Development Economics
Renault-Nissan announce entry into low-cost car market in India
The battle is intensifying to develop, manufacture and sell low priced family cars to meet the burgeoning demand from consumers in emerging markets. Renault and Nissan announced today that they are entering into a joint venture with the India firm Bajaj Motors to jointly build a $2,500 car to compete with Tata Motors’ Nano mode. A new 400,000 capacity plant is being built in Chakan, Maharashtra and the aim is to bring the car to the market in 2011.
Jeffrey Sachs on Carbon Trading
Jeffrey Sachs features on “You ask the Questions” in today’s Independent. There are loads of interesting questions and answers - Sachs remains positive about China’s growth potential although he expects it to decelerate to around seven per cent in the years ahead. Here he is on a question about carbon trading .... good evaluation here for students preparing for a question on carbon trading versus carbon taxes versus other policy measures:
“There is a good case for putting a price on carbon emissions but it is more straightforward to do it as a tax rather than a system of tradable permits. It would be easier to tax carbon at source – coal, oil, and gas companies. Tradable permits or carbon taxes will not help develop low-emission technologies. We need to combine carbon pricing with initiatives to promote sustainable energy and farming technologies.”
Catch the remainder of his article here
World Bank Development Indicators 2008
The latest World Bank Development Report is now available here. As usual there is a veritable cornucopia of interesting and revealing evidence on the changing shape of the global economy. A lot of the data is available for free as are pdf versions of selected chapters from the main report.
Brazil’s widening wealth gap
Gillian Lacey-Solymar, Business correspondent for BBC Newsnight has a piece on tonight’s show about the rising inequality in Brazil as her economy continues to experience breakneck growth. Expect an excellent video clip to be available from the BBC web site immediately after the Newsnight programme has aired. Excellent for highlighting the links between growth and income and wealth distributio, especially with a tax system that appears to have regressive effects on the lowest income earners.
Potatoes - The Crop of the Future?
In a world of agflation with grain prices continuing to climb higher as developed nations prolong a love affair with bio-fuels, perhaps the humble spud provides a credible and viable solution to the crisis that rising food prices is having for hundreds of millions of the world’s poorest people.
The Supply of Opium in Afghanistan
For most farmers, the decisions about which crops to plant and harvest boils down to straightforward cost benefit analysis. So when when the world price of ground coffee beans paid to farmers declines in Ethiopia somefarmers destory their coffee plants (some of which may have taken five years to grow) and instead produce chat. Likewise, when the return on producing cannabis or opium increases, farmers in Afghanistan increase the area under cultivation and supply responds.
The supply of opium from Afghanistan continues to grow and it is basically down to the economic incentives facing the farmers. There have been some success stories in cutting off the supply but the battle is a long way from bring won. This report from the excellent Alastair Leithead (a former student of mine at the RGS Newcastle) looks at the efforts to reduce opium supply in some regions of Afghanistan - so far there have been only mixed results. Whilst in some regions cultivation is being cut through eradication programmes, in others desert is being reclaimed by the farmers and a new supply of opium is opening up.
Vietnam’s rise to prominence
Vietnam is emerging as a significant economic competitor to China and this article in the Sunday Times gives a flavour of their rapid development. The economy has become more open and is now attracting huge inflows of foreign direct investment which in turn is reducing unemployment and generating a surge in manufacturing capacity that is providing a platform for sustained export growth. British firms are increasingly looking to Vietnam as a location for direct investment and also as a market for a range of business and financial services.
‘Vietnam gained admission to the World Trade Organisation last year, which triggered a huge surge in foreign investment commitments of more than £6 billion. The value of UK investments in Vietnam is more than £1.25 billion, according to British Embassy statistics. While British exports rose 17% in 2006 to more than £95m, the trade deficit is more than eight to one in Vietnam’s favour. However, Britain reaps invisible earnings from banking and financial services’
read more...»Wolf on a Waking Giant
Martin Wolf is always eminently readable on globalisation. His recent book ‘Why Globalisation Works’ is widely regarded as one of the most complete and authoritative jusifications for the current wave of globalisation. Martin is on good form in a special report in the Financial Times this week on India and Globalisation.
He writes
‘India is not China. Its development path has been very different and, so far at least, its global impact far smaller. But it is now more open to the world economy than at any time in its post-independence history and more economically dynamic than ever before. India’s decision in the early 1990s to embrace the world economy, as part of a wider embrace of the market economy, has led to an accelerating opening up of its economy. While its impact on the world is still relatively modest, it will continue to grow.The impact on India itself is less modest and growing fast. Both sides – India and the world – will need to get used to the experience: they will grow much closer together in the years ahead.’
At the heart of the article is a neat comparison and contrast between the economies of China and India in terms of
Exports of merchandise products
Exports and imports as a share of national income - a guide to trade openness
The scale of current account surpluses and foreign exchange reserves
Inflows and outflows of foreign direct investment
Control of exchange rates
Read the rest of his article here
Black Gold – an extraordinary documentary about coffee
Black Gold – an extraordinary documentary about coffee
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
‘As westerners revel in designer lattes and cappuccinos, impoverished Ethiopian coffee growers suffer the bitter taste of injustice. In this eye-opening expose of the multi-billion dollar industry, Black Gold traces one man's fight for a fair price.’
Black Gold is a 78-minute documentary feature from Mark and Nick Francis which provides an extraordinary vivid and remarkable insight into the lives and challenges facing coffee farmers in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />
The film offers economics students so much – the trading on the floor of the New York Board of Trade Exchange; the monopsony power of the multinational coffee buyers bidding for coffee in an Ethiopian auction house; how a simple coffee bean can have value added to it to generate the billions of pounds of profits enjoyed by shareholders in Starbucks; we understand more of the role of incentives in allocating resources - many Ethiopian coffee farmers are ploughing under their coffee trees and planting ‘chat’ instead – narcotics provide a better price.
Fundamentally this film is about fairness, about equity in the distribution of income. It provokes a response from your students; I anticipate many of them will consider changing their buying behaviour as a result.
The film visits Italian coffee producers and the world Barista championships in
In the film, we follow the journey of Tadesse Meskela around the world in search of buyers for and a better price for the coffee of the farmer working for the coffee producers’ cooperative. We witness the breakdown of the
Suggested links:
Coffee calculator: http://www.blackgoldmovie.com/CoffeeCalculator/
Oromia Coffee Farmers Cooperative Union see also http://www.greendevelopment.nl/progreso/ocfcu/
The DVD is available from Amazon using this link See also Black Gold: The Dark History of Coffee
The world price of coffee is rising, but how much of this finds its way through to the producers of the raw coffee beans?
