Unit 4 Macro: Revise and Test - Aid and Micro Finance
Revise the development topics of overseas aid, micro finance and Fair Trade and then test yourself with our short revision online quiz
read more...»A2 Economics Revision Notes
To support Year 13 students preparing for their final A Level Economics exams, we've been busy updating and extending our collection of free revision notes for A2 Economics core topics. Set out below are links to the current A2 Economics revision notes. Please bookmark or share this blog entry as we'll update this master listing each time we add new revision notes.
AS Economics students can find a full collection of AS Revision Notes here
read more...»Unit 4 Macro: FDI in Africa
Revision blog on the economics of foreign direct investment in Africa with a special focus on investment from China and other BRIC countries
read more...»Unit 4 Macro: Cyprus Infographics
Here is a selection of resources on the Cyprus banking crisis and the controversial bail-in of uninsured large depositors. Particular credit to the team at Saxo Bank for an excellent info-graphic
read more...»Budget 2013 stimulus presentation
With Evening Standard-like speed, please follow this link for a short set of questions about today's Budget.
Unit 4 Macro: Can India lead in Mobile Technology
Indian e-commerce lags behind countries such as China and a growing number of African nations. A new report in the economist looks at the future for the Indian mobile technology sector - can the adoption of cheap smartphones and adoption of 3G and 4G phone networks create new competitive advantages for the Indian economy? Who will investto build the telecoms capacity infrastructure? To what extent is the industry held back by hugely complex laws and endemic corruption? India is expected to have close to 165 million mobile Internet users by March 2014, up from 87.1 million in December 2012 - the potential is vast.
Unit 4 Macro: Trade Costs Higher for Developing Countries
Attention is often focused on the tariff and non-tariff barriers to trade and in particular, the extent to which trade from developing countries to advanced high-income nations is influenced by import taxes. Average tariff rates have come down to historic lows in recent years although non-tariff barriers proliferate.
New research from a group of European economists finds that trade costs - a concept that captures the broader expenses of getting goods and services across borders into international markets - are much higher than tariffs. And for developing countries these costs have not fallen to the same extent as richer countries.
read more...»Unit 4 Macro: Doughnut Economics
Oxfam senior researcher and former co-author of the UN's annual Human Development Report Kate Raworth visits the RSA in London to explain 'doughnut economics' -- the bold new theory that is sweeping the development world. A really clear seventeen minute video covering some of the key environment challenges that threaten sustainable growth and a call to make central to the debate the protection of natural capital and social capital.
Unit 4 Macro: Growth and Development in South Korea
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?
Unit 4 Macro: Doughnut Economics - Growth and Welfare
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
Unit 4 Macro: The Fiscal Austerity Debate
Channel 4 news hosted an extended discussion recently on the impact of fiscal austerity in the UK and many other European countries. Click below for the video which looks at whether austerity measures are bringing massive government borrowing under control or threatening an even deeper descent into semi-permanent recession. The discussion features Professor Paul Krugman
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The Tutor2u Red Nose Day Challenge
Schools and College up and down the country are preparing for all sorts of different activities for the Comic Relief Red Nose Day this Friday (15th March). Are you doing anything with your class?
Here is a ready-made Powerpoint game to run for approximately 20 to 25 minutes in your class this Friday. Whilst being a fun, team-based challenge, the multi-choice questions are all about facts and figures related to the causes that Comic Relief are attempting to support. As such, the information contained within the game should prove a useful stimulus for discussion within your class about the causes of poverty in Africa, as well as alcohol-abuse and other social issues within the UK. It could also prove a useful tool with discussing why these problems exist and what government solutions could be implemented (as well as asking why they haven't already been put in place!).
Click on this link to go to the Powerpoint file that contains the game.
read more...»Paul Ormerod: How expert are experts? Time to end the independence of the Bank
The Bank of England has held short-term interest rates very close to zero for several years, with devastating consequences for the incomes of millions of frugal people. The Bank’s latest wheeze suggests that savers pay the banks for the privilege of holding their money. The Bank has pumped hundreds of billions of pounds into the economy through quantitative easing.
All these policies are open to question. For example, quantitative easing has many critics amongst distinguished monetary economists.
Despite this, the actions of the Bank are deemed to be a Good Thing, for the Bank is independent. The decisions of its experts are untainted by the touch of mortal, corrupt politicians. Yet just how expert is its expertise?
Is this the start of Plan B?
It’s not often you read such a clearly set out, even-handed article on macroeconomic policy, so this relatively lengthy piece was interesting in itself as its writer appears to deal relatively equally with both sides of the big austerity debate. But you really have to take notice when the writer is the Secretary of State for Business, Innovation and Skills, Vince Cable.
Unit 4 Macro: New research on fiscal austerity and the sovereign debt crisis
The latest edition of the Economics Journal publishes some new macroeconomic research on the vexed issue of fiscal austerity. Below are some of the summaries of these research papers.
read more...»Paul Ormerod: What would Keynes have said? Ouija board active!
The loss of triple A status on UK government bonds has
intensified the demands for a Plan B. So-called Keynesians demand an increase in both public
spending and the public sector deficit.
What might Keynes himself have said about the current
situation? Lacking a Ouija board,
I am unable to communicate directly with the great man himself. But we can get a very strong hint from
the title of the first major work which Keynes published when confronted with
the 1929 financial crash. It is
the Treatise on Money. His most famous work was not published
until 1936, when the Great Depression was well and truly over. Its full name is the General Theory of Employment, Interest and
Money.
Unit 4 Macro: Mobile internet reaches rural Indonesia
Mobile commerce can be an important driver of growth and development. Here is an example of emerging business opportunities for leveraging the power of mobile telephony in Indonesia
read more...»Unit 4 Macro: China’s Presence in Europe
This is great for understanding key shifts in global trade and investment. The Economist offers this short video on the rising prominence of Chinese money in property and currency markets and FDI from Chinese businesses within the EU.
read more...»Unit 4 Macro: The AAA Credit Rating Downgrade
Huge media headlines today for the decision by Moody's to downgrade the UK's credit rating from AAA. It will take some time to see if this decision from one of the ratings agencies - who we must recall lost much of their credibility because of the sub-prime crisis - will have genuine and significant consequences for variables such as market interest rates, the sterling exchange rate, inflation and GDP growth. Stripping away the rather facile spin from the political parties, there have been some interesting and relevant comment pieces on the downgrading and I have chosen some of them for this blog entry. I hope some of them are helpful for your studies:
Moody's Statement
"The main driver underpinning Moody’s decision to downgrade the UK’s government bond rating to Aa1 is the increasing clarity that, despite considerable structural economic strengths, the UK’s economic growth will remain sluggish over the next few years due to the anticipated slow growth of the global economy and the drag on the UK economy from the ongoing domestic public- and private-sector de-leveraging process. Moody’s says that the country’s current economic recovery has already proven to be significantly slower — and believes that it will likely remain so — compared with the recovery observed after previous recessions, such as those of the 1970s, early 1980s and early 1990s. Moreover, while the government’s recent Funding for Lending Scheme has the potential to support a surge in growth, Moody’s believes the risks to the growth outlook remain skewed to the downside."
read more...»Unit 4 Macro: Green Growth - Commercializing Innovation
Bringing innovations to the market is crucial for countries wanting to focus on green industries as a source of economic growth. This blog will provide a number of short news videos on innovation in environmental products.
read more...»Unit 4 Macro: Dissecting the Middle-Income Trap
The Middle-Income Trap has become a popular and much quoted concept in development economics. Much discussion on the policies and strategies to lower the risks of growth slowdowns before a country has achieved high income status. But how relevant is the middle income trap? The absence of a clear definition of the idea makes it difficult to measure, this article from the Economist has a go and is highly relevant for students taking courses in development economics, especially EdExcel Unit 4.
Thailand launches strategy to escape the middle income trap (Feb 2013)
Revision notes here on the middle income trap
Unit 4 Macro: India’s Rice Revolution
Raising productivity and sustainable yields in the farm industry is a crucial component of the development/growth agenda in India. Here is a case study from Guardian Global Development of progress in achieving this aim.
Peter Mandelson famously said that he was ‘intensely relaxed about people getting filthy rich’. As
Peter Mandelson famously said that he was ‘intensely relaxed about people getting filthy rich’. As was the case with many aspects of New Labour, he was working firmly in the Leninist intellectual tradition. Some 20 years earlier, the then leader of the Chinese Communist Party, Deng Xiaoping, stated that ‘to get rich is glorious’.
The Chinese have certainly put the philosophy into practice. An intriguing article in the Wall Street Journal at the end of last year by James Areddy and James Grimaldi, described the deep intermingling of China’s richest men with the Communist Party. For example, Liang Wengen, who owns a major construction equipment making firm and whose personal wealth is estimated at $7.3 billion – billion! – is a member of the key political body, the Communist Party Congress. Overall, the elite political institutions in China have no fewer than 160 individual billionaires as members.
read more...»Unit 4 Macro: Abenomics - Changing Monetary Policy in Japan
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...»Unit 4 Macro: China’s Mass Internal Migration
This is a quite remarkable short video looking at the largest human migration on earth as up to 1bn Chinese people each year go home to their roots. The FT's Patti Waldmeir reports on the phenomenal combined buying power of China's 260m migrant workers and looks at the type of gifts they are buying this year. Consider this in the context of Chinese growth and development, the deep and persistent gaps in living standards between urban and rural areas and the challenges facing Chinese policy-makers as they seek greater regional balance in their development process. What opportunities are there for Western businesses in the Chinese countryside?
read more...»Unit 4 Macro: The UK Economy and the Euro
Mark Austen considers whether the UK economy has on balance benefited from being outside of the Euro Area in recent years
read more...»Paul Ormerod: Today Singapore and Japan, Tomorrow China
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.
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Unit 4 Macro: The UK Economy Outside of the Euro Area
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
Paul Ormerod: Springtime for America
Is America heading for a boom? Real GDP has risen for 13 successive quarters and now stands
3 per cent above its peak level. A
net total of 4.8 million jobs has been created over the past three years, with
a fall of half a million in the public sector being massively outweighed by the
5.3 million rise in the private.
But welcome and sustained though the recovery is, it hardly
constitutes a boom. And it
certainly does not when compared with the growth rates seen in the recovery
from the last major financial crisis in the 1930s. The slump was of course much worse, with output falling in
every single year during 1930-33.
The rebound was spectacular.
GDP rose by no less the 43 per cent between 1933 and 1937.
Unit 4 Macro: A Manifesto for Growth - the LSE Growth Commission Report
On Thursday 31st of January 2013, the long-awaited LSE Growth Commission Report was published and launched in London. The document itself is available for download from this link and I urge all teachers and students interested in growth, competitiveness and the fairness agenda to have a look at it. It is full of rewarding and important insights into the drivers of balanced growth in a modern advanced economy.
I will be adding new resources and links to this blog following the launch event
Key Points from LSE Growth Report
Existing Strengths
- Strong rule of law
- Generally competitive product markets
- Flexible labour market
- A world-class university system
- Openness to foreign investors and migrants
- Independent regulators including competition authorities
- Strengths in many key sectors including high end manufacturing
LSE Commission Growth Agenda
Education
- Greater autonomy for schools, tackle the long tail of under-performance. Conditional cash transfers for families to pupil attendance and performance. Focus league tables less on % attaining 5 A-C grades. Reveal performance at the bottom end.
- Concentrating on skills (improving human capital) gives people the resilience to recover from global shifts in the division of labour
Infrastructure
- Critical infrastructure essential for competitiveness in modern economy. For the UK, transport and energy are infrastructure areas with biggest issues; there has been a lack of clear strategy and lots of dithering / political delays.
- Huge opportunities for UK - industrial revolution driven by search for low-carbon technologies driving innovation - can the UK keep up?
LSE Commission proposes:
- 1) Strategy Board (for planning)
- 2) Planning Commission (for delivery)
- 3) Infrastructure Bank (for funding)
Innovation
- Innovation is the third channel for increased growth
- Problems in UK capital markets mean innovation is not properly funded - short-termism remains a structural weakness of the markets
Banking/ Finance
- More competition in retail banking
- Business bank that prioritises lending to SMEs and innovative firms
Changing the compass of economic performance
- Commission suggests that focus on GDP is not helpful
- GDP misses out on who gets the growth and measures production not income
- Need more focus on Median Household Income
- Median household income and GDP per capita have been decoupled since about 2002. GDP no longer tracks it
Overall
UK trend growth rate can be lifted by 0.5% with effective structural reforms - large compound effect on incomes over the long run
Institutions and incentives matter for growth. Macro stability important too. UK politics too short term and adversarial. Fundamental weakness is the failure to create a stable policy framework.
More focus needed on evidence based policy making to make government smarter.
Here Professor John Van Reenen, Director of CEP and co-chair of the LSE Growth Commission, presents a 'manifesto for growth' for the UK economy over the next 50 years, backed up by the Growth Commission's report.
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