The refugee crisis triggered by the civil war in Syria is a challenge of huge proportions. Providing shelter to refugees is an ethical obligation and a requirement under international law. However, refugees pose large economic, social and political challenges for the host communities. In the face of the strong inflow and the multi-fold strains it causes, more and more people are asking, “Can we handle this?”
Failure to address the issue will only make the crisis worse – for the refugees and the recipient countries too. And time is pressing. Read more
Emerging market investors have little to cheer about these days. EM currencies are falling, corporate debt is rising, and economic growth, to say it with Christine Lagarde’s words, is “cause for concern”.
But that shouldn’t stop venture capitalists and private equity investors from making a bullish bet on EM entrepreneurs. Why? Because, Turkish-American author Elmira Bayrasli writes in her book From The Other Side of The World, “the next great innovator – the next Steve Jobs – won’t be from Silicon Valley, but from Mexico, Nigeria, Pakistan or Turkey”. What makes her so sure of that? Read more
There is no bigger or costlier mismatch between science and economics than on climate change. Scientists have for years seen environmental degradation and the resulting global warming as the biggest known threat to economic well-being. Yet economists have not integrated climate change and the environment in growth accounting that underpins welfare economics, nor recognized that the carbon intensity of economic activities is a roadblock to sustaining economic growth.
This neglect has grave consequences for sustaining prosperity, the agreements at the Paris climate summit notwithstanding. Indeed, progress will be severely compromised unless economists build in low-carbon measures in the policies and investments they routinely promote around the world. Even if belatedly, the economics profession must act. Read more
A confusion between a nominal global GDP adjustment and a real global GDP slowdown is at the root of the market disarray we are seeing these days. While they are indistinguishable for companies in the short run, they have deeply different implications for the outlook of the global economy, for policymaking, and for markets.
While doomsayers talk about a global slowdown or secular stagnation, what is true is that real global GDP barely decelerated last year (from 3.4 per cent growth in 2014 to 3.1 per cent in 2015 according to the IMF) and will somewhat re-accelerate this year (to 3.4 per cent again). Even if China’s figures are overstated, it is difficult to argue the global economy is in a real slump like 2009, when the economy slowed down by more than 3 percentage points from 2008, and by more than 5 pp compared with 2007. What is going on, then, to make everyone so pessimistic? Read more
Change is needed to spur economic stability in Africa. Effective public sector entities require transparency, accountability and more honest decision-making. Enhanced financial reporting – accrual accounting – will help African governments develop policies and programmes that deliver sustainable, resilient public services and stronger economies.
Cash-based accounting — used by many governments in the region — only goes so far. Accrual accounting means more accurate identification, measurement, recording and management of assets and liabilities. It means better, more informed decision-making and reduced fraud and corruption. In this environment, citizens are the ultimate winners. Read more
For much of the early 2000s, Brazil, Russia, India, and China (the Brics) were seen not just as “the engine of new demand growth and spending power,” as Goldman Sachs researchers put it in 2003, but also as the likely begetters of a new international order, in which the US – and the west more generally – would play a much less significant role.
Today, the idea that the Brics could lead the way to this new order seems more distant than ever. Read more
A year on and I am sitting on a tropical island, eating my dinner on the beach and, like in Namibia, the Tanzanian African night sky remains unpolluted by man-made light. Good news and bad news…
Generally it has been a difficult year for developing Africa’s power needs. A combination of lower commodity prices, China’s economic slowdown, dollar strength and local currency weakness have made it a tough year for nearly all African governments. Revenues are down, the cost of servicing debt is up, and where dollar liabilities have needed to be serviced by local currency that has often led to a lack of liquidity in the local currency markets. As a result, we have seen government projects slip, and with them the ability to fund or procure much-needed power infrastructure development, despite the lower cost of fuel generally. Read more
Reform is a pressing need across emerging markets, especially as global demand remains weak and rising US interest rates threaten to increase funding costs. For countries to revive growth, they will need to create a more favourable environment for business. Politicians in many countries acknowledge this and have put structural economic reforms at the heart of their governing agenda.
But everywhere the outlook for reform is heavily dependent on political leadership and the larger political economy: where leadership and popular support for reform is strong – as in India – the outlook is positive; but where politicians are more interested in power than leadership – such as in Turkey and South Africa – the prospects for positive change are dim. Read more
The devastating floods in India’s southern state of Chennai, and now yet another deadly typhoon (Melor) bringing massive flooding in central Philippines, point to a rising frequency of climate-related disasters. For an effective response to these increasingly costly events, we can no longer regard them as one-off acts of nature. They are part of an emerging pattern shaped by human activity, in two ways. Globally, climate change is making countries far more hazard-prone; locally, environmental destruction is adding to the fall out.
Rising population densities mean that more people are locating in flood-prone areas. Unregulated urbanisation and inadequate drainage and flood protection are exacerbating people’s vulnerability. Read more
When life is already a struggle, a sudden shock can have a devastating impact. Families and communities can find themselves pulled in a downward spiral from which it may be impossible to escape.
Storms, droughts and floods are often not the reason why millions in Africa and many other regions are in poverty. But it can be the final blow which kills off their opportunity to make a better life for their families. Read more
We live in a world characterized by gender inequality. Throughout the globe, women continue to struggle for equal wages, access to capital and financing, training, supply chain inclusion and more. This state of affairs is unfair, unethical and unwise. Reams of research show that investing in women is not only the right thing to do, it’s the economically smart thing to do—for women and men.
For example, the OECD has demonstrated the correlation between economic inequality and other injustices like hunger, unequal access to education and gender-based violence. Women with increasing income have been shown to invest more than twice the amount that men do into their families, and to support their local communities. A recent McKinsey Global Institute report fully quantifies the economic cost the world faces because women are not empowered. According to McKinsey, if women were to play the same role in labour markets as men, as much as $28tn could be added to global annual GDP by 2025. Read more
In the last decade there have been at least 24 allegations of serious human and environmental harm caused by UK-linked businesses in developing countries. Had similar harms taken place in the UK many could have resulted in a criminal investigation under environmental, corporate manslaughter or health and safety legislation.
This is one of the main findings of our latest research. The allegations range from forced evictions, labour rights infringements, environmental pollution and, on at least one occasion, death. Of the companies implicated, 16 are FTSE listed and two are private companies. If these figures aren’t concerning enough, it’s worth pointing out that the Business and Human Rights Resource Centre, which systematically records allegations against UK companies, puts the number in the hundreds. Read more
Chinese premier Xi Jinping’s visit to Africa this week will certainly cause an uptick in the hubbub in the China-Africa cottage industry in Washington and London. Over the past 15 years, China’s commercial relationship with African countries has expanded, grown and deepened, as China’s total trade with sub-Saharan Africa has grown from around $10bn to over $200bn.
Yet, suspicion and unsubstantiated myths are riddling the discussion of Chinese involvement in Africa among business leaders, politicians and policy influencers. Perhaps these tendencies are spillover from the Cold War; maybe there is an attractive simplicity to a rivalry of great powers in faraway places; or it could be that, despite intentions of removal, colonial paternalism in Africa is still buried in the forefront of western thought? Whatever the reasons may be, this week’s Summit of the Forum on China-Africa Cooperation (FOCAC) in Johannesburg – a gathering of African presidents and Chinese leadership that happens every three years – provides an excellent opportunity to rationalise the China-Africa discussion and dispel five common myths that are unfortunately becoming assumptions even at the highest levels of policy-making. Read more
While the world debates climate change at the COP21 talks in Paris, it is worth having a look at how the emerging economies of Egypt and Jordan are taking a lead in stimulating private investment in renewable energy.
The EBRD has just approved a $500m envelope to support Egypt’s new solar programme, following hard on a $250m financing programme for the generation of renewable energy to be sold directly to private consumers in Morocco, Tunisia, Egypt and Jordan (supported by two multilateral climate funds, GEF and CTF). These sums will leverage much more than $1bn of parallel investment – crucially, without putting a burden on government budgets. Read more
By Nathan Dufour, Polish Institute of International Affairs
Europe’s security services are blinded by their quest to prevent terrorism from striking again. The investigation to root out the perpetrators, launched by French security services following the November 13 attacks in Paris, is well-intentioned, but cracking down on Belgium and the district of Molenbeek-Saint-Jean in Brussels are playing straight into the hands of Isis, the Islamic militant group, and its quest for destabilisation.
Molenbeek-Saint-Jean, one of Brussels’s poorest and most Muslim-populated districts, fell under international condemnation for its role as a support base for the Paris attacks. Many accused Belgium of failures, using it to portray the inadequacies of Muslim integration in western Europe. However, to properly consider the issue and investigate durable solutions, shortcut explanations should be avoided. Instead, consider why Belgium and Molenbeek fit so conveniently in Isis’ broader destabilisation plans. Read more
By Chandran Nair, Global Institute for Tomorrow
Last week, Jack Ma called for a new “e-WTO” with the aim of helping small businesses get on the Internet, as the best hope in the fight against poverty. This appeal came after Alibaba’s largest ever “Singles Day” a week earlier, with almost US$14.3bn of merchandise sold in 24 hours. Alibaba’s social media accounts even reported that Premier Li Keqiang called CEO Jack Ma to wish him a successful day. “Singles Day” is now the world’s largest shopping day, dwarfing even the United States’ “Black Friday.”
These are the latest manifestations of a worrying obsession with e-commerce and the Internet in Asia’s largest economies. In March, Beijing announced its new “Internet Plus” plan to expand Internet connectivity. Premier Li, when describing it, brought up the “mobile Internet”, “cloud computing”, “big data”, “intelligent manufacturing” and the “Internet of Things,” in a manner similar to business leaders in America. Nor is this digital obsession restricted to China. Indian Prime Minister Narendra Modi’s meeting with Mark Zuckerberg at Facebook’s headquarters received as much, if not more, media attention as his address on sustainable development to the United Nations days earlier. Read more
The creation of a slavery and human trafficking statement is now compulsory for all UK businesses with a turnover of over £36m, as stated by the Modern Slavery Act. However, unless enforced, this already diluted piece of legislation will have little effect on working practices and is open to abuse.
Modern slavery, although widely condemned as morally indefensible by UK businesses, is still rife in global industry. The International Labour Organisation estimates that over 20m people are trapped in a form of slavery worldwide, a view reinforced by countless exposés of the abhorrent working conditions present in western supply chains. Just last year, a report by NGO Verité suggested that a third of migrants working in Malaysian electronics factories were subject to forced labour. Read more
Education policymakers worldwide often make a pilgrimage of sorts to Finland and Singapore to learn about their high performing education systems. These states consistently do well in PISA tests, which are organised by the OECD every three years to measure and compare the competencies of 15-year-olds worldwide. There is no doubt that their achievements are impressive, but there is more to be said for examining places that are rapidly improving rather than those that are already highly effective. This week, CfBT Education Trust published a report exploring school reform in five world cities including three in emerging markets, where there has been rapid improvement in recent years.
Despite enormous diversity, the report has identified seven common trends that link educational success in each of these places. Strong leadership, commitment to reform and collaboration between schools are among the factors that have driven up standards. These cities have used education to break the link between poverty and attainment in a way that has not be done before and which could have profound implications for social mobility and their social and economic structures. Innovation and creativity have set new standards in these cities which could be applied in emerging markets across the world. Read more
By Spencer Lake, HSBC
China’s recent stock market and foreign exchange developments have drawn the attention away from a major development in another part of the country’s capital markets: the further opening-up of the bond market to foreign investors.
In July, the People’s Bank of China (PBoC) announced that certain foreign institutions – including central banks, sovereign wealth funds and international financial institutions – would have open access to the interbank debt market, where the vast majority of China’s government and corporate bonds are traded.
This is China’s latest measure to integrate its capital markets into the global financial system. Read more