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1491. Raising a caution flag on US financial sanctions against China

Author:
Jeffrey J. Schott
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
China’s policies in Xinjiang, Hong Kong, and the South China Sea and its ongoing support for Iran, North Korea, and Venezuela pose major challenges for the United States, where bipartisan pressure is growing to ramp up punitive sanctions against leading Chinese firms and financial institutions. Financial sanctions freeze the US assets or bar US entry of the targeted individuals and firms and prohibit US financial firms from doing business with them. Schott explains why US officials should carefully weigh the risks to international financial markets and US economic interests before imposing punitive sanctions on major financial institutions engaged with China. The collateral costs of such sanctions would be sizable, damaging US producers, financial institutions, and US alliances. By restricting access of major banks to international payments in US dollars and barring use of messaging systems like SWIFT, tougher US financial sanctions would effectively “weaponize” the dollar; friends and foes alike would be pushed to seek alternatives to dollar transactions that, over time, would weaken the international role of the dollar. Instead of doubling down on current unilateral financial sanctions, US policy should deploy sanctions in collaboration with allies and calibrate trade and financial controls to match the expected policy achievements.
Topic:
Human Rights, Sanctions, Finance, and Economy
Political Geography:
China, Asia, North America, and United States of America

1492. Fiscal resiliency in a deeply uncertain world: The role of semiautonomous discretion

Author:
Peter R. Orszag, Robert E. Rubin, and Joseph E. Stiglitz
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Orszag, Rubin, and Stiglitz outline a new fiscal framework that they argue would better equip policymakers to face deep uncertainties about future interest rates (which, they say, may not remain low forever), hard-to-predict global shocks, and climate risks. They reject fiscal anchors—simple limits on deficits or debt as a share of GDP that governments adopt to check their spending and borrowing—that have historically guided fiscal policy and believe any attempts to modify such targets for the current period of low interest rates are likely to fail. Instead they propose making the budget respond more automatically to economic distress (through stronger automatic stabilizers) and to long-term fiscal pressures (e.g., embedding adjustment mechanisms in health care and pension programs), as well as creating an infrastructure program and extending debt maturities to insure against interest rate changes. Such a "streamlined dashboard" would then allow policymakers to use discretion as necessary to take any additional actions—either to provide more stimulus during short-term difficulties or to adjust the automatic features themselves—rather than adhering to fiscal targets that may no longer be appropriate when economic conditions change.
Topic:
Financial Crisis, Economy, Fiscal Policy, and Fiscal Deficit
Political Geography:
Global Focus

1493. Prospects for the Reconstruction of Lebanon

Author:
Sara Nowacka
Publication Date:
05-2021
Content Type:
Special Report
Institution:
The Polish Institute of International Affairs
Abstract:
At the end of March, Lebanese President Michel Aoun rejected a proposal by designated Prime Minister Saad al-Hariri regarding the composition of the new government. The breakdown of the negotiations shows that despite the deepening socio-economic crisis, political groups are unable to develop a common vision for the reconstruction of the state. The EU, UN, and the World Bank engaged in initiatives aiming to improve Lebanon’s situation. However, the political deadlock threatens the implementation of their co-created “3RF” reform plan.
Topic:
United Nations, World Bank, European Union, Economy, and Crisis Management
Political Geography:
Middle East and Lebanon

1494. Turkey: The European Union’s Adversarial Partner

Author:
Karol Wasilewski
Publication Date:
04-2021
Content Type:
Special Report
Institution:
The Polish Institute of International Affairs
Abstract:
The EU intends to implement a new model of relations with Turkey based on phased, proportional, and reversible engagement. The Union’s plans are a consequence of a dilemma: although Turkey often acts like an adversary, EU members want to maintain close relations with it due to the convergence of interests in areas such as migration and the economy. The Union’s new approach creates the opportunity to strengthen its influence on Turkey. Yet, different expectations about the future shape of relations will keep EU-Turkey relations tense.
Topic:
International Relations, Migration, European Union, and Economy
Political Geography:
Europe, Turkey, and Middle East

1495. Firm performance, trade linkages, and the growth of SMEs in Tanzania

Author:
Josaphat Kweka, Julian Boys, and Amrita Saha
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
United Nations University
Abstract:
The private sector and enterprises have a key role to play in the development of the Tanzanian economy. This Policy Brief provides insights and solutions that could offer business sectors the vital policy support that they need to develop and grow.
Topic:
Development, Economy, Economic Growth, and Trade
Political Geography:
Africa and Tanzania

1496. China After Covid-19: Economic Revival and Challenges to the World

Author:
Alessia Amighini, Yukon Huang, Tyson Barker, Eduardo Missoni, Giulia Sciorati, Haihong Gao, Elisa Sales, Maximilian Kärnfelt, and Paola Magri
Publication Date:
06-2021
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
The coronavirus pandemic that has rocked China since December 2019 has posed a gruelling test for the resilience of the country’s national economy. Now, as China emerges from its Covid-induced "recession", it feels like the worst is behind it. How did China manage to come out almost unscathed from the worst crisis in over a century? This Report examines how China designed and implemented its post-Covid recovery strategy, focussing on both the internal and external challenges the country had to face over the short- and medium-run. The book offers a comprehensive argument suggesting that, despite China having lost economic and political capital during the crisis, Beijing seems to have been strengthened by the “pandemic test”, thus becoming an even more challenging “partner, competitor and rival” for Western countries.
Topic:
Politics, Science and Technology, Economy, Resilience, and COVID-19
Political Geography:
China, Europe, and Asia

1497. Handling "Value" in the US-China Conflict

Author:
Naoko Funatsu
Publication Date:
05-2021
Content Type:
Research Paper
Institution:
Japan Institute Of International Affairs (JIIA)
Abstract:
The escalating confrontation between the United States and China has been one of the most important issues in American foreign policy in recent years. The weight of US foreign policy toward China has increased as China's presence in the international community has grown. This is due to China's remarkable economic growth, and many countries around the world sought to incorporate the booming Chinese economy into the international economy to promote their own economic growth; the United States had been no exception. As globalization and China's economy continued to grow, however, the trade imbalance between the US and China expanded, and the trade deficit with China became an issue in the US. In the US presidential election of November 2016, Republican candidate Donald J. Trump made correcting the trade deficit with China a policy priority and was elected. When the administration took office in January 2017, it was marked by a discourse based on economic nationalism, one of the characteristics of a Trump administration committed to putting "America first".
Topic:
Foreign Policy, Globalization, Bilateral Relations, Economy, and Trade
Political Geography:
China, Asia, North America, and United States of America

1498. Goal-Based Global Governance Challenges: The Real Significance of the SDGs

Author:
Norichika Kanie
Publication Date:
05-2021
Content Type:
Research Paper
Institution:
Japan Institute Of International Affairs (JIIA)
Abstract:
In modern society, every issue is connected to another. As suggested in the proverb "When the wind blows, the bucket maker gains", various self-differentiated issues actually interrelate and influence each other in today's world, where globalization has made considerable progress and the Internet infrastructure has become widespred and continues to evolve. These issues can be broadly divided into three types: economic, social and environmental. At first glance, economic, social and environmental issues appear to be independent issues, but in fact they are deeply and strongly related. If you buy and drink bottled water from a vending machine to cope with "life-threatening" heat, for instance, you can rehydrate yourself as an immediate necessary measure against climate change. But, if the water bottle is a petroleum product, incinerating it as garbage also promotes climate change. If we turn on air conditioning, we may be able to escape the mortal danger posed by climate change. However, as long as the electricity is produced by coal-fired power plants, using it will also contribute to climate change.
Topic:
Environment, Governance, Economy, Sustainable Development Goals, and Society
Political Geography:
Global Focus

1499. Policy Paper: The impact of the Corona crisis on the economic sectors in the Gaza Strip

Author:
Raed Helles, Nevin Abdel Aal, and Ahmed Al-Sammak
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Pal-Think For Strategic Studies
Abstract:
The economy of Palestine is led to a recession and has had serious ramifications–mostly in a time of COVID-19 as a result of the strict adherence and concrete actions instituted by the government to help avert the disease from spreading in the enclave. However, the consequences of COVID extend to correlate the future of Palestine, not by affecting its individuals and governments only, but also all its sectors due to the loss of income for thousands of citizens. According to World Bank studies, in comparing with 2019, which witnessed difficult economic conditions for several reasons, including the Palestinian fiscal revenue leakage and the suspension of American aid, the economy might get down this year by 7.6% if Palestine returns gradually to normal and by 11% if the tough restrictions continue to be imposed.
Topic:
Economy, Public Health, Pandemic, and COVID-19
Political Geography:
Middle East, Israel, Palestine, and Gaza

1500. Platform mergers and antitrust

Author:
Geoffrey Parker, Georgios Petropoulos, and Marshall Van Alstyne
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Platform ecosystems rely on economies of scale, data-driven economies of scope, high quality algorithmic systems, and strong network effects that frequently promote winner-takes-most markets. Some platform firms have grown rapidly and their merger and acquisition strategies have been very important factors in their growth. Big platforms’ market dominance has generated competition concerns that are difficult to assess with current merger policy tools. We examine the acquisition strategies of the five major US firms—Google, Amazon, Facebook, Apple and Microsoft—since their inception. We discuss the main merger and acquisition theories of harm that can restrict market competition and reduce consumer welfare. To address competition concerns about acquisitions in big platform ecosystems we develop a four step proposal that incorporates: (1) a new ex-ante regulatory framework, (2) an update of the conditions under which the notification of mergers should be compulsory and the burden of proof should be reversed, (3) differential regulatory priorities in investigating horizontal versus vertical acquisitions, and (4) an update of competition enforcement tools to increase visibility into market data and trends.
Topic:
Markets, Digital Economy, Internet, Economy, and Innovation
Political Geography:
Global Focus and United States of America