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1. Is the banking crisis back?

Author:
Olivier Perquel
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Robert Schuman Foundation (RSF)
Abstract:
On March 8th, 2023, the Silvergate Bank, a small American regional establishment, a crypto-currency specialist, went bankrupt. Two days later, on March 10th, the Silicon Valley Bank, a large regional bank, which had become the 16th largest in the US by total assets, and the largest holder of the liquidities of Californian startups and venture capital, failed. On March 12th, Signature Bank (roughly half of the size of Silicon Valley Bank), of which the Trump family was a client until the Capitol incidents, also collapsed. Three bank runs in only a few days, even though everyone believed that since the 2007 crisis and the subsequent massive re-regulation of the banking sector in the United States and in Europe, the banking sector was safe. These three bankruptcies followed the same mechanism. Silicon Valley, as its name suggests, was the main bank of the Californian Silicon Valley, where startups and venture capital funds deposited their liquidities. And following the extraordinary development of this activity until 2022, these liquidities had become extremely large. It should indeed be understood that these funds and startups which look for financial backing all the time and obtain frequent and ever larger fundraises, therefore own significant amounts of liquidities. Indeed, start-ups raise money at a given point in time to finance their runway, i.e. their investments and working capital requirements, for a certain period of time (one, two or three years) until the following fundraise. As a result, during the intermediary period, they deposit the amounts raised and not yet spent in banks. Similarly, the venture capital funds take a certain time to invest the amounts raised and, in the meantime, deposit their Dry Powder in banks. Hence these bank deposits grow extremely rapidly. However, an organization like Silicon Valley Bank cannot develop at the same speed as its credit activities, far from it. It is therefore obliged to invest its assets in bonds, notably US Treasury bonds, liquid in nature, and not risky - supposedly. And when rates rise, the value of these bonds decreases, even if it does not show in the bank’s accounts, since these bonds are generally accounted for as “held to maturity”, i.e. at par. Indeed, at maturity, these bonds will be reimbursed at par; and if the banks keep these bonds until then, it will not lose any money
Topic:
Economy, Banking Crisis, and Startup
Political Geography:
North America and United States of America

2. Korea's Official Development Assistance to the Philippine Education Sector: Observations and Inputs

Author:
Inero Ancho
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Advocating inclusive and equitable quality education (SGD 4: Quality Education) is central to sustainable development efforts anchored on collaboration and partnership that enable the policy-to-impact synergy. Agencies and institutions in various levels need to align motivations as they work towards realizing education for sustainable development (ESD). As education fuels sustainable development, school access and completion need to be prioritized, as wealth inequality and gender gap are eliminated. Human capital investment involves the provision of relevant and responsive education systems and training. These mechanisms enable an individual to be productive and contribute to positive outcomes, improved standard of living, and potential gains. As a core element to growth and poverty reduction, human capital suggests implementing significant and concrete progress in core education indices. Further, sustained economic growth, increased productivity value, and favorable social returns are manifested outcomes at the macro level. This paper looks at the ODA from Korea to the Philippines in the context of education. The discussion will be anchored on the Philippine Development Plan and AmBisyon Natin 2040 as roadmaps reflecting the aspirations of every Filipino of having a strongly rooted, comfortable, and secured life.1 Observations and inputs will be offered to ensure effective ODA and provide focus and ways forward towards access to and quality of education, along with programs and projects that contribute into any meaningful development of the Philippine economy.
Topic:
Development, Education, Economy, Human Capital, and Sustainability
Political Geography:
Asia, South Korea, and Philippines

3. Economic sanctions against Russia: How effective? How durable?

Author:
Jeffrey J. Schott
Publication Date:
04-2023
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Economic sanctions by Western democracies against Russia have not stopped the war and attacks on Ukrainian civilians. Together with continued economic and military support for Ukraine, however, sanctions are blocking Russian president Vladimir Putin from achieving his territorial objectives. Sanctions have contributed to a sharp compression of Russian imports; forced Russia’s military and industry to source from more costly and inefficient suppliers at home and abroad; and slowly begun to squeeze Russian government finances. The G7 countries must sustain and augment their efforts, including by confiscating frozen reserves of the Central Bank of Russia to help fund Ukraine’s reconstruction. G7 policymakers need to derive lessons from the current crisis about the utility of sanctions in conflicts between major powers. Maintaining coherent and coordinated sanctions against large and powerful target countries is critical for the effectiveness and durability of the policy. Deploying sanctions against such rivals also requires a long-term commitment to the implementation and enforcement of the trade and finance restrictions. Sanctions impose costs on both the target country and those imposing the sanctions, so Western policymakers need to offset those costs via domestic support or tax relief to sustain political support over time for sanctions in big power conflicts.
Topic:
Sanctions, Economy, Conflict, and Russia-Ukraine War
Political Geography:
Russia, Europe, Ukraine, and United States of America

4. Multilateral development banks are key to unlocking low-carbon investments in developing economies

Author:
Steven Fries
Publication Date:
04-2023
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Over the next three decades, emerging markets and developing economies (EMDEs), and especially middle-income countries, are projected to account for much of the growth in global economic activity and energy use. While a decisive move to low-carbon technologies and energy efficiency would advance both their development goals and a stable climate, the countries have yet to fully tap this opportunity. The multilateral development banks (MDBs) are in a unique position to help lower barriers to low-carbon investments in EMDEs and unlock these sustainable development opportunities. Their differentiating governance, financial and technical capabilities, and financing instruments would enable MDBs to support the necessary business environment and energy reforms and to cofinance low-carbon and energy efficiency investments alongside other investors to reduce and manage risks.
Topic:
Development, Economy, Multilateralism, Investment, and Carbon Emissions
Political Geography:
Global Focus

5. China in Sub-Saharan Africa: Reaching far beyond natural resources

Author:
Amin Mohseni-Cheraghlou and Naomi Aladekoba
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
This work empirically examines China’s growing footprint in Sub-Saharan Africa’s investment, trade, cultural, and security landscape over the past two decades. It highlights China’s increasing appetite for Sub-Saharan Africa’s natural resources and growing young labor force—identifying the region’s consumer market as an important destination for Chinese goods and services over the next few decades. The analysis identifies more than 600 Chinese investments and construction contracts in Sub-Saharan Africa (SSA), valued at over $303 billion, signed between 2006 and 2020. Four sectors attract 87 percent of China’s investment and construction in the region: energy at 34 percent; transport, 29 precent; metals, 13 percent; and real estate, 11 percent. This is very similar to the Middle East and North Africa Region, where the energy sector attracts close to 50 percent of China’s investment, followed by transport, 19 percent; real estate, 15 percent; and metals, 6 percent. In terms of trade, this work shows that between 2001 and 2020, China’s merchandise trade with the region increased by a whopping 1,864 percent—surpassing SSA’s trade with both the United States and the European Union. In other words, from 2001 to 2020, China’s share in total merchandise trade in SSA rose from 4 percent to 25.6 percent, while during the same period, the shares of the United States and the EU in SSA’s total trade declined by 10 percentage points and 8 percentage points, respectively. The report also takes a look at China’s arms trade with the region. Twenty-two percent of SSA’s arms imports are sourced from China, making China the region’s second-largest supplier of arms and military equipment, with Russia in the lead (24 percent). Finally, the report highlights the fact that the size of Chinese migrants in Africa is estimated at one to two million, with around one million permanently residing in the region. The largest numbers are in Ghana, South Africa, Madagascar, Zambia, and the Democratic Republic of the Congo.This work is the first in a series of empirical analyses that will be conducted on China’s presence in developing economies and low-income countries.
Topic:
Natural Resources, Economy, Business, Economic Growth, Macroeconomics, Trade, and Inclusion
Political Geography:
Africa, China, Asia, and Sub-Saharan Africa

6. Energy investment in a time of inflation

Author:
Charles Lichfield and Joseph Webster
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
High rates of inflation across the world are forcing central banks to reluctantly tighten monetary policy despite accompanying recession risks. Moreover, restricted credit access could jeopardize energy investments, particularly for capital-intensive clean energy projects, potentially rendering the world more vulnera­ble energy to price shocks, which are a significant contributor to the current crisis. This paper briefly considers the macroeconomic drivers of inflation in late 2022, including Russia’s war in Ukraine and uncertainties around energy supply, supply-chain resets, and lingering COVID-19 disruptions, before examining the persistent energy underinvestment of the past decade and how this has left markets exposed to varying degrees. As such, this paper also considers how private capital can accelerate cleaner energy adoption, suited to different markets’ unique conditions and needs. Bor­rowing costs will rise, but this doesn’t have to bring the transition to a standstill. With the Great Moderation of low volatility, interest rates, and inflation perhaps a relic of the past, assets offering inflation protection, such as infrastructure, may become increas­ingly attractive to investors. There is a fear that global inflation will sharply curtail energy investment into emerging markets. The fear is justified. Higher interest rates in developed markets mean higher rates of return which will lure emerging markets investors back to the US and Europe. Still, it’s not all bad news for emerging markets. Quasi-state actors like Pension and Sovereign Welfare funds are interested in very long term, high-yield projects—two criteria to which emerging market energy infrastructure correspond. Disruptions to interest rates and inflation, triggered in part by energy underinvestment, will cause disparate impacts in different markets. Inflation is not, perhaps, everywhere and always a mone­tary phenomenon. Energy investment faltered from 2014 to 2020, despite low interest rates. Meanwhile, aggre­gate supply shocks—first due to COVID, then from Putin’s invasion of Ukraine—have pressured energy production and prices, raising inflation and necessitating interest rate hikes. The consequences of persistent energy underinvest­ment are now becoming apparent. The need for new energy infrastructure cannot be met without private investment. This was the case when infla­tion was lower; it is even more important now.
Topic:
Environment, Markets, Oil, Governance, Gas, Economy, Investment, Inflation, and Energy
Political Geography:
Global Focus

7. The Economic Effects of the English Parliamentary Enclosures

Author:
Leander Heldring, James A. Robinson, and Sebastian Vollmer
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
In 1808, the English agriculturist Arthur Young stumbled on something interesting. He noticed that the adjacent Cambridgeshire parishes of Childersley and Hardwicke in England had startlingly different economic outcomes, even though they were divided only by a hedgerow. In Hardwicke, wheat yields were 16 bushels per acre, whereas in Childersley, on the other side of the hedgerow, they were 24 bushels per acre—50 percent higher. What could explain the difference? It wasn’t economic fundamentals, because Childersley consisted of similar soil. Rather, Young attributed the difference to the fact that the land in Hardwicke remained in “common field” while the land in Childersley was enclosed.
Topic:
Agriculture, History, Economy, Enclosure, and Parliament
Political Geography:
Europe and England

8. Balance of Trade, Balance of Power: How the Trade Deficit Reflects U.S. Influence in the World

Author:
Daniel Griswold and Andreas Freytag
Publication Date:
04-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The U.S. trade deficit is a misunderstood symbol of U.S. economic strength and influence in the world. The deficit is not driven by unfair trade abroad or industrial weakness at home and, as the Trump years show, cannot be “fixed” through higher tariffs. Instead, the trade deficit is driven by a persistent net inflow of foreign capital, which reduces interest rates and fuels economic output. Contrary to myth, the trade deficit is not a cause of deindustrialization or a loss of manufacturing jobs. In fact, the current balance of trade points to America’s continuing influence in global affairs—as a haven for global investment, as a robust producer and buyer of global goods and services, and as the provider of a strong dollar that remains at the center of the global economy. Policymakers should reject measures that restrict trade and foreign investment and instead seek to expand America’s commercial ties to the rest of the world.
Topic:
Foreign Policy, Economy, Trade, and Trade Deficit
Political Geography:
North America and United States of America

9. Course Correction: Charting a More Effective Approach to U.S.-China Trade

Author:
Clark Packard and Scott Lincicome
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Over the past several years the U.S.-China economic relationship has soured and become subordinated to broader concerns about national security and geopolitics. After a decades‐​long reform agenda in China that lifted hundreds of millions out of grinding poverty, Chinese president Xi Jinping has increasingly turned inward—reembracing Maoist socialism and heavy‐​handed central planning. Washington’s response to these worrisome developments has been reflexively hawkish economically, scattershot, and woefully inadequate for the economic challenge that China presents.
Topic:
National Security, Bilateral Relations, Economy, and Trade
Political Geography:
China, Asia, North America, and United States of America

10. The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire

Author:
Adam Brzezinski, Yao Chen, Felix Ward, and Nuno Palma
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The Columbian voyage of 1492 marked the beginning of three centuries in which vast amounts of monetary silver were shipped from America to Spain. During that time, Spain’s money supply was subjected to the vagaries of the sea. Maritime disasters that resulted in the loss of silver‐​laden ships gave rise to random contractions in the amount of money that arrived in Spain. We studied these maritime disasters to obtain estimates of the causal effects of changes in the money supply on economic output and prices.
Topic:
Imperialism, History, Economy, and Maritime
Political Geography:
Europe and Spain

11. Global Inequality in Well‐​Being Has Decreased across Many Dimensions: Introducing the Inequality of Human Progress Index

Author:
Chelsea Follett and Vincent Geloso
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The world has seen dramatic, global human progress across a broad range of indicators in recent decades, but have those gains been widely shared? The Inequality of Human Progress Index (IHPI) measures relative gaps in global development. It surveys international inequality across a greater number of dimensions than any prior index. By analyzing inequality in a multidimensional way, the IHPI takes inequality more seriously than those indexes that focus on income inequality alone. The IHPI considers material well‐​being and seven additional metrics: lifespan, infant mortality, adequate nutrition, environmental safety, access to opportunity (as measured by education), access to information (as measured by internet access), and political freedom. Across all but two of those dimensions, the world has become more equal since 1990. Globalization and market liberalization over the past few decades have not only raised absolute living standards but also reduced overall inequality.
Topic:
Development, Inequality, Economy, and Well-Being
Political Geography:
Global Focus

12. Indian Nationalism and the Historical Fantasy of a Golden Hindu Period

Author:
Swaminathan S. Anklesaria Aiyar
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
India’s ruling Bharatiya Janata Party (BJP) promotes its Hindu nationalist agenda by claiming that India was the world’s richest region under glorious Hindu rule for thousands of years before being conquered by Muslim invaders in the 11th century and British invaders in the 18th century. BJP politicians say foreign invaders transformed a “golden bird” into an impoverished chattel. Prime Minister Narendra Modi has promised to restore India to its historical eminence. To support their narrative, BJP partisans often cite historian Angus Maddison, who estimated that India accounted for 32 percent of the world’s gross domestic product in 1 CE (during the Hindu period), but this number plummeted to 4 percent by the time British rule ended in 1947. But a closer look at Maddison’s work shows that the BJP is cherry‐​picking data to create a bogus historical narrative. In 1 CE, India’s per capita income was below the world average, at a pathetic $450. It did not rise at all during the following thousand years of Hindu rule. It did not worsen after the Muslim and British conquests, as BJP partisans claim, though it improved very slowly. The supposedly golden Hindu period was one of stark poverty and economic stagnation. Disease, drought, and war kept India’s population stagnant at 75 million people throughout a thousand years of Hindu rule in India, when just staying alive was a challenge. Under Muslim and British rule, death rates fell and the population grew, and it grew still more after independence. Both in terms of income and life expectancy, the “golden period”—if it can be called that—is today, not in the Hindu era.
Topic:
Nationalism, Economy, Domestic Politics, and Bharatiya Janata Party (BJP)
Political Geography:
South Asia and India

13. Skilled Immigration, Task Allocation, and the Innovation of Firms

Author:
Anna Maria Mayda, Gianluca Orefice, and Gianluca Santoni
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Immigration continues to be a hotly debated topic in several destination countries. Policy and academic discussions have focused on different types of immigration, depending on the host country. While research is voluminous on the United States and countries with skill‐​points‐​based immigration systems, the discussion in Europe has mostly centered on lesser‐​skilled migrants and political refugees, as they represent the largest proportion of arrivals. However, Europe has been receiving skilled migrants in increasing numbers. For example, in France, the share of college‐​educated immigrants is 23 percent— lower than in the United States, Canada, or the UK—but it increased by 11 percentage points between 1995 and 2010.
Topic:
Immigration, Economy, Innovation, and Skills
Political Geography:
Global Focus

14. Rational Eviction: How Landlords Use Evictions in Response to Rent Control

Author:
Eilidh Geddes and Nicole Holz
Publication Date:
07-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
As housing prices rise, cities are turning to rent control policies, hoping to ensure longterm affordable housing. Typically, rent control policies require leases to be renewed at statutorily limited rent increases. Rent control policies reduce the returns from operating in the rental market, creating well‐​studied incentives for landlords to leave the rental market. Many rent control policies—including San Francisco’s—feature vacancy decontrol provisions, which allow landlords to reset rents to market rates when tenants move. These policies limit the reductions in returns to operating in the rental market but create incentives for landlords to induce tenant turnover, possibly through evictions. The more tenants move, the more often a landlord can raise rents to market rates.
Topic:
Markets, Economy, Eviction, Housing, and Rent
Political Geography:
North America and United States of America

15. Central Bank Digital Currency: The Risks and the Myths

Author:
Nicholas Anthony and Norbert Michel
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Central bank digital currencies (CBDCs) have the potential to radically transform the American financial system—ultimately usurping the private sector and endangering Americans’ core freedoms. Although CBDCs have gained the attention of politicians, central bankers, and the tech industry, this experiment should be left on the drawing board. This paper provides a summary of why Congress should explicitly prohibit the Federal Reserve and the Department of the Treasury from issuing a CBDC.
Topic:
Finance, Economy, Fiscal Policy, Banking, and Digital Currency
Political Geography:
North America and United States of America

16. Self‐​Service Bans and Gasoline Prices: The Effect of Allowing Consumers to Pump Their Own Gas

Author:
Vitor Melo
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Billions of people live in countries that ban self‐​service fueling at gasoline stations, including some of the world’s largest countries by population, including China, India, and Brazil, among many others. The impact of these bans is largely understudied despite their prevalence presumably because this policy is often implemented at the national level and because there have been no policy changes in these countries that allow for an assessment of these bans on gasoline prices.
Topic:
Gas, Regulation, Economy, and Consumer Behavior
Political Geography:
North America, Global Focus, and United States of America

17. Proposals for Reducing the Size and Cost of Running Government

Author:
Kojo Asante and David Asante Darko
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
Ghana Center for Democratic Development
Abstract:
Every other sector of the economy has had to incur substantive inconvenience or financial loss in efforts to return the sovereign debts to sustainable levels. Every other sector of the economy, except government itself. Against this backdrop, this paper reiterates some of the measures that have been proposed to reduce government spending and examines them in more detail. We delve into how the ministerial team might be reduced in size and thereby optimized to cut down government expenditure.
Topic:
Government, Budget, Finance, and Economy
Political Geography:
Africa and Ghana

18. Green Hydrogen Industrial Value Chains: Geopolitical and Market Implications

Author:
Nicola De Blasio and Laima Eicke
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
The global transition to a low-carbon economy and adopting the needed clean energy technologies at scale will significantly impact existing value chains1 and transform production-to-consumption lifecycles. Regulatory and business models will need to rapidly evolve to manage the resulting substantial cost challenges and dramatic shifts in stakeholder interactions while continuing to create value. Green hydrogen2 is likely to play a pivotal role in a carbon-free future, as its adoption will enable the decarbonization of energy-intensive industrial processes whose emissions are hard to abate through simple electrification—such as steel and cement production. However, to take advantage of the economic opportunities created by its adoption at scale, countries will need to rethink the roles they could play in a new energy landscape and define strategic industrial policies accordingly. Our research3 shows how successful industrial policies must reflect a country’s potential value chain positioning in future green hydrogen markets and elucidates macro geopolitical trends that could reshape international relations as countries compete for industrial leadership, market shares, and opportunities for job creation.
Topic:
Markets, Economy, Carbon Emissions, Value Chains, Hydrogen, and Green Economy
Political Geography:
Global Focus

19. 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

20. Russia’s War Economy

Author:
András Rácz, Ole Spillner, and Guntram Wolff
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
German Council on Foreign Relations (DGAP)
Abstract:
Sanctions are a strong signal of Western resolve to oppose Russia’s war against Ukraine and have significantly weakened its ability to wage war. But Russia is adapting, turning its economy into a war economy, ramping up military production, and adjusting to sanctions. This Policy Brief looks at Russia’s economic adjustment with a focus on the shifting of resources to war purposes and the effect of sanctions on military production.
Topic:
Sanctions, Economy, Military, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

21. A New Horizon in U.S. Trade Policy: Key Developments and Questions for the Biden Administration

Author:
Trevor Sutton and Mike Williams
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Center for American Progress - CAP
Abstract:
This issue brief examines some of the key trade initiatives pursued by the Biden administration to date. It then sets out key questions facing U.S. trade policy in a global environment defined by volatility and renewed ambition to tackle the great challenges of the 21st century, such as climate change, inequality, and great power competition.
Topic:
Foreign Policy, Climate Change, Treaties and Agreements, European Union, Inequality, Economy, Trade Policy, and Strategic Competition
Political Geography:
Europe, North America, Asia-Pacific, United States of America, and Americas

22. Greater than the Sum of Its Parts: Abraham Accords Free Trade Area

Author:
Robert Greenway
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
The Abraham Accords provide an unprecedented opportunity to increase trade and investment among its members significantly by establishing a regional free trade area that would ensure progress toward their aspirations, preserve the integrity and stability of global markets, fuel growth, and constrain China’s predatory trade practices. Signatories to the accords committed to a shared vision of peace and prosperity and recognized that economic integration can enable members to achieve their long-term economic goals. The accords have paved the way for comprehensive partnerships on a variety of issues related to security, trade, investment, the environment, innovation, tourism, energy, and other key sectors. While the growth in bilateral trade is of great significance, the true transformative power of these peace agreements lies in expanding regional integration and cooperation. This is already underway. Israel concluded a Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates (UAE) in December 2022 and is currently negotiating a free trade agreement with Bahrain. Both will significantly accelerate economic development and provide incentives for others to follow suit. Israel's new foreign minister, Eli Cohen, recently stated that the volume of trade with Arab countries that normalized relations with Israel under the Abraham Accords in 2020 exceeded $2.8 billion dollars in 2022. While progress has been remarkable, its potential is far greater. According to RAND analysis of the potential of bilateral free trade agreements (FTA) between Israel and current signatories, the accords could create 46,000 new jobs and $24 billion in new economic activity for Israel's four partners. The benefits of a multilateral FTA encompassing current signatories would triple the overall benefit, creating more than 150,000 new jobs and new economic activity exceeding $75 billion. A multilateral FTA among an expanded number of potential signatories to the accords could create as much as 4 million new jobs and $1 trillion in new economic activity through 2030. This potential is not lost on the Chinese Communist Party (CCP). The CCP represents one of the most significant threats challenging the United States and its partners and allies. China’s state-directed economic policies, predatory lending, cyber intrusions, theft of intellectual property, illicit technology transfer and other coercive practices, industrial subsidies, and market access restrictions on key sectors of China’s economy constitute the most significant threats of the coming century. Several trends exacerbate the need for integrating markets aligned toward common goals. The global pandemic, the Russian invasion of Ukraine, Brexit, tariff tensions, political instability, protectionist policies, and regulatory uncertainty have threatened global trade by disrupting established supply chains and their underlying constellation of business models and trade relationships. As is often the case, these complex and interrelated challenges constitute an opportunity to realign our trade to safeguard the integrity of global markets and pursue US goals and objectives in collaboration with our partners and allies. The Abraham Accords offers just such an opportunity.
Topic:
Foreign Policy, Economy, Free Trade, and Abraham Accords
Political Geography:
Middle East and Israel

23. The Global Economic Outlook and the State of Indonesia

Author:
Ivana Markus and Pyan Amin Muchtar
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The global economy is facing a perfect storm as a result of the coronavirus disease (COVID-19) pandemic, prolonged geopolitical tensions, soaring inflation, and tightening monetary policy. A darkening future has been projected and the worst is yet to come. Amid global uncertainty, governments have become less aggressive in their budget spending, while high inflation has led many central banks to tighten their monetary policy. Furthermore, the pandemic has left widespread scarring effects, such as unemployment, poverty, and inequality, particularly on vulnerable groups. Global challenges and lower economic growth of the major economies will also affect Indonesia’s economic conditions, as the country may experience slower growth as a spillover from its major trading partners. It is important for the world and Indonesia to address these challenges, particularly the scarring effects, through multilateral solidarity and better maintenance of prudent fiscal policy.
Topic:
Monetary Policy, Geopolitics, Economy, Investment, Trade, and COVID-19
Political Geography:
Indonesia and Southeast Asia

24. Structural Transformation and the Global Production Value Chain: Potential Impact of the Cambodia-Republic of Korea FTA on Cambodia

Author:
Shandre Mugan Thangavelu and Vutha Hing
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This policy brief examines the structural transformation of the Cambodian economy based on the impact of the CKFTA in terms of trade, output growth, and employment. It summarises the key results of the CKFTA study that examined the impact of the CKFTA on the Cambodian economy – specifically quantitative (structural gravity model estimation and simulation) and qualitative trade policy evaluation in terms of exports, output, and structural transformation of the economy in the global and regional value chains. The policy brief also highlights the key benefits of the CKFTA to the Cambodian economy.
Topic:
Economy, Economic Growth, Investment, Trade, and Value Chains
Political Geography:
Asia, South Korea, and Cambodia

25. Cash Cabal: How Hezbollah Profits from Lebanon's Financial Crisis

Author:
Samara Azzi and Hanin Ghaddar
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
In March 2020, Lebanon opted for a “hard default” on $32 billion in sovereign debt, allowing the government to avoid negotiating with its Eurobond holders and investors. Beirut thereafter showed little interest in addressing the consequences of default, and the country’s economic meltdown worsened. As usual, the Lebanese people were the casualties, suffering amid what the World Bank has called a “deliberate depression.” This official negligence has cleared the way for a proliferating cash economy—which in turn has spawned a currency exchange scheme involving the central bank, foreign exchange agents, and Lebanese politicians. Hezbollah specifically has profited in areas ranging from real estate to solar energy, pharmaceuticals, and the illicit Captagon trade. In this Policy Note, authors Samara Azzi and Hanin Ghaddar—a venture capitalist and a former Lebanese journalist—skillfully diagram the corrupt status quo and explain why entrenched actors want to avoid systemic change. But as the study makes clear, the future health of the Lebanese economy requires an overhaul, and the international community must now press for deep reforms and personal accountability.
Topic:
Politics, Non State Actors, Financial Crisis, Economy, Hezbollah, and Shia Islam
Political Geography:
Middle East and Lebanon

26. Arming the Revolution: Trends in Iranian Defense Spending, 2013–23

Author:
Henry Rome
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
The Islamic Republic boasts a large and expanding nuclear program, the most capable missile and drone force in the Middle East, and a broad network of proxies that threaten U.S. interests. Nevertheless, scholars have devoted little attention to a key area: Iran’s defense spending. Although the data is publicly available, tabulating it is more difficult than one might assume, and three particular hazards await: (1) conversion of Iranian rials to dollars at unrealistic rates, (2) reliance on spending plans as opposed to actual spending, and (3) undercounting. Thus, any attempt to understand Iran’s military spending must scrupulously avoid such traps. In this Policy Note, Iran expert Henry Rome offers the most detailed public accounting yet of Tehran’s recent defense spending, illustrated by charts showing domestic trends and comparisons with regional rivals. The findings show how spending surged following the 2015 nuclear deal and plummeted following the U.S. withdrawal from the deal in 2018. They also suggest that a new nuclear accord with Washington will likely prompt another increase, demanding a broader strategy to counter Iran’s military ambitions alongside its nuclear ones.
Topic:
Security, Nuclear Weapons, Economy, Defense Spending, and Military
Political Geography:
Iran and Middle East

27. Is Foreign Direct Investment Losing Clout in Development?

Author:
Axel Berger and Alexandros Ragoussis
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Over the last decade, only a single projection of foreign direct investment (FDI) flows by the United Nations influential “World Investment Report” has proposed a negative outlook in the medium term. Based partly on surveys of business executives, these forecasts reflect ex¬pecta¬tions of investment growth which, however, have repeated¬ly failed to materialise. In fact, FDI flows to develop¬ing countries have remained stagnant over the past decade. Such wishful thinking is nurtured by a long series of positive narratives and facts about foreign investment. FDI has been one of the pillars of international development efforts for over 70 years. Its promise has not been limited to critical finance, but extends to longer term competitiveness through access to better technology, managerial know-how and, above all, prosperity through more and better paid jobs in the formal sector. From the old prescriptions of the so-called Washington Consensus to the hopeful Addis Ababa Action Agenda, the dominant development narrative has therefore favoured a rather indiscriminate pursuit of investment volume. This brief calls for rethinking of narratives and policies that help to improve the impact of FDI, based on secular trends that challenge our expectations. Four such trends stand out: First, while other sources of finance for development have grown considerably over the last decades, foreign invest¬ment has not followed the trend. Second, the kind of investment that is associated with stronger gains and longer term commitment in host economies – greenfield FDI – has also been in consistent decline as a share of total invest¬ment, while mergers and acquisitions and project finance have gained in importance. Third, the top 100 multinational enterprises (MNEs), accounting for nearly a quarter of global FDI stock, rely less on employment today than they used to in order to grow their foreign presence. Job creation, knowledge transfer and spillovers are therefore less likely to materialise through the presence of mega-firms and their corresponding investment at scale. Fourth, the growth of Chinese outward FDI within a strategic expan¬sionary political agenda stands to change rules and attitudes towards foreign investment moving forwards. We argue that, collectively, these trends invite a renewed conversation around the kind of foreign investment we want and expectations of this source of finance for develop¬ment. These facts obscure neither the broad benefits of FDI to developing countries, nor the value proposition of FDI attraction. Rather, they raise questions about expectations, priorities and the alignment of investment policy with the realities experienced across develop¬ing countries. To that end, we propose four priorities that stand to make a difference in the current context. We call for policy-makers to: 1) Place additional emphasis on retention of investment and linkages with the domestic economy. 2) Try new approaches for FDI attraction that focus on improving domestic investment facilitation frameworks. 3) Be selective as to investment sources and activities in order to mitigate political risks and align inward investment better with sustainable development. 4) Add evidence to improve our understanding of invest¬ment and inform decision-making. Overall, it is critical to engage in a serious multi-stakeholder conversation around expectations, actors and solutions that respond to the investment reality of today.
Topic:
Development, United Nations, Foreign Direct Investment, and Economy
Political Geography:
Global Focus

28. Where is China heading?

Author:
Jean-Pierre Cabestan
Publication Date:
10-2022
Content Type:
Policy Brief
Institution:
Robert Schuman Foundation (RSF)
Abstract:
China is ambitious, it is making this known and everyone is beginning to realise it. So much so that today a growing number of observers fear that it will take greater risks to achieve its objectives and fall into the famous "Thucydides' trap"; in short, that it will launch into a war, notably around Taiwan, which would inevitably involve the United States. Isn't its goal to supplant America and become the world's leading power? If, by 2028 or 2030, the Chinese economy were to exceed the US economy in terms of GDP, it is doubtful that it will succeed in removing the US from its pedestal. This is likely to be lower and more contested. But rather than a power transition, the world is witnessing the emergence of new, permanently asymmetrical bipolarity and, no doubt, a new Cold War[1].
Topic:
Foreign Policy, Geopolitics, Economy, and Multipolarity
Political Geography:
China and Asia

29. Accelerating Transitions towards a Circular Economy and Policy Implications for Korea

Author:
Jinyoung Moon, Youngseok Park, Seung Kwon Na, Sunghee Lee, and Eunmi Kim
Publication Date:
08-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study analyzes global efforts to transition to a circular economy, and analyzes each country's responses and major issues to the stages of waste generation and management, which decisively distinguish the existing economic system from the circular economy. In addition, this study examines cases of private-sector-led cooperation for sup-porting developing countries in terms of international cooperation and linking with international trade, and also analyzes the implications of information-based environmental policies in response to the circular economy. Finally, based on the results of these analyses, this study proposes policy measures to prepare for the circular economy.
Topic:
Development, International Cooperation, Economy, Trade, Private Sector, and Management
Political Geography:
Asia and South Korea

30. A Review of the First Decade of the Korea-EU FTA

Author:
Dong-Hee Joe
Publication Date:
07-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Last year marked the tenth anniversary of the Free Trade Agreement (FTA) between the European Union (EU) and Korea, which entered into force in 2011. The EU is the world's largest economy and Korea's third largest trade partner, only after China and the United States. Back when the FTA nego-tiations began in 2007, the EU was Korea's second largest export destination, from which Korea enjoyed the largest surplus. Al-so, more than 35 per cent of Korea's foreign direct investment came from the member states of the EU. Korea is also a major econ-omy and a major trade partner of the EU, especially in Asia. The FTA with Korea was the first case of the EU's “next generation” FTAs, and is considered to have served as a benchmark for the EU's bilateral trade agreements thereafter (Kang 2016). As for Korea, it was the first FTA with a major economy, even before the US, its traditional ally, and China, its closest neighbor. Because of its importance, the Korea-EU FTA has received attention from economics and trade policy. KIEP also took a look at the first decade of its implementation last year (Joe et al. 2021). This Brief introduces some of the findings in Joe et al. (2021), fo-cusing on the impact of the FTA on the bi-lateral economic relationship between the two sides.
Topic:
European Union, Economy, Free Trade, and Trade
Political Geography:
Europe, Asia, and South Korea

31. Internationalization of the Korean Won in the Light of RMB Internationalization

Author:
Hyo Sang Kim, Young Sik Jeong, Ji Young Moon, and Da Young Yang
Publication Date:
07-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
While China has risen to become a global superpower with a growing impact on the world economy, its currency, the Renminbi (RMB), has a limited role in the existing international financial system. China has made significant progress and will continue to push for the internationalization of the RMB, which can disrupt the global financial system, dominated by the US dollar. Under such circumstances, Korea must find a new direction for the internationalization of the Korean Won. The internationalization of the Korean won will provide new opportunities for the economy to take a further step through financial advancement.
Topic:
Economy, Currency, Internationalization, and Financial Development
Political Geography:
China, Asia, and South Korea

32. Australia’s Strategic Responses to the US-China Rivalry and Implications to Korea

Author:
Ina Choi, Sunhyung Lee, Jaeho Lee, and So Eun Kim
Publication Date:
08-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
As in other Asia-Pacific countries, boosting trade with China has provided a growth engine for Australia's economy. Australia shared concerns over security threats posed by China’s military expansion, but up until the mid-2010s hard balancing against China did not seem to be an option for Australia. Australia’s recent moves against China, however, signal that Canberra has reset its China policy, with an overhaul of its national security and defense strategy. The shift of Australia’s China policy is an interesting case to explore how the regional order is likely to evolve in the growing US-China competition. Assessing Australia’s recent foreign policy is also relevant to Korea, both in terms of navigating Korea’s relations with the US and China and enhancing strategic ties between Australia and Korea. Against this backdrop, this study unravels Australia’s strategic responses to the changing regional order and draw implications for Korea's foreign policy.
Topic:
Security, Foreign Policy, National Security, Economy, Trade, and Rivalry
Political Geography:
China, South Korea, Australia, Asia-Pacific, and United States of America

33. Reassessing Recruitment Costs in a Changing World of Labor Migration

Author:
Kate Hooper
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Migration Policy Institute (MPI)
Abstract:
Recent years have seen national governments, multilateral organizations, civil society, and private-sector groups take steps to promote the fair and ethical recruitment of migrant workers, including efforts to reduce or eliminate recruitment costs. High recruitment costs can result in workers taking on a financial burden that can only be serviced through high-interest loans or debt bondage, placing them in a more vulnerable position and curtailing the income they can then save or send to loved ones via remittances. Still, progress to address recruitment costs has been uneven to date, and the pandemic has been a major setback. The public-health crisis has seen some existing costs rise or fluctuate wildly and new ones emerge (e.g., fees associated with COVID-19 testing and quarantine), with particularly pronounced effects in low- and middle-skilled sectors and informal employment. This has put working abroad out of reach for some would-be migrants while exposing others who travel abroad for work to new risks. This policy brief explores how the pandemic has affected costs for migrant workers at every stage of their journey, with a focus on new public-health measures and other additional expenses. It also reflects on what these developments mean for future efforts to promote fair and ethical recruitment. The brief is the first publication resulting from a multiyear research partnership between MPI and the SDC’s Thematic Section Migration and Forced Displacement to support the development of global solutions for migration-related challenges.
Topic:
International Cooperation, International Organization, Labor Issues, Governance, Employment, Economy, COVID-19, Recruitment, Immigration Policy, and Recession
Political Geography:
Global Focus

34. Baltic Perspectives on Germany’s Role in NATO

Author:
Justinas Juozaitis
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
International Centre for Defence and Security - ICDS
Abstract:
In the second brief in our “Germany and the Security of the Baltic States” series, Justinas Juozaitis considers Germany’s contribution to NATO from a Baltic perspective and looks at what might change under Chancellor Olaf Scholz. Germany’s contribution to NATO’s collective defence and deterrence, including in the Baltic region, is substantial, but does not match what might be expected given its economic strength. The Bundeswehr already struggles to meet its commitments to the Alliance and recent increases in the defence budget have not translated into major improvements in capability. Germany will most likely not meet in full the promises it has made to enhancing collective defence. Even then, the new government will have to face decisions that will be unpopular with the public, and within their own coalition. Germany’s continued political support for deterrence in the Baltic region will likely continue, but its own military contribution will probably be smaller than promised.
Topic:
Security, Defense Policy, NATO, Economy, Regional Integration, and Deterrence
Political Geography:
Europe, Germany, and Baltic States

35. Democratic-values against authoritarianism? In the end it will be [again] the economy, stupid!

Author:
Ekrem Eddy Güzeldere
Publication Date:
07-2022
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
Opposition parties around the world (e.g., in Hungary, Poland, Brazil and Turkey) have started to form alliances against authoritarian and illiberal leaders. The introduction of a presidential system in Turkey in 2018 made political parties join forces, since 50+1% would be needed to win the presidential elections. Since May 2018, first four and now six opposition parties have formed the so-called “Millet [Nation] Alliance”; almost all the polls place the Alliance well ahead of the government AKP-MHP alliance. In 2019, Millet Alliance candidates were able to win the municipal elections in Istanbul and Ankara. In May 2022, the Millet Alliance published ten clear, value-based principles, ranging from non-discrimination to freedom of the press, religion and thought through to the independence of the judiciary. The parties of the Millet Alliance are not remembered for defending democratic values in the past, but will they now? On topics like the Kurdish issue or refugees, the Millet Alliance is often harsher and more exclusionary than the government. However, the economic situation and the candidate put forward by the Millet Alliance More will be more decisive for the elections than a debate over values. Turkey does not have a choice between black and white, but rather between different shades of gray
Topic:
Authoritarianism, Democracy, Economy, Domestic Politics, and AKP
Political Geography:
Turkey and Middle East

36. German strengths and weaknesses in the Russo-Ukrainian war

Author:
Emmanuel Comte
Publication Date:
06-2022
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The Russian attack on Ukraine has activated a series of tropes about the international balance of power in Europe. Most mainstream opinion outlets have published criticisms of Germany for supposedly being dependent on Russia and threatening the European security system by hesitating when decisive action is required. The following points serve to reintroduce some facts into the conversation. The current war in Ukraine is primarily the result of German-Russian rivalry. The war is a case of an established power, Russia, miscalculating in its efforts to prevent a rising power, Germany, from absorbing a nation within its sphere of cooperation: Ukraine. Germany’s strategy has been subtle, seeking to manage through economic interdependence an international conflict predicated upon balance of power considerations. Since circa 1900, Turkey has also played a key role in the German security system in the Black Sea region. With the benefit of hindsight, Germany’s strategy has been the most appropriate to the situation, given that Russia has been completely isolated while Germany is surrounded by allies. Germany’s problems today are not in its Russian policy, but rather in self-defeating ideologies which include the “Green” movement and economic statism.
Topic:
Security, Foreign Policy, Economy, Regional Politics, and Russia-Ukraine War
Political Geography:
Russia, Europe, Ukraine, and Germany

37. Responding to Afghanistan’s Humanitarian Crisis: The Potential Role of Digital Payments

Author:
Michael Pisa
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
Afghanistan’s humanitarian crisis continues to worsen, with the World Food Programme (WFP) reporting that 22.8 million people—more than half the country’s population—are projected to be acutely food insecure in 2022, including 8.7 million at risk of famine-like conditions.[1] Even before the Taliban took over the country on August 15, 2021, Afghanistan’s economy was buckling under the weight of the country’s worst drought in decades, a deteriorating security situation, and the COVID-19 pandemic.[2] Financial flows into Afghanistan collapsed immediately after the Taliban takeover, as foreign aid was cut, private sector activity fell sharply, and foreign banks and money service providers (collectively: “financial service providers” or FSPs) refused to process payments into the country for fear of inadvertently violating sanctions and anti-money laundering and the countering the financing of terrorism (AML/CFT) regulations. The exceptional nature of the situation hampers efforts to resume normal financial flows to Afghanistan. Never before has an organization designated as a terrorist group by the United States assumed control of an entire jurisdiction.[3] The United States and other countries responded to this novel circumstance by freezing the country’s foreign exchange reserves held abroad; keeping in place sanctions that criminalize most transactions with the Taliban; and denying official recognition of the Taliban as the legitimate head of the Afghan state, which has prevented the Afghan central bank (Da Afghanistan Bank or DAB) from maintaining correspondent accounts with foreign banks. Cumulatively, these measures have limited access to US dollars in the Afghan economy, leaving Afghans unable to pay for the food, fuel, and imported intermediate inputs their economy relies on.
Topic:
Security, Economy, Humanitarian Crisis, and Digitalization
Political Geography:
Afghanistan and Middle East

38. Governing the Global Commons: Challenges and Opportunities for US-Japan Cooperation

Author:
Kristi Govella, John Bradford, Kyoko Hatakeyama, Saadia M. Pekkanen, Setsuko Aoki, James Lewis, and Motohiro Tsuchiya
Publication Date:
12-2022
Content Type:
Policy Brief
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
The global commons—domains beyond the sovereign jurisdiction of any single state but to which all states have access—are essential to the stability and prosperity of the international order. In addition to the high seas, outer space, the atmosphere, and Antarctica, which are defined as global commons by international law, analysts have also suggested that other domains such as cyberspace may also qualify as potential commons. These domains provide essential public goods such as trade routes, transportation and communication networks, fish stocks, satellite imagery, global positioning, and e-commerce infrastructure that benefit countries around the world. To successfully manage the resources of the global commons and ensure open access to their spaces, effective governance structures must exist to accommodate and integrate the interests and responsibilities of state and non-state actors. Consequently, states have tried to come to agreements in each domain about how to enable broad access, avoid conflict, and enable cooperation. Over time, these discussions have resulted in the creation for each domain of a “regime,” a set of implicit or explicit principles, norms, rules, and decision-making procedures around which actors’ expectations converge (see Box 1). These regimes can take shape in the form of international law, national law, local regulations, private standards, and institutional bodies. They differ dramatically in maturity and complexity: the governance regime of the oceans has developed over the course of centuries, while the rules and norms of cyberspace have only had a few decades to coalesce. However, all these regimes attempt to solve similar dilemmas surrounding shared access and resources.
Topic:
Foreign Policy, Science and Technology, Democracy, Economy, Trade, and Defense Cooperation
Political Geography:
East Asia, Asia, United States of America, and Indo-Pacific

39. Shift to renewable energy could be a mixed blessing for mineral exporters

Author:
Cullen S. Hendrix
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The world’s transition to sustainable energy systems has suddenly become a boon to countries rich in critical minerals used in clean energy technologies like rechargeable batteries, solar panels, wind turbines, and electric vehicles. Among these critical minerals are aluminum, coltan, copper, aluminum, zinc, tin, rare earths, lithium, tantalum, and cobalt. Given that these minerals are key to building sustainable energy systems, vital for ensuring military might, and often extremely valuable, will countries with large, exportable endowments of these minerals fall prey to the resource curse? Hendrix says these countries may find their newfound wealth to be a mixed blessing. The size of the markets for these resources and their marginal production costs suggest that they do not have the potential to generate massive rents the way that oil and gas production have. Given that these rents are the source of many ills—authoritarianism, reduced investment in human capital, poor human rights records—this is good news. But because several of these minerals can be mined artisanally, they may lead to governance challenges related to armed conflict. Their status as strategic resources will invite major power meddling and interventions—but only if mineral-rich economies are forced to align themselves and access to their resources with a major power, like the United States or China. The 20th century’s scramble to secure oil resources led to cursed dynamics in oil-rich societies, but historical precedent is not destiny. Mineral-rich countries may avoid the resource curse, especially if they develop diverse investment and trading relationships to balance major power interests in their mineral wealth and embrace industry- and civil society–led good governance initiatives around mineral resources.
Topic:
Economy, Exports, Renewable Energy, Sustainability, and Minerals
Political Geography:
Global Focus

40. The European Union renews its offensive against US technology firms

Author:
Gary Clyde Hufbauer and Megan Hogan
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The European Union's proposed Digital Markets Act (DMA) contemplates extensive regulation of "gatekeeper" digital platforms—firms that perform a "core platform service" in the European Union (defined as online intermediation, online search, social networking, video sharing, electronic communication, cloud services, or online advertising), have a significant impact on the EU internal market, serve as an important gateway between business users and end-users, and enjoy an entrenched and durable position. Although at least one European firm could qualify as a gatekeeper, Hufbauer and Hogan say, the DMA discriminates against American technology firms by singling them out for the label of "gatekeepers." The European Commission’s proposed DMA targets both US tech giants such as Google, Amazon, Facebook, Apple, and Microsoft and smaller (albeit huge) US tech firms such as Airbnb and PayPal. The authors say the EU goal is to confer competitive advantage on European digital firms, breaching the EU commitment to national treatment of foreign firms, violating their intellectual property rights, and imposing high expenses on the "gatekeepers." At the same time, France is planning to enact its own steep barriers against US and other foreign cloud services.
Topic:
Markets, Science and Technology, European Union, Economy, and Digital Policy
Political Geography:
Europe and United States of America

41. The case for a cautiously optimistic outlook for US inflation

Author:
David Reifschneider and David Wilcox
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The Federal Reserve and most other analysts failed to anticipate the surge in inflation in 2021. Considerable debate now surrounds the question of whether the Fed is too sanguine in anticipating that too-high inflation will mostly take care of itself over the next few years, even as the unemployment rate remains low and monetary policy remains accommodative. This Policy Brief concludes that although the Federal Open Market Committee (FOMC) was too optimistic in the projections it issued in December 2021, the broad contour of its baseline inflation outlook for 2022 and beyond remains sensible. The authors find the 2021 surge in inflation resulted mainly from COVID-19-related sectoral developments rather than the classic situation of aggregate demand outstripping the overall economy's long-run productive potential. The statistical analysis in this Policy Brief was conducted before Russia invaded Ukraine. As a result of the war, the inflation situation will probably get worse before it gets better, and could do so in dramatic manner if Russian energy exports are banned altogether. Nonetheless, if the key considerations identified in this Policy Brief remain in place, and if monetary policymakers respond to evolving circumstances in a sensible manner, the inflation picture should look considerably better in the next one to three years.
Topic:
Federal Reserve, Economy, and Inflation
Political Geography:
North America and United States of America

42. For inflation relief, the United States should look to trade liberalization

Author:
Gary Clyde Hufbauer, Megan Hogan, and Yilin Wang
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
With US inflation running at 40-year high rates, the Federal Reserve is signaling more interest rate hikes in 2022 and 2023. President Joseph R. Biden Jr. has also vowed to act against what he calls anticompetitive behavior by corporations. But policymakers are overlooking one set of actions that could make a meaningful contribution to taming inflation: trade liberalization. The data cited in this Policy Brief indicate that a feasible package of liberalization could deliver a one-time reduction in consumer price index (CPI) inflation of around 1.3 percentage points, amounting to $797 per US household, about half the size of pandemic relief in 2021. As a bonus, the embrace of trade liberalization would curb inflationary expectations taking hold in American firms now protected by trade barriers from foreign competition.
Topic:
Economy, Inflation, and Trade Liberalization
Political Geography:
North America and United States of America

43. Fiscal support and monetary vigilance: Economic policy implications of the Russia-Ukraine war for the European Union

Author:
Olivier Blanchard and Jean Pisani-Ferry
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The economic shock from the war in Ukraine is forcing Europe to face difficult policy choices, according to Olivier Blanchard and Jean Pisani-Ferry. Governments must decide how best to soften the blow of higher energy and food prices, and how much to rely on debt finance. The European Central Bank must decide how to balance the fight against inflation with the need to sustain aggregate demand, in the face of decreases in real income. The authors analyze the impact of the war on the European economy, discuss the pros and cons of policy options, and call for coherence in balancing sanctions, fiscal measures, and monetary policy. They argue for the use of transfers rather than across-the-board subsidies and point to the room for debt finance. They show the potential role of tripartite wage agreement and also argue that monetary policy can remain on its current trajectory but be ready to adjust.
Topic:
War, European Union, Economy, and Fiscal Policy
Political Geography:
Russia, Europe, and Ukraine

44. Afghanistan: Where US-Iranian interests may yet intersect

Author:
Borzou Daragahi
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
A new issue brief, Afghanistan: Where US-Iranian Interests May Yet Intersect, authored by Atlantic Council senior fellow Borzou Daragahi delves into the Taliban takeover of Afghanistan and how the swift collapse of the US-backed government in Kabul last summer not only shocked the United States and its allies in the 20-year struggle in that country, but also Afghanistan’s influential neighbor, Iran. As refugees continue to stream into Iran, the government in Tehran has still not recognized the Taliban regime and remains worried about a further deterioration in Afghanistan’s economy and social cohesion, as well as the growing presence of Sunni Jihadi militants. As Iran-Afghan relations evolve, will US concerns about Afghanistan’s fragile state provide a basis for tacit cooperation between Washington and Tehran, similar to what existed when the Taliban was last in power?
Topic:
Government, Taliban, Geopolitics, Economy, and Strategic Interests
Political Geography:
Afghanistan, Iran, South Asia, and United States of America

45. Global Value Chains, Risk Perception, and Economic Statecraft

Author:
Phoebe Moon
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
Many countries, including the United States and China, have come to see economic statecraft as superior to armed conflict. Faced with a trading partner’s economic sanctions, some countries try to avoid risk by complying with or ignoring the coercer’s demands, but others retaliate and escalate conflict. In recent years, sanctions have been applied, not only to “rogue” states, but against trading partners. The United States and China, but also Japan, Australia, and Canada, were either the target or purveyor of economic coercion by or against trading partners in the last five years. However, not all resulted in trade wars. When, then, do economic sanctions lead to trade wars? This policy brief examines the ongoing Japan-South Korea trade dispute with a focus on how policymakers’ risk perceptions regarding global value chains (GVCs) can influence when trade wars take shape.
Topic:
Industrial Policy, National Security, Economy, Innovation, Global Value Chains, and Geoeconomics
Political Geography:
China, United States of America, and Indo-Pacific

46. Is the post-war trading system ending?

Author:
Uri Dadush
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The world trading system is reeling from the trade war between China and the United States, the disabling of the World Trade Organisation Dispute Settlement Understanding and repeated rule-breaking by WTO members. This does not mean the end of the post-war system, but it is being transformed into a more complex, politicised and contentious set of trade relationships. The new framework is likely to evolve around a WTO in maintenance mode with weak and largely unenforceable rules, and three blocs built by regional hegemons. Trade within the blocs will be relatively free and predictable, but the blocs are far from cohesive, contributing to the politicisation of the system. Trade relations between the blocs, especially among the regional hegemons, will be tense and potentially unstable. Countries across the world need to rethink their trade and foreign policies to reflect the new reality. They need to continue to lend support to the WTO but also to accelerate work on regional and bilateral deals, while entering plurilateral agreements on specific issues – within the WTO if possible, or outside it if not. Beyond these general prescriptions, the priorities of different economies vary greatly. The trade hegemons of China, the European Union and the US face vastly different challenges. Middle powers on the periphery of the regional blocs, or outside them, such as Brazil, India and the United Kingdom, face an especially arduous struggle to adjust to a less predictable system. Small nations will be forced into asymmetrical deals with the hegemons or will play them off against each other, adding to the politicisation of trade relations.
Topic:
Foreign Policy, Economy, Trade, and WTO
Political Geography:
Global Focus

47. Better pensions for the European Union’s self-employed

Author:
Rebecca Christie, Monika Grzegorczyk, and Diane Mulcahy
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Self-employed workers are taking on a larger role in the European economy, particularly workers who operate as independent contractors rather than as small-business owners with their own workforce. Becoming self-employed offers flexibility and entrepreneurial potential, but can limit access to state-sponsored pension schemes. We assess the current state of pension policy across the European Union and take a more detailed look at five countries to see how independent workers are treated compared with their traditionally employed counterparts. We consider how policymakers might adjust or even overhaul their pension offerings to improve opportunities for the self-employed, while being mindful of the broader policy context in areas like innovation and overall tax burdens. In assessing policy options, it is useful to determine whether government, companies or individuals will be primarily responsible for paying for better pensions, and we structure our suggestions accordingly. Governments can make programmes more widely available, more consistent for all types of work and easier to understand and take part in. Companies can be encouraged to make pension contributions for all their workers, not just those they hire full-time. Individuals can be encouraged to set aside more for retirement with tax incentives, benefits flexibility and other policy measures. Access to pensions for low-income, more vulnerable self-employed workers should be considered separately from access for higher-paid workers. The current system does not facilitate this and indeed inhibits it in jurisdictions where a minimum income is required to join self-employment pension schemes.
Topic:
Labor Issues, European Union, Economy, and Self-Employment
Political Geography:
Europe

48. Why Should Turkey Comply With The Global Climate Regime?

Author:
Ahmet Atıl Aşıcı
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
It is clear that Turkish economy is in need of a new trajectory. Under the current circumstances, it is not possible to offer jobs and hope to young people, and a secure future to the society. Therefore, it is necessary to reverse this vicious circle with a well-designed transformation program in an attempt to establish a durable and promising economic structure.
Topic:
Climate Change, Governance, Economy, and Sustainability
Political Geography:
Turkey and Middle East

49. A strategy to future-proof Zambia’s mining industry

Author:
Vincent Obisie-Orlu
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Good Governance Africa (GGA)
Abstract:
Zambia is in an opportune position to benefit from the growing demand for copper to support the global energy transition. Policymakers in President Hakainde Hichilema’s administration have an opportunity to build a resilient and high-performance Zambian economy to bring a true New Dawn. To realise this vision, Zambia must address key economic challenges such as the legacy effects of the previous instability of the mining regulatory system. Volatile changes have plagued the country until recently, with past governments changing mining taxes in response to the copper price. Resultantly, investment growth has diminished and the multiplier effect that would otherwise have been associated with mining has been foregone. Poor macroeconomic governance and mining growth retardation have also pushed Zambia’s national debt to unsustainable levels, as exports have been insufficient to fund debt repayment. The country is now seeking debt relief from its external creditors and has struck a deal with the International Monetary Fund. In this first of a two-part policy briefing series, we examine the key economic challenges associated with mining governance reform and provide recommendations that will help develop a resilient mining tax regime and a more streamlined regulatory environment. The second briefing will address the debt challenge. Considering the growing demand for copper to meet the global net-zero goal, and an impending global supply crunch, more copper will need to be produced and Zambia is in a prime position to do so. At the same time, Zambia has declining copper ore grades. Our primary recommendation, therefore, is that a profit-based Mineral Royalty Tax (MRT) framework be strongly considered. This will enable investment in the necessary capital and infrastructure needed to increase output and promote exploration. Though profit-based MRTs can be exploited by mining companies making claims of increased capital investment to increase outputs, when combined with the implementation of the Extractive Industries Transparency Initiative (EITI)’s reporting standards, the risk of exploitation is reduced.
Topic:
Natural Resources, Economy, Tax Systems, Mining, and Industry
Political Geography:
Africa and Zambia

50. The (Updated) Case for Free Trade

Author:
Scott Lincicome and Alfredo Carrillo Obregon
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The long‐​standing bipartisan consensus in favor of free trade in the United States has unraveled as the nation’s commitment to the multilateral trading system is increasingly subordinated to inward‐​looking ideological priorities. Like all forms of market competition, trade can be disruptive for some companies and workers, and various trade agreements may require updating to address both an increasingly authoritarian China and the 21st‐​century global economy. Nevertheless, both the seen and unseen economic benefits that free trade has delivered to countless individuals, businesses, and communities in America are undeniable and irreplaceable. Furthermore, the lone alternative to free trade, protectionism, has repeatedly proven to impose high costs for minimal benefits. In short, the case for free trade is an economic no‐​brainer.
Topic:
Geopolitics, Economy, Free Trade, and Protectionism
Political Geography:
North America and United States of America