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

3 July 2020

What Annexation Would Really Mean for Middle East Peace

By Aaron David Miller

Israel could soon begin the process of annexing some of the West Bank. Prime Minister Benjamin Netanyahu’s pledge to unilaterally apply Israeli law to portions of the territory—virtually guaranteeing their the permanent retention by Israel—looms alongside an even larger elephant in the room: Netanyahu is well on his way to ensuring that a real Palestinian state based on June 1967 borders with a capital in East Jerusalem goes the way of the dodo. Regardless of what happens with annexation, that will be his legacy—and it will likely be an irreversible one.

Leaders inside and outside the Middle East are now practically begging Netanyahu to show restraint. In recent weeks, the debate in Israel has shifted from whether to annex to how much to annex, underscoring the extent to which the game is being played on his terms. The Israeli prime minister faces trial for bribery, fraud, and breach of trust; a challenge from unruly right-wing coalition partners; a resurgence of COVID-19; an economic recession; and the perpetual problem of Iran. But if staying in power and permanently closing the door on the creation of a real Palestinian state are his immediate goals, he is winning, with a good deal of wind at his back.

2 July 2020

The World Isn’t Ready for Peak Oil

Amos Hochstein

Two months ago, the world experienced a historic collapse in oil prices, as coronavirus-related shutdowns cratered global demand, briefly turning prices for May delivery negative. Prices have since rebounded modestly, but they remain unsustainably low for countries that depend on oil exports to generate government revenue.

The resulting instability, from the Middle East to Africa to the Americas, raises a flurry of immediate national-security concerns. But the current crisis also offers a stark preview of the challenges the world will face if it negotiates a climate accord without also moving to stabilize the more than a dozen countries that depend on oil exports as their primary source for generating government revenue.

In Iraq, for example, oil revenues account for 90 percent of the government’s budgetary income and two-thirds of its economy. This year’s falling oil prices have already reduced the country’s revenues by half.

Despite Economic Turmoil, Indonesia-Australia Trade Agreement Pushes Ahead

By Kyle Springer

This year is going to be a tough one for trade. The COVID-19 pandemic has prompted an unprecedented cessation of economic activity. The shock is two-pronged, hitting both supply and demand. Travel restrictions and social distancing measures have disrupted the fundamental tools of international business: travel, face-to-face meetings, and large events. Supply chains are collapsing. 

But amid the chaos, an unlikely agreement has broken through. The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which has been over a decade in the making, will enter into force in July 2020

The state of their bilateral economic ties is what makes the agreement a breakthrough. For two neighboring G-20 economies, their trade and investment ties are surprisingly weak. No two G-20 countries trade as little as Australia and Indonesia do, absent a sanctions regime. Indonesia’s share of Australia’s total trade has stagnated at around 2 percent over the past two decades while Australia’s overall trade with Asia has increased. 

The investment numbers are equally uninspiring. Australia’s investment in Indonesia is less than 1 percent of its outward flows, and accounts for 1.5 percent of Indonesia’s inward investment. 

30 June 2020

Reopening America&The World


The coronavirus has imposed a heavy toll on people’s lives, livelihoods, and connections with one another. As America and the world reopen from this devastating pandemic, it is important to examine how the process is taking place, its impact on individual lives and livelihoods, and learn from the experiences of other nations. In this report, we look at the experiences of the United States and other countries to see what we can derive about the reopening and its human impact. We present the insights and observations of three dozen Brookings scholars who look at reopening from many different angles and offer their thoughts and recommendations.

The first volume focuses on the American experience while the second one examines the experiences of other nations and lessons for the United States. Brookings President John Allen’s essay presents an overview of the pandemic and the serious questions it has raised for the world. Our goals in this project are to inform the public conversation about COVID, help business, government, and civic leaders take their next steps, and think about the immediate and longer-term consequences of the virus. We must learn as much as possible about this pandemic in order to address its overall ramifications.

Global Economic Prospects, June 2020


The COVID-19 pandemic has, with alarming speed, dealt a heavy blow to an already-weak global economy, which is expected to slide into its deepest recession since the second world war, despite unprecedented policy support. The global recession would be deeper if countries take longer to bring the pandemic under control, if financial stress triggers defaults, or if there are protracted effects on households and firms. Economic disruptions are likely to be more severe and protracted in emerging market and developing economies with larger domestic outbreaks and weaker medical care systems; greater exposure to international spillovers through trade, tourism, and commodity and financial markets; weaker macroeconomic frameworks; and more pervasive informality and poverty. Beyond the current steep economic contraction, the pandemic is likely to leave lasting scars on the global economy by undermining consumer and investor confidence, human capital, and global value chains. Being mostly a reflection of the recent plunge in global energy demand, low oil prices are unlikely to provide much of a boost to global growth in the near term. While policymakers’ immediate priorities are to address the health crisis and moderate the short-term economic losses, the likely long-term consequences of the pandemic highlight the need to forcefully undertake comprehensive reform programs to improve the fundamental drivers of economic growth, once the crisis abates.

29 June 2020

This Is How Blockchain Can Be Used In Supply Chains To Shape A Post-COVID-19 Economic Recovery


The COVID-19 crisis has rattled supply chains around the globe and created serious questions about the future of commerce. Critical to recovery and restoring economic activity is regaining trust in these systems. This challenge presents an opportunity for the integration of blockchain, a technology with the potential to fundamentally alter the future of supply chain.

Though digitization has driven transaction costs down significantly, most business domains still operate in silos, creating accounting discrepancies that need to be aligned.

The need to process transactions quickly and verify the creation, transmission and reception of a particular exchange of value is ever more critical to business success. To make a supply chains resilient, there must be transparency and integrity across domains, which can be improved through the deployment of blockchain technologies.

Reviving the WTO

Ngozi Okonjo-Iweala

The World Trade Organization is in the news mostly for the wrong reasons nowadays. Many people regard it as an ineffective policeman of an outdated rulebook that is unsuited for the challenges of the twenty-first-century global economy. And WTO members generally agree that the organization urgently needs reforming in order to remain relevant.

Recent months have brought further challenges. The WTO’s appellate body, which adjudicates trade disputes among member countries, effectively ceased functioning last December amid disagreements regarding the appointment of new judges to the panel. And in May 2020, Director-General Roberto Azevêdo announced that he would step down at the end of August, a year before his current term was due to end.

Whoever Azevêdo’s successor is will face a major challenge. Since its establishment in 1995, the WTO has failed to conclude a single trade-negotiation round of global trade talks, thus missing an opportunity to deliver mutual benefits for its members. The Doha Development Round, which began in November 2001, was supposed to be concluded by January 2005.

28 June 2020

COVID-19 Threatens to Derail an Unsteady Democratic Transition in Sudan

Yasir Zaidan 

More than a year after the fall of dictator Omar al-Bashir’s regime, the coronavirus pandemic is hitting Sudan’s still-fragile democratic transition. Differences between the civilian and military leaders in the transitional, power-sharing government are growing, as the military consolidates its authority due to restrictive security measures that went into effect in April, including a ban on public gatherings and protests around the country, with particularly harsh restrictions in effect in the capital, Khartoum. COVID-19 has also brought chaos to Sudan’s troubled economy, damaging the transitional government’s credibility and popularity.

The road had not been smooth since last August, when Sudan’s powerful military agreed to an interim constitution, officially known as the Constitutional Declaration, with the Forces for Freedom and Change, an umbrella group of activists that had led the protest movement to end Bashir’s 30-year rule. The Constitutional Declaration inaugurated a three-year power-sharing period until national elections could be held, but it did not take long for relations between the civilian and military sides of the transitional government, known as the Sovereign Council, to come under strain

27 June 2020

How the Pandemic Should Shake up Economics

KAUSHIK BASU

ITHACA – The COVID-19 pandemic has caused massive disruptions to markets, supply chains, and world trade. This has forced a reckoning with many traditional policies and should be treated as an opportunity to rethink some of the ideas that economists have long taken for granted – including the basic notion of what makes an economy function efficiently.

That notion goes back to 1776, a landmark year during which Adam Smith published The Wealth of Nations, America’s 13 states declared independence, and the same day, July 4, the philosopher David Hume held a dinner party for his friends, including Smith, to mark the twilight of his life.

Smith’s path-breaking work, along with later highly influential contributions by Léon Walras, Stanley Jevons, and Alfred Marshall, transformed economics. We learned that markets can function smoothly without a central authority, because the actions of ordinary people trying to earn more and purchase the goods they want create tugs and pulls of demand and supply, causing prices to rise and fall.

As this idea became formalized, the social norms and customs on which markets also depend became part of the woodwork – tacit assumptions that we ignored, because they are so unchanging in normal times, and then forgot were there.

Reviving the WTO

NGOZI OKONJO-IWEALA

WASHINGTON, DC – The World Trade Organization is in the news mostly for the wrong reasons nowadays. Many people regard it as an ineffective policeman of an outdated rulebook that is unsuited for the challenges of the twenty-first-century global economy. And WTO members generally agree that the organization urgently needs reforming in order to remain relevant.

Recent months have brought further challenges. The WTO’s appellate body, which adjudicates trade disputes among member countries, effectively ceased functioning last December amid disagreements regarding the appointment of new judges to the panel. And in May 2020, Director-General Roberto Azevêdo announced that he would step down at the end of August, a year before his current term was due to end.

Whoever Azevêdo’s successor is will face a major challenge. Since its establishment in 1995, the WTO has failed to conclude a single trade-negotiation round of global trade talks, thus missing an opportunity to deliver mutual benefits for its members. The Doha Development Round, which began in November 2001, was supposed to be concluded by January 2005.

Fifteen years later, WTO members are still debating whether the Doha process should continue. Some think it has been overtaken by events, while others want to pursue further negotiations.

26 June 2020

How the Coronavirus Could Crush the U.S. Economy

by Desmond Lachman

Aspecter is haunting the United States and world economies. It is the specter of a second wave in the coronavirus pandemic later this year. Making this specter all the more troubling is the Trump administration’s happy talk that the U.S. economy is on the cusp of a strong V-shaped economic recovery from its worst economic recession in the past ninety years.

One does not need to be a high-powered epidemiologist to know that the coronavirus pandemic is far from over. The number of new coronavirus cases worldwide is now increasing at the fastest pace since the start of the pandemic. Twenty-one states in the United States, including California, Florida, and Texas, are all now experiencing disturbing increases in infection rates. Meanwhile, even in China, where draconian measures were taken to bring the pandemic under control, new cases are now springing up around that country.

It hardly gives comfort that many epidemiologists are now warning that the overly hasty and ill-prepared lifting of lockdowns risk increasing the infection rate. Nor can we derive solace from the rising trend towards large-scale political demonstrations and gatherings where social distancing is generally observed in the breach.

Infographic Of The Day: Tesla Is Now The World's Most Valuable Automaker


The company, which began as a problem-plagued upstart a little over 15 years ago, has now become the world's most valuable automaker - surpassing industry giants such as Toyota and Volkswagen.



Enduring Stark Utopia: A Polanyian Reading of the Global Political Economy

Alessandro Colasanti

This content was originally written for an undergraduate or Master's program. It is published as part of our mission to showcase peer-leading papers written by students during their studies. This work can be used for background reading and research, but should not be cited as an expert source or used in place of scholarly articles/books.

The 19th century planetary economic system that Karl Polanyi critically analysed in his The Great Transformation (GT) ([1944] 2001) displays a sharp resemblance with its present-day equivalent. It would be no exaggeration to characterise both as a ‘stark utopia’ (Polanyi, 2001). This essay argues that this is not simply because of the occurrence of two disastrous planetary economic and financial crises in each respective historical period – in 1929 for Polanyi, and in 2008-09 for us in the 21st century – but crucially because of the socio-political and cultural turbolences that followed the crises. Both events stem from tensions inherent to a global economy and market society founded upon a liberal creed congenial to a pursuit of personal gain, whose socio-economic effects inevitably undermine social and political stability from local to transnational levels. During both the interwar and post-2008 period, the policies derived from such creed have negatively, and in certain cases deliberately, affected those section of society who lack economic power. In both historical periods, their derived social frustrations appear to incite authoritarian sentiments and intolerance.

23 June 2020

Economic Consequences Of COVID-19 In The EU-19

Dirk Ehnts

This background article explains where the money for governments in the current crisis comes from and why, contrary to general expectations, the EU-19 (eurozone) will probably not play a major role in this crisis.

The Western states decided relatively late to largely shut down public life in response to the spread of Covid-19 (coronavirus) because they knew from the outset that the near-quarantine would have far-reaching economic consequences. Since the health and economic future is completely uncertain and, for example, pubs and hotels are or were closed, the citizens hardly spend any money. Companies are foregoing investments, and entire industries are lying idle: Lufthansa had to cancel almost all flights, VW had to stop production in Wolfsburg. The workers are therefore unemployed, which makes the applications for short-time work benefits skyrocket. More people are already unemployed than during the Great Financial Crisis of 2008/09. The economy would collapse if the state did not intervene.

But how does the state get its money - and what money? Should national governments spend more? Or should the EU spend more money, and if so, how? The questions mix up monetary policy issues with political questions about the future of the eurozone and the European Union. In this text I will try to separate the two dimensions. To put it bluntly, the crisis will cause economic damage in the form of lost production combined with unemployment. This damage is real economic damage. Less goods and services will be produced and therefore consumed. Nevertheless, we are constantly hearing about the “financial costs" of the crisis. This view of things is fundamentally wrong. Costs are a business concept. They evaluate the consumption of production factors in production. But if less is produced, then there are no “costs".

21 June 2020

Study: Face Masks Critical in Preventing Spread of Coronavirus

by Ethen Kim Lieser

A new study conducted by a team of researchers in Texas and California has found that not wearing a face mask dramatically increases a person’s chance of being infected by the COVID-19 virus.

The team utilized data to compare coronavirus infection rate trends in Italy and New York—both before and after face masks were made mandatory.

According to the study, which was published in the Proceedings of the National Academy of Sciences, both locations started to witness lower infection rates after the face mask measures were enforced.

Researchers claimed that wearing face masks prevented more than 78,000 infections in Italy between April 6 and May 9, and more than 66,000 infections in New York City between April 17 and May 9.

20 June 2020

Bias busters: War games? Here’s what they’re good for

By Hugh Courtney, Tim Koller, and Dan Lovallo

Despite their best intentions, executives fall prey to cognitive and organizational biases that get in the way of good decision making. In this series, we highlight some of them and offer a few effective ways to address them.

There’s usually a steep price to pay when you fail to anticipate competitors’ actions and reactions, or who the competitors even are. France, for instance, spent ten years and billions of francs to erect a collection of concrete forts, obstacles, and weapons installations—called the Maginot Line—to stop German forces from invading with tanks. But French military leaders didn’t anticipate that, in the period between World War I and World War II, Germany would change course and adopt a blitzkrieg strategy, increasing its use of air strikes and invading through neutral countries like Belgium. French out­posts and citizens were left open to attack (exhibit).

The fate of a nation was not at stake, but a maker of medical equipment similarly faltered because of competitive blind spots. It was first to market in the 1970s with groundbreaking computed-tomography (CT) scanning technology, but it didn’t anticipate how many other innovators would enter the market, find new uses for its technology, and build high-level sales and product-marketing capabilities around the applications. The medical-equipment manufacturer eventually ended up exiting the business because it couldn’t keep up with the specialized competitors.1

The Pentagon Will Use AI to Predict Panic Buying, COVID-19 Hotspots

BY PATRICK TUCKER

The coronavirus pandemic has revealed that “just-in-time” supply lines don’t always operate as they should. Fortune 500 companies use predictive analytics to improve their ability to deal with the unexpected — and now so do planners with U.S. Northern Command. 

The Joint Artificial Intelligence Center, or JAIC, has built a prototype AI tool that uses a wide variety of data streams to predict COVID-19 hotspots and related logistics and supply-chain problems. “You have to be looking a little in the future,” said Nand Mulchandani, chief technical officer at the JAIC. 

Dubbed Salus, for the Roman goddess of health and well-being, the tool can work on a scale as wide as the entire nation but can also drill down on specific zip codes and, in some cases, individual stores, said Mulchandani.

Its initial deployment interacts with the information systems of Northern Command and the U.S. National Guard, which are supporting FEMA’s coronavirus response. These systems already have geolocation data that allow them to do mapping, resource allocation, etc.

Recession or Depression

By George Friedman

In March, we declared our 2020 forecast null and void. The COVID-19 pandemic had essentially rendered it irrelevant. The question we posed in March was whether the disease and the steps taken to manage it would lead to a recession or a depression. A recession is a cyclical financial process inherent in the business cycle. It is inevitable, stabilizing and somewhat painful. A depression is entirely different. It includes myriad financial dimensions as well as an added element of physical economic damage. It can destroy businesses and dramatically increase unemployment and thus transform our very existence. I would encourage you to read Studs Terkel’s “Hard Times: An Oral History of the Great Depression.” The greatest effect of a depression is on the existential reality of daily life. In that sense, we must all care about what this is.

The answer has not yet emerged – I will explain why below – but the numbers are ominous. We are close to completing the second quarter of 2020 and the Federal Reserve Bank of Atlanta is predicting a 48.5 percent decline in gross domestic product. Others are speaking of a 30-40 percent decline. Unemployment is at 15 percent and climbing. Even the more optimistic numbers are staggering not simply because of the size of the contraction but because of the speed with which it is happening. In the United Kingdom, the economy contracted by 20 percent in May alone. Germany expresses the most confidence: a 10 percent contraction in the second quarter. Most countries are expecting more modest declines in the third quarter, and then recovery in the fourth quarter.

18 June 2020

Is the Age Of Rapid U.S. Economic Growth Over?

by James Pethokoukis

The US stock market, with a strong rebound from its pandemic lows, might seem unhinged from current economic and political reality. But that’s really missing the point. The stock market is supposed to be a forward-looking entity. Think of the difference between GDP and a stock’s market capitalization. You frequently see Big Tech market caps compared to national GDP numbers as a way of demonstrating their staggering — maybe even dangerous — level of economic power.

But as tech analyst Benedict Evans tweets, “These comparisons are always entertaining, but can we please try and remember that GDP is what you did this year and market cap is the value of everything you have now and everything you’ll do in all future years.”

So maybe — of course, also maybe not — what the rising stock market is saying is that the American economy might do better going forward than what you might think when looking at, say, today’s sky-high jobless rate. After all, the economy does seem to be on the upswing, with Wall Street’s forecasts pointing to strong full-year growth in 2021. And in its new economic projections, the median forecast from Federal Reserve Board members and Federal Reserve Bank presidents is for 5 percent growth next year and 3.5 percent in 2022.

17 June 2020

WHY ARE FOSSIL FUELS SO HARD TO QUIT?

Samantha Gross

But suddenly, the COVID-19 pandemic brought trade, travel, and consumer spending to a near-standstill. With billions of people recently under stay-at-home orders and economic activity plunging worldwide, the demand for and price of oil have fallen further and faster than ever before. Needless to say, oil markets have been in turmoil and producers around the world are suffering.

A combo shows the India Gate war memorial on October 17, 2019 and after air pollution level started to drop during a 21-day nationwide lockdown to slow the spreading of Coronavirus disease (COVID-19), in New Delhi, India, April 8, 2020. REUTERS/Anushree Fadnavis/Adnan Abidi

Some pundits are now asking if this crisis could be the push the world needs to move away from oil. One asked: “Could the coronavirus crisis be the beginning of the end for the oil industry?” Another: “Will the coronavirus kill the oil industry and help save the climate?” Meanwhile, 2020 annual greenhouse gas emissions are forecast to decline between 4 – 7% as a result of the virus’ effects, and some of the world’s smoggiest cities are currently enjoying clear skies.