Get Summer 2014 Right First Time with tutor2u Exam Coaching & Revision Workshops
I was delighted to give a talk to A2 economists at Wilson's School in Surrey today covering some aspects of trade and development economics. In particular we looked at the work of Hidalgo and Hausmann and their newly published Index of Economic Complexity. The slides from my talk are streamed below.read more...»
The Atlas of Economic Complexity is a new book (perfect for the coffee table) from Richard Hausmann and Cesar Hidalgo. It maps out the degree of complexity of individual economies around the world and provides a hugely visual and interesting insight into the importance of knowledge in shaping the future prosperity of countries in the global economy. I have put together a 10 question quiz on some of their key results - a useful activity I hope for students interested in the commodity composition of trade of developed and developing countries. Have a go!read more...»
In Germany the government has reluctantly agreed to introduce a minimum wage of €8.50 (£6.98) per hour. Angela Merkel's conservative Christian Democratic Union party is opposed to the idea, but need to make concessions in coalition negotiations with centre-left parties such as the Social Democrats, who have campaigned for a national minimum wage.read more...»
In this independent research assignment, Year 12 Economist Doug Feagin considers some of the factors influencing the macroeconomic performance of Mexico - a fascinating country and one of the MINT cluster of countries discussed by Jim O'Neill in his recent programmes for the BBC.read more...»
In the 1990s and early 2000s, Germany was seen by many as the new ‘Sick Man of Europe’. Between 1991 and 2005, GDP growth averaged only 1.2 per cent a year, compared to 3.3 per cent in the UK. Since then, the German economy has revived dramatically. The recovery in the German cluster of economies from the financial crisis has been as strong as in the United States, with the previous peak level of output being regained in 2011. Germany itself experienced virtually no increase in unemployment in 2008 and 2009, its exports are at record levels, and even the crisis in the Euro area has not prevented expansion in both output and employment.read more...»
Gains from international trade, the history of European economic integration, fiscal and monetary policy, the launch of the €uro and the 2008 financial crisis are all clearly animated and explained in this superb video. In just over 12 minutes it explains the problems of the €urozone and the threats and challenges it still faces. Definitely one to watch for the closing stages of an A2 macro course.read more...»
The BBC Africa Report looks at the importance of largely French funded infrastructure projects as a driver of growth and development in the Ivory Coast. But the economy is becoming more open to investors from other countries. Some of this investment may come from Japan - read this article
Related article - focusing on the mining boom in the Ivory Coast - Ivory Coast hopes for golden future as mining sector opened upread more...»
My A2 macro students are now looking at some fascinating macro policy challenges facing a range of countries. This week they choose one from two set assignments.
The first offers them an opportunity to analyse some of the causes of high inflation in India and consider how much of a threat it is to India's continued growth and development.
A second assignment looks at Abenomics in Japan and whether it can lift the Japanese economy out of over two decades of slow growth and deflationary pressures. I am hoping that there will be some interesting insights allied to good A2 macro analysis as students crack on with their independent research.
Download the assignment sheet below and I have added in some suggestions for further reading on the two topicsread more...»
Inside Story from Al Jazeerah considers whether the worst is now over for some of the cluster of Euro Area countries who have received huge bail-outs accompanied by fiscal austerity measures. The Spanish economy seems to be moving tentatively towards a stronger rebound despite persistently high mass unemployment.read more...»
Successful innovation is a driving dynamic of competitive businesses and countries. Bloomberg Rankings recently examined 215 countries and sovereign regions to determine their innovation quotient. They have narrowed this down to thirty countries and the results are available through this Bloomberg slideshow. Which nation comes first?read more...»
The coming year looks like it will be a good one. At the start of each of the past five years, the economic scales have been tilted down, and the challenge has been to look for factors which might have tipped them back up. This year, the balance is reversed. The onus lies with the pessimists to prove their case. Not that there are any shortages on this score. For example, King Canute of Twickenham, aka Vince Cable, has solemnly commanded that house prices must stop rising, for fear of a new bubble.read more...»
The Confederation of British Industry has today launched a report called Our Global Future: The Business Vision for a Reformed EU - The report calls for further EU reform not least the completion of the single market in particular in services and the new internet economy. They argue for more free trade deals with other countries and regions.
The report produces estimates – based on past academic studies – that EU membership adds £62bn-£78bn a year to UK gross domestic product, equal to the combined economies of northeast England and Northern Ireland. That works out at £3,000 per household and £1,225 per individual. The fact sheets from the report can be found hereread more...»
The nature of A2 economics specifications is that they lag interesting and important developments in the subject much of which are directly relevant to what students are taught in the classroom. The role of complexity in understanding how and why countries grow is one such example and I have blogged before about the work of Cesar Hidalgo and Richard Hausmann through the Observatory of Economic Complexity - see "Teaching Trade in a Different Way"
It is a joy to find the Financial Times covering some of their ideas in a brace of short videos as part of the John Authers Daily Note. You can always find these clips on the FT's You Tube Channel and I strongly recommend this for ambitious and enthusiastic students.read more...»
Energy prices are in the news. The recent actions of some of the energy companies can plausibly be described as provocative, no matter how well founded their decisions might be. They run the risk of provoking the ire of both the Opposition and the Government.
One interesting aspect of the debate is that it has become even clearer that decisions taken by Ed Miliband himself in the Brown government are partly to blame for our high energy bills. The plethora of green taxes and subsidies has become very expensive for consumers.
But how effective have such policies been? Not very much, seems to be the answer.read more...»
On the World Bank twitter account, President Jim Kim is quoted as saying that "Properly managed, new minerals wealth could transform Africa’s development." Back in June 2013, a new report from the African Progress Panel looked at this important issue and set out an agenda for maximising Africa’s natural resource wealth and using it to improve well-being.
My own students have been researching the economics of natural resources and whether they can be a blessing and/or a curse to countries seeking sustained growth and development. I just wanted to share one or two of these essays with you because I was delighted with the depth of the independent research on show and the quality of evaluation in their arguments.read more...»
Changes to key interest rates by central banks have a significant impact on economic activity during periods when the economy is expanding. Unfortunately, they seem to have virtually no effect during recessions – the time when the stimulus of monetary policy is most needed.
These are the central findings of research by Professor Silvana Tenreyro and Gregory Thwaites, published by the new Centre for Macroeconomics at the London School of Economics.read more...»
A revision presentation on aspects of the links between investment and economic growth. Plus some slides on the causes of the so-called Middle Income Trapread more...»
Here at Tutor2u we are really looking forward to the launch of a new programme on BBC - Talking Business with Linda Yueh. Linda has spoken at several of our Tutor2u events in recent years and her ability to communicate important and often complex ideas to a wider public has been clearly evident in her presentations. This is a programme well worth tuning into and sharing with your students. Click here for details. See also: China's Transformation - The Long View (Linda Yueh at the Tutor2u Conference)
The rate of unemployment in Greece has reached a record of just under 28% of the labour force. To put this into context, in 2008 just before the Global Financial Crisis engulfed much of the EU economy in recession, Greek unemployment was 7.8% (equivalent to where the UK jobless rate is today). Youth unemployment is staggeringly high - the latest figures show that 58.8% of people under the age of 25 are out of work.
There are some tentative signs that the Greek economy may be at a turning point from the trough of a deep and persistent depression. After six years of full-blown recession some macro indicators suggest that confidence is seeping back for businesses and consumers and that the government debt crisis might ease a little. Tourism, which accounts for about a fifth of Greece's economic output and one in five jobs is having a strong year - tourism exports represent an injection in the Greek economy's circular flow of income and spending. Chinese tourists seem to be coming to Greece in much greater numbers!
But Greece has suffered gravely over the last few years - the level of real GDP is 25% lower than it was before the crisis and some economists have started to refer to Greece as a sub-merging economy whose trend growth rate is now negative.read more...»
As an introduction to trade theory I am looking at data on the pattern of exports for different countries drawing on 2010 data from the Observatory of Economic Complexity at MIT. The task for students is to match the country with their pattern of exports (% by value) for the year 2010. There are ten countries - who can get all ten right? Download the resource below - in pdf format and also the charts in a powerpoint formatread more...»
Here are links to two freshly developed sources of data on the UK economy.read more...»
SOME people are never satisfied. The evidence is mounting that the UK economy is now on the path to recovery. But to those who denied the possibility of any economic revival at all under the policies of “austerity”, this is simply not good enough. It is the wrong kind of recovery, they say. Fuelled by debt-based personal spending, unsustainable house prices, another crash, the doom-mongering litany more or less writes itself.read more...»
Here is a great example of factors of production at work in the mining industry. The BBC's Linda Yueh has been on a tour of Mount Whaleback - an iron ore mine in the Pilbara region of Western Australia. The mining is taking place on an epic scale and the commodities industries have been a major source of economic growth for Australia in recent years.read more...»
“Give a man a fish and he will eat for a day. Teach him how to fish and he will eat for a lifetime”. This Chinese proverb has great sense and should be applied to foreign aid. Simply giving developing countries money does not benefit them in the long term, as this aid is finite. Inward investment gives them the skills to develop their own economies, whilst benefiting the aid-givers in the process. Bono is well known for his philanthropic work and he recently said: "In dealing with poverty here and around the world, welfare and foreign aid are a Band-Aid. Free enterprise is a cure." So this really is a "rockstar" concept.read more...»
The UK Energy and Climate Change Committee has stated that shale gas will not be a "game changer" in the future of UK energy, but they are wrong; it will be. The recent British Geological Survey report pointed to 1,300 trillion cubic feet of reserves, twice previous estimates. A recent study by the Institute of Directors found that the shale gas industry could generate 74,000 jobs and could supply up to half the country’s gas needs by 2030. Furthermore it could also trigger an investment boom worth £3.7 billion a year. Given the location of most of the reserves, it could also be hugely beneficial in reducing the north-south economic divide.read more...»
The GDP growth figures announced last week for the second quarter of this year have sent most people away on their holidays in a cheerier mood than last year. The recent weather has certainly helped. But gloomy clouds may hover over the exclusive settings of Tuscan villas and beach houses in Martha’s Vineyard, where bien pensant commentators and so-called Keynesian economists ritually gather for the summer.read more...»
There has been renewed focus in recent weeks on the slowing growth rates in the BRIC countries - Brazil, Russia, India and China. It is inevitable that the pace and sources of growth will change as these countries develop and experience continued structural adjustments. How successful will they be in responding the the challenges and opportunities of the next stage of development? In this blog we link to some recent articles on the BRIC countries for students wanting to deepen their understanding of this important area of the A2 macro course.read more...»
Cambridge economist Mike Kitson argues here that the Euro Zone will eventually collapse after a number of difficult years. As pressure again mounts in the Eurozone leading Cambridge economist Michael Kitson says the euro might 'stagger on' for a few more years but eventually it will disintegrate. Policy makers have been papering over the cracks in the Eurozone and causing major problems for many member countries which are trapped by tight fiscal rulesread more...»
This short video from the OECD looks at the importance of knowledge capital as a key driver of innovation and growth for businesses and economies across the world. Innovation -- building on human knowledge - is booming, changing the way business invests and grows. As coal drove the last industrial revolution, software, databases, research and development, designs, new business models and the skills people bring to an organisation are driving revolutionary changes today.read more...»
A short but useful infographic from the Economist - perhaps a resource when teaching aspects of globalisation. Foreign direct investment decisions show how the global economy is different since the financial crisis.read more...»
The American economic recovery carries on apace, with a net rise in employment of almost half a million over the past three months. The Office for National Statistics has decided that the UK never had a double dip recession, and the texture of the economic news has turned positive.
Economic imbalances are a recurring theme in discussions about prospects for the world economy. We link here to a recent lecture given at Gresham's College on some of the consequences of growing divergences between nations that are net savers and countries that are net debtors.
This lecture will look at the world surplus of savings as incomes gradually shift proportionally towards those who traditionally save a high proportion of their earnings and away from those who traditionally spend most of what they earn. In theory, the excess savings should be matched by higher investment. In practice this is not happening.
Another great short animated video from the Economist - highly relevant to students looking at the economics of protectionism / import controls. KAL, The Economist's resident cartoonist and animator, explains what dumping means and why companines do it.read more...»
SPOTTING and identifying new species is always exciting. And the last couple of years has seen the emergence of a new type of economic commentator, the recovery denier. Paul Krugman, the Nobel prize-winning economist, wrote a piece at the end of last year in which he compared the current situation to that of the 1930s. On Newsnight recently, another Nobel economist Joseph Stiglitz poured scorn on my assertion that the US economy has recovered.
But what does the data tell us? In the 1930s, output in America fell by nearly 30 per cent from its 1929 peak. This time, the fall was only 3 per cent, and the level of output is now higher than it was below the crash. The latest US labour market figures show continued growth in employment. Over 5m net new jobs have been created over the past three years, all of which have been in the private sector. Unemployment has just fallen to a four year low.
Students looking for a good example of a supply-side policy for improving the economic performance of the UK may be interested in this news article about how increasing the labour participation rates of women in the UK could lead to an increase in GDP by up to a staggering 10%. This growth could be achieved by encouraging the number of women wishing to provide their labour (or increase the provision of their labour) to the same level as men.
The common view now is that legislation is no longer good enough in itself to provide this encouragement. The Equality Act of 2010 combined the various equal opportunity laws together to penalise businesses that operate unequally. What appears to be needed is an improvement in the accessibility, availability, cost and quality of childcare facilities to allow more mothers to work (or work longer).
A further article (follow this link) explores how this principle is equally true of the Japanese economy. This article has a fantastic graph comparing the female participation rates for many of the major economies which might be a fantastic data example for teachers to use as a compare and contrast exercise.
As for the costs on society of such a policy....... That's a different question!
The BBC's Chief Business Correspondent Linda Yueh @lindayueh has new page on developments in global economy http://www.bbc.co.uk/news/correspondents/lindayueh/ - definitely one for students and teachers to follow. The opening article focuses on a concept that we have been pushing in our own macro coverage in recent times, namely the emergence of a multi-polar world economy with growth coming from a bigger number of countries / regions and less dependent on the advanced western economies. Read the article here
Fantastic interactive website here lets you check out migration flows both inward and outward from any country you care to look at.
In this short Financial Times video, Vicky Redwood the Chief UK Economist of Capital Economics looks at why economic recovery in the UK has been slower than in the USA since the end of the last recession.read more...»
The recent debacle in Cyprus has essentially been shrugged off by the markets. The European Central Bank vigorously asserts the crisis in the Euro zone is over. So why is there continued unease about the financial viability of countries such as Spain and Portugal, a morass into which even the French are now being dragged?
Economic theory helps us understand a bit more about why this is the case. One thing which the last few years in Europe have shown very starkly is the massive difference between debt which is denominated in nominal terms and that which is in real terms. Nobel Laureate Chris Sims makes the point clearly in his recently published Presidential Address to the American Economic Association.read more...»
Germany’s low unemployment is in large part due to the ‘Hartz Reforms’, which started as early as 2003 and have reduced the long-run rate of unemployment by 1.1%. That is the central finding of research by Matthias Hertweck and Oliver Sigrist, to be presented at the Royal Economic Society’s 2013 annual conference.
Unemployment rates across much of Europe have surged to unprecedented levels in recent years, particularly among the southern countries. In contrast, German unemployment has continued to fall even during the Great Recession. The authors conclude:
‘Our results build a solid basis for the macroeconomic effectiveness of such labour market reforms. This is particularly important for policy-makers across Europe who are currently planning to undertake similar structural reforms.’
The scale and depth of the unemployment crisis in Europe is confirmed by fresh figures released by Euro Stat. Unemployment in the Euro Zone was 12.0% in February 2013 and the jobless rate for the European Union as a whole was 10.9%. Last month there were 26.3 million people counted as out of work in the twenty-seven countries within the single market, 19 million of whom live in Euro Zone countries. In the last year alone, unemployment in the Euro Zone has jumped by over 1.7 million but this aggregate figure hides large country differences and persistent regional and local variations. Here is the contextual data to take into the exam:
Economic commentators love their acronyms and abbreviations - they come in handy when reaching character capacity limits on a tweet and also for students fighting the exam clock to complete a timed essay. Two new ones have come to my attention in recent days. What does ZIRP and PLOG mean to you?read more...»
Revision blog on the economics of foreign direct investment in Africa with a special focus on investment from China and other BRIC countriesread more...»
The economics news, and this blog, has recently featured the debate between those who favour more government spending on public infrastructure and those who favour sticking to the role of austerity, in the search for growth - see the debate (or spat) between Krugman and Sachs, Vince Cable's article in the New Statesman and Liam Fox's speech to the IEA last week for a range of different views. The idea that more UK spending on 'shovel-ready projects' (if such a thing exists) would help to kick start the economy through multiplied growth of GDP suggests that we don't spend enough. And this view would be borne out by those who suffer damaged car tyres from potholes, hold-ups on the roads and railways from lack of maintenance, and delayed or re-routed air travel when the airports can't cope with adverse weather. However, an article in the Wall Street Journal this weekend suggests that the UK's spending is well ahead of other countries,and that Germany in particular has a real problem with aging, collapsing infrastructure.
As part of our revision for the Unit 4 macro paper we have been discussing in school growth and development issues in South Korea. The country now has a per capita income in excess of $30,000 and is a high-income developed country with membership of the OECD. Having escaped the middle-income trap, can South Korea continue to prosper or will the country have to modify their development strategies to meet fresh competitive challenges and changing expectations?
Oxfam senior researcher and former co-author of the UN's annual Human Development Report Kate Raworth visits the RSA to explain 'doughnut economics' - the bold new theory that is sweeping the development world
Are you following important macroeconomic developments in Japan? The new government of Shinzo Abe is reforming monetary policy - including a change to the inflation target - and undertaking more aggressive fiscal measures. Will it work in lifting the Japanese economy to a higher growth plane after two decades and more of sluggish growth and the debilitating effects of price deflation?read more...»
It has suddenly become fashionable to be concerned about China’s growth rate slowing down. This is not a matter of a short-run cyclical downturn, with normal service being resumed shortly as the economy roars ahead once more. It is a worry that there will be a permanent slowdown by the end of this decade. Instead of annual growth rates around 10 per cent and even more, the Chinese economy will settle down to the much more sedate rates seen in the West in the 1950s and 1960s in the range 3 to 5 per cent.
Evaluating the UK’s macro performance outside of the Euro Zone
- Decision made in 2003 that the UK would remain outside
of the single currency
- UK remains a full member of the single market
- Supportive of further EU enlargement but distanced from deeper fiscal / banking intregration
Crucial question both in the short and medium term is whether non-participation in the Euro makes a significant difference to key macro outcomes
- Real GDP growth, estimated Trend growth (LRAS)
- Core CPI inflation and inflation expectations
- Employment and unemployment rates
- Trade balances (with EU and beyond)
- Trends in relative productivity and per capita incomes
Having German exchange students in my lesson has provided a super opportunity to discuss the position of the German economy within the Euro Area and to compare and contrast macroeconomic indicators between the UK and Europe's largest economy. Here is a selection of some of the video clips that have been used as prompts for discussion.read more...»