Topic: Markets - CIAO Search Results

1. The Polish Economy 2023 and Beyond: How to Mend Home Loans

Author:: Andrzej Reich, Dariusz Filar, and Michal Polasik
Publication Date:: 01-2024
Content Type:: Working Paper
Institution:: Center for Social and Economic Research - CASE
Abstract:: The subject of this publication, reflecting the discussion held between experts on 30 March 2023, is that of housing loans in Poland. The publication focuses primarily on discussing the state of mortgages (at the end of the first quarter of 2023). This state is the effect of (a) legislation, (b) institutional solutions, (c) past processes in the financing of housing loans, and recently also (d) the high level of inflation dampening both lending by the banks and the level of interest among bank customers. The publication's second purpose is to present recommendations which, once put into effect, could rectify today’s lamentable situation. All of the proposals presented in this publication lead to one general recommendation: the answer to the current shortcomings lies not in isolated, single changes; what is essential is a new system for the market. This new system should be (a) flexible, (b) free of legal risk while at the same time (c) better protected against market risk, and (d) it should also contain a more comprehensive range of products; on this market (e) the state, as the regulator, should intervene ex-ante and not only ex-post (as has been the case in Poland for the last 20 years), while (f) customers should have the essential minimum of financial knowledge, first and foremost regarding awareness of the risk related to, which by their very nature are long-term loans.
Topic:: Markets, Economy, Interest Rates, Risk, Mortgages, Banking, Loans, and Financial Education
Political Geography:: Europe and Poland

2. How Safe is Eastern Mediterranean Gas?

Author:: Colby Connelly, Gregory Brew, and Karen Young
Publication Date:: 01-2024
Content Type:: Video
Institution:: Middle East Institute (MEI)
Abstract:: The Middle East Institute (MEI) hosted an on-the-record briefing to discuss the security of offshore gas fields in the Eastern Mediterranean, and the state of the international gas market given the ongoing tension and conflict in the Middle East.
Topic:: Security, Markets, Gas, and Conflict
Political Geography:: Middle East and Eastern Mediterranean

3. India’s Service Sector: New Areas for Future Cooperation

Author:: Hyoungmin Han
Publication Date:: 01-2024
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Given the growing significance of the Indo-Pacific region, the strategic importance of India is on the rise. With its considerable population and economic potential, India offers many opportunities for cooperation in various sectors. However, past cooperation between Korea and India has focused on the manufacturing sector. In order to consolidate economic ties be-tween Korea and India and to access the growing Indian market, cooperation in various industries, including services, is necessary. In this article, we will explore key aspects of India’s service industry and policy implications for better cooperation between two countries.
Topic:: Economics, International Cooperation, Markets, Bilateral Relations, and Manufacturing
Political Geography:: South Asia, India, South Korea, and Indo-Pacific

4. The Russia Factor in China’s Relations with the West

Author:: Klaus W. Larres and Lea Thome
Publication Date:: 04-2024
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: Tension between China and the Western world has been a characteristic of global affairs for the better part of the last decade. Notwithstanding Russia’s full-scale invasion of Ukraine in February 2022, the United States continues to view China as its greatest global rival and competitor. In fact, many policymakers in Washington (though by no means all of them) view China as an existential threat to America’s global influence and predominance. As the European Union and its 27 member states are not among the world’s superpowers, the Europeans have a somewhat more relaxed attitude toward China. Still, according to an important policy statement issued by the EU Commission in 2019, Brussels has come to see Beijing not only as a “partner and competitor” but also as a serious “systemic rival.” This refers less to geopolitical concerns but very much to global governance issues and geoeconomic, trade, and investment relations with China. The EU is deeply concerned about the continuing lack of reciprocity of market access, intellectual property theft, and China’s frequently state-subsidized competition regarding cutting-edge technology products, including solar panels, EV vehicles, and many other products, which may soon swamp the EU market. The EU Commission has launched an investigation into China’s production of EV vehicles and also Beijing’s shipbuilding industry, which it suspects may well work on the basis of rather unfair and highly subsidized support from the Chinese state.
Topic:: Foreign Policy, Markets, Geopolitics, Economy, Strategic Competition, and Production
Political Geography:: China, Europe, Asia, and United States of America

5. The Battle for Green Supremacy: Carbon Markets, Artificial Intelligence, and the Problem of Climate Finance

Author:: Carlos Roa and Shubham Dwivedi
Publication Date:: 04-2024
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: Observe the bee as it pollinates flowers, fruits, vegetables, and a wide variety of other crops; according to the United Nations’ Food and Agriculture Organization, around one-third of the world’s food production depends on their little wings. Watch as the beaver builds its dam, shaping the landscape of its local environment. Its pond stores carbon, improves water quality, creates a suitable habitat to support biodiversity, and helps reduce climate impacts. One cannot help but conclude that some higher order guides the work of these and other creatures; someone or something seems to be managing the delicate ecology of our world. Unfortunately, human beings are not as adept at such complex environmental management. As the world increasingly bears witness to the dramatic effects of climate change, the urgency for decisive action has never been more critical. With the planet’s average temperature continuing to rise, resulting in more frequent, severe, and unusual weather events, the global community faces a stark reminder of the imperative to mitigate this environmental degradation. The upcoming UN Climate Change Conference in Baku (COP29) represents a pivotal moment for states to commit to ambitious strategies and deepen international collaboration in the fight against climate change. At the forefront is the pressing need to explore and affordably implement effective mechanisms that can significantly reduce carbon emissions on a global scale.
Topic:: Markets, Climate Finance, Artificial Intelligence, and Carbon Emissions
Political Geography:: Global Focus

6. Competing Ideas: Canada’s Competition Reform Conversation

Author:: Vass Bednar and Keldon Bester
Publication Date:: 04-2024
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation (CIGI)
Abstract:: The Government of Canada’s recent review of and updates to the Competition Act have sparked a closer examination of how competition is protected and promoted in Canada. Competition affects all Canadians, especially in the face of rising costs of living and a shrinking number of competitors in key markets. Yet the laws that govern competition are not easily understood by average consumers, leaving them out of the public policy conversation. This paper looks at why better competition law is needed and examines previous reform efforts.
Topic:: Markets, Reform, Public Policy, and Competition
Political Geography:: Canada and North America

7. Is Guanxi Changing? Referral Hiring and Social Networks in China

Author:: Elena Obukhova and Yao Lu
Publication Date:: 04-2024
Content Type:: Video
Institution:: Weatherhead East Asian Institute, Columbia University
Abstract:: What is the role of guanxi in China today? To answer this question, Professor Elena Obukhova examines the relationship between social networks and referral hiring. In the first study, she compares China and the US. In the second study, she explores differences between China’s provinces. 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:: Markets, Labor Issues, Social Networks, and Hiring
Political Geography:: China, Asia, and United States of America

8. Market power and merger control in South Africa

Author:: C. Friedrich Kreuser, Michael Kilumelume, and Rulof Burger
Publication Date:: 05-2024
Content Type:: Working Paper
Institution:: United Nations University
Abstract:: We estimate structural, materials, and labour markups for the South African economy at the three-digit industry level for 2012–19. The fall in structural labour and materials markups found for the numerical majority of industries are generally isolated to smaller industries, with industries accounting for a higher proportion of sales generally experiencing smaller downward shifts. We show that materials-based markups are increasing over this period. Upward markup pressure in structural and labour markups are primarily driven by compositional shifts of surviving firms, while materials markup growth is driven by the average firm in a given sector. We show that merger intensity is positively related to structural markup growth, with a 1% increase in the proportion of cumulative mergers over 2013–18 being related to around a 0.27% increase in structural markup growth over the period from 2012 to 2019. We find that large vertical mergers are positively related to structural and materials markup growth while being negatively related to labour markup growth. Large horizontal mergers generally increase labour and structural markups.
Topic:: Markets, Economy, Industry, and Mergers and Acquisitions
Political Geography:: Africa and South Africa

9. The flaws in project-based carbon credit trading and the need for jurisdictional alternatives

Author:: Byron Swift, Ken Berlin, George Frampton, and Frank Willey
Publication Date:: 04-2024
Content Type:: Policy Brief
Institution:: Atlantic Council
Abstract:: This issue brief highlights several significant, and at times unresolvable, problems with the project-based approach to carbon credit trading, the purpose of which is to reduce deforestation and sequester carbon. Beginning with first-hand observations of the principal author during his experience with forest conservation efforts in the tropics, the brief describes the challenges that arise when this crediting model is implemented in the field, particularly in rainforests and other remote areas of the world. The publication then assesses the three critical structural problems with project-based credit trading that lead to a fundamental lack of integrity in such programs: The intractable challenges of a project-based regulatory structure involving difficult-to-prove requirements of additionally and leakage prevention. The major transaction and intermediary costs that can amount to half of project funding. The credit duration that is far less than the life of the additional CO2 emissions that are consequently emitted. The analysis also explains how economic forces and incentives exacerbate these problems, particularly with programs that are carried out by commercial credit traders as opposed to nonprofit entities. Finally, this brief discusses better alternatives, such as jurisdictional programs administered by governments or Indigenous associations, that could more effectively reduce emissions and strengthen the social fabric of communities required to assure credit integrity, accurate measurement, and adequate co-benefits.
Topic:: Climate Change, Environment, Markets, Governance, Carbon Emissions, Energy, and Energy Transition
Political Geography:: Global Focus

10. Digital services for e-government: opportunities for a future 2.5 billion African demographic market

Author:: Nii Simmonds
Publication Date:: 06-2024
Content Type:: Special Report
Institution:: Atlantic Council
Abstract:: In partnership with Africa Development Solutions (ADS) Group, the Africa Center released a report on “Digital services for e-government: Opportunities for a future 2.5 billion African demographic market” by Atlantic Council, GeoTech Nonresident Senior Fellow, Nii Simmonds. This report argues that e-government solutions have the potential to revolutionize service delivery across the African continent. E-government services refers to the process of providing technology-enabled public services. With Africa’s population projected to reach 2.5 billion people by 2050, nearly one-quarter of the world’s population, countries like Egypt, Ethiopia, Nigeria, Kenya, and the Democratic Republic of Congo will need to strengthen their government and infrastructure to manage the administration of critical services. As the middle class continues to expand, so will the demand for access to everyday services such as healthcare, renewing a driver’s license, and filing tax returns. This report highlights the potential for growth in African markets through e-governance and the importance having strong policies and frameworks in place to secure data. Additionally, the report offers case studies on Estonia, Canada, and India, three countries that have made tremendous commitment to bridging the gap between citizens and government through digital service delivery. With key recommendations for institutions ranging from African governments and regional bodies to DFIs and private sector companies, it is clear that each have an important role to play in the digitization of public services in Africa.
Topic:: Government, Markets, Economy, Business, and E-Government
Political Geography:: Africa

11. How Huawei Weathered the Storm: Resilience, Market Conditions or Failed Sanctions?

Author:: Hosuk Lee-Makiyama and Robin Baker
Publication Date:: 02-2024
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: Huawei is exhibiting stoic resilience in the face of US sanctions, economic downturns, and the slow pace of 5G investments. There is a narrative that the company has been propped up by the Chinese government, but the key to Huawei’s resilience is multifaceted. Through pre-emptive stockpiling and ingenuity, the company has continued to fulfil its base station orders and defend its market shares abroad. Concurrently, Huawei has made an autonomous business decision to reinvest its earnings and intensify R&D to secure its supply chains against political risks and diversify into new business areas. Successful forays into semiconductors, cloud services and energy grids have also been facilitated by a capital structure that lends itself to long-term planning. Huawei’s survival is not necessarily a lesson in the futility of sanctions to stifle technological progress. However, it does show that muddled political objectives and inconsistent implementation will yield potentially contrary outcomes. At the same time, factors that contribute to Huawei’s resilience also highlight the infighting and vulnerabilities of listed firms like Mavenir, Ericsson and Nokia.
Topic:: Markets, Sanctions, Digital Economy, Resilience, and Huawei
Political Geography:: China, North America, and United States of America

12. Trading Up: An EU Trade Policy for Better Market Access and Resilient Sourcing

Author:: Fredrik Erixon, Oscar Guinea, Philipp Lamprecht, Oscar du Roy, Elena Sisto, and Renata Zilli
Publication Date:: 05-2024
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: Europe’s competitiveness could be substantially improved by a trade policy that facilitates more trade and other forms of cross-border exchange. The evidence is clear: the EU trades less with the rest of the world than would be expected given the size of its economy. With 85 percent of global growth happening outside of the EU – and with an increasing share of all new technologies, innovations, patents, human capital, and R&D expenditure emerging in other parts of the world than Europe – the EU needs to find better ways to integrate with international markets. It is now becoming urgent for the EU to revive its international trade policy. Europe’s increasing detachment from global markets lead to two major economic concerns: deteriorating market access and less capability to build economic resilience. Market access can be defined as an export challenge, as EU firms face increasing trade barriers that hinder their ability to sell products and services abroad. These barriers ultimately limit the EU’s ability to scale up production, specialise, and increase R&D spending. Economic resilience is an import challenge. To become more resilient, the EU must diversify its sources of supply, particularly for critical raw materials, and secure a stable and frictionless access to foreign high-end goods, services, and technologies. The next five years present a critical opportunity for the EU to address the challenges limiting the contribution of international trade to EU’s competitiveness. This Policy Brief outlines seven trade policy recommendations that tackle the lack of market access and address the need for economic resilience. These policy recommendations are there for the EU to take: they are realistic and achievable. The EU has the power to make these seven policy recommendations a reality.
Topic:: Markets, Treaties and Agreements, European Union, Trade, and Resilience
Political Geography:: Europe

13. Keeping Up with the US: Why Europe’s Productivity Is Falling Behind

Author:: Fredrik Erixon, Oscar Guinea, and Oscar du Roy
Publication Date:: 05-2024
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: The European Union stands at a crossroads. For decades, the EU’s productivity growth has consistently lagged the United States, leading to slower growth in living standards and decline in global economic power. While short-term factors like the strong US fiscal expansion have widened the gap in nominal GDP growth in recent years, the fact is that Europe has trailed the US economic development for several decades and the root of the problem lies in deeper structural issues within the European economy. Four major forces fuel this productivity divide. Firstly, the EU’s investment in research and development (R&D) pales in comparison to the U.S., leading to fewer patents and a slower pace of technology-fuelled innovation. Secondly, Europe trails America in the stock and growth of intangible capital investments, which are crucial for adopting and diffusing new technologies that drive productivity. Thirdly, the EU market exhibits slower business creation and destruction compared to the US. This rigidity hinders the flow of resources towards the most productive firms. Lastly, despite boasting higher levels of trade openness, the EU attracts less Foreign Direct Investment (FDI) than the US, curbing its access to cutting-edge global technologies and expertise. To close the gap, European policymakers should implement a comprehensive strategy for faster productivity growth. The first step is turning up the dial on R&D spending, targeting 4-5 percent of GDP by 2040. Next, Europe should prioritise investments in intangible assets and lay down the digital infrastructure that will underpin future growth. Revitalising the single market is also crucial: reducing internal and external market barriers for services, the primary vehicle for trading intangible assets. Moreover, the EU should foster a market environment that encourages entrepreneurship and facilitate the entry and exit of firms so resources cascade towards the most productive sectors. By harnessing the strengths of the single market and implementing these recommendations, European policymakers can propel the EU towards a more competitive and prosperous future.
Topic:: Markets, European Union, Productivity, and Economic Competition
Political Geography:: Europe, North America, and United States of America

14. Reinventing Europe’s Single Market: A Way Forward to Align Ideals and Action

Author:: Matthias Bauer, Dyuti Pandya, Vanika Sharma, and Elena Sisto
Publication Date:: 06-2024
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: It is essential for EU institutions and Member State governments to shift their focus from the abstract concept of the “Single Market” to the concrete objective of “legal harmonisation in the EU.” This transition represents a strategic realignment towards more pragmatic policymaking. Adopting a 28th regime to address national regulation discrepancies would align with this goal and enhance the Single Market’s effectiveness in promoting economic growth and competitiveness. Given the EU’s ongoing loss of relative global economic clout, it is crucial to establish an ambitious timeline for implementing the most critical Single Market reforms. The Letta Report serves as a wake-up call to revitalise the EU’s Single Market, emphasising the need for decisive action. Its vision largely hinges on legal harmonisation within Europe, building on early efforts to liberalise markets and establish a truly integrated European market. Despite efforts, “integration fatigue” remains a significant challenge due to legal fragmentation across European economies. Previous reports, from the Cecchini Report in 1992 to the Europe 2020 Strategy, have highlighted persistent issues like regulatory divergences and declining political support for market integration. Despite numerous proposals, progress has been limited, and many challenges persist or have worsened (see Section 2). An analysis of EU reports reveals a shift in policy priorities over time. Initially, there was a strong focus on liberalisation and market opening, with less attention given to state aid and industrial policymaking. The Letta Report highlights the importance of regulatory convergence and harmonisation, reflecting a deeper understanding and recognition of the drivers of EU competitiveness. The rise of nationalism and a shift towards “Strategic Autonomy” within the EU have hindered crucial market reforms. This highlights the importance of aligning laws across Member States to strengthen and reinforce EU’s economic resilience and international competitiveness (see Section 3). EU institutions and Member State governments should set specific goals for “legal harmonisation in the EU.” This shift would address real challenges faced by businesses and citizens, and build political will for necessary reforms. Prioritising legal harmonisation would enhance internal cohesion and align national laws with Union-wide goals. An actionable roadmap – potentially with a 2028 deadline – is crucial to address the substantial gap between ambitious EU strategies and Europe’s economic realities. (see Section 4). Implementing sector-specific and horizontal policies in a new regulatory regime would improve cross-border operations and competitiveness. The Letta Report advocates for a European Code of Business Law to establish a unified regulatory framework, introducing a 28th legal regime to address national regulation discrepancies. Extending this regime to include tax and labour market policies would significantly enhance cross-border operations. The EU and Member State governments can eliminate substantial internal barriers by prioritising key horizontal policies affecting all businesses, such as fragmented tax laws, labour market policies, and social security systems. Simplifying and harmonising these policies on the basis of the facilitation of four freedoms is crucial for unlocking the Single Market’s potential for businesses and workers, boosting the EU’s global competitiveness. Allowing coalitions of willing countries to advance in certain areas of legal integration provides a viable solution to the long-standing Single Market “fatigue”. By enabling smaller groups of Member States to pursue integration in specific areas, the EU can bypass the constraints imposed by rigid voting requirements and achieve greater agility, accountability, and acceptance in EU law-making. This approach not only fosters flexibility but also upholds the fundamental principles and objectives of the EU. To ensure the integrity of the EU legal order and prevent unjustified barriers or discrimination against non-participating members, it is essential to establish safeguards and oversight mechanisms. These measures would maintain cohesion within the Union while allowing for progressive legal integration among willing Member States.
Topic:: Markets, European Union, Digital Economy, and Economic Integration
Political Geography:: Europe

15. The changing dynamics of European electricity markets and the supply-demand mismatch risk

Author:: Conall Heussaff and Georg Zachmann
Publication Date:: 07-2024
Content Type:: Policy Brief
Institution:: Bruegel
Abstract:: Meeting Europe’s 2030 climate targets will require massive clean-electricity investment. To facilitate these investments, state-backed de-risking schemes such as contracts for difference (CfDs) are needed. Their role in supporting renewables has been consolidated by the European Union’s recently agreed electricity market design reform. Under such state-backed schemes, the distribution of costs between the market and the state will depend on the balance of supply and demand. Lower demand will decrease spot-market prices, reducing market costs but increasing the cost to CfD-issuing states. If electrification of European energy demand does not keep pace with the electricity supply expansion, tens of billions of euros annually could be channelled through state contracts, generating costs that must ultimately be recovered from consumers. A cost-efficient, managed transition will require European coordination of electricity supply, demand and network investments. Clean electricity supply and demand should be synchronised through a combination of state interventions and market mechanisms. Undersupply of clean power will mean a failure to meet climate targets, but oversupply can be costly too. To manage the costs of renewable de-risking schemes and to accelerate energy-system decarbonisation, flexible electricity systems should be promoted, policies to encourage electrification could be implemented and cost-recovery arising from state-backed renewable support schemes should be fair.
Topic:: Climate Change, Markets, Electricity, Energy, and Supply and Demand
Political Geography:: Europe

16. Unpacking China’s industrial policy and its implications for Europe

Author:: Alicia Garcia-Herrero and Robin Schindowski
Publication Date:: 05-2024
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: China is often credited with a successful application of industrial policy. One important particularity of China’s industrial policy is that it aims at levelling the playing field between the state economy and the private economy in access to finance, yet within a framework of strategic goals. This aim is not relevant for market economies, such as those of the European Union, but only for those where state enterprises are clearly privileged. Notwithstanding the difficulties in making valid comparisons, our analysis of how China conducts industrial policy in a variety of sectors points to success in some sectors but not all. More importantly, productivity growth in China has already been declining for two decades. Given the very large resources that China has put into industrial policy, with subsidies being only one part, it is surprising that success is not more evident. This relates partly to factors including cronyism and regional protectionism. While the former might be less relevant for the EU given the different institutional background, the latter certainly is relevant since the EU faces the potential consequences of member country-level industrial policy for its single market. A lesson from China seems to come from the sectoral focus, with a long-term and economic-security mindset. The EU is far from this, but it is in the process of linking economic security to industrial policy. Finally, responding to China’s industrial policy involves diverse investigations and challenges in measuring subsidies accurately. Understanding China’s very diverse and complex approach to helping companies achieve the government’s industrial policy goals is crucial for anticipating the consequences of China’s actions. These could be positive, such as cheaper imports of green technology, or negative, such as Chinese overcapacity spilling over to the EU single market.
Topic:: Industrial Policy, Markets, European Union, and Economy
Political Geography:: China, Europe, and Asia

17. Unity in power, power in unity: why the EU needs more integrated electricity markets

Author:: Georg Zachmann, Carlos Batlle, Francois Beaude, and Christoph Maurer
Publication Date:: 02-2024
Content Type:: Policy Brief
Institution:: Bruegel
Abstract:: The energy crisis that started in 2022 reminded European governments of the resilience provided by relatively well-integrated European electricity markets, which have been painstakingly built-up over several decades. European Union leaders thus decided to reverse a creeping energy renationalisation and to invest in completing the internal market. However, there are some indications that this momentum is being lost, with different EU capitals taking different lessons from the energy crisis, at a time of unprecedented investment needs in generation and grids across the EU. The multiple benefits of enhanced EU energy-market integration should be emphasised. ‘Techno-economic’ benefits can be secured from optimising the design and operation of several national electricity systems jointly, rather than individually. These benefits will increase massively with higher shares of renewables and include less fossil-fuel burn and less volatile short-term prices, cost savings through harnessing regional renewables advantages, reduced need for expensive back-up capacity and flexibility, and enhanced resilience to shocks. In addition, greater energy-market integration will trigger benefits of a more managerial-governance related nature, though these are harder to quantify. They include benefits in terms of competition, innovation and credibility, which are particularly useful in the electricity sector, which typically faces rather long investment times and high degrees of concentration in purely national markets. Further market integration requires substantial political investment. Governments will need to deal with significant distributional effects within and between countries. Experience has shown that domestic political constraints in this respect are often numerous and difficult to overcome. Therefore, achieving the benefits of integration will require a vision on what degree of integration is feasible and desirable, and how to properly implement and govern it. It will also require an honest acknowledgement of the implications and costs of not pursuing greater integration.
Topic:: Markets, European Union, Regional Integration, Electricity, and Energy Crisis
Political Geography:: Europe

18. The chicken-and-egg problem in the European Union Digital Markets Act

Author:: Fiona Scott Morton
Publication Date:: 01-2024
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: The gatekeeper platforms regulated by the European Union’s Digital Markets Act (DMA) must comply with the law as of 6 March 2024. The DMA requires that core platform services create and make available interfaces that allow business users to access end users via the platform at lower cost and on better terms. For example, app developers will have the right to distribute on handsets through different app stores, using different payment services, directing users to purchase content on the web and charging different prices in different channels. The gatekeeper must provide the application programming interfaces, or APIs, to enable business users to take advantage of these rights. However, the DMA does not define exactly what those APIs should be. Rather, the law requires a gatekeeper’s interface to be “effective,” meaning business users can use it to enter, compete and innovate. Because such a design is not, in general, in the interest of the gatekeeper, the input of business users to both gatekeepers and the European Commission is critical for evaluating compliance with the law. Thus far there is little evidence of platforms interacting with business users or putting out interfaces for evaluation by business users, or of business users offering comments on what interfaces would be best for entry and competition. It may be that the interface must come first, and then its existence will stimulate entry of new business users or investment into new services that will use the interface. Rather like the chicken and the egg, which should come first? Business users are needed to help create useful interfaces, while useful interfaces are needed to justify investment and entry by business users.
Topic:: Markets, European Union, Investment, and Digital Markets Act (DMA)
Political Geography:: Europe

19. Building Resilience? The Cybersecurity, Economic & Trade Impacts of Cloud Immunity Requirements

Author:: Matthias Bauer
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: EU Member States should call on the EU’s Cybersecurity Agency (ENISA) and the European Commission to abandon immunity requirements in the proposed EU Cloud Certification Scheme (EUCS). With immunity requirements in the EUCS, the EU risks opening a Pandora’s box, paving the way for data localisation, foreign ownership restrictions, and local establishment requirements in digital industries globally leading to rising trade tensions. ENISA’s current proposal could increase policymakers’ appetite for data localisation in the EU. It would empower the European Commission and Member State authorities to exclude foreign businesses from domestic cloud services markets and set a dangerous precedent for any data-intensive sector. The list of “sectors of high criticality” could be logically extended to both existing services (e.g., financial services) and to new technologies and business models, such as IoT in the energy and healthcare sectors, and autonomous driving in the transport sector. Non-EU jurisdictions would be pressured to respond in kind. EUCS immunity requirements would increase cloud adopters’ exposure to cybersecurity risks. Data localisation often creates obstacles to an integrated management approach towards cybersecurity risks. Country of headquarter and foreign ownership restrictions in the proposed EUCS risk removing global frontier cybersecurity technologies from Member State markets. Excluding these and other EU and non-EU companies from EU Member States could result in a long-lasting security deficit of EU cloud adopters vis-à-vis organisations that are still able to use reliable and often best-practice cloud services offered by providers from outside EU Member States. Immunity requirements in the EUCS are discriminatory by design. They could provoke retaliatory measures by EU trading partners, either unilaterally or through WTO or bilateral FTA (e.g., UK-EU) Dispute Settlement. Local establishment requirements and foreign ownership restrictions would by design discriminate against foreign cloud providers. US-headquartered companies, which currently serve more than 75% of the EU market, would be most affected by EU immunity requirements.[1] Depending on US preferences and the scope of the proposed EUCS, the EU could be subject to retaliatory tariffs of up to USD 12 billion worth of EU goods exports or equivalent restrictions for EU services exports to the US. Other governments could lodge complaints via the WTO as well (e.g., Singapore, Japan, Canada and others, where cloud development is advancing rapidly). EU suppliers are currently in no position to manage a broad-based transition to cloud, and thus such requirements would delay significant efficiency and security gains that current foreign suppliers could offer. A blanket exclusion of non-EU cloud vendors would also likely undermine Europe’s objective to achieve a 75% cloud adoption rate for EU enterprises. Sensitive European businesses and public sector organisations would have to delay migration and make do with legacy systems for a very long time. Contrary to large countries, these negative impacts would be much more pronounced for smaller EU Member States, which lack the presence of large domestic incumbents and generally rely much more on an open international trading regime for digital services. ENISA’s cloud certification scheme should be limited to technical and transparency requirements. Immunity requirements for non-personal data should be addressed in bilateral initiatives such as the EU-US Trade and Technology Council (TTC) or agreements requiring a company that sought to offer services of the highest level of sensitivity to be headquartered in a country granted adequacy with EU data protection rules, or a country that is an adherent to the OECD’s Trusted Government Access principles, or (concerning the US) a participant in the upcoming Trans-Atlantic Data Privacy Framework. Excluding foreign companies from operating in the EU would have far-reaching consequences. If that is the intent, it should require a sound legal analysis and the decision should be taken through a formal legislative procedure at the EU level.
Topic:: Economics, Markets, European Union, Cybersecurity, Digital Economy, Trade, and Resilience
Political Geography:: Europe

20. In Support of Market-Driven Standards

Author:: Matthias Bauer, Fredrik Erixon, Oscar Guinea, and Vanika Sharma
Publication Date:: 03-2023
Content Type:: Working Paper
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: The EU published its new Standardisation Strategy in 2022. The strategy contains some good ideas to improve the way European standards are set. However, in its attempt to gain more control over technical standards, the EU risks killing the goose that lays the golden egg. The primary motivation behind the strategy is the belief that the process governing the way CEN, CENELEC, and ETSI – the three European Standardisation Organisations – take decisions over EU standards favours non-EU multinationals. To address this perceived imbalance, EU National Standardisation Bodies will have the exclusive power to accept standardisation requests, and adopt, revise and withdraw European technical standards. These changes are particularly significant for ETSI, Europe’s Standardisation Body in charge of telecommunication standards and one of Europe’s most successful organisations. ETSI is a prime example of EU normative power since it hosts companies from more than 60 countries, while retaining a large membership of EU firms. The regulatory changes included in the strategy are not risk-free. There could be unintended consequences that may undermine a standardisation system that has delivered significant economic benefits for the EU and the world. First, giving more responsibility to EU’s National Standardisation Organisations will turn a European discussion into 30 (EU and EEA) national debates. As a consequence, small companies will not be able to contribute to each and every one of the National Standardisation Organisations, diluting their contribution, while multinational companies, with the resources needed to cooperate with a larger number of bodies, will benefit from an expanding role in the EU standard setting process. Second, if standards are fragmented along national borders and companies must multiply their efforts to take part in several Standardisation Development Organisations, there will be less resources for Research and Development spending. Finally, if each and every National Standardisation Organisation needs to have a position with regards to the acceptance of a standardisation request, or adoption, revision and withdrawal of European technical standards, the time period required to adopt a technical standard may be extended rather than shortened, which is the exact opposite of what the European Commission wants to achieve. The regulatory changes included in the EU Standardisation Strategy are akin to cracking a nut with a sledgehammer. If the European Commission is concerned about the influence of non-EU companies in European Standardisation Bodies, it does not need to overhaul their governance systems. Supporting greater participation of European firms in the European standard system will ease EU’s concerns without the downside risks associated with changing the rules of the game that govern Europe’s Standardisation Bodies. The success of the European standardisation system, which is market-driven and based on consensus, has had significant economic benefits in the development of specific industries, like the European Information and Communication Technologies (ICT). Technical standards in ICT have shaped a European industry that is not only dynamic and international but also enjoys some of the highest levels of wages and Research and Development spending. Moreover, if technical standards are not developed through an open, consensus-based, and industry-led voluntary process, they will be developed in different ways. For instance, governments and private companies can develop standards by themselves. Both solutions are inferior to the current market-driven approach that governs European standards. However, the European market-driven approach to set standards is voluntary, and its success and continuation must not be assumed. European policymakers should be worried about tinkering with a European standardisation system which has produced economic specialisation and innovation to the benefits of EU firms and consumers.
Topic:: Markets, European Union, Regulation, Economy, and Standardization
Political Geography:: Europe

21. What is Wrong with Europe’s Shattered Single Market? – Lessons from Policy Fragmentation and Misdirected Approaches to EU Competition Policy

Author:: Matthias Bauer
Publication Date:: 04-2023
Content Type:: Working Paper
Institution:: European Centre for International Political Economy (ECIPE)
Abstract:: What is wrong with Europe’s Single Market? The brief answer to that question is that it does not really exist – it is unsingle. The Single Market is in many ways a political illusion. It exists only nominally. Any company doing business in Europe faces significant barriers to cross-border exchanges within the EU, and it is these barriers that hamper companies’ ability to scale and compete internationally on the back of innovation and economic integration. We outline that Brussels and national governments need to beat the drum for eliminating policy fragmentation in Europe’s internal market and at the same time change course in competition policy to sufficiently support investments in innovation, business growth, and the adoption of advanced technologies across industries. Major economic indicators show that Europe is caught in a protracted corporate and technology crisis. The EU has for a very long time now been tailing US corporate and innovation leadership. At the same time, competition with technology-intensive imports from China is getting increasingly intense. Europe’s underperformance is rooted in a legally fragmented internal market which is disincentivising business growth and innovation. On top of that, an outdated approach to competition policy is discouraging businesses from adopting innovation and scaling across national borders, risking that EU companies continue to lose clout and international competitiveness. 30 years have passed since the formal establishment of Europe’s Single Market. Data reveals that regulatory convergence has reversed or come to a halt in most policy areas. Recent policies for technologies and digital business models, which are key sources of cross-industry competitiveness, created new layers of regulation and legal uncertainty in EU and Member State law. Overall, EU policies have not significantly helped European companies, large and small, to do business in another Member State or use advanced technology-enabled services. EU competition policy does not live up to its promise to “enable the proper functioning of the EU’s internal market”. Europe’s competition policy is still fragmented along national borders and largely ignorant to dynamic effects of competition, especially investments in innovation. Due to mixed legal competences, competition rules are often enforced differently by Member States’ national authorities and can be appropriated to support protectionist industrial policy ambitions. The recently enacted Digital Market Act (DMA) demonstrates that the European Commission and Member State authorities favour protection and discretionary enforcement over innovation and economic disruption, without providing solid evidence of abusive business behaviour and consumer harm. With the DMA, the EU introduced legislation with serious ambiguities in objectives, concepts, and rules, and explicitly allows national Member States to regulate competition at their own discretion. A recent attempt by Germany’s competition authority, the Bundeskartellamt, to enforce its own rulebook for large digital companies (Section 19a of the German Competition Act) risks creating a patchwork of competition rules for large providers of advanced digital services across the EU. Local adopters of advanced digital services, particularly small businesses, that use advanced technology services to compete in their markets would be confronted with less choice and quality. Recently imposed policies under the umbrella of European Strategic Autonomy will hardly help policymakers in their ambition to achieve “innovation and technology leadership”. The paramount task for the EU and national governments is to eliminate policy fragmentation in Europe’s internal market, accompanied by an approach to competition policy that embraces investments in innovation and business growth while accounting for the substantial value created through the adoption of innovative technologies and disruptive business models across industries in the EU.
Topic:: Markets, European Union, Economy, and Competition
Political Geography:: Europe

22. Pro- and anti-competitive provisions in the proposed European Union Data Act

Author:: Bertin Martens
Publication Date:: 01-2023
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: The proposed European Union Data Act gives users access and portability rights to the data generated by their use of tangible digital products and devices. This pro-competitive measure weakens the de-facto monopolistic control product manufacturers have over product data. However, the Data Act would also grant manufacturers a de-jure right to monopolistic pricing of data transfers to third-party service providers, restoring their control over data markets. Other anti-competitive provisions include restrictions on the use of data for competition purposes and a prohibition on transfering data to platforms identified as gatekeepers under the EU Digital Markets Act. Unnecessarily fuzzy definitions of products and data that fall under the Data Act would create uncertainty in implementation and incoherence with other EU data regulations. The Data Act should be simplified by dropping anti-competitive provisions and granting users and third-parties selected by users free access to all data generated by the use of a product or a service. This would increase competition in data-driven services and prevent users paying twice for their data. It would not disincentivise producers from investing in data-driven products and services. A further step could be the creation of a level playing field between producers and users in data-access rights. This can be achieved by introducing the principle of mutual exhaustion of data rights at point of sale. This would put all data co-generating parties in a position to generate economies of scale and scope in data aggregation, or data-driven externalities, to maximise innovation.
Topic:: Markets, Governance, European Union, and Digital Economy
Political Geography:: Europe

23. Phased European Union electricity market reform

Author:: Georg Zachmann and Conall Heussaff
Publication Date:: 03-2023
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: In an environment of record-breaking electricity prices driven by a gas supply shock and below-average electricity generation, reforming the design of the European electricity market is seen as a means to delink consumer costs from volatility in short-term power markets. Electricity markets should meet three objectives: fairness, optimal investment and optimal operation. The current market design has achieved these objectives to varying degrees. Faced with the unprecedented shock, the electricity system has operated well, but electricity markets have struggled to achieve fair outcomes and investments have not been driven by market-based cashflows. Further complicating market reform, the power system is being changed radically by decarbonisation. The electricity system is becoming more decentralised and digitalised, with an active demand side. These transformations will have consequences for the optimal electricity market design in the later stages of the energy transition. Reform proposals have focused on increasing the share of long-term contracts in the remuneration of generation technologies. Different long-term contracting regimes have structural implications for the functioning of electricity markets, especially in relation to the roles of the state and the market, and the responsibilities of national governments and European Union institutions. A phased approach should be taken to EU electricity market design reform. In the near-term, reform should seek to protect consumers and drive investment. An assessment should also be made of what market design will best meet the fairness, investment and operational objectives in a decarbonised system, and what the conceptual role of electricity markets should be during the transition. This process should start as soon as possible so well thought-through proposals are available when the next European Commission takes office.
Topic:: Markets, Reform, European Union, Electricity, and Green Economy
Political Geography:: Europe

24. How best to ensure international digital competition cooperation

Author:: Christophe Carugati
Publication Date:: 02-2023
Content Type:: Policy Brief
Institution:: Bruegel
Abstract:: Large digital firms pose similar competition issues worldwide, such as promoting their own services over those of rivals, or imposing unfair terms and conditions. Competition authorities have opened several antitrust investigations and policymakers have proposed digital competition regulations to tackle these issues. G7 competition authorities have called for several years for international cooperation on digital markets. They want competition cases and laws around the world that are consistent and work together. However, the question of how this can be done remains. A toolbox for international cooperation in competition enforcement already exists, but it does not provide for cooperation in competition policy and has shortcomings in relation to competition enforcement. Current and proposed legislation targets the largest digital firms to tackle the characteristics of digital markets, such as multi-sidedness, and the same or very similar behaviours, such as self-preferencing. Legislation in different jurisdictions addresses these issues with similar rules. While there is some convergence, some rules diverge in substance and some are at high risk of divergence in interpretation. Inconsistency is thus likely to arise from a divergence of interpretation rather than substance. The solution would be to ensure a coherent approach to competition in digital markets. This could be done by developing a framework based on four elements: (1) adoption of common legal phases for future digital competition laws to ensure clarity; (2) adoption of a common legal interpretation through guidance drafted by international forums, such as the International Competition Network (ICN); (3) adoption of common technical requirements developed in the context of ICN technical workshops, when the rules require it; and (4) the implementation of an international monitoring committee within the ICN to evaluate whether competition authorities and courts enforce the rules consistently. The impact of the framework might be limited because of the non-binding nature of the approach, and the focus on specific competition-related legislation, excluding laws that can also address the issues, such as civil law. Countries can overcome these limitations if they are willing to cooperate to ensure a consistent approach.
Topic:: Markets, Digital Economy, Digital Cooperation, and Competition
Political Geography:: Global Focus

25. Rational Eviction: How Landlords Use Evictions in Response to Rent Control

Author:: Eilidh Geddes and Nicole Holz
Publication Date:: 07-2023
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: As housing prices rise, cities are turning to rent control policies, hoping to ensure longterm affordable housing. Typically, rent control policies require leases to be renewed at statutorily limited rent increases. Rent control policies reduce the returns from operating in the rental market, creating well‐studied incentives for landlords to leave the rental market. Many rent control policies—including San Francisco’s—feature vacancy decontrol provisions, which allow landlords to reset rents to market rates when tenants move. These policies limit the reductions in returns to operating in the rental market but create incentives for landlords to induce tenant turnover, possibly through evictions. The more tenants move, the more often a landlord can raise rents to market rates.
Topic:: Markets, Economy, Eviction, Housing, and Rent
Political Geography:: North America and United States of America

26. The Pathway to an Effective ETS and Power Market Interaction: The Case of the Korean ETS

Author:: Alistair Ritchie
Publication Date:: 03-2023
Content Type:: Working Paper
Institution:: Asia Society
Abstract:: The power sector is one of the most important areas to cover in any emissions trading system (ETS), due to the scale and abatement potential of greenhouse gas (GHG) emissions in that sector. However, some critical challenges need to be overcome before an ETS can fulfil its emissions-reduction potential by driving fuel switching away from coal and toward renewables and low-carbon fuels. This is one of the most important topics for ETS development in Asia given the tight controls on power markets. The case of the Korean ETS (K-ETS) provides valuable insights for the pathway to an effective interaction between an ETS and the power market to support power sector decarbonization, based on recent developments and potential next steps. The Pathway to an Effective ETS and Power Market Interaction: The Case of the Korean ETS describes the details of recent developments in Korea's power market and the emission trading system to address insufficient emission reductions in the power sector, key future developments required, and learning points for ETSs in other Asian jurisdictions.
Topic:: Energy Policy, Markets, Carbon Emissions, and Decarbonization
Political Geography:: Asia and South Korea

27. Indian Carbon Market Simulation Training Exercise Report

Author:: Josh Margolis
Publication Date:: 06-2023
Content Type:: Special Report
Institution:: Asia Society
Abstract:: The Asia Society Policy Institute (ASPI) in partnership with Josh Margolis and the Council of Environment, Energy and Water (CEEW), conducted carbon market simulation training exercises in Delhi, Ahmedabad, and Mumbai, India. This training — conducted in February 2023 — was aimed at equipping stakeholders from enterprises, government, and civil society with core knowledge and skills relating to emissions trading systems (ETSs). The workshops significantly improved the ETS literacy of the participants, laid the foundation for future engagements, and increased the number of participants who believe that an ETS would be "very useful" or "indispensable" for India to achieve its Nationally Determined Contribution. This Indian Carbon Market Simulation Training Exercise Report summarizes the details and results of the workshops. The report includes participant demographics, how the training was conducted, ETS knowledge gained as a result of the exercise, as well as the outcomes of the training, lessons learned, and next steps for consideration.
Topic:: Markets, Carbon Emissions, and Simulation
Political Geography:: India and Asia

28. Green Hydrogen Industrial Value Chains: Geopolitical and Market Implications

Author:: Nicola De Blasio and Laima Eicke
Publication Date:: 02-2023
Content Type:: Policy Brief
Institution:: Belfer Center for Science and International Affairs, Harvard University
Abstract:: The global transition to a low-carbon economy and adopting the needed clean energy technologies at scale will significantly impact existing value chains1 and transform production-to-consumption lifecycles. Regulatory and business models will need to rapidly evolve to manage the resulting substantial cost challenges and dramatic shifts in stakeholder interactions while continuing to create value. Green hydrogen2 is likely to play a pivotal role in a carbon-free future, as its adoption will enable the decarbonization of energy-intensive industrial processes whose emissions are hard to abate through simple electrification—such as steel and cement production. However, to take advantage of the economic opportunities created by its adoption at scale, countries will need to rethink the roles they could play in a new energy landscape and define strategic industrial policies accordingly. Our research3 shows how successful industrial policies must reflect a country’s potential value chain positioning in future green hydrogen markets and elucidates macro geopolitical trends that could reshape international relations as countries compete for industrial leadership, market shares, and opportunities for job creation.
Topic:: Markets, Economy, Carbon Emissions, Value Chains, Hydrogen, and Green Economy
Political Geography:: Global Focus

29. How strategic tech cooperation can reinvigorate relations between the EU and India

Author:: Vera Kranenburg and Maaike Okano-Heijmans
Publication Date:: 01-2023
Content Type:: Special Report
Institution:: Clingendael Netherlands Institute of International Relations
Abstract:: In an era of multipolarity, India – expected to become the world’s most populous nation soon – will be a significant geopolitical player. This necessitates European Union (EU) member states to shift their policies to engage one of the world’s largest consumer and industrial markets.
Topic:: Markets, Science and Technology, European Union, Industry, Multipolarity, and Cooperation
Political Geography:: Europe, South Asia, and India

30. 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

31. 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

32. 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

33. 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

34. 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
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

35. 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

36. 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

37. 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

38. 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

39. 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

40. 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

41. 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

42. 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

43. 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

44. 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

45. 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

46. 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

47. 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

48. 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

49. 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

50. 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
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

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