Showing posts with label Economic. Show all posts
Showing posts with label Economic. Show all posts

23 June 2017

Ideas and ivory towers

Written by Dinesh Singh 

The Indian readymade garments industry has been a vital enabler of our export trade. Each year it exports to the West, ready-to-wear apparel worth several billion dollars. Trade analysts, in the recent past, have been quite gung-ho about this sector’s prospects. Where do countries like India, China and others in the region derive the strength that adds so much value to their economies? It is not as if nimble fingers and skilled tailoring hands do not exist in developed nations. The answer lies is in the availability of cheap labour. Unfortunately, this advantage is likely to disappear in the near future. Just as worrying is the obliviousness of this looming danger on the part of our policy and decision-makers.

We simply need to delve into the realm of robotics and artificial intelligence to gauge the situation. A former professor of robotics at the Georgia Institute of Technology has helped create a robotic tailor that can stitch a perfect circle: If you can stitch a perfect circle, then you can perform almost any complicated sewing task that, in the past, could only have been undertaken by skilled and experienced hands. The only seemingly viable option for the garments industry in the Asian region is to seek to import such machines. There goes a part of our plan to keep unemployment figures down.

22 June 2017

Charting the Indian banking sector’s future

Renny Thomas

The Indian banking sector is at a critical juncture in its evolution. It is now clear that the slump in credit growth and increase in stressed assets has affected the profitability of all banks, and threatens the very survival of some of them.

State-owned banks account for more than three-fourths of the stressed asset load, which is now far higher than their net worth. Provision levels are inadequate, as the banks hold only 28% of gross non-performing assets and restructured assets, as provisions. There is a $110 billion gap between the stressed assets in the system and the provisions made. Shifts in consumer preferences, combined with changes in technology and regulations, have created a perfect storm. The way out will depend to a large extent on the speed and direction of stakeholder reactions.

The core challenge is that many of the public sector banks (PSBs) are undifferentiated, sub-scale, and with limited capabilities to be full universal banks. About 80% of them own only 25% of the assets. They also operate in virtually every market segment with very limited sector or vertical-focused specialization. In fact, they focus on the same customer segments, offer similar products, and very often compete only on price. Some of this is because PSBs face challenges that impede them from competing effectively. They have to shoulder a disproportionate share of social and nation-building obligations. Policies on compensation and human resources reduce management autonomy, and inhibit their ability to attract and manage talent.

16 June 2017

Corridor of economic uncertainty

by Christophe Jaffrelot 

China presents the BRI, also known as the One Belt One Road initiative (OBOR), as a connectivity project — hence, the reference to the old Silk Road and a new maritime silk road. Illustration by C R Sasikumar

Last week, the Pentagon’s annual report to the Congress forecast that China will build a military base in Pakistan in order to have in the subcontinent facilities akin to what Beijing is developing in Djibouti. These plans are well in tune with the proposals presented last month during the Belt and Road Forum (BARF) in Beijing in the presence of 29 heads of state. India skipped it because a section of the Belt and Road Initiative (BRI), the China Pakistan Economic Corridor (CPEC), infringes New Delhi’s sovereignty as it passes through Kashmir. But the CPEC probably affects Pakistan’s sovereignty even more, since this project is more than a corridor; it is an expansionist plan, as the military base singled out by the Pentagon also suggests.

6 June 2017

How to rob a bank, according to economics


By:Corinne PurtillDan Kopf

Bank robberies are great case studies for the economics of crime. They’re premeditated affairs in which a perpetrator has evaluated (consciously or not) the rationality of proceeding. The gains are quantifiable. They also come with a built-in dilemma: every minute a robber stays in the bank increases both the haul and the chance of getting caught.

If you are an economist curious about bank robberies, there is no better laboratory than Italy. From 2000-2006, the last period for which comprehensive public data are available, Italy averaged nearly as many bank robberies each year than the rest of Europe combined. The Italian Banking Association also retains detailed records of every heist, including the duration, amount seized, and if and when an arrest was made.

Economists Giovanni Mastrobuoni and David A. Rivers studied nearly 5,000 bank robberies in Italy between 2005 and 2007. The average heist lasted 4 minutes, 16 seconds and yielded €16,000 (about $19,800 at the exchange rate of the time). Though each additional minute in the bank, on average, leads to about €1,400 more in earnings, the majority of robberies last three minutes or less because the risk of getting caught increases with time.

19 February 2017

Imagining India’s first 100 Million City

Saurabh Chandra

Countries need moonshots. Without a goal in the future that excites a lot of young people (and we have a LOT of young people in India), things can get pretty restive and eventually messy. A feeling of a fixed pie focuses people into grabbing more of its share. Moonshots that can tremendously grow the pie focus people into thinking — how do I become a part of that. An obvious moonshot in front of humanity is a colony on Mars. For India, an obvious moonshot is available here on earth itself — world’s first 100 Million city.

The original moonshot was a leap of technology and it created a whole lot of technology spinoffs that created utilitarian justification for the Apollo programme. Making a 100 Million city is also a technological challenge but the benefits are humongous in the outcome itself and we don’t have to justify it in terms of spin-offs to the bean counters. Cities produce wealth and higher density of living is environmentally more sustainable (since we can optimise per person consumption).

The challenge is also not mere technological. It is sociological, political and even administrative. And that is what is great about this idea — it is a grand challenge in multiple dimensions and solving it will pull up our capabilities in all those terms. Compared to making 100 cities, creating exceptions and special laws for 1 is much more feasible. It also plays to India’s strengths and weaknesses where we have been far better at concentrating our best talent on a few problems and running them on mission mode.

13 January 2017

Choose the best tax saving instrument for you

Babar Zaidi

So many options, so little time. If you have still not completed your tax planning for 2016-17, don’t panic. 

ET Wealth’s annual ranking of tax saving instruments cuts through the clutter and tells you which is the most suitable option for you. 

ET Wealth Ratings 

6 January 2017

The end of capitalism has begun


Paul Mason

Without us noticing, we are entering the postcapitalist era. At the heart of further change to come is information technology, new ways of working and the sharing economy. The old ways will take a long while to disappear, but it’s time to be utopian 

The red flags and marching songs of Syriza during the Greek crisis, plus the expectation that the banks would be nationalised, revived briefly a 20th-century dream: the forced destruction of the market from above. For much of the 20th century this was how the left conceived the first stage of an economy beyond capitalism. The force would be applied by the working class, either at the ballot box or on the barricades. The lever would be the state. The opportunity would come through frequent episodes of economic collapse.

Instead over the past 25 years it has been the left’s project that has collapsed. The market destroyed the plan; individualism replaced collectivism and solidarity; the hugely expanded workforce of the world looks like a “proletariat”, but no longer thinks or behaves as it once did.

24 December 2016

Raghuram Rajan Takes On Critics, Again, And Shows Chart By Chart Why They're Wrong

Rimin Dutt

Governments should protect the independence of central banks and look beyond uninformed criticism, he says 

Outgoing Reserve Bank of India Governor Raghuram Rajan took on critics again Tuesday and defended the key policies undertaken by the central bank during his tenure, going into extraordinary detail explaining the context of many of the bank's decisions.

Specifically, he addressed concerns about interest rates, which many of his critics say have been too high, hurting credit growth and spending, and the RBI-mandated clean-up of bad loans and balance sheets at banks, which some critics allege has compounded the credit growth slowdown.

"The RBI, of course, stands by its policies," Rajan said addressing the 10th Statistics Day conference at the RBI headquarters. "Nevertheless, this debate is very important because it could shape policy directions in India over the medium term."

Economic Conditions Snapshot, December 2016: McKinsey Global Survey results







































In the face of political transitions and concerns over trade, executives expect improvements at home and a stable global economy—with some regional divergences. 

As executives look ahead to a new year, they see political transitions as a leading risk to global and domestic growth—and among the more pressing threats to their businesses—in McKinsey’s latest survey on economic conditions.1In parallel, slowing trade also has risen as a threat to global growth, especially for respondents in China and developed Asia.2Despite these uncertainties, executives are more positive than negative about economic prospects at home and, as they have all year long, expect global economic conditions to hold steady. Across regions, though, outlooks can vary. Respondents in China and the United States report increasingly positive expectations for their economies and believe growth rates will improve in coming months, while opinions on the eurozone are mixed. Nearly everyone sees more global volatility on the way. 
Political transitions at the fore 

2 December 2016

2017 Index Of Economic Freedom: Trade And Prosperity At Risk – Analysis


By Bryan Riley and Ambassador Terry Miller*

The latest rankings of trade freedom around the world, developed by The Heritage Foundation in the forthcoming 2017 Index of Economic Freedom,[1] once again demonstrate that citizens of countries that embrace trade freedom are better off than those in countries that do not. The data continue to show a strong correlation between trade freedom and a variety of positive indicators, including economic prosperity, low poverty rates, and clean environments.

Worldwide, the average trade freedom score improved just barely over the past year, from 75.6 to 75.9 out of a maximum score of 100. The improvement was due to a small decline in average tariff rates among the countries measured.
Why Trade Freedom Matters

A comparison of economic performance and trade scores in the 2017 Index of Economic Freedomdemonstrates the importance of trade freedom to prosperity and well-being. Countries with the most trade freedom have higher per capita incomes, lower incidences of hunger in their populations, and cleaner environments.

29 November 2016

Five Stages Of Climate Grief – OpEd

NOVEMBER 28, 2016

Ever since the elections, our media, schools, workplaces and houses of worship have presented stories showcasing the stages of grief: denial, anger, bargaining, depression and acceptance.

Liberal-progressive snowflakes are wallowing in denial, anger and depression. They cannot work, attend class or take exams. They need safe “healing” spaces, Play-Doh, comfort critters and counseling. Too many throw tirades equating Donald Trump with Adolph Hitler, while too few are actually moving to Canada, New Zeeland or Jupiter, after solemnly promising they would.

Nouveau grief is also characterized by the elimination of bargaining and acceptance – and their replacement by two new stages: intolerance for other views and defiance or even riots. Sadly, it appears these new stages have become a dominant, permanent, shameful feature of liberal policies and politics.

The Left has long been intolerant of alternative viewpoints. Refusing to engage or debate, banning or forcibly removing books and posters, threatening and silencing contrarians, disinviting or shouting down conservative speakers, denying tax exempt status to opposing political groups, even criminalizing and prosecuting climate change “deniers” – have all become trademark tactics. Defiance and riots were rare during the Obama years, simply because his government enforced lib-prog ideologies and policies.

Liberals view government as their domain, their reason for being, far too important to be left to “poorly educated” rural and small-town voters, blue-collar workers or other “deplorable” elements. Liberals may not care what we do in our bedrooms, but they intend to control everything outside those four walls.

Trump’s Economic Plan: This Isn’t Going To Work – OpEd

NOVEMBER 28, 2016

Will Donald Trump be good for the US economy?

The American people seem to think so. According to a recent survey taken by Gallup “Americans have relatively high expectations (of) the president-elect… Substantial majorities (upward of 60%) believe the Trump administration will improve the economy and create jobs. A slim majority (52%) say he’ll improve the healthcare system.”

Even more impressive, the University of Michigan Consumer Sentiment Index spiked to a 93.8 -high in November, signaling a significant improvement in overall consumer attitudes about the economy.

Analysts attribute this change in outlook to the recent presidential election which showed a marked-uptick in optimism “across all income and age subgroups across the country.”

“The initial reaction of consumers to Trump’s victory was to express greater optimism about their personal finances as well as improved prospects for the national economy,” said Richard Curtin, the survey’s chief economist.

So, people are not just giving Trump the benefit of the doubt, they genuinely think their economic situation is going to get better under the new president.

The results are particularly significant when we realize that the economy not only topped the list of important issues going into the November elections, but that also (according to a survey conducted by Edison Research) “Three in five voters said the country was seriously on the wrong track and about the same number said the economy was either not good or poor. Two-thirds said their personal financial situation was either worse or the same as it was four years ago. About one in three voters said they expected life to be worse for the next generation.”

27 November 2016

League of nationalists

Nov 19th 2016 

AFTER the sans culottes rose up against Louis XVI in 1789 they drew up a declaration of the universal rights of man and of the citizen. Napoleon’s Grande Armée marched not just for the glory of France but for liberty, equality and fraternity. By contrast, the nationalism born with the unification of Germany decades later harked back to Blut und Boden—blood and soil—a romantic and exclusive belief in race and tradition as the wellspring of national belonging. The German legions were fighting for their Volk and against the world.

All societies draw on nationalism of one sort or another to define relations between the state, the citizen and the outside world. Craig Calhoun, an American sociologist, argues that cosmopolitan elites, who sometimes yearn for a post-nationalist order, underestimate “how central nationalist categories are to political and social theory—and to practical reasoning about democracy, political legitimacy and the nature of society itself.” 

It is troubling, then, how many countries are shifting from the universal, civic nationalism towards the blood-and-soil, ethnic sort. As positive patriotism warps into negative nationalism, solidarity is mutating into distrust of minorities, who are present in growing numbers (see chart 1). A benign love of one’s country—the spirit that impels Americans to salute the Stars and Stripes, Nigerians to cheer the Super Eagles and Britons to buy Duchess of Cambridge teacups—is being replaced by an urge to look on the world with mistrust.

20 November 2016

An Economic Ultimatum for the Arab World

NOV 16, 2016 2

WASHINGTON, DC – If Middle Eastern countries do not start making real progress on fundamental political and economic reforms, further regional turmoil is inevitable. With the rentier systems that governments have maintained for decades now at a breaking point, policymakers must begin the difficult, but not impossible, process of establishing new social contracts.

That contract in Arab countries started to erode at the turn of the century, when governments with inflated budgets and bloated bureaucracies could no longer provide an adequate supply of basic services such as health care and education, create a sufficient number of jobs, or sustain food and fuel subsidies. But, despite diminished state benefits, most leaders have continued to insist that their countries’ people uphold their end of the contract by not participating meaningfully in public life.

Arab governments were able to sustain inefficient economies for decades because they were propped up by oil revenues. In recent decades, most Arab countries have benefited in some way from the Middle East’s abundant oil and gas reserves. Hydrocarbon-producing countries used their profits to buy their citizens’ loyalty and establish what were effectively welfare states; and non-oil producers enjoyed the benefits of aid, capital inflows, and remittances sent back by their nationals working in resource-rich countries.

Because the governments of oil-producing countries used revenues to provide for most of their people’s needs – including jobs, services, and favors – these governments fostered a culture of dependency, rather than encouraging self-reliance and entrepreneurship to expand the private sector. What’s more, because they did not need to tax their citizens to generate revenues, people had little recourse to challenge authoritarianism. The political culture reflected a simple principle: “no taxation, no representation.”

16 November 2016

Asia Frets over Trump, But There’s an Economic Upside

November 14, 2016

Donald Trump’s surprise election win sent shockwaves through Asian markets, while his apparent intent to cancel the Trans-Pacific Partnership (TPP) has not helped sentiment either. But providing he avoids provoking a trade war with China, a Trump administration could actually be beneficial to Asia’s economy.

Here is a quick look at the positives and negatives for the world’s most dynamic economic region.

Positives: U.S. Economic Growth

A stronger U.S. economy would not only benefit Americans. Providing Trump does not follow through on threats to slap tariffs of up to 45 percent on Chinese imports, Asia’s major exporters, including China, Japan and South Korea, would all benefit should America’s consumers increase spending, along with the promised boost to U.S. infrastructure.

Accounting for nearly a quarter of global gross domestic product, any pickup in the United States, the world’s largest economy, would help propel global GDP higher and lift millions more out of poverty in Asia.

The last two presidents to expand America’s role in the global economy were Clinton and Reagan, with U.S. GDP accounting for around 32 percent of the global economy when Clinton left office. (It was 34 percent under Reagan). Reversing that slide would help global trade start recovering and the world economy get back to at least trend growth, after two years of subpar performance.

Stronger Dollar

13 November 2016

GCC States To Boost Economic Integration

BY ARAB NEWS 
NOVEMBER 11, 2016

Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman, second deputy premier and minister of defense, said GCC as a bloc has the potential to become the sixth largest economy in the world if it acts wisely in the coming years.

He was speaking at the first meeting of the GCC’s Commission of Economic and Developmental Affairs at the Conference Palace in Riyadh on Thursday.

The prince said: “Today we should try to take advantage of opportunities, knowing that we live in an era of many economic fluctuations around the world, and we are in need of cementing a bloc in the era of blocs.
“We want, through this meeting, to proceed toward realizing the goal of the GCC leaders and people, which is to achieve growth and prosperity.”

The deputy crown prince stressed that many achievements have been attained recently, “which have had positive returns and benefits for our countries and people,” adding that many more opportunities can be grasped in order to ensure further economic prosperity, growth and security in the GCC countries.

The meeting was attended by Sheikh Mansour bin Zayed Al-Nahyan, UAE’s deputy prime minister and minister of presidential affairs; Nasser bin Hamad Al-Khalifa, representative of the King of Bahrain for humanitarian and youth affairs; Khalid bin Hilal bin Saud Al-Bousaeedi, minister of the Royal Court of Oman and his country’s representative at the commission; Sheikh Mohammed bin Abdulrahman bin Jassem Al-Thani, Qatari minister of foreign affairs; Sheikh Mohammed bin Abdullah Al-Mubarak Al-Sabah, Kuwaiti minister of state for Cabinet affairs; and Abdullatif Al-Zayani, secretary-general of the GCC.

30 October 2016

Thailand: ‘Sufficiency Economics’ King Bhumibol’s Best Legacy – Analysis

By Lim Kooi Fong* 
OCTOBER 27, 2016

One of the most enduring images of the late Thai King Bhumibol Adulyadej is that he is almost always seen with a camera around his neck or in his hand during his time visiting regions within Thailand, checking on projects, which he personally supported and followed up.For over 70 years of his reign,

Thailand’s much loved monarch kept a promise – the promise that he would reign with righteousness for the benefit and happiness of the Siamese people.

In 1997 when Thailand suffered its worst economic crisis in living memory, he came up with his now trademark ‘Sufficiency Economics’ theory, based on Buddhist principles to help alleviate the suffering of his people – especially the mental condition. The theory was based on the experience of over 40 years in helping his people to adopt a sustainable development model.

As of 1998, there were 2,159 royal development projects initiated by the King and implemented throughout the country. Most of the projects are aimed at improving the living conditions of his subjects, particularly those in the remote rural areas.

Sometimes he would use his own funds in the early stages to help a project get off the ground. In 1988, he established the Chaipattana Foundation to fund and help in accelerating rural development projects that are beneficial to the people and the country as a whole.

The off-shoot of his passion for the deprived sections of the Thai people is his ‘New Theory’ in land management and the development of water sources for agricultural purposes. The ‘New Theory’ was a simple formula: 30-30-30-10.

The Made-in-America Global Security and Economic System Still Serves U.S. Interests

October 26, 2016

When the new president takes office next January, a world of troubles awaits. Violent extremism, irresponsible adventurism by China, an aggressive and authoritarian Russia, economic uncertainty and racial unrest at home, to name a few issues, will give no peace to the White House's new occupant, Democrat or Republican.

The new president will also inherit a global system of security and economic institutions.

There is no doubt this system has been good for the world, producing 70 years without a great power war—the longest such stretch in modern history—a standard of living in the West that is the highest ever achieved, and billions lifted out of poverty around the globe.

But less remarked upon is the fact that it has also been good for America.

This system has been good for the world, producing 70 years without a great power war.

Carefully built and tended following the destruction and horror of World War II, the system has kept America out of devastating foreign wars in Europe and Asia. It has enabled Americans to attain lifestyles that the last generation that fought a global war could never have imagined as they suffered horrific casualties at Iwo Jima or wondered if they would survive the Battle of the Bulge.

Even less remarked upon is that the global system was designed by and made in America. The United States built it and has sought to sustain and expand it, joined in partnership with a voluntary association of a large and diverse array of the richest, freest, most advanced countries in history, all of which find it in their interest to work with the United States. Because of it, the United States enjoys a remarkable position of power and possibilities.

23 October 2016

Washington’s Global Economic Wars – OpEd

OCTOBER 21, 2016

During most of the past two decades Washington has aggressively launched military and economic wars against at least nine countries, either directly or through its military aid to regional allies and proxies. US air and ground troops have bombed or invaded Afghanistan, Iraq, Pakistan, Libya, Somalia, Syria, Yemen and Lebanon.

More recently Washington has escalated its global economic war against major economic rivals as well as against weaker countries. The US no longer confines its aggressive impulses to peripheral economic countries in the Middle East, Latin America and Southern Asia: It has declared trade wars against world powers in Asia, Eastern and Central Europe and the Gulf states.

The targets of the US economic aggression include economic powerhouses like Russia, China, Germany, Iran and Saudi Arabia, as well as Syria, Yemen, Venezuela, Cuba and the Donbas region of Ukraine.

There is an increasingly thinner distinction between military and economic warfare, as the US has frequently moved from one to the other, particularly when economic aggression has not resulted in ‘regime change’ – as in the case of the sanctions campaign against Iraq leading up to the devastating invasion and destruction.

10 October 2016

How digital finance could boost growth in emerging economies

By James Manyika, Susan Lund, Marc Singer, Olivia White, and Chris Berry
September 2016 

How digital finance could boost growth in emerging economies


Delivering financial services by mobile phone could benefit billions of people by spurring inclusive growth that adds $3.7 trillion to the GDP of emerging economies within a decade. 

Two billion individuals and 200 million micro, small, and midsize businesses in emerging economies today lack access to savings and credit. Even those with access must often pay high fees for a limited range of products. Economic growth suffers. But a solution is right in people’s hands: a mobile phone. Digital finance—payments and financial services delivered via mobile phones and the Internet—could transform the lives and economic prospects of individuals, businesses, and governments across the developing world, boosting GDP and making the aspiration of financial inclusiona reality. 

A new report from the McKinsey Global Institute (MGI), Digital finance for all: Powering inclusive growth in emerging economies, is the first attempt to quantify the full impact of digital finance. In addition to extensive economic modeling, the report draws on the findings of field visits to seven countries—Brazil, China, Ethiopia, India, Mexico, Nigeria, and Pakistan—and more than 150 expert interviews. It also lays out the key conditions that will need to be met to capture the benefits. 

The research finds that widespread adoption and use of digital finance could increase the GDPs of all emerging economies by 6 percent, or a total of $3.7 trillion, by 2025. This is the equivalent of adding to the world an economy the size of Germany, or one that’s larger than all the economies of Africa. This additional GDP could create up to 95 million new jobs across all sectors of the economy.