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  • Publication Date: 11-2012
  • Content Type: Working Paper
  • Institution: Economist Intelligence Unit
  • Abstract: Markets of the future—China, India, Brazil and Russia—will become the dominant retail markets l Africa, the final frontier—as BRIC opportunities diminish retailers will look to Africa as a driver of growth l Virtual marketplace— e-commerce, m-commerce and s-commerce—will transform the global retail landscape l Bricks and mortar will fight back as traditional retailers respond to change by integrating online with physical store offerings l Convenience will be king as shopping habits evolve into a multichannel approach rather than “one-stop shopping” l UK focus: polarised shopping habits could continue even when incomes recover, leading to an even greater squeeze on mid-market retail by 2022.
  • Topic: Economics, Emerging Markets, International Trade and Finance, Markets, Science and Technology, Communications
  • Political Geography: Russia, China, United Kingdom, India, Brazil
  • Author: Barry Naughton, Dieter Ernst
  • Publication Date: 08-2012
  • Content Type: Working Paper
  • Institution: East-West Center
  • Abstract: The paper examines the role of global technology sourcing, and its drivers and impacts in China's integrated circuit (IC) design industry. IC design is one of the priority targets of China's innovation policy, as codified especially in the ―Strategic Emerging Industries‖ initiative. At the same time, however, China's IC design industry is deeply integrated into the vertically disintegrated global semiconductor industry, through markets, investment and technology. The paper highlights a fundamental challenge for China's innovation strategy: How can China reconcile its primary objective of strengthening indigenous innovation with the benefits that it could reap from its deep integration into international trade and into global networks of production and innovation?
  • Topic: Economics, Industrial Policy, International Trade and Finance, Science and Technology
  • Political Geography: China, Israel
  • Author: Perrin Beatty, Andrés Rozental
  • Publication Date: 11-2012
  • Content Type: Working Paper
  • Institution: Centre for International Governance Innovation
  • Abstract: Both Canada and Mexico are recovering well from the global economic recession of 2008-2009, but must work harder to make their bilateral relationship work to their mutual benefit. Bilateral trade and investment have grown steadily from very low pre-North American Free Trade Agreement (NAFTA) levels, but there remains enormous, untapped potential, particularly in Mexico. Student, tourist, investor and temporary worker exchanges are enhancing familiarity with each other, but unhelpful stereotypes remain common. New investment and trade opportunities should flow from the new Mexican administration's commitment to open up the energy sector to foreign participation. The assessment and recommendations contained in this special report point to the benefit of efforts that will intensify bilateral partnerships, not only in their own right, but also in strengthening the two countries' ability to deal more effectively with the United States in pursuing matters of mutual concern.
  • Topic: Economics, International Trade and Finance, Markets, Bilateral Relations
  • Political Geography: United States, Canada, Latin America, North America, Mexico
  • Author: James Manicom
  • Publication Date: 11-2012
  • Content Type: Working Paper
  • Institution: Centre for International Governance Innovation
  • Abstract: The United States and Canada have simultaneously re- invigorated their diplomatic and military postures toward the Asia-Pacific region. As two of the world's closest allies, it is worth exploring the possible synergies and tensions between their efforts to identify areas of possible policy coordination. Canada has considerable assets that could support US diplomacy in the region, including the legacy of its good offices and its close ties with the US military; however, these assets are outweighed by three liabilities. First, Canada's diplomacy to the Asia-Pacific is driven by its desire to diversify away from the US market. Although relatively innocuous in isolation, the politics of this shift, driven by growing concern in Canada about whether the United States remains a reliable market for energy exports, adds a layer of complexity. Second, Canada's closer economic ties with China could undermine its willingness to support the United States on tough regional security issues in the Asia-Pacific. Third, and related, Canadian silence about navigational freedoms, the primary security issue between the United States and China in East Asia, has not gone unnoticed. This paper argues that, on balance, Canada may not be an ideal Pacific partner for the United States.
  • Topic: Defense Policy, Arms Control and Proliferation, Diplomacy, International Trade and Finance, Bilateral Relations
  • Political Geography: United States, China, Canada, East Asia, Asia, Australia/Pacific, Asia-Pacific
  • Author: Gerald P. O'Driscoll Jr.
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: Advocates of central bank reform must examine why central banks emerged and what forces sustain them. They did not arise in an institutional vacuum, and will not be reformed in an institutional vacuum. The historical origins of central banks explain how they came into existence. The forces sustaining and feeding their growth may differ from those explaining their origin.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy, Governance
  • Political Geography: United States
  • Author: Joshua Kurlantzick
  • Publication Date: 11-2012
  • Content Type: Working Paper
  • Institution: Council on Foreign Relations
  • Abstract: In a region largely bereft of regional organizations and long divided by the Cold War, the Association of Southeast Asian Nations (ASEAN) has been the most significant multilateral group for the past forty-five years. Since the end of the Cold War, ASEAN has grown increasingly influential. While much of the West and most emerging markets continue to suffer because of the 2008 global recession, the leading ASEAN economies have recovered and are thriving. Perhaps most important, ASEAN has helped prevent interstate conflicts in Southeast Asia, despite several brewing territorial disputes in the region.
  • Topic: Cold War, Development, Economics, Emerging Markets, International Trade and Finance
  • Political Geography: United States, Asia
  • Author: Francesco Prota, Gianfranco Viesti
  • Publication Date: 11-2012
  • Content Type: Working Paper
  • Institution: Istituto Affari Internazionali
  • Abstract: The main onus of responsibility for the current global economic predicament is on the financial system, not on a lack of fiscal discipline. Nonetheless, the crisis is having an extremely severe impact on the real economy, which is felt most acutely in the southern Eurozone member states. Since the end of the deepest phase of the crisis in 2009, European governments have committed themselves to fiscal consolidation. The results of these policies have been perverse: the impact of fiscal tightening during a depression may result in depressed output and high unemployment, without lowering the debt-Gross Domestic Product ratio. In light of this, we make a case for restoring growth in Europe without further delay, and discuss the role of the EU budget as an instrument for setting and implementing a real EU growth strategy.
  • Topic: Economics, Globalization, International Trade and Finance, Monetary Policy, Financial Crisis
  • Publication Date: 12-2012
  • Content Type: Working Paper
  • Institution: Economist Intelligence Unit
  • Abstract: Last year we published Industries in 2012 and made a number of predictions about developments in our six key industries – Automotive, Consumer Goods and Retail, Energy, Financial Services, Healthcare and Telecommunications. Some of our predictions were prescient, others were premature.
  • Topic: Economics, Emerging Markets, Industrial Policy, International Trade and Finance, Markets, Global Recession
  • Publication Date: 12-2012
  • Content Type: Working Paper
  • Institution: International Crisis Group
  • Abstract: En l'espace d'une décennie, le golfe de Guinée est devenu l'une des zones mar itimes les plus dangereuses du monde. L'insécurité maritime est un véritable problème régional qui menace, à court terme, le commerce et, à long terme, la stabilité des pays riverains en compromettant le déve- loppement de cette zone éc onomique stratégique. Initia- lement pris au dépourvu, les Etats de la région ont pris conscience du problème et un sommet international sur ce sujet doit être prochainement organisé. Afin d'éviter que, comme sur les côtes est-africaines, cette criminalité trans- nationale ne prenne une ampleur déstabilisatrice, les gou- vernements concernés doivent mettre fin au vide sécuritaire et apporter une réponse collective à ce danger. Grâce à une coopération dynamique en tre la Communauté écono- mique des Etats d'Afrique centrale (CEEAC) et la Commu- nauté économique des Etats de l'Afrique de l'Ouest (Ce- deao), les pays du golfe de Guinée doivent devenir les premiers acteurs de leur sécurité et mettre en œuvre une nouvelle approche fondée sur l'amélioration de leur sécuri- té maritime mais aussi de leur gouvernance économique.
  • Topic: Conflict Resolution, Crime, Development, International Trade and Finance, Maritime Commerce, Fragile/Failed State, Piracy
  • Political Geography: Africa
  • Author: J. Bradford Jensen
  • Publication Date: 11-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper argues that developing Asia is overlooking an opportunity for increased growth and development through trade in business services. Developing Asia would benefit from liberalizing services trade as it has benefited from liberalizing goods trade. This argument rests on these key findings: business services are important for growth, developing Asia is relatively under-endowed with business services, many business services are tradable, and developing Asia has relatively high barriers to services trade.
  • Topic: Economics, Emerging Markets, International Trade and Finance, Markets, Monetary Policy
  • Political Geography: Israel, Asia
  • Author: Donghyun Park, Kwanho Shin
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: The underdeveloped services sector in Asia has the potential to become a new engine of economic growth in developing Asia, which has traditionally relied on export-oriented manufacturing to power its growth. In this paper, Park and Shin empirically analyze the prospects for the services sector in Asia. Their analysis of 12 Asian countries indicates that the services sector has already contributed substantially to the region's growth in the past. Somewhat surprisingly, in light of the difficulty of achieving productivity gains in services, they also find that services labor productivity grew at a healthy pace in much of the region. Overall their analysis provides substantial cause for optimism about the role of the services sector as an engine of growth in Asia. However, they caution that some Asian countries where the services sector is currently struggling, such as Korea and Thailand, will find it more challenging to develop the sector.
  • Topic: Economics, Emerging Markets, Industrial Policy, International Trade and Finance, Markets, Monetary Policy
  • Political Geography: Asia
  • Author: Donghyun Park, Kwanho Shin
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: There is a widespread perception that Korea's services sector lags behind its dynamic world-class manufacturing sector. This paper empirically analyzes the past performance of Korea's services sector in order to assess its prospects as an engine of growth. The analysis resoundingly confirms the conventional wisdom of an underperforming service sector. In light of Korea's high income and development level, the poor performance of modern services is of particular concern. The authors identify a number of factors underlying the poor performance and set forth policy recommendations for addressing them. Overall, Korea faces a challenging but navigable road ahead in developing a high value-added services sector.
  • Topic: Development, Economics, Emerging Markets, Industrial Policy, International Trade and Finance
  • Political Geography: Israel, Korea
  • Author: Jeffrey J. Schott, Julia Muir, Minsoo Lee
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: Trade and investment in services are difficult to measure, and the regulatory barriers that inhibit the free flow of services are hard to quantify. As a result, very little attention has been paid to dismantling barriers to services trade and investment. Rather, free trade negotiations tend to focus on liberalizing merchandise trade. This paper examines what has been achieved in both regional and multilateral compacts by surveying international precedents involving Asian countries in which services reforms have been included in bilateral and regional trade pacts. The authors then assess the prospects for services trade negotiations and explore how services trade negotiations could be pursued over the next decade through two distinct channels: the Trans-Pacific Partnership (TPP) and a plurilateral approach among groups of WTO countries. The authors find that in the case of developing Asia, free trade agreements have largely excluded services or have only committed to "lock in" current practices in a narrow subset of service sectors. This is also the case in agreements negotiated between developing countries, which have produced less substantial commitments to liberalize services than those negotiated between developing and developed countries. Multilateral negotiations on services have also underperformed, as substantive negotiations on services in the Doha Round never really got underway. To that end, the authors advocate a stronger effort by developing Asian countries to prioritize services negotiations in their regional arrangements and to expand coverage of services in those pacts to a broad range of infrastructure services that are included in other FTAs in force or under construction in the Asia-Pacific region.
  • Topic: International Relations, Development, Economics, Globalization, International Trade and Finance, Markets, World Trade Organization
  • Political Geography: Asia
  • Author: Jacob Funk Kirkegaard
  • Publication Date: 10-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: In this paper Kirkegaard presents new micro-level data consisting of individual greenfield investment projects and mergers and acquisitions as a source for detailed analysis of services sector cross-border investment flows among the Asian Development Bank (ADB) regional membership in Asia. The new transactional foreign direct investment (FDI) data are methodologically distinct from traditional BPM5-compliant FDI data but found to yield generally comparable aggregates, when compared with the latest available International Monetary Fund (IMF) data from the Comprehensive Direct Investment Survey for the ADB regional membership. The services sectors are found to receive considerably larger amounts of foreign investment, when compared with the Asian region's manufacturing and raw materials sectors. OECD countries account for roughly three-quarters of total recorded inward services sector FDI of about $2 trillion, relatively evenly split between the United States, the EU-27, and regional OECD-level-income countries. The presence of sizable regional "upward flowing" services sector investments into OECD-level-income economies is verified. Kirkegaard draws preliminary policy conclusions based on the new transactional FDI data results concerning prospects for regional services sector liberalization, threshold income levels for inward services sector FDI, upward-flowing regional services FDI, and preferred modes of services sector investments.
  • Topic: Economics, Emerging Markets, International Trade and Finance, Foreign Direct Investment
  • Political Geography: United States, Israel, Asia
  • Author: C. Randall Henning
  • Publication Date: 09-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper examines the exchange rate regimes of East Asian countries since the initial shift by China to a controlled appreciation in July 2005, testing econometrically the weights of key currencies in the implicit baskets that appear to be targeted by East Asian monetary authorities. It finds, first, that Malaysia, Thailand, Singapore and the Philippines have formed a loose but effective “renminbi bloc” with China, and that South Korea has participated tentatively since the global financial crisis. Second, the emergence of the renminbi bloc in terms of the exchange rate has been facilitated by the continued dominance of the US dollar as a trade, investment, and reserve currency. Third, exchange rate stabilization is explained by the economic strategies of these countries, which rely heavily on export development and financial repression, and the economic rise of China. Fourth, analysts should specify the exchange rate preferences of these emerging market countries carefully before drawing inferences about Chinese influence within the region.
  • Topic: Development, Emerging Markets, Foreign Exchange, International Trade and Finance
  • Political Geography: China, Malaysia, Asia, South Korea, Philippines, Singapore, Thailand
  • Author: Edwin M. Truman
  • Publication Date: 08-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: Throughout his brilliant career, John Williamson has frequently focused his considerable analytical skills and powers of persuasion on reform of the international monetary system. This paper examines two principal areas of his concern: (1) exchange rates and the adjustment process, and (2) international liquidity, seigniorage, and the stability of the system. With respect to exchange rates, I find that there has been a moderate reduction in variability, but over the past 40 years external imbalances have, if anything, worsened. The adjustment process has malfunctioned. With respect to international liquidity, reserves have expanded rapidly, but their expansion has been demand-determined, has not involved a remonetization of gold or an increase in inflation. I find that concerns about the size and maldistribution of seigniorage are misplaced. Moreover, we are seeing a steady evolution toward a multicurrency international monetary and financial system. However, reserve diversification does not appear to have adversely affected exchange rate volatility to date. I conclude that the principal benefits of the Bretton Woods international monetary system remain and the principal weaknesses remain. But the system is evolving. It could be improved with respect to the adjustment process and the role of the International Monetary Fund as the international lender of last resort.
  • Topic: Economics, Foreign Exchange, International Trade and Finance, International Monetary Fund, Monetary Policy, Financial Crisis
  • Author: William R. Cline
  • Publication Date: 08-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper introduces a new probabilistic approach to sovereign debt projections and presents new estimates of debt ratios through 2020 for Italy and Spain. The new approach takes account of likely correlations across 243 alternative scenarios with three states (good, baseline, bad) for five key variables (growth, interest rate, primary surplus, bank recapitalization, and privatization). The 25th and 75th percentile scenarios are reported, as are the baseline and probability-weighted outcomes. The results suggest sovereign debt is sustainable in both Italy (where debt ratios are likely to decline because of a high primary surplus) and Spain (where the ratios rise but at a decelerating pace and from relatively low levels).
  • Topic: Debt, Economics, International Trade and Finance, Markets, Financial Crisis
  • Political Geography: Spain, Italy
  • Author: Olivier Jeanne
  • Publication Date: 05-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: Has the US dollar delivered the benefit that the rest of the world is expecting from its holdings of international liquidity? US government debt has been liquid and safe, and it is supplied in sufficient quantity. But it has given a low return to the countries that accumulated the most reserves, especially when those returns are measured in terms of the countries' own consumption. Jeanne argues that countries that accumulate the most reserves should expect a low return in terms of their own consumption and that international monetary reform can do little to change that fact.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: United States
  • Author: Stephan Haggard, Marcus Noland
  • Publication Date: 05-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: Economic integration between North and South Korea occurs through three modalities: traditional arm's-length trade and investment, processing on commission (POC) trade, and operations within the Kaesong Industrial Complex (KIC). In order, these three modalities are characterized by decreasing exposure of South Korean firms to North Korean policy and infrastructure. Through a survey of 200 South Korean firms operating in North Korea, the authors find that these modalities of exchange matter greatly in terms of implied risk. For example, firms operating in the KIC are able to transact on significantly looser financial terms than those outside it. The authors find that direct and indirect South Korean public policy interventions influence these different modalities of exchange and thus impact entry, profitability, and sustainability of South Korean business activities in the North. In effect, the South Korean government has substituted relatively strong South Korean institutions for the relatively weak Northern ones in the KIC, thus socializing risk. As a result, the level and type of cross-border integration observed in the survey is very much a product of South Korean public policy.
  • Topic: Conflict Resolution, Economics, International Trade and Finance, Infrastructure
  • Political Geography: South Korea, North Korea
  • Author: Stephan Haggard, Marcus Noland
  • Publication Date: 05-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: A central hope of engagement with North Korea is that increased cross-border exchange will encourage the strengthening of institutions, and eventually, a moderation of the country's foreign policy. An unprecedented survey of Chinese enterprises operating in North Korea reveals that trade is largely dominated by state entities on the North Korean side, although the authors cannot rule out de facto privatization of exchange. Little trust is evident beyond the relationships among Chinese and North Korean state-owned enterprises. Formal networks and dispute settlement mechanisms are weak and do not appear to have consequences for relational contracting. Rather, firms rely on personal ties for identifying counterparties and resolving disputes. The weakness of formal institutions implies that the growth in exchange does not conform with the expectations of the engagement model and may prove self-limiting. The results also cast doubt that integration between China and North Korea, at least as it is currently proceeding, will foster reform and opening.
  • Topic: Foreign Policy, Economics, International Trade and Finance, Bilateral Relations
  • Political Geography: China, Israel, North Korea
  • Author: Anders Åslund
  • Publication Date: 04-2012
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: The response of the ten new eastern members of the European Union to the global financial crisis has valuable lessons of crisis resolution for the euro area. These countries were severely hit by the crisis in the fall of 2008 and responded with extensive reforms. Crisis made the unthinkable possible. This paper outlines the main reform measures that the ten Central and East European (CEE) countries carried out. It then quantifies to what extent the CEE countries resolved the macroeconomic crisis and explores the effects of the reforms on future growth prospects. The fourth and major section discusses how the political economy of the crisis resolution actually worked. Finally, the author examines what lessons euro area countries can learn from the crisis resolution of the newest members of the European Union.
  • Topic: Debt, Economics, International Trade and Finance, Markets, Political Economy, Financial Crisis
  • Political Geography: Europe
  • Author: Xiaofang Shen
  • Publication Date: 11-2012
  • Content Type: Working Paper
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: China, 1980s. Newly embarked on its economic transformation, China opened to foreign direct investment (FDI) to obtain capital, technology and access to world markets. Investors hesitated, however, since national law prohibited access to state-owned land. In reaction, the government introduced a long-term lease system, first tested in special economic zones and later applied across the country. This approach enabled China's phenomenal success in attracting FDI in the years to come; it also paved the way for 500 million urban citizens to gain property rights, which in turn inspired the rural population to ask for the same rights today.
  • Topic: Development, Economics, Emerging Markets, International Trade and Finance
  • Political Geography: China
  • Author: Martin Kenney, Timo Seppälä
  • Publication Date: 12-2012
  • Content Type: Working Paper
  • Institution: Berkeley Roundtable on the International Economy
  • Abstract: The contemporary competition in the smartphone industry is an ideal setting for studying Schumpeterian creative destruction, the role of the complementary assets, and the strategic use of technology platforms. This current creative destruction is particularly interesting because the current convergence from previously separate industries is pitting firms with differing business models from the old telecommunications world against the operating system winners of the old personal computer, and competitors from the new internet world. This paper utilizes insights from the literature on complementary assets and technology platforms to understand the completion in smartphones. This paper contributes a broadened understanding of the contemporary industry convergence occurring with Internet and cloud computing at its unifying center, and with intelligent communications devices at its edges. Furthermore, this paper extends the current academic discussion of the changes in the mobile telecommunications industry to consider the possibility that cloud computing will integrate a plethora of new devices that will include personal computers, smartphones, the internet-enabled television, and a nearly infinite number of other devices that will provide data to the cloud.
  • Topic: Economics, Globalization, Industrial Policy, International Trade and Finance, Markets, Science and Technology
  • Author: Frans-Paul van der Putten
  • Publication Date: 12-2012
  • Content Type: Working Paper
  • Institution: Norwegian Peacebuilding Resource Centre
  • Abstract: This paper provides a brief overview of current developments relevant to Sino-U.S. security relations, and to China's involvement in regional security issues, in East and South-East Asia. The most fundamental challenge with regard to regional stability is how the roles of China and the United States in the Asia Pacific can be reconciled. While the U.S. is concerned that a rising China will eventually push American influence out of East and South-East Asia, China in turn fears that the U.S. will try to retain its leadership role by exploiting and amplifying tensions between the Chinese and their neighbours. Currently the Sino-U.S. rivalry is threatening unity within ASEAN, which poses an immediate risk for regional stability. A substantial improvement in regional stability – whether in South-East or in East Asia – is unlikely unless the U.S. and China manage to stabilise their bilateral relationship. It is important for all interested parties, inside Asia but also outside (including in Europe), to contribute to a move away from a scenario in which regional stability continues to deteriorate, and in the direction of a scenario that involves a cooperative arrangement between China and the U.S. in a stable multilateral setting.
  • Topic: Foreign Policy, Arms Control and Proliferation, International Trade and Finance, Bilateral Relations, Hegemony
  • Political Geography: United States, China, Israel, East Asia, Australia/Pacific, Southeast Asia
  • Author: Murray Hiebert, Ernest Z. Bower, David Pumphrey, Gregory B. Poling, Molly A. Walton
  • Publication Date: 12-2012
  • Content Type: Working Paper
  • Institution: Center for Strategic and International Studies
  • Abstract: Southeast Asia will be the next big growth engine in Asia. Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, with a population of 525 million and a combined GDP of $2.8 trillion (when measured by purchasing power parity), are expected to grow almost 6 percent between now and 2030, according to the Asian Development Bank. For years, they have been eclipsed by China and India, but now their combined GDP is catching up with India and they could overtake Japan in less than two decades. For U.S. firms, these five members of the Association of South East Asian Nations—hereafter the ASEAN-5—are a trade, energy, and environment story.
  • Topic: Development, Economics, Energy Policy, International Trade and Finance, Oil
  • Political Geography: Indonesia, Malaysia, Asia, Vietnam, Philippines, Thailand, Southeast Asia
  • Author: Ed Gerwin
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: Third Way
  • Abstract: By 2020, the Asia-Pacific's $10 trillion import market will present vast opportunities to support U.S. economic growth and wider prosperity for America's Middle Class. But, over the past decade, the U.S. share of key Asia-Pacific markets has actually plummeted–by over 40%. Retaking America's share of these rapidly expanding economies—beginning with trade deals like the Trans Pacific Partnership (TPP)—could pay huge dividends: over a half trillion dollars in additional U.S. exports, supporting millions of good American jobs.
  • Topic: Economics, International Trade and Finance, Labor Issues
  • Political Geography: United States, America, Asia
  • Author: Irwin M. Stelzer
  • Publication Date: 07-2012
  • Content Type: Working Paper
  • Institution: Hudson Institute
  • Abstract: Slow, slower, and may be even stop. That's a quick summary of how Federal Reserve Board chairman Ben Bernanke sees the US economy. The economy grew at an annual rate of 2.5% last year, 1.9% in the first quarter of this year, "and available indicators point to a still-smaller gain in the second quarter" he advised congress last week. Household spending is slowing down because "confidence remains relatively low" (at its lowest level since December); numerous factors (a supply overhang, unavailability of credit) "impede growth" in the housing sector; manufacturing production has slowed; business investment has "decelerated"; there is "further weakness ahead" for investment demand; and "reduction in the unemployment rate seems likely to be frustratingly slow."
  • Topic: Economics, International Trade and Finance, Financial Crisis
  • Political Geography: United States
  • Author: Irwin M. Stelzer
  • Publication Date: 05-2012
  • Content Type: Working Paper
  • Institution: Hudson Institute
  • Abstract: There comes a tide in the affairs of men And the one sweeping from Greece, across Europe and into the United States is washing away support for austerity, in some cases reinforcing opposition to it, largely from the Left. President Obama is delighted at this support for his refusal to cut spending in the face of mounting deficits, and the Republicans are feeling beleaguered at what they see as the disinterment of the body of works of John Maynard Keynes. No longer must the President sit at G8 meetings (in this weekend's case, G7 since Vladimir Putin finds it necessary to stay at home to deal with an unpleasant spate of dissent) and hear only the voice of Germany's iron Chancellor, Angela Merkel, extolling the virtues of thrift, austerity and balanced budgets. Now he has France's new socialist President, François Hollande, to preach the virtues of spending, "the indispensable stimulation of the economy", and, even better, high taxes-- up to 75% on incomes in excess of $1.35 million per year, which makes the team of Buffett and Obama mere pikers at the soak-the-rich game. Secretary of State Hillary Clinton expressed the administration's delight at Hollande's "different political approach Different voices may be louder on growth than they have been It's been our view that there needed to be adjustments to austerity, so that there could be growth, both for economic reasons and for political reasons President Obama and our economic team have been saying for some time that growth had to factor into a European recovery." Take that, Mrs. Merkel and all you Republicans who want to cut entitlement spending and retain the Bush tax cuts that benefit "millionaires and billionaires", Obama shorthand for families earning more than $250,000 per year.
  • Topic: Economics, International Trade and Finance, Monetary Policy, Budget
  • Political Geography: United States, Europe, Washington, Greece, France
  • Author: Hanns Kuttner
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: Hudson Institute
  • Abstract: In any market, buyers seek out the seller who offers the lowest prices and best terms. Government can distort markets by decreasing or increasing prices through subsidies, taxes or regulation. Compared to a free market, distortion means different sellers get the sale and at different prices.
  • Topic: Economics, International Trade and Finance, Markets, Science and Technology
  • Author: Irwin M. Stelzer
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: Hudson Institute
  • Abstract: This version of the glorious sonnet composed by Emma Lazarus in 1883, and later engraved on a bronze plaque installed on the Statue of Liberty, calling the world's huddled masses to our shores, captures what it means these days to be a safe haven. Just as America proved to be such a safe haven for immigrants in the latter 19th and early 20th centuries, it is now seen as a safe haven for wealth attempting to escape Europe's tax collectors and financial chaos and recession in Europe, and for foreign central banks newly enamored of the dollar.
  • Topic: Economics, International Trade and Finance, Immigration, Monetary Policy
  • Political Geography: United States, Europe, Germany
  • Author: Irwin M. Stelzer
  • Publication Date: 06-2012
  • Content Type: Working Paper
  • Institution: Hudson Institute
  • Abstract: Slow growth here and in China, and recession in Europe are reducing demand for oil. Inventories in the U.S. are at a 22-year high. The Federal Reserve Board's QEs that pumped paper money into the economy and drove up the nominal price of oil have come to an end. And the twelve OPEC oil cartelists, who between them supply 40% of the world's oil, are producing 1.6 million barrels in excess of the agreed daily quota of 30 million barrels. As a result, U.S. benchmark crude oil prices are now closer to $80 per barrel than to the $110 they reached only four months ago.
  • Topic: Economics, International Trade and Finance, Markets, Oil
  • Political Geography: United States, China, Europe
  • Author: Tim Kane
  • Publication Date: 07-2012
  • Content Type: Working Paper
  • Institution: Hudson Institute
  • Abstract: Three of the last six U.S. presidents have inherited a recessionary economy: Ronald Reagan, George W. Bush, and Barack Obama. Let's define "inheriting a recession" as meaning that on the date a president is sworn into office, the economy is technically still in recession or enters one within a few months. Most economists would agree that presidents have little short-term control over the economy, but that their fiscal policies can be implemented quickly and affect macroeconomic performance after the first year. Reagan, inaugurated in January 1981, actually endured a double-dip recession-one that had been raging since early 1980 and a second that hit in July 1981-but the economy experienced a strong and sustained recovery that began in November 1982 during his second year in the White House. Bush was inaugurated in January 2001, and the economy entered recession just weeks later. Obama entered office in January 2009, like Reagan, after the United States had been in recession for a full year.
  • Topic: Economics, International Trade and Finance, Monetary Policy, Financial Crisis, Governance
  • Political Geography: United States
  • Author: Katherine Trebeck
  • Publication Date: 01-2011
  • Content Type: Working Paper
  • Institution: Oxfam Publishing
  • Abstract: In the UK, persistent poverty exists alongside high economic prosperity, leading to significant inequalities in income and wealth, and in life chances and lifestyles, between individuals and communities. Scottish society is also deeply divided: 'wealthy and secure neighbourhoods are situated next to the most deprived and vulnerable communities [where]… inequality is tangible'.
  • Topic: Development, Economics, International Trade and Finance, Markets
  • Political Geography: Europe
  • Author: Daniel Danxia Xie
  • Publication Date: 02-2011
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper provides new evidence on the long-run relationship between economic growth and labor's share in national income, based on a comprehensive panel data set for 123 countries from 1950 to 2004. Xie's primary finding is that labor's share follows a cubic relationship with real GDP per capita over the long process of development. At the beginning of the modern economic growth process, the share of labor in national income first decreases until an initial threshold is reached. After that, labor's share keeps increasing until the country's GDP per capita reaches a second threshold before falling again. Xie argues that these dynamics apply not only to the less developed countries in the postwar years, but also to the advanced countries like the United States and the United Kingdom during their early economic take-offs, starting in the late 18th and 19th century, respectively. Finally, he proposes a two-sector constant elasticity of substitution (CES)-type growth model and simulate the model to replicate and explain the possible mechanism behind such a nonlinear pattern of movements in labor's share.
  • Topic: Economics, International Trade and Finance, Labor Issues, Monetary Policy
  • Political Geography: United States, United Kingdom
  • Author: Joseph Gagnon
  • Publication Date: 01-2011
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper finds statistically robust and economically important effects of fiscal policy, external financial policy, net foreign assets, and oil prices on current account balances. The statistical model builds upon and improves previous explanations of current account balances in the academic literature. A key advance is that the model captures the effect of external financial policies, including exchange rate policies, through data on net official financial flows. Based on current and expected future policies, current account imbalances in major G-20 economies are likely to widen much more in the next five years than projected by the International Monetary Fund (IMF). This paper concludes with a discussion of appropriate policies to prevent widening imbalances.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy
  • Author: Kimberly Ann Elliott
  • Publication Date: 02-2011
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: The combination of relatively high American barriers to trade in textiles and apparel and the importance of the sector to the Pakistani economy make increased market access a potentially powerful tool of U.S. policy. Unfortunately, recent proposals to extend duty-free market access for Pakistani exports restrict the product and geographic coverage so severely that they would be meaningless in practice. Moreover, the analysis in this paper suggests that the concerns about job loss in the U.S. textile industry from broader coverage are exaggerated. A serious trade package for Pakistan would expand the geographic coverage to allow duty-free imports from all of Pakistan, expand the product coverage for clothing, and cover all other Pakistani exports as well.
  • Topic: International Trade and Finance, Markets
  • Political Geography: Pakistan, United States
  • Author: Luigi R. Einaudi
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: Institute for National Strategic Studies
  • Abstract: Washington's identification of Brazil with Latin America and the Third World hampers its appreciation of Brazil's power and importance to the United States. It is true that Brazil is geographically part of Latin America, and it is also true that Brazil, a founder of the Group of 77, was, with India, among the original leaders of the “Third World.” But Brazil is Brazil—as large and every bit as unique as the United States or China. Brazil, for many years the seat of the Portuguese empire, is the world's largest Portuguese-speaking country. It never had the large settled Amerindian populations that became a repressed underclass in the Andes and Mesoamerica; Brazilians today are as diverse as their North American cousins but growing faster.
  • Topic: Economics, International Trade and Finance, Bilateral Relations
  • Political Geography: United States, Brazil, Latin America
  • Publication Date: 02-2011
  • Content Type: Working Paper
  • Institution: The Carter Center
  • Abstract: An opening product of the Andean-U.S. Dialogue Forum, this report is intended to spur conversations on more effective cooperation by identifying convergences and divergences in priorities among the countries and the citizens of Venezuela, Colombia, Ecuador, Peru, and Bolivia and the United States. It seeks to open the door to a better understanding of the internal dynamics in each country and to reduce stereotypes that impede cooperation to resolve mutual challenges. This report highlights the transnational issues of energy, climate change, trade, and illegal drugs, recognizing that beneficial progress will demand a collective response from all.
  • Topic: Climate Change, International Trade and Finance, Regional Cooperation, War on Drugs
  • Political Geography: United States, Colombia, Latin America, Venezuela, Peru, Ecuador, Bolivia
  • Publication Date: 04-2011
  • Content Type: Working Paper
  • Institution: Oxford Economics
  • Abstract: The Tohoku Pacific earthquake which struck Japan on 11th March was the most serious to hit Japan since the Kobe earthquake of 1995, and was followed by a highly destructive tsunami. As well as having significant short-term economic and financial impacts, these disasters could also leave a longer-term footprint on the Japanese and global economies.
  • Topic: Economics, International Trade and Finance, Markets, Natural Disasters
  • Political Geography: Japan
  • Author: Konstantin M. Wacker
  • Publication Date: 01-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper first shows that important economic arguments in favor of the Prebisch- Singer hypothesis of falling terms of trade of developing countries have implicitly relied on the role of multinational corporations and foreign direct investment. As of yet, the relationship between the latter and terms of trade has not been empirically investigated. In order to start closing this gap in research, data on 111 developing countries between 1980 and 2008 is analyzed using panel data methods. The empirical results suggest that there is no reason to believe multinationals' activities were responsible for a possible decrease of the developing countries' net barter terms of trade. On the contrary, foreign direct investment seems to play a positive role for developing countries' terms of trade.
  • Topic: Development, Economics, International Trade and Finance, Foreign Direct Investment
  • Author: Michael Cohen
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: International narratives on Argentina's recovery from the crisis of 2001-02 tend to emphasize the role of rising commodity prices and growing demand from China. Argentina is said to have been 'lucky', saved by global demand for its agricultural exports. The international narrative has also been used by local agricultural exporters to justify their objections against higher export taxes during periods of high commodity prices. These narratives are not correct. Data on the country's recovery show that it was not led by agricultural exports but was fuelled by urban demand and production. When the Convertibility period ended and the peso was devalued in 2002, price increases for imports stimulated the production of domestic goods and services for consumers. This production in turn generated multiplier effects which supported small and medium-sized firms and helped to create many new jobs. This later produced a revival of the construction and then the manufacturing sectors as well.
  • Topic: Agriculture, Economics, International Trade and Finance, Markets, Financial Crisis
  • Political Geography: China, Argentina, Latin America
  • Author: Mahvash Saeed Qureshi, Charalambos G. Tsangarides
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper revisits the link between exchange rate regimes and trade in the context of Africa's exchange rate arrangements. Applying an augmented gravity model that includes measures of currency unions and pegged regimes, the paper compares Africa's experience with that of the world. Our results suggest that both currency unions and direct pegs promote bilateral trade in Africa vis-à-vis more flexible exchange rate regimes,and that their effect is almost double for the region than that for an average country in the world sample. Further, we find evidence that the effect of conventional pegs is at least as large as that of currency unions in Africa, and that the benefits of fixed exchange rate regimes stem through channels in addition to reduced exchange rate volatility.
  • Topic: Economics, International Trade and Finance, Bilateral Relations, Monetary Policy
  • Political Geography: Africa
  • Author: Philip Abbott, Finn Tarp
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Vietnam has been among the most successful East Asian economies, especially in weathering the external shocks of recent globalization crises—the 1997-98 Asian financial crisis and the 2008-09 great recession, financial crisis and collapse of global trade. Its success contradicts its characterization as an example of export-led growth and highlights the role of the state, particularly in maintaining and influencing investment. Examination of economic performance and policy responses shows rising dependence on foreign finance around each crisis, and actions by the government to counteract that dependence and bolster the domestic economy while continuing to restructure the economy toward greater emphasis on the private sector. Growth, employment and poverty alleviation have been maintained at the expense of renewed inflation, larger budget deficits, and currency depreciation. The 'stop-go' nature of present …
  • Topic: Development, Economics, Globalization, International Trade and Finance
  • Political Geography: Asia
  • Author: Carmen M. Reinhart, Nicolas E. Magud, Kenneth S. Rogoff
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: The literature on capital controls has (at least) four very serious apples-to-oranges problems: (i) There is no unified theoretical framework to analyze the macroeconomic consequences of controls; (ii) there is significant heterogeneity across countries and time in the control measures implemented; (iii) there are multiple definitions of what constitutes a "success" and (iv) the empirical studies lack a common methodology-furthermore these are significantly "overweighted" by a couple of country cases (Chile and Malaysia). In this paper, we attempt to address some of these shortcomings by: being very explicit about what measures are construed as capital controls. Also, given that success is measured so differently across studies, we sought to "standardize" the results of over 30 empirical studies we summarize in this paper. The standardization was done by constructing two indices of capital controls: Capital Controls Effectiveness Index (CCE Index), and Weighted Capital Control Effectiveness Index (WCCE Index). The difference between them lies in that the WCCE controls for the differentiated degree of methodological rigor applied to draw conclusions in each of the considered papers. Inasmuch as possible, we bring to bear the experiences of less well known episodes than those of Chile and Malaysia. Then, using a portfolio balance approach we model the effects of imposing capital controls on short-term flows. We find that there should exist country-specific characteristics for capital controls to be effective. From this simple perspective, this rationalizes why some capital controls were effective and some were not. We also show that the equivalence in effects of price- vs. quantity-capital control are conditional on the level of short-term capital flows.
  • Topic: Development, Economics, International Trade and Finance, Markets
  • Political Geography: Latin America, Southeast Asia
  • Author: Morris Goldstein
  • Publication Date: 02-2011
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper links reform of the international financial regulatory system with reform of the international monetary system because as this recent global crisis demonstrates so vividly, the root causes can come from both the financial and monetary spheres and they can interact in variety of dangerous ways. On the financial regulatory side, I highlight three problems: developing a better tool kit for pricking asset-price bubbles before they get too large; shooting for national minima for regulatory bank capital that are at least twice as high those recently agreed as part of Basel III; and implementing a comprehensive approach to "too-big-to-fail" financial institutions that will rein-in their past excessive risk-taking. On the international monetary side, I emphasize what needs to be done to discourage "beggar-thy-neighbor" exchange rate policies, including agreeing on a graduated set of penalties for countries that refuse persistently to honor their international obligations on exchange rate policy.
  • Topic: Economics, International Trade and Finance, Monetary Policy, Financial Crisis
  • Author: Gordon S. Smith
  • Publication Date: 05-2011
  • Content Type: Working Paper
  • Institution: Centre for International Governance Innovation
  • Abstract: This paper provides a brief history of the evolution of the Group of Seven (G7) from its origins in the aftermath of the 1971 breakdown of the Bretton Woods system of exchange rates and the oil crisis in 1973. It then discusses Russia's participation at summits after the fall of the Berlin Wall, formally joining the group in 1997, thus becoming the Group of Eight (G8). The paper gives a concise account of the formation of the Group of Twenty (G20) finance ministers and central bank governors in the late 1990s, in the wake of financial crises in Asia and Latin America, which was elevated to a leaders' summit forum at the outbreak of the global financial crisis in 2008. The paper wraps up with a discussion of the differences in the G8 and G20 models, concluding that the G20 process is still the best option for meeting the challenges of complex global governance issues.
  • Topic: International Cooperation, International Organization, International Trade and Finance, Financial Crisis, Governance
  • Political Geography: Russia, Asia, Latin America
  • Author: Kenji E. Kushida
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: Berkeley Roundtable on the International Economy
  • Abstract: Despite global leadership by Japanese firms in sectors such as automobiles, precision equipment, and various high tech components, Japanese firms in the telecommunications sector have followed a persistent pattern of leading without followers. While leading the domestic market to ever-high levels of sophistication, sometimes beyond that of most other advanced industrial countries, Japanese ICT companies have retreated dramatically from international telecommunications-related markets. Moreover, in technology after technology, Japanese ICT firms invest heavily, undertake extensive R, and for network technologies, deploy infrastructure rapidly, only to find that global technological trajectories shift in a different direction. While globally successful Japanese industries were able to use their domestic market as a springboard into international markets, Japan's telecommunications sector became decoupled from global markets, trapping Japanese firms in the domestic market.
  • Topic: Globalization, Industrial Policy, International Trade and Finance
  • Political Geography: Japan, Israel
  • Author: Martin Kenney, Andrew Hargadon
  • Publication Date: 04-2011
  • Content Type: Working Paper
  • Institution: Berkeley Roundtable on the International Economy
  • Abstract: In the last half - century, venture capitalists have financed many of the most important new U.S. technology-based firms and industries. Most recently, venture capital has been touted as a key investor and driver of a new clean technology future. This paper examines the characteristics of successful venture capital investing and the structure and dynamics of clean technology markets to predict whether venture capital is the best model for financing a clean technology transition. We identify the following three key characteristics of technologies and markets in which venture capital can be successfully invested. First, the firm's markets must be large and rapidly growing. Second, the firm's solutions must be scalable, with the particular characteristic that a firm's growth in revenue (and valuation) significantly outpaces the capital cost of achieving that growth. Third, there must be the potential for large and rapid payoff, as either a public stock offering or acquisition by another firm. In the U.S. clean technology market, with the exception of energy being a large market, in nearly all cases these characteristics do not hold. For these reasons, a venture capital model for funding clean technology innovation is unlikely to be successful and the imposition of venture capital goals on clean technology firms may even be harmful to their survival. The current Obama Administration's strategy of providing enormous loan guarantees to a few chosen venture capital ‐ financed firms is misguided because it is likely to truncate the chaotic business model search that characterizes the formation of new industries.
  • Topic: Climate Change, Economics, Energy Policy, International Trade and Finance, Markets
  • Author: John Zysman, Kenji E. Kushida, Jonathan Murray
  • Publication Date: 01-2011
  • Content Type: Working Paper
  • Institution: Berkeley Roundtable on the International Economy
  • Abstract: Cloud Computing is rapidly emerging as the new information technology platform. It is, however, much more than simply a new set of technologies and business models. Cloud Computing is transforming how consumers, companies, and governments store information, how they process that information, and how they utilize computing power. It can be an engine of innovation, a platform for entrepreneurship, and driver of corporate efficiency. While an increasingly commonly term, confusion remains over what exactly constitutes Cloud Computing, how the markets are unfolding, and what forces will drive their evolution and diffusion. This paper provides an overview and conceptual tools for business leaders, policymakers, and non-specialist scholars to identify, distill, and easily understand the core aspects of how Cloud Computing service markets are developing, and how an array of policy issues will influence how this new computing platform unfolds across the world.
  • Topic: Globalization, International Trade and Finance, Markets, Science and Technology
  • Author: Jyrki Ali-Yrkkö, Petri Rouvinen, Timo Seppälä, Pekka Ylä-Anttila
  • Publication Date: 02-2011
  • Content Type: Working Paper
  • Institution: Berkeley Roundtable on the International Economy
  • Abstract: Available statistics tell us little about the economic consequences of increasing global dispersion of production processes. In order to shed light on the issue, we perform grass roots detective work to uncover the geography of value added in the case of a Nokia N95 smartphone circa 2007. The phone was assembled in Finland and China. In the case when the device was assembled and sold in Europe, the value-added share of Europe (EU-27) rose to 68%. Even in the case when it was assembled in China and sold in the United States, Europe captured as much as 51% of the value added, despite of the fact that it had rather little role in supplying the physical components. Our analysis illustrates that international trade statistics can be misleading; the capture of value added is largely detached from the physical goods flows. It is rather services and other intangible aspects of the supply chain that dominate. While final assembly – commanding 2% of the value added in our case – has increasingly moved offshore, the developed countries continue to capture most of the value added generated by global supply chains.
  • Topic: Economics, Globalization, Industrial Policy, International Trade and Finance, Markets
  • Political Geography: China, Europe, Finland
  • Author: Bartholomew C. Watson
  • Publication Date: 02-2011
  • Content Type: Working Paper
  • Institution: Berkeley Roundtable on the International Economy
  • Abstract: Like other service sectors, information technology has dramatically altered the growth and character of the retail trade sector in the affluent economies. Nevertheless, significant variation exists in the typical strategies of retail firms in different countries. This article explores this variation and proposes both an ideal type and an explanation. It argues that the problems of markets and hierarchies in retailing were set in motion by a series of political fights starting in the 1960s and 1970s. This demonstrates that once again that technical outcomes are not determined by the technology itself, but by social and political rules. Future technology platforms, such as e-commerce of mobile commerce, should be expected to follow similar political logics. As retailing firms spread around the globe, this has important implications for national competition policy.
  • Topic: Economics, International Trade and Finance, Science and Technology, Communications
  • Author: Martin Kenney, Bryan Pon
  • Publication Date: 01-2011
  • Content Type: Working Paper
  • Institution: Berkeley Roundtable on the International Economy
  • Abstract: Until the introduction of the iPhone, cellular telephony and the Internet were essentially separate. The Internet was a PC-based service, while mobile telephony was conducted on a telephone. Though there were mobile products that provided communication services such as email, web access and other Internet services were either unavailable or inferior to those available on a PC. The “smartphone” category re defined by Apple meant the convergence of traditional mobile telephony, Internet services, and personal computing. As these sectors merge into a single device, formerly separate industry architectures and their constituent firms are being forced into direct competition. We test theories of industry architecture and technological platforms regarding their ability to explain the strategies of key entrants in navigating the transition. We analyze in detail the actions and strategies of four major competitors, including Apple, Google, Microsoft, Nokia, and, more briefly, Research in Motion and HP/Palm, from the framework of technological platform theory. Our analysis suggests that currently some competitors are following traditional platform strategies, but that Google and Apple appear to have adopted strategies at odds with platform literature. We examine how the dynamics of this convergence may lead to a reconsideration of certain tenets of platform theory.
  • Topic: International Trade and Finance, Markets, Science and Technology, Communications
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: Oxford Economics
  • Abstract: International leaders face an era of unprecedented change. The recession and financial crisis that ended in 2009 caused a seismic shift that has reshaped the global business landscape. The world economy is now characterized by sluggish growth in the West, a shift in power to the East, and value-driven customers and rising risks everywhere. At the same time, the downturn has hastened the adoption of key technologies—mobility, cloud computing, business intelligence and social media—that are transforming businesses and sparking a new wave of wealth creation, particularly in the emerging world.
  • Topic: Economics, International Trade and Finance, Markets, Science and Technology
  • Publication Date: 05-2011
  • Content Type: Working Paper
  • Institution: Oxford Economics
  • Abstract: The financial crisis has forced a reappraisal of the regulatory architecture, globally and in the EU and its member states. Around the world, policymakers are proposing significant changes to rules governing the financial sector, with the goal of making the financial system more resilient. Given the large and visible costs of financial instability for Europe, it is natural for European policymakers to make the avoidance of financial crises a high priority. But it is also important to recognise that regulation carries a range of costs that can dilute the economic benefits of a competitive and dynamic financial services sector. The academic literature has robustly established that financial development is not only the consequence of economic growth but also a driver. If the EU is to achieve the ambitious goals for unleashing private enterprise and creating jobs set out within the Europe 2020 agenda, then it cannot afford to overlook the role of the financial system in fostering innovation and growth. As supervisory authorities consider a broad set of proposals to strengthen the regulatory infrastructure, a n important quest ion that arises is how to assess the aggregate impact of these various measures. Although each may look sensible in isolation, they could still impose a larger - than - expected burden on the financial system when take n in the aggregate. The focus of policy reforms should be on forcing financial institutions to internalise the social costs of their risk - taking decisions rather than suppressing financial innovation. Credible policies to allow the failure of financial institutions would encourage market monitoring of risk - taking, reducing the need for additional prudential regulation and minimising costs to the taxpayer in the event of bankruptcy. Policymakers should aim to put in place an objective, sustainable and flexible regulatory regime, as the design of the regulatory framework will play a significant role in the future development of both the financial industry and the wider economy. International consistency in the regulatory reform agenda is also important so as not to risk fragmentation of global capital markets, which bring significant economic benefits to companies and consumers alike. The economic and social purpose of financial markets is the efficient allocation of capital, and the regulatory agenda must be framed around this goal. At a time when the European economy is struggling to recover lost ground, changes to the regulatory regime should not unduly restrict the potential of the financial sector to contribute to the continents future prosperity.
  • Topic: Development, Economics, Globalization, International Trade and Finance, Financial Crisis
  • Political Geography: Europe
  • Author: Rajah Rasiah, Chandran Govindaraju
  • Publication Date: 04-2011
  • Content Type: Working Paper
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: Malaysia is still perceived as an important destination for foreign direct investment (FDI). Deregulation by the Malaysian government in 1986 with a new round of Pioneer status tax holidays, tax allowances for expansion projects, liberal rules for firms operating in free trade zones (FTZs), and tax exemptions are encouraging stronger FDI inflows (IFDI). IFDI flows reached a peak in 1988-1993 as export-oriented foreign multinational enterprises (MNEs) relocated manufacturing production operations to Malaysia to benefit from cheap labor, government incentives and liberal conditions for manufacturing FDI. After 1996, due to the Asian financial crisis in 1997-1998, IFDI flows into Malaysia decreased and subsequently recorded the lowest level in 2001 as a result of the world trade recession. Following steady growth in 2002-2007, IFDI in Malaysia fell dramatically in 2008 and 2009 due to the global economic crisis. However, a strong resumption in the first quarter of 2010 and government efforts, including continued liberalization of manufacturing and services, the Government Transformation Programme, promoting new key economic areas, and the active role of the Ministry of International Trade and Industry (MITI), contributed to an increase in inward FDI flows in the second quarter of 2010.
  • Topic: Economics, Industrial Policy, International Trade and Finance, Foreign Direct Investment, Financial Crisis
  • Political Geography: Malaysia, Southeast Asia
  • Author: Samuel W. Bodman, James D. Wolfensohn, Julia E. Sweig
  • Publication Date: 07-2011
  • Content Type: Working Paper
  • Institution: Council on Foreign Relations
  • Abstract: Brazil has transcended its status as the largest and most resource-rich country in Latin America to now be counted among the world's pivotal powers. Brazil is not a conventional military power, it does not rival China or India in population or economic size, and it cannot match the geopolitical history of Russia. Still, how Brazil defines and projects its interests, a still-evolving process, is critical to understanding the character of the new multipolar and unpredictable global order.
  • Topic: Development, Economics, Globalization, International Trade and Finance
  • Political Geography: Russia, China, India, Brazil, Latin America
  • Author: Fulvio Castellacci
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: Norwegian Institute of International Affairs
  • Abstract: This paper introduces service innovation in the proximity-concentration trade-off model of trade and FDI (Helpman, Melitz and Yeaple, 2004). The idea is that innovation will have two main effects on service firms' choice between exports and FDI. First, innovative firms will on average have higher productivity levels than non-innovative enterprises. Secondly, innovators will have to pay a higher relational distance cost for undertaking export activities, and they will therefore prefer to avoid (or reduce) these costs by choosing a FDI strategy instead. We test the empirical relevance of this idea on a new survey dataset for a representative sample of firms in all business service sectors in Norway. The results show that firms are more likely to choose FDI rather than export the greater their productivity level and the higher the relational distance costs they face.
  • Topic: Industrial Policy, International Trade and Finance, Foreign Direct Investment
  • Author: Raymond Robertson, Arianna Rossi
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: Globalization of production has created an environment for labor-management relations that involves international actors and spans countries, going beyond the boundaries of the traditional workspace. The dramatic changes brought about by globalization led to the emergence of new cross-border forms of industrial relations. This paper analyses the case of the International Labour Organization's Better Factories Cambodia (BFC) project as a transnational instrument to create the institutional space for industrial relations in Cambodia. Based on the principle of social dialogue among the social partners (the national Government and workers' and employers' organizations) as well as with global buyers, BFC's multistakeholder approach reaches beyond the workplace and may be a key instrument of industrial relations because it bridges the gap between the sphere of production and that of consumption. The empirical results reveal some of the particular strengths of the program.
  • Topic: Development, Globalization, Industrial Policy, International Trade and Finance, Labor Issues
  • Political Geography: Cambodia, Southeast Asia
  • Author: Giacomo Luciani
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: This paper looks at restrictions of passage, accidents and oil transportation norms as causes of interruption in oil supplies. The key 'chokepoints' are discussed in detail: the Straits of Hormuz, Malacca, Bab el-Mandeb, the Canals of Suez and Panama, the Turkish Straits and the entrance to the Baltic Sea. It is concluded that in most cases the danger of closure can only be temporary; nevertheless, investment in bypasses and alternatives is highly desirable, and in the case of the Turkish Straits, has not been forthcoming. The discussion then turns to threats to navigation outside the chokepoints, such as piracy and oil spills in enclosed seas, particularly the Mediterranean. The final section looks at changing international norms, especially the entry into force of the requirement of double hulls for oil tankers. The paper's main conclusion is that there is no scenario of interruption of maritime oil and gas transportation that may cause a severe physical shortage of oil, in general or specifically for Europe. In almost all cases potential tensions could be easily allayed if responsible governments took the necessary steps to create alternatives (notably pipeline bypasses) or to curb illegal activities. The main factor preventing the required investment in transportation alternatives is the lack of a well-functioning market mechanism for burden sharing. Where passage must be paid for, the resulting income stream supports investment to increase capacity and accommodate growing demand.
  • Topic: International Trade and Finance, Oil, Maritime Commerce, Piracy
  • Political Geography: Turkey
  • Author: Consuelo Pacchioli
  • Publication Date: 05-2011
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: As an alternative to measuring the extent of market integration, 'home-bias' indicates the degree to which economic agents 'over-prefer' to transact with domestic agents rather than agents from other EU countries. Such an exclusive preference is measured against a benchmark of (ideal) market integration and is called 'home-bias'.
  • Topic: International Trade and Finance, Markets, Regional Cooperation
  • Political Geography: Europe
  • Author: Daniel Gros, Cinzia Alcidi
  • Publication Date: 05-2011
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: This paper describes four key drivers behind the adjustment difficulties in the periphery of the eurozone: The adjustment will be particularly difficult for Greece and Portugal, as two relatively closed economies with low savings rates. Both of these countries combine high external debt levels with low growth rates, which suggest they are facing a solvency problem. In both countries fiscal adjustment is a necessary condition for overall sustainability, but it not sufficient by itself. A sharp cut in domestic consumption (or an unrealistically large jump in exports) is required to quickly establish external sustainability. An internal devaluation (a cut in nominal wages in the private sector) is unavoidable in the longer run. Without such this adjustment in the private sector, even continuing large-scale provision of official funding will not stave off default. Ireland's problems are different. They stem from the exceptionally large losses in the Irish banks, which were taken on by the national government, leading to an explosion of government debt. However, the Irish sovereign should be solvent because the country has little net foreign debt. Spain faces a similar problem as Ireland, although its foreign debt is somewhat higher but its construction bubble has been less extreme. The government should thus also be solvent, although further losses in the banking system seem unavoidable. Italy seems to have a better starting position on almost on all accounts. But its domestic savings rate has deteriorated substantially over the last decade.
  • Topic: Economics, International Trade and Finance, Financial Crisis
  • Political Geography: Spain, Ireland
  • Author: David Kleimann
  • Publication Date: 04-2011
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: The first 16 months of the EU's common commercial policy (CCP) in the post-Lisbon period provide indicative insights into how the European Parliament, the European Commission and the Council of Ministers interpret their respective roles under the new legal framework introduced by the Lisbon Treaty. This paper analyses the amendments, the institutional capacities to respond to the reform challenges and the evolving institutional balance applying to Lisbon-era common commercial policy. Against this backdrop, the paper gives an overview of the changing dynamics of EU trade and investment policy in a context of enhanced politicization resulting from the European Parliament's involvement in the decision-making process. Particular importance is given to the question whether enhanced EP involvement in decision-making has the potential to lead to a scenario resembling the policy process in the United States, where congressional responsibility for trade and investment policy has resulted in the capture of the policy agenda by special interest groups and snail-paced policy progress (if any) in recent years. Accordingly, the paper scrutinizes the political preferences that the European Parliament is introducing into current European trade policy debates as well as the framework legislation and trade agreements. Finally, it is argued that parliamentary involvement in making common commercial policy has the potential to narrow the gap between European public political preferences and perceptions, on the one hand, and actual EU trade policies on the other, and to place EU trade and investment policies on a foundation of renewed public political support. In the author's view, however, it is imperative that such an achievement is based on well-informed, responsible, sustainable and clearly communicated policy proposals from the MEPs, who respond to and seek to balance the multiplicity of interests of CCP stakeholders in European civil society and respect the Union's international obligations.
  • Topic: Economics, International Trade and Finance, Treaties and Agreements
  • Political Geography: Europe
  • Author: Claudio Vicarelli, Marco Fioramanti
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: Centre for European Policy Studies
  • Abstract: The recent economic and financial crises have shown the weakness of EU economic governance. A process of strengthening macroeconomic and fiscal surveillance started in the course of 2010; among other proposals, the European Commission suggested a new binding criterion of debt reduction: debt-to-GDP ratio is to be considered sufficiently diminishing if its distance with respect to the 60% of GDP reference value has reduced over the previous three years at a rate of the order of one-twentieth per year.
  • Topic: Debt, Economics, International Trade and Finance, Financial Crisis, Governance
  • Political Geography: Europe
  • Author: Liu Lirong
  • Publication Date: 07-2011
  • Content Type: Working Paper
  • Institution: European Union Institute for Security Studies
  • Abstract: China's engagement in Africa has obliged the EU to re-evaluate its own relationship with Africa. Since 2008, in an attempt to resolve the conflicts of norms and interests, the EU has proposed establishing a trilateral dialogue and cooperation mechanism between the EU, China and Africa, which so far has not yielded any substantial results. The differences between China's and the EU's Africa policies are mainly visible in two areas: aid and security. The contradiction between their respective aid policies lies in China's 'no-strings-attached aid' versus European 'conditionality' or emphasis on 'fundamental principles'. The contradiction between their security approaches in Africa lies in China's non-interference policy and the European concept of human security. Promoting common normative values and principles is at the core of the Common Foreign and Security Policy (CFSP), which is important for the EU's self-construction at present. China's non-interference policy is related to its domestic security and stability and in this context it engages in its own rhetoric. In matters of principle it is difficult for both sides to make compromises or accept limitations imposed by the other.
  • Topic: Security, Foreign Policy, International Trade and Finance, Foreign Direct Investment
  • Political Geography: Africa, China, Europe
  • Publication Date: 04-2011
  • Content Type: Working Paper
  • Institution: Economist Intelligence Unit
  • Abstract: In the run-up to the global financial crisis, the euro area looked very much like a microcosm of the world economy. The region as a whole grew in line with its long-term trend, and its trade position with the outside world was broadly in balance. However, the euro area's aggregate position masked large variations across the member states. In some parts of the region (notably countries on the geographical periphery), demand grew consistently faster than output; in others (like Germany), the reverse was the case. Profligacy in the periphery was funded by thrift in the "core". This arrangement suited both sides.for a time at least. While countries in the periphery enjoyed debt-fuelled booms, countries such as Germany, where domestic demand was weak, could rely on exports to keep growing.
  • Topic: Debt, International Trade and Finance, Markets, Financial Crisis
  • Political Geography: Europe, Germany
  • Author: Wu Xinbo
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: United States Institute of Peace
  • Abstract: In an era of increased economic interdependence and shared security issues, it is vital that China and the United States become genuine partners, based not on shared ideology or traditional geopolitical interests, but on the needs of global governance. This, however, requires both countries to respect the other's legitimate core interests; if they do not, the resulting distrust and misinterpretation of intentions make cooperation less likely. To date, China has emphasized protection of its core interests, while the United States has emphasized developing areas of common interest while maintaining its expansive approach to foreign policy. This difference in emphasis has set up both areas of friction and possibilities for greater interaction. China's interests in Taiwan, Tibet, and Xinjiang lies at the heart of its national security concerns and their management is considered fundamental to the country's survival and development. As China has declared, continuing U.S. involvement with these issues is viewed as a challenge to China's core interests. If the United States eases its policies toward China's core interests, this could, in turn, encourage China to respect U.S. core interests and foster cooperation as China's material power and international influence are both growing. Developing common interests, meanwhile, can create more momentum for the two countries to manage and resolve their differences. Potential areas for successful cooperation include building a permanent peace mechanism on the Korean Peninsula; helping to secure strong, sustainable, and balanced global economic growth; and bringing about a global arrangement on creating an international environmental regime.
  • Topic: Foreign Policy, International Trade and Finance, Bilateral Relations
  • Political Geography: United States, China, Taiwan, Sinai Peninsula
  • Author: Karim Sadjadpour
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: Carnegie Endowment for International Peace
  • Abstract: As the United States seeks to contain Iran's nuclear ambitions through economic sanctions and diplomatic isolation, the United Arab Emirates (UAE) has come to play a critical yet often ambiguous role. The UAE, namely the emirate of Dubai, is a top source of Iranian imports and a key transshipment point for goods-legal and illegal-destined for the Islamic Republic. Dubai's bustling and loosely regulated ports have repeatedly frustrated international sanctions against Iran.
  • Topic: International Trade and Finance, Nuclear Weapons
  • Political Geography: United States, Iran, Arabia, United Arab Emirates, Dubai
  • Author: Thomas Carothers, Richard Youngs
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: Carnegie Endowment for International Peace
  • Abstract: The emergence of a multipolar world gives Western democracy advocates cause for both optimism and anxiety. China's success sparks fears of the spread of an autocratic development model. Yet democratic states such as Brazil, Indonesia, India, South Africa, and Turkey are also gaining ground. These countries serve as powerful examples of the universal appeal of democracy and possess unique experiences with democratization. The United States and Europe understandably hope that rising democracies will use their growing prominence to defend democratic values abroad, potentially revitalizing international democracy support.
  • Topic: Democratization, Development, Human Rights, International Trade and Finance
  • Political Geography: United States, China, Indonesia, Turkey, India, South Africa, Brazil
  • Author: Tsveta Petrova
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: Carnegie Endowment for International Peace
  • Abstract: The new democracies of Central and Eastern Europe are increasingly engaging in international democracy support, especially in the former Soviet Union and the Western Balkans. They have leveraged their membership in a number of Euro-Atlantic international organizations and used their bilateral diplomatic ties with democratization laggards to motivate and pressure them to observe democratic norms and practices. They are also been supplying small but growing amounts of democracy assistance.
  • Topic: Democratization, Development, International Organization, International Trade and Finance, Political Economy
  • Political Geography: Soviet Union, Balkans
  • Author: Jennifer Lee, Stephan Haggard, Marcus Noland
  • Publication Date: 08-2011
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: Theory tells us that weak rule of law and institutions deter cross-border integration, deter investment relative to trade, and inhibit trade finance. Drawing on a survey of more than 300 Chinese enterprises that are doing or have done business in North Korea, the authors consider how informal institutions have addressed these problems in a setting in which rule of law and institutions are particularly weak. Given the apparent reliance on hedging strategies, the rapid growth in exchange witnessed in recent years may prove self-limiting, as the effectiveness of informal institutions erodes and the risk premium rises. Institutional improvement could have significant welfare implications, affecting the volume, composition, and financial terms of cross-border exchange.
  • Topic: Economics, International Trade and Finance, Foreign Direct Investment
  • Political Geography: Israel
  • Author: Edwin M. Truman
  • Publication Date: 06-2011
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: Sovereign wealth funds (SWFs) have become a prominent feature of the international financial landscape. They are sufficiently diverse in their origins, structures, and objectives that generalizations are perilous. However, legitimate concerns have been raised in home and host countries about the management, behavior, and interactions of these funds. Many of those concerns can be addressed via increased accountability and transparency. The Santiago Principles are a good start in doing so, but Edwin M. Truman's SWF scoreboard points to areas where these principles can be improved. Meanwhile, SWF compliance must be further increased. At the same time, the Organization for Economic Cooperation and Development (OECD) effort to address concerns from the host-country side has not resulted in the erection of new barriers to that form of cross-border investment, but the OECD failed to reverse the creeping financial protectionism of the past decade. Because of their size and the source of their funding, some Asian funds are different. As a result, they will be held to a higher standard of accountability and transparency even as their government owners press for more openness to cross-border investment.
  • Topic: Economics, Emerging Markets, International Trade and Finance
  • Political Geography: Asia
  • Author: Theodore H. Moran
  • Publication Date: 04-2011
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: What is the relationship between foreign manufacturing multinational corporations (MNCs) and the expansion of indigenous technological and managerial technological capabilities among Chinese firms? China has been remarkably successful in designing industrial policies, joint venture requirements, and technology transfer pressures to use FDI to create indigenous national champions in a handful of prominent sectors: high speed rail transport, information technology, auto assembly, and an emerging civil aviation sector. But what is striking in the aggregate data is how relatively thin the layer of horizontal and vertical spillovers from foreign manufacturing multinationals to indigenous Chinese firms has proven to be. Despite the large size of manufacturing FDI inflows, the impact of multinational corporate investment in China has been largely confined to building plants that incorporate capital, technology, and managerial expertise controlled by the foreigner. As the skill-intensity of exports increases, the percentage of the value of the final product that derives from imported components rises sharply. China has remained a low value-added assembler of more sophisticated inputs imported from abroad—a “workbench” economy. Where do the gains from FDI in China end up? While manufacturing MNCs may build plants in China, the largest impact from deployment of worldwide earnings is to bolster production, employment, R, and local purchases in their home markets. For the United States the most recent data show that US-headquartered MNCs have 70 percent of their operations, make 89 percent of their purchases, spend 87 percent of their R dollars, and locate more than half of their workforce within the US economy—this is where most of the earnings from FDI in China are delivered.
  • Topic: Economics, Industrial Policy, International Trade and Finance, Science and Technology
  • Political Geography: United States, China, Israel
  • Author: Carmen M. Reinhart
  • Publication Date: 04-2011
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: Historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts. A subtle type of debt restructuring takes the form of "financial repression." Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks. In this paper, the authors describe some of the regulatory measures and policy actions that characterized the heyday of the financial repression era. In the heavily regulated financial markets of the Bretton Woods system, several restrictions facilitated a sharp and rapid reduction in public debt/GDP ratios from the late 1940s to the 1970s. Low nominal interest rates help reduce debt servicing costs while a high incidence of negative real interest rates liquidates or erodes the real value of government debt. Thus, financial repression is most successful in liquidating debts when accompanied by a steady dose of inflation. Inflation need not take market participants entirely by surprise and, in effect, it need not be very high (by historical standards). For the advanced economies in Reinhart and Sbrancia's sample, real interest rates were negative roughly half of the time during 1945–80. For the United States and the United Kingdom, their estimates of the annual liquidation of debt via negative real interest rates amounted on average to 3 to 4 percent of GDP a year. For Australia and Italy, which recorded higher inflation rates, the liquidation effect was larger (around 5 percent per annum).
  • Topic: Debt, Economics, International Trade and Finance, Markets
  • Political Geography: United States, United Kingdom
  • Author: Roger Bate
  • Publication Date: 02-2011
  • Content Type: Working Paper
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Increasing competition generally decreases product prices. But in the case of pharmaceuticals, this is only beneficial if competitor products are therapeutically equivalent (bioequivalent). One measure of quality control is a consistently made product, examined in detail in this paper. A comprehensive study of drug samples in African and Asian countries--assessed for variability by spectrometer--suggests that registered products perform notably better than unregistered products. As all of the sampled drugs are used to treat potentially lethal infections, this product variability (particularly of unregistered drugs) could prove detrimental to public health. Future analysis will assess how significant these spectral differences are in terms of drug quality and hence how important changes in policy should be to limit quality variability.
  • Topic: Emerging Markets, Health, Human Welfare, International Trade and Finance
  • Political Geography: Africa, China, Asia
  • Author: Kevin Dowd, Martin Hutchinson, Jimi Hinchliffe, Simon Ashby
  • Publication Date: 07-2011
  • Content Type: Working Paper
  • Institution: The Cato Institute
  • Abstract: The Basel regime is an international system of capital adequacy regulation designed to strengthen banks' financial health and the safety and soundness of the financial system as a whole. It originated with the 1988 Basel Accord, now known as Basel I, and was then overhauled. Basel II had still not been implemented in the United States when the financial crisis struck, and in the wake of the banking system collapse, regulators rushed out Basel III.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy, Governance
  • Political Geography: United States
  • Author: Caroline Bain
  • Publication Date: 09-2011
  • Content Type: Working Paper
  • Institution: Economist Intelligence Unit
  • Abstract: Global oil consumption grew by 3.4% in 2010, rebounding from a contraction of 1% in 2009. Consumption growth will slow in 2011-14 but remain relatively strong.
  • Topic: Energy Policy, International Political Economy, International Trade and Finance, Markets, Oil
  • Author: Matthew J. Slaughter, Edward Alden, Andrew H. Card, Thomas A. Daschle
  • Publication Date: 09-2011
  • Content Type: Working Paper
  • Institution: Council on Foreign Relations
  • Abstract: The growth of global trade and investment has brought significant benefits to the United States and to the rest of the world. Freer trade and investment, facilitated by rules the United States led in negotiating and implementing, have alleviated poverty, raised average standards of living, and discouraged conflict.
  • Topic: Economics, International Trade and Finance, Markets, Labor Issues, Financial Crisis
  • Political Geography: United States
  • Author: Miguel Haubrich Seco
  • Publication Date: 07-2011
  • Content Type: Working Paper
  • Institution: Istituto Affari Internazionali
  • Abstract: In its external relations, the EU advances regional cooperation as a successful means of achieving peace and prosperity. In doing so, the EU promotes its own model as the most successful case of regional integration. A wide-reaching set of instruments, spanning from trade to political dialogue and aid, is used to promote regional cooperation and integration. Noneheless, regional organisations supported by the EU are far from accomplishing their set objectives. Using as a test case the Andean Community, the oldest Latin American regional organisation and a prominent case of EU support for regional integration, this paper examines the reasons behind the EU's lack of impact in promoting regional integration. Stemming from this analysis, the paper proposes a recalibration of EU policy by decoupling trade relations from political engagement and by increasing support for physical and visible integration as opposed to formal institutions detached from the perceived needs of the public.
  • Topic: Economics, International Trade and Finance, Regional Cooperation
  • Political Geography: Europe, Latin America
  • Author: Valérie Vicky Miranda
  • Publication Date: 05-2011
  • Content Type: Working Paper
  • Institution: Istituto Affari Internazionali
  • Abstract: To what extent is foreign policy driven by norms and/or by interests? Considering the main trends of Italian foreign policy after World War II and two case studies, the Balkans and Libya, this paper investigates the role played by norms and interests and the interconnection between the two in Italian foreign policy. In the Balkans, norms and interests have neatly dovetailed: supporting democratization and the rule of law has also meant furthering Italian security and economic interests in the region. By contrast, Libya was the theatre of an essentially interest-driven foreign policy. Nevertheless, the Italian government's response to the Libyan crisis between March and May 2011 has interestingly marked a rupture from the recent past.
  • Topic: Security, Foreign Policy, Economics, International Trade and Finance
  • Political Geography: Bosnia, Libya, Kosovo, Balkans, North Africa, Italy
  • Author: Michele Comelli
  • Publication Date: 04-2011
  • Content Type: Working Paper
  • Institution: Istituto Affari Internazionali
  • Abstract: Once a renowned Euro-enthusiastic country, Italy has experienced a decrease in public support for European integration. Many are the reasons, including the emergence of a less idealistic vision of the EU, a general disaffection vis-à-vis politics, particularly at the domestic level, and the increasingly more vocal Euroscepticism of some political forces within the centre-right ruling coalition. The current Berlusconi government does not show the same degree of interest for European integration as previous centrist and centre-left governments. This is not to say that Italy's love affair with Europe has come to a bitter end. Italians continue to trust European institutions significantly more than national ones and would like the EU to acquire more competences. In addition, the vocal anti-EU rhetoric of some political forces within the governing coalition, and especially the Northern League, is often not matched by deeds, largely because EU policy-making is generally used as a source of leverage to obtain concessions in other policy domains. Tellingly, the Treaty of Lisbon was speedily ratified by the Italian parliament by unanimous vote - something unthinkable in most EU countries.
  • Topic: International Trade and Finance, Regional Cooperation
  • Political Geography: Europe, Italy, Lisbon
  • Author: Paul B. Stares, Micah Zenko
  • Publication Date: 09-2011
  • Content Type: Working Paper
  • Institution: Council on Foreign Relations
  • Abstract: With the U.S. military overstretched after a decade of continuous combat operations and Washington facing acute fiscal pressures, the strategic logic of preventive action to reduce the number of foreign crises and conflicts that could embroil the United States in burdensome new commitments has never been more compelling.
  • Topic: Globalization, International Organization, International Trade and Finance, Peace Studies, United Nations
  • Political Geography: United States, Europe, Washington, Southeast Asia
  • Author: Daniel Markey, Paul B. Stares, Evan A. Feigenbaum, Scott A. Snyder, John W. Vessey, Joshua Kurlantzick
  • Publication Date: 08-2011
  • Content Type: Working Paper
  • Institution: Council on Foreign Relations
  • Abstract: If past experience is any guide, the United States and China will find themselves embroiled in a serious crisis at some point in the future. Such crises have occurred with some regularity in recent years, and often with little or no warning. Relatively recent examples include the Taiwan Strait crisis of 1996, the accidental bombing of the Chinese embassy in Belgrade in 1999, and the EP-3 reconnaissance plane incident in 2001, as well as several minor naval skirmishes since then. The ensuing tension has typically dissipated without major or lasting harm to U.S.-China relations. With China's rise as a global power, however, the next major crisis is likely to be freighted with greater significance for the relationship than in previous instances. Policymakers in both Washington and Beijing, not to mention their respective publics, have become more sensitive to each other's moves and intentions as the balance of power has shifted in recent years. As anxieties and uncertainties have grown, the level of mutual trust has inevitably diminished. How the two countries manage a future crisis or string of crises, therefore, could have profound and prolonged consequences for the U.S.-China relationship. Given the importance of this relationship to not only the future evolution of the Asia-Pacific region but also to the management of a host of international challenges, the stakes could not be higher.
  • Topic: Conflict Prevention, Foreign Policy, Arms Control and Proliferation, Diplomacy, International Trade and Finance
  • Political Geography: United States, China, Israel, Asia
  • Publication Date: 09-2011
  • Content Type: Working Paper
  • Institution: Economist Intelligence Unit
  • Abstract: Foreign companies continue to be attracted by the opportunities offered by China's large and rapidly growing economy. China has a population of over 1.3bn, and the size of the economy is likely to grow to just under US$13trn a year at market exchange rates by 2015. Although GDP per head will still be relatively low by the end of the forecast period, at just under US$10,000 a year, this will represent a substantial improvement from just under US$4,500 in 2010. Significant regional disparities within China will persist. The provinces of the eastern seaboard enjoy standards of living well above the national average. However, there are also markets to be found in inland China, where many large cities are located. To some extent, the size of the population and the pace of economic growth belie the challenges of operating in China. Nationwide distribution networks will increasingly be put in place, but the Chinese market is likely still to be a fragmented one by 2015.
  • Topic: Demographics, International Trade and Finance, Markets, Foreign Direct Investment
  • Political Geography: China
  • Author: Rafiq Dossani
  • Publication Date: 05-2011
  • Content Type: Working Paper
  • Institution: Asia-Pacific Research Center
  • Abstract: Social media refers to the information and communication technology platforms designed for real-time social interaction, such as wikis, discussion forums and blogs. These platforms are available on public sites such as Facebook and private sites such as Jive and Yammer. Some sites are more specialized in their objectives than others, eg., Linked-In's objective is to enable professionals to create and share profiles and to enable HR professionals to interact with them, while Facebook's objective is to enable information creation and interaction for more general audiences. Hence, Facebook uses a large number of platforms, such as instant messaging, event planning and image-uploading. In general, more narrow objectives usually result in the use of fewer platforms: for instance, Twitter only contains a microblog platform and YouTube contains platforms for image sharing and comments, while enterprise social network Yammer contains wikis, discussion forums, blogs, text and multi-media content sharing and more.
  • Topic: Economics, International Trade and Finance, Markets, Science and Technology
  • Author: Alejandro Foxley, Fernando Sossdorf
  • Publication Date: 09-2011
  • Content Type: Working Paper
  • Institution: Carnegie Endowment for International Peace
  • Abstract: Few middle-income countries have successfully transitioned into advanced economies in the past twenty years. As the world struggles with a new economic slowdown, middle-income countries should look at the lessons from the economies that successfully made the jump.
  • Topic: Development, Emerging Markets, International Trade and Finance, Markets, Financial Crisis
  • Author: Thomas Jost
  • Publication Date: 09-2011
  • Content Type: Working Paper
  • Institution: Columbia Center on Sustainable Investment
  • Abstract: In 2010, German companies strongly increased their investments in foreign affiliates, with outward foreign direct investment (OFDI) flows having reached their third highest value on record (US$ 105 billion). Flows were driven by rising exports and growing profits of the German corporate sector. In 2010, the German economy made a robust recovery from the worldwide economic and financial crisis and became a growth engine among European Union (EU) countries. A further increase of OFDI is expected in 2011, as German companies are seeking to strengthen their strategic position in their main markets, although the pre-crisis level of OFDI flows of US$ 171 billion in 2007 will be hard to achieve. The German Government has continued to support the internationalization process of the German corporate sector by expanding its network of bilateral investment treaties and providing financial support and information services.
  • Topic: International Trade and Finance, Markets, Foreign Direct Investment
  • Political Geography: Europe, Germany, Ethiopia
  • Author: Adam S. Posen, Kenneth N. Kuttner
  • Publication Date: 09-2011
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper takes up the issue of the flexibility of inflation targeting regimes, with the specific goal of determining whether the monetary policy of the Bank of England, which has a formal inflation target, has been any less flexible than that of the Federal Reserve, which does not have such a target. The empirical analysis uses the speed of inflation forecast convergence, estimated from professional forecasters' predictions at successive forecast horizons, to gauge the perceived flexibility of the central bank's response to macroeconomic shocks. Based on this criterion, there is no evidence to suggest that the Bank of England's inflation target has compelled it to be more aggressive in pursuit of low inflation than the Federal Reserve.
  • Topic: Economics, International Trade and Finance, Markets, Monetary Policy
  • Political Geography: England
  • Author: Avinash D. Persaud
  • Publication Date: 10-2011
  • Content Type: Working Paper
  • Institution: Centre for International Governance Innovation
  • Abstract: The desks of civil servants in small states are stacked with yellowing consultancy reports from multilateral agencies on the need to generate sustainable jobs and growth, attract investment, bolster infrastructure and institutions, and improve the efficiency and reduce the expense of government. The real question is not what, but why? Why, in spite of everything we know, are many small states, especially those in the Caribbean, trapped in a zone of low growth, stagnation or relative decline? Policy makers face physical and financial constraints and implementation deficiencies, but the overriding constraint, even more so than in other countries, is political economy.
  • Topic: Development, Economics, International Trade and Finance, Poverty, Maritime Commerce
  • Political Geography: Caribbean
  • Author: Hugo Dobson
  • Publication Date: 11-2011
  • Content Type: Working Paper
  • Institution: German Institute of Global and Area Studies
  • Abstract: As a result of the emergence of the G20 as the self‐appointed “premier forum for international economic cooperation”, Asia's expanded participation in G‐summitry has attracted considerable attention. As original G7 member Japan is joined by Australia, China, Indonesia, India and South Korea, this has given rise to another alphanumeric configuration of the Asian 6 (A6). Resulting expectations are that membership in the G20 will impact Asian regionalism as the A6 are forced into coordination and cooperation in response to the G20's agenda and commitments. However, by highlighting the concrete behaviours and motivations of the individual A6 in the G20 summits so far, this paper stands in contrast to the majority of the predominantly normative extant literature. It highlights divergent agendas amongst the A6 as regards the future of the G20 and discusses the high degree of competition over their identities and roles therein. This divergence and competition can be seen across a range of other behaviours including responding to the norm of internationalism in promoting global governance and maintaining the status quo and national interest, in addition to claiming a regional leadership role and managing bilateral relationships with the US.
  • Topic: Economics, Emerging Markets, Globalization, International Trade and Finance, Regional Cooperation, Governance
  • Political Geography: United States, Japan, China, Indonesia, India, Asia, South Korea, Australia
  • Publication Date: 11-2011
  • Content Type: Working Paper
  • Institution: Economist Intelligence Unit
  • Abstract: Thirteen years since its launch, Europe's common currency is in crisis. A Greek debt restructuring is inevitable, and concern is now focusing on contagion among the larger euro area economies. The prospect of a cascade of disorderly sovereign defaults is chilling investors, and the departure of some members from the common currency is increasingly being discussed. The Economist Intelligence Unit's central forecast is that the currency area will survive, but the odds of failure are too high to ignore. To help clients anticipate the implications for their operations of a collapse in the euro zone, we have compiled a list of frequently asked questions (FAQ), exploring the potential scope and impact of a euro-area break-up. We look at what “break-up” could mean, although in practice numerous possible permutations exist between the extremes of departure by a single country and the exit of all 17 members.
  • Topic: Economics, International Trade and Finance, Markets, Regional Cooperation, Monetary Policy, Financial Crisis
  • Political Geography: Europe
  • Author: Jose Brambila-Macias, Isabella Massa, Matthew J. Salois
  • Publication Date: 11-2011
  • Content Type: Working Paper
  • Institution: Danish Institute for International Studies
  • Abstract: In this paper, we use a mixed-effects trade gravity model on a sample of 83 developing countries over the period 1990-2007 to assess the impact of trade finance and foreign aid on bilateral export flows. In addition to traditional variables, we also include a banking crises variable and a global economic downturns variable among the regressors. Differences across developing regions are taken into account. Our results suggest that: (i) trade finance has a positive and significant impact on bilateral export flows in all developing regions except Latin America; (ii) foreign aid matters in all regions; (iii) global economic downturns exert a negative and significant impact on export flows in all developing countries, and especially in Latin American and Sub-Saharan African economies; (iv) banking crises appear to have no significant impact in most developing regions.
  • Topic: Economics, Globalization, International Trade and Finance, Foreign Aid, Financial Crisis
  • Political Geography: Africa, Latin America
  • Author: Laurence Marfaing, Alena Thiel
  • Publication Date: 11-2011
  • Content Type: Working Paper
  • Institution: German Institute of Global and Area Studies
  • Abstract: Since the beginning of the twenty‐first century, Africa has seen the arrival of a new form of Chinese migration. Largely independent from big Chinese players, these “new entrepreneurial migrants” come to Africa not as workers in the highly prestigious state projects, but rather to follow their own economic interests. Engaging in business activities as diverse as petty manufacturing, printing, pharmaceutical and medical services, restaurants, beauty salons and last but not least, general trade, these independent Chinese migrants are often acknowledged for bringing affordable new commercial services and goods to low‐income households on the African continent. On the other hand, the high visibility of the Chinese entrepreneurial activities has also sparked anti‐Chinese sentiments among many African entrepreneurs.
  • Topic: Economics, Imperialism, International Trade and Finance, Markets
  • Political Geography: Africa, China, Ghana
  • Author: Crystal Murphy
  • Publication Date: 10-2011
  • Content Type: Working Paper
  • Institution: The Woodrow Wilson International Center for Scholars
  • Abstract: Though microfinance is championed in “typical” underdeveloped societies, its appropriateness for societies in the wake of conflict is not certain. Through in-depth field interviews and subsequent narrative analysis, this essay details lived realities of microfinance in Juba, South Sudan since the 20 05 Comprehensive Peace Agreement. It describes how repatriates navigate the complex new economy, credit, and income opportunities to secure livelihoods after war. It finds that microfinance in Juba does serve some worthwhile ends in the post-conflict economy, which, however, complicate the industry's success narratives.
  • Topic: Conflict Resolution, Economics, International Trade and Finance, Peacekeeping
  • Political Geography: Africa, South Sudan, Juba
  • Author: Paul Holtom
  • Publication Date: 02-2011
  • Content Type: Working Paper
  • Institution: Stockholm International Peace Research Institute
  • Abstract: Ukraine has consistently been among the 10 largest arms exporters in the world during the past two decades. An estimated 18 per cent of Ukrainian arms exports during 2005–2009 were for recipients in sub-Saharan Africa, specifically to Kenya (or Southern Sudan), Chad, Nigeria, Equatorial Guinea, and the Democratic Republic of the Congo (DRC). Ukraine has supplied surplus aircraft, tanks, armoured vehicles, artillery, SALW and ammunition to armed forces in sub-Saharan Africa. Additionally, Ukrainian companies and individuals have supplied other services related to arms transfers and participated in combat missions for African armed forces.
  • Topic: Security, Arms Control and Proliferation, International Trade and Finance
  • Political Geography: Kenya, Africa, Ukraine, Democratic Republic of the Congo, Nigeria, Guinea, South Sudan
  • Author: Peter A. Petri, Michael G. Plummer, Fan Zhai
  • Publication Date: 10-2011
  • Content Type: Working Paper
  • Institution: East-West Center
  • Abstract: Two emerging tracks of trade agreements in the Asia-Pacific—one based on the proposed Trans-Pacific Partnership (TPP) agreement and an Asian track—could consolidate the “noodle bowl” of current smaller agreements and provide pathways to a Free Trade Area of the Asia-Pacific (FTAAP). We examine the benefits and strategic incentives generated by these tracks over 2010-2025. The effects on the world economy would be small initially but by 2025 the annual welfare gains would rise to $104 billion on the TPP track, $303 billion on both tracks, and $862 billion with an FTAAP. The tracks will be competitive but their strategic implications are constructive: each would generate incentives for enlargement. Over time, strong economic incentives would emerge for the United States and China to consolidate the tracks into a region-wide agreement. Each track would bring a different template to such consolidation and can be viewed as defining a “disagreement point” in the Asia-Pacific bargaining game. The study is based on an analysis of 48 actual and proposed Asia-Pacific trade agreements and models impacts on variables including sectoral trade, output, employment and job shifts in 24 world regions.
  • Topic: Economics, International Trade and Finance
  • Political Geography: United States, China, Israel, Asia, Australia/Pacific, Asia-Pacific
  • Author: ZhongXiang Zhang, Lei Zhu, Ying Fan
  • Publication Date: 11-2011
  • Content Type: Working Paper
  • Institution: East-West Center
  • Abstract: This paper applies real options theory to establish an overseas oil investment evaluation model that is based on Monte Carlo simulation and is solved by the Least Squares Monte-Carlo method. To better reflect the reality of overseas oil investment, the model has incorporated not only the uncertainties of oil price and investment cost but also the uncertainties of exchange rate and investment environment. These unique features have enabled the model to be best equipped to evaluate the value of oil overseas investment projects of three oil field sizes (large, medium, small) and under different resource tax systems (royalty tax and production sharing contracts). In the empirical setting, China was selected as an investor country and Indonesia as an investee country as a case study. The results show that the investment risks and project values of small sized oil fields are more sensitive to changes in the uncertainty factors than the large and medium sized oil fields. Furthermore, among the uncertainty factors considered in the model, the investment risk of overseas oil investment may be underestimated if no consideration is given of the impacts of exchange rate and investment environment. Finally, as there is an important tradeoff between oil resource investee country and overseas oil investor, in medium and small sized oil investment negotiation the oil company should try to increase the cost oil limit in production sharing contract and avoid the term of a windfall profits tax to reduce the investment risk of overseas oil fields.
  • Topic: Development, Economics, Energy Policy, International Trade and Finance, Oil
  • Political Geography: China, Indonesia, Israel
  • Author: ZhongXiang Zhang
  • Publication Date: 11-2011
  • Content Type: Working Paper
  • Institution: East-West Center
  • Abstract: China's capital-intensive, export-oriented, spectacular economic growth since launching its open-door policy and economic reforms in late 1978 not only has created jobs and has lifted millions of the Chinese people out of poverty, but also has given rise to unprecedented environmental pollution and CO2 emissions. While estimates of the embedded CO2 emissions in China's trade differ, both single country studies for China and global studies show a hefty chunk of China's CO2 emissions embedded in trade. This portion of CO2 emissions had helped to turn China into the world's largest carbon emitter, and is further widening its gap with the second largest emitter. This raises the issue of who should be responsible for this portion of emissions and bearing the carbon cost of exports. China certainly wants importers to cover some, if not all, of that costs. While China's stance is understandable, this paper has argued from a broad and balanced perspective that if this is pushed too far, it will not help to find solutions to this issue. On the contrary it can be to China's disadvantage for a number of reasons. However, aligning this responsibility with China does not necessarily suggest the sole reliance on domestic actions. In that context, the paper recommends specific actions that need to be taken internationally as well as domestically in order to effectively control the embedded CO2 emissions in China's trade.
  • Topic: Climate Change, Economics, Industrial Policy, International Trade and Finance
  • Political Geography: China
  • Author: Marcus Noland
  • Publication Date: 11-2011
  • Content Type: Working Paper
  • Institution: East-West Center
  • Abstract: South Korea is arguably the premier development success story of the last half century. For 47 years starting in 1963, the economy averaged 7 percent real growth annually, and experienced only two years of economic contraction: 1980 after the second oil shock and the assassination of President Park Chung-hee, and 1998 at the nadir of the Asian financial crisis. At the start of that period South Korea had a per capita income lower than that of Mozambique or Bolivia; today it is richer than Spain or New Zealand, and was the first Asian and first non-G7 country to host a summit of the G20, the unofficial steering committee of the world economy.
  • Topic: Demographics, Development, Economics, Industrial Policy, International Trade and Finance, Political Economy
  • Political Geography: Israel, Asia, South Korea, Spain, Mozambique, New Zealand, Bolivia
  • Author: Nathan Jensen, Edmund Malesky, Dimitar Gueorgiev
  • Publication Date: 11-2011
  • Content Type: Working Paper
  • Institution: East-West Center
  • Abstract: We argue that openness to foreign investment can have differential effects on corruption, even within the same country and under the exact same domestic institutions over time. Our theoretical approach departs from standard political economy by attributing corruption motives to firms as well as officials. Rather than interpreting bribes solely as a coercive “tax” imposed on business activities, we allow for the possibility that firms may be complicit in using bribes to enter protected sectors. Thus, we expect variation in bribe propensity across sectors according to expected profitability which we proxy with investment restrictions. Specifically, we argue that foreign investment will not be associated with corruption in sectors with fewer restrictions and more competition, but will increase dramatically as firms seek to enter restricted and uncompetitive sectors that offer higher rents. We test this effect using a list experiment, a technique drawn from applied psychology, embedded in a nationally representative survey of 10,000 foreign and domestic businesses in Vietnam. Our findings show that the impact of domestic reforms and economic openness on corruption is conditional on polices that restrict competition by limiting entry into the sector.
  • Topic: Development, Industrial Policy, International Trade and Finance, Political Economy, Foreign Direct Investment
  • Political Geography: Israel, Vietnam
  • Author: Shantayanan Devarajan, Hélène Ehrhart, Tuan Minh Le, Gaël Raballand
  • Publication Date: 12-2011
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: To enhance efficiency of public spending in oil-rich economies, this paper proposes that some of the oil revenues be transferred directly to citizens, and then taxed to finance public expenditures. The argument is that spending that is financed by taxation—rather than by resource revenues accruing directly to the government—is more likely to be scrutinized by citizens and hence subject to greater efficiency. We develop the case as follows: First, we confirm that public expenditure efficiency is lower in oil-rich countries compared with other developing countries. Second, we develop a theoretical model to explain why citizens' scrutiny over public expenditure can be increased by transferring oil revenues to citizens and then taxing them. By receiving transfers and then paying taxes, citizens are better informed about the level of government revenue, and they have an incentive to ensure that their taxes are spent on public goods. Third, we show empirically that enhanced citizens' scrutiny is associated with more efficient government spending decisions and that accountability is stronger in countries that rely more on taxation to finance public spending. We conclude that, while it may be difficult to implement such a proposal in existing oil producers, there is scope for introducing it in some of Africa's new oil producers.
  • Topic: Economics, International Trade and Finance, Oil
  • Political Geography: Africa