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Posts Tagged ‘Spence’

Can China’s Economy Withstand the Coronavirus?

Posted by hkarner - 2. März 2020

Date: 29‑02‑2020

Source: Project Syndicate by Michael Spence

Michael Spence, a Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business and Senior Fellow at the Hoover Institution. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006‑2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence: The Future of Economic Growth in a Multispeed World.  

The COVID‑19 epidemic’s tail risks are significant and frightening, but as of now, they do not seem particularly likely to materialize. Instead, the outbreak’s economic consequences will probably be substantial but transitory.

MILAN – The new coronavirus, COVID‑19, that emerged in Wuhan, China in December has already killed thousands, altered the daily lives of hundreds of millions, and put the entire world on edge. Because epidemiologists have not yet fully discerned the virus’ transmission mechanisms, no one can say for sure when the outbreak might be contained, let alone what its economic fallout will be.

This does not mean, however, that no educated guesses can be made. Historical experience with similar large shocks suggests that the short‑run economic damage may be considerable. As investors de‑risk their portfolios, market volatility should be expected, especially in sectors deemed to have the largest exposures, such as travel and tourism, luxury goods, and autos. Den Rest des Beitrags lesen »

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What My Younger Self Never Expected

Posted by hkarner - 5. Januar 2020

Michael Spence, a Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business and Senior Fellow at the Hoover Institution. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence: The Future of Economic Growth in a Multispeed World.

At the start of a new year and a new decade, it is both humbling and illuminating to reflect on major global developments that no one saw coming just a few decades ago. For those who grew up during the Cold War or in the ensuing period of American primacy, the economic and geopolitical rise of the developing world must rank high on the list.

FORT LAUDERDALE – As one advances in age, one tends to mark each new year by reflecting on the broader developments that have run in parallel with one’s own lifetime. For my part, I usually focus on the surprises (both positive and negative): things I would have been considered unlikely or even unimaginable in my younger years.

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The End of Shareholder Primacy?

Posted by hkarner - 27. August 2019

Date: 26-08-2019
Source: by Michael Spence

Michael Spence, a Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business and Senior Fellow at the Hoover Institution. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

The recent decision by America’s Business Roundtable to abandon its support for shareholder primacy was a long time coming, and reflects a broader shift toward socially conscious investment. Now that the multi-stakeholder model is receiving the attention it deserves, it will be incumbent on governments to create space for it to succeed. Den Rest des Beitrags lesen »

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The Global Economy’s Next Winners

Posted by hkarner - 28. Juni 2019

Date: 27-06-2019
Source: Foreign Affairs

What It Takes to Thrive in the Automation Age

By Susan Lund, James Manyika, and Michael Spence

Back in business: at an Amazon warehouse in Florence, New Jersey, August 2017

The countries that once led the world toward economic openness are retreating into protectionism. Over the past two and a half years, the United States has abandoned the Trans-Pacific Partnership and imposed tariffs on steel, aluminum, and a wide range of Chinese goods. The United Kingdom is in the process of leaving the world’s largest free-trade area. And rising nationalist sentiment is threatening to repeat these self-destructive acts elsewhere. The rich world is turning inward.

Its timing couldn’t be worse. Even as critics of free trade gain the upper hand, globalization, wholly of its own accord, is transforming in rich countries’ favor. Economic growth in the developing world is boosting demand for products made in the developed world. Trade in services is up. Companies are moving production closer to their customers so they can respond faster to changes in demand. Automation has slowed the relentless search for people willing to work for ever-lower wages. And the greater complexity of modern goods means that research, design, and maintenance are coming to matter more than production. Den Rest des Beitrags lesen »

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Beyond Unemployment

Posted by hkarner - 30. Mai 2019

Michael Spence, a Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business and Senior Fellow at the Hoover Institution. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

In modern economies, people may have jobs, but they still harbor major concerns in a wide range of areas, including security, health and work-life balance, income and distribution, training, mobility, and opportunity. By focusing solely on the unemployment rate, policymakers are ignoring the many dimensions of employment that affect welfare.

MILAN – For much of the post-World War II period, economic policy has focused on unemployment. The massive job losses of the Great Depression – reversed only when World War II, and the massive debt accumulated to finance it, kick-started economic growth – had a lasting impact on at least two generations. But employment is just one facet of welfare, and in today’s world, it is not enough.

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The Restructuring of the World

Posted by hkarner - 28. September 2018

Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Advisory Board Co-Chair of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

Trade protectionism, together with fears over the national-security implications of technological development, are contributing to a balkanization of the world order. This is not good news for the United States as it faces an intensifying rivalry with an increasingly powerful China.

MILAN – The global economy is undergoing a far-reaching transformation. Change is being driven by shifts in countries’ populations, productivity, wealth, power, and ambitions, and accelerated by US President Donald Trump’s moves to reshape supply-chain structures, alter cross-border investment incentives, and limit the movement of people and technology across borders.

The tensions that these changes are producing are most apparent in escalating disputes over trade. Notwithstanding some dislocations in emerging economies, markets’ reaction to the tit-for-tat tariffs so far has been only muted. Investors probably assume that it is all just part of a renegotiation process that will ultimately produce new rules of engagement for global business – rules that are even more favorable to the powerful.

But such assumptions may underestimate the complexity of the issues at play, beginning with the politically salient matter of where investment and employment are created. On their own, tariff and trade barriers, if viewed as transitory negotiating tactics, will not significantly change global investment patterns or the structure of global supply chains and employment.

Protectionists like Trump argue that the power of tariffs and other trade barriers lies in their ability to curb cheating and free-riding. The implication is that such measures can help to eliminate the tensions, imbalances, and polarization associated with globalization.

“Cheating,” of course, is in the eye of the beholder. State subsidies for specific sectors, including preferential treatment of state-owned enterprises, may be regarded as cheating. So may requiring technology transfer in exchange for market access, public procurement favoring domestic entities, acceptance of unsafe work environments and exploitative labor practices, and exchange-rate manipulation.

The test of free-riding is whether a country contributes too little, relative to its capacity, to the provision of global public goods, such as defense and security, scientific and technical knowledge, mitigation of climate change, and absorption of refugees. The culprits depend on the topic in question.

But whatever the downsides to cheating or free-riding, tackling these behaviors is unlikely to eliminate the conditions that have contributed to economic, social, and political polarization. After all, labor arbitrage has been the core driver of the organization of global supply chains for at least three decades – accelerating, of course, with China’s rise – with significant distributional and employment effects. It seems unlikely that, had China and other emerging economies adhered to the letter of World Trade Organization rules, the distributional effects of their integration into the global economy would have disappeared.

What, then, is the real purpose of the tariffs? Trump could be interested only in leveling the playing field, at which point he will accept global market outcomes. But it is more plausible that this is all part of his strategy – echoed by leaders in a growing number of countries worldwide – to win support by asserting national priorities and sovereignty.

Such efforts are pushing the world toward a more balkanized system. Moreover, the challenges and fears raised by advances in technology, especially digital technology, with regard to both national security and economic performance are also propelling the world toward greater fragmentation.

Fifteen years ago, few would have predicted that mega-platforms like Google or Facebook would become key players in areas like image recognition, artificial intelligence, and the development of autonomous vehicles (including military vehicles). Yet that is exactly what has happened. In fact, Google is now a defense contractor (though it may not renew its contract).

Given the security implications of these developments, as well as a host of issues like data privacy and security, social fragmentation, and foreign interventions in elections, countries are unwilling to leave the Internet unregulated. But they are also unwilling to delegate regulation to a supra-national body. As a result, many are taking matters into their own hands, leading to a growing divergence among countries regarding Internet regulation.

Reflecting the national-security tilt of these initiatives, the scope and authority of the Committee on Foreign Investment in the United States – responsible for reviewing the national-security implications of foreign ownership of US companies or operations – has recently been expanded.

Despite these efforts, however, the fact remains that innovation cannot easily be blocked by national borders. On the contrary, the diffusion of ideas may well become the most consequential dimension of globalization in the future.

While this may complicate national-security planning, it represents powerful new opportunities for business, even as trade faces headwinds. Already, there has been an explosion of innovative, digitally-based business models, many of which could become powerful engines of inclusive growth, especially in emerging economies. Digitally-enabled ecosystems, with open architecture and low barriers to entry, are one example of an emerging model with considerable economic potential.

There is one more crucial dynamic that will shape how the global economy will develop in the coming decades: the strategic rivalry between China and the US. At this point, it is impossible to say precisely what form this rivalry will take. What is clear is that every part of the global economy will be affected by the mix of cooperation and competition that emerges.

In the face of a powerful rival, one might expect the US to pursue a strategy focused on building, expanding, and consolidating alliances with natural allies – that is, countries with similar governance structures and shared views about the benefits of international cooperation and open markets. Instead, Trump has alienated longtime allies and attacked multilateral structures and institutions, all while antagonizing China in what is quickly becoming a two-player game.

This is a bizarre strategy. Whatever advantage Trump thinks he will gain by positioning the US in opposition to its natural allies will be dwarfed by the losses. A split between the US and its traditional allies, if it becomes a permanent feature of the new global order, would lead to deeper fragmentation among the world’s market-oriented democracies. That will surely shift the long-term balance of power in China’s favor, as it moves steadily toward becoming the world’s largest economy.1

 

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The Italian Economy’s Moment of Truth

Posted by hkarner - 11. Juni 2018

Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Advisory Board Co-Chair of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

Unlike many other European countries, Italy still has not restored economic growth to its pre-crisis level – a fundamental failing that lies at the heart of many of its political problems. Now that a new anti-establishment government is taking power, it remains to be seen if the economy will be remade, or broken further.

MILAN – Italy and Europe are at an inflection point. After an election in March in which the anti-establishment Five Star Movement (M5S) and the far-right League party captured a combined parliamentary majority, followed by months of uncertainty, Italy has become the first major EU member state to be governed by a populist coalition.

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Preventing the Balkanization of the Internet

Posted by hkarner - 29. März 2018

Fred Hu is Chairman and Founder of Primavera Capital Group, a China-based global investment firm.

With the entire global economy becoming inextricably linked to the Internet and digital technologies, stronger regulation is more important than ever. But if that regulation is fragmented, clumsy, heavy-handed, or inconsistent, the consequences for economic integration – and, in turn, prosperity – could be severe.
BEIJING – The recent revelation that more than 50 million Facebook profiles were harvested by app and given to political consultancy Cambridge Analytica has produced a backlash against the platform. But it is just the latest example of the risks associated with the Internet, which forms the core of today’s digital revolution.

Most of the digital innovations that have reshaped the global economy over the last 25 years rely on network connectivity, which has transformed commerce, communication, education and training, supply chains, and much more. Connectivity also enables access to vast amounts of information, including information that underpins machine learning, which is essential to modern artificial intelligence. Den Rest des Beitrags lesen »

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Pessimism Amid Plenty

Posted by hkarner - 26. Februar 2018

Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Advisory Board Co-Chair of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

While there is no shortage of challenges facing economies and societies today, they should not be allowed to obscure positive long-term trends. The best remedies for undue pessimism are practical: effective fact-based policymaking, shaped by scientific inquiry and social solidarity.

MILAN – A few years ago, I wrote a book called The Next Convergence, about how developing economies were “catching up” to their advanced counterparts in terms of income, wealth, health, and other measures of wellbeing. I looked not just at how these countries had achieved rapid growth – including the central role played by an open global economy – but also at the opportunities and challenges this process of convergence would bring.

In writing the book, I had planned to include a lot of data in visual form. But a respected literary agent told me that using graphs was a bad idea, because only a small share of people absorb quantitative information better when it is presented visually. I came to realize that graphs are, in a sense, answers to questions. If you don’t pose a question, a graph is somewhere between uninteresting and meaningless.1 Den Rest des Beitrags lesen »

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Making Migration Work

Posted by hkarner - 24. Januar 2018

Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Advisory Board Co-Chair of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

The UN is right to underscore the benefits of broad-based international cooperation on migration, particularly regarding measures that could, over time, reduce migrant flows by improving conditions in source countries. But, to be politically acceptable in virtually any country, such cooperation must respect national sovereignty.

MILAN – There are four pillars of globalization and economic interdependence: trade, investment, migration, and the flow of information, whether data or knowledge. But only two – trade and investment – are founded on relatively effective structures, buttressed by domestic consensus and international agreements. The other two – migration and information – are badly in need of similar frameworks. Den Rest des Beitrags lesen »

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