Topic: Markets - CIAO Search Results

51. Risks and challenges to oil and gas markets in the current Middle East conflict

Author:: Colby Connelly, Emily Stromquist, Karen Young, Yesar Al-Maleki, and Nikolay Kozhanov
Publication Date:: 03-2024
Content Type:: Video
Institution:: Middle East Institute (MEI)
Abstract:: The Middle East Institute’s (MEI) Program on Economics and Energy cordially invites you to a panel discussion of the war-time threats to energy transit along the Red Sea corridor and to regional production facilities, within the context of broader supply-and-demand dynamics. Since Hamas’ Oct. 7 terrorist attack on Israel and subsequent war in Gaza, hydrocarbon prices have held relatively stable, although attacks by Houthi militants on shipping in the Red Sea could cause long-term market shifts and geographic segmentation. Why have we seen such a low impact on oil prices to date despite profound regional instability? What explains natural gas prices staying at historic lows? Are Gulf oil facilities at risk? What is the outlook for gas production in the Eastern Mediterranean? And how is OPEC considering outside supply competition and near-term demand? To answer these and other questions, MEI has convened five top US and regional energy and geopolitical risk analysts, who include contributors to MEI’s new edited volume Energy Transitions in the Middle East. They will reflect on their assessments of oil and gas markets prior to Oct. 7 as well as share their views on the current risks and challenges for fossil fuel producers in the region.
Topic:: Economics, Markets, Oil, Energy, and Natural Gas
Political Geography:: Middle East, Yemen, Gaza, and Red Sea

52. Virtual briefing: The risk of targeting regional energy assets in the ongoing Middle East conflict

Author:: Helima Croft, Colby Connelly, and Karen Young
Publication Date:: 10-2024
Content Type:: Video
Institution:: Middle East Institute (MEI)
Abstract:: Helima Croft, Colby Connelly, and Karen Young, discuss the risk of retaliatory strikes on regional energy facilities; the possible impact on Israel’s natural gas production and on its importers, including Egypt and Jordan; the potential spillover to the Gulf’s energy sector; as well as the relative likelihood of the conflict leading to a major supply shock in the global energy market. Speakers: Helima Croft Head of Global Commodity Strategy and MENA Research, RBC Capital Markets Colby Connelly Director, Economics and Energy Program, MEI Karen Young Non-Resident Senior Fellow and Chair of the Economics and Energy Program Advisory Council, MEI
Topic:: Markets, Imports, Energy, and Natural Gas
Political Geography:: Middle East, Israel, Egypt, and Jordan

53. Asset Ownership, Rates of Return, and the U.S. Working Class

Author:: Leila Davis and Charalampos Konstantinidis
Publication Date:: 12-2024
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: In this paper, we analyze the intersection of asset market participation and inter-class wealth inequality in the United States by showing that working-class households earn lower rates of return on their assets than non-working-class households. We, first, operationalize an empirical definition of working-class status using the Survey of Consumer Finances for 1989-2022. Using this classification, we, second, document that inter-class income and wealth inequality have risen since 1989. Third, we show that, with the exception of business assets, working-class households hold similar asset classes as non-working-class households and receive financial income. However, working-class households receive a 2.5 percentage point lower average rate of return than non-working-class households, conditional on observable demographic and economic differences across classes. This gap reflects differential returns on businesses and real estate. These results suggest that expanded asset market access in the U.S. has conferred unequal benefits by class status and widened inequalities along class lines.
Topic:: Markets, Inequality, Assets, and Working Class
Political Geography:: North America and United States of America

54. The Growth of Private Financial Markets

Author:: Lenore Palladino and Harrison Karlewicz
Publication Date:: 05-2024
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: Over the past decade, “private” financial markets, which face little oversight by regulators, have grown to the point where they dominate financial activity. Private funds have approximately tripled in size in the last decade to $26 trillion in gross assets (compared to the $23 trillion in the U.S. commercial banking industry). Private markets raise more in equity than public markets: in 2021, new stock issuances resulted in $434.7 billion, while private markets raised $1.73 trillion in committed funds that same year–almost four times as much. Private markets are structured differently–organized into funds by asset managers as limited partnerships, which shields general managers from liability. The primary dealers in these private markets are venture capital, private equity, private credit funds, and private real asset managers. In this working paper, we examine four institutional shareholder types: public and private pension funders, endowment plans, and foundations. Institutional shareholders now allocate 28-35% of their assets under management to the “alternative” assets of private markets. Pension funds alone currently account for $2.7 trillion in committed funds to private financial markets, the latter of which has ballooned to $26 trillion in gross assets. This development potentially represents new systemic risks to the economy at large and for the institutional shareholders participating in these markets.
Topic:: Economics, Markets, Regulation, and Financial Markets
Political Geography:: Global Focus

55. Scramble for Green Technologies: Strategies of Major Players and Serbia’s Opportunities

Author:: Mikhail Korostikov
Publication Date:: 09-2024
Content Type:: Commentary and Analysis
Institution:: Belgrade Centre for Security Policy (BCSP)
Abstract:: The struggle between the EU, the US and China for dominance in new technological niche markets has the potential to become the most important story of the next two to three decades, potentially overshadowing any ongoing military conflicts in the world. It is taking place on several fronts at once: artificial intelligence, new principles of industrial production (such as the use of robots or additive technologies), space exploration, and much more. This report explores the political and economic confrontation between the three sides regarding the green technology industry and draws certain conclusions regarding the implications of this confrontation for Serbia. The role of Serbia’s reserves of lithium and other minerals important for the latest high-tech industries could affect the country’s standing in the world in general, and its importance to the EU in particular. However, it is critical to ensure that Serbia maximises the opportunities associated with the exploitation of lithium and concentrates the maximum number of links in the value chain associated with the extraction, processing and utilisation of the valuable resource. It is equally important that the lithium mining process be carried out in accordance with the best environmental standards and, first and foremost, with the support of the environmental authorities of the European Union, potentially being the final beneficiaries of the project.
Topic:: Markets, European Union, Green Technology, Mining, Lithium, and Green Transition
Political Geography:: China, Eastern Europe, Serbia, and United States of America

56. Service Market Opening in Latin America and Its Effect on the Region's Manufacturing GVCs

Author:: Sungwoo Hong
Publication Date:: 05-2024
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Due to the accelerating digital transformation in the post-COVID-19 world, the share of service trade in the economies of major countries worldwide is expected to increase further. Services and participation in the global value chain (GVC) are closely related because services serve as a significant input factor in the manufacturing sector. The recent movement to open the service market in Latin American countries has an inherent policy goal of enhancing participation in the GVC centered on the manufacturing industry by facilitating the introduction of services within and outside the region in product trade. Korea’s exports are still concentrated on the trade of manufacturing-centered products, and improving competitiveness in the service sector is a challenge. In a situation where Korea's exports to the world are sluggish due to the spread of protectionism and delayed global economic recovery, the Korean government and companies need to move away from the traditional Korea-Latin America cooperation model that was focused on manufacturing-oriented product trade. In addition, they need to expand service trade and create new solutions in the service sector. Therefore, against this background, it is essential to understand the level of service market openness in major Latin American countries, provide information to governments and companies, and provide the logic for economic cooperation between Korea and Latin America in the service sector. This report briefly shows the status of service market opening in major countries in Lain America and empirical findings of relationships between service market opening and manufacturing GVCs of Latin America. As a result of reviewing the domestic laws of MERCOSUR and the Pacific Alliance in Latin America, the level of regulation on investment in the service sector has been lowered due to the past active policy of attracting foreign direct investment except for some cases. However, the level of service concessions in these countries was significantly lower than the level of investment liberalization based on domestic law. As a result of the empirical analysis, I found that when Latin American countries signed a bilateral service trade agreement with a Global North country, the agreement significantly strengthened the backward linkages of Latin American exporting countries. Among Latin American countries, when a country in the Global North concluded a service trade agreement with a Global North country, forward linkages of Latin American exporting countries also increased.
Topic:: Markets, Manufacturing, Trade, and Service Marketing
Political Geography:: South America and Latin America

57. The Letta and Draghi Reports: The Only Way to Go, Despite the Hurdles

Author:: Alekos Kritikos
Publication Date:: 11-2024
Content Type:: Policy Brief
Institution:: Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:: The Letta and Draghi reports begin with the same realisation, though they formulate it differently: that the international geopolitical environment has changed dramatically and that the EU must take immediate action as a result. The Letta report’s take-home message is that the Single Market must be transformed into something “much more than just a market”. Thus, research, innovation and education need to be integrated into its core, as a “fifth freedom”, and the Single Market extended to include the telecommunications, energy, financial services and defence sectors. There is fear at the heart of the Draghi report, fear of the “existential challenge” confronting the EU, which will require an extra €800 billion a year in investment. The report’s proposals are articulated around five major horizontal policies: closing the innovation gap, decarbonising the economy and making it more competitive, strengthening security and the defence sector and reducing dependencies in this area, financing investment, and strengthening EU governance. The Letta and Draghi reports agree on both the fields where intervention is required and the form such intervention should take. And while they differ in terms of the competition—and, still more, cohesion—policy they prescribe, they do so constructively while their proposals complement one another. In relation to Greece, the proposals made in both reports with respect to the defence industry, to reducing energy costs, and to the provision of generous funding for additional investment through —inter alia—joint borrowing, are of the utmost importance. No serious disagreement has been voiced with respect to the proposals made in the Letta and Draghi reports, apart from the predictable German reaction to additional funding and new joint borrowing, coupled with unfounded criticism of the proposals as ‘unfeasible’. The “New European Agreement on Competitiveness” adopted in Budapest on 8 November is a critical development, given that it adopts the bulk of the key approaches contained in the Letta and Draghi reports, and sets specific milestones for some, as well. The two reports stress that, even if certain recent developments around the world cannot be considered favourable for the EU (political crisis in Germany, economic problems in France, Trump’s election in the US), Europe still has the “weapons” it needs to reverse the situation. And while the Budapest summit decision may not have gone as far as the situation demands, it still adopted the bulk of the proposals made in the two reports, making it crystal clear that the European Union has taken the need to regain the initiative fully on board.
Topic:: Markets, European Union, Economy, Regional Integration, and Regional Economy
Political Geography:: Europe and Greece

58. An energy and sustainability road map for the Middle East

Author:: Ariel Ezrahi
Publication Date:: 11-2024
Content Type:: Special Report
Institution:: Atlantic Council
Abstract:: Global warming is impacting the Middle East at more than twice the global average. In a region already beset by territorial and religious conflicts, this is alarming: Beyond the immediate human suffering from war, the region’s people face severe consequences of global warming. While it is uncertain if humanity can entirely avert this crisis, it is clear that mitigation and adaptation measures are essential to address its worst effects. Climate change respects no borders; for instance, nature does not distinguish between Areas A, B, and C in the West Bank, nor does it differentiate between the rising sea levels along the shores of Tel Aviv and Beirut. Cross-border cooperation will be critical to implementing effective mitigation and adaptation measures. As temperatures rise and extreme weather events, such as intense but infrequent rainfall, become more common, countries in the region must work together to optimize and expand sustainable energy and water resources. This report was partially written prior to the October 7, 2023, attack by Hamas on Israel, which triggered the ongoing Gaza war. Beyond the physical reconstruction required in Israel and the Gaza Strip, the traumas on both sides of the border could take decades to heal. Now, with the death of Hamas leader Yahya Sinwar and Hezbollah leader Hassan Nasrallah, the region has a rare opportunity for rebuilding and peace. On the Israeli side, it is clear that new Israeli leadership will be critical for rebuilding and unifying the country, as well as for mending relations with the Palestinians and the wider region. Saudi Arabia has indicated it would need to see a clear path for an independent Palestinian state for normalization of its relationship with Israel to proceed. Other regional powers, such as the United Arab Emirates, Egypt, Jordan, and Bahrain, have cooled relations with Israeli Prime Minister Benjamin Netanyahu’s government. For there to be a realistic possibility of building on the Abraham Accords—or even taking small steps to increase cooperation in the region—a “New Middle Eastern Order” will need to be established. A comprehensive new US plan could shape this new order. The United States, seen by some in the region as disengaging, now has an opportunity to counter that perception by helping to establish a “New Middle Eastern Order” based on a tangible plan for strong intra-regional energy and climate-related cooperation, alongside efforts to facilitate a permanent solution to the Israeli-Palestinian conflict. For example, the energy and climate component could form a cornerstone of the US strategy for the region. The alternative is a region increasingly mired in conflict due to dwindling resources in the face of a worsening climate crisis and a deepening of existing conflicts fueled by a destructive Iranian agenda. Furthermore, this alternative risks exacerbating global conflict-driven emissions and environmental disasters, as seen recently with the Houthi attacks in the Red Sea. Although tangible cooperation on energy- and climate-related issues has so far been limited, this can—and indeed must—change. The purpose of this piece is to highlight some specific areas where cooperation can be undertaken and advanced under the task force platform outlined below.1
Topic:: Climate Change, Environment, Markets, Governance, Sustainability, and Energy
Political Geography:: Middle East, Israel, and Gulf Nations

59. Future-proofing the EU’s Investment Attractiveness: A Bold Reform Agenda for Competition Enforcement, Taxation and Digital Policy

Author:: Matthias Bauer, Dyuti Pandya, and Oscar du Roy
Publication Date:: 07-2024
Content Type:: Working Paper
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: Reducing the deterrent effects from EU and Member State laws in three key cross-sector policy areas – competition policy, business taxes and VAT, and digital policies – could significantly enhance the business environment within the Single Market and boost the EU’s attractiveness to both domestic and foreign investors. The EU’s future competitiveness is at risk due to a significant disparity in investments, particularly in technological innovation, compared to the US. Despite having a larger population and labour force, the EU lags behind in large business activities, with US firms consistently outspending their European counterparts in key tech-intensive sectors such as software, computer services, pharmaceuticals, and biotechnology. Moreover, China and other emerging nations are rapidly catching up, dramatically diminishing the EU’s relative economic and political influence on the global stage. The urgency for the EU to bridge these gaps is more critical than ever (Section 2). The EU’s profound investment gap highlights a systemic advantage for the US in fostering innovation and economic growth. The EU’s regulatory complexity, largely driven by legal fragmentation in horizontal policies, further exacerbate the situation, deterring cross-border activities reducing the region’s attractiveness to global investors (Section 3).
Topic:: Markets, Reform, European Union, Digital Economy, Investment, and Digital Policy
Political Geography:: Europe

60. A European circular single market for economic security and competitiveness

Author:: Heather Grabbe and Luca Léry Moffat
Publication Date:: 09-2024
Content Type:: Policy Brief
Institution:: Bruegel
Abstract:: If the European Union is to achieve a sustainable net-zero economy, resources need to be used much more efficiently. Extraction from nature and processing of materials are the principal causes of biodiversity loss and are also major sources of pollution, water stress and greenhouse gas emissions. Resources are used inefficiently currently because market and government failures create a nexus of disincentives and barriers to firms and individuals, hindering them in making resource-efficient choices. The most prominent failure is the artificial cheapness of raw materials because the environmental and human costs of extraction are not including in their prices. A powerful way to improve resource efficiency is to increase circularity, so that fewer resources are used to meet the same level of human need. This can be done by extending the duration of use and reuse of materials, and by reducing resource demand from the start by designing products and systems for optimal efficiency. A circular single market would allow faster de-risking from toxic dependencies and economic coercion by authoritarian regimes. It would increase resilience in the context of fragile supply chains while reducing instability from volatile commodity prices. Firm competitiveness would also be enhanced, given that European companies operate on a continent that is poor in energy and natural resources, and are thus very exposed to future scarcity of resources when climate impacts will make water and land scarcer. If firms were to optimise production and consumption systems for efficiency now, they would be ahead of the curve. To develop the circular economy further, the EU will need to spur investment. Public policy that sets common standards and a predictable regulatory framework would accelerate the development of markets for inputs such as recyclates and services such as repair, both in the EU and in trade partners. The EU has established a legislative framework for the circular economy but it needs scaling up in the forthcoming Circular Economy Act.
Topic:: Climate Change, Environment, Markets, European Union, Economic Security, and Resources
Political Geography:: Europe

61. Catch-up with the US or prosper below the tech frontier? An EU artificial intelligence strategy

Author:: Bertin Martens
Publication Date:: 10-2024
Content Type:: Policy Brief
Institution:: Bruegel
Abstract:: European Union policymakers want to close the artificial intelligence innovation gap with the United States, as a way to accelerate lagging productivity growth. The EU focus is on expanding an existing supercomputer network with more AI hardware and computing infrastructure, with taxpayer support. However, this computing infrastructure is not adapted to AI modelling. The cost of catching up with leading big tech AI computing centres is already prohibitive for EU budgets, and is set to become even more so. The hardware focus overlooks missing EU markets for complementary services that are required to set up a successful AI business: large-scale business outlets for frontier generative AI models to generate sufficient revenues to cover huge fixed model training costs, hyperscale cloud-computing infrastructure and private equity financing for AI start-ups. In the absence of (or with insufficient) complementary services markets in the EU, start-ups are forced to collaborate with US big tech firms. Injecting taxpayer subsidies to make up for these missing markets may further distort EU markets. Regulatory compliance costs, including uncertainty about the implementation arrangements for the EU Artificial Intelligence Act, add to market problems. The EU should address a wider range of market failures in its policy initiatives. It should strive to increase productivity growth below the AI technology frontier, by facilitating investment and applications of AI-driven services produced by derived and specialised generative AI models, or AI-applications that build on top of existing generative AI models. Building these below-frontier AI applications requires far less computing capacity and less heavy investment costs. Promoting the uptake of AI application services across a wide range of industries can substantially stimulate productivity growth. That requires a razor-sharp focus on pro-innovation guidelines, standards and implementation provisions for the EU AI Act, shortening the Act’s regulatory uncertainty horizon as much as possible, and facilitating collaborations between EU AI startups and big tech companies. Widening and deepening the EU private equity and venture capital market would also be very helpful.
Topic:: Markets, Science and Technology, European Union, Investment, and Artificial Intelligence
Political Geography:: Europe and United States of America

62. Rare Earths, Rare Opportunities: Australia’s Crucial Role in the Green Transition

Author:: Daniel Borer and Nhung Vu Thi Hong
Publication Date:: 04-2024
Content Type:: Commentary and Analysis
Institution:: Australian Institute of International Affairs (AIIA)
Abstract:: Rare Earth Elements are becoming increasingly important in the world’s green transition. Australia should become a more proactive contributor.
Topic:: Markets, Mining, Rare earth elements (REEs), Energy, and Green Transition
Political Geography:: Australia and Oceania

63. Sudan’s agricultural input supply in times of war

Author:: Anette Hoffmann and Laurens van den Tempel
Publication Date:: 12-2024
Content Type:: Special Report
Institution:: Clingendael Netherlands Institute of International Relations
Abstract:: Over a year and a half since the outbreak of the war in Sudan, food insecurity has reached unprecedented levels. Famine has been declared in multiple areas and experts warn that the country faces a food deficit of 750,000 m t this year, which is expected to increase to 1.9 million m t next year. According to the UN, over half of the population, approximately 25 million people, face acute food insecurity. With no end to the fighting in sight, the situation is likely to further deteriorate. As the war continues to rage in Sudan, farmers in some parts of the country have begun harvesting. Despite the ongoing fighting and the risks and uncertainties that this entails, the cultivation areas in the safer regions in the North and East have been expanded during this summer season, compared to before the conflict, due to the massive influx of refugees and the growing need for food and income. This is very much needed, since insecurity in large parts of the country prevents farmers from growing their crops. Nonetheless, multiple challenges threaten to undermine the current and future harvests. This study offers insights into Sudan’s agricultural input supply markets to inform preparations for the upcoming seasons. In addition, this research aims to contribute to a better understanding of the workings of the supply market for agricultural inputs. It presents first-hand evidence regarding key agricultural inputs, namely seeds, fertilisers and agrochemicals and explores how input supply has been affected and continues to be affected by the war. The aim of the study is to present entry points for donors and implementing partners to ease and improve the timely provision of critically needed agriculture inputs for the upcoming seasons. To this end, the report maps out Sudan’s agricultural input supply market before the war, assesses how input supply has been affected by the war and how chain actors have adapted to this impact, and concludes by presenting possible external interventions to optimise the agricultural input supply in the upcoming seasons.
Topic:: Agriculture, Humanitarian Aid, Markets, Food, and Food Security
Political Geography:: Africa and Sudan

64. EU Trade Policy Must Focus on Market Openness and New Partnerships

Author:: Claudia Schmucker
Publication Date:: 10-2024
Content Type:: Policy Brief
Institution:: German Council on Foreign Relations (DGAP)
Abstract:: Trade is the most important pillar of the EU’s dealings with third countries. To maintain this, the EU must refocus its trade policy on openness and partnerships. The new Commission needs to engage on all outstanding FTAs and consider pragmatic mini deals. Regardless of the outcome of the US elections, the EU needs to keep the United States as a partner and offer it potential opportunities. On a multilateral level, the WTO should be kept alive, focusing on trust building while advancing plurilateral deals.
Topic:: Markets, European Union, Partnerships, Trade Policy, and WTO
Political Geography:: Europe

65. Summary of the 182nd mBank-CASE Seminar

Author:: Ewa Balcerowicz
Publication Date:: 10-2024
Content Type:: Commentary and Analysis
Institution:: Center for Social and Economic Research - CASE
Abstract:: The seminar discussed the challenges and opportunities related to the integration of Ukrainian agriculture into the European market, a process that became particularly important after Ukraine started its EU accession process. Both Polish and Ukrainian agriculture share common traits, such as high food self-sufficiency levels and significant economic importance. However, there are notable differences—Ukraine has far larger agricultural resources, though its agricultural sector is underfunded, while Poland has made considerable progress due to EU support. A key concern is the risk of excessive competition between countries, which could harm European farmers. Experts emphasized that the development of Ukrainian agriculture should be based on synergy, and the accession process will require long-term negotiations and transitional periods. Differences in export structures were also discussed—Ukraine focuses on agricultural raw materials like grains and oils, while Polish exports are more diversified. The Common Agricultural Policy (CAP) will need to be reformed to support the agricultural sectors of both countries in a sustainable way, considering new challenges and promoting environmentally friendly practices.
Topic:: Agriculture, Markets, European Union, Economy, and Common Agricultural Policy (CAP)
Political Geography:: Europe, Ukraine, and Poland

66. Exchange Rate Pass-Around

Author:: Matthieu Crozet, Julian Hinz, and Federico Trionfetti
Publication Date:: 04-2023
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: In January 2015, The Swiss Franc (CHF) appreciated unexpectedly against the Euro by approximately 15%. We document a new fact: French firms that exported to both the Swiss market and the Eurozone also exhibited a sudden change in their export prices to the Eurozone. We coin this the “exchange rate pass-around” effect. We rationalise this fact with a simple model based on the endogenous decision of some firms to give up pricing-to-market and opt for single-pricing to all markets. An important implication of this finding is that single-pricing may be one of the causes of the incomplete pass-through. This mechanism has so far remained unexplored in the literature, which may have led to overestimating the importance of other factors. Based on monthly French export data, our empirical analysis confirms the existence of the pass-around. Firms directly affected by the CHF exchange rate shock increased their prices in neighboring markets by 0.8% compared to other exporters. The effect was stronger for firms with lower ex-ante price heterogeneity across markets and for firms with smaller trade costs to Switzerland. However, the effect was short-lived. As time passed, exporters tended to decouple the prices they set on the Swiss market from those for the Eurozone, and the pass-around effect faded.
Topic:: International Trade and Finance, Markets, Monetary Policy, European Union, and Exchange Rate Policy
Political Geography:: Europe

67. How Russia Brings Its Aggression Against Ukraine to The Global South

Author:: Ivan Ulises Klyszcz
Publication Date:: 04-2023
Content Type:: Special Report
Institution:: International Centre for Defence and Security - ICDS
Abstract:: 2022 was a wake-up call for the West. The response by the Global South to the war in Ukraine highlighted Russia’s enduring strengths in Africa, Latin America, the Middle East, and South and Southeast Asia. This report explores the evolution of Russia’s relations with the countries in the Global South and the ways Russia cultivates these relationships in pursuit of its foreign policy agenda. Moscow’s current interactions in the Global South are driven by the demands of its war of aggression, as well as by its long-term goal: to challenge the international order. The latter dictate several manoeuvres found throughout such engagements: strategic communications, market substitution and sanctions evasion, and regime sheltering. This report presents three case studies meant to illustrate how Russia’s relations with the Global South have evolved since 2022. First, Tunisia exemplifies a superficial partner, with Moscow’s main tool in the country being strategic communication aimed at shaping public opinion in its favour. Second, India is illustrative of a strategic partner whom Moscow tries to engage in order to substitute for lost energy markets and evade sanctions. Third, Myanmar represents a hierarchical relationship, in which the local regime depends on Moscow for diplomatic support and arms deliveries. Notwithstanding varied perspectives on and responses to Russia’s war of aggression in Ukraine, countries in the Global South have generally sought to prioritise their economy and security by attempting to strike a balance between Russia and the West. Aware of such desires, Moscow has been exploiting this situation to maintain its influence internationally. Challenging Russia in the Global South will put pressure on the Kremlin and limit its ability to conduct aggressive foreign policy – and wage war against Ukraine. The report concludes with six recommendations on how to counter Russia in the Global South.
Topic:: Cold War, Markets, Science and Technology, Communications, Arms Trade, Defense Industry, and Military
Political Geography:: Russia, Europe, Ukraine, Middle East, India, Asia, Tunisia, Myanmar, United States of America, and Global South

68. Putin the Green? The Unintended Consequences of Russia’s Energy War on Europe

Author:: Mitchell Orenstein
Publication Date:: 02-2023
Content Type:: Special Report
Institution:: Foreign Policy Research Institute (FPRI)
Abstract:: Both before and during its re-invasion of Ukraine in 2022, Russia cut energy supplies to Europe in an effort to force the continent to abandon Ukraine. Instead, Vladimir Putin accelerated Europe’s transition to green energy, decimating a key market for Russian exporters. Over the long term, Europe is well-positioned to win the energy war with Russia.
Topic:: Energy Policy, Markets, Renewable Energy, Energy Crisis, Russia-Ukraine War, and Invasion
Political Geography:: Russia, Europe, Eurasia, and Ukraine

69. Garbling an evaluation to retain an advantage

Author:: Ascencion Andina-Diaz and Jose A. Garcia-Martinez
Publication Date:: 07-2023
Content Type:: Working Paper
Institution:: Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:: We study the effects of introducing interpersonal comparisons on the decisions made by career concerned experts. We consider competition between two experts who may differ in their initial reputation. We obtain that whereas full transmission of experts' private information is an equilibrium when experts have the same initial reputation, this is not necessarily the case when they are heterogenous. In this case, we identify an incentive for the stronger expert to deliberately misreport her signal, aiming at garbling the evaluation of the principal to retain her advantage. In equilibrium, this expert may even completely contradict her signal and the other experts' decision. We discuss the implications of our results to different contexts, such as reaching consenses in a society, competition for attention, and misconception of the market's evaluation system.
Topic:: Economics, Markets, Experts, Career, Reputation, and Competition
Political Geography:: Global Focus

70. NERINT Strategic Analysis: The Brazilian Challenge of Reactivating UNASUR and Strengthening MERCOSUR

Author:: Leonardo Granato
Publication Date:: 06-2023
Content Type:: Journal Article
Journal:: AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:: Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:: In his third presidential term, President Lula has been devoting a large part of his government agenda to foreign policy, aimed at strengthening the country’s capacity to advance its interests and, within the aforementioned public policy, at rebuilding integration relations with neighboring countries. Faced with the spread of nationalism and protectionist postures in the midst of a complex international scene marked by the impacts of the Covid-19 pandemic, the war in Ukraine, and tensions between the United States and China, the Brazilian option is for the defense of peace, dialogue and cooperation, starting with its strategic environment represented by South America and Mercosur.With regard to the South American region, the Brazilian government’s ability to convene and unify perspectives was challenged by the heterogeneity of agendas and priorities of different countries, even among countries with progressive governments. In fact, the so-called “Consensus of Brasilia”, a joint declaration resulting from the presidential meeting of May 30, 2023, highlights the size of the aforementioned challenge, since there was no mention, in that declaration, of the Union of South American Nations (UNASUR) and its reactivation. Faced with its dismantling during the Bolsonaro government, carrying forward the Brazilian government’s priority objective of reactivating UNASUR will require, perhaps more than in the past, a broad effort to build consensus.With regard to Mercosur, also under a setback in recent years, Brazil will play, during the second half of 2023, the pro-tempore presidency of the bloc, which will represent the opportunity for the Brazilian state to project its foreign policy priorities, as well as the principles that guide its internal public policies. In President Lula’s own speech at the 62nd Mercosur Summit, which took place in Puerto Iguazú (Argentina) on July 4, 2023, the major issues to be privileged during his tenure at the head of the bloc were portrayed. Such matters refer, essentially, to the strengthening of Mercosur in its multiple dimensions, and to the conclusion of the bi-regional agreement with the European Union.
Topic:: Foreign Policy, Markets, Treaties and Agreements, Trade, and Lula da Silva
Political Geography:: Europe, Brazil, and South America

71. Korea has increased its lending to emerging-market and developing economies but faces risks if their debt problems grow

Author:: Julieta Contreras and Adnan Mazarei
Publication Date:: 07-2023
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics (PIIE)
Abstract:: Over the last few decades, South Korea has transitioned from an aid beneficiary to a provider of financial aid to emerging-market and developing economies (EMDEs). This Policy Brief examines Korea’s role as a creditor to EMDEs and how EMDE debt problems affect it as a creditor. For now, Korea’s direct exposure to EMDEs is not large. In 2021, the latest year with comprehensive data, the stock of Korea’s claims on EMDEs amounted to almost $11 billion, about 0.6 percent of its GDP. Although this share is larger than those of some countries with similar GDP per capita, such as Italy and Spain, it is well below the shares of others, such as China and Japan. The immediate risks from Korea’s lending are limited, but it is vulnerable to risks from a systemic EMDE debt crisis in other ways, particularly through trade. It is therefore in Korea’s interest to continue to play a constructive role in ongoing international efforts, especially through the G20, to establish more effective debt restructuring frameworks.
Topic:: Debt, Development, Emerging Markets, Markets, and Economies
Political Geography:: Asia and South Korea

72. America's payoff from engaging in world markets since 1950 was almost $2.6 trillion in 2022

Author:: Gary Clyde Hufbauer and Megan Hogan
Publication Date:: 12-2023
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics (PIIE)
Abstract:: International trade may not be as popular in the United States as it once was, but this updated PIIE study demonstrates that the payoff to the US economy from globalization has been significant. Gains from trade since 1950, facilitated by vastly improved transportation and communications, added up to $2.6 trillion in 2022, lifting US GDP by 10 percent. These gains averaged $7,800 per person and $19,500 per household in the United States in 2022. Despite these gains, trade barriers were erected under former president Donald Trump and continued under the Biden administration, spurred by concerns over trade-related job loss. These protectionist policies, coupled with the global financial crisis and the COVID pandemic, have slowed globalization. To be sure, trade has inflicted losses on certain US workers. Between 2001 and 2016, more than 300,000 workers annually lost or switched jobs because of imports. In comparison, more than 50 million workers change jobs each year. Americans enjoy large but less visible gains from trade through cheaper and more varied products and increased productivity at firms. Instead of restricting trade, US policymakers should adopt better safety nets for displaced workers and ensure that economic growth is more widely shared.
Topic:: Globalization, Markets, Labor Issues, Economic Growth, and Trade Policy
Political Geography:: North America and United States of America

73. Online Platform Regulation and Investment Attractiveness: A Look at the EU, the UK and Impacts on Small Open Economies

Author:: Matthias Bauer, Vanika Sharma, and Oscar du Roy
Publication Date:: 08-2023
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: Small trade- and investment-oriented economies like the United Kingdom (UK) should carefully consider whether to regulate online platform services based on presumptions rather than evidence that consumers are being harmed. Flimsily enforced platform regulation can have a chilling effect on investments in business expansion and innovation, particularly in technology-adopting industries. Several countries around the world are designing new competition policies that specifically target large digital platforms. The theory behind these policies is grey. There are political concerns about the impact of various aspects of platforms on society, especially regarding the collection and safety of data. However, practices that harm consumers – traditionally a key motivation of competition enforcement – are very rare. Indeed, the success stories of large tech platforms demonstrate that they offer strong benefits and conveniences to millions of business users across a wide range of industries. Marginal costs of supply, high-quality services, continuous technological advancements, and platforms’ ability to drive productivity growth have enabled especially small businesses to thrive and compete in domestic and international markets. Against this background, it is highly questionable why some governments, with the backing of power-seeking competition regulators, are aiming to legally interfere in services provided by large technology companies. An important consequence that has so far received little attention from policymakers and competition authorities is the impact of platform regulation on a country’s investment attractiveness. It is obvious that bans and restrictions on corporate conduct cause regulated companies to abstain from investments and establish new business elsewhere. What is less clear is the effect of regulation on investments by companies that extensively adopt platform services to reduce costs, speed-up innovation, and expand market opportunities. In this policy brief, we argue that access to integrated and internationally traded platform services is increasingly important for a country’s investment attractiveness, even more so for smaller countries. Access to advanced technologies and the utilisation of network effects create a virtuous cycle of economic opportunities, investments, value creation, and trade. Discretionary and presumption-based competition enforcement, as adopted in the EU, risks hurting smaller countries in particular. The EU has chosen the path of proscriptive and protective policymaking with the DMA to achieve industrial and trade policy goals rather than defending competition in the Single Market. UK competition policy risks being driven by institutional interests and ideological considerations, which could potentially lead to the adoption of a regulatory landscape that is even more restrictive than that of the EU, undermining Britain’s ambitions for economic and innovation leadership.
Topic:: Markets, European Union, Regulation, Economy, Investment, Trade, and Online Platforms
Political Geography:: United Kingdom and Europe

74. Adverse Selection Among Early Adopters and Unraveling Innovation

Author:: Rory McGee
Publication Date:: 01-2023
Content Type:: Working Paper
Institution:: Centre for Human Capital and Productivity (CHCP), Western University
Abstract:: I provide an equilibrium analysis of “selection markets”: where consumers not only vary in how much they are willing to pay, but also in how much they cost to the seller. The model provides a joint explanation for three empirical phenomena: low uptake of existing products, slow demand for new products, and market inactivity despite unmet demand. I characterize when early adopters are more adversely selected in new markets. This lowers demand, increases costs, and leads markets to unravel prematurely. With endogenous market entry for new products (e.g., reverse mortgages, annuities), extended patents serve as de facto time-varying subsidies.
Topic:: Economics, Markets, and Innovation
Political Geography:: Global Focus

75. Are new EU data market regulations coherent and efficient?

Author:: Bertin Martins
Publication Date:: 12-2023
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: Technical restrictions on access to and re-use of data may result in failures in data markets and data-driven services markets. This paper examines three new EU data regulations (the European Health Data Space, the Data Act and the Digital Markets Act) that vary substantially in mandatory access measures intended to overcome these market failures. It applies three economic criteria, economies of scope in re-use and in aggregation of data, and data supply-side failures, to assess the efficiency of these regulations in overcoming market failures and coherence across regulations. Variations might be justified by particular sectoral market conditions. The European Health Data Space proposal comes close to an ideal data access regime for primary re-use and secondary pooling of health data. The Data Act opens access to data from tangible products only. It strengthens the market power of data holders by giving them quasi-ownership rights over data. It introduces new obstacles to re-use that are likely to minimise its impact. The Digital Markets Act opens access to market data pools collected by very large gatekeeper platforms. Some access provisions are vaguely defined. Others facilitate access to data pools but may risk unwinding the benefits of data-driven network effects. Th ere is scope for significant improvement in these data regulations.
Topic:: Markets, European Union, Regulation, and Digital Markets Act (DMA)
Political Geography:: Europe

76. European Union debt financing: leeway and barriers from a legal perspective

Author:: Sebastian Grund and Armin Steinbach
Publication Date:: 09-2023
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: We explore legal leeway for two approaches to debt-financing European Union spending: creation of extra-budgetary, one-off and temporary EU funds to finance European public goods (similarly to NextGenerationEU), and debt-financing the EU’s regular budget, hence creating an on-budget, permanent borrowing capacity at EU level. We find that NGEU could in principle be replicated. This would require an amendment to the Own Resources Decision (ORD) – a unanimous Council decision that designates the main sources of EU financing and requires ratification by each member state – to authorise borrowing and specify how the borrowing proceeds are to be used. However, this approach would be constrained by the legal requirement that financing EU spending through ‘other revenues’ (as opposed to ‘own resources’ designated as such in the ORD) remain exceptional. As a result, no permanent EU tasks could be financed through NGEU-like funds and NGEU-like financing could not exceed financing through ‘own resources’. We also find that, while EU primary law does not stop the EU from debt-financing its budget, the scope for EU borrowing would remain severely limited compared to a sovereign state. The permissible amount of borrowing must be specified in the ORD and the EU must be able to meet its debt service in any year, which must be secured by a sufficient amount of (non-borrowed) own resources. Finally, considerable flexibility exists for the spending of borrowed funds, regardless of whether this occurs through new NGEU-like extrabudgetary funds or on budget. Borrowed funds could be allocated to climate funding, cohesion policy, infrastructure or research. In the event that borrowing proceeds are established as an ‘own resource’ in an appropriately amended ORD, borrowed funds could even be used for general financing of the EU budget.
Topic:: Debt, Markets, European Union, Finance, and Public Goods
Political Geography:: Europe

77. The Ukrainian war economy

Author:: Dmytro Boyarchuk and Marek Dabrowski
Publication Date:: 07-2023
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: Ukraine has been subject to full-scale Russian aggression since 24 February 2022, with major implications for Ukraine’s economic performance and economic management. Martial law has temporarily restricted civil and political rights and allowed the government to introduce command management in the economic sphere. These war-related prerogatives have been used only partly (for example, in the energy and transportation sectors, restricting convertibility of the hryvnia and banking transactions with foreign currency), while the dominant role of the private sector and market forces has been maintained in other respects. As a result of war damages and territorial losses, Ukraine’s real GDP contracted by about 30 percent in 2022. Ukraine also experienced severe balance-of-payments and budget tensions in the first months of the war. Intensification of foreign financial aid from the second half of 2022 helped to achieve relative macroeconomic stability in the first half of 2023. The prospects of the Ukrainian economy depend on the length of the war, associated damages and the size of external financial aid. Before February 2022, Ukraine’s record of economic and governance reform was mixed; the war stopped most reforms. On the other hand, obtaining European Union candidate status in June 2022 provided a new incentive to implement comprehensive governance reforms related, in particular, to the judicial system, media, national minorities, public transparency and fighting corruption.
Topic:: Markets, Economy, Banking, and Russia-Ukraine War
Political Geography:: Europe and Ukraine

78. India’s Regulatory Shift: An Examination of Five Agencies of the Post- Liberalisation Era

Author:: Arkaja Singh
Publication Date:: 02-2023
Content Type:: Working Paper
Institution:: Centre for Policy Research, India
Abstract:: This paper explores the design of Indian regulatory agencies established post-liberalisation from an administrative perspective. Regulatory agencies were set up to replace state inefficiencies, and to discipline profligate state agencies, even as much as they were a response to state-market reorganisations and the challenge of privatization. Regulation provided an opportunity for upper levels of the Indian bureaucratic state to recast their power, with the idea that it would provide a framework for economic rationality, independence and technical specialization to take centre-stage. In actual practice however, the design of each of the regulatory agencies is shaped largely by pre-existing legal frameworks and institutions, and the agencies have remained quite tied in with their counterpart departments and on retired bureaucrats. However, in spite of these limitations, these agencies have some common features imbued by legislative mandate and organisational design which are unique in the context of the Indian state. They have focus and stability, a degree of functional independence, and most importantly, a concentration of power, which enables them to think through and implement complex policy transitions from multi-year and context-specific perspectives. The paper builds on learnings from a series of conversations with regulatory agency chairpersons in order to identify what regulatory governance is, in terms of the powers and mandate of the regulatory agencies and what makes them distinctive from the rest of public administration.
Topic:: Markets, Governance, Regulation, Bureaucracy, and Liberalization
Political Geography:: South Asia and India

79. The Lessons We Choose to Draw

Author:: Paul J. McKinney
Publication Date:: 08-2023
Content Type:: Special Report
Institution:: Center for Contemporary Arab Studies (CCAS)
Abstract:: In September 2003, just a few violent months after the Bush administration proclaimed major combat operations had ended, the Coalition Provisional Authority (CPA) – the US-led civilian body charged with administering occupied Iraq – organized a two-day workshop in Baghdad to identify best practices for countries transitioning from state-led to market economies. Seeking to draw lessons that may be applicable to Iraq, the CPA invited former ministers and finance officials from Central and Eastern European countries to share their experiences. Evidently impressed by Poland’s “shock therapy,” in which Warsaw introduced a drastic neoliberal package during the country’s emergence from Soviet domination in the early 90s, the CPA appointed the former Polish finance and prime minister responsible for those reforms, Marek Belka, to head the CPA’s Office of Economic Policy. With Belka at the helm, lessons learned from Poland’s transition would be universalized and superimposed onto Iraq, with little regard to contextual factors. Iraq was, after all, seen as a blank canvas upon which the West could project its own visions. Zealously driven by a belief that markets are the most efficient way to organize a society and, by extension, to optimize individual freedom, the CPA issued what can only be described as the economic equivalent to the U.S. military’s “shock-and-awe” campaign. Within a year, the CPA issued an astoundingly high number of Orders to build the new neoliberal state. Some of the most notable included, for example, selling about 200 state-run enterprises, eliminating the right to unionize in most sectors, outlawing labor strikes, opening Iraq’s banks to foreign ownership and control, mandating a regressive flat tax on income, lowering the corporate rate to a flat 15%, eliminating taxes on profits repatriated to foreign-owned businesses, and even prohibiting Iraqi farmers from re-using “protected” varieties of genetically modified seeds.
Topic:: Security, Markets, Reform, and Iraq War
Political Geography:: Iraq and Middle East

80. China’s Changing COVID-19 Policies: Market and Public Health

Author:: Zhun Xu
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:: After the outbreak of COVID-19 in early 2020, China took fast and decisive measures to successfully contain the spread of the virus within its borders. While the rest of the world saw huge human and social costs in the pandemic, the Chinese mainland for about two years was largely free from COVID. The zero-COVID model, however, met great challenges by early 2022. Despite some efforts to save the zero-COVID model, in November 2022, the Chinese government abruptly abandoned its signature COVID controls during the pandemic and switched to the opposite. This article reviews the evolution of the Chinese COVID policies and places the dramatic turns in the context of the changing Chinese political economy. The findings show that the shifting class interests and actions were an important force behind China’s retreat from zero- COVID.
Topic:: Markets, Political Economy, Public Health, and COVID-19
Political Geography:: China and Asia

81. Relational Contracts in the Rwandan Coffee Chain

Author:: Kasper Vrolijk
Publication Date:: 01-2023
Content Type:: Policy Brief
Institution:: German Institute of Development and Sustainability (IDOS)
Abstract:: Businesses often engage in long-term relationships with firms and people they trust and know, in which they informally sell and exchange information and services (Baker, Gibbons, & Murphy, 2002). As postulated by Arrow (1972, p. 357), “virtually every commercial trans-action has within itself an element of trust”. Within these relations, trust is defined as the belief that market actors adhere to informal contract arrangements. Particularly in lower-income countries, which are often described by distortions – such as inefficient institutions (e.g., contract enforcement), imperfect markets (e.g., access to credit), and market distortions created by firms (e.g., lobbying) (Atkin & Khandelwal, 2020) – such relational contracts are important for commercial interactions locally and internationally and are an important complement to formal contracts. In low-income economies, how are relational contracts used to foster economic activity? What policy measures can be used to aid trust-based relational contracts, or to address its inefficiencies? This Policy Brief presents the results from a study on the Rwandan coffee chain, which surveyed coffee mills, farmers and exporters on their performance and relational contracts. The main findings are that relational contracts are an important component at two levels of the chain: (a) between cooperatives, washing stations and mills, and its members, and (b) between mills and buyers. Mills, for example, offer informal provisions to its farmers to ensure timely delivery of high-quality beans. Exporters and mills invest in trust-based relationships with buyers by spending on getting market access and productivity-increasing activities (e.g., investing in new machinery) in anticipation of future buyer demand and prior to formal contracting. Buyers likewise invest in creating and maintaining relational contracts to local firms by providing informal technical and financial support. With the exception of certification programmes, few of the activities that both mills and buyers undertake are formally enforced through contracts but instead are done at the discretion of producers and buyers. Such informal relations are important and necessary because in low-income countries there can be market risks (e.g., limited access to inputs for farmers) that, if not addressed, affect the coffee supply and quality. The coffee sector in Rwanda is to a large extent com-parable to the coffee sector in other countries and other agricultural supply chains in low-income countries (like labour- and quality-intensive products, such as tea and cocoa). Therefore, this study may offer some valuable lessons to policy makers: 1. Promote brokerage services to support trust-based relationships between local firms and international buyers. Brokerage services include programmes (either by governments of international organisations) that bring together and facilitate buyer-supplier linkages. These services have proven successful in creating long-term buyer-supplier relationships, while also facilitating financial and technical support for local firms and market access. There is a role for both international organisations and national governments to provide financing or facilitate such services. 2. Use certification to formalise quality upgrading and market access. Certification programmes include credible, internationally recognised standards and evaluation protocols that are used across multiple commodities. Certification can help formalise some of the quality upgrading and market access activities that firms and farmers otherwise would receive informally through relational contracts. There are roles for national governments to promote and subsidise certification practices and for international organisations and certification providers to expand such services.
Topic:: Development, Markets, Business, and Contracts
Political Geography:: Africa and Rwanda

82. The geopolitics of European wheat

Author:: Sébastien Abis
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Robert Schuman Foundation (RSF)
Abstract:: With its twenty-seven Member States, the European Union is a major agricultural and cereal-producing power. And with 450 million inhabitants, it is the world's second largest consumer of wheat after China[1]. More than just a single market, the EU has also become the world's largest wheat producer, although the Middle Kingdom regularly challenges this position[2] , especially when the harvests on the Old Continent are not as good. The European Union is also now the world's second largest wheat exporter, behind Russia but ahead of the United States[3] . These geo-economic advantages are based on a political project: union. The figures on European wheat, disaggregated and observed by member state, would not be so comforting. But is the European Union aware of its agricultural strengths and does it want to maintain them in the 21st century? Why does wheat embody both power as well as a dose of experimentation?[4]
Topic:: Agriculture, Markets, European Union, Food Security, Geopolitics, Economic Competition, and Wheat
Political Geography:: Europe

83. New biotechnologies, allies for food safety in the face of climate change. Where does Europe stand?

Author:: Agnès Ricroch
Publication Date:: 09-2023
Content Type:: Working Paper
Institution:: Robert Schuman Foundation (RSF)
Abstract:: The food market is currently marked by soaring prices and shortages due to supply shocks in the wake of the Covid-19 pandemic, but also to repeated extreme weather events linked to climate change; and finally, to geopolitical conflicts, in particular Russia's invasion of Ukraine. All innovations must be used to ensure food security, particularly for the European Union.
Topic:: Climate Change, Markets, European Union, Food Security, Innovation, and Biotechnology
Political Geography:: Europe

84. Analysis of Trade Pattern Between the EAEU and South Korea

Author:: Zoia Podoba
Publication Date:: 05-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The Eurasian Economic Union (EAEU) is a relatively newly-formed regional integration bloc. It evolved on the basis of the Customs Union of Russia, Kazakhstan, and Belarus in 2015 with Armenia and Kyrgyzstan joining the agreement. The foreign economic aspirations of the EAEU as a single market, in the context of tense relations with Western partners, are turned towards Asian countries. The pivot to the East is supported by the ideological concept of “Greater Eurasia” (sometimes translated as “Big Eurasia”), which implies more extensive cooperation with the economies of Central, East, and South Asia. At a time when political efforts to bring the Union and Korea closer together have been put on hold, the paper aims to provide a comprehensive description of the bilateral merchandise trade pattern between the EAEU and the Republic of Korea to verify if statistical evidence on bilateral trade provides ground for the development of guiding actual policy deliberations in the future. Trade Intensity Index (TII), the sectoral bilateral coefficient of revealed comparative advantages, and the standard Grubel-Lloyd index have been used in order to analyze the bilateral trade between the EAEU and the Republic of Korea.
Topic:: Economics, Markets, Regional Integration, and Trade
Political Geography:: Eurasia, Asia, and South Korea

85. India’s Medical Devices Sector: A Window of Opportunity for South Korea

Author:: Ram Singh
Publication Date:: 07-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The medical devices sector in India has been rapidly growing and evolving, driven by factors such as increasing healthcare expenditure, rising awareness of advanced medical technologies, government initiatives, and a growing population with a rising demand for healthcare services. The Indian medical devices market was valued at approximately $12 billion in 2021 and is expected to reach $50 billion by 2025, indicating significant growth potential. The sector covers a wide range of products, such as diagnostic imaging equipment, surgical instruments, patient monitoring devices, implants, consumables, and healthcare IT solutions. The market is primarily driven by imports, with domestic manufacturing accounting for a smaller share (Dang and Sharma 2019). However, the government has been promoting domestic manufacturing with an aim to reduce import dependency, the Medical Devices Policy-2023 of India should be seen in the same context.
Topic:: Markets, Trade, Industry, Healthcare System, and Medical Devices
Political Geography:: South Asia, India, Asia, and South Korea

86. Liberalizing Markets for Environmental Goods and Services

Author:: Jukwan Lee
Publication Date:: 10-2023
Content Type:: Working Paper
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The international community is striving to establish trade rules for the environmental market in order to secure a free and fair trade order and contribute to achieving carbon neutrality and sustainability. This paper examines the related discussions, reviews the current status and market openness of environmental goods and services, and analyzes the effects of environmental market regulation and liberalization on the global and Korean economies.
Topic:: Environment, Markets, Economy, Trade, and Liberalization
Political Geography:: South Korea and Global Focus

87. The structural improvement for Korea's foreign exchange market and its implications on Korean economy

Author:: Hyo Sang Kim, Sungbae An, and Young Sik Jeong
Publication Date:: 12-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The Korean government recognizes the imperative to improve the structure of the foreign exchange market to align with global standards, aiming for increased openness and competitiveness. The plan involves a twofold approach. One is a comprehensive reform of foreign exchange laws and regulations, notably the Foreign Exchange Transaction Act enacted in 1999, to adapt to evolving economic environments. The other is the systematic improvement of the foreign exchange market infrastructure to make the market more accessible to foreign investors. Through this procedure, Korea desires to develop a deeper and more market-oriented foreign exchange market, thereby improving the convenience and efficiency of participants. Also, it helps to internationalize the Korean won in the longer term. Amidst Korea's export-led growth and aging population, improving the foreign exchange market becomes pivotal for supporting the positioning of the Korean financial market, fostering financial openness, and sustaining long-term economic growth.
Topic:: Foreign Exchange, Markets, Economy, and Economic Growth
Political Geography:: Asia and South Korea

88. CBDCs and Their Implications for the International Monetary System

Author:: Robert Fay and Angelo Federico Arcelli
Publication Date:: 11-2023
Content Type:: Special Report
Institution:: Centre for International Governance Innovation (CIGI)
Abstract:: Central bank digital currencies (CBDCs) promise to revolutionize the way the world uses money, but there are questions around the impacts on monetary regulation and financial markets that still need to be answered. Unlike other types of digital currencies, such as cryptocurrencies and stablecoins, CBDCs are considered more trustworthy as a national currency because they are issued by national banks. But moving from traditional paper- and coin-based currencies to a digital platform raises many questions around monetary and financial stability, as well as governance (for example, related to privacy, competition, consumer protection and so on) that are currently being explored. Co-hosted by the Centre for International Governance Innovation, the Fondazione Mario Arcelli ETS, Istituto di Studi per l’Economia Applicata and UniCredit Group, the conference on “Central Bank Digital Currencies (CBDC) and Their Implications for the International Monetary System” looked at the possible implications of CBDCs on monetary policy and financial markets.
Topic:: Markets, Monetary Policy, Regulation, and Central Bank Digital Currencies (CBDCs)
Political Geography:: Global Focus

89. Effective Shareholder Engagement to Address the Food Sector’s SDG-Related Impacts in Mexico

Author:: Nora Mardirossian
Publication Date:: 11-2023
Content Type:: Special Report
Institution:: Columbia Center on Sustainable Investment
Abstract:: Globally, there is growing investor engagement on environmental and social issues. Over 550 financial institutions participate in net zero alliances,1 the largest-ever number of ESG-related resolutions was filed in 2023 (over 500),2 and global sustainable fund assets hit nearly $2.8 trillion at the end of June 2023.3 Corporate sustainability reporting standards and regulations – many of which are international, have extraterritorial reach, or cover global value chains – have proliferated and are reinforcing the larger trend. Traditional investing has historically focused on mitigating financial risk without being cognizant of other important external risks. Sustainable investing takes a wider view that is explicitly interested in sustainability issues, but some approaches are more progressive than others. Some sustainability or ESG investment efforts focus on sustainability impacts only to the extent they are linked to or overlap with financial materiality. Some large institutional investors, particularly those considered to be universal owners, express an understanding that system-level issues like climate change, biodiversity loss, and inequality present risks to the entire economic system, and thus to their entire portfolios.4 Some mainstream investors have acknowledged they have a responsibility to manage severe environmental and social risks, in line with international standards.5 Other smaller and philanthropic funds use an impact investing strategy that focuses more on driving sustainability impacts, with a less explicit focus on returns.6 Rather than investment decision making (i.e., deciding what to invest in either by screening or excluding companies or entire sectors that are seen as high risk or by targeting investments in areas that have some kind of positive sustainability potential through impact investing), this report focuses on the more effective strategy for public equity investors to influence companies’ SDG-related impacts: active ownership through shareholder engagement and advancing and voting on resolutions.7 Through active ownership, investors use their leverage to influence the conduct and decision-making of the firms they own, to avoid sustainability and human rights risks or to capitalize on sustainability and human rights opportunities. This report considers how active investors can best exercise their leverage in the particular context of Mexico’s food sector. Although active ownership efforts have grown globally, they remain limited in Mexico and other emerging markets. Investors have an opportunity to do more to help address critical SDG-related issues in these contexts through their active ownership efforts. By doing so, they can be more responsible in ensuring respect for human rights, protecting shared systems, and supporting their long-term financial interests. Importantly, they can also ensure they comply with – and support their portfolio companies in complying with – emerging legal frameworks requiring reporting and due diligence on the impacts of their global value chains, including in Mexico.8 This report summarizes key opportunities and barriers facing investors who wish to more actively drive positive SDG outcomes in Mexico’s food sector through shareholder engagement. First, this report discusses the food sector-related SDG challenges globally and then those that are most important in Mexico. It identifies influential companies investors can engage with and surveys benchmarks on those companies’ SDG disclosure. Next, the report provides an overview of the status of and legal context for sustainable investing in Mexico. Then, it considers the extent and nature of investor influence over companies in Mexico. Based on this analysis, the report concludes by providing recommendations for investors on influencing portfolio food sector companies’ management of their SDG-related impacts in Mexico. The recommendations draw upon existing standards and guidance that bear on the roles and responsibilities of investors. This report’s primary aim is to provide guidance to Mexican and foreign institutional investors who can use their shareholdings to engage with food sector companies with a footprint in Mexico. Other stakeholders may also find this report valuable, including those interested in opportunities for the financial sector to advance the SDG-alignment in the Mexican food sector or any sector in any comparable emerging market.
Topic:: Markets, Food Security, Sustainable Development Goals, Investment, Sustainability, and Shareholder Value
Political Geography:: North America and Mexico

90. The Fruits of Opportunism: The Making of the World’s Largest For-profit Education Industry in China

Author:: Le Lin and Qin Gao
Publication Date:: 10-2023
Content Type:: Video
Institution:: Weatherhead East Asian Institute, Columbia University
Abstract:: Supplemental education, such as test-preparation coaching and after-school tutoring, has become increasingly influential in shaping educational outcome and social inequality in China, U.S. and around the world. This study examines the last forty years’ making of the world’s largest for-profit education industry—China’s supplemental education industry (the Industry)—on the margin of China’s socialist education system. How and why has the Industry privatized, marketized and become globally financialized, despite the Chinese state’s restrictive policies? Drawing on in-depth interviews, internal archives, and participant observations on 28 leading supplemental education organization, the study finds that the ambiguity of the Industry empowered socially marginalized entrepreneurs to enter this previously state-dominated market and found opportunistic organizations. With their opportunistic practices being made effective and invisible under ambiguity, opportunistic organizations as a prototype of private enterprises expanded the boundaries of market operations, facilitated the retreat of the state and fostered the Industry’s privatization and marketization. This study illustrates that while opportunism leaves destruction in its wake, it can also drive the formation and evolution of a market. The study also has implications for institutional change and social stratification during China’s market transition. This event is part of the 2023-2024 lecture series on “Labor Market Transformations in China" and is hosted by the Weatherhead East Asian Institute and cosponsored by Columbia's China Center for Social Policy.
Topic:: Education, Markets, Privatization, and Industry
Political Geography:: China and Asia

91. The Anatomy of Cyber Risk

Author:: Rustam Jamilov, Hélène Rey, and Ahmed Tahoun
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: This paper employs computational linguistics to introduce a novel text-based measure of firm-level cyber risk exposure based on quarterly earnings conference calls of listed firms. Our quarterly measures are available for more than 13,000 firms from 85 countries over 2002-2021. We document that cyber risk exposure predicts cyber attacks, affects stock returns and profits, and is priced in the equity option market. The cost of option protection against price, variance, and tail risks is greater for more cyber-exposed firms. Cyber risks spill over across firms and persist at the sectoral level. The geography of cyber risk exposure is well approximated by a gravity model extended with cross-border portfolio flows. Back-of-the-envelope calculations suggest that the global cost of cyber risk is over $200 billion per year.
Topic:: Economics, Markets, Cybersecurity, Business, and Risk
Political Geography:: Global Focus

92. Betting on Black Gold: Oil Speculation and U.S. Inflation (2020-2022)

Author:: Carlotta Breman and Servaas Storm
Publication Date:: 06-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Sharp increases in systemically important crude oil prices have been a major cause of the recent surge in the inflation rate in the U.S. This paper investigates the extent to which the increase in oil prices can be attributed to excessive speculation in the oil futures market. Our analysis suggests that excessive speculation in the crude oil market has been responsible for 24%-48% of the increase in the WTI crude oil price during October 2020-June 2022. These estimates translate into an oil price increase of around $18-$36 per barrel and an increase in the U.S. PCE inflation rate by circa 0.75 to 1.5 percentage points during the same period. We complement the analysis with an empirical investigation of the crude oil market which shows that (speculative) long non-commercial open-interest positions in oil futures have increased considerably relative to short non-commercial positions. We further find that higher futures prices for crude oil ‘Granger-cause’ oil spot prices, the futures prices of corn and soybeans and the fertilizer price. These econometric results show that oil speculators have to be held accountable for not just raising oil prices, but also driving up food commodity prices. We finally discuss measures to clamp down on excessive speculation in oil in order to eliminate its systemically adverse consequences for the U.S. economy.
Topic:: Economics, Markets, Oil, Inflation, and Speculation
Political Geography:: North America and United States of America

93. The Horizontal Merger Efficiency Fallacy

Author:: Mark Glick, Gabriel A. Lozada, Pavitra Govindan, and Darren Bush
Publication Date:: 08-2023
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The Department of Justice and Federal Trade Commission Merger Guidelines (the “Merger Guidelines”), including the much improved latest revision in 2023 (the “New Merger Guidelines”), have continued to perpetrate what we call in this paper the horizontal merger efficiency fallacy. The fallacy arises because in the Guidelines the term “efficiencies” has become unmoored from its foundations in economic theory and has been reduced to the business school construct of cost savings. We show that cost savings can only be considered universally socially beneficial by acceptance of what is termed “the Consumer Welfare Standard” (antitrust) or “the surplus theory of welfare” (economics), a theory that has been discredited and abandoned by welfare economists. In economic theory, efficiency means Pareto Efficiency. We explore the various attempts to tether the cost savings definition of efficiency to Pareto Efficiency and explain why these attempts have failed. We conclude that there is no sound way to theoretically reconcile cost savings with the economic meaning of efficiencies. We then move beyond the efficiency fallacy and show how modern welfare economics can be used to integrate Congressional antitrust goals into the New Merger Guidelines. This requires abandoning the unsupported “standard deduction” for efficiencies and replacing it with an evidence-based assessment of how a specific merger under review potentially impacts Congressional antitrust goals. This change renders the present efficiency rebuttal section of the New Merger Guidelines superfluous, and we provide specific reasons why this section as currently drafted is flawed and should be jettisoned.
Topic:: Economics, Government, Markets, Business, and Efficiency
Political Geography:: Global Focus

94. Energy, Inflation and Market Power: Excess Pass-Through in France

Author:: Axelle Arquie and Malte Thie
Publication Date:: 10-2023
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We explore how, in the French manufacturing sector, producer prices vary with market power during a severe episode of energy price hikes (between January 2020 and December 2022). Our work provides micro-level empirical evidence in favor of a role for firms' market power in explaining inflation. Using a rich dataset on French manufacturing firms' balance sheets, we first estimate markups at the firm-level, and aggregate them at the sectoral level. We then study the response of the producer price index (PPI) to a change in spot energy prices, depending on average market power within sectors. We show that in sectors with higher markups, prices increase relatively more: in the least competitive sector, firms pass through over 115% of the energy shock, implying an excess pass-through of more than 15 percentage points. In addition, we analyze in greater detail the mechanisms that might be behind our results: we discard the possibility that the pricing behavior might be driven by a "liquidity buffer rationale", implying that the excess pass-through we identify is detrimental to consumers.
Topic:: Markets, Inflation, Manufacturing, Energy, and Markups
Political Geography:: Europe and France

95. Reasons Behind Words: OPEC Narratives and the Oil Market

Author:: Celso Brunetti, Marc Joëts, and Valérie Mignon
Publication Date:: 09-2023
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We analyze the content of the Organization of the Petroleum Exporting Countries (OPEC) communications and whether it provides valuable information to the crude oil market. To this end, we derive an empirical strategy which allows us to measure OPEC’s public signal and test its credibility. Using Structural Topic Models, we identify in OPEC narratives several topics related to fundamental factors such as demand, supply, and speculative activity in the crude oil market, highlighting that OPEC announcements are highly linked to oil market volatility and traders’ positions. Most importantly, we find that OPEC communication is credible, reduces oil price volatility, and prompts market participants to rebalance their positions.
Topic:: Markets, Oil, OPEC, Trade, and Volatility
Political Geography:: Global Focus

96. Securing Foreign Markets: Exports, Relational Specificity and New Investment Locations

Author:: Giorgia Giovannetti, Gianluca Santoni, and Giulio Vannelli
Publication Date:: 02-2023
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: In this article we examine how the need to secure profit streams from exports has affected the location choice of new foreign investments by French manufacturing firms. Motivated by the observation that most firms entering a new foreign country do not establish a production unit there or decrease their exports, we develop a simple theoretical framework to guide our analysis and provide empirical evidence to support this “market securing” mechanism. Our results confirm that companies tend to locate new investments in countries that account for a larger share of their past exports; allowing for better monitoring of the foreign market, the investment prevents the disruption of the relationship, whose impact on profits would be more detrimental in the case of more important foreign partners. A 10 percent increase in bilateral exports increases the probability of investing by 3.4 percent. Consistent with our mechanism, given the same volume of exports, firms prefer countries that purchase goods with higher relational specificity as finding new buyers for these goods would imply higher costs if the relationship was broken.Exporting at least one good with relational specificity above the 75th percentile increases the probability of investing by 2.2 times compared to exporting more generic goods (below the 50th percentile).
Topic:: Markets, Foreign Direct Investment, Investment, Exports, and Manufacturing
Political Geography:: Europe and France

97. The Post-COVID Consensus

Author:: Shahid Yusuf
Publication Date:: 10-2023
Content Type:: Policy Brief
Institution:: Center for Global Development (CGD)
Abstract:: Development economics is turning a full circle with a difference. This paper addresses the circling back to the policies in vogue during the 1980s and earlier, including industrial policies, coupled with protectionism; accounts for the regression to earlier certitudes after an extended spell of globalization underpinned by market fundamentalism; and indicates how a transforming global environment has enlarged the policy agenda. There is a new policy consensus in the making, which borrows some elements of the Washington Consensus but goes beyond to encompass a broader policy agenda.
Topic:: Development, Markets, Poverty, Inequality, Economic Development, and COVID-19
Political Geography:: Global Focus

98. Rethinking Gas Diplomacy in the Eastern Mediterranean

Author:: International Crisis Group
Publication Date:: 04-2023
Content Type:: Special Report
Institution:: International Crisis Group
Abstract:: Major gas finds in the eastern Mediterranean seabed over the last ten years have fuelled ambitions to link the region’s energy markets and, in turn, bring its countries in conflict to the negotiating table. These great expectations have proven outsized, but smaller-scale objectives are achievable.
Topic:: Diplomacy, Markets, Gas, and Energy
Political Geography:: Turkey and Eastern Mediterranean

99. Digital Sovereignty: For a Schuman Data Plan

Author:: Arno Pons
Publication Date:: 01-2023
Content Type:: Policy Brief
Institution:: Robert Schuman Foundation (RSF)
Abstract:: On 9 January, the European Commission launched the first cooperation and monitoring cycle for the achievement of the European Union’s digital decade by 2030. If, in the digital field, Europe faces issues of sovereignty, it is because it has left the sector open for over twenty years to the American Tech giants, who have imposed a game whose rules that have never been understood here. Either because these rules were inaccessible to the European Union (Moore and Metcalfe laws), or because we accepted that there were no rules of the game (code is law).
Topic:: Markets, Science and Technology, Infrastructure, Law, European Union, Data, European Commission, and Digital Sovereignty
Political Geography:: Europe

100. Energy investment in a time of inflation

Author:: Charles Lichfield and Joseph Webster
Publication Date:: 01-2023
Content Type:: Policy Brief
Institution:: Atlantic Council
Abstract:: High rates of inflation across the world are forcing central banks to reluctantly tighten monetary policy despite accompanying recession risks. Moreover, restricted credit access could jeopardize energy investments, particularly for capital-intensive clean energy projects, potentially rendering the world more vulnerable energy to price shocks, which are a significant contributor to the current crisis. This paper briefly considers the macroeconomic drivers of inflation in late 2022, including Russia’s war in Ukraine and uncertainties around energy supply, supply-chain resets, and lingering COVID-19 disruptions, before examining the persistent energy underinvestment of the past decade and how this has left markets exposed to varying degrees. As such, this paper also considers how private capital can accelerate cleaner energy adoption, suited to different markets’ unique conditions and needs. Borrowing costs will rise, but this doesn’t have to bring the transition to a standstill. With the Great Moderation of low volatility, interest rates, and inflation perhaps a relic of the past, assets offering inflation protection, such as infrastructure, may become increasingly attractive to investors. There is a fear that global inflation will sharply curtail energy investment into emerging markets. The fear is justified. Higher interest rates in developed markets mean higher rates of return which will lure emerging markets investors back to the US and Europe. Still, it’s not all bad news for emerging markets. Quasi-state actors like Pension and Sovereign Welfare funds are interested in very long term, high-yield projects—two criteria to which emerging market energy infrastructure correspond. Disruptions to interest rates and inflation, triggered in part by energy underinvestment, will cause disparate impacts in different markets. Inflation is not, perhaps, everywhere and always a monetary phenomenon. Energy investment faltered from 2014 to 2020, despite low interest rates. Meanwhile, aggregate supply shocks—first due to COVID, then from Putin’s invasion of Ukraine—have pressured energy production and prices, raising inflation and necessitating interest rate hikes. The consequences of persistent energy underinvestment are now becoming apparent. The need for new energy infrastructure cannot be met without private investment. This was the case when inflation was lower; it is even more important now.
Topic:: Environment, Markets, Oil, Governance, Gas, Economy, Investment, Inflation, and Energy
Political Geography:: Global Focus

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COLUMBIA UNIVERSITY PRESS