Global economy

The death of Lee Kuan Yew, the founding father of modern Singapore, has focused attention on the economic miracle he helped to create.

In the three decades since Lee first became prime minister in 1959 until he stepped aside in 1990, per capita income in the city-state rose by a factor of 29, jumping from around $435 to more than $12,700. Nearby Malaysia only managed a ten-fold increase, from $230 to around $2400.

Yet economists remain divided over the causes behind this remarkable take-off.

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  • Lee Kuan Yew, the founder and patriarch of modern Singapore who has died at the age of 91, was one of postwar Asia’s most revered and controversial politicians
  • In a fight between whales, the shrimp’s back is broken, according to a South Korean expression that sums up the country’s struggle to balance its strategic relationships with China and the US
  • Can economic optimism return quickly enough in Europe to prevent the further rise of extremist political parties? asks Gideon Rachman
  • Despite brutal punishments under Saudi justice drawing comparisons to Isis, avenues for mercy are built into the system that allow reprieves (New York Times)
  • It is used by almost a tenth of the world’s population, gives a buzz equivalent to six cups of coffee and is a symbol of love. But the humble betel nut is also sending tens of thousands to an early grave (BBC)

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In his Budget speech to parliament on Wednesday, the UK chancellor George Osborne indulged in the traditional needling of his opponents on the opposite bench. Whether it was a dig at Ed Miliband, Labour leader, for his two kitchens, or at the party’s recent electioneering in a “women-friendly” pink van, his jokes at the opposition’s expense met with the usual roars of raucous approval from his own benches.

But the second biggest target of his needling was rather more surprising – our friends across the Channel. Read more

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The spectre of deflation is seldom something to fear, according to economists at the Bank for International Settlements who argue that evidence which shows how price falls persistently cause economic havoc is weak.

The risk of a vicious bout of falling prices is viewed as the biggest threat to the global economic recovery by many of the world’s top economic policy makers. Earlier this year, fears of years of weak price pressures led the European Central Bank to unleash a €1.1trn landmark quantitative easing package in the face of fierce resistance from the German economic and political establishment. Read more

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Remarks by the president of Chechnya have sparked theories that Boris Nemtsov, the assassinated Russian opposition politician, fell victim to infighting in an opaque regime

Policy makers in some of the world’s largest economies have devalued their currencies in a bid to boost export-led recoveries, but there is evidence lower exchange rates do not always work

An unprecedented environmental protest movement in a remote part of Algeria has disrupted the country’s multibillion-dollar shale programme, and is making political waves across the region

Four years after a nuclear disaster, Fukushima’s farmers are struggling to sell their produce despite decontamination efforts as the region tries to stand on its own two feet (WSJ)

Win or lose in Tikrit, Isis can only be defeated in Iraq by the Sunnis, writes Hassan Hassan (The Guardian)  Read more

China’s leaders are looking to the internet to offset sagging economic growth.

At the annual meeting on Thursday of the National People’s Congress, China’s legislature, internet and ecommerce merited a dozen mentions, culminating in Prime Minister Li Keqiang announcing an “internet-plus action plan”.

That, he promised, would “integrate the mobile internet, cloud computing, big data and the internet of things with modern manufacturing, to encourage the healthy development of ecommerce, industrial networks, and internet banking, and to guide internet based companies to increase their presence in the international market”.

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  • A drought in Brazil, which depends on hydropower for 70 per cent of its electricity, is sparking fears of water rationing and energy shortages that could hit economic growth
  • As public deficits rise, pressure to cut costly subsidies on fuel and other products is growing in developing economies. Morocco has shown other countries how the reform can work
  • He is close to Vladimir Putin and has described the European Union as the modern heir to the Third Reich – so why is Viktor Medvedchuk negotiating on behalf of Ukraine in peace talks? (NYT)
  • As China moves into the third year of its anti-corruption campaign, experts are worried that without the grease of bribes, projects are stagnating and the economy is taking a hit (Washington Post)
  • Grow vegetables extensively! North Korea has unveiled a list of 310 new political slogans covering every conceivable topic (Agence France-Presse)

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  • Greece’s privatisation programme, ordered under the terms of its international bailout, was falling far short of targets even before the country’s new left-wing government vowed to scrap further sales of state assets
  • Following Isis’ brutal execution by immolation of captured Jordanian pilot Muath al-Kasaesbeh, many in the country have called for a deeper military commitment against the jihadist group
  • Foreigners are leaving Russia in unprecedented numbers, reflecting a worsening economic outlook as western sanctions bite
  • The west’s inability to comprehend how Vladimir Putin sees the world means it has trouble thinking constructively about how to deal with him (The American Interest)
  • A convicted al-Qaeda operative has claimed that more than a dozen prominent Saudi figures were donors to the terror group and that a Saudi diplomat discussed with him a plot to shoot down Air Force One (NYT)

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A former colleague on the FT (no names, but he now runs the UK’s Office for Budget Responsibility) used to muse that a useful all-purpose headline for any story about an emerging market economy was “[Insert Name Of Country Here]: Structural Reform?”

Putting “Greece” into that formula after Syriza’s resounding victory in Sunday’s election, where do we stand? Every pundit in Europe is retailing some version of the insightful observation that it is all about whether Syriza — and its leader, Alexis Tsipras, Greece’s new prime minister (above) — can be induced to do enough structural reform to buy the fiscal leeway and debt relief it wants.

The problem with this view is that “structural reform” is a crude and unhelpful term. Read more

(c) WEF

Holding the World Economic Forum in a ski resort in the Alps sounds like an eccentric decision. In fact, the choice of Davos as a location for the WEF is very clever. It is such a pain to get here that once the delegates are in Davos, they feel compelled to stay. If the WEF took place in a big city, there would be a lot more flitting in-and-out. Read more

It is a momentous day for the European Central Bank as it launches full-scale government bond buying. Mr Draghi started speaking at 13.30 GMT and the press conference usually lasts for an hour.

By Ralph Atkins and Lindsay Whipp

 

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  • Magnus Carlsen retained his crown as world chess champion without the aid of supercomputers or a huge team of assistants – reinforcing the view that he is the best player the game has ever seen
  • Foreign travellers are returning to the pyramids in Giza and Cairo’s ancient markets as Egypt’s tourist industry picks up, a sign that the country’s broader economic picture may be improving
  • “Lung washing tours” are the new thing in Chinese tourism, as smog drives mainland tourists into novel migration patterns to escape the worst days of autumn
  • As China increasingly uses its state-owned television network as an arm of the law, not only are its journalists embarrassed to wear its logo in public – they don’t even believe the things they report (Foreign Policy)
  • Mumbai gangsters have returned to targeting Bollywood celebrities in an effort to find a “new business model”, police in India’s commercial capital say (Guardian)

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