Topic: Economics - CIAO Search Results

351. How Innovative Financing Models Can Support the Scaling of Supply Chain Innovations

Author:: Allie Dichiara and John Simon
Publication Date:: 10-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: Substantial progress has been made toward achieving Sustainable Development Goal (SDG) 3: Health and Well-Being for All. However, progress is plateauing as global health development funding decelerates, and much of the remaining gaps are among the hardest to address, especially for the most vulnerable and hardest-to-reach communities. A key element to reigniting progress toward SDG 3 is significantly improving the effectiveness of the current fragmented health commodity supply chain, through which billions in spending—approximately $6 billion in donor funds in 2015 and $50 billion in overall spending in 2017—flow each year to low- and lower-middle-income countries (LMICs). Fortunately, there is a growing number of innovative supply chain solutions available across sub-Saharan Africa that could have the potential to dramatically improve the underperforming status quo.
Topic:: Economics, Science and Technology, Innovation, and Supply Chains
Political Geography:: Africa

352. A Model Comprehensive MSME Policy for Indian States

Author:: Richard M. Rossow
Publication Date:: 11-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: Small businesses are the job-creating engines of any healthy economy. Having a supportive policy environment can help high-potential businesses accelerate. Creating such an environment is a shared responsibility of both the central government and India’s 28 states. Many state governments in India have piecemeal policies and programs to support micro, small, and medium enterprises (MSMEs). About one-third of India’s states have worked to craft multifaceted and supportive policies and practices to encourage MSME growth. This paper reviews the ideas already enacted in different Indian states, as well as in national and subnational governments around the world. Developing a single comprehensive MSME policy is an effective approach for a state-level government to consider. It allows small firms to find policy incentives and programs in a single place, and perhaps most importantly, it allows a state to directly consider a range of intertwined incentives that can work together. This will maximize the positive impact to small firms that are poised for growth. Facilitating the growth of MSMEs will have a much wider impact on India’s job growth overall. The large multinational manufacturers that India hopes to lure to invest through programs like Make in India require a diverse and efficient network of suppliers. Supporting MSME growth can create a multiplier effect—driving new investment and employment generation by larger firms. The central government has affirmed a 25 percent target of gross domestic product (GDP) for manufacturing, up from around 14 percent today. This white paper provides leading international examples in the promotion of small businesses, while also enumerating best practices from Indian states’ MSME policies. The final section lays out the 30 elements commonly utilized by Indian states to offer targeted assistance to MSMEs as a roadmap for other states that want to provide best-in-class policy interventions.
Topic:: Development, Economics, Business, and Job Creation
Political Geography:: India and Asia

353. A Future Built on Data: Data Strategies, Competitive Advantage and Trust

Author:: Susal Ariel Aarsonson
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation (CIGI)
Abstract:: In the twenty-first century, data became the subject of national strategy. This paper examines these visions and strategies to better understand what policy makers hope to achieve. Data is different from other inputs: it is plentiful, easy to use and can be utilized and shared by many different people without being used up. Moreover, data can be simultaneously a commercial asset and a public good. Various types of data can be analyzed to create new products and services or to mitigate complex “wicked” problems that transcend generations and nations (a public good function). However, an economy built on data analysis also brings problems — firms and governments can manipulate or misuse personal data, and in so doing undermine human autonomy and human rights. Given the complicated nature of data and its various types (for example, personal, proprietary, public, and so on), a growing number of governments have decided to outline how they see data’s role in the economy and polity. While it is too early to evaluate the effectiveness of these strategies, policy makers increasingly recognize that if they want to build their country’s future on data, they must also focus on trust.
Topic:: Economics, Governance, Data, and Competition
Political Geography:: Global Focus

354. Merger Policy for a Dynamic and Digital Canadian Economy

Author:: Keldon Bester
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation (CIGI)
Abstract:: As an element of competition and antitrust law frameworks, merger policy plays an important role in preventing acquisitions that would otherwise allow incumbent firms to extinguish competitive threats and entrench their dominance. But evidence suggests that current approaches to merger law in Canada and abroad have underestimated the harms these transactions can pose to competition and overestimated the effectiveness of the remedies intended to mitigate those harms. Although relevant across the Canadian economy, this permissive treatment of mergers is particularly pronounced in digital markets, where platform business models, the importance of potential competitors and the role of intangible assets such as data as a barrier to entry test the assumptions underlying the country’s merger law. Canada’s current law and jurisprudence mean the Competition Bureau, Canada’s sole competition authority, is limited in its ability to detect potentially harmful transactions, faces material barriers to intervening and fully remedying the harms of those transactions, and is unable to assess the outcome of previous action or inaction. This paper provides recommendations for Canada to ensure its merger law is calibrated for a modern economy.
Topic:: Economics, Regulation, Digital Economy, and Digitalization
Political Geography:: Canada and North America

355. A Digital Loonie among Many Digital Currencies: Prospects and Outlook

Author:: Pierre L. Siklos
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation (CIGI)
Abstract:: Global interest in digitalization is growing in response to the COVID-19 pandemic and driving central banks to introduce retail central bank digital currencies (CBDCs). The successful rollout of retail CBDCs will depend on each country’s institutional capacity and the scope of international cooperation and regulation. Retail CBDCs are unlikely to replace domestic currencies but instead complement notes and coins in circulation, offering greater convenience and lower transactions costs.
Topic:: Economics, Science and Technology, Digital Economy, Currency, and Digitalization
Political Geography:: Global Focus

356. Lending to Defaulters: The IMF Updates Its Lending into Arrears Policy

Author:: Gregory Makoff
Publication Date:: 08-2022
Content Type:: Policy Brief
Institution:: Centre for International Governance Innovation (CIGI)
Abstract:: The International Monetary Fund’s (IMF’s) “lending into arrears” policy outlines the criteria used by the IMF in deciding whether to loan to a country in default. This policy brief focuses on one of the conditions a country must meet when seeking debt relief from the IMF: it must engage in good faith negotiations with its creditors (known as the good faith criterion). The country must also implement significant financial reforms and provide assurances that it will be able to meet its financial obligations. This policy brief looks at the history of the lending into arrears policy, the controversy surrounding its use during Argentina’s 2005 debt restructuring and the May 2022 update to the policy.
Topic:: Economics, International Cooperation, Finance, and IMF
Political Geography:: Argentina and South America

357. Russian economic nationalism and the vectors of Russian foreign policy

Author:: Rafał Lisiakiewicz
Publication Date:: 06-2022
Content Type:: Journal Article
Journal:: Nowa Polityka Wschodnia
Institution:: Faculty of Political Science and International Studies, Nicolaus Copernicus University in Toruń
Abstract:: In this article, the author wants to test the impact of economic nationalism on the change in Russia’s foreign policy. The author will refer to neoclassical realism, which shows how to combine the issues of power distribution in international relations with the influence of the domestic level of the state on the process of creation of the foreign policy. In terms of neoclassical realism, economic nationalism is a variable that shapes the perception of the economic challenges facing Russia. The author also points out that economic nationalism is also related to the protectionist policy of the Russian Federation. Thus, it influences the shaping of processes within and outside the country. The author recognizes that in the process of creating the Russian foreign policy decisions, economic nationalism should be linked to other factors, especially security issues and Russia’s general strategic culture, in order to obtain the final set of premises that will determine Russia’s shifts in foreign policy. The tensions related to the role of the EU and NATO in the countries of Eastern Europe clearly influenced the level of cooperation between Russia and the West. Nevertheless, economic issues in this regard were also extremely important. Russia’s power position was based on the economic potential.
Topic:: Foreign Policy, NATO, Economics, Nationalism, and European Union
Political Geography:: Russia and Eurasia

358. The Russia-Ukraine Conflict: Economic Consequences on Europe and the World

Author:: Philip Fwaldin Kasuwa
Publication Date:: 09-2022
Content Type:: Journal Article
Journal:: Nowa Polityka Wschodnia
Institution:: Faculty of Political Science and International Studies, Nicolaus Copernicus University in Toruń
Abstract:: A number of international sanctions have been placed on Russia since it launched an attack on Ukraine on February 24, 2022, in order to persuade the country to de-escalate the conflict. The sanctions imposed on Russia, while designed to harm the Russian economy, had unintended consequences on the world economy, primarily through the disruption of global supply chains. Energy supply shocks, commodities and trade supply shocks were all caused by the conflict. In many nations, this resulted in an increase in worldwide inflation. Despite the fact that Israel and Turkey were instrumental in mediating a peaceful end of the conflict between Russia and Ukraine, the economic fallout from the crisis continued to reverberate throughout Europe and beyond.
Topic:: Economics, Sanctions, Commodities, Trade, Supply Chains, and Russia-Ukraine War
Political Geography:: Russia, Ukraine, and Eastern Europe

359. Istanbul Journal of Economics: Volume 72 Issue 1

Author:: Gökhan Karabulut
Publication Date:: 01-2022
Content Type:: Journal Article
Journal:: Istanbul Journal of Economics
Institution:: Istanbul University Faculty of Economics
Abstract:: Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:: Debt, Development, Economics, Budget, Finance, Investment, Trade, Unemployment, and COVID-19
Political Geography:: Europe, Turkey, and Asia

360. Istanbul Journal of Economics: Volume 72 Issue 2

Author:: Gökhan Karabulut
Publication Date:: 06-2022
Content Type:: Journal Article
Journal:: Istanbul Journal of Economics
Institution:: Istanbul University Faculty of Economics
Abstract:: Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:: Economics, Islam, Religion, Communications, Natural Resources, Finance, Internet, Economic Growth, Macroeconomics, Currency, Unemployment, Sustainability, COVID-19, BRICS, Labor Market, Economic Stability, Consumer Behavior, Rent-seeking, Energy, and Wages
Political Geography:: Europe, Turkey, and Asia

361. How to save the WTO with more flexible trading rules

Author:: Robert Z. Lawrence
Publication Date:: 12-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: The clash between the Western and Chinese economic systems is threatening the world trading system, with countries increasingly using trade as a tool to coerce other countries. It is imperative to return to an inclusive, rules-based international trading order before the problems in trade spill over into the other geopolitical frictions that plague the world. This Policy Brief argues for a system that steers between two extremes that have emerged: “deep integration,” a single undertaking in which all members of the World Trade Organization (WTO) are expected to adhere to all rules regardless of their preferences and circumstances, and “decoupling,” in which groups of countries centered on the United States or China limit trade with each other. Instead, Lawrence says, the world trading system should have a “variable geometry” that allows open plurilateral agreements among self-selected members that desire deeper integration on particular issues while allowing members that prefer to implement distinctive domestic policies to remain outside some of these agreements and follow a set of more limited rules. The universal rules would permit diversity but still promote trade between all countries through measures such as safeguards that would deal mainly with the most harmful systemic frictions. If the multilateral system is not up to the task of creating such an approach, it is likely to lose its relevance as differentiated regional or topic groupings become increasingly dominant.
Topic:: Economics, International Trade and Finance, World Trade Organization, Reform, and Trade
Political Geography:: Global Focus

362. EU carbon border adjustment mechanism faces many challenges

Author:: Gary Clyde Hufbauer, Jeffrey J. Schott, Megan Hogan, and Jisun Kim
Publication Date:: 10-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: This Policy Brief assesses the evolving EU Emissions Trading System and EU carbon border adjustment mechanism (CBAM) and explains objections within Europe and from major trading countries likely to be affected by the proposed CBAM import levies. While EU officials have sought to ensure that the CBAM is consistent with obligations under the World Trade Organization (WTO), key aspects of the CBAM could violate WTO rules and are likely to be contested, taking years to play out. Meanwhile, several other countries will adopt new carbon-inspired border restrictions, adding to global trade frictions. Major carbon-emitting countries, therefore, need to act cooperatively instead of unilaterally to both advance the fight against climate change and update the rules-based global trading system. Two-thirds of greenhouse gas emissions result from nontraded activities, such as road transport, electricity generation, and home and office heating. Countries can curb emissions in these activities, while developing guidelines for carbon abatement in traded sectors.
Topic:: Climate Change, Economics, International Trade and Finance, World Trade Organization, European Union, and Carbon Emissions
Political Geography:: Europe

363. CHIPS Act will spur US production but not foreclose China

Author:: Gary Clyde Hufbauer and Megan Hogan
Publication Date:: 10-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: The CHIPS and Science Act, export controls, and agreements with allied countries will accomplish many of their multiple objectives. More US semiconductor fabrication plants will be built, US R&D will be accelerated, and advanced chips and chip-making machines will be denied to China, Russia, and other adversaries. However, the Act will not make a material difference to US chip supplies in the next two or three years. Slower economic growth has already tipped the chips market in favor of ample supplies. While collective measures have inflicted considerable short-term pain on China, causing a sharp drop in the fortunes of its high-tech firms, China will respond by redoubling its self-sufficiency programs. The United States, however, should not mimic China in pursuing self-sufficiency, as US self-sufficiency is an illusion. The United States currently exports high-value chips and imports low-value chips, so increasing self-sufficiency would require the United States to prioritize basic chip production at the same time it is supposed to be competing with China in advanced chip production. Continuing to prioritize advanced chip production—where the United States has a clear advantage—is the most efficient course of action.
Topic:: Economics, Legislation, Exports, Production, and Semiconductors
Political Geography:: China, Asia, and United States of America

364. Soaring demand is driving double-digit import price inflation in the United States

Author:: Caroline Freund
Publication Date:: 10-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: At a time of soaring price increases in the United States, inflation in the US import sector has been soaring the most. Import price inflation in the first half of 2022 was in the double digits, above US consumer price index and personal consumption expenditures inflation. Excess demand for certain imported goods is playing a big role, but so are supply shortages caused by temporary business closures overseas and shipping delays associated with the COVID-19 pandemic. Correctly identifying the culprit for misaligned demand and supply, and hence rising prices, is central to understanding the type and extent of policy intervention needed. Using movements in prices and quantities of specific goods, the analysis presented in this Policy Brief shows that the increase in import price inflation has been driven to the same or a greater extent by demand compared with supply constraints. The results have important implications for policies to help reduce the supply and demand imbalance and thus tame inflation.
Topic:: Economics, Inflation, COVID-19, Imports, and Supply and Demand
Political Geography:: North America and United States of America

365. Is South Korea vulnerable to EU and US carbon border restrictions?

Author:: Jeffrey J. Schott and Megan Hogan
Publication Date:: 07-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: South Korean exports, especially carbon-intensive products like steel, are increasingly vulnerable to both the European Union’s proposed carbon border adjustment mechanism (CBAM)—set to begin on January 1, 2023—and the proposed Clean Competition Act (CCA) before the US Congress. Schott and Hogan caution that Korean exporters should not count on Korea’s decade-old EU and US free trade agreements (FTAs), nor on the multilateral trading rules of the World Trade Organization (WTO), to protect them from new carbon-based import barriers in key foreign markets. The WTO and the FTAs have broad and loosely defined exemptions for environmental protection. Nor is Korea likely to be shielded by its own cap-and-trade emissions trading system (the K-ETS), because of extensive use of free allowances and large differences between EU and Korean carbon prices. While the threat the EU CBAM poses to Korean exports is imminent, passage of the CCA faces major legislative obstacles. But US imports of Korean steel and other carbon-intensive goods are still subject to climate-related duties at the US border under US unfair trade statutes. The US Department of Commerce has ruled that free allowances issued under the K-ETS (and EU ETS) are implicit subsidies that can be offset by countervailing duties. These charges are in addition to the harsh tariff-rate quotas on imported Korean steel applied under the “national security” authority of Section 232 of US trade law, which are more restrictive than measures imposed against European and other steel exporters. The authors suggest relaxing these US barriers, as they have been for shipments from Europe, in return for Korean participation in the nascent US-EU talks to establish a “Global Arrangement on Sustainable Steel and Aluminum.”
Topic:: Economics, International Trade and Finance, European Union, Exports, and Carbon Emissions
Political Geography:: Europe, Asia, South Korea, and United States of America

366. The online gig economy’s impact is not as big as many thought

Author:: Lee G. Branstetter
Publication Date:: 07-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: The explosive global growth of online ride-hailing platforms raised concern (and, in some quarters, optimism) that similar growth in other platforms could rapidly disrupt traditional labor arrangements on a large scale in advanced economies. But the evidence to date suggests no significant changes in the overall importance of “gig” work in the US labor market nor a significant decline in the importance of traditional employment relationships. Online platforms may play a growing role (relative to traditional “brick-and-mortar” intermediaries) in connecting gig workers to their customers, but that alone does not guarantee a large increase in the importance of gig work. Branstetter reviews this evidence, noting the gaps in labor market data series that make the measurement of this phenomenon so difficult. Even if traditional employment relationships are not likely to decline significantly in the near future, the rise of online gig work nevertheless highlights longstanding inadequacies of labor market regulations, which recognize employees and truly independent contractors but struggle with the intermediate kinds of worker-firm relationships the online platforms enable. Branstetter summarizes proposals for regulating gig economy work and the lessons policymakers in South Korea and other economies can learn from the literature he reviews in this Policy Brief.
Topic:: Economics, Employment, Labor Market, and Gig Economy
Political Geography:: Global Focus

367. South Korea should prepare for its exposure to US-China technology tensions

Author:: Mary Lovely and Abigail Dahlman
Publication Date:: 07-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: The stated goal of the US-led Indo-Pacific Economic Framework for Prosperity (IPEF) is to create standards that enhance and elevate regional trade and investment flows, but it is clearly aimed at reducing the role of China in global supply chains. As China is Korea’s largest trading partner, US policy discouraging Chinese participation in supply chains has immediate detrimental implications for Korean manufacturers. The United States is the second-most important destination for Korean exports. Given the values of these triangular trade flows, Lovely and Dahlman assess South Korea’s exposure to US demands to remove or reduce Chinese participation in the manufacture of exports destined for the US market. The reliance of the proposed framework on certain standards will likely reduce Chinese participation in IPEF trade networks. Korea may benefit from this trend, but IPEF could also increase production costs for Korean companies, especially in the electronics sector, a problem that would worsen if China retaliates against these companies. To reduce these risks, Korea might find it prudent to reduce its reliance on intermediate goods from China for products it produces for export to the United States. The Korean government should also seek to better understand its exposure to US–China trade tensions and diversify its trade relations. Korean firms should start preparing for supply chain disruptions, perhaps by making investments at home. Korea could also help other IPEF members reduce supply chain disruptions while addressing security concerns over China.
Topic:: Economics, Science and Technology, Supply Chains, and Competition
Political Geography:: China, Asia, South Korea, North America, and United States of America

368. China's CPTPP bid spurs South Korea to act on Asia-Pacific trade pacts

Author:: Jeffrey J. Schott
Publication Date:: 06-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: China’s sudden application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in September 2021 has broad implications for South Korea’s economic relations with China, Japan, and the United States. In the past, Korea frequently debated but invariably postponed deciding whether to participate in negotiations on the CPTPP, despite the substantial benefits to be gained from doing so. However, China’s application has prompted Korean officials to get off the fence and apply as well. As China moves to deepen its ties to regional partners, Korea needs to follow suit, complementing the ongoing implementation of the Regional Comprehensive Economic Partnership (RCEP) with expedited negotiations to join the CPTPP and participation in the US-led Indo-Pacific Economic Framework for Prosperity (IPEF). Korean participation in the RCEP, CPTPP, and IPEF is desirable and mutually reinforcing and should allow Korea to sustain its strong commercial interests in both the US and Chinese markets.
Topic:: Economics, International Trade and Finance, Treaties and Agreements, and Trade
Political Geography:: China, South Korea, and Asia-Pacific

369. Public responses to foreign protectionism: Evidence from the US-China trade war

Author:: David Steinberg and Yeling Tan
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: America's recent turn toward protectionism has raised concerns about the future viability of the liberal international trading system. This study examines how and why public attitudes toward international trade change when one's country is targeted by protectionist measures from abroad. To address this question, the authors fielded three original survey experiments in the country most affected by US protectionism: China. First, they find consistent evidence that US protectionism reduces Chinese citizens' support for trade. This finding is replicated in parallel experiments on technology cooperation, and further validated outside of the China context with a survey experiment in Argentina. Second, they show that responses to US protectionism reflect both a "direct reciprocity" logic—citizens want to retaliate against the United States specifically—and a "generalized reciprocity" logic that reduces support for trade on a broader, systemic basis.
Topic:: Economics, International Trade and Finance, Protectionism, and Competition
Political Geography:: China, Asia, North America, and United States of America

370. 25 years of excess unemployment in advanced economies: Lessons for monetary policy

Author:: Joseph E. Gagnon and Madi Sarsenbayev
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: For about 25 years before the COVID-19 pandemic, inflation was very low and stable in most advanced economies. A little noticed dark side of this impressive achievement is that unemployment rates were almost always higher than needed to keep inflation low. This widespread and persistent policy error arose because of a major flaw in standard macroeconomic models—the use of a linear Phillips curve. This flaw would have been far less costly if central banks had not chosen such a low target for inflation. This paper thus adds to the arguments in favor of a moderately higher inflation target. Even without a higher target, central banks need to use a broader range of economic models and should verify their estimates of the natural rate of unemployment by running the economy hot from time to time in order to see nascent inflationary pressure before throttling back.
Topic:: Economics, Monetary Policy, Unemployment, and COVID-19
Political Geography:: Global Focus

371. How carbon tariffs and climate clubs can slow global warming

Author:: Shantayanan Devarajan, Delfin S. Go, Sherman Robinson, and Karen Thierfelder
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: Slowing global warming requires countries to reduce carbon emissions, which imposes costs on their economies. To be effective, most countries must agree collectively to participate (e.g., the Paris Agreement, COP26). However, every country has an incentive not to comply and still reap the benefits of other countries’ actions—a classic free-rider problem. This paper evaluates recent recommendations to use trade policy to solve the free-rider problem associated with climate mitigation strategies. It shows that the European Union’s carbon border adjustment mechanism (CBAM tariffs) are effective at offsetting the unfair competitive advantage of noncompliant countries in the markets of compliant countries but have little effect on the trade of noncompliant countries, who can divert trade to other noncompliers. CBAM tariffs alone have little impact on global CO2 emissions. The paper also examines “climate clubs” (coalitions of countries that agree to impose carbon taxes or other equivalent policies and impose punitive tariffs on non-club members to induce them to join the club). It finds that punitive climate club tariffs can be effective in inflicting significant damage on the economies of nonmembers, providing a strong incentive for them to join the club. The paper identifies trade dependence between club and non-club members as an important consideration for the success of a climate club. Club members that are strongly linked to non-club members suffer losses when the club punishes non-club members, which would make them hesitant to impose punitive tariffs on a major nonmember trading partner.
Topic:: Climate Change, Economics, Tariffs, and Carbon Emissions
Political Geography:: Global Focus

372. A reform strategy to transform energy: From piecemeal to systemwide change

Author:: Steven Fries
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: The Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report on Climate Change Mitigation highlights the vast gap between climate change mitigation actions and climate stabilization goals. But its broad policy prescriptions are likely to leave policymakers pondering what specific actions to take. Informed by accumulating evidence on transforming aspects of energy systems like power generation from solar and wind resources and battery electric cars, this paper develops a more pointed energy reform strategy than that of the IPCC to deliver the necessary systemwide changes. It makes the case for two unorthodox policies. One is for governments to provide, in addition to R&D supports, market-creating supports for early deployment of low-carbon technologies in initial markets. The second is to sequence emissions pricing after innovation and market-creating supports and differentiate this pricing across key energy sectors rather than imposing one economywide price. Compared with a single price, targeting higher emissions pricing on sectors that are costlier to decarbonize still promotes cost-effective emission cuts but limits adverse distributional impacts. The paper also considers nonprice barriers to change and ways to coordinate domestic reforms across countries.
Topic:: Climate Change, Economics, Reform, Carbon Emissions, and Energy
Political Geography:: Global Focus

373. Green energy depends on critical minerals. Who controls the supply chains?

Author:: Luc Leruth, Adnan Mazarei, Pierre Régibeau, and Luc Renneboog
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: In light of the transition away from fossil fuel–based energy, this paper highlights the importance of understanding who controls vital parts of the global supply chains of critical minerals and rare earth elements (REEs). Analysis of direct ownership does not reveal the real sources of control over the decisions of the company. To identify those sources, the authors use an index that measures the degree to which important shareholders can affect voting decisions. This analysis is not straightforward, because companies along the supply chain are not necessarily incorporated in the countries in which mining and production activities take place, and shareholders can exert influence through multiple layers of subsidiaries. The analysis reveals that China’s control over the global value chains involving critical minerals and REEs extends beyond what is commonly assumed. It also sheds light on environmental, social, and governance issues in the countries in which mining and/or production take place. The paper advocates increasing transparency regarding the sources of control to better assess and manage economic and geopolitical risks; enhancing recycling, to reduce dependency on foreign supply; avoiding protectionist and trade-reducing reactions; and encouraging research and development in order to speed up the adoption of technologies of substitution.
Topic:: Economics, Geopolitics, Supply Chains, Minerals, Energy, and Green Transition
Political Geography:: Global Focus

374. Why gender disparities persist in South Korea’s labor market

Author:: Karen Dynan, Jacob Funk Kirkegaard, and Anna Stansbury
Publication Date:: 07-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: Although the South Korean economy fared relatively well on the whole during the pandemic, the labor market consequences were uneven, with women experiencing worse outcomes than men. These gender disparities have reinforced and highlighted important longer-term gender-related challenges in the South Korean labor market. Despite an above-average level of female tertiary education, the gender pay gap in South Korea is at the top of the range among OECD countries. The labor force participation rate is 20 percentage points lower for women than for men, a difference that is about one-quarter larger than the average for high-income countries. These disparities—as well as fertility that is the lowest of any advanced economy country in the world—reduce South Korea's future economic prospects and will contribute to fiscal challenges as the population rapidly ages. The analysis in this paper suggests that the combination of low female employment and low fertility in South Korea reflects features of the traditional nature of work that create a particularly stark tradeoff for women between work and family and put pressure on women to choose one or the other. This tradeoff has increased in recent years because the opportunity cost of having a child has risen with the rapid growth in the tertiary education rate of South Korean women. Regressions based on individual-level data from the Korean Labor and Income Panel Study (KLIPS) show that the entire gap in female labor force participation is driven by married women, particularly women with children. Unmarried women with no children are just as likely to be employed as men. A sizable "child earnings penalty" for South Korean women is fully explained by women dropping out of the labor force after the birth of their first child rather than reducing hours or hourly wages. Although South Korea has made strides toward making work more family friendly, there is scope to do better.
Topic:: Economics, Inequality, Labor Market, Fertility, and Gender
Political Geography:: Asia and South Korea

375. Unravelling Africa’s raw material footprints and their drivers

Author:: Albert Kwame Osei-Owusu, Michael Danquah, and Edgar Towa
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: This paper applies an environmentally extended input–output analysis, leveraging the Eora database, to estimate the global raw material footprints of 51 African nations from 1995 to 2015. It employs least absolute shrinkage and selection operator and panel regression models to quantify the effects of diverse variables on Africa’s raw material footprints. The findings show that the raw material footprints of Africa’s production and consumption soared by 41 per cent and 38 per cent, respectively, from 1995 to 2015, mainly driven by biomass and construction materials. They show that Africa outsources 25 per cent of its raw material footprints from consumption, while over 60 per cent of its footprints from production arise from its exports. Our findings beckon African governments to reduce the excessive focus on exploitation and concentrate on combatting corruption and extreme rent-seeking while decoupling Africa’s raw material footprints from rising public debt, carbon emissions, income levels, and population.
Topic:: Economics, Carbon Emissions, Public Debt, Income, Raw Materials, and Input-Output Analysis
Political Geography:: Africa

376. Gender preference at birth: A new measure for son preference based on stated preferences and observed measures of parents’ fertility decisions

Author:: Mehwish Ali, Ashton de Silva, Sarah Sinclair, and Ankita Mishra
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: Investigating preference for sons is a continuing focal area of development economics and demographic research. Son preference presents a challenge in achieving the United Nations Sustainable Development Goals of ‘no poverty’, ‘good health and wellbeing’, and ‘gender equality’ by 2030. It is thus important to investigate son preference to inform policy-makers of the potential challenges in achieving these goals. Inaccurate interpretation of the mechanisms of son preference could misinform policy analysis and result in unintended consequences. Existing measures including sex ratios and gender composition of children do not reflect the true extent of son preference in high fertility countries such as Pakistan, where the success of policy action is limited and significant barriers to sex-selective technologies exist. Given the likely impact of son preference on fertility behaviour in Pakistan, accurate measurement of the forms this gender bias can take is necessary to appropriately gauge the influence of son preference on the fertility outcomes. The limited capacity of existing measures to accurately depict son preference in countries with high fertility combined with limited demarcation between pre- and post-birth son preference warrants development of a new measure for son preference to evaluate its effects. In this paper, a new measure of son preference called ‘gender preferences at birth’ (GPB) is presented. GPB combines stated fertility preferences and observed fertility outcomes to acknowledge that households in countries with high fertility and low contraception usage have less control over their fertility decisions.
Topic:: Economics, Sustainable Development Goals, Welfare, Family Planning, Fertility, and Gender
Political Geography:: Pakistan, South Asia, and Global Focus

377. Determinants of corporate cash holdings in South Africa

Author:: Ewa Karwowski, Hanna Szymborska, Keagile Lesame, and Tlhologelo Thoka
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: Globally, corporate cash holdings have risen since the 1980s. In South Africa, some commentators have accused corporations of engaging in an ‘investment strike’, while others see corporate liquidity as a precaution against systemic uncertainty. We use the unique South African Revenue Service/National Treasury firm-level dataset to scrutinize corporate liquidity, using panel analysis. Relative to GDP, corporate cash and liquidity holdings have not increased between 2010 and 2017. However, corporate cash is high in international comparison and has grown at the firm level. We do not find evidence for the hypothesis that companies are engaging in an investment strike. Cash and liquidity are shaped by idiosyncratic and sectoral risk factors. In the short run, heightened uncertainty might reduce corporate cash and liquidity as firms struggle to adjust to an unexpected economic situation. In the medium run, we find a strong association between political uncertainty and corporate cash and liquidity holdings.
Topic:: Economics, Corporations, Liquidity, and Cash
Political Geography:: Africa, South Africa, and Global Focus

378. Illicit financial flows and country-by-country reporting in extractive industries

Author:: Saila Stausholm, Petr Janský, and Marek Šedivý
Publication Date:: 07-2022
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: Economic data are important in governing the international political economy. Some of the most widely used macro statistics risk being undermined by systematic misalignment in reporting of economic activity due to illicit financial flows, as well as tax-minimizing financial transactions by multinational corporations. Measuring these misalignments may prove a way to correct old statistical standards, if adequate data can be obtained. We evaluate whether new transparency and reporting regimes that require country-by-country reporting by multinational corporations could prove a feasible way to appropriate the amount of tax avoidance and use these figures to correct macro statistics. We evaluate the existing data for two of the standards through previous literature and provide original analysis of a third standard that is applied to the extractive industries. We find that the standards lack coherence and workability, and that particularly the extractive industry standard falls short of enabling thorough research on profit reporting and taxmotivated misalignments by multinational corporations.
Topic:: Economics, Tax Evasion, Extractive Industries, and Illicit Financial Flows
Political Geography:: Global Focus

379. Will economic statecraft threaten western currency dominance? Sanctions, geopolitics, and the global monetary order

Author:: Carla Norrlof
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Atlantic Council
Abstract:: The return of great power rivalry is stoking renewed fears of weakening Western currency dominance. Financial sanctions are becoming the preferred economic tool for accomplishing geopolitical goals. These instruments are especially popular with the United States and Europe. In response, rival great powers, notably China and Russia, are diversifying away from Western currencies and developing counterstrategies to maintain economic and foreign policy autonomy. As other countries are hit by increasingly punishing Western sanctions, the incentive to join Russia and China’s alternative international monetary order increases. New analysis, published in this report, shows early signs that some countries may be trying to diversify away from the dollar. A growing circle of countries attempting to evade the Western-centric financial and currency order may over time erode the dollar and the euro’s sizeable lead, though will likely fall well short of ending their global dominance. This report analyzes these trends and quantifies the extent of reserve diversification following Russia’s 2022 war on Ukraine. It also assesses the polarity of the international currency order since the onset of the euro in 2002. Reserve diversification out of the dollar, and into the euro, has been modest, though Chinese renminbi reserves grew after Russia’s February offensive in Ukraine. Dollar unipolarity declined acutely in 2017 as the number of countries sanctioned by the United States increased and the US President Donald J. Trump threatened to revoke alliance commitments. Using economic statecraft while retaining global economic influence will require the United States to keep its economic house in order and allies close, if the current unipolar currency order is to survive.
Topic:: Economics, Monetary Policy, Sanctions, and Geopolitics
Political Geography:: China, Europe, and Asia

380. A Palestinian Outlet to the World, A Path toward Peace? Considerations and Options for a Gaza Seaport

Author:: Asaf Ashar and Joel Singer
Publication Date:: 09-2022
Content Type:: Journal Article
Journal:: Cairo Review of Global Affairs
Institution:: School of Global Affairs and Public Policy, American University in Cairo
Abstract:: Between economic considerations, intra-Palestinian divisions, and Israeli security concerns, there are a number of challenges facing the building of a seaport in Gaza, or in its alternatives. Nevertheless, it may be an opportunity to establish a tri-state free trade zone, and, ultimately, peace.
Topic:: Economics, Maritime Commerce, Maritime, and Peace
Political Geography:: Middle East and Palestine

381. Building a Seaport in Gaza: Prospects, Challenges, and Opportunities

Author:: Omar Shaban
Publication Date:: 09-2022
Content Type:: Journal Article
Journal:: Cairo Review of Global Affairs
Institution:: School of Global Affairs and Public Policy, American University in Cairo
Abstract:: A seaport in Gaza would not only be an important economic and developmental leap forward for Palestine, but also an expression of its unity and sovereignty. To achieve this, there are multiple options available, each with its own unique set of challenges and opportunitie.
Topic:: Development, Economics, Maritime, and Port
Political Geography:: Middle East and Palestine

382. Immigrant entrepreneurship in startup cities — what works in which context?

Publication Date:: 02-2022
Content Type:: Video
Institution:: MIT Center for International Studies
Abstract:: Migrants are often considered to be ‘natural entrepreneurs’. This notion is based on a presumed inclination to take risks, an openness to new experiences, and a higher willingness to adapt than their local counterparts. Migrants found more businesses relative to the local population in many countries, despite facing additional challenges in the startup process. To support them in overcoming these challenges and to leverage their entrepreneurial potential, more and more organizations create targeted offers for this group of entrepreneurs — particularly in cities with vibrant entrepreneurial ecosystems. Increasingly, these ‘newcomer entrepreneurs’ find that their particular needs are better recognised and taken into account. Despite this, it is still unclear which interventions actually work for which target group, and in which context. Which role do the different stakeholders and systemic mechanisms in the local entrepreneurial ecosystem play?
Topic:: Economics, Entrepreneurship, Business, and Immigrants
Political Geography:: Global Focus

383. Mine Action and the Environment in Karabakh

Author:: Emil Hasanov
Publication Date:: 04-2022
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: The now‑liberated areas of Azerbaijan are contaminated by mines and explosive remnants of war (ERW), the clearance thereof being one of Baku’s highest post‑conflict priorities. Before proceeding any further, we must provide proper definitions of these terms, since they are technical in nature and thus may not be familiar to the general reader. According to the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti‑Personnel Mines and on Their Destruction that was adopted in Oslo in 1997 and entered into force in 1999 (it is colloquially called the AntiPersonnel Mine Ban Convention, or APMBC), an anti‑personnel mine “means a mine designed to be exploded by the presence, proximity or contact of a person and that will incapacitate, injure or kill one or more persons.” An antivehicle or antitank mine is effectually the same thing, except that it is designed to explode when triggered by a vehicle. Together, they fall under the catchall term mine, which the same document defines as a “munition designed to be placed under, on, or near the ground or other surface area and to be exploded by the presence, proximity, or contact of a person or a vehicle.” Furthermore, explosive remnants of war (ERW) are defined as explosive munitions left behind after a conflict has ended. They include unexploded artillery shells, grenades, mortars, rockets, air‑dropped bombs, and cluster munitions. If such weapons fail to detonate as intended for whatever reason, they are called unexploded ordnance (UXO); if, on the other hand, they have not been used during an armed conflict and have been left behind by the party that brought them to the battlefield, they are called abandoned explosive ordnance (AXO). Lastly, cluster bombs or cluster munitions, which are defined as weapons containing from several to hundreds of explosive submunitions. They are dropped either from the air or fired from the ground and are designed to break open in mid‑air, releasing submunitions and saturating an area that can be as wide as several football pitches. Based on past practice, the failure rate of cluster munitions to explode as intended stands at between 10 and 30 percent.
Topic:: Climate Change, Economics, Environment, Mining, and Recovery
Political Geography:: Central Asia, Asia, and Azerbaijan

384. Unfair Trade or Unfair Protection? The Evolution and Abuse of Section 301

Author:: Scott Lincicome, Inu Manak, and Alfredo Carrillo Obregon
Publication Date:: 06-2022
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: Section 301 of the Trade Act of 1974 gives the U.S. trade representative (USTR) broad authority to investigate “unfair” foreign trade policies allegedly harming American companies and to impose tariffs or other trade restrictions to achieve the removal of those policies. The statute was a common tool of U.S. trade policy from the 1980s to the 1990s, authorizing the USTR to conduct almost 100 different investigations during that period. Since the World Trade Organization (WTO) was established in 1995, however, the USTR has used Section 301 infrequently and almost exclusively to initiate or implement WTO dispute settlement actions—actions that, per WTO rules, were supposed to supplant the kinds of unilateral trade actions once applied under the law. The Trump administration departed from this long‐standing U.S. practice and took advantage of Section 301’s flaws to circumvent the WTO and enact unilateral tariffs against multiple U.S. trading partners, imposing significant economic and geopolitical costs along the way. This paper examines the Trump administration’s actions in historical context, evaluates how the law was stretched beyond its intended purpose in direct contravention of the United States’ WTO obligations, and offers practical reforms to prevent future abuse.
Topic:: Economics, Legislation, Trade, Protectionism, and WTO
Political Geography:: North America and United States of America

385. Assessing the economic, societal and cultural impact of YouTube in India

Author:: Oxford Economics
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Oxford Economics
Abstract:: Recent research by Oxford Economics suggests YouTube contributed 6,800 Cr to the Indian economy in 2020 and supported 6,83,900 jobs. But its impact goes further, bringing a rich array of economic, cultural and societal benefits to India. YouTube generates substantial revenue for creators, artists, and media companies, who in turn support a broad ecosystem of employees and businesses in India. Creators deliver a wealth of educational tools and materials, which are valued by students, parents, and teachers alike.
Topic:: Economics, Mass Media, Social Media, and YouTube
Political Geography:: India and Asia

386. The State of the Creator Economy – Assessing the economic, societal, and cultural impact of YouTube in the US in 2021

Author:: Oxford Economics
Publication Date:: 07-2022
Content Type:: Policy Brief
Institution:: Oxford Economics
Abstract:: This study presents an updated assessment of YouTube’s contribution to US GDP and employment, and its broader impact on society and culture.
Topic:: Economics, Mass Media, Employment, Social Media, and YouTube
Political Geography:: North America and United States of America

387. The Instability of Preferences: Uncertain Futures and the Incommensurable and Intersubjective Nature of Value(s

Author:: Richard Bronk and Jens Beckert
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: The default assumption of standard economics is to treat preferences as exogenously ‘given’, consistent with one another, ‘revealed’ by past choices, and context independent. There has been increased interest recently (within behavioural economics) in the impact of inconsis- tent or irrational preferences and (more broadly) in dynamic and endogenous preferences. This paper builds on these challenges to standard assumptions by analysing the pivotal role of three aspects of preference formation in explaining capitalist dynamics and market insta- bility. These are the constant creation of new preferences and the indeterminacy of choice sets in the context of widespread product innovation; the moral indeterminacy implied by conflicting and incommensurable social norms attaching to market goods where there is no single scale of value and hence no unique set of rational trade-offs; and, lastly, the con- tingent social and market construction of the product differentiation, quality attribution, and value assessments central to preference formation. The paper concludes by considering implications for economics as a discipline.
Topic:: Economics, Capitalism, Norms, and Social Order
Political Geography:: Global Focus

388. Interfaith Relations in Pakistan Perspectives and Worldview of Youth in Punjab

Author:: Ahmed Ali
Publication Date:: 02-2022
Content Type:: Special Report
Institution:: Pak Institute for Peace Studies (PIPS)
Abstract:: In the present day where concerns are gradually shifting from overpopulation to decreasing youth population in many countries, Pakistan’s youth population makes it a young nation. On a theoretical level, a large youth population with energy and capacity for work should help boost the national economy and contribute to GDP growth. However, in practice, lack of focus on youth in policymaking has drastically checked Pakistan’s ability to capitalize on its youth bulge and channelize the youth’s energies for economic growth. Still more worrisome, youth engagement is usually overlooked in policy discourse and formulation concerning peace and security, even though youth are integral to Pakistan’s security issues including violent extremism and terrorism. In recent past, the scale of religious extremism and violence witnessed in Pakistan could not have been possible without the formidable role of the youth who were indoctrinated in violent ideologies and used as weapons of war by militant groups. The Amnesty International has documented the using of youth in conflicts and hostilities around the world. In Pakistan, a Taliban commander Qari Hussain called the children “the tools to achieve God’s will”.1 The strategy of using young people in acts of violence was demonstrated by terror outfits, and children and teenagers were deployed as human bombs. However, despite Pakistan’s bitter experiences with faith-based extremism and terrorism, the youth continue to be discounted in policy. There is no effective or functional youth policy to speak of, though leaders do quite often cite the youth bulge as a source of national strength and promise uplift of youth. But rhetoric is barely followed by befitting policy measures. Resultantly, the youth are left largely rudderless and disenchanted which make them vulnerable to exploitation. There is already enough evidence to suggest that the current generation of Pakistani youth harbor anger inside which is often manifested in violent ways including in the forms of vigilantism and lynching.
Topic:: Security, Economics, Leadership, and Youth
Political Geography:: Pakistan and Middle East

389. Untapped Innovation? The Racial and Gender Divides That Hinder the U.S. Knowledge Economy

Author:: Alexander Kersten and Gabrielle Athanasia
Publication Date:: 05-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: The United States’ innovative spirit rests on a complex network of economic rules favoring market-based competition, predictable legal arrangements for patenting and securing intellectual property, and incentives for investors. It also relies on a robust university system that provides the requisite educational training and facilities to carry out research and development (R&D). Maintaining this network fundamentally requires a focus on early education, especially in science, technology, engineering, and mathematics (STEM). A more inclusive innovation economy also demands greater attention to communities of color, who are often poorly connected to the innovation economy; women, who are underrepresented in the innovation economy; and those in regions that do not yet share in the prosperity of the United States’ innovation clusters. To build a more inclusive innovation-based economy, policymakers should foster equitable access to early childhood STEM education. They should encourage the expansion of technology transfer programs across universities and colleges, including historically Black colleges and universities (HBCUs), and connect them to their regions’ economic growth. Policymakers, academia, and industry leaders should also encourage minorities and women to participate in the patenting and venture systems that support the innovation economy. Renewing American innovation means making opportunity as universal as the talent that seeks it.
Topic:: Economics, Gender Issues, Race, Labor Issues, Discrimination, and Innovation
Political Geography:: North America and United States of America

390. Red Ink: Estimating Chinese Industrial Policy Spending in Comparative Perspective

Author:: Gerard Dipippo, Ilaria Mazzocco, and Scott Kennedy
Publication Date:: 05-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: A new report by the CSIS Economics Program and the Trustee Chair in Chinese Business and Economics quantifies the size of total industrial policy spending by China and compares it to seven other major economies: Brazil, France, Germany, Japan, South Korea, Taiwan, and the United States. Much of the existing research on industrial policy focuses on its effects, but there are few, if any, published studies that attempt a systematic comparison and quantification of overall industrial policy spending. The heart of the report is the careful calculation of total industrial policy spending by China and the other economies, combining estimates from multiple tools, among them direct subsidies, tax breaks, below-market credit, and state investment funds. The report provides additional context by examining the historical trajectory of industrial policy of these economies and the evolution of industrial policy across these economies for three industries—aluminum, semiconductors, and electric vehicles. The historical and sectoral analyses point to some similarities across economies, but they also demonstrate how distinctive China has been in terms of both quantifiable spending and non-quantifiable policy tools. Finally, this report discusses several important policy implications, including greater transparency and more harmonized reporting about industrial policy spending and the potential ways in which policymakers could employ these data to more effectively limit industrial policy spending by China and other economies.
Topic:: Economics, Industrial Policy, Industry, and Labor Market
Political Geography:: China and Asia

391. Sanctions, SWIFT, and China’s Cross-Border Interbank Payments System

Author:: Barry Eichengreen
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Center for Strategic and International Studies
Abstract:: In response to Russia’s attack on Ukraine, the United States and a coalition of cooperating countries imposed harsh financial sanctions on the Russian government, corporations, and individuals.1 These sanctions bar Russian banks from using SWIFT (the Society for Worldwide Interbank Financial Telecommunications) to facilitate cross-border payments, prohibit banks from doing most forms of business with Russian entities, and freeze assets held abroad by the Central Bank of Russia in the form of treasury securities and bank deposits. These developments have led Russia, as well as other countries contemplating whether they might find themselves in the same position, to explore alternatives. Such options could include building a substitute for SWIFT to send instructions regarding cross-border interbank transactions; identifying financial counterparties other than Western banks with which to do international business and platforms other than Western clearinghouses through which to make payment; and finding a vehicle other than the dollar for denominating and executing transactions. Specifically, countries are looking to China, which has large internationally active banks, has created its own clearinghouse for cross-border transactions and is embarked on a campaign to encourage broader international use of its currency, the renminbi.2 This note investigates how far China has gone in creating alternatives to SWIFT, Western banks, and the dollar. It explores whether Russia and other countries might be drawn toward this parallel international financial universe and what economic and political implications this has—for the United States, for its geopolitical rivals, and for global economics and politics. China is making strides in fostering cross-border use of the renminbi and building a renminbi-based interbank payments system that can serve as an alternative to SWIFT and Western clearinghouses. However, these remain somewhat limited alternatives—for the moment. The situation could change faster if lent additional impetus by Western sanctions. Thus, countries such as the United States that employ financial sanctions should prepare for the development of alternative financial arrangements in China and possibly elsewhere. This may mean relying more heavily on nonfinancial measures insofar as financial sanctions eventually become less effective.
Topic:: Economics, Sanctions, Finance, Borders, and Banks
Political Geography:: China and Asia

392. Economic Security in Emerging Markets: A Look at India, Vietnam, and Indonesia

Author:: Matthew Goodman, Matthew Reynolds, and Julianne Fittipaldi
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Center for Strategic and International Studies
Abstract:: With the outbreak of the Covid-19 pandemic, supply chain resilience has emerged as a policy priority of the United States and its allies. The issue of supply chains has also raised the profile of emerging economies that offer possible alternatives to China as production platforms for multinational firms. This report surveys economic security policy developments in three major emerging economies: India, Vietnam, and Indonesia. It finds that all are attempting to take advantage of this new focus on supply chain resilience, while (to varying degrees) balancing the economic security risks posed by China’s rise. The United States and its allies have an opportunity to work with these emerging economies to shape their decisions about trade, investment, and technology policies in ways that promote mutual economic security and enhance international economic rules and norms.
Topic:: Security, Economics, Emerging Markets, International Trade and Finance, and Markets
Political Geography:: Indonesia, India, Asia, Vietnam, and Asia-Pacific

393. How China’s Human Capital Impacts Its National Competitiveness

Author:: Briana Boland, Kevin Dong, Jude Blanchette, and Ryan Haas
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Center for Strategic and International Studies
Abstract:: How will the strengths and weaknesses of China’s human capital impact national competitiveness? China’s efforts to maintain economic growth, strengthen supply chains, develop strategic science, technology, engineering, and mathematics (STEM) sectors, and secure a modern military edge hinges on the ability to cultivate and utilize human capital. As the United States and other countries increasingly engage in multidomain competition with China, it is critical to start from a clear-eyed understanding of China’s human capital and Beijing’s strategy for nurturing national talent. Investments in higher education, strategic STEM sectors, and military talent demonstrate key areas in which Beijing is focusing on cultivating human capital. However, China must overcome significant obstacles to innovate as it faces substantial demographic pressures, socio-economic inequalities, and challenges to attracting and retaining top talent both domestically and internationally.
Topic:: Economics, Labor Issues, Human Capital, and Strategic Competition
Political Geography:: China and Asia

394. An Analysis on India's Foreign Economic Relations and Its Implications for Korea-India Cooperation

Author:: Jeeyon Janet Kim, Hyoungmin Han, Hyeyoon Keum, and Jonghun Pek
Publication Date:: 03-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Economic exchanges between Korea and India have been expanding since the signing of the Korea-India CEPA, which took effect in 2010, and the promotion of the New Southern Policy (NSP) by Korea, but the level of exchange still remains insufficient considering the potential of the two countries. We aim to contribute to deepening Korea-India trade cooperation by analyzing India's foreign trade investment relations. Part II and III examine India's recent trade and investment structure with major countries including Korea, and Part IV analyzes India's status on the global production networks. In conclusion, Part V presents various implications for Korea-India trade cooperation.
Topic:: Foreign Policy, Economics, International Cooperation, Bilateral Relations, and Trade
Political Geography:: South Asia, India, Asia, and South Korea

395. Impacts of New International Tax System on Multinational Firms’ FDI

Author:: Sangjun Yea
Publication Date:: 04-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: In this study, I present a theoretical model to quantitatively assess the economics impact of Pillar 1 and Pillar 2, especially focusing on the changes in the FDI patterns of multinational enterprises (MNEs). Pillar 1 offsets the incentives of MNEs' profits-shifting for tax-planning purposes, thereby reducing the inbound FDI into the countries with low corporate income tax rates. Pillar 2 burdens MNEs with 'top-up' taxes attributed from the subsidiaries in low tax countries. As the profits after tax (PAT) of MNEs shrink at the global level, innovation and R&D investment for new products will decrease, and as a result, global FDI flows will hamper.
Topic:: Economics, Foreign Direct Investment, Multinational Corporations, and Tax Systems
Political Geography:: Global Focus

396. The Indo-Pacific Economic Framework and Digital Trade in Southeast Asia

Author:: Andreyka Natalegawa and Gregory B. Poling
Publication Date:: 05-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: In October 2021, the Biden administration announced the development of an Indo-Pacific Economic Framework (IPEF) with partner nations to “define our shared objectives around trade facilitation, standards for the digital economy and technology, supply chain resiliency, decarbonization and clean energy, infrastructure, worker standards, and other areas of shared interest.” Details on the framework are still being worked out, but it now seems that those six areas of focus have been distilled into four negotiating “pillars.” Deputy U.S. Trade Representative Sarah Bianchi said in early February that these would include “fair and resilient trade, supply chain resilience, infrastructure and decarbonization, and tax and anticorruption.” The Office of the U.S. Trade Representative (USTR) will likely lead negotiations on the first, while it appears that the Commerce Department will take the lead on the other three. The details of each pillar will be worked out in the months ahead, but the Biden administration is certain to face challenges and trade-offs across each, given the diversity of economies and political constraints across the region. USTR has said the trade pillar will be “high-ambition” and include binding commitments. But this will be complicated by the fact that the administration plans to roll out the IPEF through executive action rather than as a traditional trade deal requiring congressional approval. This pathway will help the framework sidestep political obstacles that agreements like the Trans-Pacific Partnership faced before Congress, but it also means that the administration cannot offer increased market access or any other concessions that would require changes to U.S. law. Moreover, moving forward with the IPEF through executive action has led to concerns among partners that the framework could be vulnerable to U.S. domestic politics or that a future administration may well roll back or abandon the framework. Given these self-imposed constraints, the administration will face headwinds trying to convince countries to sign on to high-standard provisions on digital trade, labor, and environmental standards that might run counter to their perceived short-term political or economic interests. One possible solution would have been to make the involvement in the other three pillars, where there are likely to be more tangible benefits for other countries, contingent on an agreement in the trade pillar. But that would run counter to the desire to get as many countries on board as possible. So, the administration has instead indicated that countries will be invited to engage in each pillar a la carte. And while like-mindedness in and of itself does not immediately guarantee their support for the IPEF, the likely result is that only Japan, Australia, New Zealand, Singapore, and perhaps South Korea—the most developed economies which already share U.S. standards on digital trade, environment, and labor—will engage with USTR on the trade pillar. But a wider array of economies will likely join the talks with the Commerce Department on the other three.
Topic:: Economics, International Trade and Finance, Digital Economy, and Economic Cooperation
Political Geography:: Asia, Southeast Asia, and Indo-Pacific

397. Russia Futures: Three Trajectories

Author:: Cyrus Newlin and Andrew Lohsen
Publication Date:: 05-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: Beginning in 2018, the Europe, Russia, and Eurasia Program at CSIS initiated a research project to explore scenarios related to Russia’s future development and to consider the transatlantic implications of each scenario. The project, which was generously funded by the Norwegian Foreign Ministry, was intended to provide policymakers with an understanding of how Russia’s domestic political situation, economic outlook, military activities, and foreign policy might evolve in response to modern-day challenges including climate change, growing competition in the Arctic, and the fraught relationship between China and the collective West. Based on original research and workshops involving U.S., Norwegian, and European experts, CSIS identified three potential scenarios for Russia’s future development. The first scenario envisioned a path of continuity, in which Russian leaders strove to maintain the status quo. The second scenario foresaw a trend of risk reduction in the Kremlin’s decisionmaking that led to a partial normalization of relations with the West. The third scenario considered a darker future, in which Russian leaders accepted a higher degree of risk to manage mounting problems at home and abroad, leading to sustained confrontation with the West and the further detachment of the Russian government from its people. These scenarios were being prepared for publication when Russian president Vladimir Putin launched a renewed invasion of Ukraine on February 24 and ushered in a period of deep uncertainty for European and global affairs. Almost immediately, Russia’s act of aggression turned the country into a global pariah, triggering international sanctions far beyond the Kremlin’s expectations and consolidating transatlantic unity to an extent that was difficult to imagine in the tense months immediately preceding the invasion. As orthodoxies have been challenged and expectations reconsidered, contingencies that were thought impossible—from embargoes of Russian hydrocarbons to the potential use of nuclear weapons by the Kremlin—are starting to feature into conversations among policymakers and analysts.
Topic:: Defense Policy, Development, Economics, and Military Strategy
Political Geography:: Russia and Europe

398. Strategic Competition in the Financial Gray Zone

Author:: Heather A Conley, James Andrew Lewis, Eugenia Lostri, and Donatienne Ruy
Publication Date:: 04-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: Over the past 10 years, the U.S. government has slowly reoriented its foreign and security policy from the fight against global terrorism toward strategic competition with Russia and China. This reorientation has been accompanied by a new examination of how strategic competition will impact the integrity and future stability of the U.S. economy and financial system. One of the most important elements of strategic competition is sub-threshold warfare (also called asymmetric, hybrid, or gray zone warfare), wherein strategic competitors seek to shape the geostrategic environment in their favor, from information operations to economic warfare—which includes such tools as illicit finance and strategic corruption. Strategic competitors present a clear economic and financial threat to the United States when they operate in the emerging financial gray zone, in which malign actors can take advantage of the U.S. financial system to further their aims and disarm the country internally. The U.S. government, along with its allies, has only begun to acknowledge the sweeping nature of the financial gray zone and to reposition itself to compete within it. Because adversaries exploit the seams between the internal and external policies and authorities, Washington must have greater insights into a complex operating system and better integrate data across the many relevant agencies—in a way, connecting the financial dots. As it develops this comprehensive picture, the U.S. government should develop stronger defensive and offensive policy tools to counter this emerging threat.
Topic:: Economics, Finance, Strategic Competition, and Rivalry
Political Geography:: China, Asia, North America, and United States of America

399. Regional Perspectives on the Indo-Pacific Economic Framework

Author:: Matthew Goodman and Aidan Arasasingham
Publication Date:: 04-2022
Content Type:: Policy Brief
Institution:: Center for Strategic and International Studies
Abstract:: The proposed Indo-Pacific Economic Framework (IPEF) is the Biden administration’s answer to questions about the United States’ economic commitment to the vital Indo-Pacific region. For this initiative to succeed, it must address concerns among regional partners about the framework’s form, function, benefits, inclusivity, and durability. Based on conversations with representatives from over a dozen regional governments, this brief summarizes Indo-Pacific perspectives on the IPEF.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Regionalism
Political Geography:: North America, United States of America, and Indo-Pacific

400. Beyond 2025: The Future of the African Growth and Opportunity Act

Author:: Daniel F. Runde and Sundar R. Ramanujam
Publication Date:: 03-2022
Content Type:: Policy Brief
Institution:: Center for Strategic and International Studies
Abstract:: Over the past two decades, the United States has provided assistance and support for sub-Saharan Africa’s efforts to transform its economic and trade relationships, centered around the African Growth and Opportunity Act (AGOA). First enacted into law on May 18, 2000, AGOA was designed to significantly enhance designated sub-Saharan African countries’ market access to the United States by providing duty-free treatment for specific import categories. The legislation’s primary goal was to promote economic growth through good governance and free markets. To qualify and remain eligible for AGOA, countries were expected to demonstrate progress toward market liberalization and to improve the rule of law, human rights protections, and core labor standards. More than 20 years later, AGOA continues to provide preferential treatment to 44 countries in the region, spanning over 6,500 tariff lines. Since May 2000, AGOA has been amended four times, mostly to clarify preferential treatment terms, technical standards, and sunset deadlines. The act was initially designed to be valid for eight years, expiring at the end of September 2007. In July 2004, however, President George W. Bush signed the AGOA Acceleration Act, extending it to 2015. Toward the end of his second term, in June 2015 President Barack Obama extended its validity by signing the Trade Preferences Extension Act, under which AGOA is set to expire in 2025. The global political and economic landscape has changed profoundly since AGOA was enacted in 2000, even before the Covid-19 pandemic created new disruptions and accelerated several ongoing changes. The mobile telephony revolution has created new opportunities for millions to participate in the digital sphere, use mobile banking and payments systems, and receive commercial, educational, and medical services via the internet. Even as the sub-Saharan African region’s middle class continues to grow, it is also set to experience a youth population boom in the next three decades—which, under the right conditions, could pay a demographic dividend and avert a social crisis. Meanwhile, the United States has also entered an era of great-power competition with China. With China’s influence in sub-Saharan Africa rising significantly, this competition is also playing out through the region’s political and economic institutions. Considering these opportunities and challenges, leaders in Washington (and their constituents across the United States) ought to look at Africa as a prospect for deepening commercial partnerships, not as a continent that needs to be “saved” through foreign assistance. Accordingly, the United States can consider one of the three following scenarios in response to AGOA’s current expiration timeline
Topic:: Development, Economics, International Cooperation, and International Trade and Finance
Political Geography:: Africa

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COLUMBIA UNIVERSITY PRESS