Showing posts with label Economic. Show all posts
Showing posts with label Economic. Show all posts

14 June 2019

Uncertainty in ending extreme poverty

Fabian Mendez Ramos

Whereas sustained economic growth is considered the primary driver of poverty alleviation, the different ways in which growth interacts with changes in income inequality mean that the future of poverty reduction is highly uncertain.

In a recently published working paper, I use historical (1980-2014) data to model and simulate future paths of income inequality and growth, which, in turn, enable us to quantify country-specific changes in poverty rates and income distribution. Our historical-based simulations estimate that the probability of alleviating extreme poverty below the 3 percent threshold by 2030 (Sustainable Development Goal 1) at the global level is small—less than 2 percent.

Furthermore, our results indicate significant variation in future poverty outcomes. For instance, by 2030, the most favorable estimate of poverty headcount at the global level displays a median value of 4.6 percent, with a standard deviation of 0.5. Conversely, our most pessimistic result shows a median outcome of 8.9 percent with a standard deviation of 0.9. These median estimates represent approximately 370 and 720 million people around the world subsisting on less than $1.90 a day (2011 PPP).

10 June 2019

Why Economics Must Go Digital


Mainstream economics has largely failed to keep up with the rapid pace of digital transformation, and it is struggling to find practical ways to address the growing power of dominant tech companies. If economists want to remain relevant, they must rethink some of their discipline's basic assumptions.

CAMBRIDGE – One of the biggest concerns about today’s tech giants is their market power. At least outside China, Google, Facebook, and Amazon dominate online search, social media, and online retail, respectively. And yet economists have largely failed to address these concerns in a coherent way. To help governments and regulators as they struggle to address this market concentration, we must make economics itself more relevant to the digital age.

Digital markets often become highly concentrated, with one dominant firm, because larger players enjoy significant returns to scale. For example, digital platforms incur large upfront development costs, but benefit from low marginal costs once the software is written. They gain from network effects, whereby the more users a platform has, the more all users benefit. And data generation plays a self-reinforcing role: more data improves the service, which brings in more users, which generates more data. To put it bluntly, a digital platform is either large or dead.

8 June 2019

Trade War Becomes Cold War

by Jim Welsh

The expectation of a global rebound in the second half of 2019 was predicated on a positive resolution in the trade talks between the U.S. and China and the U.S. and the European Union. With a burst of stimulus from the Peoples Bank of China and Chinese fiscal stimulus since last summer, the global economy was beginning to show signs of improvement.

A positive outcome on trade was likely to engender a pick-up in business investment in the U.S. and globally, as the uncertainty of the trade issue was removed. With solid job growth, the highest wage growth in ten years, and Consumer Confidence near 20 year highs, a trade deal would have provided a boost that was likely to lift core inflation above 2.0% and drive the unemployment rate lower. This outcome would have eliminated any chance the Federal Reserve would lower rates before the end of 2019 and potentially raise the specter of an increase. Since the majority of markets participants were expecting the Fed to lower rates, the prospect of an increase would have caught investors off balance.

Much has changed since May 5 when President Trump indicated tariffs would increase form 10% to 25% on May 10. As I noted in a bit of understatement in the May 3 Macro Tides:

Data Governance Principles for the Global Digital Economy

In January 2019, Japanese Prime Minister Shinzo Abe called for the upcoming G20 summit in Osaka to “be the summit that [starts] world-wide data governance.” The rise of the data economy has driven unprecedented growth and innovation in recent decades but is also generating new policy challenges for global leaders. Figuring out how to govern the complex data ecosystem, both enabling its potential and managing its risks, is becoming a top priority for global policymakers.

In partnership with the Omidyar Network, the CSIS Technology Policy Program and Project on Prosperity and Development developed a set of data governance principles for the G20 member states, which can inform the development of data governance frameworks around the world.

Discussions of data governance are not happening in a vacuum. Laws, conventions, frameworks, norms, and protocols around data have existed for decades. Data governance is implicitly or explicitly wrapped up in existing governance mechanisms around privacy, digital trade and e-commerce, and human rights law. Few of these, however, anticipate emerging technology trends that have extended the reach of digital tracking into the physical world and have allowed us to derive detailed insight from the immense ocean of data generated by the digital economy.

2 June 2019

Did China Break the World Economic Order?


Last Friday, the White House raised the tariffs on $200 billion worth of Chinese imports up to 25 percent. On Monday, China retaliated with tariffs of its own. The trade war is now full-on — except that it’s not really about trade.

China does account for the largest share of America’s trade deficit. But many experts don’t seem to think that bilateral trade deficits are a problem in themselves — they’re just a symptom of other issues (if even that). “The overall United States global trade imbalance is the result of economic conditions in the United States — the excess of investment over savings,” Martin Feldstein, a former chairman of the Council of Economic Advisers, has argued, adding that if America’s trade imbalance with China were eliminated, it would simply shift to other countries.

Whether President Trump is misguided in doggedly pursuing tariffs or playing coy and using them as leverage with the Chinese government, America’s continued drive to levy penalties is less about fixing a trade problem than about changing China’s investment rules. In particular, the Trump administration perceives those rules as forcing the transfer of foreign technology to Chinese companies, unfairly helping them.

National Security Today Through 2028: Women Leading the Next Decade

Hillary Dickinson and Alexandra Trent

William & Mary Whole of Government Center of Excellence

A dearth of near-peer competitors in the post-Cold War era and the September 11th terrorist attacks incentivized more recent American decision-makers to treat non-state actors as the foremost danger to our national security. But in the years since the commencement of the global war on terror, our security environment has changed: near-peer competition from Russia and China; North Korean and Iranian nuclear capabilities; and threats in non-traditional domains like space and cyberspace all threaten American safety.

Such complex challenges cannot be solved in isolation by individual agencies; rather, they require cohesive strategies that involve all stakeholders, public and private. As William & Mary (W&M) commemorates 100 years of coeducation and the inauguration of President Katherine A. Rowe, our Whole of Government Center of Excellenceheld its Second Annual National Security Conference, “National Security Today Through 2028: Women Leading the Next Decade,” on Thursday, April 4, 2019 to discuss the future national security environment with some of the nation's top leaders.

27 May 2019

Wanted: Harsh Realism at the World Bank

by Hilton L. Root

The World Bank is recovering from one of the worst disasters in its history: the six-year (July 2012 to February 2019) tenure of Jim Yong Kim as its twelfth president. His newly-appointed replacement, President David Malpass, takes over an organization that has lost its focus on reducing extreme poverty and promoting shared prosperity, declined in esteem among global institutions, and seen massive demoralization among staff as a result of futile organizational restructures. These problems certainly give Malpass a mandate to change course.

For that, he will receive no shortage of suggestions. Few will be radical enough to create the bank needed for the twenty-first century.

The new World Bank president should begin his assessment with a strong dose of harsh realism. Other development organizations—like the Asian Infrastructure Investment Bank, BRICS New Development Bank, and Gates Foundation—have emerged with impressive resources, faster processing and more focused agendas. The World Bank has relatively fewer funds and multiple missions far beyond its means. Moreover, its operations should be refocused on something attainable and, most importantly, something for which it is uniquely capable.

25 May 2019

What have we learned about the learning crisis?

Michelle Kaffenberger

That learning in many developing countries is in crisis has been well established. The learning crisis was the focus of the World Bank’s World Development Report 2018, and UN global education goalshighlight the need for improved learning. Yet, we are still learning much about the contours of the learning crisis, with important implications for how to address it. Recent research and analysis conducted by the RISE Programme sheds light on the severity and scale of the crisis, showing that dramatic improvements are needed to address it.


1. New data shows just how severe the crisis is in many countries

PISA for Development (PISA-D), a new effort to include more low- and middle-income countries in the internationally comparable PISA assessments, released its first results in late 2018. Test results revealed shockingly low learning levels. Across the seven countries participating, only 12 percent of children who were tested met minimum proficiency levels for math, and 23 percent for reading, compared with 77 percent and 80 percent in Organisation for Economic Co-operation and Development (OECD) countries, respectively. Further, the test is only administered to 15-year-olds who are in school and in at least grade seven. When children who were ineligible for the test are taken into account, only six percent of all 15-year-olds on average across the PISA-D countries demonstrated proficiency in math (Figure 1). In Zambia it was only one percent. These measures of minimal proficiency correspond with the Sustainable Development Goals (SDG) for literacy and numeracy, meaning these countries are far from achieving this basic goal.
Figure 1: All PISA-D countries fall far short of universal minimum proficiency in mathematics

Beyond Technology: The Fourth Industrial Revolution in the Developing World

There are not going to be driverless Ubers in Lagos anytime soon. Robots are not going to steal millions of jobs from American miners or factory workers. Nor will our genes be spliced with technological enhancements to defeat diseases and to supercharge our neurons. Not yet, at least. But we are beginning to see symptoms of the globally disruptive phenomenon known as the Fourth Industrial Revolution (4IR). Rapid periods of past technological industrialization have created tectonic shifts in societies throughout human history. Diverse technologies have grown and scaled to knock off behemoths and traditions to become the next giants themselves. 

Some of these technologies that will define next-generation human enterprise, connectivity, and lifestyles already are here, but they haven’t been scaled to everyday utilization. For example, the vertical lift technology for flying cars has been around for years, but the regulatory environment, legal considerations, and other issues currently outweigh the benefit to innovate. Just because society has these technologies does not mean they will roll out. There are growing speed bumps to technology around privacy, competition, and equitable access. Technologies’ dramatic impact on everyday life could take a long time, but just like previous revolutions, if we do not plan for these evolutions now, we won’t benefit from them in the future.

This report is made possible by the generous support of the Royal Embassy of Denmark.

24 May 2019

Trump's tech-economic war and self-serving definition of national security

Bobby Naderi

Editor's note: Bobby Naderi is a journalist, current affairs commentator, documentary filmmaker and member of the Writers Guild of Great Britain. The article reflects the author's opinion, and not necessarily the views of CGTN.

The Trumpsters are at it again. After the arbitrary imposition of additional tariffs on Chinese goods, the U.S. Commerce Department is now joyfully adding Huawei Technologies Co Ltd and 70 affiliates to its so-called "Entity List."

An executive order for this, which will begin in the coming days, was autographed by President Donald Trump himself on Wednesday. Under Trump's order, whose tweets lord over the U.S. economy and stock market, the largest telecom equipment producer in the world cannot buy parts and components from American companies without a U.S. government license. Huawei will also need the authorization to sell products in the U.S.

Curiously, Trump, who once tweeted "I want the United States to win through competition, not by blocking out currently more advanced technologies," has claimed his decision is based on "national security" and not on his suicidal trade and technology warfare with the world's second-largest economy. 

23 May 2019

Huawei in the Trump Administration’s Crosshairs as US-China Economic Warfare Escalates

By Ankit Panda

The Trump administration has served up a side-helping of serious economic decoupling alongside this month’s main course: the escalating trade war. On Wednesday, the administration announced that it would blacklist China’s Huawei Technologies Co. by blocking American firms from serving as suppliers for Huawei products. A long-rumored executive order signed by U.S. President Donald J. Trump was followed by a U.S. Commerce Department listing of Huawei and 70 affiliates to an “Entity List,” barring the company from sourcing U.S. components for its products and services.

Given the assumptions that had underlaid globalization and U.S.-China interdependence in the technology sector, the move will hit Huawei, China’s largest technology company and a source of national pride, where it’ll hurt.

20 May 2019

Will a GDPR-Style Data Protection Law Work For India?


The European Union’s (EU’s) General Data Protection Regulation (GDPR) took effect in May 2018, harmonizing data protection and privacy requirements across the EU.1 Many other countries have either implemented data protection requirements or are in the process of considering them. In the United States, for example, Senator Elizabeth Warren has proposed a bill to expand criminal liability for the executives of companies that suffer data breaches.2

India, too, is taking steps to enact a data protection framework modeled along the lines of the GDPR. In July 2017, the government of India appointed a Committee of Experts on a Data Protection Framework for India, or Data Protection Committee (DPC), under the chairmanship of Justice B.N. Srikrishna, to study issues related to data protection in India.3Though the committee submitted its report—and proposed a comprehensive law on data protection—on July 27, 2018, it failed to weigh the economic costs and benefits of implementing a GDPR-style law in India.

Emerging economies—like India—that are considering such proposals need to carefully evaluate the direct and indirect costs of such laws vis-à-vis the benefits from a data protection framework. A survey of the existing literature that estimates these costs and benefits highlights the need for further research on data protection laws.

The Suspected Sabotage of Oil Tankers Puts the Persian Gulf on High Alert

What Happened

There are more questions than answers following an incident in the Gulf of Oman that could raise the stakes in a battle pitting Iran against its regional adversaries and the United States. On May 12, four oil tankers off the coast of the Emirati port of Fujairah suffered damage in what the United Arab Emirates has described as sabotage. A day later, Saudi Arabia confirmed an attack against two of its tankers, Amjad and Al Marzoqah. The other tankers involved included the Norwegian-flagged Andre Victoria, as well as a small Emirati bunkering tanker that had been supplying the Andre Victoria. 

The Big Picture

The Persian Gulf has been on a heightened state of alert since the United States declined to extend sanctions waivers for Iran's oil customers. Tehran announced it would suspend two of its commitments to the Joint Comprehensive Plan of Action and Washington announced it was sending a carrier group and more bombers to the region. We are watching closely for any incident that could provoke a conflict, up to and including a military strike by the United States and its regional allies against Iran — or vice versa. No evidence has yet emerged that Iran sabotaged four vessels in the United Arab Emirates on May 12, but given that it has threatened tankers traversing the Persian Gulf in response to U.S. actions, it is an incident worth watching closely.

17 May 2019

Economists often don’t know what they’re talking about

The most intriguing and indisputable thing we have learned about economists in recent decades is that they don’t know nearly as much as they thought they knew. We see evidence of this all the time. Just recently, the Bureau of Labor Statistics reported that the economy had created 263,000 payroll jobs in April. This was almost 40 percent morethan the 190,000 that economists had predicted.

Something new and different seems to be happening in labor markets, as the growth in jobs has continued to be unexpectedly strong. But just what it is, how long it will last and whether it might soon be reversed are mysteries to most of us, including most economists.

It’s part of the larger problem. As an economic journalist for roughly half a century, I have slowly and somewhat reluctantly come to the conclusion that many economists (and this applies across the political spectrum) often don’t know what they’re talking about — a shortcoming that is sometimes acknowledged and sometimes isn’t.

Economists often don’t know what they’re talking about

By Robert J. Samuelson

The most intriguing and indisputable thing we have learned about economists in recent decades is that they don’t know nearly as much as they thought they knew. We see evidence of this all the time. Just recently, the Bureau of Labor Statistics reported that the economy had created 263,000 payroll jobs in April. This was almost 40 percent more than the 190,000 that economists had predicted.

Something new and different seems to be happening in labor markets, as the growth in jobs has continued to be unexpectedly strong. But just what it is, how long it will last and whether it might soon be reversed are mysteries to most of us, including most economists.

It’s part of the larger problem. As an economic journalist for roughly half a century, I have slowly and somewhat reluctantly come to the conclusion that many economists (and this applies across the political spectrum) often don’t know what they’re talking about — a shortcoming that is sometimes acknowledged and sometimes isn’t.

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16 May 2019

Is OPEC Playing a Losing Hand?

Oil prices have taken a momentary pause from their 2019 tear. Brent crude now stands around $70 a barrel, reflecting a near 40 percent increase since the start of the new year. Resilient demand growth, a temporary leveling in U.S. production, strong Organization of Petroleum Exporting Countries-plus (OPEC+) compliance, and disruptions in Venezuela converged to bring the market into a supply deficit since February . The supply side, in particular, saw a dramatic reversal of course with OPEC production falling by nearly 3 million barrels per day (b/d) from November 2018 to March 2019. OPEC+ is now 126 percent compliant with its production agreement, attaining conformity as it did during the 2017-2018 curtailment. At first glance, this bodes well for the group’s ability to influence the market. However, a close look at the data and a consideration of U.S. driven dynamics, show a different reality: the group’s hand looks weak, but several factors outside of their control may just continue to play out in their favor.

The Current Cut

In December 2018, OPEC+ agreed to collectively cut 1.2 million b/d from the market from January through June 2019. This followed a significant ramp-up in supply commencing in June 2018 when the group decided to relax individual quotas and return to the overall rate of conformity of the previous agreement on the back of rising prices. However, that decision in part caused the market to fall out of balance again and instigated this new round of cuts. As shown in the graph below, the cohort achieved full compliance with the new agreement in March, by collectively reducing production by 1.5 million b/d from October 2018 levels (the baseline for the curtailment).

15 May 2019

People are key to securing the defense-industrial supply chain

By: George Kamis  

Successfully targeting a single component of the defense industrial base can cause a ripple effect that can significantly impact everything from data centers to war fighters in theater, and people are the first line of defense. 

Infiltrating the defense supply chain is one of the most insidious means by which attackers can compromise our nation’s communications and weapons systems. Successfully targeting a single component of the defense industrial base can cause a ripple effect that can significantly impact everything from data centers to war fighters in theater.

The Department of Defense’s new “Deliver Uncompromised” security initiative is designed to tackle this problem at its root cause: third-party suppliers. In essence, the DoD is requiring its suppliers to bake security into their applications from the beginning of the production process. A “good enough” approach that just clears the bar for minimal security criteria is no longer good enough. Security must be ingrained in the very fabric of the entire production process.

US Sanctions, Iran’s Response and worsening Oil Situation

Amb D P Srivastava

President Rouhani in a nationally televised speech on 8th May announced that Iran would not be temporarily performing some of its obligations under the nuclear deal or Joint Comprehensive Action Plan (JCPOA). This is not withdrawal from the agreement. As Rouhani said, ‘This surgery is for saving the deal, not destroying it’. Iranian action came a year after President Trump announced US withdrawal from JCPOA, despite Iran maintaining its commitments under the nuclear accord as certified by International Atomic Energy Agency (IAEA). Recently, US also imposed additional measures. In early April, it declared Iranian Revolutionary Guards Corps (IRGC) as a terrorist organization. On 22nd April, it announced end of sanctions waivers on crude purchase by eight importing countries. Last Sunday, US announced dispatch of a carrier task force led by USS Abraham Lincoln to the Middle East.

Iran invoked Article 26 of the JCPOA to announce it would stop selling unspent enriched uranium and heavy water to other nations for 60 days. The article allows Iran to treat re-imposition of specified sanctions as ‘grounds to cease performing its commitments under this JCPOA in whole or in part.’ During this period, it expects European Union to make good on its promises to protect Iran’s oil and banking sectors. If it does, Iran will resume its cooperation under the nuclear accord proportionately. If not, ‘Iran will scale back more commitments in phases.’

12 May 2019

Three questions about emerging economies

Recent research from the McKinsey Global Institute analyzed the per capita GDP growth of 71 economies over 50 years. The results were striking. About one in four were “outperformers,” with real annual per capita GDP growth of 3.5 percent for the entire period; 11 of these achieved annual per capita GDP growth of at least 5.0 percent between 1995 and 2016.

Are these outperformers the secret to future global growth? What challenges will they face?

To answer these questions on emerging markets, the McKinsey Global Institute spoke with Peter Henry, the dean emeritus of New York University’s Leonard N. Stern School of Business and William R. Berkley professor of economics; Acha Leke, a senior partner at McKinsey; Anu Madgavkar, a partner at the McKinsey Global Institute; and Rakesh Mohan, senior fellow at the Jackson Institute for Global Affairs at Yale University and distinguished fellow at Brookings India. The following is a transcript of their responses.

VideoWhat’s the outlook for emerging economies?

Can emerging economies continue to drive the global economy?

11 May 2019

Is it Time for an Insurgency in Venezuela?

Gary Anderson

Frustrated members of Venezuela’s opposition and their supporters saw their attempt at a military coup fall short last week as senior leaders of the security forces failed to join an attempt to force President Maduro out of office and out of the country. Despite an economy in ruins, a failed health care system, and international sanctions; the Maduro regime has survived. There are several reasons for this.

First, the security services are led by men who profit from the regime. They are among the leftist elites who still live well while the rest of the country suffers. Even if they join a coup, there is no guarantee that many would not eventually be held accountable for past abuses. That fear is not entirely unfounded.

The Venezuelan Army rank and file are not nearly as well motivated as the general officers and colonels, but in an uncertain economy, they at least have jobs and are fed regularly - if not well. They may not be very well trained or motivated to die for the regime but running over unarmed civilians with armored vehicles doesn’t take crack troops. I have said before in these pages that an American funded promise to provide decent pay and conditions for the troops when the current regime goes would be the thing to turn the rank and file against the government and their generals. This would be a key in successful internally generated regime change; unfortunately, that has not been seriously attempted to date.