Topic: Economics - CIAO Search Results

301. Income shocks, political support and voting behaviour

Author:: Richard Upward and Peter Wright
Publication Date:: 12-2023
Content Type:: Working Paper
Institution:: Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:: We provide new evidence on the effects of economic shocks on political support, voting behaviour and political opinions over the last 25 years. We exploit a sudden, large and long-lasting shock in the form of job loss and trace out its impact on individual political outcomes for up to 10 years after the event. The availability of detailed information on households before and after the job loss event allows us to reweight a comparison group to closely mimic the job losers in terms of their observable characteristics, pre-existing political support and voting behaviour. We find consistent, long-lasting but quantitatively small effects on support and votes for the incumbent party, and short-lived effects on political engagement. We find limited impact on the support for fringe or populist parties. In the context of Brexit, opposition to the EU was much higher amongst those who lost their jobs, but this was largely due to pre-existing differences which were not exacerbated by the job loss event itself.
Topic:: Economics, Politics, European Union, Brexit, Income, and Voting Behavior
Political Geography:: United Kingdom and Europe

302. Can competition reduce conflict?

Author:: Teevrat Garg, Caterina Gennaioli, Stefania Lovo, and Gregor Singer
Publication Date:: 07-2023
Content Type:: Working Paper
Institution:: Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:: We examine the effect of inter-group fiscal competition on within-group violent conflict. Using a triple difference design, we exploit exogenous variation in the degree to which villages in sub-districts compete for public funds. We find that higher competition between villages reduces conflict but only up to moderate levels of competition. The conflict-reducing effects of competition are largest in the most ethnically fractionalized and segregated villages and exist regardless of the eventual outcome of the competition. Our results are consistent with external competition favoring coordination within otherwise divided communities and boosting village identity relative to ethnic identity.
Topic:: Economics, Armed Conflict, Identity, Public Finance, Competition, and Fiscal Competition
Political Geography:: Global Focus

303. Garbling an evaluation to retain an advantage

Author:: Ascencion Andina-Diaz and Jose A. Garcia-Martinez
Publication Date:: 07-2023
Content Type:: Working Paper
Institution:: Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:: We study the effects of introducing interpersonal comparisons on the decisions made by career concerned experts. We consider competition between two experts who may differ in their initial reputation. We obtain that whereas full transmission of experts' private information is an equilibrium when experts have the same initial reputation, this is not necessarily the case when they are heterogenous. In this case, we identify an incentive for the stronger expert to deliberately misreport her signal, aiming at garbling the evaluation of the principal to retain her advantage. In equilibrium, this expert may even completely contradict her signal and the other experts' decision. We discuss the implications of our results to different contexts, such as reaching consenses in a society, competition for attention, and misconception of the market's evaluation system.
Topic:: Economics, Markets, Experts, Career, Reputation, and Competition
Political Geography:: Global Focus

304. Starr Forum: Rebuilding Ukraine While Under Fire

Author:: Oleg Ustenko and Simon Johnson
Publication Date:: 09-2023
Content Type:: Video
Institution:: MIT Center for International Studies
Abstract:: A discussion with experts--including Oleg Ustenko, the economic advisor to President Zelensky--on rebuilding Ukraine in the midst of the ongoing war. Joining Ustenko is Simon Johnson, professor at MIT Sloan and former chief economist at the International Monetary Fund.
Topic:: Economics, Reconstruction, Armed Conflict, and Russia-Ukraine War
Political Geography:: Russia, Europe, and Ukraine

305. Korea faces opportunities as well as risks under the Indo-Pacific Economic Framework

Author:: Jeffrey J. Schott and Megan Hogan
Publication Date:: 07-2023
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics (PIIE)
Abstract:: South Korea participates in several regional trade and investment arrangements, including the bilateral Korea-China Free Trade Agreement, the Asia Pacific Economic Cooperation (APEC) forum, and the Regional Comprehensive Economic Partnership (RCEP); it has also joined the Digital Economy Partnership Agreement (DEPA) and is considering following China’s example and applying for membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). All these initiatives are complementary and open to a broad range of countries and separate customs territories. The US-led Indo-Pacific Economic Framework (IPEF) would largely reinforce Korea’s benefits from other economic integration pacts, but in key respects it could build barricades instead of bridges to nonmember countries. The authors examine the progress in building IPEF, how the four IPEF pillars would advance and/or constrain Korean policy, and what the impact could be on Korea’s economic relations with major trading nations in the region, including China, which shares membership with Korea in important pacts like RCEP. The key challenge for Korea in IPEF will be to balance its relationships with China while deepening its economic and security ties with the United States.
Topic:: Economics, Treaties and Agreements, Bilateral Relations, Investment, and Trade
Political Geography:: Asia, South Korea, and Indo-Pacific

306. A reform option for pension fund contribution as tax expenditure in South Africa

Author:: Ada Jansen, Winele Ngobeni, and Wynnona Steyn
Publication Date:: 11-2023
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: South Africa has a progressive broad-based personal income tax system with relatively few tax expenditures. The two most important are the medical contribution plus additional tax credits for medical expenses, and the deductions allowed for retirement contributions. A pertinent question for tax reform in South Africa is whether redistributive gains can be achieved by restructuring expenditures in the personal income tax system. This paper considers the redistributive implications of converting the tax deduction for retirement contributions to a tax credit. This would build on the gains achieved by introducing a medical tax credit system in 2012. We analyse the tax revenue gains/losses of income groups and in total in terms of distributional effects and progressivity outcomes using a static microsimulation model based on data for the 2019/20 tax year. We find a high concentration of taxpayers in terms of taxable income and retirement contributions. The concentration of contributions is highly skewed towards lower- and middle-income earners, whose annual contribution amounts are low compared with higher-income earners. We recommend a conversion rate that considers the current distribution of taxpayers contributing to retirement funds. Converting the pension contribution deduction to a tax credit would raise additional revenue and make the tax system more progressive, benefiting low-income earners with marginal tax rates of less than the proposed conversion rate. The revenue gained would provide increased fiscal space to fund social expenditure or reduce government debt. Further distributional and behavioural analyses are needed on low-income earners and those earning below/above the minimum tax threshold, to refine understanding of the impact on low-and middle-income earners’ contributions to retirement funds.
Topic:: Economics, Reform, Tax Systems, and Pension
Political Geography:: Africa and South Africa

307. Differential bunching impacts across the income distribution: Evidence from Zambian tax administrative data

Author:: Samuel Bryson, Kwabena Adu-Ababio, Evaristo Mwale, and John Rand
Publication Date:: 12-2023
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: We investigate the behavioural responses of individual taxpayers to changes in marginal personal income tax rates applying empirical bunching methodology to tax administrative data from Zambia over the period from 2014 to 2021. We find evidence for excess bunching at the first kink in the tax schedule for all years but less evidence of bunching at the second and third thresholds. While bunching is considerable and behavioural responses are observed to changes in the location of the kinks over time, bunching at reference points (‘round-number bunching’) also appears large. Implied elasticities of taxable income are however not remarkable, and comparing actual and estimated counterfactual wage distributions reveal that missed tax revenue arising from the excess bunching is limited. This is consistent with the observed bunching reacting sharply and immediately to changes in the location of the kink points over time, suggesting that observed behavioural change is driven by reporting behaviour rather than real economic responses.
Topic:: Economics, Tax Systems, Income, and Income Distribution
Political Geography:: Africa and Zambia

308. Adverse Selection Among Early Adopters and Unraveling Innovation

Author:: Rory McGee
Publication Date:: 01-2023
Content Type:: Working Paper
Institution:: Centre for Human Capital and Productivity (CHCP), Western University
Abstract:: I provide an equilibrium analysis of “selection markets”: where consumers not only vary in how much they are willing to pay, but also in how much they cost to the seller. The model provides a joint explanation for three empirical phenomena: low uptake of existing products, slow demand for new products, and market inactivity despite unmet demand. I characterize when early adopters are more adversely selected in new markets. This lowers demand, increases costs, and leads markets to unravel prematurely. With endogenous market entry for new products (e.g., reverse mortgages, annuities), extended patents serve as de facto time-varying subsidies.
Topic:: Economics, Markets, and Innovation
Political Geography:: Global Focus

309. From opportunity to impact – Assessing the economic, societal, and cultural benefits of YouTube in Canada in 2022

Author:: Hamilton Galloway and Alice Gambarin
Publication Date:: 06-2023
Content Type:: Special Report
Institution:: Oxford Economics
Abstract:: This study presents an updated assessment of YouTube’s contribution to Canada’s GDP and employment, and its broader impact on society and culture. Every day, YouTube helps Canadian users to learn new skills, connect with others, and enrich their lives. It also provides a platform for a diverse range of content creators to share their interests and passions with audiences within Canada and beyond, creating opportunities to build new careers and businesses. This supports substantial economic value for creators who receive income from the platform, for example as they are paid a share of the revenues from advertising placed alongside their videos. Creators may also earn revenues from other sources that are helped by their YouTube presence. These revenue sources not only support jobs and income for the creators themselves, but also wider activity in their supply chains, and through workers’ spending. In total, our economic modeling suggests that YouTube’s creative ecosystem contributed more than $2 billion CAD to Canada’s economy in 2022 and supported more than 35,000 full-time equivalent jobs. In this report we provide further details of our economic analysis, as well as the findings of wider survey research to investigate how YouTube can sustain careers for content creators; help businesses grow; build skills; amplify Canadian talent; and drive cultural diversity. Alongside the findings from our economic modeling and surveys, the report presents a series of case studies to highlight the personal stories of successful Canadian content creators, ranging from financial literacy to cross-cultural cuisine.
Topic:: Economics, Culture, YouTube, Society, and Revenue
Political Geography:: Canada and North America

310. The Economics of Reduced-Risk Products: Global policy landscape and principles for policy treatment

Author:: Oxford Economics
Publication Date:: 11-2023
Content Type:: Special Report
Institution:: Oxford Economics
Abstract:: Heated Tobacco Products (HTPs) and vapour products (e.g., e-cigarettes) are new categories of Reduced-Risk Products (RRPs) in the tobacco market that have gained in popularity in recent years, with global sales of approximately US $20 billion each in 2020. In response, the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) has generally advocated a precautionary stance. For HTPs that can mean imposing equivalent fiscal and non-fiscal rules that are applied to combustible tobacco products. For e-cigarettes, it can mean strict controls on usage, with a focus on protecting vulnerable groups. However, pursuing a harsh stance towards RRPs could potentially limit policymakers’ options for mitigating health risks, and puts at risk the positive economic footprint supported by the RRP industry, in terms of the GDP, jobs, wages, and large R&D investments it supports. Against this backdrop, we propose three key principles that regulating authorities should adhere to for optimal outcomes in their approach to RRPs: tailor restrictions on RRP usage to different groups; differentiate the treatment of RRPs from combustible tobacco products; and incentivise innovation in industry to achieve better health outcomes at the population level.
Topic:: Economics, Health, Regulation, Innovation, Tobacco, and Reduced-Risk Products
Political Geography:: Global Focus

311. The Economic Impact of China PNTR Repeal

Author:: David Schockenhoff and Michael Kleiman
Publication Date:: 11-2023
Content Type:: Special Report
Institution:: Oxford Economics
Abstract:: As scepticism towards China is rising among policymakers, businesses grow more concerned about the potential economic fallout from an escalation in US-China tariff policy. Oxford Economics was commissioned by the US-China Business Council (USCBC) to help inform the policymaking process by examining two scenarios that could materialize if China’s Permanent Normalized Trade Relations (PNTR) status was revoked – including the increase of US tariffs on Chinese goods to column 2 rates as well as a Chinese retaliation imposing pre-WTO rates on US goods. Our analysis incorporates state-of-the art trade and economic models, including the Oxford Economics GEM, and finds that the US could lose up to $1.9trn in output over the five-year period following a China PNTR repeal. This is our third study for USCBC after examining the impact of the US-China relationship and associated scenarios in two previous reports (2017 and 2021).
Topic:: Economics, Politics, Bilateral Relations, Regulation, Tariffs, Trade, Supply Chains, Policymaking, Decoupling, and Goods and Services
Political Geography:: China, Asia, North America, and United States of America

312. Chipping Away: Assessing and addressing the labor market gap facing the US semiconductor industry

Author:: Dan Martin and Hamilton Galloway
Publication Date:: 07-2023
Content Type:: Special Report
Institution:: Oxford Economics
Abstract:: Thanks in large part to enactment of the landmark 2022 CHIPS and Science Act, a significant share of expected new chip manufacturing capacity and R&D is expected to be located in the US. We project the semiconductor industry’s US-based workforce will grow by nearly 115,000 jobs by 2030, from approximately 345,000 jobs today to approximately 460,000 jobs by the end of the decade. We estimate that roughly 67,000, or 58%, of these new jobs risk going unfilled at current degree completion rates. Of the unfilled jobs: 39% will be technicians, most of whom have two-year degrees or less; 35% will be computer scientists, or engineers with four-year degrees; and 26% will be engineers at the master’s or PhD level. For the US economy as a whole, we estimate that 3.85 million additional jobs in these three technical fields will be created by the end of 2030. Of those, 1.4 million jobs risk going unfilled unless the pipeline for such workers is expanded. To address the skills gap facing the broader economy and the semiconductor industry, we present three core recommendations to strengthen the US technical workforce: Strengthen support for regional partnerships and programs aimed at growing the pipeline for skilled technicians for semiconductor manufacturing and other advanced manufacturing sectors. Grow the domestic STEM pipeline for engineers and computer scientists vital to the semiconductor industry and other sectors that are critical to the future economy. Retain and attract more international advanced degree students within the US economy.
Topic:: Economics, Science and Technology, Regulation, Manufacturing, Labor Market, Workforce, and Semiconductors
Political Geography:: North America and United States of America

313. Misperceptions of OPEC Capability and Behavior: Unmasking OPEC Theater

Author:: David Kemp and Peter Van Doren
Publication Date:: 11-2023
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: In the view of the American public, media, and politicians, the Organization of Petroleum Exporting Countries (OPEC) sets oil prices by adjusting the amount of crude oil its members produce. However, the geological and engineering realities of oil extraction, the inconclusive academic evidence on the relationship between OPEC production and oil prices, and the cheating on oil production quotas by OPEC members and lack of enforcement all indicate that OPEC is more a political club than an effective oil cartel. In fact, three key members—Saudi Arabia, Kuwait, and the United Arab Emirates (UAE)—have oil production volatility similar to the United States over the past three decades. This implies that these three important and politically stable OPEC nations do not possess, or do not utilize, a unique short-term capability to alter their oil production to regulate oil prices. Altogether, the evidence suggests that the attention paid to OPEC is mostly about political benefits to both OPEC members and Western leaders, not an actual ability to control the oil market. The OPEC members use their oil production as an international bargaining chip and the perception of influence over the West to gain domestic legitimacy. Western leaders are happy to reciprocate by using OPEC as a scapegoat for unpleasant oil supply or demand shocks. Based on this picture of OPEC, U.S. concerns about OPEC behavior are unfounded and legislative proposals to punish OPEC are misguided.
Topic:: Economics, Oil, OPEC, and Fossil Fuels
Political Geography:: Middle East, Kuwait, Saudi Arabia, United Arab Emirates, and Gulf Nations

314. Trade and Investment Are Not a Balancing Act

Author:: Norbert Michel
Publication Date:: 11-2023
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: The trade deficit is the amount by which the value of a country’s imports exceeds the value of its exports during a given period, such as one calendar year or quarter. It is a commonly misunderstood concept that inspires harmful economic policies, such as proposals that a country “balance” its imports and exports by taxing international capital flows. Supporters of this policy hope to shrink the trade deficit (i.e., to balance imports and exports) by taxing the capital surplus that goes along with a trade deficit in the balance-of-payments framework. In the United States, senators Tammy Baldwin (D‑WI) and Josh Hawley (R‑MO) authored a 2019 bill to do this and, though it died in the Senate Banking Committee, similar legislation may appear in the future. This kind of policy is highly flawed on theoretical, empirical, and practical grounds. For starters, trade deficits and capital surpluses are merely part of a national accounting system that includes multiple arbitrarily assigned categories. In fact, even the concept of balancing in the national accounting system is not as straightforward as supporters of balancing trade flows suggest. The evidence demonstrates that there is no clear negative relationship between a trade imbalance and a country’s optimal economic performance, especially regarding employment in manufacturing, which is a common concern among politicians. At best, taxing international capital flows would fail to change the incentives that drive US consumers’ high demand for imports. At worst, it would cause a global economic recession that impoverishes millions of people and makes Americans poorer.
Topic:: Economics, Investment, Trade, and Deficit
Political Geography:: Global Focus and United States of America

315. Does Gravity Matter for Trade in Intermediate Services?

Author:: Anmol Kaur Grewal
Publication Date:: 09-2023
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: This paper makes a twofold contribution to the literature on trade in services. First, I construct a novel bilateral dataset of trade in services differentiating between final consumption and intermediate consumption following the most recent classification of UN’s Broad Economic Categories (BEC Rev. 5). Second, I use this dataset to estimate a gravity model of trade in intermediate and final services for a sample of 48 economies for the time period 2010-2019. Using a robust model specification consistent with the recent advancements in the gravity literature, I find that trade in services exhibits a sensitivity to bilateral distance between trading partners, similar to trade in goods. Intermediate services tend to be more sensitive to distance relative to final services due to the distinct nature of these services (B2B versus B2C). Common language and common borders are important determinants of both trade in intermediate and final services. I also find evidence of non-linear effects of time zone differences on trade in services.
Topic:: Economics, Services, Trade, and Consumption
Political Geography:: Global Focus

316. Governing in Hard Times Conference: Constraints and Strategy with Nick Thomas-Symonds MP

Author:: Lyndsey Jenkins, Nick Thomas-Symonds, Nick Pearce, and Alan Finlayson
Publication Date:: 06-2023
Content Type:: Video
Institution:: Mile End Institute, Queen Mary University of London
Abstract:: In this introductory session, Nick Thomas-Symonds MP delivered a keynote address on the Labour Party's strategy for government and the lessons that Keir Starmer and the current Shadow Cabinet can learn from previous Labour governments. This was followed by responses from Professor Nick Pearce and Professor Alan Finlayson on the institutional and economic constraints that a future centre-left administration will face and how it might navigate its first difficult months in office. Chair: Dr Lyndsey Jenkins (Deputy Director of the Mile End Institute) Panel: Nick Thomas-Symonds MP (MP for Torfaen and Shadow Secretary of State for International Trade) Professor Nick Pearce (Director of the Institute for Policy Research at the University of Bath) Professor Alan Finlayson (Professor of Political and Social Theory at the University of East Anglia)
Topic:: Economics, Governance, Domestic Politics, Labour Party, and Center Left
Political Geography:: United Kingdom and Europe

317. Why does Germany maintain its rapprochement with China?

Author:: FARAS
Publication Date:: 10-2023
Content Type:: Policy Brief
Institution:: Future for Advanced Research and Studies (FARAS)
Abstract:: During a meeting with Chinese Vice Premier He Lifeng in Frankfurt in early October 2023, German Finance Minister Christian Lindner emphasized the importance of developing economic ties between Berlin and Beijing and enhancing joint cooperation on some critical issues, particularly poverty alleviation and climate change.
Topic:: Foreign Policy, Climate Change, Economics, Poverty, and Bilateral Relations
Political Geography:: China, Europe, Asia, and Germany

318. Analysis of Foreign Trade Between Türkiye and Africa

Author:: Şükrü Cicioğlu and Ryan Hafiz Ahmed İbrahim
Publication Date:: 12-2023
Content Type:: Journal Article
Journal:: Turkish Journal of Middle Eastern Studies
Institution:: Sakarya University (SAU)
Abstract:: While enhancing our economic relations with African countries was positioned as a target within Türkiye’s vision, especially after the Cold War, this could only come true in the first decade of the 21st century. As a result, there have been significant trade volume developments. Although Türkiye had a trade deficit with Africa from the mid-90s to the early 2000s, it became a surplus party in the subsequent period due to stagnation and the impacts of various crises. The trade with Africa is primarily with North African countries due to geographical proximity and historical ties. While Africa's share in Türkiye's total foreign trade volume has been gradually increasing, it remains significantly lower compared to Asia and Europe. Relations between the continent and Türkiye haven’t grown stronger yet, mainly because most African countries were former colonies. On the other hand, Türkiye's geographical proximity to Africa offers a significant opportunity to meet African countries' agricultural and food needs. In this context, this study aims to analyze Türkiye’s trade with the African continent and to reveal the opportunities, threats, strengths, and weaknesses this trade offers for both actors. Furthermore, the study provides recommendations to enhance these relations in this framework.
Topic:: International Relations, Economics, History, and Trade
Political Geography:: Africa, Turkey, and Middle East

319. Decoding China’s Dilemma: The Difficulties Of Economic Reform

Author:: Sunny Cheung
Publication Date:: 12-2023
Content Type:: Journal Article
Journal:: China Brief
Institution:: The Jamestown Foundation
Abstract:: On November 27, the State Council of the People’s Republic of China (PRC) unveiled a new policy, titled “Notice on Strengthening Financial Support Measures for the Private Economy (关于强化金融支持举措助力民营经济发展壮大的通知)” (People’s Bank of China, November 27). The notice introduces a set of 25 measures crafted to reinvigorate the private sector. These prioritize key areas such as technological innovation, green initiatives, and primary support for small to medium-sized enterprises. The package includes increasing financial assistance and gradually enhancing the proportion of loans to private businesses. It underscores the importance of facilitating credit, lowering interest rates, issuing bonds, and other kinds of financial instruments to meet the varied financing needs of private enterprises. This policy measure echoes mandates put forth during the 20th Party Congress in October 2022 and Central Financial Work Conference held at the end of October 2023 in response to China’s deepening economic woes (Xinhua, November 1). This backdrop has prompted policies aimed at addressing the challenges facing the Chinese economy. In October, the PRC National Bureau of Statistics announced that the Consumer Price Index (CPI) fell by 0.2 percent year-on-year—worse than expected and marking a contraction since July (RTHK, November 9). This ominous data, which includes price deflation for both July and October this year, is indicative of significant weakness in domestic demand, particularly due to the underperforming real estate market, which affects citizens’ expectations for asset prices. The ongoing economic downturn in China also refutes the notion that economic chaos would clear up after the abandonment of the Zero-Covid policy. This situation is also similar to the Japan-style recession in the 90s in which consumption and investment are further repressed in favor of paying down debt. China’s recent response has been to implement a series of economic stimulus measures in an attempt to revive its weakening national economy.
Topic:: Economics, Reform, Business, and Banking
Political Geography:: China and Asia

320. The Chinese Debate on Economic Reform

Author:: Arran Hope
Publication Date:: 09-2023
Content Type:: Journal Article
Journal:: China Brief
Institution:: The Jamestown Foundation
Abstract:: A steady drumbeat of ominous data and troubling commentary on the state of China’s economy has punctuated the summer months. Reports from the commentariat in the anglosphere have provided diagnostic analysis and detailed potential policy solutions that the Chinese government might pursue. However, China’s central decision makers in the Politburo or in the National Development and Reform Commission (NDRC), are more likely to take their cues from internal advisors and domestic experts within the PRC than from those outside. As such, one fruitful exercise is to take the temperature of voices within the system to determine the extent to which their perceptions align or diverge from those in the West, and to ascertain which views carry weight with the final arbiters of economic policy in Beijing. By doing so, analysts outside of China may better comprehend the future (mis)steps that China will take as it struggles to achieve its aim of “basically realizing socialist modernization.” In July, the Chinese government held several meetings and released documents pertaining the economy. On July 24 the Politburo met to discuss the economy as it usually does this time of year. But on the same day, a 17-point plan was issued by the NDRC, following on from a 31-point plan co-issued by the State Council and the Central Committee ten days prior. These send a clear message about the concern in government over China’s straitened circumstances. Indeed, just this week, the NDRC announced a new “private economy development bureau” to further support private industry (NDRC, September 4). The assessment of the situation is put bluntly in the Politburo readout: “the current economic system is facing new challenges… insufficient domestic demand, difficulties in some enterprise’s operations, multiple risks in key areas, and a complex and severe external environment.”
Topic:: Development, Economics, and Reform
Political Geography:: China and Asia

321. A Belt and Road to Nowhere? Italy on the Frontlines of Europe’s Changing Strategy Toward China

Author:: Andrew R. Novo
Publication Date:: 08-2023
Content Type:: Journal Article
Journal:: China Brief
Institution:: The Jamestown Foundation
Abstract:: During her tenure as Prime Minister, Giorgia Meloni has been far more active on the international scene than most observers predicted. Within the first ten months of her tenure, she has traveled to capitals across Europe, Asia, and North Africa and has hosted numerous foreign leaders on official visits. In July, Meloni visited Washington, D.C. where she and President Biden affirmed their commitment to deepening collaboration across various areas of shared interests. Meloni’s foreign policy agenda has touched on a range of issues including, but not limited to, European security, migration, energy policy, and international trade. It is on this last issue that Italy’s decision-making might be most impactful. As the Meloni administration reassesses its economic partnerships around the world, Italy’s relations—and by extension the European Union’s (EU) overarching position—towards the People’s Republic of China (PRC) could witness lasting changes. At the heart of the new government’s economic policy lies its choice of whether to withdraw from China’s Belt and Road Initiative (BRI). Meloni—along with many members of her cabinet—have voiced skepticism towards the agreement. As such, everything is on the table in the run-up to the decision at the end of the year.
Topic:: Foreign Policy, Economics, Infrastructure, and Belt and Road Initiative (BRI)
Political Geography:: China, Europe, Asia, and Italy

322. The Demise of Diplomatic Ambiguity: Parsing South Korea’s Estrangement From China

Author:: Matthew Fulco
Publication Date:: 08-2023
Content Type:: Journal Article
Journal:: China Brief
Institution:: The Jamestown Foundation
Abstract:: In July, the US Ohio-class ballistic-missile submarine (SSBN) visited South Korea for the first time since 1981. Not one, but two of the 560-foot-long warships—which carried a payload of 24 long-range Trident ballistic missiles—surfaced in South Korean waters (Korea JoongAn Daily, July 24, 2023). From Washington and Seoul’s perspective, the SSBN deployment was a pointed reminder to the mercurial North Korean regime to exercise restraint, but the symbolism of the SSBN visit was not lost on China—Pyongyang’s closest ally. For all its military modernization efforts, Beijing has no effective defense against the Ohio-class sub. That South Korea would support the deployment of the SSBNs to its territory illustrates both its concern about rising North Korean brinkmanship and newfound willingness to risk Beijing’s ire. Indeed, after three decades of stable ties anchored in economic interdependence, major changes are afoot in the South Korea-China relationship. Compared to Japan, which also counts China as its largest trading partner, South Korea has historically been less willing to stand its ground in the face of political pressure from Beijing. On the one hand, Seoul and Beijing have no major territorial disputes, but more importantly, South Korea had previously calculated that its political deference—especially on China’s “core interests” like Taiwan—would encourage Beijing to support denuclearization of the Korean Peninsula, the Republic of Korea’s (ROK) top foreign policy objective. For many years, South Korea handled Beijing with kid gloves, irrespective of who was in the Blue House. While the left-leaning Democratic Party of Korea (DPK) is traditionally more China-friendly, it was the conservative President Park Geun-hye who attended China’s jingoistic September 2015 military parade. After a summit between Xi Jinping and Park, both leaders made a commitment to oppose any unilateral actions that could lead to tension on the Korean Peninsula. The following day, President Park joined Xi and Russian President Vladimir Putin in China’s military parade. South Korea was the only US ally to attend the event (The Korea Herald, September 3, 2015). Since then, however, the two countries have drifted apart. The catalyst for this change was Seoul’s decision to deploy the THAAD missile defense system in 2017, which China views as a security threat and South Korea deems essential for self-defense. China has repeatedly demanded that South Korea dismantle its THAAD system (Xinhua, September 21, 2017). When those demands failed to bear fruit, it resorted to sanctions against South Korea (The Korea Herald, March 8, 2017). Furthermore, both China’s imposition of a draconian national security law in Hong Kong and its mismanagement of the coronavirus pandemic have hurt its reputation in South Korea (The South China Morning Post, October 20, 2020). It is against this backdrop that the ROK’s anti-China sentiment has surged to an all-time high—a development that will inevitably spill over into Seoul’s foreign policy. According to a 2021 survey conducted by SisaIN, for the first time since the ROK and the PRC normalized relations in 1992, South Koreans view China even more negatively than they do Japan (SisaIN, November 29, 2021). China’s ruling Communist Party seems oblivious to the existential threat that South Korea feels in the face of surging missile tests by North Korea. The JoongAng Daily noted in June that it takes just two minutes for a North Korean missile to hit Seoul. According to the editorial, “South Korea is technically still at war with North Korea. The government and people must not forget that” (Yonhap News Agency, June 1, 2023). Concluding that political appeasement and economic engagement with China have failed to pay off, South Korea is taking two significant steps: strengthening its ties with its top security partner, the US, and mending fences with its former rival, Japan. The implications of Seoul’s estrangement from Beijing could have far-reaching implications for geopolitics in the broader Indo Pacific region.
Topic:: International Relations, Diplomacy, Economics, and Regional Security
Political Geography:: China, Asia, and South Korea

323. China-Pakistan Economic Corridor: Socio-Cultural and Political Implications for Pakistan Amid Covid19 and the Way Forward

Author:: Mubeen Adnan and Reema Murad
Publication Date:: 07-2023
Content Type:: Journal Article
Journal:: Journal of Political Studies
Institution:: Department of Political Science, University of the Punjab
Abstract:: Through the ‘game changer’ project of China Pakistan Economic Corridor, China is aiming to stabilize its western part by promoting investment and economic development in its neighbour to the West, Pakistan, which will lead to a boost in the Pakistani economy through investments in infrastructure and construction of gas and oil pipeline. There is also the aim of reducing extremism in the Xinjiang region. However, there are several social, cultural and political changes that the project has the potential to bring about in Pakistan. This research work has made an attempt to understand the variousimplications of the China Pakistan Economic Corridor on Pakistan as well as how the COVID-19 pandemic impacted CPEC and the path ahead as the world slowly transitions out of COVID-19. This research paper has used secondary sources in order to answer these pertinent topics. Major opportunities which Pakistan and China have gained through this ChinaPakistan economic Corridor as well as some challenges are also discussed.
Topic:: Economics, Bilateral Relations, Investment, Economic Development, COVID-19, and Opportunity
Political Geography:: Pakistan, China, South Asia, and Asia

324. Deciphering Pakistan Navy’s Role in CPEC Security: A Comprehensive Security Approach

Author:: Shabana Fayyaz and Nabeel Hussain
Publication Date:: 07-2023
Content Type:: Journal Article
Journal:: Journal of Political Studies
Institution:: Department of Political Science, University of the Punjab
Abstract:: Contemporary geo-political and geo-economics potentialities creates new horizons for the bilateral relations between states. These potential arrangements require security as a pre-requisite, both traditional and nontraditional domain. Pakistan Navy is dealing with these security threats from a comprehensive security approach. Through Task Force-88 and Task Force-150 as well as the Force Protection Battalion (FPB) for the security of CPEC from foreign actors, it has made enormous efforts to protect the China Pakistan Economic Corridor (CPEC) from new challenges and threats. This demonstrates that the People's Liberation Army Navy (PLAN) and the Pakistan Navy might accomplish compressive security through joint efforts. The protection and defence of sea lanes of communication (SLOCs) and the maritime-based economy are also enshrined in Pakistan's maritime doctrine. The Pakistan Navy's active engagement in Pakistan's security sector has also opened doors for the improvement of bilateral ties between various countries through the AMAN Exercises, a global collaboration of 45 nations to combat rising security threats.
Topic:: Security, Economics, Bilateral Relations, Geopolitics, Non-Traditional Threats, and CPEC
Political Geography:: Pakistan, China, and South Asia

325. The EU–US Data Protection Framework: Balancing Economic, Security and Privacy Considerations

Author:: Federica Marconi
Publication Date:: 09-2023
Content Type:: Commentary and Analysis
Institution:: Istituto Affari Internazionali
Abstract:: The rapid evolution of digital technology has ushered in a data-centric economy, where data accessibility drives marketplace efficiency and economic growth across various industries. However, this shift, while offering numerous benefits, introduces significant privacy and data security challenges, particularly in the context of transatlantic data transfers. Considering the vast economic ties between the EU and the US, the transatlantic data flow vividly illustrates the complexities involved in governing and transferring data. It grapples with the ongoing challenge of striking a satisfactory balance between economic advantages stemming from data utilisation and various concerns pertaining to national security, digital sovereignty and individual rights. In recent years, the European Commission approved two different frameworks on transatlantic data flow – Safe Harbour in 2000[1] and Privacy Shield in 2016[2] – asserting that the US provided a level of data protection for data transfers essentially equivalent to that guaranteed in the EU. However, despite initial optimism, both adequacy decisions faced a significant setback when the Court of Justice of the European Union invalidated them in what is commonly referred to as the “Schrems saga”,[3] named after the Austrian activist who first challenged both frameworks before the European Court. The core arguments centred on the absence of adequate safeguards for personal data within US domestic law and the extent of state surveillance over such data when it was transferred, as initially disclosed by Edward Snowden in 2013.[4] This legal development led to a period of significant uncertainty and further heightened the ongoing debate concerning the regulation of transatlantic data transfer. To address the consequences of this legal turmoil, both EU and the US committed to establishing “a renewed and sound framework for transatlantic data flows”,[5] seeking a long-term solution to address the complexities of data privacy and security, eventually leading to the recently adopted EU–US Data Privacy Framework (“DPF”).
Topic:: Security, Economics, Political Economy, European Union, Privacy, Transatlantic Relations, and Digital Policy
Political Geography:: Europe and United States of America

326. To Deal or Not to Deal: How to Support Tunisia out of Its Predicament

Author:: Michaël Ayari and Riccardo Fabiani
Publication Date:: 12-2023
Content Type:: Commentary and Analysis
Institution:: Istituto Affari Internazionali
Abstract:: Tunisia is beset by deepening political and economic challenges. President Kais Saied is transforming the country’s parliamentary system into an authoritarian presidential one that has become increasingly repressive. Arrests and convictions of opposition politicians have surged. Saied’s aggressive anti-foreigner discourse has fuelled xenophobic sentiment and contributed to a spike in violent attacks against sub-Saharan migrants. Economically, Tunisia is grappling with the fallout of a decade of sluggish growth compounded by a series of economic shocks since 2020. The nation’s public debt has soared, with significant debt repayments looming. As the country tries to deal with mounting financial constraints, its inability to attract foreign loans is further clouding its economic future. Saied now must decide whether to embrace a credit agreement with the International Monetary Fund (IMF) or potentially default on Tunisia’s foreign debt. Against this backdrop, the EU and, in particular, Italy have a pivotal role to play. They can either help steer Tunisia toward a more stable economic future or watch it descend into chaos.
Topic:: Economics, Foreign Aid, European Union, and IMF
Political Geography:: North Africa and Tunisia

327. Measuring economic resilience for the CEE and Black Sea countries in the framework of comprehensive defense

Author:: Maria Constantinescu
Publication Date:: 12-2023
Content Type:: Journal Article
Journal:: Security and Defence Quarterly
Institution:: War Studies University
Abstract:: The main research objective of this paper is to identify key factors influencing economic resilience from the perspective of comprehensive defence. This involves developing a composite economic resilience index (Ericda) that outlines the relative economic resilience of countries in Central and Eastern Europe and the Black Sea regions, within the comprehensive defence framework. The paper employs qualitative research methods, focusing on an analysis of specialist literature pertaining to economic resilience. Quantitative methods are also used for developing the Economic Resilience Index from the Comprehensive Approach to Defence (Ericda) perspective. This includes using data on selected resilience indicators in Central and the Eastern European and Black Sea region countries to generate rankings. The results of the study reveal strong positive correlations between the economic resilience index and various factors, such as logistics and infrastructure, economic complexity, foreign trade vulnerabilities and dependence, economic stability and development, governance effectiveness, military, and human capital. Additionally, a negative correlation was observed with the resilience index. The research findings suggest that to ensure effective comprehensive defence, isolated measures targeting individual pillars are inadequate. Economic resilience requires a collaborative approach, extending beyond the purview of the finance ministry and involving a broader range of stakeholders.
Topic:: Economics, International Security, Resilience, Economic Security, and Military
Political Geography:: Europe and Black Sea

328. Exchange Rate Arrangements: Fix, Float, or Manage?

Author:: Nathaniel Cline, Carlos Schönerwald da Silva, and Matias Vernengo
Publication Date:: 10-2023
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: The paper tries to provide a concise summary of the main debates on exchange rate arrangements. It a simple taxonomy of exchange rate arrangements, fixed, flexible and managed, and a brief analysis of the main debates about their advantages and disadvantages. It emphasizes the different policy objectives of mainstream and heterodox schools of thought, suggesting that they tend to be more relevant than the specific defense of one particular exchange rate arrangement. In that sense, there are divergences on their preferences within schools of thought. The paper also discusses the causes of currency crises and the role of the dollar in the international monetary system.
Topic:: Economics, Monetary Policy, Crisis Management, Exchange Rate Policy, and Currency
Political Geography:: Global Focus

329. Optimal Inflation Targeting With Anchoring

Author:: Thomas Michl
Publication Date:: 06-2023
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: This paper presents an alternative foundation to the standard quadratic loss function characterizing central bank inflation policy. The alternative treats high employment as a social benefit. In recognition of the inherent asymmetry of the output gap, two self-imposed constraints provide guardrails that rule out excess unemployment and opportunistic reflation. The loss function includes a novel reverse discounting mechanism that penalizes the bank for more sustained inflation gaps that could undermine confidence in the central bank’s target. In the absence of anchoring, the central bank is obliged to use economic slack to accomplish a disinflation but the presence of anchoring creates greater policy flexibility freeing it from the tyranny of the sacrifice ratio. The central bank’s optimal policy differs dramatically from the standard Taylor Rule recommendation in choosing policy plans with higher employment, in its willingness to overshoot inflation targets, and in avoiding excess unemployment, all while observing the discipline needed for successful inflation targeting.
Topic:: Economics, Employment, Banks, and Inflation
Political Geography:: Global Focus

330. The Crisis of Capitalism, the Noun

Author:: Nancy Folbre
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: This paper explores the challenges that feminist theory, stratification economics, and intersectionality pose to the characterization of capitalism as a unitary system. Attention to the structural basis for inequalities based on gender and race weakens traditional Marxian concepts of exploitation based on the appropriation of surplus value. On the other hand, the continuing relevance of many forms of collective conflict heightens appreciation of the ways in which capitalist institutions discourage the forms of cooperation necessary to address both ecological threats and shortfalls in care provision.
Topic:: Economics, Race, Capitalism, Intersectionality, Gender, and Feminist Theory
Political Geography:: Global Focus

331. Geopolitics, the Global South and Development Policy

Author:: Stephan Klingebiel
Publication Date:: 01-2023
Content Type:: Policy Brief
Institution:: German Institute of Development and Sustainability (IDOS)
Abstract:: This policy brief discusses the new geopolitical and geo-economic context and its significance for the Global South and the development policies of Western actors. The systemic confrontation between China and the USA, the Russian invasion of Ukraine, but also the seizure of power through a military putsch in Niger, among other places, show: The environment for global cooperation efforts has become much more difficult. Actors in the Global South are no longer just participants on the sidelines of geopolitical conflicts, but are taking an active role. Western countries and Russia make strong efforts to woo them. At the same time, China and India in particular aspire to leadership roles as leaders for the Global South. The following points are of particular importance: (1) The changes in the international system have given the Global South as a group (despite the enormous differences between the actors in this group) a new impetus of identity – similar to the West. It is noteworthy that this North/South bloc formation makes other possible commonalities less pronounced. This applies above all to the attempt – which has been less success-ful so far – to strengthen the identification of open democratic systems as a mark of belonging. For many debates and alliances, the identification “Global North/South” is formative. Formation of North and South camps is not helpful for finding international solutions. Approaches to counteract entrenched bloc formations and to create effective formats for exchange and understanding are therefore important. (2) From the perspective of Southern actors, the existing international order is a deeply unjust system that primarily protects the interests of the West, and especially those of the USA. Political offers from the West that do not really lead to structural changes are unlikely to arouse interest in the Global South, and will instead favour counter-designs – be they from China with its claim to leadership for the Global South or Russia. (3) In principle, the development policy of OECD actors has important potential to help shape the realignment of relations with the Global South. The policy field is, on the one hand, a proof of international credibility (among other things, fulfilment of international obligations) and, on the other hand, an approach that makes it possible to work with operational means on international problems in the first place. (4) Western development policy is likely to face further difficult situations with risks of escalation and failure (such as Niger and Afghanistan) in the face of multiple tensions in developing regions. Development policy should reflect the geopolitical context even more consciously in strategy and action. The defining geo-political context harbours the danger that the original development policy task – sustainable development of the partner countries – will be overshadowed. (5) Overall, it should be an important concern to rethink how international burden-sharing for development and climate finance agendas is organised. Here, it is important to consider both the actors from the Global North and those from the Global South.
Topic:: Economics, Geopolitics, International Order, Cooperation, and Development Policy
Political Geography:: Global South

332. The Effects of Robotization on Foreign Direct Investment

Author:: Sungwoo Hong, Wongi Kim, and Yeo Joon Yoon
Publication Date:: 08-2023
Content Type:: Working Paper
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study aims to investigate the effects of robotization on foreign direct investment (FDI). We address this research question by providing a theoreti-cal prediction derived from a simple model and then empirically testing our prediction. Theoretically, we found that an exogenous rise in industrial robots depresses both the robot rental rate and the domestic cost of task execution. Thus, it is more profitable to perform more tasks at home, leading to a de-crease in FDI. Empirical results are summarized as follows. First, an increase in robotization in source countries negatively affects outward FDI. Second, this negative effect is not consistent across global regions.
Topic:: Economics, Foreign Direct Investment, and Industrial Structure
Political Geography:: Global Focus

333. An Analysis on the Regional Integration of Northeast Asia by Developing NARCI (Northeast Asia Regional Cooperation Index)

Author:: Ji Young Moon, Jehoon Park, and Sung-Hoon Park
Publication Date:: 10-2023
Content Type:: Working Paper
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This paper aims to develop an index to analyze regional cooperation in Northeast Asia, which is Northeast Asia Regional Cooperation Index(NARCI). NARCI evaluates intra-regional cooperation and integration in four areas, which are functional cooperation, politico-security cooperation, socio-cultural cooperation, and institutionalization, in order to identify the conflict and cooperation situation in the Northeast Asian region. The analysis of economic integration found that Northeast Asian regional cooperation is characterized by a high level of integration in goods trade and regional value chain cooperation, but a relatively low level of integration in intra-regional direct investment and energy supply chain cooperation. The analysis of the political and security cooperation shows that the intensification of U.S.-China competition and the factional confrontation between Korea, U.S., Japan, and North Korea, China, Russia have had a significant impact on regional cooperation in political and diplomatic security. The result shows that the level of integration is low, with all evaluation indicators being negative. The analysis of the socio-cultural integration shows a relatively low level of integration in civil society cooperation and intergovernmental exchanges, a relatively high level of integration in cultural and educational exchanges and study abroad, and a neutral level of integration in information technology cooperation, labor mobility, and the share of tourists in the region. Finally, the analysis of institutional integration shows a relatively high level of integration in the bilateral channels between governments and the institutionalization of regional cooperation in the socio-cultural field, and half of the countries had institutional integration in financial integration and regional cooperation in the economic field. The level of integration in the political and security field was low due to the existence of only multilateral meetings. The analysis of NARCI shows that the impact of geopolitical conflicts on the economy and socio-culture has been expanding in recent years. However, the low level of political and diplomatic cooperation in the region and related institutional deficiencies are considered to be insufficient to buffer these risks, and efforts are needed to address them.
Topic:: Economics, Industrial Policy, Regional Cooperation, Economic Growth, and Regional Integration
Political Geography:: Asia and Northeast Asia

334. Analysis of Trade Pattern Between the EAEU and South Korea

Author:: Zoia Podoba
Publication Date:: 05-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The Eurasian Economic Union (EAEU) is a relatively newly-formed regional integration bloc. It evolved on the basis of the Customs Union of Russia, Kazakhstan, and Belarus in 2015 with Armenia and Kyrgyzstan joining the agreement. The foreign economic aspirations of the EAEU as a single market, in the context of tense relations with Western partners, are turned towards Asian countries. The pivot to the East is supported by the ideological concept of “Greater Eurasia” (sometimes translated as “Big Eurasia”), which implies more extensive cooperation with the economies of Central, East, and South Asia. At a time when political efforts to bring the Union and Korea closer together have been put on hold, the paper aims to provide a comprehensive description of the bilateral merchandise trade pattern between the EAEU and the Republic of Korea to verify if statistical evidence on bilateral trade provides ground for the development of guiding actual policy deliberations in the future. Trade Intensity Index (TII), the sectoral bilateral coefficient of revealed comparative advantages, and the standard Grubel-Lloyd index have been used in order to analyze the bilateral trade between the EAEU and the Republic of Korea.
Topic:: Economics, Markets, Regional Integration, and Trade
Political Geography:: Eurasia, Asia, and South Korea

335. Enhancing Korea’s Services Trade Statistics: Policy Recommendations

Author:: Jongduk Kim
Publication Date:: 05-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study revisits the definition of trade in services, explores the translation of service statistics into the Korean Standard Industry Classification (KSIC), proposes a method to estimate Korea's services trade by mode of service supply under the WTO trade agreement, and seeks ways to collect data on digital trade in services. It classifies the objectives pertaining to the enhancement of Korea's service trade statistics into short-term, medium-term, and long-term agendas.
Topic:: Economics, Trade, WTO, and Service Delivery
Political Geography:: Asia and South Korea

336. A Review of Changes in the Global Value Chain of Latin America

Author:: Sungwoo Hong
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Based on the findings of the value chain analysis conducted on major Latin American countries, it suggests that these countries may have derived certain economic benefits. This can be attributed to the increased exports to the United States and China, where Latin American countries served as substitute countries for imports during the intensifying competition between the two nations. Amidst the U.S.-China hegemony race and the supply chain disruptions caused by the COVID-19 pandemic, there is a notable shift in focus. Particularly, the United States is actively working to establish secure and stable supply chains, primarily centered around its own country and allied nations, with the intention of reducing dependence on China. As part of this process, the United States advocates for reshoring or near-shoring, which involves relocating production facilities to its home country or neighboring nations. Additionally, the U.S. is implementing various incentives to support this objective. If near-shoring takes place in Latin America, they can be regarded as favorable locations for establishing a foothold to access North America or securing key minerals. Additionally, Latin American countries with substantial backward linkages should be prioritized in trade with the United States. Among them, Mexico and Brazil, which exhibit relatively high levels of backward linkage within Latin America, are considered suitable hubs due to their capacity for generating significant foreign added value in their exports to the United States.
Topic:: Economics, Trade, Global Value Chains, COVID-19, and Minerals
Political Geography:: Latin America and United States of America

337. How Well Does Korea's Employment Insurance System Support Workers Facing Trade Shocks?

Author:: Kyong Hyun Koo
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study uses worker-level longitudinal panel data and trade data to conduct an analysis of the performance of Korea's employment insurance system in supporting trade-affected workers. We find that the rapid economic growth of China and Vietnam since the 2000s has subjected some Korean industries to heightened import competition. The Korean workers who were employed in these industries in their earlier careers tended to experience a long-term (10-year) decline in the growth rate of labor income and a relative deterioration in their employment security as the probability of involuntary job separation increased. With an increased probability of involuntary job separation, workers in import-competing industries were more likely to receive unemployment benefits. This implies that the unemployment benefit system in Korea was relatively effective in the short term to alleviate employment shocks triggered by trade shocks. Nevertheless, the trade adjustment support function of the unemployment benefit system had certain limitations in that the receipt of unemployment benefits could not ultimately counteract the downward trend in long-term labor income for workers in import-competing industries. In contrast to unemployment benefits, government-supported vocational training holds the potential to increase the long-term earnings of workers more exposed to import competition. However, workers employed in import-competing industries were not more likely to participate in government-supported vocational training; on the contrary, workers in export-expanding industries were more likely to participate in government-supported vocational training. This finding implies that the jobs of workers in import-intensive industries were less likely to be covered by employment insurance than those in export-intensive industries. Consequently, workers in import-intensive industries, who are at greater risk of trade shocks, may be less safeguarded than their counterparts in export-growing industries under the prevailing employment insurance system.
Topic:: Economics, Employment, Trade, and Insurance
Political Geography:: Asia and South Korea

338. Global Perspectives on ESG and Implications for Korea

Author:: Jinyoung Moon, Sang-Ha Yoon, Jiwon Park, Seung Kwon Na, and Sunghee Lee
Publication Date:: 06-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: ESG, which stands for Environmental, Social, and Governance, has gained significant importance in recent years. Adoption of Paris Agreement and Sustainable Development Goals and efforts to recover from COVID-19 have contributed to this global trend. Businesses and regulators are now placing more emphasis on the sustainability of economic activities and transparent disclosure of ESG information. In light of this, our study focuses on examining global ESG policy trends and supply chain due diligence regulations. We also compare ESG scores of firms across major countries and analyze the impacts of ESG performances on employment and productivity. Based on our findings, we aim to provide recommendations and implications for the government and private sector to address ESG in practice.
Topic:: Development, Economics, Environment, Governance, and Sustainability
Political Geography:: Asia and South Korea

339. Japan’s New Trade Strategy Focuses on Supply Chain Resilience and Trade Liberalization

Author:: Gyu-Pan Kim
Publication Date:: 07-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Since the inauguration of the U.S Trump administration in January 2017, Japan's trade strategies have been shifting from trade liberalization to protectionism, emphasizing the strengthening of supply chains. The Kishida cabinet, which was launched in October 2021, is strengthening economic cooperation with the United States through bilateral dialogue as well as multilateral cooperation frameworks such as IPEF. It also enacted the Economic Security Promotion Act in May 2022, and strengthened industrial policies for strategic industries such as the semiconductors. However, the Japanese government's new trade strategy is not limited to supply chain strengthening measures and industrial policies. It is aiming to take the lead in digital trade, which is a new trade issue, and bolster its leadership in CPTPP. This brief is structured as follows. In the following section we will examine Japan’s new trade strategy in terms of supply chain resilience, focusing on industrial policies represented by reshoring policy and national semiconductor strategy, and supply chain policies of critical materials outlined in the Economic Security Promotion Act enacted in May 2022. And we look at bilateral coopera-tion between the U.S and Japan, and key negotiation agenda on supply chains at the Indo-Pacific Economic Framework (IPEF). The third section reviews the Japan’s trade liberalization strategy focused on the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), and Digital Trade Agreements. In particular, we derived the direction of Japan’s free trade policy through an analysis of the characteristics of the CPTPP as a 21st-century trade norm, and a comparative analysis of major regulations related to e-commerce in the CPTPP, US-Japan Digital Trade Agreement, and RCEP.
Topic:: Economics, Trade, Resilience, Supply Chains, and Liberalization
Political Geography:: Japan and Asia

340. Trade and Investment Cooperation between South Korea and the Visegrad Group

Author:: Grzegorz Mazur
Publication Date:: 07-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The Visegrad group (V4) is a political alliance of four countries of Central Europe - the Czech Republic, Hungary, Poland and Slovakia, reaching its roots to the beginning of the 1990s, when the countries started reforming their political and economic systems from centrally planned to democratic free market economies. The coalition - consisting of countries with similar historical experience, transformation challenges and level of socio-economic development - aimed at regional co-operation and mutual support on their strategic goal of full membership in the European Union (EU). The V4 countries are currently full members of the EU (since 2004) with dynamic and competitive economies. The four countries form a market of over 60 million consumers with a share of ca. 7.7% of the EU’s GDP (Table 1). Over last three decades V4 countries have experienced high economic growth, closing a development gap with highly developed countries of the EU. Their economies have opened up to the global trading system, changing directions (mostly towards other EU countries) and expanding volumes of their international trade. Liberalizing economies have become attractive destinations for FDIs due to their central location at the continent, well-educated society as well as restructuration and privatization of many economic sectors (Mazur, 2009). Joining the European Union in 2004, V4 countries became part of the European Single Market leading to various consequences for economic policy and business conditions. While membership in the EU brought new economic opportunities and enhanced the countries’ business attractiveness, it has also had relevant consequences for their trade co-operation with third countries. The V4 states adopted all rights and commitments from the EU’s Common Trade Policy and have since been developing their trade and economic co-operation with third countries, including the Republic of Korea, commonly with other EU partners and exclusively at the EU level.
Topic:: Economics, Investment, Trade, Visegrad Group, and Cooperation
Political Geography:: Asia, South Korea, and Central Europe

341. EU's Trade Strategies and Korea-EU Cooperation Plans

Author:: Young-ook Jang
Publication Date:: 09-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Jang et al. (2022) investigate the recent shifts in the European Union's medium- to long-term trade strategies, which have evolved in response to a rapidly changing global trade landscape. We closely examine the policy domains currently in the EU's spotlight, including supply chain resilience, digitalization, tackling climate change, and public health crisis management. Another objective of this study is to identify opportunities for cooperation between Korea and the EU in the above-mentioned areas. Our recommendations include fostering partnerships in Net-zero technology development and multilateral climate discussions, modernizing digital trade agreements, and enhancing pharmaceutical cooperation.
Topic:: Economics, International Cooperation, Treaties and Agreements, European Union, Partnerships, and Trade
Political Geography:: Europe, Asia, and South Korea

342. Policy Implications of the Biden Administration’s Global Supply Chain Reorganization

Author:: Gusang Kang
Publication Date:: 09-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study indirectly estimates the impact of implementation of the Biden government’s supply chain restructuring policy on the U.S. and Korean economies, and derives policy implications accordingly. For the first analysis to indirectly examine the economic impact of the global supply chain reorganization of the semiconductor and battery industries, we estimate the impact of changes in the export share of the semiconductor or battery industry by country on the change in GDP per capita. Our results show an increase in the export share of semiconductors or batteries has a statistically significant increase in GDP per capita. These results support the reason why the Biden administration is moving to expand its exports through the reorganization of the U.S.-centered supply chain in the industry. By reorganizing the supply chain centered on the U.S., President Biden intends to attract production facilities in weak sectors such as memory semiconductors, foundries, and lithium-ion battery manufacturing to the U.S. through cooperation with partner countries such as Taiwan and Korea in the short term. In conclusion, this policy promotion seems to be part of a strategy to discover sustainable economic growth engines for the U.S. while checking China’s technological rise in key industries, and restoring U.S. leadership. Secondly, we estimate the impact of changes in export concentration or import concentration by semiconductor or battery item in the U.S. and Korea on the change in net exports by the two countries. First of all, in the case of the U.S. semiconductor industry, changes in export concentration and import concentration did not have a statistically significant effect on changes in net exports of the corresponding item. However, in the case of the Korean semiconductor industry, an increase in export concentration had a negative impact on the net export of the item, whereas a change in import concentration did not have a statistically significant effect on the change in Korea’s net export of the same item. In the case of the U.S. battery industry, as the import concentration by item increases, the U.S. net export of the same item decreases. However, we find that both the increase in the concentration of exports and the concentration of imports in the Korean battery industry decrease net exports of the product. Taken together, it can be inferred that the concentration of supply chains in the semiconductor and battery industries in the U.S. or Korea has the potential to hinder economic growth by reducing net exports of the relevant items in both countries. Based on the analysis results, it is necessary to strengthen norms-based supply chain cooperation with the U.S. and efforts are needed to diversify the lithium-ion battery supply chain.
Topic:: Economics, Supply Chains, and Joe Biden
Political Geography:: Asia, South Korea, North America, and United States of America

343. Economic Cooperation Policies of China, Japan and India towards South Asia and Their Implications for Korea

Author:: Jeong Gon Kim
Publication Date:: 10-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: With the Indo-Pacific region increasingly gaining recognition for its strategic importance, countries such as China, Japan, and India are seeking close economic cooperation with South Asian countries. This report analyses these countries’ strategic perspectives and cooperation policies towards South Asia (Pakistan, Bangladesh, Sri Lanka) under the rapidly changing international political and economic environment, and examines Korea’s future economic cooperation strategies and policies. Korea’s economic cooperation with South Asian countries has mainly focused on ODA. Although trade and investment have been centered on some manufacturing industries, they have recently shown a shrinking trend. While competition among major countries in South Asia is in full swing, it is necessary to establish a new direction for economic cooperation and promote policies towards South Asia from a strategic perspective.
Topic:: Economics, Regional Integration, Economic Cooperation, and Competition
Political Geography:: Japan, China, South Asia, India, Asia, and South Korea

344. Impact of China's Emissions Trading System on Industries and its Policy Implications

Author:: Jihyun Jung
Publication Date:: 10-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: China, the world's largest carbon emitter and skeptical of developing countries’ emissions reduction commitments, announced internationally in 2020 its vision to peak carbon emissions in 2030 and achieve carbon neutrality by 2060. China's emission reduction strategy has a significant impact on China's economy and society as a whole, and Korea, which has a close economic ties with China, will also be affected. China's carbon neutral policy announced in 2021 includes the continuous promotion of policies such as direct regulation, public investment, and subsidies, as well as the nationwide implementation of the ETS and the expansion of applicable industries. This study analyzed the impact of China's ETS on Chinese industries using the input-output model, and derived implications for Korea-China economic relations based on the results.
Topic:: Climate Change, Development, Economics, Trade, Industry, and Carbon Emissions
Political Geography:: China, Asia, and South Korea

345. Central Asia’s Trade Strategies and Korea-Central Asia Cooperation Plans

Author:: Minhyeon Jeong, Dongyeon Jeong, Jiyoung Min, and Boogyun Kang
Publication Date:: 12-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The purpose of this research is to derive the future directions of the cooperation between Korea and Central Asia under the global uncertainty that is deepening with the competition and confrontation of major powers that cannot be easily resolved, and as the strategic value of economic security increases. In the situation where the sanctions against the Russian economy are expected to be prolonged, the geographical value of Central Asia, which connects Russia and Europe, becomes more prominent. In addition, given the rich natural resources and relatively young population structure of Central Asia, expanding cooperation with Central Asia has even more significant implications. In this study, we classified the five Central Asian countries into three middle-income countries (Kazakhstan, Uzbekistan, Turkmenistan) and two low-income countries (Kyrgyzstan, Tajikistan) based on the similarities and differences revealed in the structural characteristics of each country's economy and the level of development. According to this classification, we analyzed the direction of cooperation in the digital, climate change, and health and medical sectors, which are currently in high demand for cooperation.
Topic:: Climate Change, Development, Economics, Health, International Cooperation, and Trade
Political Geography:: Central Asia and South Korea

346. U.S. Trade Strategies and Korea-U.S. Cooperation Plans

Author:: Gu Sang Kang, Hyok Jung Kim, Jonghyuk Kim, Hyuk Ju Kwon, Eunbin Park, and Yeo Joon Yoon
Publication Date:: 12-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The U.S. has taken a leading role in global discussions, not only in addressing major economic and trade issues but also in formulating cooperative measures on the international stage. Consequently, understanding the U.S. position and response strategies for each critical issue arising from external shocks is essential. This understanding holds significant importance in shaping Korea's mid- to long-term foreign economic strategy. By comprehending the U.S. position and response strategies, particularly regarding major issues, this study aims to derive Korea’s future trade strategies with the U.S. and develop cooperation plans with the U.S. As a result of conducting research under these objectives, the following cooperation strategies between South Korea and the United States have been derived. First, in the context of supply chain restructuring, South Korea should consider expanding local investment and production in the semiconductor and battery sectors within the U.S. close collaboration between the government and companies is essential to maximize national interests. It is crucial for our companies to take advantage of the tax incentives and other regulatory incentives offered by the U.S. government when entering the U.S. market, and our government should provide diplomatic support for these efforts. Regarding digital trade, South Korea should actively participate in international discussions led by the U.S. to set standards for essential infrastructure in the global digital transformation, such as advanced communication networks like 5G and 6G. Further-more, South Korea should actively lead discussions within the IPEF on the Trade Facilitation and Digital Commerce Working Group to overcome limitations within the KORUS FTA's digital trade provisions and collaborate with participating countries to develop a roadmap for digital trade norms. In the area of climate change mitigation, South Korea and the U.S. should strengthen their cooperation by promoting joint research in environmentally friendly, low-carbon technologies such as hydrogen production and utilization, fuel cells, carbon capture, utilization, and storage (CCUS), and energy storage devices. Additionally, both countries should collaborate on producing related products. Furthermore, South Korea should proactively engage with the U.S. in discussions related to climate change policies that the U.S. and the EU are considering. This proactive engagement can help increase the effectiveness of collaborative by anticipating the possibility that these policies may be-come international norms in the future.
Topic:: Development, Economics, International Cooperation, and Trade
Political Geography:: Asia, South Korea, and United States of America

347. Structural Change Reversed: A Comparative Analysis Pre- and Post-2015

Author:: Santosh Mehrotra
Publication Date:: 11-2023
Content Type:: Special Report
Institution:: India International Centre (IIC)
Abstract:: Since the well-known research of Simon Kuznets (Nobel Prize Winner in Economics), the structural transformation of all economies is characterised by two simultaneous phenomena. The first is that there is a structural shift in terms of the contribution of the three main sectors—agriculture, industry, and services—to the gross domestic product in favour of non-farm sectors; the second involves total employment in the economy—with a shift away from agriculture towards the other two main sectors of economic activity—first towards industry, followed by services. This paper is motivated by some major developments that have occurred in the macro-economy in India, and their implications for the labour market. It is an attempt to understand these significant changes to the labour market in agriculture in particular, which accounted for around two-fifths of India’s total workforce of 520 million in 2021. This paper is organised in three sections. Section 1 shows that structural transformation, which had been relatively slow for a significant part of the last century, gathered momentum during the first decade of the current century. It has been rather stalled for the last six years and has been reversed by poor economic policies and management. Section 2 examines how workers in agriculture have had to respond to the changed economic conditions and nonfarm labour market trends. The changes have only served to increase rural distress. In other words, far from farmers’ income having doubled between 2015 and 2022, as the Union government had attempted, the quality of work in agriculture has worsened, wages have fallen, and women (and men) who had exited agriculture have been forced to rejoin it. This is a form of disguised unemployment, with workers surviving merely on account of safety nets like Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA) or cash transfer (PM Kisan) or Public Distribution System (PDS) rations (Pradhan Mantri Garib Kalyan Yojna [PMGKY] was free during the pandemic). Section 3 examines the reasons for the emergence of these worsening labour market conditions. The concluding section summarises the findings.
Topic:: Agriculture, Economics, Employment, Macroeconomics, and Labor Market
Political Geography:: South Asia and India

348. Latin America and the ‘New Caucasus’: Linking Points Between Brazil and Azerbaijan

Author:: Roberto Rodolfo Georg Uebel
Publication Date:: 10-2023
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: For those arriving in Baku, the capital of Azerbaijan, after crossing the Atlantic Ocean and flying over war-torn Europe, in addition to the modern buildings along the Caspian Sea coast and the unique hospitality of its people, what stands out the most is the emerging ‘New Caucasus’ on the horizon. It is a region no longer constrained by the geopolitical, geoeconomic, and cultural ties to the old Eastern Europe and no longer overshadowed by historical hegemons like Russia (most recently) and Iran (previously). When I visited in 2022, I discovered a country, and a region, that masterfully coordinates a pragmatic foreign policy without relinquishing its Caucasian and Caspian values and roots, creating a unique political identity that, to some extent, resembles our Latin American political identity, of course bearing in mind the appropriate hemispheric and historical proportions. My observation is that Azerbaijan is emerging as a strategic actor in the Caspian Sea region as well as in the relations between Central Asia, the Caucasus, the European Union, and the Middle East.
Topic:: International Relations, Foreign Policy, Economics, and Geopolitics
Political Geography:: Brazil, Azerbaijan, Latin America, and South Caucasus

349. When the Economic Road Ends: Is Another Great Depression on the Horizon?

Author:: Tuomas Malinen
Publication Date:: 08-2023
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: We begin with a quintessential American expression: “uh oh.” Those words very likely embody the thoughts of the chief examiner of the U.S.-based Silicon Valley Bank (SVB) on 10 March 2023, the day when that bank faced a cataclysmic run on its deposits. In just two days, SVB customers tried to pull an astonishing 87% of deposits from the bank. It is obvious that no bank can survive such an onslaught. SVB was destined to fail. And so, it did—on that very day, in fact. Jonathan Rose, a historian and Senior Economist at the Federal Reserve Bank of Chicago, has published an eye-opening inquiry into the historical parallels of the runs on Silicon Valley Bank, Silvergate, Signature Bank, and First Republic in a recent article in the academic journal Economic Synopses. His research paints a startling picture on the scope of those runs, placing them in the context of the history of the largest depositor runs in the U.S. banking system between 1934 and 2021. Rose found that the most destructive bank runs in the period following the Great Depression of the 1930s and before 2022 have been the runs on Continental Illinois and Trust (which commenced on 7 May 1984), Washington Mutual (8 September 2008) and Wachovia (15 September 2008). They saw a deposit outflows of 30%, 10.1%, and 4.4% of total deposits, respectively. To note, the run on Continental Illinois in 1984 was already a largely electronic one due to automated wire transfers, and thus “lightning fast.” The outflow from Silvergate was 52% (during Q4 2022); on SVB it was 87% (10 March 2023 + expected during the next day); on Signature it was 29% (10 March 2023 + expected next day); and on First Republic it was 57% (approx. between 10-24 March). These are truly historical figures, matching those seen during the Great Depression. Many authorities and analysts are currently pondering what this all means for banks, their deposits, and countries in general, and where we could be heading. In this essay, I will explain why authorities have caused the ongoing crisis, why is it likely to get much worse, and what this implies for the world. I will conclude with a bit of unsolicited advice on how a certain category of countries, which includes Azerbaijan, can prepare and even benefit from its effects.
Topic:: Economics, Great Depression, Banking, and Economic Crisis
Political Geography:: Azerbaijan and Global Focus

350. Unpacking ‘One Nation, Two States’: The Panoptic Aliyev-Demirel Fraternity

Author:: Ayça Ergun
Publication Date:: 04-2023
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: The exceptional, privileged, and special relationship between Azerbaijan and Türkiye is well known. The two countries are not only friendly allies but also strategic partners whose foreign policy priorities and strategic and economic interests overlap. The leaders of both countries enjoy their partnership as statespersons and friends dating back to when President Heydar Aliyev led Azerbaijan and President Süleyman Demirel led Türkiye. Both they and their respective successors have frequently referred to their brotherhood in the eyes of their respective publics and when addressing other audiences around the world. Thus, the same pattern has also been embraced by the current presidents of the two states, Recep Tayyip Erdogan and Ilham Aliyev, who both underline and highlight the motto of “one nation, two states” on almost all occasions related to foreign policy, peace, and security building in the Silk Road region, fostering economic ties, and constructing an energy and transportation hub and connectivity network in the region. This motto is not only a reflection of the policies and priorities of the two states but is also a result of the societal perceptions, popular support, and meanings attributed to each other by their respective public opinions. The social dimension of bilateral relations constitutes the backbone of the preferences and priorities of the leaders of both countries. Linguistic and cultural affinity facilitates communication between ordinary citizens, who greet each other with a warm welcome, resulting in “feeling like at home” in each other’s countries. Simply put, traveling to Türkiye for an ordinary Azerbaijani citizen does not really feel like going abroad: from the early years of restored independence, there was a pre-assumption of kinship with Anatolian Turks. For an ordinary citizen of Türkiye, who was much less literate on Azerbaijani culture and its people than his/her typical Azerbaijani counterpart, it was a sweet surprise to meet with people who speak (more or less) the same language. It was even more surprising to see how he/ she was treated like “one of their own” in Azerbaijan, regardless of the occasion—whether due to a government visit, business trip, or to engage in trade (since Azerbaijan was not, until recently, a tourist destination for an ordinary citizen of Türkiye). Indeed, various types of social encounters have made both ordinary Azerbaijanis and ordinary Turks see how similar they are to each other. In the more than thirty years since Azerbaijan regained its independence in 1991, societal interaction and peopleto-people contact have increased extensively through official visits, commercial relations, educational programs, civil societal initiatives, and intermarriages. One can thus argue that the framework adopted by Demirel and Heydar Aliyev has been significantly filled-in, adopted, reconstructed, and fortified by numerous groups and initiatives originating in the two societies themselves.
Topic:: Foreign Policy, Economics, and Bilateral Relations
Political Geography:: Turkey, Middle East, Azerbaijan, and South Caucasus

351. The Coup Against the Third World: Chile, 1973

Author:: Tricontinental: Institute for Social Research
Publication Date:: 09-2023
Content Type:: Working Paper
Institution:: Tricontinental: Institute for Social Research
Abstract:: Dossier no. 68 presents an analysis of the 1973 coup against Chile and its effects on the Third World and non-aligned countries.
Topic:: Economics, Sovereignty, Third World, Coup, and International Order
Political Geography:: Latin America and Chile

352. Eight Contradictions of the Imperialist ‘Rules-Based Order’

Author:: Tricontinental: Institute for Social Research
Publication Date:: 03-2023
Content Type:: Case Study
Institution:: Tricontinental: Institute for Social Research
Abstract:: We are now entering a qualitatively new phase of world history. Significant global changes have emerged in the years since the Great Financial Crisis of 2008. This can be seen in a new phase of imperialism and changes in the particularities of eight contradictions.
Topic:: Economics, Human Rights, Imperialism, Financial Crisis, Capitalism, Global South, Socialism, and International Order
Political Geography:: China, Asia, Global Focus, and United States of America

353. Georgia-EU Economic Relations Dynamics and Cooperation Opportunities

Author:: Davit Shatakishvili
Publication Date:: 10-2023
Content Type:: Commentary and Analysis
Institution:: Georgian Foundation for Strategic International Studies -GFSIS
Abstract:: Rapprochement with the European Union in terms of legislation, trade, logistics, finance and economy, which should result in full-fledged integration, is a task of state importance for Georgia. Since Georgia gained independence, the European Union has been actively supporting the territorial integrity and sovereignty of the country, helping to improve the infrastructure, digital and investment environment, and has played a major role in strengthening state institutions and the civil sector. In June 2014, an Association Agreement was signed between Georgia and the European Union, including the Deep and Comprehensive Free Trade Area, which entered into force in July 2016. In March 2017, the visa-free travel regime for Georgian citizens in the Schengen area was launched. In the same year, the Constitution of Georgia was changed to reflect the unwavering will of the Georgian people to integrate into the European and Euro-Atlantic space. Over the decades, the economic relations between Georgia and the European Union have made significant progress. The trade turnover between the parties, investment volume, the export and import goods nomenclature, the number of incoming and outgoing tourists, the volume of remittances, the degree of integration into the common regional transport networks and others are dynamically increasing. For Georgia, a small and developing economy, keeping the European Union as a reliable and stable partner is a critically important task. In this article, we will analyze the existing trade-economic relations between the parties, and review such important sectors as: foreign trade, foreign direct investments, remittances, tourism and the foreign exchange market, as well as outline the opportunities and future perspectives of bilateral regional economic cooperation.
Topic:: Economics, Regional Cooperation, Bilateral Relations, and European Union
Political Geography:: Europe and Georgia

354. Urban Politics in the Middle East

Author:: Mona Harb, Marc Lynch, Jillian Schwedler, Gehad Abaza, and Munqeth Othman
Publication Date:: 10-2023
Content Type:: Research Paper
Institution:: Project on Middle East Political Science (POMEPS)
Abstract:: Urban politics has received growing attention in the anthropology, sociology, and political science of the MENA region. In line with global trends, questions of scale, territory, flows and connectivities and materialities have come to the fore, with a wide range of creative and novel lines of inquiry connecting the global to the hyper-local and every scale in between. In February 2023, POMEPS partnered with the Beirut Urban Lab at the American University of Beirut and The Policy Initiative think tank for a workshop in Beirut to bring together an interdisciplinary group of young scholars from across the region to explore questions of urban life, politics, and culture. The papers moved beyond more traditional political science topics such as municipal government, decentralization, clientelistic voting, protests, and clientelism. While those themes certainly operated in the background, the authors assembled in Beirut pushed to shift the lens towards multi-scalar ethnographic modes of inquiry, highlighting the materialities and relationalities of the hyper-local, examining sites and places which concentrate power dynamics.
Topic:: Economics, Migration, Politics, Race, Religion, Sectarianism, Culture, Syrian War, Mobility, Urban, Trade, Music, Transportation, Cities, Heritage, Resistance, Labor Market, Domestic Work, and Urbicide
Political Geography:: Iraq, Iran, Middle East, Tehran, Baghdad, Algeria, North Africa, Lebanon, Syria, Egypt, Jordan, Tunisia, Beirut, Cairo, Tunis, and Aqaba

355. Economic Challenges to Ukrainian Refugee Integration in Central and Eastern Europe

Author:: Atanas Dimitrov and Vasil Pavlov
Publication Date:: 12-2023
Content Type:: Journal Article
Journal:: Journal of Liberty and International Affairs
Institution:: Institute for Research and European Studies (IRES)
Abstract:: The invasion of Ukraine by Russia has resulted in the displacement of millions of Ukrainians, leading to socio-economic and political challenges for the host countries. The Refugee Response Plan, encompassing heavily affected EU Member States, has been the focus of this study, examining how the issue of refugee integration was addressed, with a specific emphasis on flaws and omissions in the approach. Various demographic and socioeconomic data and strategic national documents related to refugee integration were compared for this analysis. Employment was identified as a key tool for the integration of Ukrainian refugees. The findings revealed a lack of a common refugee integration policy among the surveyed countries despite similar past and current socioeconomic circumstances and security environments, including mixed migration. Ambiguities across these countries, including local population perceptions hindering Ukrainian refugee integration, were observed. Consequently, we assert the necessity for EU harmonized measures, emphasizing their long-term implementation to alleviate the economic burden of the war in Ukraine and provide predictability in the actions of individual governments.
Topic:: Economics, Refugees, Integration, and Russia-Ukraine War
Political Geography:: Europe, Ukraine, and Eastern Europe

356. The Perils of Antitrust Econometrics: Unrealistic Engel Curves, Inadequate Data, and Aggregation Bias

Author:: Gabriel A. Lozada
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Some economists argue antitrust policy should be based on empirical methods used by the Industrial Organization subdiscipline of economics, but non-economists must understand that those methods contain certain highly restrictive assumptions. Those assumptions involve econometric “identification,” and treating aggregate demand as if it were generated by a representative consumer (Muellbauer’s “generalized linear” preferences). We derive new results illustrating how restrictive the representative consumer assumption is; we explain aggregation bias in Almost Ideal Demand System models; and we show that data limitations make it even harder to justify economists’ restricting aggregate demands as one would the demand of a single individual.
Topic:: Economics, Antitrust Law, Data, and Econometrics
Political Geography:: Global Focus

357. Where Does the Money Go? An Analysis of Revenues in the GB Power Sector During the Energy Crisis

Author:: Serguey Maximov, Paul Drummond, Phil McNally, and Michael Grubb
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The gas crisis has fed through to a huge impact on wholesale electricity prices in Britain. We use hourly price and generation data to estimate the impact on associated revenues to different types of generators. Given the extent of forward contracting, we complement simple results based on the day-ahead prices (“Case 1”) with a more realistic case based on a representative, technology-specific assumptions on forward contracts (“Case 2”). We estimate that revenues to GB generators rose by almost £30bn, from about £20.5bn/yr (pre- Covid) to £49.5bn in 2022. About 70% of this accrued to gas generators (from about £6bn/yr to £19bn) and renewable generators with Renewable Obligation Certification (from £7.7bn to £15.5bn). There are various indications that the increase in revenues to gas plants significantly exceeded the rise in their input costs, and no reason to think the generating cost of these renewables significantly increased. Nuclear, and some other biomass and renewables also benefited. We find that the Electricity Generation Levy, introduced in Jan 2023, would have had limited impact on these numbers if it had existed in 2022 and is likely to have less impact in 2023. Finally, we discuss reasons and potential implications of the findings.
Topic:: Economics, Environment, Money, Energy Crisis, and Revenue
Political Geography:: Britain and Europe

358. The Anatomy of Cyber Risk

Author:: Rustam Jamilov, Hélène Rey, and Ahmed Tahoun
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: This paper employs computational linguistics to introduce a novel text-based measure of firm-level cyber risk exposure based on quarterly earnings conference calls of listed firms. Our quarterly measures are available for more than 13,000 firms from 85 countries over 2002-2021. We document that cyber risk exposure predicts cyber attacks, affects stock returns and profits, and is priced in the equity option market. The cost of option protection against price, variance, and tail risks is greater for more cyber-exposed firms. Cyber risks spill over across firms and persist at the sectoral level. The geography of cyber risk exposure is well approximated by a gravity model extended with cross-border portfolio flows. Back-of-the-envelope calculations suggest that the global cost of cyber risk is over $200 billion per year.
Topic:: Economics, Markets, Cybersecurity, Business, and Risk
Political Geography:: Global Focus

359. Betting on Black Gold: Oil Speculation and U.S. Inflation (2020-2022)

Author:: Carlotta Breman and Servaas Storm
Publication Date:: 06-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Sharp increases in systemically important crude oil prices have been a major cause of the recent surge in the inflation rate in the U.S. This paper investigates the extent to which the increase in oil prices can be attributed to excessive speculation in the oil futures market. Our analysis suggests that excessive speculation in the crude oil market has been responsible for 24%-48% of the increase in the WTI crude oil price during October 2020-June 2022. These estimates translate into an oil price increase of around $18-$36 per barrel and an increase in the U.S. PCE inflation rate by circa 0.75 to 1.5 percentage points during the same period. We complement the analysis with an empirical investigation of the crude oil market which shows that (speculative) long non-commercial open-interest positions in oil futures have increased considerably relative to short non-commercial positions. We further find that higher futures prices for crude oil ‘Granger-cause’ oil spot prices, the futures prices of corn and soybeans and the fertilizer price. These econometric results show that oil speculators have to be held accountable for not just raising oil prices, but also driving up food commodity prices. We finally discuss measures to clamp down on excessive speculation in oil in order to eliminate its systemically adverse consequences for the U.S. economy.
Topic:: Economics, Markets, Oil, Inflation, and Speculation
Political Geography:: North America and United States of America

360. Is “Inflation First” Really “Rentiers First”? The Taylor Rule and Rentier Income in Industrialized Countries

Author:: Mario Seccareccia and Guillermo Matamoros Romero
Publication Date:: 07-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The Taylor rule has returned as a significant policy guide amid increasingly overt political pressures for its official (and not just its implicit) adoption at the US Fed as inflation fears have come to dominate monetary policy actions both in the US and internationally in recent times. Our paper analyzes the effect of monetary policy on the functional distribution of income by reconstructing how the post-1970s “inflation first” policy commitments of central banks came to be crystallized in the Taylor rule. While there are differences among the various specifications of this “rule”, the Taylor relation is merely an offshoot of what can be described generically as the family of Wicksellian reaction functions whose implications support rentier income over time. Because of the internal logic of the Taylor rule, this has led to different interpretations such as, for example, the more Keynesian Yellen rule, which depart from the strict sense of the Taylor rule. The paper also interprets the Taylor Rule in light of Wicksell’s formulation and analyzes the potential consequence of the differences. In contrast to the strict Wicksell rule of “proportional” adjustment, our econometric findings suggest evidence that central banks adjust “over-proportionally” the benchmark money interest rate in the presence of changes in the inflation rate for the complete “inflation first” era since the 1970s until the COVID-19 crisis. They thereby strongly favored rentier incomes in their reaction functions, with the possible exception of the post-financial crisis period. To limit the pro-rentier consequences of such inflation-targeting regimes, it is important that policymakers mandate multiple objectives for central banks, as exemplified in the current US Fed’s dual mandate.
Topic:: Economics, Inflation, Industrialization, and Rentierism
Political Geography:: North America and United States of America

361. Why The Monetary Policy Framework in Advanced Countries Needs Fundamental Reform

Author:: William White
Publication Date:: 08-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The objective pursued by most central banks in recent decades has been a low level of inflation. Since inflation was believed to respond to changes in unemployment, this implied a primary focus on labor markets and output gaps in the “real” economy when setting monetary policy. In contrast, “financial” sector developments were thought to be of no great importance.
Topic:: Economics, Monetary Policy, Reform, Inflation, and Labor Market
Political Geography:: Global Focus

362. The Horizontal Merger Efficiency Fallacy

Author:: Mark Glick, Gabriel A. Lozada, Pavitra Govindan, and Darren Bush
Publication Date:: 08-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The Department of Justice and Federal Trade Commission Merger Guidelines (the “Merger Guidelines”), including the much improved latest revision in 2023 (the “New Merger Guidelines”), have continued to perpetrate what we call in this paper the horizontal merger efficiency fallacy. The fallacy arises because in the Guidelines the term “efficiencies” has become unmoored from its foundations in economic theory and has been reduced to the business school construct of cost savings. We show that cost savings can only be considered universally socially beneficial by acceptance of what is termed “the Consumer Welfare Standard” (antitrust) or “the surplus theory of welfare” (economics), a theory that has been discredited and abandoned by welfare economists. In economic theory, efficiency means Pareto Efficiency. We explore the various attempts to tether the cost savings definition of efficiency to Pareto Efficiency and explain why these attempts have failed. We conclude that there is no sound way to theoretically reconcile cost savings with the economic meaning of efficiencies. We then move beyond the efficiency fallacy and show how modern welfare economics can be used to integrate Congressional antitrust goals into the New Merger Guidelines. This requires abandoning the unsupported “standard deduction” for efficiencies and replacing it with an evidence-based assessment of how a specific merger under review potentially impacts Congressional antitrust goals. This change renders the present efficiency rebuttal section of the New Merger Guidelines superfluous, and we provide specific reasons why this section as currently drafted is flawed and should be jettisoned.
Topic:: Economics, Government, Markets, Business, and Efficiency
Political Geography:: Global Focus

363. Precedents, Instruments and Targets that the Fed Has Used to Create and Support a Postcrisis Global Safety Net

Author:: Edward J. Kane
Publication Date:: 09-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Much has been made of the Global Safety Net that has been put into place since the Great Financial Crisis but the distributional effects of some of the Fed’s strategies are still shrouded in mystery. In supplying bailout funds at below-market terms to uninsured creditors of firms and governments that were economically insolvent, the Fed reinforced the implicit expectation that megabanks are free to take on high levels of risk and benefit from the upside while being protected from any serious downside. An important example of this is the role of currency swaps. By extending its “temporary” dollar swap lines with other central banks, including the European Central Bank, “until further notice” the Fed broadcasted its intention to act as the financial world’s “liquidity provider” of last resort. The “liquidity” support provided by the Fed to megabanks through cross-border lending in fact acted as subsidies, the costs of which were borne by ordinary US citizens. This is just one piece of an unacknowledged game plan of building global strategies of crisis prevention and crisis management based on misdirection and piles of bullsh*t.
Topic:: Economics, Monetary Policy, Federal Reserve, Central Bank, and Safety Net
Political Geography:: North America and United States of America

364. The Art of Paradigm Maintenance: How the ‘Science of Monetary Policy’ tries to deal with the inflation of 2021-2023

Author:: Servaas Storm
Publication Date:: 10-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The macroeconomic models used by major institutions including the Federal Reserve and the International Monetary Fund (IMF) failed to predict the inflation surge during 2021-2023. The output gap, the unemployment gap, the New Keynesian Phillips curve and inflation expectations did not give timely and relevant signals. The re-emergence of inflation thus threw the ‘science of monetary policy’ off the rails. Faced with the choice between changing their paradigm and proving that there is no need to do so, the ‘scientists of monetary policy’ got busy on the proof. As a result, a number of ad-hoc epicycles have been added to the New Keynesian analytical core—with the help of which one can claim to be able to explain the sudden acceleration of inflation post-factum. This paper critically reviews the theoretical and empirical merits of three recent tweaks to the New Keynesian core: using the vacancy ratio as the appropriate measure of real economic activity; hammering on the considerable risk of an imminent wage-price spiral; and the resurrection of the non-linear Phillips curve. The paper concludes by drawing out sobering lessons concerning the art of paradigm maintenance as practiced by the ‘scientists of monetary policy’.
Topic:: Economics, Monetary Policy, Institutions, Inflation, and Macroeconomics
Political Geography:: Global Focus

365. Visa Digitalization and Tourism in Cameroon: A Promising Future?

Author:: Yollande Meli Tankeu and Boris Andzanga Ndzana
Publication Date:: 07-2023
Content Type:: Working Paper
Institution:: The Nkafu Policy Institute
Abstract:: Cameroon is endowed with a culture rich in natural reserves and breathtaking landscapes, making it a popular destination for tourists from all over the world. However, the cost and hassle of obtaining a visa have long been one of the main obstacles to the growth of tourism in Cameroon. In order to respond to the growing interest of travelers and to make Cameroon a preferred destination for tourists, the government has recently made significant progress by switching from the manual visa procedure to the electronic visa procedure. By Decree No. 2023/147 of March 2, 2023 (1), the electronic visa application came into force on April 30, 2023, in diplomatic missions, consular posts, international airports, air, land, and sea borders. It could be a potential solution to boost tourism in Cameroon. This transition to a digital visa procedure has many advantages. This article analyses the impact visa digitalization on the tourism sector in Cameroon. In the first part, the paper will present an overview of tourism in Cameroon, and in the second part, the expected effects of visa digitalization on the tourism sector in Cameroon.
Topic:: Economics, Tourism, Visa, and Digitalization
Political Geography:: Africa and Cameroon

366. Pooling Actions to Raise the Impact of Think Tanks in Central Africa

Author:: Nkafu Policy Institute
Publication Date:: 09-2023
Content Type:: Working Paper
Institution:: The Nkafu Policy Institute
Abstract:: The Economic Community of Central African States (ECCAS) continues to confront a multitude of challenges spanning human rights abuses, armed conflicts, transnational crime, inadequate governance, food insecurity, poverty, usurpation, corruption, extensive embezzlement, and sluggish economic growth. These issues have dire repercussions on both the well-being of the populace and the economies of ECCAS member states. A significant factor contributing to this situation is the deficiency of robust national and international institutions capable of advocating for reform or making evidence-based policy decisions. In this context, the pivotal role of think tanks in advancing good governance, upholding the rule of law, safeguarding fundamental human rights, fostering inclusive and sustainable conflict resolution, among other objectives, is widely acknowledged on a global scale. Nevertheless, the few think tanks operating within the ECCAS region continue to grapple with multifaceted challenges that hinder their capacity to advocate for evidence-based decisions and carry out their advocacy initiatives without hindrance. These challenges encompass securing sustainable funding, upholding integrity and credibility, as well as difficulties with effective advocacy for various evidence-informed policies.
Topic:: Civil Society, Economics, Human Rights, Think Tanks, and Armed Conflict
Political Geography:: Africa and Central Africa

367. Economic Impacts of a New Global Financing Aid on Sub-Saharan African Countries

Author:: Bin Meh
Publication Date:: 10-2023
Content Type:: Working Paper
Institution:: The Nkafu Policy Institute
Abstract:: The world is challenged with multiple shocks, and Sub-Saharan Africa (SSA) is highly affected by these challenges. Due to these challenges, the chances of diverging from set development agendas to achieving sustainable development goals are high. In the presence of the shocks, economic growth in SSA is anticipated to deteriorate from 3.9% in 2022 to 3.6% in 2023 (1). External debts and inflation are on the rise in SSA, attributed to the war in Ukraine, climate change and the ripple effects of Covid-19 on households, businesses and other economic sectors in the region. The purchasing power, household consumption, investments, government revenue and expenditures of SSA countries are falling, thus exposing the SSA economies’ vulnerabilities.
Topic:: Economics, Foreign Aid, and Sustainable Development
Political Geography:: Africa and Sub-Saharan Africa

368. The U.S.-China Rivalry is Changing International Supply Chains

Author:: Piotr Dzierżanowski
Publication Date:: 10-2023
Content Type:: Working Paper
Institution:: The Polish Institute of International Affairs
Abstract:: While the U.S.-China economic rivalry has been intensifying for years and is closely linked to the deterioration in political relations, the sudden collapse of supply chains caused by the COVID-19 pandemic has highlighted the increased role of security considerations in economic relations and the interdependencies between China and developed countries. The American actions to reduce those links will have long-term consequences for U.S.-China relations and the economies of other countries.
Topic:: Security, Economics, Trade, Rivalry, and Supply Chains
Political Geography:: China and United States of America

369. Using Targeted Sanctions to Help Prevent Mass Atrocities: Results from Interviews with Experienced Practitioners

Author:: Tallan Donine, Kyra Fox, Daniel Solomon, Alex Vandermaas-Peeler, and Lawerence Woocher
Publication Date:: 01-2023
Content Type:: Special Report
Institution:: Simon-Skjodt Center for the Prevention of Genocide, United States Holocaust Memorial Museum
Abstract:: The Simon-Skjodt Center’s “lessons learned” project aims to understand better how policy makers, across all levels of government, can take effective action to prevent mass atrocity crimes and protect civilian populations in situations where they face serious threats of group-targeted, systematic violence. We have sought to identify, distill, and organize insights on a range of policy tools—ranging from “naming and shaming” to sanctions to prosecutions—which are sometimes used to help prevent or respond to mass atrocities. To complement our review of the empirical research literature on the use of targeted sanctions, we conducted interviews with people who had substantial policy or operational experience working in the US government on targeted sanctions prior to 2021. The premise for the interviews is that experienced practitioners have important insights about when and how targeted sanctions can be most effective in helping prevent mass atrocities.3 While one can find many ideas about how to use targeted sanctions most effectively, none that we are aware of are: (1) focused specifically on the use of targeted sanctions for mass atrocity prevention and (2) based on the collective perspectives of a set of experienced practitioners. This report summarizes the results of the interviews with experienced targeted sanctions practitioners. Details on the methods employed and the interview respondents are presented in appendices.
Topic:: Foreign Policy, Economics, Sanctions, and Atrocity Prevention
Political Geography:: Global Focus

370. ASEAN's medium- to long-term trade strategies and the direction of RoK-ASEAN cooperation

Author:: Sungil Kwak, Seungjin Cho, Jaewan Cheong, Jaeho Lee, Mingeum Shin, Nayoun Park, and So Eun Kim
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: In recent years, the U.S.-China hegemony competition has intensified, dividing the world into two blocs. ASEAN has long culti-vated its position on the international stage by maintaining a certain distance between the United States and China. In that sense, ASEAN is the best partner for Korea to ef-fectively respond to the divided world. Therefore, this study seeks the directions of cooperation with ASEAN in supply chain, digital trade, climate change response, and health and development cooperation in line with changes in the international order.
Topic:: Climate Change, Development, Economics, International Cooperation, Trade, and ASEAN
Political Geography:: China, Asia, North America, and United States of America

371. Developing ODA Evaluation Methodology for Technical Cooperation

Author:: Eunsuk Lee and Hyemin Yoon
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: As the volume of Korea's official development assistance (ODA) expands, the demand for systematic management of evaluations and improvement of their usefulness is increasing. This study focuses on developing evaluation methodology for technical cooperation (TC) which is an important part of Korea’s ODA. Based on the case studies of six multilateral organizations and four bilateral development agencies, we draw lessons for Korean ODA agencies in terms of selection criteria, types, and methodological aspects of evaluation of technical cooperation and propose a four-step project management and evaluation mechanism for TC activities.
Topic:: Development, Economics, Science and Technology, and Management
Political Geography:: Asia and South Korea

372. International Humanitarian Assistance and Multilateral Cooperation in North Korea

Author:: Jangho Choi and Yoojeong Choi
Publication Date:: 04-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The economic situation in North Korea is worsening. If an economic crisis occurs in North Korea, the first thing that will be pursued is humanitarian aid from the international community. North Korea's problems should not spread beyond North Korea, and above all, the international community should help ensure that the residents of North Korea can live at a minimum level of respect as human beings. This article aims to examine international humanitarian aid to North Korea and multilateral cooperation. We will examine how international humanitarian aid to North Korea has been carried out so far, what North Korea's position is on international support, and what the achievements of multilateral cooperation have been.
Topic:: Economics, Humanitarian Aid, and Multilateralism
Political Geography:: Asia and North Korea

373. Covid-19 Crisis and Shifts in the Corporate Competitive Landscape: Comparisons with Previous Economic Crises

Author:: Sang-Ha Yoon, Yaein Baek, Wontae Han, Yoonsoo Lee, and Daisoon Kim
Publication Date:: 04-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: In terms of economic fluctuations, it is well recognized that the effects of an economic crisis have a detrimental impact on the entry, growth, decline, and exit of firms. In addition, the magnitude of the impact varies both within and between industries depending on the size and other characteristics of the firm. The economy is going through significant changes due to the emergence of new industries and the decline or disappearance of current ones. This study looks at how big economic events like the COVID-19 pandemic and the global financial crisis have affected businesses and industries. After completing a study at several levels of top international corporations, larger domestic enterprises, and domestic small and medium-sized businesses, it attempts to draw policy implications. First, it is necessary to foster and support top-tier companies to defend against global economic fluctuations and strengthen international competitiveness. In particular, the institution in charge of competition policies domestically and the institution that helps companies improve their competitiveness are different and the focus of policies is distinctive, so comprehensive attention and perspective of policymakers are needed. Second, it is urgent to respond to new issues related to competition policy in the domestic market. The behavior of emerging big tech and platform companies is different from monopoly companies in the past, so consumer welfare is not impaired, but it burdens nearby and other market participants. Therefore, a view that deviates from the focus on monopoly pricing is also essential for competition policy. Third, measures to support global corporate growth and countermeasures against changes in the industrial landscape should be prepared. Investment and R&D expansion at the corporate level is essential for corporate growth, and measures are needed to boost investment in recently emerging intangible assets. In addition, it is important to revitalize the movement of economic resources to cope with changes in the inter-industry landscape accompanied by the crisis. Fourth, policies to revitalize start-ups and closures are required. The decline in new companies' market entry and exit rates is a symtom of an aging economy contributing to the overall decrease in productivity. Therefore, enhancing the revitalization of the corporate ecosystem and expanding the size of enterprises are essential to enhance the dynamics of the economy. Fifth, it is necessary to find an appropriate combination of government roles in times of crisis. In particular, it is important to grasp the detailed status of economic stabilization policies in relation to SMEs, and at the same time, clear judgments on the appropriate size of support measures, the period of support, and the timing of collection are urgently needed.
Topic:: Economics, COVID-19, Corporations, Economic Crisis, and Competition
Political Geography:: Global Focus

374. Does Institutional Quality Matter to Korean Outward FDI? A Gravity Model Analysis

Author:: Muhammad Akhtaruzzaman
Publication Date:: 01-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: According to Korea’s Ministry of Knowledge Economy (currently the Ministry of Trade, Industry and Energy), foreign investment has now become one of the major economic pillars driving the Korean economy over the past 15 years (Tang 2022). The Korean economy started to open up to rest of the world following the Asian financial crisis in 1997 and was the biggest FDI policy reformer among 40 developed and emerging economies over the period from 1997 to 2010 (Nicolas et al. 2013). Over the last decade, Korea’s outward FDI grew much faster than inward FDI (See Figure 1) and Korea is now a net capital exporter to the world. In 2021, Korea’s outward FDI flows totaled $76.64 billion and a total of 2323 Korean enterprises invested in overseas countries (Korea EXIM Bank 2022). Due to this increased amount of outward FDI, a large number of studies (Kim and Rhee 2009; Park and Jung 2020) investigated what determines Korea’s outward FDI (OFDI). Institutional quality is found to be a major determinant in FDI literature in general. It suggests that political risk (lack of/poor institutional quality) not only deters FDI inflows to host countries but also can lead FDI to countries with higher risks and to ‘pollution heaven’ which might have an adverse impact on long term growth and development in both host and home countries. There are strong empirical evidences in literature that lack of institutional quality or good governance is associated with lower FDI inflows. An extensive literature (Alfaro et al. 2008; Ali et al. 2010; Akhtaruzzaman et al. 2017; Bénassy‐Quéré et al. 2007) investigated FDI response to various types of institutional quality in FDI host countries. Over the last 20 years data evidenced that Korea’s OFDI flowed to developing countries with a sustained large gap existing in institutional quality between host countries and Korea (See, Fig 2 top panel); however; those countries had been offering a higher degree of capital account openness. A sharp increase in capital account openness since the early 2000s coincides with sharp increase in Korea’s OFDI to those host countries. For example, Peru was the least open economy and started to initiate measures to open capital account since the mid-90s and early 2000s. The degree of openness in Peru is now similar to that of developed countries. On the other hand, Peru is one of the least progressed countries in terms of institutional quality over the same period of time. This slow or no progress in institutional quality is a common pattern of institutional improvement for a large sample of host countries of Korea’s OFDI (see, Figure 2). However, those developing countries including Peru are regular destinations of a substantial amount of Korea’s OFDI. Does this suggest that institutional quality of host country does not matter to Korean investors, or is there a 3rd factor mitigating the impact of institutional quality on Korea’s OFDI? Few studies on Korea’s OFDI considered institutional quality of host country as a control variable instead of main determinant of FDI (Park and Jung 2020). However, existing studies do not explain why Korea’s OFDI flowed to countries with a large gap in institutional quality between Korea and host countries. This research fills the gap in the literature of Korea’s OFDI. The findings of this research suggest that high degree of capital account openness (a factor that ensures profit repatriation of investors) weakened the negative impact of poor institutional quality in host countries on Korea’s OFDI. The remaining of this paper is organised as follows. Section II reviews relevant literature of FDI and identifies major determinants for Korea’s OFDI from existing studies; Section III discusses research method and empirical issues; Section IV presents the research findings; Section V concludes the research, points to the research limitations, and provides policy recommendations.
Topic:: Economics, Foreign Direct Investment, Institutions, and Knowledge Economy
Political Geography:: Asia and South Korea

375. Analysis on the Determinants of Labor Share and Its Policy Implications

Author:: Yaein Baek, Minsoo Han, Wongi Kim, and Hyunsuk Kim
Publication Date:: 02-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: There has been a significant decline in the global labor share, leading to numerous studies about the cause of this drop. The labor share is used as one of the main indicators of inequality because a decrease in the labor share can lead to aggravation of income inequality. This is because low-skilled workers can be greatly affected by such a decline in the labor share and the main source of in-come for the low-income class, including the self-employed, is labor income. Among various indicators of inequality, this study analyzes the determinants of the change in labor share. Technological changes such as adoption of robots, advancements in information and communications technology (ICT) and the Fourth Industrial Revolution (4IR) are expected to change the labor market. Hence, this study analyzes the impact of technological changes on labor share and suggests policy responses.
Topic:: Economics, Science and Technology, Labor Issues, and Inequality
Political Geography:: Global Focus

376. Strategies of Multinational Companies Entering China in the Era of U.S.-China Competition and Implications for Korea

Author:: Sang Baek Hyun, Ji Young Moon, Min-suk Park, Jonghyuk Oh, and Yunmi Oh
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: With the integration of resources and markets around the world sparked by the trend of globalization, multinational companies have continued to grow at a rapid pace. In particular, global manufacturers have maintained their competitiveness by distributing resources more efficiently while establishing a global value chain with China as their main production hub. However, measures taken by the U.S. to block China’s access to technology and supply chains in some high-tech industries have prompted discussions on reorganization of the global supply chain, placing these multinational companies in an uncertain situation concerning their operations in China. At a time when competition between the U.S. and China is intensifying, it is necessary to look at the response strategies of global companies that have entered China and seek effective countermeasures for Korean companies.
Topic:: Economics, Multinational Corporations, Manufacturing, and Competition
Political Geography:: China, Asia, South Korea, North America, and United States of America

377. Mitigating Global Fragmentation in Digital Trade Governance: A Case Study

Author:: Douglas Lippoldt
Publication Date:: 01-2023
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation (CIGI)
Abstract:: Digital trade is growing rapidly, and regulators are trying to keep up. Concerns about privacy, consumer protection and national security demand regulatory attention, but too much regulation risks stifling digital trade. Current-generation trade agreements need to find the right balance between regulatory and liberal approaches to e-commerce. This paper looks at how five leading digital economies (Canada, the European Union, Japan, Singapore and the United States) are using regional trade agreements to address concerns while enhancing trade.
Topic:: Economics, International Cooperation, International Trade and Finance, Governance, and Digitalization
Political Geography:: Global Focus

378. An Economic Mirage: How Canadian Universities Impact Freedom to Operate

Author:: James Hinton, Mardi Witzel, and Joanna Wajda
Publication Date:: 04-2023
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation (CIGI)
Abstract:: Canada’s universities drive research and innovation, but when publicly funded institutions partner with foreign firms and countries, who is the biggest beneficiary? Not Canada or the Canadian economy. According to the authors of this paper, foreign entities that invest in Canadian research often take their intellectual property (IP) (and the money it generates) out of the country, leaving Canadian taxpayers holding the bill, unable to benefit from the economic return on their investment. This paper looks at the U15, a collective of some of Canada’s most research-intensive universities, accounting for 79 percent of all competitively allocated research funding in Canada and 83 percent of all contracted private sector research in Canada. With a focus on research outcomes, specifically IP, this paper examines patent data; IP ownership; and the impact on freedom to operate, an indicator of Canadian firms’ ability to commercialize their technology, to maximize Canada’s return on investment.
Topic:: Economics, Education, Higher Education, and Freedom
Political Geography:: Canada and North America

379. Collective screening

Author:: Vincent Anesi and Peter Buisseret
Publication Date:: 03-2023
Content Type:: Working Paper
Institution:: Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:: We study a dynamic principal-agent model in which the principal is a group whose members hold heterogeneous and evolving values from an agreement with the agent. Learning about the agent’s private information reduces the principals’ conflicts over their joint offer, mitigating a principal’s losses if she is not decisive over future offers. As a consequence, a principal in a group prefers to screen the agent more aggressively than a single principal. We study the dynamics of the principals’ collective choice, and obtain conditions under which decisive members of the group successively trade away their decision-making authority, leading inexorably to the concentration of negotiation power in the hands of a single principal.
Topic:: Economics, Political Science, and Decision-Making
Political Geography:: Global Focus

380. Why the proposed Brussels buyers club to procure critical minerals is a bad idea

Author:: Cullen Hendrix
Publication Date:: 05-2023
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics (PIIE)
Abstract:: Concerned about critical mineral supply chains and its own strategic vulnerabilities, the European Union is advancing a buyers club to procure minerals critical to the clean energy transition, such as bauxite, cobalt, lithium, and nickel. The European Union is deeply dependent on imports of both raw and processed critical minerals and materials and thus highly exposed to global price volatility. The door appears to be open for the United States or other EU trading partners and like-minded countries to join this club. Decarbonization is not the only impetus behind the proposed Brussels buyers club. Both the European Union and United States view China’s dominance of critical mineral supply chains as a national security issue, because these minerals are key inputs to modern military technology. Hendrix agrees that supply chains for critical minerals desperately need widening to meet projected global demand and tackle climate change mitigation, but he warns that a purchasers club would not be a step in the right direction. A buyers club would be prone to free riding, set up distributive conflicts within the European Union, and reduce the share of climate mitigation benefits accruing to critical mineral–producing countries, many of which are developing and middle-income economies.
Topic:: Economics, National Security, European Union, Supply Chains, and Minerals
Political Geography:: China and Europe

381. Can the World Trade Organization be saved? Should it?

Author:: Alan Wm. Wolff
Publication Date:: 05-2023
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics (PIIE)
Abstract:: Heads of state, trade ministers, and academics have repeatedly called for reforming the World Trade Organization (WTO), the institution charged with the stewardship of the global trading system. The durability and worth of the WTO are being increasingly questioned despite the fact that by almost all objective measures, it has been a great success, with world trade growing much faster than global GDP over the last 75 years. However, past success does not guarantee future performance. This Policy Brief examines the institution’s most serious defects and the multitude of challenges it faces. It suggests the institution needs to evolve to reach broad-based international trade agreements, adding much needed new rules to the world trade rulebook and developing effective means to settle disputes that would render the rules of the system enforceable once again.
Topic:: Economics, International Trade and Finance, Treaties and Agreements, and World Trade Organization
Political Geography:: Global Focus

382. The international tax agreement of 2021: Why it’s needed, what it does, and what comes next?

Author:: Kimberly Clausing
Publication Date:: 04-2023
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics (PIIE)
Abstract:: In 2021, more than 135 jurisdictions agreed on transformative new international tax rules that would establish a minimum tax rate of 15 percent on multinational corporate income regardless of where it was reported. In December 2022, the European Union unanimously moved forward to implement this minimum tax, and other countries, including South Korea, Japan, Australia, Canada, and the United Kingdom, are also either implementing the tax or taking substantial steps toward implementation. In tandem, the United States should also reform its international tax system and adopt a stronger minimum tax. While the future of the international agreement is uncertain, it has important implications for the ability of governments worldwide to create tax systems that are administrable, fair, and efficient. The agreement also demonstrates important guiding principles for the future of multilateral cooperation on global collective action problems, including efforts to protect public health from future pandemics, address nuclear proliferation, and resolve territorial conflicts. US progress on international tax reform would enhance much needed international cooperation on these issues.
Topic:: Economics, Treaties and Agreements, Reform, European Union, and Tax Systems
Political Geography:: Europe and Global Focus

383. Will China's impending overhaul of its financial regulatory system make a difference?

Author:: Martin Chorzempa and Nicolas Véron
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics (PIIE)
Abstract:: China's reshuffle of its financial supervisory architecture announced in March, like previous changes, appears incremental rather than radical. It will not, however, resolve the main challenge hobbling China’s financial system, which is not linked to specific choices of supervisory architecture but rather to the unfinished transition from a state-directed to a market-based financial system and the way the Chinese Communist Party's pervasive role creates obstacles to good corporate governance of individual financial firms and to the independence of supervisory authorities. Too often, political authorities and sometimes the supervisors themselves intervene directly in financial firms’ decisions to allocate capital and credit, occasionally resulting in failures of risk control and risk management. The authors argue that Chinese reformers should aim at a clearer and more rigorous division of responsibilities, in which financial firms manage financial opportunities and risks, and supervisors are exclusively focused on their respective public policy mandates.
Topic:: Economics, Regulation, Finance, and Corporate Governance
Political Geography:: China and Asia

384. Carbon border adjustments, climate clubs, and subsidy races when climate policies vary

Author:: Kimberly Clausing and Catherine Wolfram
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics (PIIE)
Abstract:: Jurisdictions adopt heterogeneous climate policies that vary in terms of both ambition and policy approach, with some jurisdictions pricing carbon and others subsidizing clean production. We distinguish two types of policy spillovers associated with diverse policy approaches to climate change. First, when countries have different levels of climate ambition, free riders will benefit at the expense of more committed countries. Second, when countries pursue different approaches, carbon-intensive producers within cost-imposing jurisdictions will be at a relative competitive disadvantage compared with producers in subsidizing jurisdictions. Carbon border adjustments and climate clubs are attempts to respond to these policy spillovers, but when countries have divergent policy approaches, one policy alone will not be able to address both types of spillovers. We also consider the policy dynamics that result from carbon border adjustments and climate clubs; both have the potential to encourage upward harmonization of climate policy, but they come with risks. Further, the pressures of international competition in the presence of divergent climate policy approaches may result in subsidy races, which come with their own potential risks and benefits.
Topic:: Climate Change, Economics, Carbon Emissions, and Production
Political Geography:: Global Focus

385. Saving the WTO from the national security exception

Author:: Warren Maruyama and Alan Wm. Wolff
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics (PIIE)
Abstract:: For any member of the World Trade Organization (WTO) not making alternative arrangements, enforceability of the rules of the global trading system, a distinguishing feature of the WTO, ceased to exist on December 11, 2019, because the United States blocked appointments to the Appellate Body of the WTO dispute settlement mechanism. A major obstacle to the United States accepting any resolution of this impasse—thus permitting dispute settlement to once again be binding on all WTO members—is settling the issue of whether claims of national security to legitimize trade measures are reviewable. This is a red line for the United States, which argues this claim is nonreviewable. In the emerging area of great power competition, the United States is unlikely to accept a return to fully effective WTO dispute settlement absent a compromise that finds determinations of national security nonjusticiable. This paper offers a compromise: There would be no adjudication of whether a trade measure was justified under the WTO’s national security exception, but those WTO members adversely affected would have an immediate right to rebalance trade concessions themselves by imposing retaliatory trade measures against the WTO member invoking the exception.
Topic:: Economics, International Trade and Finance, National Security, and World Trade Organization
Political Geography:: Global Focus

386. Macro-financial implications of public debt in South Africa: The role of financial regimes

Author:: Theshne Kisten
Publication Date:: 06-2023
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: This paper examines the role of financial frictions in the public debt–growth nexus, documenting that a public debt shock has different macro-financial implications dependent on the state of financial markets in South Africa. A non-linear vector autoregression model is estimated which allows the transmission mechanism to be characterized by two distinct financial regimes: stressful versus normal. The empirical results suggest that a public debt shock has a broadly insignificant impact on economic growth over the full sample, reflecting the ineffectiveness of government borrowing in stimulating the economy, and could suggest that the high and growing debt service costs faced by the government reduces funds available for investment purposes. Debt shocks are found to be deflationary in both regimes, lending support to the precautionary savings effect and the existence of a well-developed financial market, while interest rates decline with the immediate impact being moderately larger in the stress regime, providing evidence of the accommodative stance between fiscal policy and monetary policy. In response to a public debt shock, financial conditions show an immediate and transitory improvement in the high-stress regime; however, in the low-stress regime there is an immediate yet negligible improvement in financial conditions. Lastly, the responses evolve over time, with fiscal policy being less effective in stimulating the economy in the post-crisis period, but it has been effective in reducing financial stress in the high-stress regime.
Topic:: Economics, Finance, Economic Growth, and Public Debt
Political Geography:: Africa and South Africa

387. Impact of economic sanctions on net commodity-producing and net commodity-consuming countries

Author:: Sergio R. Vale and Eduardo Viola
Publication Date:: 01-2023
Content Type:: Journal Article
Journal:: Revista Brasileira de Política Internacional (RBPI)
Institution:: Instituto Brasileiro de Relações Internacionais (IBRI)
Abstract:: The war in Ukraine has had a marked economic impact. However, since Russia is a net producer of important commodities, the impact of sanctions on its economy was less than expected. But what would happen if there was a war involving a country that was a net importer of commodities? In the case of a possible China-US conflict over Taiwan, the impact on the world economy would be different, with a deeper recession around the world, but the impact on the Brazilian economy would still be positive on account of the possibility that would remain of agricultural exports to China.
Topic:: Agriculture, Economics, International Trade and Finance, Sanctions, Commodities, and Exports
Political Geography:: Russia, China, Europe, Ukraine, Taiwan, Asia, North America, and United States of America

388. Building Resilience? The Cybersecurity, Economic & Trade Impacts of Cloud Immunity Requirements

Author:: Matthias Bauer
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: EU Member States should call on the EU’s Cybersecurity Agency (ENISA) and the European Commission to abandon immunity requirements in the proposed EU Cloud Certification Scheme (EUCS). With immunity requirements in the EUCS, the EU risks opening a Pandora’s box, paving the way for data localisation, foreign ownership restrictions, and local establishment requirements in digital industries globally leading to rising trade tensions. ENISA’s current proposal could increase policymakers’ appetite for data localisation in the EU. It would empower the European Commission and Member State authorities to exclude foreign businesses from domestic cloud services markets and set a dangerous precedent for any data-intensive sector. The list of “sectors of high criticality” could be logically extended to both existing services (e.g., financial services) and to new technologies and business models, such as IoT in the energy and healthcare sectors, and autonomous driving in the transport sector. Non-EU jurisdictions would be pressured to respond in kind. EUCS immunity requirements would increase cloud adopters’ exposure to cybersecurity risks. Data localisation often creates obstacles to an integrated management approach towards cybersecurity risks. Country of headquarter and foreign ownership restrictions in the proposed EUCS risk removing global frontier cybersecurity technologies from Member State markets. Excluding these and other EU and non-EU companies from EU Member States could result in a long-lasting security deficit of EU cloud adopters vis-à-vis organisations that are still able to use reliable and often best-practice cloud services offered by providers from outside EU Member States. Immunity requirements in the EUCS are discriminatory by design. They could provoke retaliatory measures by EU trading partners, either unilaterally or through WTO or bilateral FTA (e.g., UK-EU) Dispute Settlement. Local establishment requirements and foreign ownership restrictions would by design discriminate against foreign cloud providers. US-headquartered companies, which currently serve more than 75% of the EU market, would be most affected by EU immunity requirements.[1] Depending on US preferences and the scope of the proposed EUCS, the EU could be subject to retaliatory tariffs of up to USD 12 billion worth of EU goods exports or equivalent restrictions for EU services exports to the US. Other governments could lodge complaints via the WTO as well (e.g., Singapore, Japan, Canada and others, where cloud development is advancing rapidly). EU suppliers are currently in no position to manage a broad-based transition to cloud, and thus such requirements would delay significant efficiency and security gains that current foreign suppliers could offer. A blanket exclusion of non-EU cloud vendors would also likely undermine Europe’s objective to achieve a 75% cloud adoption rate for EU enterprises. Sensitive European businesses and public sector organisations would have to delay migration and make do with legacy systems for a very long time. Contrary to large countries, these negative impacts would be much more pronounced for smaller EU Member States, which lack the presence of large domestic incumbents and generally rely much more on an open international trading regime for digital services. ENISA’s cloud certification scheme should be limited to technical and transparency requirements. Immunity requirements for non-personal data should be addressed in bilateral initiatives such as the EU-US Trade and Technology Council (TTC) or agreements requiring a company that sought to offer services of the highest level of sensitivity to be headquartered in a country granted adequacy with EU data protection rules, or a country that is an adherent to the OECD’s Trusted Government Access principles, or (concerning the US) a participant in the upcoming Trans-Atlantic Data Privacy Framework. Excluding foreign companies from operating in the EU would have far-reaching consequences. If that is the intent, it should require a sound legal analysis and the decision should be taken through a formal legislative procedure at the EU level.
Topic:: Economics, Markets, European Union, Cybersecurity, Digital Economy, Trade, and Resilience
Political Geography:: Europe

389. The Economic Dividend of Competitiveness

Author:: Fredrik Erixon, Oscar Guinea, Philipp Lamprecht, Elena Sisto, and Erik van der Marel
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: In a world of technological and economic rivalry, the EU must devote increased attention to its competitiveness. Higher levels of competitiveness will help the EU build a more prosperous economy which will in turn produce innovation and resources to address the great challenges of our time. ECIPE published a study presenting a competitiveness compass with concrete policy recommendations that will improve EU’s competitiveness. These policy recommendations, once implemented, will bring tangible benefits to the EU economy in the form of higher levels of trade and productivity. This report presents five scenarios in which the EU pursues competitiveness policies that lead to higher economic growth.
Topic:: Economics, Science and Technology, European Union, Economic Growth, and Competition
Political Geography:: Europe

390. Building a Mature UK Trade Policy

Author:: David Henig
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: Global Britain has not delivered according to the hopes expressed by supporters of leaving the EU. Trade with the rest of the world has not grown to make up for leaving a bloc with seamless trade, early Free Trade Agreements with Australia and New Zealand are of minor economic significance, and it is hard to discern much of a strategy beyond completing a few more similar deals. Meanwhile the world of trade policy is transformed since 2016, negatively. The US has essentially declared its national interests to be more important than global rules, while the EU wants to act unilaterally as the global regulator. In both, the climate crisis is being used as an excuse to reintroduce protectionist measures threatening economic damage and global stability. Expectations of what a UK outside of the EU could achieve were exaggerated, but nonetheless the country could be doing a lot better in its trade policy. There is no good reason for such tensions as exist with a broad range of frustrated stakeholders, the absence of clear purpose on UK strengths such as services, or the defensiveness that seemingly takes pride in secrecy and resistance to proper scrutiny. Adjustment time was inevitable, but six years should have been enough.
Topic:: Economics, European Union, Free Trade, and Trade Policy
Political Geography:: United Kingdom and Europe

391. Increasing Systemic Legal Risks in the EU: The Economic Impacts of Changes to the EU’s Product Liability Legislation

Author:: Matthias Bauer and Elena Sisto
Publication Date:: 06-2023
Content Type:: Working Paper
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: The EU’s Product Liability Directive (PLD) determines the rules for strict product liability in the EU. It establishes a framework in which manufacturers’ liability is determined solely based on the presence of defects in the product, regardless of the manufacturer’s fault. The PLD is intended to serve as a “safety net” when fault-based or contractual liability rules do not offer sufficient compensation to consumers. It operates independently from contractual arrangements between businesses and consumers, and it cannot be weakened by contractual agreements between businesses and consumers. The PLD is a horizontal regulation that applies to a wide range of industries in the EU because it applies to all products available on the EU market. The recently proposed changes by the European Commission would increase systemic legal uncertainty for producers and sellers of technology-intensive goods and services in the EU. The impact assessment of the European Commission does not sufficiently account for changes to the PLD proposed in 2022. Nor does it sufficiently account for the major impacts of increased legal uncertainty for European businesses. Legislators in the Council and the European Parliament should slow negotiations to allow time for policymakers to collect more evidence on the impacts on businesses, insurers, and courts we detail in this paper. This would be an opportunity to improve regulatory quality in light of the high levels of legal uncertainty associated with the changes proposed by the Commission.
Topic:: Economics, European Union, Legislation, and Risk
Political Geography:: Europe

392. Refugees from Ukraine Adapting to the European Labour Market

Author:: Jolanta Szymańska
Publication Date:: 03-2023
Content Type:: Working Paper
Institution:: The Polish Institute of International Affairs
Abstract:: Due to the length of the war in Ukraine, more and more refugees from this country have decided to take up employment in the EU. Preliminary data indicate that they are integrating into European labour markets faster than refugees from other regions. However, the mismatch between their jobs and qualifications remains a challenge. Despite the refugees’ inclusion, the deteriorating economic situation in Europe may lead to negative perceptions in host countries.
Topic:: Economics, European Union, Refugees, and Labor Market
Political Geography:: Russia, Europe, and Ukraine

393. The Regressive Nature of the U.S. Tariff Code: Origins and Implications

Author:: Lydia Cox
Publication Date:: 06-2023
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: Tariffs are often thought of as taxes that fall uniformly across goods or industries. In reality, however, the U.S. tariff schedule is extremely complex—the modern‐day tariff code comprises 4,394 pages of tariffs on 19,347 varieties of goods. As a result, there is a lot of variation in tariff rates, even within narrowly defined categories of goods. We study this complexity through the lens of a little‐known but consequential pattern in the modern U.S. tariff schedule: tariff rates are systematically higher on low‐value versions of goods relative to their high‐value counterparts. For example, the tariff on a $400 handbag made of reptile leather is 5.3 percent, while the tariff on an $8 plastic‐sided handbag is 16 percent. Through a comprehensive analysis of U.S. tariffs over the past 100 years, we show that this regressive pattern is, and has been, a systematic feature of tariffs for decades. Our findings are emblematic of a more fundamental feature of U.S. tariff policy: tariffs set to meet policy objectives of the past have persisted through vast changes in the economic landscape and, despite their historical origins, are still affecting consumers today.
Topic:: Economics, Tariffs, and Trade Policy
Political Geography:: North America and United States of America

394. From Stunt to Substance: An assessment of IMF engagement with civil society

Author:: Nabil Abdo, Nadia Daar, and Alex Ray
Publication Date:: 01-2023
Content Type:: Policy Brief
Institution:: Oxfam Publishing
Abstract:: The International Monetary Fund (IMF) is doling out billions of dollars, influencing economies around the world through its finance, and through the policies it expects governments to implement in return for the funds. But who has a say in those decisions? This paper presents case study research from Pakistan, Tunisia, Egypt, Ecuador, Argentina, Zambia and Ghana to assess the extent and meaningfulness of IMF engagement with civil society. With findings on power, motivations, impact and the importance of civic space considerations, the paper makes the case for significantly improved engagement, and recommends how to do so systematically, meaningfully and safely.
Topic:: Civil Society, Economics, International Cooperation, and IMF
Political Geography:: Global Focus

395. The Impact of the Ukrainian-Russian War on Rwanda

Author:: Jonathan R. Beloff
Publication Date:: 03-2023
Content Type:: Journal Article
Journal:: Turkish Policy Quarterly (TPQ)
Institution:: Transatlantic Policy Quarterly (TPQ)
Abstract:: The current Ukrainian-Russian war has far greater-reaching effects than what is typically reported in much of the international news media. The war has significantly impacted African development, which was already harmed during the global Covid-19 pandemic. With the pandemic seemingly over, African nations such as Rwanda hoped for increased economic development. However, the current war in Ukraine sparked increased fuel and food prices throughout the continent, which has impacted expected growth rates. This article reviews the war’s impact on the central African nation of Rwanda. It illustrates Rwandan anger about the economic implications of the war and the frustration from the nation’s inability to stop its effects.
Topic:: Development, Economics, Pandemic, COVID-19, and Russia-Ukraine War
Political Geography:: Africa, Russia, Europe, Ukraine, and Rwanda

396. US-ASEAN Digital Economy Cooperation

Author:: Hanh Nguyen
Publication Date:: 07-2023
Content Type:: Working Paper
Institution:: Pacific Forum
Abstract:: Long criticized for its lackluster record in economic engagement with Southeast Asia, the US is now looking to bolster digital economy cooperation with the region as part of its Indo-Pacific strategy. Both sides have already engaged in several cooperation initiatives to strengthen Southeast Asia’s digital capacities. These actions/engagements aim to help the region capture the immense benefit and respond to potential socioeconomic disruptions brought by the digital economic boom. However, US-ASEAN cooperation will have to deal with two challenges. First, China has already established a comprehensive and prevalent presence in the region’s digital economy, from hard infrastructure and customer-facing businesses to developing digital standards. Second, Southeast Asia’s diversity in economic development leads to varied capacities among its members. These attributes carry certain security complications for Southeast Asia and the US in the long run. Addressing them will require both sides to further boost cooperation, particularly in shaping regional digital standards.
Topic:: Economics, International Cooperation, Digital Economy, and ASEAN
Political Geography:: North America, Southeast Asia, United States of America, and Indo-Pacific

397. US-China Effort to Set “Guardrails” Fizzles with Balloon Incident

Author:: Sourabh Gupta
Publication Date:: 05-2023
Content Type:: Journal Article
Journal:: Comparative Connections
Institution:: Pacific Forum
Abstract:: The proposed “guardrail” that Joe Biden and Xi Jinping sought to erect last fall in Bali failed to emerge in the bitter aftermath of a wayward Chinese surveillance balloon that overflew the United States and violated its sovereignty. Though Antony Blinken and Wang Yi met on the sidelines of the Munich Security Conference afterward, aspersions cast by each side against the other, including a series of disparaging Chinese government reports, fed the chill in ties. Taiwan President Tsai Ing-wen’s meeting with House Speaker Kevin McCarthy during the return leg of her US transit added to bilateral and cross-strait tensions and were met with Chinese sanctions. Issues pertaining to Taiwan, be it arms sales or a speculated Chinese invasion date of the island, remained contentious. The administration’s attempt to restart constructive economic reengagement with China, including via an important speech by US Treasury Secretary Janet Yellen, appears to have fallen on deaf ears in Beijing. Following the Biden-Xi meeting on Nov. 14 on the sidelines of the G20 Leaders Summit in Bali, Indonesia, US-People’s Republic of China relations were transitioning to an improving track—or so it seemed. US Defense Secretary Lloyd Austin met with his Chinese counterpart, Defense Minister Wei Fenghe, on the sidelines of the ASEAN Defense Ministers” Meeting-Plus meeting in Cambodia on Nov. 22. On Dec. 11-12, US Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink held “candid, in-depth and constructive” talks in Beijing. On Jan. 18, Secretary Yellen had a “candid, substantive, and constructive conversation” with departing Vice-Premier Liu He in Zurich ahead of the World Economic Forum in Davos. Hours before Secretary Blinken was due to board a flight to Beijing on Feb. 3, which would have been the highest-ranking contact between the two sides since the Bali meeting, the budding rapprochement came to a screeching halt.
Topic:: Security, Foreign Policy, Economics, and Bilateral Relations
Political Geography:: China, Asia, North America, and United States of America

398. Japan-China Relations: A Period of Cold Peace?

Author:: June Teufel Dreyer
Publication Date:: 01-2023
Content Type:: Journal Article
Journal:: Comparative Connections
Institution:: Pacific Forum
Abstract:: In the sole high-level meeting in the reporting period, on the sidelines of the APEC meeting in Bangkok in November, General Secretary/President Xi Jinping and Prime Minister Kishida Fumio essentially talked past each other. At an earlier ASEAN+3 meeting in Phnom Penh, Premier Li Keqiang and Kishida not only talked past each other but pointedly walked past each other. There was no resolution of major issues: the Chinese position is and remains that Taiwan is a core interest of the PRC in which Japan must not interfere. Japan counters that a Chinese invasion would be an emergency for Japan. On the islands known to the Chinese as the Diaoyu and to the Japanese as the Senkaku, Tokyo considers them an integral part of Japan on the basis of history and international law while China says the islands are part of China. On jurisdiction in the East China Sea, Japan says that demarcation should be based on the median line and that China’s efforts at unilateral development of oil and gas resources on its side of the median are illegal. Beijing does not recognize the validity of the median line. Economically, a number of Japanese industries have been decoupling from China out of concern for the integrity of their supply chains and for security reasons while others are planning to expand operations there. Both sides continued their respective defense buildups while accusing the other of military expansionism.
Topic:: Security, Defense Policy, Diplomacy, Economics, Politics, and Bilateral Relations
Political Geography:: Japan, China, and Asia

399. Promoting diaspora investment in fragile settings: The case of Somalia

Author:: Guido Lanfranchi
Publication Date:: 08-2023
Content Type:: Policy Brief
Institution:: Clingendael Netherlands Institute of International Relations
Abstract:: This policy brief analyses the extent to which diaspora investment can support economic development and livelihoods, with a particular focus on fragile settings. Using the case study of Somalia, the brief explores some of the main advantages and risks associated with this tool. On the one hand, diaspora investment can channel finance into productive activities in the diaspora’s country of origin, supporting the creation of revenue streams, while also generating returns for diaspora investors. On the other hand, particularly in fragile settings, these investments can also undermine social cohesion and even increase the likelihood of violent conflict, especially if they are channelled along identity lines. On the basis of this analysis, the brief offers the following recommendations to donor governments interested in promoting diaspora investment in Somalia and beyond: (i) to ensure effectiveness, donors should gather comprehensive, in-depth data on the needs and preferences of both potential investors in the diaspora and investees in the country of origin; (ii) to avoid exacerbating tensions and conflict, donors should be as inclusive and transparent as possible in their engagement with stakeholders, most notably in the selection of beneficiaries; (iii) any efforts to promote diaspora investment in fragile settings should be grounded in a thorough understanding of the specific context in which they are implemented, in order to understand both the economic and political implications of such investment.
Topic:: Economics, Politics, Diaspora, Investment, and Fragility
Political Geography:: Africa and Somalia

400. Power and potential: The economics of Egyptian construction and ICT

Author:: Matteo Colombo
Publication Date:: 05-2023
Content Type:: Policy Brief
Institution:: Clingendael Netherlands Institute of International Relations
Abstract:: Young Egyptians’ dissatisfaction with their employment prospects was a key driver of protests in 2011 and 2013. Since then, the country’s political authorities have worked hard to create job opportunities for young Egyptians by boosting growth in the construction sector (infrastructure and public works), among other things. Since the sector also generates substantial revenues for the country’s power elite, this has been a win-win strategy in the short-term. But overreliance on the construction sector has also created too many informal and unstable jobs that are a poor match for Egypt’s many well-educated graduates. Cairo’s growth strategy has not addressed some of the country’s long-standing economic problems, such as informality and a low overall employment rate. Giving the country’s promising ICT sector a boost similar to that of the construction sector to address such deficiencies and anticipate a looming debt crisis requires a paradigm shift with two elements. First, a deal between Egypt’s political authorities and the power elite that buys time in exchange for future rents. Second, facilitation of private sector dynamism through regulatory encouragement and public seed funding for new business activity.
Topic:: Development, Economics, Employment, and Construction
Political Geography:: Middle East and Egypt

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