Unit 1 Micro: Winning the War on Deforestation
Justin Rowlatt from the BBC has been investigating some of the remarkable progress being made in controlling deforestation in Brazil. The battle focuses on an area known as the “arc of destruction” and the video reports here show the impact of a government making a clear commitment to tackling the issue and backing it up with force and with incentives.
read more...»Unit 2 Macro:Video Resources on Human Development Data
Here is a short collection of short video resources on measuring human development with specific reference to the annual human development report and to progress in improving welfare in countries such as Kenya and Brazil
read more...»Unit 2 Macro: Brazil Overtakes UK in Economic Size
The Guardian has reported new research from the CEBR that Brazil is set to overtake the UK to become the sixth biggest economy in the world. The U.S., China, Japan, Germany and France occupy the top five places.
Typically the Sun newspaper gets their economics muddled with this piece of sloppy writing
“BRITAIN will fall to seventh in the league table of the world’s richest countries next year when it is leap-frogged by buoyant Brazil.”
Brazil richer than the UK? The Sun is confusing the size of GDP with the level of real GDP per capita (adjusted to a purchasing power standard). And as our Timetric chart shows below there remains an enormous gap in average living standards between the UK and Brazil.
read more...»Economics of Deforestation
The Human Development Report 2011 reported that deforestation is a severe problem. In the last two decades, Latin American and Sub-Saharan Africa have experienced severe forest losses, especially when compared to the rest of the world.
For economists the economic and social costs of rapid deforestation represent a telling example of the tragedy of the commons where the pursuit of individual self-interest can risk a permanent destruction of natural resources that undermines the sustainability of communities and societies for current and future generations. The United Nations calculates that deforestation and degradation is responsible for nearly 20 per cent of global greenhouse gas emissions.
Will the REDD programme make a difference?
REDD stands for Reducing Emissions from Deforestation and Forest Degradation in Developing Countries and is designed to provide financial incentives funded by advanced nations for developing countries to preserve their forests and instead invest in low-carbon paths to sustainable development.
The UN estimates financial flows of up to $30bn could come from REDD and related initiatives - the scheme effectively allows rich countries to offset their carbon emissions from domestic industries and consumers by funding clean low-carbon development projects in developing countries. But it is highly controversial and opposed by many organisations such as Friends of the Earth and the World Rainforest Movement.
In this blog we have put together some web resources on the issue of deforestation - focusing on causation, consequences and also on some of the policy approaches that might work to bring about behavioural change.
Jim O’Neill - The Growth Map: Economic Opportunity in the BRICs and Beyond
Jim O’Neill the Chairman of Goldman Sachs Asset Management has a new book published early next week and it looks like being a tremendous resource for teachers and students wanting to deepen their understanding of crucial changes in the global economy. The Telegraph has been publishing extracts from the book - to have a view please click on the links below:
read more...»Economic boom in Brazil
Brazilians who wanted to get on in life used to leave the country to seek their fortune in the richer developed nations. But now that trend is reversing in a big way - the workers are moving back home, and being followed by a reverse wave of movement of people and capital away from the shrinking economies of the US and Europe to the booming, resource rich economy of Brazil.
This article has a number of interesting examples and raises issues such as the extent to which Brazil is likely to over-expand, and so risk a fast upturn followed by equally fast decline through the economic cycle, and the role that their high interest rates will play in avoiding that.
It makes an interesting read, and might just encourage a few to learn Portuguese and take the plunge - with the fabulous climate and geography, abundant resources, and the World Cup coming to Brazil in 2014 followed by the Olympics in 2016, why would you not?
UK firms wake up to Brazilian opportunities
As Nick Clegg makes his delayed visit to Brazil this week, with the aim of doubling UK exports to this fast-growing economy, the UK’s former Consul-General in Sao Paolo has written an interesting piece for the BBC’s website. As Martin Raven points out, British business has taken a long time to take Brazil seriously, and this high-level visit replaces one that was due to take place in February but cancelled at less than a week’s notice because of the debate in the House of Commons over the AV referendum - which can hardly have helped. As a result, he says, the UK has fallen behind other countries investment into the Brazilian economy and “there are now more international German companies in Sao Paulo alone than in any individual city in Germany.”
read more...»Globalisation - Peering into the MIST?
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...»Promising news on deforestation
There is better news on progress being made by the Brazilian government in reducing the annual toll of deforestation in the Amazon. Better surveillance, tougher penalties and more effective incentives all have a role to play.
Brazil’s battle with hyperinflation
This is a super piece on the economic and social benefits from successful policies to bring about price stability in a Brazilian economy that has suffered from hyperinflation during the late 1980s and early 1990s. Very good on the consequences of high and volatile inflation on real incomes, the incentive to save and the asymmetric impact of rampant inflation on different social groups.
Brazil - the country of the future - and always will be
A superb new report from the BBC’s Matt Frei in Sao Paulo which looks at the gaps between rich and poor in booming Brazil. “Untangling the cycle of poverty is complex and daunting” but Brazil’s rising economic prosperity offers the opportunity for many millions of her poorest people to aspire to join the middle classes.
Brazilian aviation reaches new heights
This BBC News Asia report provides a terrific example of how the Brazilian aviation industry is enjoying fast growth on the back of greater competition and rising per capita incomes. (Air travel has a high income elasticity of demand). Domestic demand for short haul and long haul flights is rising quickly and the emergence of Brazil as the world’s third largest manufacturer of commercial airlines is testimony to the increasing diversity of the Brazilian economy away from dependence on exporting commodities.
A2 Economics Revision - Changing Pattern of Global Trade & Investment
This new streamed revision presentation guides students through some key evaluation points on the changing patterns in global trade & investment. Ideal for A2 revision.
Revision Presentation on the Changing Pattern of Global Trade & Investment
BRIC economies
The BRIC grouping is shorthand for four countries – Brazil, Russia, India and China – and the BRIC acronym has become popular to describe the growing power and influence of emerging markets in the global economy. The BRICs already have a bigger share of world trade than the USA and China is on the verge of surpassing Japan as the second largest economy in the world.
read more...»Living in a multi-polar world economy
Although many millions of people in the lowest income countries have suffered greatly from the world recession, for many emerging countries growth has continued apace and the world economy is more resilient than the consensus view believes. This was one of the arguments explored by Jim O’Neill, Head of Global Economics, Commodities and Strategy Research for Goldman Sachs, in his talk to the 40th Anniversary meeting of the Eton College Keynes Society last night. The creator of the BRIC acronym was also quite bullish about prospects for the UK economy, with Britain able to take advantage of a competitive exchange rate and a strong rebound in global economic activity driven forward by fast growth in emerging market countries.
read more...»PIGS or BRICS - which is most important for UK exports this year?
The PIGS - Portugal, Italy, Greece and Spain - are in economic turmoil and likely to experience weak growth in the near term. A contrast to the BRICs - Brazil, Russia, India and China - three of whom are already seeing a ramping up of their growth rates as the world economic cycle turns. But which group is more important for the UK export sector? Chris Giles from the Financial Times has the answer here and his blog provides a useful evaluation point for AS and A2 macroeconomics students.
Brazil looks to diversify
BBC World Business news carries an interview with Luciano Coutinho, CEO of BNDES Bank in which he argues that Brazil is looking to diversify its economic base as a platform for stronger long term economic growth
“The Government is stepping up efforts to diversify the economy, creating global champions in a range of industries, from telecoms to farming. Brazil dominates global trade in several agricultural commodities, from coffee to sugar, or chicken and beef.”
Focus on the BRICs
The following video clips from the FT focus on the so-called BRIC economies (coined by the Chief Economist at Goldman Sachs in 2001).
There are excellent to provide discussion points on why grouping the BRIC (Brazil, Russia, India, China) economies together is flawed, with the 4 countries being actually very different and the acronym BRIC no longer being appropriate, in its description of their experiences or their futures. They also discuss whether economic power has shifted from the US to the East.
Jimmy’s Global Harvest
A warm woolly hat tip to Himesh Patel from the Heathland School, Hounslow for spotting this superb resource that will be available for a while on the BBC iPlayer. Himesh points out that Jimmy’s Global Harvest: Brazil on BBC1 last night was an excellent epsiode that explained how Brazil produces biofuels using its crop harvest. The show goes through the full production phase from harvest to final product. If you teach anyone sitting the AS Micro paper next week, it is extremely useful for the evaluation of biofuels as an alternative to traditional fossil fuel energy. In addition it is pitched at the correct level enabling access for all students. The link is here Pay particular attention from 22.12 mins (where the biofuel begins). Definately something to recommend students to watch.
Jim O’Neill Remains Hugely Positive on the BRICS
A fascinating, short interview on Bloomberg today (4 Jan 2010) with Jim O’Neill (Cheif Economist at Goldman Sachs) talking about the economic prospects of the BRICS in the next decade.
read more...»Taxing hot money - is Brazil getting it wrong?
Carl Mortished’s excellent world business briefing in the Times today covers developments in the Brazilian economy. Huge inflows of foreign direct investment have helped to drive their currency higher and the Brazilian Finance Ministry has responded with a 2 per cent capital tax on foreign ‘hot money’ inflows into stocks and bonds. The article suggests that Brazil might be better off in the long run by cutting import tariffs on capital goods thus reducing the price of imports of hi-tech machinery that will give her economy a major supply-side boost. In contrast to China, Brazil exports a relatively low percentage of her national output and it is largely self sufficient. The country has enjoyed a significant improvement in her terms of trade with strong world prices for many of her key exported commodites such as iron ore, coffee and orange juice. The boom in commodity exports has helped to increase the real purchasing power of millions of Brazil’s poorest people but a huge amount remains to be done and income and wealth inequalities are vast.
“Brazil is not China; it does not trade that much. Where China’s motor is manufacturing exports, Brazil is largely a self-sufficient economy, more like the United States, with a vast hinterland of eager, albeit poor, consumers.”
GDP per Capita - A Cool Way to Show the Data
I came across a cool interactive resource on GDP data whilst doing some research tonight on the BRICS.
read more...»Fascinating interview with BRIC creator
The Evening Standard has a fascinating interview with Jim O’Neill, Chief Economist at Goldman Sachs, the man credited with coining the BRIC acronym that has come to capture much of the essence of the rise to economic prominence of a cluster of fast growing emerging market countries.
“The economic tectonic plates are shifting and the person who first spotted the development of a new order was O’Neill. “I’m regarded as the creator of Brics [the economies of Brazil, Russia, India and China] in the analytical world. I thought of it eight years ago - it was the same time as people became aware of the emerging markets. Until then, they’d not been lumped together.” He laughs. “I suppose they’ve formed a large part of my analyst life ever since. At least once and up to eight times a day, I’m asked to give a talk somewhere in the world about Brics. What’s funny is that until I wrote about it, I’d never been to any of them, except China.”
Volkswagen looks to China on the road to being the biggest car maker
Volkswagen has a hugely ambitious long term aim - by 2018 it wants to overtake Toyota as the world’s biggest car manufacturer.
With this in mind it makes clear sense to focus capital investment in countries where the projected growth of demand for new vehicles is strongest. The relatively mature markets of Western Europe and North America look less attractive compared to emerging economies such as China and Brazil.
This week Volkswagen has announced a Euro 4 billion plan to expand capacity and output in China. In the short term the commercial need is to have sufficient capacity in place to meet the surge in demand brought about by the deep cuts in taxes on new cars introduced by the Chinese government as part of its economic stimulus programme - there has been a temporary cut in the purchase tax on cars with 1.6 liter engines to 5%. In the first half of 2009 Volkswagen has already sold over 620,000 cars in China!
Long term however the market demand for automobiles is forecast to rise by more than 10% per annum. Volkswagen has engineered joint ventures with Chinese manufacturers to build cars at plants in Nanjing and Chengdu - it is not beyond the realms of possibility that within eight years, it could be assembling over two million cars a year in China - a staggering volume of production and one designed to maximise the economies of large scale production.
More here from the BBC news site
BRIC Watch: Brazil climbs out of recession
The BBC reports that one of the BRIC nations - Brazil - is emerging from the recessionary stage of the economic cycle. “The largest economy in Latin America expanded by 1.9% in the second quarter from the previous three months.”. The article also flags up three policies that may have helped to bring about a turning point in the economic cycle: “Brazil has poured money into large-scale public infrastructure projects, cut taxes on new cars and passed tax breaks on companies and individuals.”
Can you name an example of a “public infrastructure project”?
Why might the government have chosen to cut the tax on new cars?
What is a tax break?
As a linked article Steve Schifferes from BBC news looks at the financial costs of the credit crunch and the many government bail-outs of banks and other lenders that have fallen into deep trouble because of toxic debts
“The world’s largest economies have spent $10,000 for every person in a bid to fix the financial meltdown of the past year…..most of this bail-out money was in the form of guarantees to the banking system, and as that system pulls out of the crisis, governments stand to recover most but not all of that money.”
Imbalance between supply and demand drives sugar prices to 28 year high
There is plenty of coverage today of the news that the global price of raw sugar has increased to its highest level since March 1981 on the back of a widening imbalance between world supply and demand.
The hike in sugar prices is a classic market response to a rise in demand for sugar - especially in countries such as Brazil where a growing volume is being used as a (subsidised) source of ethanol - combined with supply shortages caused by low rainfall during the monsoon season in India and China and hail and drought affecting supplies from Russia.
Sugar output in India has contracted by more than 45% over the last year and the country is on the point of moving from being a net exporter to a net importer of sugar if measures are taken to limit existing exports to maintain sufficient supplies for the home economy. Global sugar demand will exceed output by as much as 5 million tons in the year through September 2010, according to the International Sugar Organization in London.
When demand exceeds supply, existing stocks fall and this is a key factor driving prices higher. Speculators can cause the price movements to be exaggerated as they trade in the forward markets to buy up available stocks in the expectation of further price increases.
Independent: Chasing a sugar rush: global deficit drives price rises
Telegraph: Sugar price hits 28-year high
OECD Review of the Brazilian Economy
The OECD today published their latest review of the performance of the Brazilian economy - one of the BRIC nations. The policy briefing can be downloaded using this link.
There is a broadly favourable assessment of where Brazil stands during this global downturn
“Brazil’s economic fundamentals have improved considerably in the ten years following the abandonment of exchange-rate management in 1999 and adoption of a policy framework combining inflation targeting, rules-based fiscal management and a flexible exchange rate. The economy is therefore weathering the effects of the unfolding global financial and economic crisis rather well, and an incipient recovery is getting under way.”
Q&A: Are there countries not in recession this year?
The simple answer is yes! Although the world economy is forecast to experience a recession this year (Deutsche Bank have pencilled in a 1.9% contraction in global GDP for 2009 and the G7 nations will see output slump by 4.5%), there will always be countries at different stages of the business cycle and those who for one reason or another manage to avoid the worst of the fall out from the global financial and economic crisis. Using forecasts for 2009 from the economics team at Deutsche Bank here are some of the countries expected to avoid a full-blown recession:
read more...»Investing the proceeds of the oil bonanza
This BBC article focuses on the ways in which the Brazilian government is seeking to use the revenue from oil exports to boost the economy’s long run economic growth potential and reducing poverty. There is a neat line in here about the importance of value added - from moving away from dependence on exporting crude oil to selling derivatives of oil that carry a higher value in world markets. Yet another country looks poised to establish a sovereign wealth fund to manage some of the assets that come from selling black gold to the rest of the world.
Brazil - on course to be a superpower?
The Independent carried an article on the development of the Brazilian economy last Friday - here is the link - the BRIC analysis from Jim O’Neill and his team at Goldman Sachs continues to carry much weight and we tend perhaps to focus too much on China and India!
“The Brazilian stock market, already buoyed by the boom in prices for the country’s commodities and other exports, has surged to a record level this week on news that Standard & Poor’s, the credit rating agency, has declared the country to be “investment grade”. Specifically, that is a stamp of approval on Brazilian government debt, but it is also the culmination of Brazil’s long slog away from financial crisis, hyper-inflation and democratic sclerosis. The country might finally be about to deliver on its promise as an economic power.”
