Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Globalization’

New techniques show the damage done by subsidies at the heart of global trade

Posted by hkarner - 10. August 2014

Date: 09-08-2014
Source: The Economist
Subject: Free exchange: Tilted marine

ShipbuildingTHERE is no better symbol of the benefits of globalisation than the container ship. More than 9 billion tonnes of goods and materials were transported by sea in 2012, with trade helping to lift global growth rates. An ever-expanding web of links connects rich and poor; developing countries now account for around 60% of seaborne trade. But ships also show the rotten side of trade: protectionism. In 2006 China enacted a “Long and Medium-Term Plan” to enlarge its shipping industry by 2015. It has been successful (see left-hand chart). New research shows its attempts to tilt markets may be having a bigger impact than previously thought.

Protectionism in shipping is centuries old. In a 1905 study* Royal Meeker, an American economist, explained how a system of subsidies developed under Elizabeth I. Rewards were based on tonnage of ship, and included “bounties” paid to fishing boats heading for the North Sea in search of herring. Adam Smith provided an early economic analysis in “The Wealth of Nations”, lamenting: “It has, I am afraid, been too common for vessels to fit out for the sole purpose of catching, not the fish, but the bounty.” The handouts distorted the shipbuilding industry, resulting in an oversize fishing fleet and a misallocation of resources.

Far from avoiding the distortion Smith spotted, governments have been keen to nurture it. The early logic was military. A strong merchant fleet meant lots of boats that could be commandeered during times of war. One way to bolster shipping has been to grant lucrative contracts for postal delivery: Britain’s Cunard lines benefited hugely from such a deal in the 1830s. Another method, used by both America and Japan in the early 1900s, was easy finance, in the form of cut-price government loans. Den Rest des Beitrags lesen »

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Getting Globalization Right

Posted by hkarner - 17. Juli 2014

Date: 16-07-2014
Source: Project Syndicate


Ian Goldin, Director of the Oxford Martin School at the University of Oxford and Vice-Chair of the Oxford Martin Commission for Future Generations, is the co-author of The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do about It.

OXFORD – Recent evidence suggests that much of the world has entered a period of low financial-market volatility. But this is no time for complacency; more turbulent times are likely to lie ahead.

Over the last quarter-century, rapid technology-driven globalization – characterized by the physical and virtual integration of the global economy, including the opening of world markets – has contributed to the fastest increase in incomes and population in history. But, while globalization has created unprecedented opportunity, it has also unleashed a new form of systemic risk – one that threatens to devastate political institutions and national economies.

Systemic risk is intrinsic to globalization. Greater openness and integration necessarily increase the potential for cascading crises and amplification of shocks.

As individuals and societies become richer, they come into closer contact with one another – virtually, through communication technologies, and physically, through population growth, urbanization, and travel. Meanwhile, rising consumption of products like food, energy, and medicine enhances the externalities, or spillover effects, of individual choices, with the connectivity of global systems increasing these effects’ range and impact. Den Rest des Beitrags lesen »

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The instability that stems from trilemmas

Posted by hkarner - 4. Juli 2014

Date: 03-07-2014
Source: The Economist: Buttonwood
Subject: Three’s a crowd

THERE is always resistance when new words are coined, or become modish; the offending term is attacked for being ugly, superfluous or obfuscating. But sometimes a word illustrates a useful concept. So it is with trilemma. If a dilemma represents a choice between two (often unpalatable) options, a trilemma involves the inevitable sacrifice of one of three desirable characteristics.

Perhaps the best known economic trilemma is that to which monetary regimes are subject. A country can have a fixed exchange rate, free movement of capital or independent monetary policy, but not all three. Under the gold standard capital flowed freely and exchange rates were fixed, but monetary policy had to adjust to maintain the peg to gold. Bretton Woods had fixed rates and independent monetary policy, but that required capital controls.

The designers of Bretton Woods were in favour of fixed currencies because they prevent competitive devaluations and give greater certainty to international investors and those involved in trade. But when the system collapsed in the 1970s, most economists inclined to the view that floating currencies were preferable because they give economies more flexibility. Nevertheless large parts of the world still feel differently: China manages its exchange rate against the dollar and Europe went to the trouble of establishing a single currency in part to bring an end to the gyrating exchange rates among the countries that now use the euro. Den Rest des Beitrags lesen »

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The Great Backlash

Posted by hkarner - 9. Juni 2014

Author: Nouriel Roubini  ·  June 2nd, 2014  ·  Project SyndicateRoubini Africa

In the immediate aftermath of the 2008 global financial crisis, policymakers’ success in preventing the Great Recession from turning into Great Depression II held in check demands for protectionist and inward-looking measures. But now the backlash against globalization – and the freer movement of goods, services, capital, labor, and technology that came with it – has arrived.

This new nationalism takes different economic forms: trade barriers, asset protection, reaction against foreign direct investment, policies favoring domestic workers and firms, anti-immigration measures, state capitalism, and resource nationalism. In the political realm, populist, anti-globalization, anti-immigration, and in some cases outright racist and anti-Semitic parties are on the rise.

These forces loath the alphabet soup of supra-national governance institutions – the EU, the UN, the WTO, and the IMF, among others – that globalization requires. Even the Internet, the epitome of globalization for the past two decades, is at risk of being balkanized as more authoritarian countries – including China, Iran, Turkey, and Russia – seek to restrict access to social media and crack down on free expression. Den Rest des Beitrags lesen »

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Posted by klausgabriel - 14. April 2014

The recent CEPS Study

Executive Summary

There is widespread consensus that the world will be richer and older by the year 2030, and there will be
somewhat smaller differences in GDP per capita across countries. There is also no doubt that the relative
weights of today’s advanced economies will diminish as the emerging market economies continue to
This study confirms this consensus and argues that the catch-up of emerging economies is not just a
temporary phenomenon, but one based on solid fundamentals that will continue to operate, even beyond
2030. It also provides some new insights, which in some cases deviate from the conventional wisdom.
Global trends
The global population might peak soon. One trend that has been regularly underestimated so far is
that population growth is declining everywhere. The year 2030 might mark an historical point in human
demography: the global population might reach a plateau and start to decline. This demographic turning
point is likely to have profound implications. The long-term outlook for the availability of natural
resources changes radically when the pressure of population growth disappears. The emergence of a
global middle class will of course lead to increased pressure on resources for some time to come; but if
the global population ceases to increase, the end of growth in resource use will be in sight.
A first corollary is that the availability of natural resources should not be a major concern. This
applies in particular to energy. There is actually too much carbon (in the form of coal and hydrocarbons)
available than could actually be used if the increase in global temperatures is to be kept to a manageable
level (usually assumed to be 2 degrees). Den Rest des Beitrags lesen »

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Can Liberal Democracy Survive the Decline of the Middle Class?

Posted by hkarner - 6. März 2014

This article is just essential and brilliant !!! (hfk)

Date: 05-03-2014Fukuyama cc
Source: Foreign Affairs By Francis Fukuyama
Subject: The Future of History

Can Liberal Democracy Survive the Decline of the Middle Class?

Something strange is going on in the world today. The global financial crisis that began in 2008 and the ongoing crisis of the euro are both products of the model of lightly regulated financial capitalism that emerged over the past three decades. Yet despite widespread anger at Wall Street bailouts, there has been no great upsurge of left-wing American populism in response. It is conceivable that the Occupy Wall Street movement will gain traction, but the most dynamic recent populist movement to date has been the right-wing Tea Party, whose main target is the regulatory state that seeks to protect ordinary people from financial speculators. Something similar is true in Europe as well, where the left is anemic and right-wing populist parties are on the move.

There are several reasons for this lack of left-wing mobilization, but chief among them is a failure in the realm of ideas. For the past generation, the ideological high ground on economic issues has been held by a libertarian right. The left has not been able to make a plausible case for an agenda other than a return to an unaffordable form of old-fashioned social democracy. This absence of a plausible progressive counter­narrative is unhealthy, because competition is good for intellectual ­debate just as it is for economic activity. And serious intellectual debate is urgently needed, since the current form of globalized capitalism is eroding the middle-class social base on which liberal democracy rests. Den Rest des Beitrags lesen »

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Don’t Just Do Something. Sit There.

Posted by hkarner - 27. Februar 2014

Date: 26-02-2014
Source: Thomas L. Friedman

With Russia growling over the downfall of its ally running Ukraine and still protecting its murderous ally running Syria, there is much talk that we’re returning to the Cold War — and that the Obama team is not up to defending our interests or friends. I beg to differ. I don’t think the Cold War is back; today’s geopolitics are actually so much more interesting than that. And I also don’t think President Obama’s caution is entirely misplaced.

The Cold War was a unique event that pitted two global ideologies, two global superpowers, each with globe-spanning nuclear arsenals and broad alliances behind them. Indeed, the world was divided into a chessboard of red and black, and who controlled each square mattered to each side’s sense of security, well-being and power. It was also a zero-sum game, in which every gain for the Soviet Union and its allies was a loss for the West and NATO, and vice versa.

That game is over. We won. What we have today is the combination of an older game and a newer game. The biggest geopolitical divide in the world today “is between those countries who want their states to be powerful and those countries who want their people to be prosperous,” argues Michael Mandelbaum, professor of foreign policy at Johns Hopkins. Den Rest des Beitrags lesen »

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Trade: Into Uncharted Waters

Posted by hkarner - 4. November 2013

Date: 04-11-2013
Source: The Financial Times

The pace of global trade has slowed. “For the past three decades, trade has regularly grown at twice the rate of world gross domestic product,” writes Shawn Donnan for the Financial Times. “This year, trade is expected to grow just 2.5 per cent, compared with GDP growth of 2.9 per cent.” Economists debate whether the dip is temporary or signals structural change in global trade and supply chains. Targets for blame include the eurozone debt crisis, rising labor costs in China, environmental and other regulations that mask protectionism, technological innovations that reduce manufacturing costs and jobs, and increasing representation of services in the global economy. More bilateral and regional agreements, as well as 160 WTO members giving a go-ahead to the Doha Round in December, could allow trade growth to resume, Donnan notes. Ongoing support for globalization, according to one research study, requires China to do more to open markets and advanced economies like the US to sustain support by resisting wage stagnation and inequality. – YaleGlobal

A 30-year trend of trade growing at twice the speed of the global economy has ended

Container ShipThe Tangerine Island, a bulk carrier sailing under the flag of the Marshall Islands, is moored in the Gulf of Panama after passing through the canal a few hours earlier. Off southern England, the 199-metre Turandot, a vehicle carrier, is setting a course for New York after leaving Southampton. In the Strait of Malacca off Sumatra, the Liberian-flagged Amazon River is steaming along at 16 knots.

This snapshot of the thousands of freighters crossing the oceans each day – as tracked this week on the £2.49 “Marine Traffic” app – suggests that the world’s seaborne trade is in rude health. But this picture obscures a statistical mystery; one that some see as a warning about the future of globalisation.

Global trade this year is expected, for a second year in a row, to grow at close to or even less than global economic output. This is an anomaly. Den Rest des Beitrags lesen »

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How Globalization Helped Decreasing Inflation

Posted by hkarner - 9. August 2013


Authors: Gregor Schwerhoff & Mouhamadou Sy · August 6th, 2013 · RGE EconoMonitor

Globalization in the form of increasing international trade increases competition both within and across countries. This increase in competition has put pressure on prices, which slowed inflation. Globalization therefore helps to explain the “Global Disinflation”, the phenomenon of decreasing inflation levels, in the last 20 years.

From 1990 to present, tariff rates around the world have declined continuously in a worldwide push to liberalize trade. As a result, trade has surged. The share of imports and exports in GDP increased from a global average of 38% in 1990 to 54% in 2005. While the causal link between tariff rates and trade is straightforward, there has been another and perhaps more surprising development. In the same period inflation fell from an average of 26% to a mere 4%, a trend called “Global Disinflation”. Figure 1 illustrates the parallel movement of tariff rates and inflation.
11.png (496×315)

Figure 1.Development of tariff rates (bold line) and inflation (dashed line), world averages

While these basic facts are widely known, Figure 2 reveals some interesting aspects behind them. It shows the cross country distribution of inflation across 123 countries for a given year and then compares the distribution over four different years: 1980, 1990, 2000 and 2010. This reveals three important features. First, since deflation is very rare, inflation values become strongly concentrated on values close to zero. Second, all world regions are affected so the development is not driven only by a few economic “heavyweights”. Third, the change occurs continuously over the entire period of 1990 to 2010, there is no jump in levels. Den Rest des Beitrags lesen »

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Is financial globalisation in retreat? And if so, does it matter?

Posted by hkarner - 27. Juni 2013

Richard Dobbs, Susan Lund (McKinsey Global Institute), 19 June 2013, voxeu

Is financial globalisation in retreat? This column suggests it might be. There’s been a recent and significant retreat in European financial integration and a retrenchment of global banking (although capital inflows into emerging markets and FDI are only just below their recent peaks). What are we to make of this shift? A more compartmentalised global financial system could certainly reduce the likelihood of a financial crisis spreading from one country to the next. But there is now a danger that the pendulum could swing too far, Policymakers should therefore do more to remove limitations on FDI and investor purchases of foreign equities and bonds, balancing the trade-off between the need for stability and the need to provide financing for economic growth.

Cross-border capital flows – including foreign direct investment, investor purchases of foreign bonds and equities, and cross-border lending – rose from $0.5 trillion in 1980 to a peak of $11.8 trillion in 2007 as national financial markets grew ever more tightly integrated. Yet when the crisis struck, that intricate web of connections rapidly transmitted shocks between countries confirming that the network of financial interdependencies can cascade risks (Elliott, Golub, and Jackson 2013). Den Rest des Beitrags lesen »

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