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7951. Formula for a Crisis: Protectionism and Supply Chain Resiliency—the Infant Formula Case Study

Author:
Scott Lincicome, Gabriella Beaumont-Smith, and Alfredo Carrillo Obregon
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
It has become accepted wisdom in Washington that the COVID-19 pandemic revealed how openness to international trade and investment increases U.S. vulnerability to economic shocks and contributes to widespread shortages of food, medicine, and other essential goods. This official narrative, however, ignores ample economic research showing that, while disruptions are inevitable in a modern economy, the alternative to free trade—a protectionism‐​driven onshoring of global supply chains—carries its own risks and can even heighten vulnerability by inhibiting natural market adjustments to economic shocks. The infant formula crisis, which lasted for most of 2022 and was unique to the United States, provided an unfortunate real‐​world lesson in this regard.
Topic:
International Trade and Finance, Free Trade, Resilience, COVID-19, and Supply Chains
Political Geography:
North America and United States of America

7952. The Ukraine effect: demise or rebirth of the global order?

Author:
Bobo Lo
Publication Date:
05-2023
Content Type:
Commentary and Analysis
Institution:
Lowy Institute for International Policy
Abstract:
The Russian invasion of Ukraine has sharpened the commitment of Western governments to a liberal vision of international order. But it is a different story elsewhere. Many countries, particularly in the Global South, regard the rules-based order as an artificial Western construct, and the Ukraine war as a matter of geopolitics rather than norms and principles. Events in Ukraine have reinforced Washington’s views about two competing visions of global order — one democratic, the other autocratic. However, such binarism has little resonance beyond the West. For the Global South, the divide that matters is with the Global North. This is not only about relative influence and status in the international system, but also diverging priorities. A rules-based international order is achievable, but not as commonly imagined in the West. The post-Cold War template of unalloyed US global leadership and Western-dominated institutions is no longer tenable. The only viable order is one that is more inclusive and representative, reflecting a world where power is increasingly diffuse, and global cooperation is critical in meeting threats such as climate change and human insecurity.
Topic:
Multilateralism, International Order, and Russia-Ukraine War
Political Geography:
Russia and Ukraine

7953. Chips, subsidies, security, and great power competition

Author:
John Edwards
Publication Date:
05-2023
Content Type:
Commentary and Analysis
Institution:
Lowy Institute for International Policy
Abstract:
Government subsidies to industry in leading economies are large and growing, with potentially deep, wide-ranging, and unpredictable consequences for the world. It is not clear what rules, if any, will apply in this new era of industry competition, nor whether the measures will be effective in denying frontier technology to rival economies. The impacts of industry subsidies and export controls, including for countries such as Australia, hang on their implementation — beneficial in so far as they speed tech innovation, but detrimental if they split the global economy into competing blocs.
Topic:
Security, Economy, Subsidies, Competition, and Microchips
Political Geography:
Australia and Global Focus

7954. Southeast Asia Aid Map - Key Findings Report

Author:
Alexandre Dayant, Grace Stanhope, and Roland Rajah
Publication Date:
06-2023
Content Type:
Commentary and Analysis
Institution:
Lowy Institute for International Policy
Abstract:
Official development finance plays an important role in financing Southeast Asia’s development, equivalent to around 10% of total government development spending in the region. China is Southeast Asia’s single largest development partner and leads infrastructure financing. Yet, implementation problems have seen the scale of China’s financing decline in recent years. Traditional development partners collectively still dominate development financing in Southeast Asia at 80% of the total. The multilateral development banks lead the way, followed by Japan, Europe, and South Korea. The United States and Australia are mid-sized players. India and the Middle East have become notable sources of non-traditional development finance, with the Islamic Development Bank playing an important role. Climate development finance is increasing, but Southeast Asia will need more support if it is to transition towards resilient, low-carbon development. Intraregional development cooperation is growing, but only makes up a small part of development finance in Southeast Asia.
Topic:
Climate Change, Development, Humanitarian Aid, Finance, and Economy
Political Geography:
Asia and Southeast Asia

7955. Follow the money: connecting anti-money laundering systems to disrupt environmental crime in the Amazon

Author:
Melina Risso, Carolina Andrade Quevedo, Lycia Brasil, Vivian Calderoni, and Maria Fe Vallejo
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Igarapé Institute
Abstract:
Environmental crime became the world’s third most lucrative illicit economy after drug trafficking and smuggling, with estimates of $110 to $281 billion in annual profits. Between 2006 and 2016, environmental crimes grew at a rate of 5% to 7% per year, a pace two or three times faster than that of global GDP growth. Money laundering is part of the criminal machinery that plunders the Amazon Rainforest. The study “Follow the Money: connecting anti-money laundering systems to disrupt environmental crime in the amazon” reveals the need for systems, agencies, and institutions responsible for preventing money laundering to turn their attention to the connections between this illicit practice and environmental crimes. The Igarapé study shows that the money laundering cycle follows three stages before the laundered funds can enter the financial system: placement, layering, and integration. However, not all proceeds from criminal activity are directly laundered into the formal financial system. Thus, informal diversification constitutes the process of moving illegal flows into the informal economy. It is estimated that 30% of the money to be laundered is used to pay the operating expenses of illicit economies. Cash transactions, divided into small amounts and deposited by “money mules,” are used to finance the hiring of precarious labor, accommodations, food, security, transportation, health services, leisure, and machinery, for example. The remaining 70% of illicit proceeds are formally inserted into the financial system. The study also recalls that the World Bank estimated in 2019 that governments lose between 6 and 9 billion dollars in tax revenue each year due to illegal logging. Similarly, other environmental crimes such as illegal mining, especially of gold and diamonds, generate between 12 and 48 billion dollars in revenue. In 2018, Interpol’s Global Illicit Flows Atlas found that illegal logging accounted for a percentage between 15% and 30% of the global timber trade, calculated between 51 billion and 152 billion dollars per year. The illegal logging industry is responsible for up to 90% of deforestation of tropical forests in African countries such as the Democratic Republic of Congo. Combating illicit financial flows is a powerful tool for dismantling illegal economies. It becomes even more relevant when it is identified that illicit financial flows fuel an ecosystem of environmental crime composed of a convergence of environmental and non-environmental crimes, such as corruption, fraud, tax evasion, and others.
Topic:
Security, Environment, Financial Crimes, Money Laundering, and Illicit Financial Flows
Political Geography:
Brazil, South America, and Amazon Basin

7956. Harnessing Public Employment Programmes' Potential: An Intervention Brief Focusing on Youth Inclusion in South Africa's Community Work Programme

Author:
M. Langa
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
Centre for the Study of Violence and Reconciliation (CSVR)
Abstract:
Youth continue to be worst affected by social and economic issues such as unemployment, substance abuse and violence (ILO, 2021; United Nations, 2011). South African youth are no exception to this claim, experiencing the world’s highest rate of unemployment as well as some of the highest rates of homicide and gender-based violence (Clifford, 2020; Rebello, 2021). These challenges have gained increased recognition from stakeholders, such as the South African government, with the Presidential Youth Employment Initiative representing one of many recent initiatives. This intervention brief aims to contribute to conversations around how to better address the challenges faced by South African youth. It builds on research conducted by the Centre for the Study of Violence and Reconciliation (CSVR), which focused on how public employment programmes, specifically the Community Work Programme (CWP), may contribute to youth social and economic inclusion, which may further assist in reducing the vulnerability of South African youth. This brief highlights how some youth have negative perceptions of the CWP, which primarily stem from the nature of the activities carried out by the CWP and a lack of accurate knowledge about the programme. Examples from four CWP sites highlight how youthoriented activities may attract greater interest in the programme among youth. It also highlights how youth have benefitted and can continue to benefit from the programme.
Topic:
Government, Employment, Youth, Unemployment, and Inclusion
Political Geography:
Africa and South Africa

7957. Trade Shocks and Social Mobility: The Intergenerational Effect of Import Competition in Brazil

Author:
Andrés César, Matias Ciaschi, Guillermo Falcone, and Guido Neidhöfer
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
This paper investigates whether the impact of trade shocks on employment and wages persists across generations. Using an instrumental variable strategy on survey data with retrospective information on parental employment, we study the consequences of increased Chinese import competition in Brazilian industries on individuals with differently exposed fathers. Results show that several years after the shock, children of more exposed fathers have lower education and earnings, lower chances of formal jobs, and are more likely to rely on social assistance. These effects are substantial for children from disadvantaged background, indicating that the shock had a negative impact on intergenerational mobility.
Topic:
Trade, Imports, Economic Competition, and Social Mobility
Political Geography:
Brazil and South America

7958. The Effects of Differential Exposure to COVID-19 on Educational Outcomes in Guatemala

Author:
Andres Ham, Emmanuel Vazquez, and Monica Yanez-Pagans
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
This paper studies the effects of differential exposure to COVID-19 on educational outcomes in Guatemala. The government adopted a warning index (ranging from 0 to 10) to classify municipalities by infection rates in 2020, which was then used by the Ministry of Education in 2021 to establish a “stoplight” system for in-person instruction. Using administrative panel data for all students in Guatemala, the study employs a difference-in-differences strategy that leverages municipal differences over time in the warning index to estimate the effects of the pandemic on dropout, promotion, and school switching. The results show that municipalities with a higher warning index had significantly larger dropout, lower promotion rates, and a greater share of students switching from private to public schools. These effects were more pronounced during the first year of the pandemic. The findings show differential effects by the level of instruction, with greater losses for younger children in initial and primary education. The results are robust to specification choice, multiple hypothesis adjustments, and placebo experiments, suggesting that the pandemic has had heterogeneous consequences.
Topic:
Education, Government, COVID-19, and Schools
Political Geography:
Central America and Guatemala

7959. The Impact of Robots in Latin America: Evidence from Local Labor Markets

Author:
Irene Brambilla, Andrés César, Guillermo Falcone, and Leonardo Gasparini
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We study the effect of robots on labor markets in Argentina, Brazil, and Mexico, the major robot users in Latin America, during the period 2004{2016. We exploit spatial and time variations in exposure to robots arising from initial differences in industry specialization across geographic locations and the evolution of robot adoption across industries, to estimate a causal effect of robots on local labor market outcomes. We find that district’s exposure to robots causes a relative deterioration in labor market indicators such us unemployment and labor informality. We document that robots mainly replace formal salaried jobs, affecting young and semi-skilled workers to a greater extent, and that informal employment acts as a buffer that prevents a larger increase in unemployment.
Topic:
Unemployment, Robotics, Labor Market, and Informal Economy
Political Geography:
Brazil, Argentina, Latin America, and Mexico

7960. Inequality of Opportunity and Income Redistribution

Author:
Marcel Preuss, Germán Reyes, Jason Somerville, and Joy Wu
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We examine how people redistribute income when there is uncertainty about the role luck plays in determining opportunities and outcomes. We elicit redistribution decisions from a U.S.- representative sample who observe worker outcomes and whether luck magnified workers’ effort (“lucky opportunities”) or determined workers’ income directly (“lucky outcomes”). We find that participants redistribute less and are less reactive to changes in the importance of luck in environments with lucky opportunities. Our findings have implications for models that seek to understand and predict redistribution attitudes, and help to explain the gap between lab evidence on support for redistribution and U.S. inequality trends.
Topic:
Inequality, Redistribution, and Income
Political Geography:
North America and United States of America