International Herald Tribune, “EU Report criticizes pace of reform in Turkey”
A draft of the annual progress report from the EU shows concern over Turkey’s lack of attention to rooting out corruption, modernizing its judiciary, reducing the power of the military and increasing freedom of expression. The EU will release the official annual progress report next week. The report will likely describe the EU’s expansion plans.
The draft report does have some positive, including Turkey’s “‘unique interface between the West and the Muslim world,’ a diplomatic and military partner and an energy hub.” However, the report mainly focuses on what Turkey needs to do to increase their chances of gaining EU membership. In short, the report urges Turkey to renew the previous momentum of political reforms. One example of a misstep was when the Turkish military making statements about the presidency, causing a mini-crisis and parliamentary elections. The report also focuses on Turkey’s lack of progress in fighting widespread corruption and the high number of journalists, intellectuals and human rights activists prosecuted for expressing nonviolent opinions.
One pundit feels that a number of governments that have been pro-Turkey are now “backpedaling.” The same pundit believes Turkey’s best hope for eventually joining the EU is to hope that the European climate changes. Aside from political analysts, even public opinion in the EU seems to be against Turkey joining the EU
The final version of the document may also make a plea to Turkey to avoid disproportionate retaliation. The report, which covers the whole EU enlargement process, also says that Croatia might be able to join the bloc by the end of the decade if it speeds up the reform of its judiciary and the fight against corruption.
Questions for discussion: (1) What do you think Turkey's chances are of eventually joining the EU?; (2) What other countries should the EU consider for admission?
Saturday, November 03, 2007
Friday, November 02, 2007
Indian companies seek markets abroad
Source: Financial Times: Indian groups look overseas for new capital
India’s property sector has been expanding rapidly due to India’s expanding economy. India’s property sector already has been growing by 30% a year. Indian real estate companies are now looking to alternate markets overseas for new capital. Indian developers have recently started to consider listing real estate trusts abroad. Indian companies anticipate raising hundreds of millions of dollars through such actions.
India’s central bank has been a factor in Indian real estate companies’ interest in overseas stock markets. The bank has established tighter controls on lending to real estate which has raised the cost of capital for Indian companies. As a result, companies are worried about the high cost of capital and are contemplating other markets outside of India. A partner at Ernst & Young in India commented “There is a need for capital at the moment, huge amounts of capital.”
However, companies who list realty trusts abroad must be prepared to deal with new or complicated regulations and requirements. For example, many Indian developers would not be able to list a real estate investment trust (REIT) in Singapore. To qualify for inclusion in a REIT, a property must be 90% complete. Many Indian projects are in the first phases of development and would therefore not qualify under such provision.
For Discussion:
Will India avoid a real estate "bubble" by increasing the cost of funds to real estate companies thereby forcing the companies to seek capital from other non-Indian investors?
India’s property sector has been expanding rapidly due to India’s expanding economy. India’s property sector already has been growing by 30% a year. Indian real estate companies are now looking to alternate markets overseas for new capital. Indian developers have recently started to consider listing real estate trusts abroad. Indian companies anticipate raising hundreds of millions of dollars through such actions.
India’s central bank has been a factor in Indian real estate companies’ interest in overseas stock markets. The bank has established tighter controls on lending to real estate which has raised the cost of capital for Indian companies. As a result, companies are worried about the high cost of capital and are contemplating other markets outside of India. A partner at Ernst & Young in India commented “There is a need for capital at the moment, huge amounts of capital.”
However, companies who list realty trusts abroad must be prepared to deal with new or complicated regulations and requirements. For example, many Indian developers would not be able to list a real estate investment trust (REIT) in Singapore. To qualify for inclusion in a REIT, a property must be 90% complete. Many Indian projects are in the first phases of development and would therefore not qualify under such provision.
For Discussion:
Will India avoid a real estate "bubble" by increasing the cost of funds to real estate companies thereby forcing the companies to seek capital from other non-Indian investors?
Ecuador Urges OPEC to be Wary of Provoking Alternative Energy
Sources:
Financial Times - Ecuador Calls on OPEC to Protect Future Demand
El Comercio (Quito) - Ecuador Anuncia Imparcialidad en la OPEP
Ecuador’s oil minister has warned OPEC that rising oil prices might threaten future demand of oil, as consumers turn to alternative energy sources that are increasingly being developed to offset the price spike of crude oil. Minister Chiriboga gave the warning at a time of record-high oil prices, reaching $94 a barrel this week. Chiriboga stated that the greatest challenge facing OPEC is to maintain an equilibrium in the price of oil and a competitive position in relation to alternative energy sources.
Ecuador has recently re-joined OPEC after several decades outside of the organization. Although a small producer relative to the largest-producing oil countries in the group – such as Saudi Arabia, Iran, and Venezuela – Chiriboga expressed hope that Ecuador could be a mediating country between oil price “hawks” like Venezuela and Iran, and more moderate members like Saudi Arabia and United Arab Emirates. Chiriboga’s remarks occur just ahead of an OPEC head of state summit, which is one of only several such summits in the history of OPEC. The summit presents the opportunity for member countries to develop long-term strategies and a response to the high prices.
Oil closed around $93 yesterday at the close of the New York Stock Exchange, down from its high of $94 earlier. The oil closed just down from its peak price because of the rising value of the US dollar as well as a fall in the NYSE.
However, the slight fall in prices masks the overall trend of rising oil prices in the past few years. Since the beginning of the year, oil prices have risen more than 50%, and rose 18% just in the month of October. Many experts have noted the dollar’s continuing weakness as a cause of the rising price of oil.
Discussion:
1. How should those working for renewable fuels and “green” energy sources respond to OPEC’s interest in the continued future demand for oil?
2. Who do higher oil prices primarily benefit?
Financial Times - Ecuador Calls on OPEC to Protect Future Demand
El Comercio (Quito) - Ecuador Anuncia Imparcialidad en la OPEP
Ecuador’s oil minister has warned OPEC that rising oil prices might threaten future demand of oil, as consumers turn to alternative energy sources that are increasingly being developed to offset the price spike of crude oil. Minister Chiriboga gave the warning at a time of record-high oil prices, reaching $94 a barrel this week. Chiriboga stated that the greatest challenge facing OPEC is to maintain an equilibrium in the price of oil and a competitive position in relation to alternative energy sources.
Ecuador has recently re-joined OPEC after several decades outside of the organization. Although a small producer relative to the largest-producing oil countries in the group – such as Saudi Arabia, Iran, and Venezuela – Chiriboga expressed hope that Ecuador could be a mediating country between oil price “hawks” like Venezuela and Iran, and more moderate members like Saudi Arabia and United Arab Emirates. Chiriboga’s remarks occur just ahead of an OPEC head of state summit, which is one of only several such summits in the history of OPEC. The summit presents the opportunity for member countries to develop long-term strategies and a response to the high prices.
Oil closed around $93 yesterday at the close of the New York Stock Exchange, down from its high of $94 earlier. The oil closed just down from its peak price because of the rising value of the US dollar as well as a fall in the NYSE.
However, the slight fall in prices masks the overall trend of rising oil prices in the past few years. Since the beginning of the year, oil prices have risen more than 50%, and rose 18% just in the month of October. Many experts have noted the dollar’s continuing weakness as a cause of the rising price of oil.
Discussion:
1. How should those working for renewable fuels and “green” energy sources respond to OPEC’s interest in the continued future demand for oil?
2. Who do higher oil prices primarily benefit?
Thursday, November 01, 2007
Rise in Foreign Employment in the UK
Source: Foreigners fill new UK jobs, Warning Signs Over Employment
Although unemployment rates remain steady, for the first time in recent history, employment rates in the UK are barely rising. Typically, there are as many as 200,000 new jobs created each year. However, recent trends show that considerably fewer new jobs. Analysts blame this change on three key developments.
The first development involves the arrival of new immigrants. In the past two years, over 540,000 foreign workers have replaced British nationals, accounting for nearly all of the new jobs created. Particularly vulnerable to this trend are those citizens aged 18-24. Over the last year, the employment rate among this group fell drastically from 65.5 percent to 64.1 percent. Although general unemployment rates in the UK do not seem to be increasing, unemployment among the under-24 population continues to rise.
The second development deals with individuals working in temporary positions. Many who fall into this category are there by choice, because they prefer the flexibility temporary employment offers. However those reporting they took temporary work only because they could not find permanent work has risen 12 percent in the last year to 400,000, effectively ending a 10 year decline in this demographic.
The third factor is that there are nearly eight million “economically inactive” people of working age. The “inactive” members include those who have left the labor market voluntarily and those who wish to re-enter the market. Curiously, there are more than two million people wanting to re-enter the market, as compared to 1.6 million who are classified as unemployed by choice.
Although these numbers are relatively telling, there are still questions that remain unanswered. Three of the largest classes of unemployed are those who retire early, students and those who are temporarily ill. It is not clear if these individuals are retiring early or returning to the classroom early because that is their choice, or if they are doing so out of necessity because they are unable to find employment. It is possible that the ten percent increase in the number of individuals retiring early could reflect sickness and redundancy; it is equally possible that this increase reflects a conscious decision to lead a more leisurely life.
Questions for Discussion
1. Are these employment statistics likely to result in stricter UK immigration policies?
Although unemployment rates remain steady, for the first time in recent history, employment rates in the UK are barely rising. Typically, there are as many as 200,000 new jobs created each year. However, recent trends show that considerably fewer new jobs. Analysts blame this change on three key developments.
The first development involves the arrival of new immigrants. In the past two years, over 540,000 foreign workers have replaced British nationals, accounting for nearly all of the new jobs created. Particularly vulnerable to this trend are those citizens aged 18-24. Over the last year, the employment rate among this group fell drastically from 65.5 percent to 64.1 percent. Although general unemployment rates in the UK do not seem to be increasing, unemployment among the under-24 population continues to rise.
The second development deals with individuals working in temporary positions. Many who fall into this category are there by choice, because they prefer the flexibility temporary employment offers. However those reporting they took temporary work only because they could not find permanent work has risen 12 percent in the last year to 400,000, effectively ending a 10 year decline in this demographic.
The third factor is that there are nearly eight million “economically inactive” people of working age. The “inactive” members include those who have left the labor market voluntarily and those who wish to re-enter the market. Curiously, there are more than two million people wanting to re-enter the market, as compared to 1.6 million who are classified as unemployed by choice.
Although these numbers are relatively telling, there are still questions that remain unanswered. Three of the largest classes of unemployed are those who retire early, students and those who are temporarily ill. It is not clear if these individuals are retiring early or returning to the classroom early because that is their choice, or if they are doing so out of necessity because they are unable to find employment. It is possible that the ten percent increase in the number of individuals retiring early could reflect sickness and redundancy; it is equally possible that this increase reflects a conscious decision to lead a more leisurely life.
Questions for Discussion
1. Are these employment statistics likely to result in stricter UK immigration policies?
Monday, October 29, 2007
China Dragging Feet on Piracy Issues
Sources: US Says China Slows Anti-Piracy Cooperation Since WTO Complaint, US-China Talks on Piracy Back on Track
The U.S. Undersecretary of Commerce Jon W. Dudas reported recently that although China has increased cooperation in certain areas with regard to fighting piracy since the U.S. filed complaints to the World Trade Organization earlier this year, there has been a marked slow-down in some areas of cooperation. Last April, the U.S. filed complaints accusing China of failing to take reasonable steps to cease copying of movies, music, and various goods. The complaints have strained relations between the countries. China is the leading source of pirated goods - just last year over 80% of pirated products seized at U.S. borders came from China.
One step that the U.S. is urging China to take is to eliminate requirements that pirates be caught with a certain minimum amount of counterfeited products before sanctions can apply. Even then, many offense are punishable by fines rather than jail time. The U.S. claims that these penalties are so minimal as to lack any real deterrant effect.
Questions:
1) How can China change its laws to more effectively decrease its piracy rates?
2) What effect on China's economy and growth might an abolishment of piracy practices have?
The U.S. Undersecretary of Commerce Jon W. Dudas reported recently that although China has increased cooperation in certain areas with regard to fighting piracy since the U.S. filed complaints to the World Trade Organization earlier this year, there has been a marked slow-down in some areas of cooperation. Last April, the U.S. filed complaints accusing China of failing to take reasonable steps to cease copying of movies, music, and various goods. The complaints have strained relations between the countries. China is the leading source of pirated goods - just last year over 80% of pirated products seized at U.S. borders came from China.
One step that the U.S. is urging China to take is to eliminate requirements that pirates be caught with a certain minimum amount of counterfeited products before sanctions can apply. Even then, many offense are punishable by fines rather than jail time. The U.S. claims that these penalties are so minimal as to lack any real deterrant effect.
Questions:
1) How can China change its laws to more effectively decrease its piracy rates?
2) What effect on China's economy and growth might an abolishment of piracy practices have?
Is China's Hot Stock Market "Too Hot"?
Sources: Buffett Calls for Caution Over China Stocks, Warren Buffett Warns Investors that the Chinese Stock Market is "Too Hot"
Warren Buffett warned investors last week to take caution when dealing in the Chinese stock market. His warnings come on the heel of a 2 year hot streak during which the Chinese market rose over fivefold. He claims that the market has been too hot and, thus, most likely does not present investors with many good buys. Such steep surges in markets oftentimes leads to overvaluation.
Buffet has himself recently sold all of his investment group's (Berkshire Hathaway) holdings in PetroChina. Buffet managed to watch his holdings in this company, which he purchased in 2003, rise 76% just in the past year. Berkshire Hathaway sold its 11% stake in PetroChina, which it purchased for $488 million and grew to a worth of $3.31 billion in 2006.
Questions:
1) Is China's breakneck speed of growth going to break soon?
2) Will overseas investors heed Buffet's warnings and turn away form the Chinese market?
Warren Buffett warned investors last week to take caution when dealing in the Chinese stock market. His warnings come on the heel of a 2 year hot streak during which the Chinese market rose over fivefold. He claims that the market has been too hot and, thus, most likely does not present investors with many good buys. Such steep surges in markets oftentimes leads to overvaluation.
Buffet has himself recently sold all of his investment group's (Berkshire Hathaway) holdings in PetroChina. Buffet managed to watch his holdings in this company, which he purchased in 2003, rise 76% just in the past year. Berkshire Hathaway sold its 11% stake in PetroChina, which it purchased for $488 million and grew to a worth of $3.31 billion in 2006.
Questions:
1) Is China's breakneck speed of growth going to break soon?
2) Will overseas investors heed Buffet's warnings and turn away form the Chinese market?
In Egypt, everything seems to be booming but workers’ wages.
SOURCE: Los Angeles Times—“Discontent Among Egypt’s Workers”
The Egyptian government under President Hosni Mubarak implemented a program of economic liberalization that has resulted in 7% economic growth in each of the last three years. However, the benefits of growth have not been felt by the lower and middle classes. Wage rates have not increased. This, coupled with high inflation has resulted in significant unrest in Egypt, as strikes and work stoppages spread around the country and political dissidents take advantage of the situation to further anti-Mubarak rhetoric.
The Mubarak administration has accused its opponents--groups such as the Muslim Brotherhood (a strict Islamist group) and Kefaya (a secular political organization)--of fomenting unrest among Egyptian workers, but the workers deny this. Instead they assert that economic liberalization has left them behind, only benefiting the wealthy and those with connections to the government.
FOR DISCUSSION:
Egypt’s economic strategy has been very successful on one level, posting high levels of growth. At another level, it is foundering due to unrest among workers who are struggling to survive in an economy where everything is booming but their wages. This latter problem has the potential to create political instability in Egypt. Do you think the situation is salvageable for the Mubarak administration? How might they turn it around?
The Egyptian government under President Hosni Mubarak implemented a program of economic liberalization that has resulted in 7% economic growth in each of the last three years. However, the benefits of growth have not been felt by the lower and middle classes. Wage rates have not increased. This, coupled with high inflation has resulted in significant unrest in Egypt, as strikes and work stoppages spread around the country and political dissidents take advantage of the situation to further anti-Mubarak rhetoric.
The Mubarak administration has accused its opponents--groups such as the Muslim Brotherhood (a strict Islamist group) and Kefaya (a secular political organization)--of fomenting unrest among Egyptian workers, but the workers deny this. Instead they assert that economic liberalization has left them behind, only benefiting the wealthy and those with connections to the government.
FOR DISCUSSION:
Egypt’s economic strategy has been very successful on one level, posting high levels of growth. At another level, it is foundering due to unrest among workers who are struggling to survive in an economy where everything is booming but their wages. This latter problem has the potential to create political instability in Egypt. Do you think the situation is salvageable for the Mubarak administration? How might they turn it around?
Sunday, October 28, 2007
Saudi Transformation
Sources: Financial Times – Saudis Build on Boom
Saudi Arabia has begun following in the footsteps of its Gulf neighbors. The Saudis are extremely ambitious in their new construction projects, which involve building roads, railways, plants, and housing units. The investment is estimated at $320bn. The recent oil boom in Saudi Arabia is paying for the high cost in construction.
Saudis expect the oil boom to cover the costs of many projects to come. The new construction has been catching the attention of foreign and local investors. Saudis hope that the oil boom will cause a ripple effect in other industries, especially since the little growth of 1980s and 1990s. As a result, the Saudis may have more economic diversity and security in the future.
Saudi Arabia produces 25% of the world’s oil reserve. However, they are facing difficulties in improving services, reducing “its dependence on oil,” and improve skills of local workers. Unemployment in Saudi Arabia is currently at 12%. The government must address the high rate of unemployment to reach its new economic goals.
In previous years, Saudi Arabia invested approximately 17% of its GDP. However, currently, it is investing about 35%. Saudis will have difficulty keeping up with the high paced growth. Inflation is at a 7 year high, which will directly affect the pace of construction. All in all, growth is expected to continue at this rate until 2015.
Discussion questions:Will the recent oil boom create further investment by outside financiers? Will Saudi Arabia be able to compete with other countries in the Gulf (i.e. Dubai)?
Saudi Arabia has begun following in the footsteps of its Gulf neighbors. The Saudis are extremely ambitious in their new construction projects, which involve building roads, railways, plants, and housing units. The investment is estimated at $320bn. The recent oil boom in Saudi Arabia is paying for the high cost in construction.
Saudis expect the oil boom to cover the costs of many projects to come. The new construction has been catching the attention of foreign and local investors. Saudis hope that the oil boom will cause a ripple effect in other industries, especially since the little growth of 1980s and 1990s. As a result, the Saudis may have more economic diversity and security in the future.
Saudi Arabia produces 25% of the world’s oil reserve. However, they are facing difficulties in improving services, reducing “its dependence on oil,” and improve skills of local workers. Unemployment in Saudi Arabia is currently at 12%. The government must address the high rate of unemployment to reach its new economic goals.
In previous years, Saudi Arabia invested approximately 17% of its GDP. However, currently, it is investing about 35%. Saudis will have difficulty keeping up with the high paced growth. Inflation is at a 7 year high, which will directly affect the pace of construction. All in all, growth is expected to continue at this rate until 2015.
Discussion questions:Will the recent oil boom create further investment by outside financiers? Will Saudi Arabia be able to compete with other countries in the Gulf (i.e. Dubai)?
Coming Soon to Latin America: A New Development Bank?
Sources: Delays at Bank of the South; Bank of the South, championed by Venezuela, begins to take form; Venezuela to skip IMF, World Bank meetings
The Venezuelan government announced today that the Bank of South will begin its operations on December 5, a month later than initially planned. The Bank of the South is a new institution proposed by Hugo Chávez as an alternative to the World Bank, the Inter-American Development Bank, and the International Monetary Fund (“IMF”) based in the United States. To symbolize its clear break with the extant international financial institutions, the Bank will be located in Caracas, Venezuela. Its founding members include Argentina, Brazil, Bolivia, Colombia, Ecuador, Paraguay, and Uruguay, in addition to Venezuela.
The Bank of the South will open later than originally anticipated because many important details of its governance structure have not been fixed. The founding members are still trying to determine the appropriate size and purpose for the Bank, as well as the dues for its member states. The Bank’s founding members have tempered the exclusivity sought by Chávez. Brazil has stated that the Bank will not duplicate the IMF by creating a bail-out fund. Additionally, Colombia has announced that its membership in the Bank is not to be construed as a repudiation of other international financial institutions.
These efforts are in contrast to those of Venezuela. While the country remains a member of both the World Bank and the IMF, the Venezuelan finance minister did not attend the 2007 Annual Meetings last weekend. Instead, he led a delegation to promote the Bank of the South during that time.
Discussion:
Is the Bank of the South simply a political ploy of the Venezuelan government, or will it provide an alternative source of funding for the Latin American countries? Do you think this Bank will be able to address those concerns unanswered by the Bretton Woods Institutions, when the main difference appears to be the absence of the United States, rather than a change in banking practices?
The Venezuelan government announced today that the Bank of South will begin its operations on December 5, a month later than initially planned. The Bank of the South is a new institution proposed by Hugo Chávez as an alternative to the World Bank, the Inter-American Development Bank, and the International Monetary Fund (“IMF”) based in the United States. To symbolize its clear break with the extant international financial institutions, the Bank will be located in Caracas, Venezuela. Its founding members include Argentina, Brazil, Bolivia, Colombia, Ecuador, Paraguay, and Uruguay, in addition to Venezuela.
The Bank of the South will open later than originally anticipated because many important details of its governance structure have not been fixed. The founding members are still trying to determine the appropriate size and purpose for the Bank, as well as the dues for its member states. The Bank’s founding members have tempered the exclusivity sought by Chávez. Brazil has stated that the Bank will not duplicate the IMF by creating a bail-out fund. Additionally, Colombia has announced that its membership in the Bank is not to be construed as a repudiation of other international financial institutions.
These efforts are in contrast to those of Venezuela. While the country remains a member of both the World Bank and the IMF, the Venezuelan finance minister did not attend the 2007 Annual Meetings last weekend. Instead, he led a delegation to promote the Bank of the South during that time.
Discussion:
Is the Bank of the South simply a political ploy of the Venezuelan government, or will it provide an alternative source of funding for the Latin American countries? Do you think this Bank will be able to address those concerns unanswered by the Bretton Woods Institutions, when the main difference appears to be the absence of the United States, rather than a change in banking practices?
Housing Crash Continues
CNN Money
The mortgage crisis saw another numbing statistic: number of empty homes increased during the third quarter to a whopping 2.07 million. That is a seven percent increase from last year. This is, however, down from first quarter levels this year.
What has caused these empty homes? There are always some empties, but a combination of high supply and low demand fueled by the loan crisis (i.e., individuals face additional difficulty in gaining loan financing) has led to this huge surplus of homes.
Some think this problem will get worse. Home sales were at 11 year lows this summer, and September sales dropped 24% from last year. Sales aren't expected to hit the floor until next spring, and fourth quarter orders dropped 40%. Debts of leading homebuilders were rated as “junk.” Countrywide, one of America’s leading mortgage lenders, saw a 1.2 billion dollar third quarter loss. Furthermore, an additional problem is looming. 2.8 million homeowners will see interest rate resets, and if these homeowners cannot afford the new payments, that could cause additional empties because of foreclosures. It’s likely that 3 or maybe 4 million homes will enter the market.
Question: Can the US government step in and do anything to reverse this trend of negative home-sales that appear to have no end?
Question: What international ramifications, if any, may this have?
The mortgage crisis saw another numbing statistic: number of empty homes increased during the third quarter to a whopping 2.07 million. That is a seven percent increase from last year. This is, however, down from first quarter levels this year.
What has caused these empty homes? There are always some empties, but a combination of high supply and low demand fueled by the loan crisis (i.e., individuals face additional difficulty in gaining loan financing) has led to this huge surplus of homes.
Some think this problem will get worse. Home sales were at 11 year lows this summer, and September sales dropped 24% from last year. Sales aren't expected to hit the floor until next spring, and fourth quarter orders dropped 40%. Debts of leading homebuilders were rated as “junk.” Countrywide, one of America’s leading mortgage lenders, saw a 1.2 billion dollar third quarter loss. Furthermore, an additional problem is looming. 2.8 million homeowners will see interest rate resets, and if these homeowners cannot afford the new payments, that could cause additional empties because of foreclosures. It’s likely that 3 or maybe 4 million homes will enter the market.
Question: Can the US government step in and do anything to reverse this trend of negative home-sales that appear to have no end?
Question: What international ramifications, if any, may this have?
The Economic Effects of Global Warming in Greenland
Source: International Herald Tribune "As temperatures rise, a greening of Greenland"
Thanks to warmer temperatures in Greenland, old trees throughout Greenland are coming back to life and growing again. The temperature is also increasing the supply of locally grown cauliflower, broccoli, cabbage, and other vegetables. In addition, numerous farmers are experimenting with growing potatoes.
Currently, Greenland has only 51 farms – all sheep farms – and most of the vegetables Greenlanders eat are imported from Denmark. However, Greenland’s chief agriculture adviser believes that southern Greenland can eventually be full of vegetable farms and viable forests.
Greenland’s great ice sheet in the north covers 80% of the island’s land mass and is rapidly melting. As the ice melts, sea levels will rise. However, in the subartic south, the changes of global warming are more subtle and beneficial. As Greenland’s chief agriculture adviser points out, a few degrees can make a large impact in Greenland’s southern climate because the limiting factor for human survival is temperature.
Examples of the warmer climate’s positive effects include a shorter winter, the reappearance of cod off the coast, fatter lambs, successful strawberry crops, numerous strains of potatoes, and annual flowers. As temperatures continue to rise these effects should become even more obvious.
The change will not be easy for sum, as one Greenlander thinks that it will take time for Greenlanders to change their way of living and being – Greenlanders are known as hunters. However, the same individual believes that things can grow in south Greenland.
Questions for discussion: What other “benefits” does global warming have in store for Greenland and other countries? Are there ways to enjoy the benefits of global warming without experiencing the negatives of global warming?
Thanks to warmer temperatures in Greenland, old trees throughout Greenland are coming back to life and growing again. The temperature is also increasing the supply of locally grown cauliflower, broccoli, cabbage, and other vegetables. In addition, numerous farmers are experimenting with growing potatoes.
Currently, Greenland has only 51 farms – all sheep farms – and most of the vegetables Greenlanders eat are imported from Denmark. However, Greenland’s chief agriculture adviser believes that southern Greenland can eventually be full of vegetable farms and viable forests.
Greenland’s great ice sheet in the north covers 80% of the island’s land mass and is rapidly melting. As the ice melts, sea levels will rise. However, in the subartic south, the changes of global warming are more subtle and beneficial. As Greenland’s chief agriculture adviser points out, a few degrees can make a large impact in Greenland’s southern climate because the limiting factor for human survival is temperature.
Examples of the warmer climate’s positive effects include a shorter winter, the reappearance of cod off the coast, fatter lambs, successful strawberry crops, numerous strains of potatoes, and annual flowers. As temperatures continue to rise these effects should become even more obvious.
The change will not be easy for sum, as one Greenlander thinks that it will take time for Greenlanders to change their way of living and being – Greenlanders are known as hunters. However, the same individual believes that things can grow in south Greenland.
Questions for discussion: What other “benefits” does global warming have in store for Greenland and other countries? Are there ways to enjoy the benefits of global warming without experiencing the negatives of global warming?
Bush Calls for Continued Economic Pressure on Cuban Government
Financial Times - Bush Renews Call for Change in
Global Security Org – Cuba’s economy
Granma Internacional (Cuba) - Cuba Responde a Bush
US President George Bush reaffirmed the
Bush’s message was directed in part at the international community and existing and potential trade partners of
In Bush’s speech, he claimed that
The Cuban economy, although growing in the single digits yearly, has experienced adverse effects from the global downturn in tourism (an increasingly significant portion of GDP), declining yields of the sugar industry, an increasing informal economy that is largely denominated in dollars instead of pesos, and decreases in the amount of remittances that Cubans living in the US can send to the island (also an increasingly significant portion of GDP).
The Cuban chancellor responded to Bush’s speech by rejecting the assertion that the Cuban people are dissatisfied with the regime, and noted that Bush’s statements were made under the flawed presumption that the Cuban people do not continue to support the Socialist revolution.
Discussion:
1. Do continued
China criticizes the IMF
Source: China slams the IMF over forex, calls for bigger role
China is upset at the IMF over what it feels is unwarranted concern over the valuation of the yuan while more pressing matters are needing the Fund’s attention. China is particularly concerned with the lack of growth in major developed countries (like the U.S.) and the risks that status might pose. China also slammed the IMF over what it regards as an unbalanced global development picture, particularly countries in the Northern hemisphere experiencing significant development while those in the Southern do not.
The attack by China came after the Group of Seven wealthy nations pressed the former to allow the yuan to appreciate faster, citing concerns over trade. However, China’s concerns with the IMF are deeper than just the current fracas over the yuan: China believes that the IMF, in attempting to enforce its own exchange rate regime on countries, disrespects those countries autonomy, and that developing countries like it have a disproportionate hand in the management of the IMF and World Bank. Both institutions have promised greater control for developing countries, but China is unhappy with the “lack of progress” in ensuring those promises come to fruition.
Question: Despite its legitimate concerns over the IMF, should China nonetheless concede the point on the valuation of the yuan? Is this current controversy a bargaining chip with which China hopes to spur along the "progress" of greater control over the IMF by countries like itself?
China is upset at the IMF over what it feels is unwarranted concern over the valuation of the yuan while more pressing matters are needing the Fund’s attention. China is particularly concerned with the lack of growth in major developed countries (like the U.S.) and the risks that status might pose. China also slammed the IMF over what it regards as an unbalanced global development picture, particularly countries in the Northern hemisphere experiencing significant development while those in the Southern do not.
The attack by China came after the Group of Seven wealthy nations pressed the former to allow the yuan to appreciate faster, citing concerns over trade. However, China’s concerns with the IMF are deeper than just the current fracas over the yuan: China believes that the IMF, in attempting to enforce its own exchange rate regime on countries, disrespects those countries autonomy, and that developing countries like it have a disproportionate hand in the management of the IMF and World Bank. Both institutions have promised greater control for developing countries, but China is unhappy with the “lack of progress” in ensuring those promises come to fruition.
Question: Despite its legitimate concerns over the IMF, should China nonetheless concede the point on the valuation of the yuan? Is this current controversy a bargaining chip with which China hopes to spur along the "progress" of greater control over the IMF by countries like itself?
Saturday, October 27, 2007
IMF reports robust growth for Africa
Sources:
- Robust growth rates for Africa
- Sub-Saharan Africa: Regional Economic Outlook
According to the IMF, sub-Saharan Africa can expect to see its economy experience a change in growth from 6% in 2007 to nearly 7% in 2008, an increase largely resulting from the coalescing of a surge in commodity prices and investments, and sound policy reforms instituted by regional governments. Further, the growth is mostly attributed to oil exporting countries, but this fact provides assurance to the IMF that the growth is sustainable. Historically, economic growth in the region has been unstable because of institutional weakness and fluctuating commodity prices, and often a period of growth was followed by a disastrous collapse in output. Yet the IMF is hopeful that the situation is different this time around, again owing mostly to sound policies being implemented in the region.
However, the IMF’s hopefulness is not without caution—it noted several adverse potentialities. For instance, the IMF warned that though donor-funding is allowing for growth, the supply of that funding are not poised to keep up with the demand. An increase in donor commitments is needed for the region to maintain growth and avoid a future collapse.
Finally, the IMF noted that while countries in the region have come along way with policy reform, a good deal of reform is still needed in certain countries, particularly reforms related to expenditures in the medium-term. The IMF is nevertheless satisfied with the perceived effectiveness of its policy advice and capacity building in the region.
Question: What other factors might contribute to a downturn in economic growth in Sub-Saharan Africa?
- Robust growth rates for Africa
- Sub-Saharan Africa: Regional Economic Outlook
According to the IMF, sub-Saharan Africa can expect to see its economy experience a change in growth from 6% in 2007 to nearly 7% in 2008, an increase largely resulting from the coalescing of a surge in commodity prices and investments, and sound policy reforms instituted by regional governments. Further, the growth is mostly attributed to oil exporting countries, but this fact provides assurance to the IMF that the growth is sustainable. Historically, economic growth in the region has been unstable because of institutional weakness and fluctuating commodity prices, and often a period of growth was followed by a disastrous collapse in output. Yet the IMF is hopeful that the situation is different this time around, again owing mostly to sound policies being implemented in the region.
However, the IMF’s hopefulness is not without caution—it noted several adverse potentialities. For instance, the IMF warned that though donor-funding is allowing for growth, the supply of that funding are not poised to keep up with the demand. An increase in donor commitments is needed for the region to maintain growth and avoid a future collapse.
Finally, the IMF noted that while countries in the region have come along way with policy reform, a good deal of reform is still needed in certain countries, particularly reforms related to expenditures in the medium-term. The IMF is nevertheless satisfied with the perceived effectiveness of its policy advice and capacity building in the region.
Question: What other factors might contribute to a downturn in economic growth in Sub-Saharan Africa?
Increasing friction between China and the US
Source: Asia Times: Multinationals fear US-China trade wars
International trade between China and the US has been upset recently by Chinese product recalls in the US. China and the US have been retaliating against each other by rejecting the other country’s goods and filing complaints against each other with the World Trade Organization. For example, since 2006, the US has filed four complaints against China with the WTO. In September, China initiated its first complaint in five years against the US with the WTO. Furthermore, in response to the Chinese product recalls in the US, China has rejected US-made product shipments for quality deficiencies, citing bacterial infections in food products and high levels of toxicity in children’s products.
The US Congress is now getting involved. Senators Clinton and Obama are co-sponsoring legislation that would levy punitive duties on Chinese goods. However, large multinational companies, such as Boeing, Citigroup, Microsoft, and General Motors, are worried about such legislation, believing that “imposing unfair barriers to trade in the name of currency valuation or product safety is not a solution to the underlying concerns.” These companies want Congress to reject protectionist legislation against China. US Treasury Secretary Henry Paulson also agrees, fearing unilateral action aimed at another nation may have large repercussions on the US’s economic well-being.
Trade barriers can greatly affect the economy. One report states that about 30% of a sample of 2,500 Chinese exporters suffered economic losses. The companies lost $35.9 billion, in contrast to $28.8 billion in 2005.
Discussion Questions:
1. Is product safety an expected by-product of economic globalization and therefore a manageable concern through between-country trade agreements, or is it a means for some countries, like China, to take advantage of weak trade oversight?
2. Is legislation the best way to control trade issues between countries?
International trade between China and the US has been upset recently by Chinese product recalls in the US. China and the US have been retaliating against each other by rejecting the other country’s goods and filing complaints against each other with the World Trade Organization. For example, since 2006, the US has filed four complaints against China with the WTO. In September, China initiated its first complaint in five years against the US with the WTO. Furthermore, in response to the Chinese product recalls in the US, China has rejected US-made product shipments for quality deficiencies, citing bacterial infections in food products and high levels of toxicity in children’s products.
The US Congress is now getting involved. Senators Clinton and Obama are co-sponsoring legislation that would levy punitive duties on Chinese goods. However, large multinational companies, such as Boeing, Citigroup, Microsoft, and General Motors, are worried about such legislation, believing that “imposing unfair barriers to trade in the name of currency valuation or product safety is not a solution to the underlying concerns.” These companies want Congress to reject protectionist legislation against China. US Treasury Secretary Henry Paulson also agrees, fearing unilateral action aimed at another nation may have large repercussions on the US’s economic well-being.
Trade barriers can greatly affect the economy. One report states that about 30% of a sample of 2,500 Chinese exporters suffered economic losses. The companies lost $35.9 billion, in contrast to $28.8 billion in 2005.
Discussion Questions:
1. Is product safety an expected by-product of economic globalization and therefore a manageable concern through between-country trade agreements, or is it a means for some countries, like China, to take advantage of weak trade oversight?
2. Is legislation the best way to control trade issues between countries?
Friday, October 26, 2007
Annual Meeting of the World Bank Concludes African Development Has Improved, and Report Calls for Investment in Agriculture to Sustain Growth
Sources:
This Day: W’Bank: 25 African Countries Record Impressive Growth
The World Bank: World Bank Calls For Agricultural Renewal, Focus On Productivity Growth In Sub-Saharan Africa
Newsweek: Troubled Waters
The 2007 Annual Meetings of the World Bank and IMF’s Board of Governors were held last weekend. At the meeting, World Bank President Robert Zoellick stated there was “good news” regarding Africa, with seventeen African countries achieving average annual growth of 5.5 percent between 1995 and 2005 and another eight countries attaining 7.5 percent growth. However, the Annual Meetings also indicated that African countries will continued financial assistance from developed countries to sustain this growth. In order to attain even higher growth, Zoellick stated that African countries need “assistance to build infrastructure . . . especially energy and physical facilities that can support regional integration. They also want us to help develop local financial markets, including microfinance, that can mobilize African savings for Africans.”
Meanwhile, the World Development Report (WDR) is advocating for greater investment in African agriculture. Because Africa is a primarily agrarian society, an emphasis on investment in African agriculture may help Africa to move out of poverty. WDR believes a greater emphasis on developing a sustainable agriculture base will increase overall economic growth for Africa. The report notes that the share of official development assistance for agriculture in developing countries is only 4 percent and needs to increase. Furthermore, the report states that action is especially needed in Sub-Saharan Africa, a region that has lagged behind other regions in its agricultural productivity growth. Some of the measures to improve African agriculture include sustainable water and soil management. In connection with these goals, a Newsweek article expressed concern for the global water crisis, which is harming African countries as they try to manage depleting water resources.
Discussion Question:
Is it realistic to think with a growing African population, depleting water resources, and insufficient financial support from rich countries that Africa will be able to maintain its economic growth?
This Day: W’Bank: 25 African Countries Record Impressive Growth
The World Bank: World Bank Calls For Agricultural Renewal, Focus On Productivity Growth In Sub-Saharan Africa
Newsweek: Troubled Waters
The 2007 Annual Meetings of the World Bank and IMF’s Board of Governors were held last weekend. At the meeting, World Bank President Robert Zoellick stated there was “good news” regarding Africa, with seventeen African countries achieving average annual growth of 5.5 percent between 1995 and 2005 and another eight countries attaining 7.5 percent growth. However, the Annual Meetings also indicated that African countries will continued financial assistance from developed countries to sustain this growth. In order to attain even higher growth, Zoellick stated that African countries need “assistance to build infrastructure . . . especially energy and physical facilities that can support regional integration. They also want us to help develop local financial markets, including microfinance, that can mobilize African savings for Africans.”
Meanwhile, the World Development Report (WDR) is advocating for greater investment in African agriculture. Because Africa is a primarily agrarian society, an emphasis on investment in African agriculture may help Africa to move out of poverty. WDR believes a greater emphasis on developing a sustainable agriculture base will increase overall economic growth for Africa. The report notes that the share of official development assistance for agriculture in developing countries is only 4 percent and needs to increase. Furthermore, the report states that action is especially needed in Sub-Saharan Africa, a region that has lagged behind other regions in its agricultural productivity growth. Some of the measures to improve African agriculture include sustainable water and soil management. In connection with these goals, a Newsweek article expressed concern for the global water crisis, which is harming African countries as they try to manage depleting water resources.
Discussion Question:
Is it realistic to think with a growing African population, depleting water resources, and insufficient financial support from rich countries that Africa will be able to maintain its economic growth?
Weak Consumer Confidence Threatens German Inflation Rate
source: Price fears hit German optimism
Fear of inflation, combined with global increases in food prices, threatens to chill German consumer confidence, according to surveys late last week. Germans ‘inclination to buy’ is slowing in response to uncertain expectations about their incomes in the near future. The Nuremberg-based GfK consumer research organization expects that the consumer climate index will fall next month to its lowest level since April, when the country was adjusting to a three-percentage point increase in value added tax. Additionally, data shows that inflation is on the rise. Four federal states reported larger-than-expected price increases in October. These reports led analysts to predict German-wide figures to remain at 2.4%, the highest in two years.
Bild, the German mass market newspaper, attacked comments by Bundesbank president Axel Weber, who, earlier this week, predicted that German inflation may reach as high as 3%. Since the European Central Bank aims to keep inflation at 2%, the newspaper said that Weber’s comments created an “inflation alarm” to already nervous consumers. His comments raised similar concerns in Frankfurt, creating the impression that the central bank has lost control of inflation and that Weber’s comments may prove to be self fulfilling.
Consumer experience purchasing day-to-day goods, such as food, largely shape their impressions about the inflation rate. Butter prices have risen as much as 40% over the last year, cucumbers as much as 42% in the month of October alone. With no immediate relief in sight to the sharp increase in the cost of food, inflation rates are particularly susceptible to the uneasy consumer. However, as economist Jorg Kramer points out, food accounts for only about 10% of the goods used to calculate the German inflation rate. The main cause of higher inflation, he says, continues to be the charges imposed by the government, including the 3% increase in value added tax earlier this year. This tension between consumer expectations and realities creates serious difficulties for policy makers.
Questions for Discussion
1. Are consumer impressions likely to have as dramatic of an effect on the inflation rate as Weber warned?
Fear of inflation, combined with global increases in food prices, threatens to chill German consumer confidence, according to surveys late last week. Germans ‘inclination to buy’ is slowing in response to uncertain expectations about their incomes in the near future. The Nuremberg-based GfK consumer research organization expects that the consumer climate index will fall next month to its lowest level since April, when the country was adjusting to a three-percentage point increase in value added tax. Additionally, data shows that inflation is on the rise. Four federal states reported larger-than-expected price increases in October. These reports led analysts to predict German-wide figures to remain at 2.4%, the highest in two years.
Bild, the German mass market newspaper, attacked comments by Bundesbank president Axel Weber, who, earlier this week, predicted that German inflation may reach as high as 3%. Since the European Central Bank aims to keep inflation at 2%, the newspaper said that Weber’s comments created an “inflation alarm” to already nervous consumers. His comments raised similar concerns in Frankfurt, creating the impression that the central bank has lost control of inflation and that Weber’s comments may prove to be self fulfilling.
Consumer experience purchasing day-to-day goods, such as food, largely shape their impressions about the inflation rate. Butter prices have risen as much as 40% over the last year, cucumbers as much as 42% in the month of October alone. With no immediate relief in sight to the sharp increase in the cost of food, inflation rates are particularly susceptible to the uneasy consumer. However, as economist Jorg Kramer points out, food accounts for only about 10% of the goods used to calculate the German inflation rate. The main cause of higher inflation, he says, continues to be the charges imposed by the government, including the 3% increase in value added tax earlier this year. This tension between consumer expectations and realities creates serious difficulties for policy makers.
Questions for Discussion
1. Are consumer impressions likely to have as dramatic of an effect on the inflation rate as Weber warned?
Tuesday, October 23, 2007
Chrysler Workers on Verge of Deal?
Sources:
Chicago Sun-Times
Financial Times
Reuters
Chrysler employees at six plants in Michigan and Indiana will decide the fate of the new four year labor contract negotiated this week. This deal is similar to the most recently negotiated United Auto Workers deal with General Motors and includes broad measures to cut Chrysler’s health care costs and boosting production competitiveness.
As of Tuesday, the results have been split--with 10,000 workers at eleven facilities have approved the deal, and 11,000 workers at six larger plants have rejected the deal. 1/3 of the Chrysler workforce, based primarily in Michigan and Indiana, will vote as the tie-breaking force. Plants in favor of the deal have approved the deal by over 80 percent, while anti-deal plants have rejected it by 63 percent.
This current deal has come under fire from both outside and within the union. Critics have blasted the deal for the inclusion of a concession that allows Chrysler to hire new workers at half the wages of current employees. Furthermore, critics claim that Chrysler is making fewer long-term manufacturing commitments than GM. The Canadian Auto Worker's Union leaders believe this deal will ultimately fail, which would force Chrysler and UAW to go back to the drawing board. This may also delay the upcoming labor discussions with Ford. Nevertheless, Chrysler has attempted to lure and sweeten the deal for workers by giving some temporary workers a substantial signing bonus. Furthermore, this deal supposedly gives Chrysler additional, long-term viability as one of the leading US automakers.
Discussion Question:
Assuming Chrysler workers agree to the deal, will the concession allowing Chrysler to hire workers at half the wages of current employees eventually strip unions the power to later negotiate for higher salaries?
Chicago Sun-Times
Financial Times
Reuters
Chrysler employees at six plants in Michigan and Indiana will decide the fate of the new four year labor contract negotiated this week. This deal is similar to the most recently negotiated United Auto Workers deal with General Motors and includes broad measures to cut Chrysler’s health care costs and boosting production competitiveness.
As of Tuesday, the results have been split--with 10,000 workers at eleven facilities have approved the deal, and 11,000 workers at six larger plants have rejected the deal. 1/3 of the Chrysler workforce, based primarily in Michigan and Indiana, will vote as the tie-breaking force. Plants in favor of the deal have approved the deal by over 80 percent, while anti-deal plants have rejected it by 63 percent.
This current deal has come under fire from both outside and within the union. Critics have blasted the deal for the inclusion of a concession that allows Chrysler to hire new workers at half the wages of current employees. Furthermore, critics claim that Chrysler is making fewer long-term manufacturing commitments than GM. The Canadian Auto Worker's Union leaders believe this deal will ultimately fail, which would force Chrysler and UAW to go back to the drawing board. This may also delay the upcoming labor discussions with Ford. Nevertheless, Chrysler has attempted to lure and sweeten the deal for workers by giving some temporary workers a substantial signing bonus. Furthermore, this deal supposedly gives Chrysler additional, long-term viability as one of the leading US automakers.
Discussion Question:
Assuming Chrysler workers agree to the deal, will the concession allowing Chrysler to hire workers at half the wages of current employees eventually strip unions the power to later negotiate for higher salaries?
Sunday, October 21, 2007
Is Russia Headed For Slower Growth
Sources: “Role reversal at IMF as the rich come under fire” ;
“Next Year Could Bring Instability, Warns IMF”
The International Monetary fund (IMF) believes Russia’s growth in 2008 will be lower than originally thought. High oil prices, capital inflows and productivity gains helped Russia avoided the risks of the instable global financial markets this year. However, analysts believe that the market turbulence in foreign and domestic financing in the coming year will have a larger effect on Russia’s economy than the current year.
On a similar note, the IMF’s semi-annual meeting has a different tone because of the subprime mortgage crisis. While the meetings typically involve Europeans and Americans directing poor countries to modernize their capital markets, promote transparency and adhere to sound investment standards, the theme of the current meeting is the global impact of the subprime mortgage crisis. Further, many pundits argue that the failures in regulatory supervision caused the subprime mortgage crisis.
Questions for discussion: Do you think that international growth in 2008 will slow down, compared to the current year, as a result of the turbulent foreign and domestic financing markets? Further, are developing countries becoming more of a driving force and stabilizing factor in the world economy?
“Next Year Could Bring Instability, Warns IMF”
The International Monetary fund (IMF) believes Russia’s growth in 2008 will be lower than originally thought. High oil prices, capital inflows and productivity gains helped Russia avoided the risks of the instable global financial markets this year. However, analysts believe that the market turbulence in foreign and domestic financing in the coming year will have a larger effect on Russia’s economy than the current year.
On a similar note, the IMF’s semi-annual meeting has a different tone because of the subprime mortgage crisis. While the meetings typically involve Europeans and Americans directing poor countries to modernize their capital markets, promote transparency and adhere to sound investment standards, the theme of the current meeting is the global impact of the subprime mortgage crisis. Further, many pundits argue that the failures in regulatory supervision caused the subprime mortgage crisis.
Questions for discussion: Do you think that international growth in 2008 will slow down, compared to the current year, as a result of the turbulent foreign and domestic financing markets? Further, are developing countries becoming more of a driving force and stabilizing factor in the world economy?
Zoellick Announces New Agenda for the World Bank at the 2007 Annual Meetings
Sources: World Bank chief calls for new direction for lender; Will the Bottom Billion Ever Catch Up?
On October 21, Robert Zoellick propounded a new agenda for the World Bank. The Bank’s new six-point agenda seeks to (1) increase cooperation between the institution and its member states; (2) facilitate greater involvement of the private sector in developed countries in the Bank’s development efforts; (3) develop a more responsive post-conflict adjustment strategy for affected states; (4) continue engagement with middle-income countries by offering services other than loans that are better tailored to their needs; (5) increase expenditures in health-related issues; and (6) consider the effects of the projects undertaken for economic development on the state of the environment.
At the Annual Meetings, Zoellick also asked the Bank's donor countries to raise their commitments for the replenishment of the International Development Association (IDA), which provides concessionary loans to the poorest countries. So far, South Africa—an emerging donor—has agreed to increase its donation to the IDA fund by thirty percent.
One commentator commended Zoellick on his on-going efforts to incorporate the bottom billion (i.e. people living in the poorest countries in the world) into the world economy. However, the commentator criticized Zoellick and others in the international community for concentrating their efforts on decreasing absolute poverty, as that does not necessarily assist in closing the gap for the bottom billion. Consequently, he suggests that development efforts (which include the Bank’s new agenda) need to expand beyond their current focus on aid to include more comprehensive policies in the area of trade, security, and good governance.
Discussion:
Neither Zoellick nor the commentator fixed deadlines for the achievement of their development objectives. Is it desirable to establish a firm time commitment for these proposals? Why or why not?
On October 21, Robert Zoellick propounded a new agenda for the World Bank. The Bank’s new six-point agenda seeks to (1) increase cooperation between the institution and its member states; (2) facilitate greater involvement of the private sector in developed countries in the Bank’s development efforts; (3) develop a more responsive post-conflict adjustment strategy for affected states; (4) continue engagement with middle-income countries by offering services other than loans that are better tailored to their needs; (5) increase expenditures in health-related issues; and (6) consider the effects of the projects undertaken for economic development on the state of the environment.
At the Annual Meetings, Zoellick also asked the Bank's donor countries to raise their commitments for the replenishment of the International Development Association (IDA), which provides concessionary loans to the poorest countries. So far, South Africa—an emerging donor—has agreed to increase its donation to the IDA fund by thirty percent.
One commentator commended Zoellick on his on-going efforts to incorporate the bottom billion (i.e. people living in the poorest countries in the world) into the world economy. However, the commentator criticized Zoellick and others in the international community for concentrating their efforts on decreasing absolute poverty, as that does not necessarily assist in closing the gap for the bottom billion. Consequently, he suggests that development efforts (which include the Bank’s new agenda) need to expand beyond their current focus on aid to include more comprehensive policies in the area of trade, security, and good governance.
Discussion:
Neither Zoellick nor the commentator fixed deadlines for the achievement of their development objectives. Is it desirable to establish a firm time commitment for these proposals? Why or why not?
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