Global

The nature of environmental and natural resource security has changed dramatically since the 1990s. Over the last two decades, the global economy, geared towards exploiting natural resources to serve an exponentially growing population of consumers, has far exceeded the carrying capacity of the planet. The depth of the transformation has been so profound that it has pushed Earth into a new geological epoch, the Anthropocene. Indeed, scientists have identified planetary boundaries that it would be unwise to transgress, and we seem to be in the process of crossing many of them right now.

Over the past few years, the world economy has also been quietly undergoing a further, high-speed transformation driven by the fusion of digital, material science and biological innovations of the Fourth Industrial Revolution. The World Economic Forum has highlighted this transformational pathway as the fundamental shift that is driving the global economy today. How it will incorporate the value of ecosystems and the interconnectedness of human and natural processes will determine whether the global economy manages to reconcile itself with the planet’s finite resources or whether we will simply accelerate its impacts. Read more

By Ganeshan Wignaraja and Juzhong Zhuang*

Rising protectionist sentiment in the West and a dramatic decline in global trade since 2011 have led many to speculate that Asia’s era of export-led growth will end soon. This speculation is overdone. While the slowdown in trade does demand responses, Asia is well positioned to be a bulwark against protectionism. In fact, it can lead global trade in the years to come.

But, getting the responses right will require a clear understanding of the causes. Policy makers need to ask first what explains the export slowdown, and what this means for Asian economies. The story starts with the great recession in 2008, which left advanced countries stuck in low growth, low demand environments that have weighed heavily on Asia’s export-dominated economies. Read more

Corporate borrowers in emerging markets are already facing higher debt service and capital repayment costs, due to the combined impact of dollar strength and rising benchmark US 10-year interest rates. In turn, this risks creating a vicious circle for growth. The latest data from the Bank for International Settlements (BIS) suggest the EMs’ dollar-denominated debt doubled to $3.2tn between 2009 and March 2016.

As the IMF has warned: “China urgently needs to tackle its corporate-debt problem before it becomes a major drag on growth.” Read more

In the second half of the last century, world populations sought peace and security as the background for economic growth and overall prosperity. The US was the major underwriter and supplier and became world leader.

In this 21st century, with the globalisation of trade, social habits and new technologies, world populations need infrastructure and connectivity to be able to achieve economic growth and prosperity. China seems to be emerging as the main underwriter and supplier, be it in Asia, with the creation of the Asia Infrastructure Investment Bank; Latin America, with massive investments in power transmission; or in Africa, where it has been the main developer, builder and financier of infrastructure assets, based primarily on bilateral government-to-government arrangements. Read more

Last year, a combination of mass migration, the largest refugee crisis since World War II and stagnant living standards proved to be an explosive cocktail for political elites in Europe and the US.

In 2017, middle-income countries are facing even stronger headwinds. They house the majority of the world’s 21m refugees and are struggling with depressed global markets and lower remittances. In this context, donors and governments must rethink how they respond to global displacement. Instead of focusing on providing refugees with short-term handouts, they must expand employment opportunities both for those fleeing their homes and for the communities that host them. Read more

By Joseph Losavio and Michael Drexler , World Economic Forum

Is 2017 the year Argentina finally turns a century of economic torpidity around? Last year’s signs were promising: Argentines swept President Mauricio Macri into office with a mandate to reform the moribund economy, attract foreign investment, and restore Argentina to its place as a Latin American leader and a global player.

But to regain its past riches, more will be needed than a reform promises. Here’s three areas that need action in 2017. It’s remarkable Argentina even needs a renaissance. Exactly 100 years ago, it was already one of the world’s wealthiest economies. Read more

The global mood has shifted since Donald Trump’s surprise victory in the US presidential election. Europeans are fretful and Mexicans are panicking but many of the US investors we met in mid-November have become intensely optimistic about the prospects for their own economy. No one is quite sure whether this will benefit emerging markets or not and many Trump supporters probably don’t care. Their vote was to make America great again, not to lift up emerging or frontier economies in East Africa.

Yet US investors should still focus on economies in the East African Community (EAC), because something pretty special is brewing there. From Tanzania to Ethiopia, the region is ripe for industrialisation and growth that should easily exceed the best the US might produce in coming years. There is no doubt that US growth can accelerate in the short term but East Africa, and Kenya in particular, should grow faster. Read more

By Matthew Reed, Ovum

The number of mobile subscriptions in Africa will reach one billion by the end of 2016, according to figures from research firm Ovum. But even as the continent nears this landmark, its telecoms market is changing fast, and data and digital services rather than mobile voice and SMS will lead the next phase of development.

In the first decade of the 2000s, Africa underwent a mobile revolution as the roll-out of mobile networks across the continent brought communications technology to many for the first time. By the end of the decade, the mobile-money service M-Pesa was showing that mobile services might be able to plug some of the other gaps in Africa’s infrastructure, such as in financial services. Read more

You walk into your local pharmacy to pick up a prescription. How much of what you pay is the manufacturer’s price, and how much is mark-up grafted on by other players as the medicine moves along the supply chain? It depends where you are.

In Kenya, for example, if you buy a course of antibiotics, the price you pay, on average, is close to double the manufacturer’s wholesale price. If you buy it at your local CVS in the US, or Boots in the UK, the manufacturer’s price will be 85-90 per cent of the retail price. Thus, assuming the manufacturer sells an antibiotic for $10 globally, you may pay about $20 in Kenya, compared with $11-12 in the US or UK. Read more

When accepting his hard-earned peace prize at the Nobel ceremony in Oslo last Saturday, President Juan Manuel Santos predicted that “one of the great legacies” of Colombia’s peace process would be “a model of transitional justice that allows us to obtain maximum justice without sacrificing peace”. If only that were true.

After the prize was announced in October, the president’s negotiators had indeed worked with the Revolutionary Armed Forces of Colombia (Farc) to improve the justice provisions of the original deal, which had been narrowly defeated in a national plebiscite on October 2 due in part to concerns that Farc war criminals wouldn’t face meaningful punishment for their crimes. The new agreement that emerged in November included language that could salvage the justice provisions, with the passage of appropriate implementing legislation, and secure at least a minimal degree of justice for their victims. Read more

The consent of Russia and other non-Opec oil producers to production cuts of 558,000 barrels a day to support Opec members’ agreement on a 1.2mbd cut for the first six months of 2017 represents an important breakthrough whose strategic significance, both for the oil market and for Middle East geopolitics, should not be underestimated.

Three aspects of this agreement underlie its significance. First, it is clear that Saudi Arabia has permanently abandoned its market share-focused strategy and gone back to defending the price of oil. Second, all indications are that this agreement, in contrast to other Opec agreements in the past, will be sustained, perhaps even beyond the agreed period. And finally, the agreement may have opened an exceptional opportunity for President Vladimir Putin to further deepen Russia’s involvement in the Middle East. Read more

By Jon Fredrik Baksaas, GSMA

There are a myriad of social and economic benefits made possible by bringing communication services to previously unconnected populations. This commitment to “Digital Inclusion” – the ability to extend connectivity to all corners of the globe – is driving internet access and usage, and providing access to vital services such as healthcare, education and commerce.

One barrier to digital inclusion is the availability of networks. To address this mobile operators have invested billions rolling out 3G/4G mobile broadband across the globe. Today mobile broadband networks cover 80 per cent of the world’s population, providing internet access to many markets where fixed access is either prohibitively expensive or non-existent. Read more

Turkmenistan is doing its best to attract foreign investors to what President Gurbanguly Berdymukhammedov (pictured above) says is his country’s “colossal economic potential and stability”. But while the potential is certainly there, the stability, at least for investors, is lacking. Turkenistan is ruled by an idiosyncratic form of authoritarianism and is permeated by arcane institutions and bureaucratic practices that pose big challenges to investors.

Last month, the economy ministry and the Chamber of Commerce and Industry of Turkmenistan organised the VIII International Investment Forum at the national tourist resort of Avaza, the state news agency reports. In his address to the forum, Mr Berdymukhammedov assured foreigners that their investments were secure. Read more

By Tomasz Telma, IFC

If you want to see how quickly the developing world is urbanising—and the problems that this creates—look no further than Istanbul.

In 1990, Turkey’s commercial capital was home to about 6.5m people. By 2014, that number had more than doubled to 16m, creating an urban crush that has sparked everything from blackouts to 2 am traffic jams.

But Istanbul is far from alone. Its struggles echo those of many cities in the developing world, where a massive urban migration has stretched local infrastructure to a breaking point, entrenching poverty and driving up greenhouse gas emissions. Read more

September’s United Nations Summit for Refugees and Migrants at the General Assembly won pledges to increase official funding and resettlement to improve on 2015’s dismal record, when just over half of its appeal and one-tenth of slots were covered. Countries also endorsed preparation of a comprehensive medium-term plan detailing international community priorities and responsibilities in future emergencies.

However, the greatest breakthrough could be represented by private sector groups that organized their own support around the event, including the UN Global Compact for businesses dedicated to the Sustainable Development Goals, and President Barack Obama’s White House Call to Action, which drew initial commitments from 50 companies of hundreds of millions of dollars and innovative solutions to economic and practical challenges. Read more

It would be easy to become depressed about the outlook for climate policy. After all, the topic barely warranted a mention during the recent US election, except for occasional disparaging remarks from the now president-elect. But at this week’s UN climate conference in Marrakesh, delegates have attempted to build on the success of last year’s event in Paris, which delivered a watershed moment in the form of a long overdue agreement on emissions. This year’s conference could be remembered for an equally enduring landmark if the parties choose to accelerate a quiet revolution that is radically reshaping energy systems around the world.

Globally, 2.2bn people have no access to electricity or endure highly unreliable service and rely instead on a toxic mix of kerosene, paraffin, candles and wood. For a third of the world’s population energy is dangerous, erratic and ruinously expensive. Lighting can cost a poor household more than a hundred times what it does in rich countries. Some 4.3m people die each year from the effects of pollution from cooking alone. Read more

Latin America is experiencing its worst economic growth — projected to be negative this year – since the lost decade of the 1980s. At this crucial time, the United States is turning its back and stepping backward from Latin America while China takes further steps forward in its economic relations with the region.

President elect Trump has pledged to walk away from the Trans-Pacific Partnership (TPP) and the North American Free Trade Agreement (NAFTA), as well as steeply raise tariffs on Mexican manufacturing. He also says he will scrap the Dodd-Frank financial reform bill and engage in questionable fiscal and monetary policies. To top it off, he pledges to deport Mexican and other Latin Americans from the United States and build a wall so they can’t come back. Read more

The ideal financial customer is not who you think. First, she lives on about two dollars a day. Second, she lives in rural Africa, the Middle East, South Asia or Latin America. Finally, she’s never owned a financial account of her own.

What’s ideal about all that? Growth. And digital technology is the key to driving it. Read more

While the US was debating Russian hacking and leaks ahead of its elections, EU leaders met last month to discuss Moscow’s efforts to influence European liberal democracies through misinformation and propaganda. “We don’t have the tools to look at this centrally,” one senior EU diplomat complained, referring to a lack of cooperation between EU intelligence services. The official is right – but in a much deeper sense.

For 25 years, open societies saw themselves as the uncontested winners and expected that the remaining autocracies, with the help of western pro-democracy actors, would be relegated to the dustbin of history. So it is with disbelief that we are facing a thrust reversal. Read more

As the world descends on Morocco for the annual United Nations climate conference, the host nation is championing an unlikely hero: African agriculture.

After launching the ambitious Adaptation of African Agriculture (AAA) initiative in September, the Moroccan government seeks to mobilise $30bn of investment for the sector that is under the most significant threat from climate change, in the region that is the least equipped to deal with it. According to current estimates, the negative effects of climate change are already reducing Africa’s GDP by about 1.4 per cent, and the costs arising from adaptation to climate change are set to reach an annual three per cent of GDP by 2030. A principal victim of this is the agriculture sector, which not only feeds the chronically food-insecure continent, but forms the backbone of its economy and its route out of poverty. Read more