02-2019
  • Content Type: Special Report
  • Institution: Centre d'Etudes et de Recherches Internationales
  • Abstract: Regards sur l’Eurasie. L’année politique est une publication annuelle du Centre de recherches internationales de Sciences Po (CERI) dirigée par Anne de Tinguy. Elle propose des clefs de compréhension des événements et des phénomènes qui marquent de leur empreinte les évolutions d’une région, l’espace postsoviétique, en profonde mutation depuis l’effondrement de l’Union soviétique en 1991. Forte d’une approche transversale qui ne prétend nullement à l’exhaustivité, elle vise à identifier les grands facteurs explicatifs, les dynamiques régionales et les enjeux sous-jacents.
  • Topic: Defense Policy, Corruption, Democratization, Economics, Health, International Security, Natural Resources, Conflict, Multilateralism, Europeanization, Political Science, Regional Integration
  • Political Geography: Russia, Europe, Ukraine, Caucasus, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Armenia, Azerbaijan, Turkmenistan
  • Author: Surabhi Ranganathan
  • Publication Date: 04-2019
  • Content Type: Journal Article
  • Institution: European Journal of International Law
  • Abstract: In this article, I argue for a critical recognition of the law of the sea, as it developed from the post-war period, as fostering a ‘grab’ of the ocean floor via national jurisdiction and international administration. I discuss why we should view what might be discussed otherwise as an ‘enclosure’ or ‘incorporation’ of the ocean floor within the state system as its grab. I then trace the grounds on which the ocean was brought within national and international regimes: the ocean floor’s geography and economic value. Both were asserted as givens – that is, as purely factual, but they were, in fact, reified through law. The article thus calls attention to the law’s constitutive effects. I examine the making of this law, showing that law-making by governments was influenced by acts of representation and narrative creation by many non-state actors. It was informed by both economic and non-economic influences, including political solidarity and suspicion, and parochial as well as cosmopolitan urges. Moreover, the law did not develop gradually or consistently. In exploring its development, I bring into focus the role played by one influential group of actors – international lawyers themselves.
  • Topic: Economics, International Law, History, Law of the Sea, Maritime
  • Political Geography: Europe, Oceans
  • Publication Date: 11-2019
  • Content Type: Policy Brief
  • Institution: The Sexual Violence Research Initiative
  • Abstract: Poverty is a risk factor associated with gender-based violence; it also often intersects with and reinforces gender inequality. Various microfinance and other economic empowerment approaches have been implemented to try to address this intersection.
  • Topic: Economics, Gender Issues, Poverty, Women, Gender Based Violence , Microcredit
  • Political Geography: Bangladesh, Egypt, Global Focus
  • Author: Umar Farooq, Asma Shakir Khawaja
  • Publication Date: 07-2019
  • Content Type: Journal Article
  • Journal: South Asian Studies
  • Institution: Department of Political Science, University of the Punjab
  • Abstract: The article is intended to find out the geopolitical implications, regional constraints and benefits of China-Pakistan Economic Corridor. Researcher reviewed both published research articles and books to find out geopolitical implication, regional constraints and benefits of China-Pakistan Economic Corridor. For this purpose, researcher also reviewed newspapers articles and published reports by government and non-governmental stakeholders working on CPEC. Review of the articles and reports indicated that CPEC had enormous benefits not only for China and Pakistan but also for the whole region. But different internal and external stakeholders are not in favor of successful completion of this project. Extremism, sense of deprivation, lack of political consensus, political instability are some of the internal constraints. On the other hand, Afghanistan, India, Iran, UAE and USA are posing constraints to halt the successful completion of CPEC.
  • Topic: Economics, International Trade and Finance, Regional Cooperation, Violent Extremism, Geopolitics
  • Political Geography: Pakistan, Afghanistan, China, Iran, South Asia, India, Asia, Punjab, United Arab Emirates, United States of America
  • Author: Kanwal Hayat, Rehana Saeed Hashmi
  • Publication Date: 07-2019
  • Content Type: Journal Article
  • Journal: South Asian Studies
  • Institution: Department of Political Science, University of the Punjab
  • Abstract: China claims South China Sea as its sovereign domain where it possesses the right to intervene militarily and economically. However, USA considers South China Sea as a common global passage where rule of law and freedom of navigation should prevail.These diverging viewpoints coexist in a wobbly peace environment where both US and China want their own version of international law to be applied and have occasionally resorted to minor armed conflicts over this issue. Every state claiming authority over South China Sea is willing to use coercion in order to get what they want, however, the extent of how far they are willing to go is not clear. This is resulting in a show of gunboat diplomacy involving maritime force of influential states that strives to manipulate the policy makers of the relevant nations (Costlow, 2012). The paper will focus on the situation in the South China Sea. South China Sea is not only claimed by China but various other Asian nations. Does this territorial strife possess the power to turn the region into a war zone? Being one of the most active trade routes in the world having complicated geography and the diverging regional and international interests makes it very sensitive area. China being the emerging economic giant gives competition to the USA in many spheres. Although America has no territorial claim in the South China Sea, it has strategic and economic interests. Where China wants a complete hegemonic control of the area, USA wants to find a way where free unchecked trade could be the future for all.Accompanied with numerous other South Asian nations claiming various portions of the region, a constant tension exists in the region.
  • Topic: Conflict Prevention, Economics, International Trade and Finance, Sovereignty, Territorial Disputes, Hegemony, Conflict
  • Political Geography: China, Asia, North America, United States of America, Oceans
  • Author: A. Z. Hilali
  • Publication Date: 07-2019
  • Content Type: Journal Article
  • Journal: South Asian Studies
  • Institution: Department of Political Science, University of the Punjab
  • Abstract: China-Pakistan Economic Corridor (CPEC) is a set of projects under China‟s Belt and Road initiative, marks a new era of economic ties in a bilateral relationship between the two traditional friends. The multi-dimensional project will not only reform Pakistan economy but it will serve for people‟s prosperity and will help to revive the country economy of both countries. The visions of project partners are clear and the goals of the short term, mid-term and long-term plans of CPEC have been identified. So, the CPEC is not just a transit route for China and Pakistan‟s exports but it will transform Pakistan‟s economy and overcome its problems such as unemployment, energy, underdevelopment, and overall external economic dependency by building capacity in all necessary sectors. Therefore, CPEC could promote economic development and growth which will open new avenues and investment to the country which is based on shared partnership of cooperation, mutual benefits and sustainability. Thus, the CPEC is a grand porgramme and will deliver the economic gains to both China-Pakistan and it can be executed more efficiently and in a balanced way to serve the interests of both the countries. The project of CPEC is also important to China‟s energy and strategic security with reference to South China Sea and other regional and global players. Thus, CPEC could bring economic avenues to Pakistan and can improve regional economic and trade activities for greater development and prosperity. It has perceived that the project will not only foster socio-economic development but it will also reduce the level of political humidity and will be source of peace and harmony between the traditional adversaries. It has also assumed that regional economic integration through CPEC could be a harbinger to resolve the political differences by economic cooperation and regional economic connection could make 21st century the Asian century setting aside the perennial political issues to start a new beginning. Thus, in a longer perspective the CPEC can foster an economic community in the entire region of Asia and beyond if its vision is materialized in its true sense. The time will prove that the CPEC reap its fruits and will be advantages for not only Pakistan and China but for the entire region.
  • Topic: Economics, International Trade and Finance, Regional Cooperation, Power Politics, Infrastructure
  • Political Geography: Pakistan, China, South Asia, Asia, Punjab
  • Author: Nazir Hussain, Amna Javed
  • Publication Date: 01-2019
  • Content Type: Journal Article
  • Journal: South Asian Studies
  • Institution: Department of Political Science, University of the Punjab
  • Abstract: South Asia is an important but complex region. Its manifold complexity is largely ascribed through historical, economic, political and strategic manifestations. The region has witnessed instability in all the given premises and interactions. The entirety happens to be the fact that the structure of alignments is motivated by security complexes which involve cohesion of foreign powers and regional states. The US, Russia, Iran and China now make out to be contemporary stakeholders in South Asian security equation. Their involvement has been seen as a major reorientation in the regional dynamics in terms of political, economic and security characteristics. The manifold possibilities of re-alignments are what the future of the region will look like. The chance of full-fledged strategic alliance in the face of US-India on the basis of similar political, economic and security interests is on the horizon. As a corollary to this alliance pattern, there is China-Russia-Pakistan alliance which is similar in force but opposite in direction. These two systems are one set of opposition forces to each other, which are also natural in form. Another structure which occurs out of the regional dynamics happens to be of India-Iran-Afghanistan which is a trifecta aiming at Pakistan. On the other hand, Russia-China-Pakistan which could turn into a politically motivated and economically driven alliance and can also cover certain aspects of security. Therefore, due to various changes in order there will stem out various patterns of relationships, which could set the order of the region as one marked by various fluctuating alignment patterns.
  • Topic: Security, Economics, Power Politics, Geopolitics, Realignment
  • Political Geography: Pakistan, Afghanistan, Russia, China, South Asia, North America, Punjab, United States of America
  • Author: Benjamin Augé
  • Publication Date: 12-2019
  • Content Type: Policy Brief
  • Institution: Institut français des relations internationales (IFRI)
  • Abstract: In 2017, the coming to power of João Lourenço put an end to nearly four decades of rule by the former head of state, José Eduardo Dos Santos. João Lourenço’s first objective was to strengthen his authority by appointing people close to him and cadres from the old regime, who had professed loyalty to him, to high office. The speed of the takeover of all the decision-making centers – army, intelligence services, state-owned companies, oil industry and above all the MPLA (Popular Movement for the Liberation of Angola) party-state – by the new “Comrade Number One” surprised the leaders of the Dos Santos era, some of whom were abruptly dismissed or even sentenced to prison. Now firmly established in Angola’s command centers, João Lourenço is however facing a serious economic crisis, the most worrying for the country since the end of the civil war in 2002.
  • Topic: Economics, Politics, Governance
  • Political Geography: Africa, Angola
  • Author: Garcia Isabella
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: Centre for Global Political Economy, University of Sussex
  • Abstract: In 2018/2019 the CGPE launched an annual Gender & Global Political Economy Undergraduate Essay Prize competition, open to all undergraduate students within the School of Global Studies. The winner of the 2018/2019 competition is Isabella Garcia for the essay “How do global supply chains exacerbate gender-based violence against women in the Global South?” Isabella graduated with a BA in International Relations and Development in July and will join the MA cohort in our Global Political Economy programme for 2019/2020. Given the very strong field of submissions, the award committee further decided to award a second-place prize to Yume Tamiya for the essay “Does the rise of the middle class disguise existing inequalities in Brazil?”. Yume graduated with a BA in International Development with International Education and Development. We are delighted to publish both of these excellent essays in the CGPE Working Paper series.
  • Topic: Economics, Gender Issues, Women, Gender Based Violence , Global South
  • Political Geography: Africa, Latin America, Mexico, Democratic Republic of Congo
  • Author: Yume Tamiya
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: Centre for Global Political Economy, University of Sussex
  • Abstract: In 2018/2019 the CGPE launched an annual Gender & Global Political Economy Undergraduate Essay Prize competition, open to all undergraduate students within the School of Global Studies. The winner of the 2018/2019 competition is Isabella Garcia for the essay “How do global supply chains exacerbate gender-based violence against women in the Global South?” Isabella graduated with a BA in International Relations and Development in July and will join the MA cohort in our Global Political Economy programme for 2019/2020. Given the very strong field of submissions, the award committee further decided to award a second-place prize to Yume Tamiya for the essay “Does the rise of the middle class disguise existing inequalities in Brazil?”. Yume graduated with a BA in International Development with International Education and Development. We are delighted to publish both of these excellent essays in the CGPE Working Paper series.
  • Topic: Development, Economics, Inequality, Economic growth
  • Political Geography: Brazil, Latin America
  • Author: Saliha Metinsoy
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: Centre for Global Political Economy, University of Sussex
  • Abstract: Why does the International Monetary Fund (IMF) assign more stringent labor conditions in some cases and not others? This paper argues that the Fund’s bureaucratic organizational culture and neoliberal economic beliefs dictate its interpretation of international economics and predict the stringency of labor conditions in its programs. Particularly, the Fund staff envisage that lower unit labor costs would indirectly increase competitiveness, boost exports, and contribute to the balance of payments in fixed exchange rate regimes, where currency depreciation is not possible. To this end, the Fund assigns more stringent labor conditions in fixed regimes compared to floating ones. To test this theory, the paper uses a mixed method. It firstly demonstrates the association between exchange rate regimes and the stringency of labor conditions in Fund programs in a global sample. It then complements this analysis by showing particular organizational habits and beliefs at work in two cases, namely in Latvia and Hungary in 2008 under their respective IMF programs. Furthermore, the paper shows that distribution of income away from labor groups (i.e. lowered wages) is in fact by design in IMF programs in an attempt to increase competitiveness in fixed regimes.
  • Topic: Economics, International Monetary Fund, International Development, Neoliberalism
  • Political Geography: Europe, Eastern Europe, Hungary, Latvia
  • Author: Enea Gjoza
  • Publication Date: 11-2019
  • Content Type: Policy Brief
  • Institution: Defense Priorities
  • Abstract: The American economy, dollar, and banking system create unparalleled power for the U.S. in the global financial system. This power provides disproportionate influence over the world’s key economic and financial institutions, regulatory authority over major foreign companies and banks, and allows borrowing on favorable terms and in dollars, enabling long-term deficit spending.
  • Topic: Economics, International Trade and Finance, Hegemony, Sanctions, Finance, Global Political Economy
  • Political Geography: United States
  • Author: Susan Namirembe Kavuma, Florence Kuteesa, George Bogere, Richard Ayesigwa
  • Publication Date: 05-2019
  • Content Type: Special Report
  • Institution: Advocates Coalition for Development and Environment (ACODE)
  • Abstract: The study examined the approach used to integrate gender issues in the budgeting process in Uganda. It focused on the agriculture sector and specifically analysed the Ministerial Policy Statements (MPS) of four institutions: Ministry of Agriculture, Animal Industry and Fisheries (MAAIF); National Agricultural Advisory Services (NAADS); National Agricultural Research Organisation (NARO); and Uganda Coffee Development Authority (UCDA). The analysis obtained data from relevant documents and primary data collected from key informants in the mentioned organisations along with oversight organisations such as: the Ministry of Finance, Planning and Economic Development (MFPED); Ministry of Gender, Labour and Social Development (MGLSD) and the Equal Opportunities Commission (EOC). Specifically, the study sought to elicit stakeholder’s perspectives on the gender issues in the sector, the approach used to integrate gender in the budget process, the assessment method and challenges encountered by Ministries, Departments and Agencies (MDAs) in the process of integrating gender in the budget process. A Knowledge, Attitude, and Practices (KAP) survey conducted among the respondents was to ascertain the awareness of gender issues in the sector
  • Topic: Economics, Gender Issues, Budget
  • Political Geography: Uganda, Africa
  • Publication Date: 01-2019
  • Content Type: Policy Brief
  • Institution: Advocates Coalition for Development and Environment (ACODE)
  • Abstract: Chinese investment is flowing fast into Uganda, and spreading into the agriculture and forestry sectors. The government needs to keep pace with these developments so the benefits can be shared by Ugandans. A new analysis shows that, while the jobs and new businesses created are well received, the working conditions and environmental practices of Chinese companies are often poor. Many people evicted from their land to make way for new projects have not been compensated. To hold Chinese companies to account, government agencies, with support from NGOs, must share information about these investments and introduce stronger regulation — in particular to uphold community rights. In turn, Chinese companies must be more transparent, responsible and legally compliant. With a proactive and accountable strategy for Chinese investment management, Uganda could make major gains for sustainable development.
  • Topic: Development, Economics, International Trade and Finance, Foreign Direct Investment, Business , Accountability, Investment, NGOs
  • Political Geography: Uganda, Africa, China
  • Author: Michael Kende1, Nivedita Sen
  • Publication Date: 01-2019
  • Content Type: Working Paper
  • Institution: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
  • Abstract: E-commerce has long been recognized as a driver of growth of the digital economy, with the potential to promote economic development. The benefits come from lower transaction costs online, increased efficiency, and access to new markets. The smallest of vendors can join online marketplaces to increase their sales, while larger companies can use the Internet to join global value chains (GVCs), and the largest e-commerce providers are now among the most valuable companies in the world.
  • Topic: Development, Economics, Science and Technology, World Trade Organization, Digital Economy, Economic growth, Free Trade
  • Political Geography: United States, Europe, Switzerland, Global Focus
  • Author: Chanya Punyakumpol
  • Publication Date: 02-2019
  • Content Type: Working Paper
  • Institution: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
  • Abstract: Is there a doctrine of 'stare decisis' in international trade and international investment law? From a positive law perspective, the answer is a definite no. However, as many scholars have observed, in practice, there has been a strong level of deference from the Appellate Body to its previous rulings, but less so from investment tribunals. Using social network analysis to assess actual citations from the Appellate Body Reports and investment arbitrations from the inception to the current time, this paper examines the evolution and 'status quo' of citation networks in international trade and international investment arbitrations. It asks, not only whether there is a 'de facto' rule of precedent in the two regimes, but also when it occurs and how the development links with the institutional design of dispute settlement. The results show how the doctrine of 'stare decisis' diverges in international trade and international investment, as well as the importance of institutional design in shaping and constraining the behaviors of tribunals.
  • Topic: Economics, Globalization, International Trade and Finance, Law, Finance, Global Political Economy
  • Political Geography: Global Focus
  • Author: Keith C. Smith
  • Publication Date: 02-2019
  • Content Type: Journal Article
  • Journal: American Diplomacy
  • Institution: American Diplomacy
  • Abstract: President Boris Yeltsin’s imperial views on the “near abroad,” and President Vladimir Putin’s regarding Russia’s alleged “sphere of influence” has left Russia considerably weaker than it would have been otherwise, and the world much more endangered.
  • Topic: Arms Control and Proliferation, Cold War, Diplomacy, Economics, Politics, Armed Forces, Reform, Gas
  • Political Geography: Russia, Europe, Ukraine, Soviet Union, Germany, Estonia, Latvia, United States of America, Baltic States
  • Author: Tarek A. Hassan, Laurence van Lent, Stephan Hollander, Ahmed Tahoun
  • Publication Date: 01-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: Using tools from computational linguistics, we construct new measures of the impact of Brexit on listed firms in the United States and around the world: the share of discussions in quarterly earnings conference calls on costs, benefits, and risks associated with the UK’s intention to leave the EU. Using this approach, we identify which firms expect to gain or lose from Brexit and which are most affected by Brexit uncertainty. We then estimate the effects of these different kinds of Brexit exposure on firm-level outcomes. We find that concerns about Brexit-related uncertainty extend far beyond British or even European firms. US and international firms most exposed to Brexit uncertainty have lost a substantial fraction of their market value and have reduced hiring and investment. In addition to Brexit uncertainty (the second moment), we find that international firms overwhelmingly expect negative direct effects of Brexit (the first moment), should it come to pass. Most prominently, firms expect difficulties resulting from regulatory divergence, reduced labor mobility, trade access, and the costs of adjusting their operations post-Brexit. Consistent with the predictions of canonical theory, this negative sentiment is recognized and priced in stock markets but has not yet had significant effects on firm actions.
  • Topic: Economics, Political Economy, Regional Cooperation, Brexit, Global Political Economy, Economic Policy
  • Political Geography: Britain, United States, United Kingdom, Europe, European Union
  • Author: Joseph Halevi
  • Publication Date: 06-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: This paper analyzes the early stages of the formation of the Common Market. The period covered runs from the end of WW2 to 1959, which is the year in which the European Payments Union ceased to operate. The essay begins by highlighting the differences between the prewar political economy of Europe and the new dimensions and institutions brought in by the United States after 1945. It focuses on the marginalization of Britain and on the relaunching of French great power ambitions and how the latter determined, in a very problematical way, the European complexion of France. Because of France’s imperial aspirations, France, not West Germany, emerged as the politically crisis prone country of Europe acting as a factor of instability thereby jeopardizing the process of European integration, Among the large European nations, Germany and Italy appear, for opposite economic reasons, as the countries most focused on furthering integration. Germany expressed the strongest form of neomercantilism while Italy the weakest.
  • Topic: Economics, Political Economy, Global Political Economy, World War II, Common Market
  • Political Geography: United States, Europe, Germany, Global Focus
  • Author: Joseph Halevi
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: This essay deals with the contradictory dynamics that engulfed Europe from 1959 to 1979, the year of the launching of the European Monetary System. It focuses on how the macroeconomic frame- work of stop-go policies in the 1960s ended up privileging external – intra-European - exports at the expense of domestic demand. The paper offers a very tentative explanation as to why stop-go policies, by weakening domestic demand, did not put an end to the to the ‘long boom’ earlier as they should have. The French crisis of 1968-69 leading to the demise of De Gaulle is discussed at length, as is the renewal of the German export drive in the wake of a nominal revaluation of the D-Mark in 1969. Finally, the revival of labor struggles in Italy in the same year is put in the context of the structural weaknesses of the Italian economy as analyzed by the late Marcello de Cecco. The conclusion is that European countries had neither the political culture nor the institutional mechanisms to coordinate mutually advantageous policies. Their so-called cooperation was an exercise in establishing hegemony while defending the interests specific to the dominant economic groups of each country. The essay then deals with the formation of the EMS as an expression of efforts to establish and enforce economic dominance.
  • Topic: Economics, Markets, History, Monetary Policy, Capitalism, Common Market, Macroeconomics
  • Political Geography: Europe
  • Author: Joseph Halevi
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: The paper highlights the position of German authorities, showing that they were quite lucid about the fundamental weaknesses inherent in a process that separated monetary from fiscal policies by giving priority to the centralization of the former. Instead of repeating the well known critiques levelled against the EMU – for which readers are referred to the unsurpassed treatment by Stiglitz, the essay highlights the splintering of Europe in the way in which it has unfolded during the 1990s and in the first decade of the present millennium. In particular the early economic and political origins of the terminal crisis of Italy are located between the late 1980s and the 1990s. France is shown to belong increasingly to the so-called European periphery by virtue of a weakening industrial structure and persistent balance of payments deficits. The paper argues that France regains its central role by political means and through its weight as an active nuclear military power centered on maintaining its imperial interests and posture especially in Africa. The first decade of the present millennium is portrayed as the period in which a distinct German economic area had been formed in the midst of Europe with a strong drive to the east with an increasingly powerful gravitational pull towards the People’s Republic of China.
  • Topic: Economics, International Political Economy, Political Economy, History, Macroeconomics
  • Political Geography: Africa, China, Europe, Asia, Germany, Global Focus
  • Author: Lance Taylor
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: Expansionary macroeconomic policy with a strong redistributive component is an attractive proposition, most recently launched on the basis of Modern Monetary Theory or MMT. The Theory is a synthesis of familiar ideas, newly relevant but scarcely path-breaking. Its basics – Chartalist or fiat money, functional finance, and models based on consistent national accounting – come straight from Maynard Keynes, Abba Lerner, and Wynne Godley. Functional finance is the heart of fiscalist Keynesianism built upon automatic stabilizers for the business cycle. MMT’s job guarantee proposal is one more stabilizer which could be a modest helpful supplement to the system which exists. National accounting comparisons of a possible MMT package with the 2008 crash and the Trump tax cut are presented with emphasis on autonomous shifts in demand. The package could have problems with debt sustainability and external balance. Inflation is unlikely if wage repression in the USA is not reversed. But strong wage increases are presumably a goal of MMT.
  • Topic: Economics, Monetary Policy, Finance, Economic Theory, Macroeconomics, Money
  • Political Geography: United States
  • Author: Catherine Ruetschli, Mark Glick
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: The Big Tech companies, including Google, Facebook, Amazon, Microsoft and Apple, have individually and collectively engaged in an unprecedented number of acquisitions.When a dominant firm purchases a start-up that could be a future entrant and thereby increase competitive rivalry, it raises a potential competition issue. Unfortunately, the antitrust law of potential competition mergers is ill-equipped to address tech mergers. We contend that the Chicago School’s assumptions and policy prescriptions hobbled antitrust law and policy on potential competition mergers. We illustrate this problem with the example of Facebook. Facebook has engaged in 90 completed acquisitions in its short history (documented in the Appendix to this paper). Many antitrust commentators have focused on the Instagram and WhatsApp acquisitions as cases of mergers that have reduced potential competition. We show the impotence of the potential competition doctrine applied to these two acquisitions. We suggest that the remedy for Chicago School damage to the potential competition doctrine is a return to an empirically tractable structural approach to potential competition mergers.
  • Topic: Economics, Science and Technology, Communications, Law, Digital Economy, Macroeconomics, Monopoly, Antitrust Law
  • Political Geography: United States
  • Author: Mark Glick
  • Publication Date: 07-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: Since the publication of Robert Bork’s The Antitrust Paradox, lawyers, judges, and many economists have defended “Consumer welfare” (CW) as a standard for decisions about antitrust goals and enforcement priorities. This paper argues that the CW is actually an empty concept and is an inappropriate goal for antitrust. Welfare economists concede that there is no credible measurable link between price and output and human well-being. This means that the concept of CW does not legitimate limited antitrust enforcement, nor does it justify the exclusion of other antitrust goals that require more active enforcement practices. This paper contends that antitrust policy is not welfare based at all, and that if it were, antitrust policy and enforcement would differ significantly from the Chicago School vision. Without the fiction that economists can establish that in the short run lower price and higher output measurably increases welfare more than other goals, recent defenses of the CW standard resolve down to arguments based on unsupported assumptions.
  • Topic: Economics, Law, Legal Theory , Economic Theory, Macroeconomics, Antitrust Law, Microeconomics
  • Political Geography: United States