Archive for the ‘Globalization & International Trade’ Category

17
Dec

President faces uninvented threats from around the world

By Edward Luce

Asked about the fiscal cliff’s impact on foreign perceptions of the US, David Rothkopf, a former Clinton official, quipped: “If Lindsay Lohan were arrested again tomorrow, how much would it change your opinion of her?” The cliff is a domestic crisis of choice rather than of necessity so it is still possible to make light of it. The same cannot be said of Barack Obama’s overseas inbox.

At a moment of acute Washington navel gazing, Mr Obama faces an ominous range of uninvented threats from around the world. Whether 2013 turns out to be the year of Iran, Syria, Egypt, North Korea or Afghanistan, or a mix of the above, they march to their own time. One or two, notably Iran, could be time bombs. Alas, the fracas over Susan Rice’s withdrawal from consideration as secretary of state last week suggests Mr Obama will be distracted for some time by Washington’s clock – the one that is stuck at 11.59pm.

Mr Obama is this week likely to announce John Kerry as his choice to replace Hillary Clinton. But even the smoothest nomination will not go through the Senate until January. Foreign diplomats chafing at the Do Not Disturb sign hanging outside the White House for much of this year find it is still there six weeks after the election. Even at the price of jettisoning his most trusted foreign policy adviser, Mr Obama is trying to conserve all his leverage for the cliff and beyond. Most importantly, it is swallowing his time.

On Iran, in particular, there is little to waste. Among Washington’s foreign policy luminaries, it is hard to find one who claims to know the Obama administration’s strategy. Some speculate that the White House may have already established a back channel dialogue with Tehran led by someone like Thomas Pickering, the veteran state department envoy. If so, it would be reassuring. But this is a hope rather than an estimate. Others worry that Mr Obama lacks a real strategy to communicate. Read more…

As published in www.ft.com on December 16, 2012.

13
Dec

For Better Planning, Watch Global Demographic Trends

By Joseph Chamie

Figure 1. Uneven growth: Near 95 percent of the world’s annual demographic growth takes place in less developed regions; yet more than half the world’s GDP is center in the more developed economies. Source: United Nations and World Bank

While governments and institutions try to grapple with economic uncertainty and volatility an important factor of relative certainty is often overlooked: demography. One may not know how the markets will behave, but demographic trends can provide instructive and relative certainty for the near term to deal with debt, taxes, unemployment and entitlements, to name a few. Dismissal of major demographic trends, seven of which described below, will in all likelihood result in ill-conceived policies, unsustainable programs and squandered resources.

First, at an estimated 7 billion, the world’s population is growing at 1.1 percent annually, or 78 million people, half the peak level of 2.1 percent in the late 1960s. Although the world’s demographic growth rate is continuing to slow due to declining birthrates, the 8 billion world population mark will likely be reached by 2025. This growth will increase the world’s working age population, 15 to 64 years, by 610 million and those aged 65 years and older by 290 million, increases of 13 and 52 percent, respectively.

Second, nearly all of the world’s annual demographic growth – close to 95 percent – is occurring in less developed regions. Top seven contributing nations are India, 22 percent; China, 9 percent; Nigeria, 5 percent; Pakistan, 4 percent; Indonesia, 3 percent; Brazil, 2 percent; and Ethiopia, 2 percent (see Figure 1). Due to its much higher growth, the juggernaut population of India – currently larger than all the developed regions combined – is expected to overtake China in a decade, when the Indian population is projected to reach 1.4 billion. Among more developed regions, the nation contributing most to world population growth is the United States at 3 percent, and the growth of the next six nations, including Spain, Italy, Australia, the United Kingdom, France and Canada, ranges from 0.7 to 0.5 percent.

Though nearly all of the world’s demographic growth is occurring in less developed regions, 54 percent of the world’s GDP is carried out by the 10 largest national economies of the more developed countries (Figure 1). Collectively, these more developed countries – led by the United States, Japan and Germany – represent 14 percent of world population, expected to decline to 11 percent by midcentury. Read more…

Joseph Chamie, former director of the United Nations Population Division, recently stepped down as research director at the Center for Migration Studies.

As published by Yale Global on December 12, 2012.

7
Dec

Barack Obama’s foreign-policy goal in his second term: to avoid costly entanglements

By cynical tradition “abroad” is where American presidents go to seek a legacy, after their domestic agendas have stalled. This is especially true of second-term presidents. As they lose momentum at home, the temptation is to head overseas in search of crises that only American clout can resolve.

At the outset of his second term, Barack Obama seems to be planning the opposite approach. Mr Obama and his team believe that his outstanding task is to secure a domestic legacy. Their fear is that foreign entanglements may threaten that goal. It may help that he secured something of a global legacy on the day he was elected four years ago amid worldwide adulation, peaking with a Nobel peace prize awarded after less than a year in office, essentially for not being George W. Bush.

On the 2012 campaign trail, Mr Obama earned some of his warmest applause when he vowed to bring troops back from Afghanistan, ending more than a decade of war-fighting that has cost thousands of American lives and more than a trillion dollars. Time for nation-building “right here at home”, he constantly declared, to cheers. In a newspaper essay on November 23rd Mr Obama’s former White House chief of staff, Rahm Emanuel, rammed the point home. Democrats need to make America globally competitive, wrote Mr Emanuel, now mayor of Chicago. Whether it means fixing failing schools, potholed roads, snail-like internet networks or a broken immigration system, the second-term mission must be to “come home and rebuild America”.

Yet the world keeps calling. From Gaza to Syria, Jordan, Egypt, Iran, the disputed waters around China or even the euro zone, foreign crises threaten to sidetrack Mr Obama. Read more…

As published in www.economist.com on December 1, 2012 (from the Print Edition).

16
Nov

By Paola Subacchi

Throughout the just concluded 18th Congress of the Chinese Communist Party ubiquitous television screens in trains and metro stations broadcast a live feed of the Chinese assembly. Beijing’s busy people, however, seemed not to pay close attention: for them, it was business as usual.

The Chinese public’s indifference to their country’s ceremonial transition of power is hardly surprising. All critical decisions were taken well ahead of the Congress, behind closed doors, with very little input from outsiders. This apparently seamless transition, however, is widely expected to usher in a complex and potentially difficult decade for China – and for the rest of the world.

China is at a turning point. With more than 100 million people still below the official poverty line and per capita income currently just over $6,000 in nominal terms, robust economic growth must be maintained. Outgoing President Hu Jintao indicated that China’s total GDP and per capita income should double by 2020, which will require 7.5% average annual growth. Is this feasible?

Recent improvements in data for industrial production, fixed investment, and retail sales suggest that the Chinese economy, which had slowed in recent quarters, may already be on the mend. But the authorities remain cautious, given that China’s economic outlook depends heavily on external conditions, which is the source of most current uncertainty. However, as things stand, most independent economists expect 7-7.5% annual GDP in 2013-2017, while the International Monetary Fund forecasts a more optimistic 8.2-8.5% rate during this period. Read more…

Paola Subacchi is Research Director of International Economics, Chatham House, London.

As published by Project Syndicate on November 16, 2012.

7
Nov

The Second Coming of Barack Obama

By Kemal Derviş

The race was tough, but US President Barack Obama has won re-election. The question now, for the United States and the world, is what will he do with a fresh four-year term?

To win re-election with a still-weak economy and unemployment close to 8% was not easy. Many leaders – Nicolas Sarkozy, Gordon Brown, and José Luis Rodríguez Zapatero come to mind – have been swept away by economic discontent in recent years. Although the financial disaster erupted on George W. Bush’s watch, after eight years of a Republican presidency, Obama had to carry the burden of an anemic recovery.

Obama won not only because of his extraordinary personal resilience, but also because a sufficient number of middle-class voters, while unhappy with the pace of economic progress, sensed that an Obama presidency would help them more than the policies championed by his Republican challenger, Mitt Romney, which were perceived as tilted to the affluent. Moreover, America’s ongoing demographic transformation makes it harder for candidates who are unable to reach out strongly to Latinos and other minority communities – something that Romney singularly failed to do – to carry the country.

Some aspects of the campaign, particularly the amount of money spent and its negative tone, struck many observers as objectionable. But the competitiveness of American democracy – the fact that an alternative always exists, and that those in power have to fight hard to stay there – was on admirable display for the whole world to see.

Obama will embark on his second term with the global economy at a crossroads. In the US, the uneven and weak recovery has been sustained by extraordinarily expansive monetary policies and ongoing large fiscal deficits. While corporate coffers hold mountains of cash, private investment stagnates. In Japan, solid economic performance remains elusive, while prime ministers succeed each other at a breathtaking pace.

Likewise, Europe is on life support, thanks to European Central Bank President Mario Draghi’s astute maneuvering and promises of unlimited intervention in sovereign-debt markets. But unemployment is at its highest in decades and growth has essentially stalled, even in Germany, while the troubled southern economies are mired in deep recession. The situation in Greece, moreover, has become socially unsustainable; Greece is small, but a total collapse there could have very negative financial and psychological effects elsewhere. Read more…

Kemal Derviş, a former minister of economy in Turkey, administrator of the United Nations Development Program (UNDP), and vice president of the World Bank, is currently Vice President of the Brookings Institution.

As published in www.project-syndicate.org on November 7, 2012.
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