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Archive for 7. Oktober 2016

Returning to Investment

Posted by hkarner - 7. Oktober 2016

Photo of Richard Kozul-Wright

Richard Kozul-Wright

Richard Kozul-Wright, Director of the Division on Globalization and Development Strategies at the United Nations Conference on Trade and Development, is the author, most recently, of Transforming Economies: Making Industrial Policy Work for Growth, Jobs and Development.

OCT 6, 2016 Project Syndicate

GENEVA – At the G20 summit last month in Hangzhou, China, world leaders outlined an ambitious plan for a “new era of global growth.” But they left out a key ingredient: fixing the investment climate.

Conventional wisdom holds that, through efficient financial markets, household savings will flow to companies that can best put the money to productive use. But in many developing countries, easier access to finance – owing to unrestricted cross-border capital flows and financial-market deregulation – still has not led to more financing for long-term investments, particularly in manufacturing.

Investment decisions depend on a variety of complex factors and contingencies, and a mix of public and private finance is crucial for bringing new projects to fruition. In East Asia, which has experienced rapid growth and development in recent years, policymakers have not only allowed, but encouraged, higher corporate profits, so long as they are channeled into productive investments. As a result, as much as four-fifths of large East Asian companies’ investment spending is funded from retained earnings, while publicly owned financial institutions have helped maintain the pace of investment-led growth. Den Rest des Beitrags lesen »

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What is the difference between a “hard” and “soft” Brexit?

Posted by hkarner - 7. Oktober 2016

Date: 06-10-2016
Source: The Economist

May cc 1THERESA MAY, Britain’s prime minister, promised the Conservative party conference this week that she would invoke Article 50 of the European Union treaty, the only legal route to leave the EU, by the end of March 2017. She also said that, after Brexit, she wanted a deal that gave British companies the maximum freedom to trade with and operate in the EU’s single market. But at the same time she insisted that after Brexit Britain would become a fully independent, sovereign country that was able to make its own decisions on issues ranging from how to label its food to the way it chose to control immigration. And she said that Britain could not leave the EU only to find itself still subject to the European Court of Justice.

The problem with this is that these goals seem to be incompatible with each other. If Britain wants to benefit fully from the single market, which eliminates all tariff and most non-tariff barriers as well as customs controls, it will have to abide by most European laws, including the free movement of people from other EU countries and a huge clutch of single-market regulations that are ultimately enforced by the European Court. That is what countries like Norway and Switzerland, which are outside the EU but largely inside the single market, have to do; they also pay into the EU budget. Were Britain to choose a similar path, this would amount to a “soft” Brexit that kept many of the advantages of EU membership but at the price of some significant constraints on its independent policy freedom. Den Rest des Beitrags lesen »

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Risk of Deglobalization Hangs Over World Economy

Posted by hkarner - 7. Oktober 2016

Date: 06-10-2016
Source: The Wall Street Journal By SIMON NIXON

The worry is that politics, economics and finance are combining in a way that threatens to throw globalization in reverse, Simon Nixon writes

One of the biggest puzzles in the global economy right now is the slowdown in trade.

Since 2012, global trade has been growing at just 3% a year, less than half the rate in the previous three decades. Between 1985 and 2003, it grew twice as fast as global gross domestic product; in the last four years, trade has barely managed to keep pace, according to the International Monetary Fund.

What’s more, this slowdown has been across the board, affecting both developed countries and emerging economies, trade in services as well as goods.

The World Trade Organization is now forecasting that world trade will grow by just 1.7% this year, making this the first year in 15 years it has grown more slowly than the world economy. Den Rest des Beitrags lesen »

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Three Risks to the Global Financial System as Debt Hits Record Levels

Posted by hkarner - 7. Oktober 2016

Date: 06-10-2016
Source: The Wall Street Journal

IMF urges major restructuring of the European banking system and sees emerging-market corporate defaults on the rise

Deutsche Bank CC1Deutsche Bank headquarters in Frankfurt. Like other European banks, the German financial giant has come under pressure from investors wary of the company’s ability to turn a profit.

In recent years, the global financial system has weathered Brexit, China’s deceleration and emerging market mayhem.

But there’s no reason to be complacent, the International Monetary Fund warns in its latest reports on global financial stability and the fiscal health of economies around the world.

“The passing of these near-term risks has seen volatility fall and equity prices in advanced economies rise,” says Peter Dattels, deputy director of the fund’s monetary and capital markets department. “But medium-term risks are building because we are entering a new era of challenges.”

An unprecedented era of ultralow interest rates and feeble growth has led to a record buildup in global debt levels. Den Rest des Beitrags lesen »

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