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The IMF has a video channel on You Tube - a mix of interviews with notable economists and short features on individual countries such as the UK and Poland (both featured in recent months). Keeping in mind the traditional IMF policy prescriptions for economic reforms in countries where it is asked to provide bail-outs, the video resources may well be useful for colleagues wanting to embed some current video content in their teaching of global economics. Here is the link to their You Tube channel.
Poland is the largest of the central and eastern european countries (CEECs) to have entered the European Union Single Market in the recent enlargement process. And her macroeconomic record during and after the global financial crisis stands comparison as one of the best of the twenty seven EU member nations. Recession has been avoided and the economy is set to continue a long run of economic growth that is (slowly) bringing about a rise in relative living standards and a sustained fall in unemployment. The Guardian newspaper has been running a series on New Europe and this set of articles focuses on some of the challenges and opportunities facing Poland as Europe seeks to drag itself into a durable recovery phase.
Guardian - New Europe - Focus on Poland
An excellent resource for Unit 2 and Unit 4 macroeconomics. Vishnu Padmanabhan from Timetric has this excellent look at the impact of the recession on real GDP growth in OECD countries. Which countries did best and worst in the recession? It turns out that Australia, Poland, Israel and South Korea were the countries least affected by the crisis and all avoided a full-blown recession - experiencing instead a soft landing. Here is Vishnu’s article. Our own growing selection of Timetric charts can be found by scrolling down to the bottom of this blog entry.
The OECD has just produced their annual review of Going for Growth - a largely supply-side look at policies designed to promote long-term growth in productive potential in the world economy. Details can be found here.
One of the most keenly awaited macro statistics in the USA is the monthly data on employment and unemployment. For some time there have been fears that the huge fiscal and monetary policy stimulus programs seem to have been having little effect on the jobless rate.
As we can see from the charts below there are tentative signs that a more durable economic recovery is setting across the Atlantic. The unemployment rate has fallen to a two year low, employment in private sector businesses is expanding and the steep fall in manufacturing employment seems to have come to an end (for now). Getting unemployment down is crucial for Obama with the next Presidential electoral campaign in view. And it is also important for the wider health of the world’s biggest economy.
One of the really striking things about the recent recession and weak recovery has been the dramatic increase in the mean duration of unemployment in the USA compared to previous bouts of cyclical unemployment. My third chart in this blog looks compelling and suggests that it has been really hard for those who have lost their jobs in the wake of the global financial crisis and the subsequent recession to find fresh work. Long-term unemployment is a structural problem in the labour market and it becomes harder to resolve as the length of time spent out of paid work grows month by month.
Remittances are the sending of money to people in another country. Despite a recent dip because of the global recession, total remittance flows have grown in the world economy over the longer-term as the scale of migration between countries has grown. For many lower-income nations, remittance income is now a sizeable contribution to their Gross National Income (GNI) The World Bank estimates that there are over 250 million people living overseas who send some of their earned income back - remittances to all countries topped $305bn in 2008. The biggest single recipients of remittances are India, Mexico and China but measured as a share of national income is probably a better way of considering their relative importance. The World Bank calculated that in 2007, remittances as a share of GDP was particularly high in these countries:
Our Timetric charts provide some data background to the importance of remittances
For a currency that used to have the tag of the “Pacific Peso”, these are heady days for the Australian dollar. The external value of the dollar has reached a 29-year high as the Aussie dollar continues to appreciate on the global currency markets. Our Timetric charts follow the Australian dollar against the US dollar and also sterling.
This is a good mini case study on the factors that determine the value of a currency when it is allowed to float freely in foreign exchange markets
1/ The Australian economy is growing relatively strongly - increasing the expected returns from foreign investment in the economy
2/ Policy interest rates are relatively high (4.75%) - attracting inflows of hot money - short term banking flows that seek the best risk-adjusted rate of return
3/ Trade - the Australian economy has enjoyed a resurgence in the value of exports, notably from selling minerals and liquid natural gas to fast-growing developing countries in Asia
4/ Changing sentiment in the market - foreign exchange market speculators seem to be buying the Australian dollar as a safe haven investment instead of Japanese Yen
In simple terms the expected yield to investors prepared to buy Australian dollars is pretty high - for example compared to that on offer in Japan. This is causing a strong market demand for the Australian dollarread more...»
One aspect of globalisation is that manufacturers source their supplies from around the world. This will depend on the comparative advantage those countries have developed in producing various types of components. Japan produces about 30% of the global output of ‘flash memory’ used in electronic cameras and smartphones, and about 15% of the DRAM memory used in PCs. If something happens to disrupt that supply chain, as is clearly the case after the horrific events in Japan, there will be global effects.read more...»
I will keep this blog updated with a selection of video clips relevant to the study of the EU - please check below for some links and embedded videosread more...»
A wonderful chart showing the long run path of GDP per capita for the USA, Africa, Western Europe and Asia at constant 1990 prices. The sweep of this data makes for a terrific discussion in the classroom. So too does the second chart which tracks UK population and per capita GDP (measured in US dollars at constant 1990 prices)read more...»
There is a noticeable trend in the monthly trade balance! UK exports to China have grown over the years but the trade imbalance has widened enormously! According to former Business Secretary, Lord Mandelson UK exports to Brazil, Russia, India and China - the so-called ‘Bric countries’ - are lagging behind the rest of the world. The share of exports to the four BRIC nations remains persistently below our 3.7% share of world trade. Some economists point to an “export gap” worth £19.8bn with China, £3.2bn with India, and £1.8bn with both Russia and Brazil.
This is a terrific visualisation of what has happened to US house prices since the late nineteenth century - we ride the rollercoaster based on data from the Case Shiller index.
And if you want the latest Case Shiller data on US house prices - based on the 20 city survey, then click on the Timetric charts below .... hold onto your hats, the Florida property price data in particular looks pretty scaryread more...»
The terrible news coming out of Japan reminds one of the fragility of human life in the face of overwhelming natural forces. The thoughts of everyone at Tutor2u are with the people of the region affected by the earthquake and subsequent tsunami.
The narrow economic impact of the natural disaster will take many months to calibrate - Japan is one of the richest countries in the world and ought to have the resources to cope with the immediate aftermath. But her macro-economy has been weak for many years - the country has been struggling to shrug off a lost decade of slow growth and - more recently - one of the deepest recessions in her post war history.
Does the third largest but most indebted government in the world have any fiscal freedom to react? What will happen in the short term to industrial production, energy and food supplies and her export sectors?
Earthquakes have a special power to create hugely damaging economic consequences. Japan suffered losses of 10 trillion Japanese yen in the 1995 Kobe quake, 2.5 percent of the country’s GDP the previous year. Over time a rebuilding process will help to stabilise economic activity but there is an opportunity cost of having to devote scarce resources to rebuilding. The Japanese economy has endured a period of relative stagnation in part because many Japanese companies have out-sourced their manufacturing production to China and other countries where unit labour costs are lowest.
I have produced a series of charts below tracking some of the recent key changes in macroeconomic indicators for Japan and linked to some news coverage and audio-visual resources on how the earthquake may affect the Japanese economy
Hamish McRae: The cost of catastrophe and unrest is huge in both human and economic terms
BBC News (Feb 2011): Japan is no longer the world’s second largest economy
BBC News (Nov 2010): Japan grapples with deflation and demographics
BBC news: (Nov 2010): G20: Currency War and Japan
Guardian: Japan’s economy heads into freefall after earthquake and tsunami
Telegraph: Japan shuts down as economic fears grow
There is much talk in macro-economic policy circles of “re-balancing the economy” as a prelude to sustaining economic growth in the future. One aspect of this is addressing the long-term increase in importance of household spending as a share of national income (GDP). As our Timetric chart shows, the proportion of GDP accounted for by consumer spending on goods and services has edged higher over the years from 58% in 1980 to nearly two thirds of GDP in the credit-fuelled spending boom of the last few years.read more...»
Dambisa Moyo’s talk at the RSA available here focuses on some of the long term structural problems facing Western Economies in general and the USA in particular. She argues that there are three crucial ingredients in economic growth - better capital, the quantity and quality of the workforce plus improvements in productivity
Our good friends at Timetric are producing some superb stuff with economic data and here is another example. Policy interest rates are at historically low levels but the cost of borrowing for businesses and unsecured loans for personal customers continues to edge higher and is a vast multiple of the policy rate. This blog from Timetric offers timely background on the rising cost of credit. And it provides a connection to information failures in the consumer credit market.
Two videos show the stark contrast between rail networks between China and India! Good for understanding a little more about the importance of rail network investment (high speed and conventional) as a platform for economic growth and development.
Here is a link to an article written by John Gapper in the Financial Times about the long term decline of the US container shipping industry. The finger of blame is pointed at the protectionist ruling that “all domestic cargo must be carried in US ships made in US shipyards, crewed by US citizens .....Of the world’s 7,200 container ships in 2007, only 89 were US-registered compared with 1,250 European ships and 860 in Greater China ......An alliance of shipping companies, trade unions and US shipyards has blocked liberalisation.”
This is also a really good article on the economies of scale in container shipping.
Inflation is rising in China, and many of the reasons are the same as those given by Mervyn King for the rise in the UK - food prices are up 10.3% and the producer price index has risen to 6.6%, giving an annual inflation rate of 4.9% in January.
This is in spite of three interest rate rises in the last four months, and has brought about a further rise from 5.81% to 6.06% by the Central Bank.
The growth of the property owning middle class is recognised as having a role here - the National Bureau of Statistics also announced changes in how it calculates consumer price inflation.
In spite of the fact that there is still a huge proportion of the population who live on a very low income, and poor families spend up to half their incomes on food, housing has now been given a much larger share of the new consumer price index (CPI) basket, and food prices have been given less weight, it said.read more...»
This is a 16 minute video produced by Media Storm on behalf of Yale Environment 360 which is an online magazine offering opinion, analysis, reporting and debate on global environmental issues - may be of interest to colleagues teaching water scarcity in Africa / the economics and geography of adaptation to climate change. From the Yale 360 site this video on The Warriors of Qiugang - A Chinese Village Fights Back is particularly powerful.
The US trade gap with China hit a record $273.1 billion in 2010 raising fresh fears of a deteriorating trade relationship between the world’s two biggest economies. But a quick look behind the figures suggests that the US economy is enjoying a surge in exports a major stimulus to their recovery hopes.
The raw data is that US goods exported to China totaled $91.9 billion in 2010 while imports from China rose 24 percent to $364.9 billion. In fact that represents a rise in the value of US-China exports in 2010 of more than 31%.
And the true scale of the trade imbalance with China is likely to be much smaller than the conventionally published data suggests.
The deepening economic ties between China and the continent of Africa is a hot topic in the globalisation debate and one that has been covered in a two part series on the BBC by Justin Rowlatt. Details here. Episode 1 / Episode 2 More programme information can be found here.
Diane Coyle has a revealing blog post on the subtleties of this relationship in this blog post where she reviews the new book The Dragon’s Gift.
For visual learners this photo archive from the BBC is superb!
Here are some more recent news stories on this topic:
Poverty and Development: Africa-China relations mutually beneficial (Tutor2u Politics Blog)
Global food prices have risen on average by more than 135% over the last 5 years. While the price of food has been highly volatile, with a spike during 2008, there is clearly a trend pattern of a long term rise. This can be attributed to various root causes, both demand and supply side in nature.read more...»
The financialisation of the British economy continues apace. This article in the Guardian reports that US pay day loan businesses (regulated loan sharks to you and me) are planning a rapid and sizeable entry into the UK consumer credit market. In part this might be because in the UK there is little or no effective regulation on what they can charge.
Cash-strapped families often denied credit by high street banks are vulnerable to the heavy marketing of these businesses - students will know of one of them Wonga the shirt sponsor for Blackpool FC. The typical pay day loan is around £75 to £750, which is deposited in their bank account in as little as 15 minutes, to be repaid in around two to four weeks but with interest rates that can easily reach 30% a month or higher.
The pay day loan market might be a good case study for students wanting to understand more about the demand for credit and discussions about whether there should be a maximum price or cap on the interest rates that can be charged.
The NPR Friday podcast features Michael Lewis - author of The Big Short. For those who have enjoyed the book this will be a treat!
I would have to travel a long way to hear a better and more incisive talk than Mo’s talk at Fulham on Monday about the economics of currency wars. His students are lucky indeed to have such a gifted and authoritative communicator in their classroom! It was fascinating and focused on so many global economic forces that A2 macroeconomists need to have a handle on as their exams loom. Here are some brief notes taken during Mo’s talk and (at the end) a link to a pdf download of Mo’s presentation - full of fantastic supporting charts!read more...»
David Smith from the Sunday Times was on fine form in his talk to the Global Economy Student Enrichment event at Fulham yesterday. I have some brief notes below on some of his key themes and the pdf version of his presentation can be downloaded from the link at the bottom of the blogread more...»
Two programmes on BBC2 in the next two weeks investigate the spread of Chinese influence around the planet and asks what the world will be like if (when, surely?) China overtakes America as the world’s economic superpower. The first is on Tuesday 8th at 9pm, in which Justin Rowlatt covers a journey across Southern Africa to chart the extraordinary phenomenon of Chinese migration to Africa, and the huge influence of China on the development of the continent. This looks well worth watching, for all students who are embarking on topics of globalisation and development economics.
The BBC website for the programmes says that “While many in the West view Africa as a land of poverty, to the Chinese it is seen as an almost limitless business opportunity. From Angola to Tanzania, Justin meets the fearless Chinese entrepreneurs who have travelled thousands of miles to set up businesses.” Radio 4’s “From Our Own Correspondent” today featured a fascinating report by him about Chinese farmers who have emigrated to Angola to become chicken farmers there, and met with great success but some resentment from the local farmers, who are not managing to respond to this new competition in their market. There are also two short video extracts from the programmes:
Chinese sell ‘tender’ chickens in Zambia
Zambian chicken farmers lose trade to chinese
With EU carbon emissions market has closed since the middle of January after hackers stole €30m of permits the economics of a EU wide carbon tax has been given fresh prominence in recent weeks. Charles Hart evaluates the arguments for and against a tax on emissions in this super applied micro essay. After the essay there are some links to recent blog posts and other resources on carbon trading and carbon taxation.read more...»
Is Jim O’Neill at it again? A decade or more ago he coined the acronym BRIC for four emerging economies set to reshape the boundaries of power and influence in the global economy. Now he is making frequent reference to another cluster of four countries that together spell MIST. Can students name them?read more...»
This is one of the longest running disputes in trade history. Europe and the US have been fighting for more than six years over each other’s subsidies for large passenger aircraft in the duopolistic battle between Boeing and Airbus. Now the World Trade Organisation has found that Boeing received at least $5bn (£3.1bn) in illegal subsidies and was only able to launch its 787 Dreamliner with such support. Airbus has als been found to be in breach of receiving illegal state aid. Reuters provides useful background here.
This is a must read article for every student who wants to appreciate the impact of innovation on competitiveness and growth. Writing in the Business Guardian, James Dyson argues that “For me, the UK economy shouldn’t be built entirely on the City of London or the next digital fad. We need substance – patentable exports. They bring new money into our coffers. And what will generate economic growth is not just talk of spending cuts, but creating the right environment for research and invention.” Dyson is a strong supporter of tax credits and lower corporation tax for research and development projects and also for science and maths graduate teachers to be paid more.
More here: Innovation: Britain’s other deficit
Tories look to Dyson on hi-tech economy (BBC news video)
Fans of Brad Pitt may be interested to know that the Hollywood star is pretty much lined up to take a lead role in the film of The Big Short - the epic new book from Michael Lewis. The author let this slip in discussion at a packed LSE last week as he explored the charaacters of many of the lead figures in a story of epic financial returns from staggering regulatory failure.read more...»
A hat tip to Ian Martin from Beauchamp College for spotting this resource. The FT is doing a series on the growing influence of China and its impact on economies and markets around the globe. This is a link to a lovely interactive graphic showing how China’s trade with 43 nations has increased since 1992.
Now releasing in the UK and starring Kevin Spacey, Paul Bettany, Jeremy Irons and Demi Moore, Margin Call is presented as a thriller that revolves around the key people at a investment bank over a 24-hour period during the early stages of the financial crisis.
BBC Newsnight interview (Jan 2012)read more...»
Happiness or Prosperity. How can we tell if a country is happy? Does it matter?read more...»
The Economist has a neat graphic looking at how American states compare with other countries in terms of GDP and population.
The BBC produced a nice little graphic this week to go illustrate comparisons between the US and Chinese economies, alongside the talks between President Obama and President Hu Jintao. Relations between the two countries have been strained by issues such as the trade imbalance and China’s growing military might. The figures here give some background to those issues.read more...»
The UK is one of many countries that now face a dilemma when it comes to fish stocks and their sustainability. In the UK we now consume over 385,000 tons of fish per year whilst on a global scale only 10% of large fish stocks that existed in the 1950s are still present today; this include both cod and tuna. Stock depletion has become a larger issue because of the increases in fishing technology – especially in long-line fishing which is the main technique used in Japan.
As a result many of the once inaccessible fish reserves have become economically viable to fish as boats are more fuel efficient and require less labour. In a fully functioning market the decline in supply of the product would cause an increase in price and act as a disincentive for consumers to purchase the product meaning that the industry would reach a sustainable equilibrium. In this case however there has been a deep market failure resulting from the tragedy of the commons. The sea, and its fish, is a common resource either on a global scale or on a national scale within a country’s own territorial waters. There are very few established property rights over the sea meaning that rational economic agents have an incentive to plunder the seas resources causing the falling fish stock levels.read more...»
I am a big fan of the journalistic work of Roger Harrabin at the BBC. Here is a nap hand selection of five recent video pieces on environmental issues focusing on emissions issues and policies in developed and developing countries.read more...»
Will many advanced economies have to live with a new semi-permanently higher level of unemployment as a consequence of the global financial crisis, economic slump and a period of fiscal austerity?
Here are five links to stories and issues connected to environmental economics - we are embarking on a study of this for our A2 microeconomicsread more...»
The rapid growth of the world population is back at the front of the international news agenda with food prices spiking back above their 2008 levels. Roger Harrabin writes here about approaches to adaptation in a world of possible population overload that flow from the ideas of senior engineers. Over the next six decades the world’s population is expected to soar from 6.9 billion to peak at 9.5 billion in 2075 according to this new report from the Institution of Mechanical Engineers. Mega-cities’ of more than 10 million people will rise to 29 by 2025 and the urban population will increase from 3.3billion (2007) to 6.4 billion (2050).
I’m always on the look-out for useful websites that can enliven the statistics behind economic development, and this looks like another very useful one…read more...»
A sustained rise in the global prices of foodstuffs is called agflation. As our chart below shows, the Economist’s index of global food prices has shown high volatility in recent years, there have been two sizeable and steep increases in food prices and a downturn in the wake of the 2009 global recession. And now the United Nations Index of Food Prices has now risen back above levels last seen in 2008 at a record high.
A period of rising food prices affects both the demand and supply-side of an economy. And the impact will depend on many factors including:
(i) The patterns of trade for one or more countries e.g. whether a country is a net exporter or importer of food
(ii) The importance of food production and exports in economic activity e.g. the share of value added contributed by farming, food processing and other food-related industries
(iii) Average incomes for a given country / region and the percentage of incomes that must be spent on food to ensure a modest but adequate lifestyle
(iv) Possible effects of rising food prices on variables such as inflation, interest rates and the exchange rate
There is plenty of coverage and discussion at the moment of the extent to which Cuba is making a decisive and significant move away from a soviet-style economic model. In a bid to cut government debt, subsidies for many staple foods have been cut and hundreds of thousands of under-employed workers in government-run industries are facing unemployment in the next couple of years. But how far is Cuba prepared to go to make structural changes to their economic system? Here are some background articles:
Is Cuba set for major changes in 2011? (BBC news, January 2011)
Cuba issues plans to expand its private sector (BBC news, September 2010)
Cuba to withdraw cheap cigarettes for elderly (BBC news, September 2010)
Cubans stock up as reforms take toll on ration (Reuters, December 2010)
Cuba bows to pressure to reform its economy (Financial Times, December 2010)
A starting point to this question is to discuss what “weaker EU countries” might mean. We can use some of the conventional indicators of macro performance to help us namely:
1. Slow or negative economic growth
2. Rising unemployment and falling employment rates
3. Deteriorating public sector finances and higher government debt
4. Relatively high inflation or perhaps an economy experiencing a period of deflation
5. A high deficit in trade in goods and services
Other indicators might be used to identify weaknesses in performance - for example:
1. Relatively low labour productivity
2. A falling share of global trade
3. Rising yields on long term government bond issues
4. Weaknesses in non-price competitiveness
A seasonal hat tip to Anita Hibbert for spotting what looks to be an excellent resource for students and teachers who look at and evaluate microfinance as a strategy for reducing poverty…read more...»
Here is a great piece from the BBC World Service programme “Business Daily”. If you would like to listen to the Irish brogue of Colm O’Regan click here
China (which produces about 97 percent of the global supply of rare earth metals) has announced that it plans to restrict exports of rare earths by 10% for 2011 and it is also increasing export taxes for some rare earth elements to 25 percent in 2011.
These moves raise fears that shortages of rare earths will drive prices higher and make many hi-tech consumer goods more expensive.read more...»
Minimum wages in China are decided at the provincial level and, in a move designed to soften growing social tensions among the lowest income households, the Beijing City government has announced a further steep rise in their minimum wage - a 21% rise that will take effect in the New Year. The statutory minimum monthly wage in the Chinese capital rises on New Year’s Day to $175 and it is now 40% higher than at the start of 2010.