The Federal Reserve is well into its third round of “quantitative easing,” in which it buys longer-term assets to bring down long-term lending rates.
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Efforts to Revive the Economy Lead to Worries of a Bubble - NYTimes.com - 0 views
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In March, a smaller percentage of working-age people were actually working than at any other time since 1979.
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In March, a smaller percentage of working-age people were actually working than at any other time since 1979.
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Ben S. Bernanke and company would also like to kindle inflation expectations, spurring people to buy and companies to invest today instead of waiting until tomorrow. Supposedly, all of this will drive a self-sustaining economic recovery.
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Alternatively, many investors look at something called the Q, devised by the economist James Tobin, which compares stock prices with corporate net worth. The nonfinancial companies are overpriced by 57 percent.
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Investors are desperate for yield and are paying up for riskier assets.
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There are more reliable measures of stock market value, and they look frothy. One gauge, the price of stocks based on the past decade of earnings, is named after the Yale economist Robert J. Shiller. Using that, stocks are too expensive by 65 percent.
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Instead, the Fed has kindled speculation.
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Last month, investors were paying more for such loans than at any time in the last five years. They are snapping up billions of dollars in securities made up of subprime auto loans.
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Oversize Expectations for the Airbus A380 - NYTimes.com - 0 views
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this aircraft, which can hold more than 500 passengers. The plane dwarfs every commercial jet in the skies.
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Its two full-length decks total 6,000 square feet, 50 percent more than the original jumbo jet, the Boeing 747.
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The A380 was also Airbus’s answer to a problematic trend: More and more passengers meant more flights and increasingly congested tarmacs. Airbus figured that the future of air travel belonged to big planes flying between major hubs.
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Airbus has struggled to sell the planes. Orders have been slow, and not a single buyer has been found in the United States, South America, Africa or India.
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While the A380 program has been a boon for the European aerospace industry, Airbus is unlikely to recover its research and development costs. The best it can now expect is to break even on production costs, according to analysts, provided that it can keep orders going.
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Airbus made the wrong prediction about travel preferences. People would rather take direct flights on smaller airplanes, he said, than get on big airplanes — no matter their feats of engineering — that make connections through huge hubs.
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“It’s a commercial disaster,” Mr. Aboulafia says. “Every conceivably bad idea that anyone’s ever had about the aviation industry is embodied in this airplane.”
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Airline executives were wary of expanding their fleets aggressively, especially for a costly, four-engine fuel hog.
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And there are a fair number of those routes. Around 15 of the 20 largest long-haul routes by passenger volume in the world today are slot-constrained,
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“The A380 is not made for every route, but it is ideal for high-traffic routes, high-volume routes that are congested, or where there are flying constraints,”
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A little more than a decade ago, the two dominant airplane makers, Boeing and Airbus, looked at where their businesses were headed and saw similar facts: air traffic doubling every 15 years, estimates that the number of travelers would hit four billion by 2030 — and came to radically different conclusions about what those numbers meant for their future.
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Boeing, too, is facing lukewarm demand for its latest jumbo jet upgrade, known as the 747-8. The company has received just 51 orders for this big plane, which can seat about 460 passengers and lists at $357 million. By contrast, it has sold more than 1,200 twin-engine 777s, which sell for as much as $320 million.
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Richard H. Anderson, Delta’s chief executive, has said the A380 is “by definition an uneconomic airplane unless you’re a state-owned enterprise with subsidies.”
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Bruno Delile, Air France’s senior vice president for fleet management, says that there are a limited number of routes in its network with enough daily traffic to justify the expense of such a big plane. “The forecasts about traffic growth and market saturation haven’t exactly panned out,” he says.
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Not only do airlines take a big risk on the size and cost of the A380, but they also have to gain the cooperation of airports to modify gates and widen taxiways to make room for the plane.
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With versions that seat 210 to 330 passengers, and with a range of about 9,000 miles, the 787 allows airlines to fly pretty much anywhere in the world and connect smaller airports without going through a hub.
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And passengers are willing to pay more to avoid a connection
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f most airlines appear skeptical of the A380, Emirates is a true believer. It stunned the industry in December when it ordered 50 more of the planes, beyond the 90 it already had on order, throwing Airbus a much needed lifeline
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The airport handled 66 million passengers last year, rivaling Heathrow as the busiest international hub.
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for Emirates, the biggest selling point of the A380 is its ability to pack in more business-class seats and create an environment that appeals to big-spending passengers.
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Even Greece Exports Rise in Europe's 11% Jobless Recovery - Bloomberg - 0 views
www.bloomberg.com/...ope-s-11-jobless-recovery.html
undefined greece exports rise europe recovery bloomberg
shared by Gene Ellis on 21 Mar 13
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“The current- account deficits of countries that have been under stress diminished over the last years considerably.”
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Just two of 14 euro-zone government leaders have kept their posts in elections since late 2009 and extremists such as Golden Dawn in Greece are gaining support.
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“The internal rebalancing in the euro area is progressing,” said Fels. “Some of them, especially Spain but also Portugal not to speak of Ireland, are regaining competitiveness.”
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This is the same sort of response which companies would have made to a depreciation in the local currency without the euro, but with the added problem of deflationary effects on the rest of the economy.
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Ford Motor Co. (F) (F) said at the end of last year it will increase capacity near Valencia as it shuts plants in the U.K. and Belgium.
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While a slide in imports accounts for some of the correction, Greece boosted its exports outside the EU by about 30 percent in the fourth quarter of 2012 from the previous year, while Italy’s rose 13 percent in January from a year ago, he said.
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In Ireland, U.S. companies such as EBay Inc (EBAY) (EBAY)., Google Inc. (GOOG) (GOOG) and Facebook Inc (FB). all have expanded in the past two years, taking advantage of a corporate-tax rate of just 12.5 percent compared to Spain’s 30 percent.
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The metamorphosis is known as internal devaluation
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Prevented by membership of the euro from driving down currencies, governments and companies are squeezing labor costs to spur productivity.
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reducing social- security payments
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aising the retirement age, making it easier to fire workers in downturns and preventing unions from clinging to boom-time wage deals.
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On average, the periphery is about halfway to eliminating large structural current-account deficits, which allow for declines related to recession-driven weaker import demand, estimates Goldman Sachs (GS).
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The OECD today published an index showing that relative labor costs in Spain and Portugal have now dropped below Germany’s for the first time since 2005.
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“It’s potentially good for the economy but only if it results in faster investment,”
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“If not then there’s a downward spiral risk.”
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The smaller trade imbalances really reflect a collapse in demand for imports as consumers and companies hunker down,
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It’s the mirror image of the euro’s first decade, when historically low interest rates in the periphery fueled inflationary spending booms, reflected in credit bubbles and deteriorating current accounts and government budgets.
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“At this stage it is still demand destruction which has helped current-account deficit countries balance their accounts,” said Mayer. “It’s not a healthy situation.”
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They also say countries will need to run even healthier current accounts than now if they are to stabilize the debts they owe abroad.
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French Tax Proposal Tackles Data Harvest by Google and Facebook - NYTimes.com - 0 views
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Internet companies like Amazon.com, Facebook and Google stay largely out of reach of tax collectors in large European countries like Britain, France and Germany by routing their sales through smaller countries, like Ireland and Luxembourg, where corporate tax rates are lower. The companies insist that such practices are permitted under European Union law and international taxation treaties.
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France and other countries have begun talks to change those conventions, so Internet companies could be taxed in the country where a sale takes place, rather than in the location where the transaction is recorded. But that could take many years, with no guarantee of any change.
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A recent study by Ovum, a research firm in London, showed that 81 percent of Internet users in France would use a “do not track” feature on Web sites if it were readily available. That was the highest percentage in any of the 11 countries surveyed.
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The Eurozone's Delayed Reckoning by Nouriel Roubini - Project Syndicate - 0 views
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For starters, the European Central Bank’s “outright monetary transactions” program has been incredibly effective: interest-rate spreads for Spain and Italy have fallen by about 250 basis points, even before a single euro has been spent to purchase government bonds.
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The introduction of the European Stability Mechanism (ESM), which provides another €500 billion ($650 billion) to be used to backstop banks and sovereigns, has also helped, as has European leaders’ recognition that a monetary union alone is unstable and incomplete, requiring deeper banking, fiscal, economic, and political integration.
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But, perhaps most important, Germany’s attitude toward the eurozone in general, and Greece in particular, has changed. German officials now understand that, given extensive trade and financial links, a disorderly eurozone hurts not just the periphery but the core.
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GDP continues to shrink,
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Moreover, balkanization of economic activity, banking systems, and public-debt markets continues, as foreign investors flee the eurozone periphery and seek safety in the core.
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Likewise, competitiveness losses have been partly reversed as wages have lagged productivity growth, thus reducing unit labor costs, and some structural reforms are ongoing.
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but countries like Germany, which were over-saving and running external surpluses, have not been forced to adjust by increasing domestic demand, so their trade surpluses have remained large.
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either the eurozone moves toward fuller integration (capped by political union to provide democratic legitimacy to the loss of national sovereignty on banking, fiscal, and economic affairs), or it will undergo disunion, dis-integration, fragmentation, and eventual breakup.
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German leaders fear that the risk-sharing elements of deeper integration
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imply a politically unacceptable transfer union whereby Germany and the core unilaterally and permanently subsidize the periphery.
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Of course, Germany fails to recognize that successful monetary unions like the United States have a full banking union with significant risk-sharing elements, and a fiscal union whereby idiosyncratic shocks to specific states’ output are absorbed by the federal budget. The US is also a large transfer union, in which richer states permanently subsidize the poorer ones.
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These are key features, built into the over-representation of the poorer, smaller, more agricultural, states; as well as in the central institutions.
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But the fundamental crisis of the eurozone has not been resolved, and another year of muddling through could revive these risks in a more virulent form in 2014 and beyond. Unfortunately, the eurozone crisis is likely to remain with us for years to come, sustaining the likelihood of coercive debt restructurings and eurozone exits.
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Oil tanker - Wikipedia, the free encyclopedia - 0 views
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Oil tankers are often classified by their size as well as their occupation. The size classes range from inland or coastal tankers of a few thousand metric tons of deadweight (DWT) to the mammoth ultra large crude carriers (ULCCs) of 550,000 DWT.
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The expense was significant: for example, in the early years of the Russian oil industry, barrels accounted for half the cost of petroleum production.[10]
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While a typical T2 tanker of the World War II era was 532 feet (162 m) long and had a capacity of 16,500 DWT, the ultra-large crude carriers (ULCC) built in the 1970s were over 1,300 feet (400 m) long and had a capacity of 500,000 DWT.[29]
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"Supertankers" are the largest tankers, including very large crude carriers (VLCC) and ULCCs with capacities over 250,000 DWT. These ships can transport 2,000,000 barrels (320,000 m3) of oil/318 000 metric tons.[46] By way of comparison, the United Kingdom consumed about 1.6 million barrels (250,000 m3) of oil per day in 2009.[47] ULCCs, commissioned in the 1970s, were the largest vessels ever built, but the longest ones have already been scrapped; only a few ULCCs remain in service, none of which are more than 400m long.[48] Because of their great size, supertankers often can not enter port fully loaded.[28] These ships can take on their cargo at off-shore platforms and single-point moorings.[28] On the other end of the journey, they often pump their cargo off to smaller tankers at designated lightering points off-coast.[28] A supertanker's routes are generally long, requiring it to stay at sea for extended periods, up to and beyond seventy days at a time.[28]
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As demand grew moderately in the United States and Western Europe, expanding economies such as China fueled exponential growth in demand.[60]
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The average one-year time charter rate for a 5-year-old tanker of 280,000 metric tons of deadweight varied from $56,500 per day in December 2005 to $53,000 per day in September 2007 with a high of $64,500 per day in September 2006.[59]
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PORTFOLIO.HU | Blanchard: Eurozone integration needs to go forward or go back, but it c... - 0 views
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And, while lower investment since the beginning of the crisis has led to a smaller capital stock, again the effect appears quantitatively small. It is also difficult to see why the crisis would have led to a large decrease in total factor productivity. This being said, I would have expected a large output gap to lead to more downward pressure on inflation than we have seen. I see the fact that inflation is roughly stable is a puzzle. We are doing more research on this issue at the IMF.
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O.B.:There is no question internal devaluations are tougher to achieve than when you can adjust the nominal exchange rate. That’s well understood. A number of European countries have a competitiveness problem, which shows up in a large current account deficit.
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olve it. And there is no alternative for them than to become more competitive, to decrease the real exchange rate. Is it happening? I think it’s starting to happen, but it’s happening slowly, and it’s going to take a long time.
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They have to
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Many countries have a tough adjustment to achieve. In doing so, they indeed have to be careful about their social implications. When adjustment requires a decrease in the real wage (or at least a decrease relative to productivity), it is essential that the decrease be fairly shared. You have to make sure that there is a safety net in place. If the pension system has to be made less generous, which is the case in a number of countries, you have to make sure the lowest pensions are protected.
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It is clear that adjustment in the Euro zone requires a decrease in the relative price of periphery countries and an increase in the relative price of core countries. If the ECB wants to maintain two percent inflation for the Euro zone as a whole, this implies, arithmetically, that core countries have to have inflation higher than two percent, periphery countries have to have inflation lower than two percent, until the adjustment has taken place.
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A Declining Euro Can't Cure All Ills - WSJ.com - 0 views
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but what would in normal times be a boon for the region may not help as much now, experts say.
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Before the crisis, actions such as the European Central Bank rate cuts two weeks ago would have had a twofold effect in reviving the economy: Banks would have passed the lower rate on to their clients, while foreign-exchange markets would have marked the currency down, giving exporters better chances to sell their products abroad.
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In today's polarized euro zone, it isn't that simple. For one thing, tThere is no certainty that euro-zone banks will pass on the cut in borrowing costs.
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Even if they did, he explained, the euro zone's problems are now so acute that few companies seem to want to borrow.
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Mario Boselli, chairman of the Italian Chamber of Fashion, frets that larger emerging economies still account for only 10% of total Italian exports. "This is not enough" to offset the weakness in developed economies, he says.
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Both Mr. Boselli and Philip Halpin, an adviser to the Irish Exporters' Association, say the euro would have to fall as low as $1.10 (from about $1.23 currently), to produce a robust export-led recovery.
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Ludovic Subran, chief economist at French trade-credit insurer Euler Hermes, warns that might not be enough. Such a depreciation would have little effect in France because high taxes and rigid labor costs reduce the potential benefits, he says.
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Any euro-zone economy would benefit from a drop in the euro to the extent that it can redirect more resources to external markets. But the willingness and ability of businesses to do that differs across the region. Nadio Delai, chairman of Italian research and consultancy firm Ermeneia, say a host of smaller, less prestigious Italian shoe and textile companies have started to export to emerging markets, riding the coattails of more famous names.
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Crippled eurozone to face fresh debt crisis this year, warns ex-ECB strongman Axel Webe... - 0 views
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Crippled eurozone to face fresh debt crisis this year, warns ex-ECB strongman Axel Weber
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Harvard professor Kenneth Rogoff said the launch of the euro had been a "giant historic mistake, done to soon" that now requires a degree of fiscal union and a common bank resolution fund to make it work, but EMU leaders are still refusing to take these steps.
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"People are no longer talking about the euro falling apart but youth unemployment is really horrific. They can't leave this twisting in wind for another five years," he said.
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Mr Rogoff said Europe is squandering the "scarce resource" of its youth, badly needed to fortify an ageing society as the demographic crunch sets in.
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"If these latent technologies are not realised, Europe will wake up like Rip Van Winkel from a long Japan-like slumber to find itself a much smaller part of the world economy, and a lot less important."
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Mr Rogoff said debt write-downs across the EMU periphery "will eventually happen" but the longer leaders let the crisis fester with half-measures, the worse damage this will do to European society in the end.
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Mr Weber, who resigned from the Bundesbank and the ECB in a dispute over euro debt crisis strategy, said new "bail-in" rules for bond-holders of eurozone banks will cause investors to act pre-emptively, aiming to avoid large losses before the ECB issues its test verdicts. "We may see that speculators do not wait until November, but bet on winners and losers before that," he said.
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Sir Martin said the eurozone is pursuing a reverse "Phillips Curve" - the trade off between jobs and inflation - as if it were testing "what level of unemployment it is prepared to tolerate for zero inflation".
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Pierre Nanterme, chairman and chief executive officer of Accenture, said Europe is losing the great battle for competitiveness, and risks a perma-slump where debt burdens of 100pc of GDP prevent governments breaking free by investing in skills and technology.
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He said Europe is falling further behind as the US basks in cheap energy and pours funds into cutting-edge technology. "A lot is at stake. If in 12 to 24 months no radical steps are taken to break the curse, we might have not just five, ten, but twenty years of a low-growth sluggish situation in Europe," he said.
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"People are no longer talking about the euro falling apart but youth unemployment is really horrific. They can't leave this twisting in wind for another five years," he said
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A Multibillion-Dollar Question for Airbus and Its A330 - NYTimes.com - 0 views
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A Multibillion-Dollar Question for Airbus and Its A330
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While the A330 continues to generate around 40 percent of Airbus’s civilian aircraft profits, new orders for the plane have slowed significantly in recent years.
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But with the wait times to receive new planes now stretching to more than six years, airlines have been slower to reach for their checkbooks.
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Analysts say a revamped A330 would probably not be able to compete with the fuel economy of Boeing’s three-year-old 787 Dreamliner or with the updated 777, which in addition to new engines will have lighter wings made of carbon fiber instead of aluminum.
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A more attractive price tag, combined with earlier availability — analysts say a revamped A330 could be ready for service in four years — would probably attract a wide range of customers.
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Still, a revamped A330 would burn around 15 percent more fuel than its newer competitors, meaning that it could be a tough sell, even at a discount.
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"Will you end up selling any more than you would have if you stuck with the old version and cut the price?” asked Mr. Cunningham, the London analyst. He noted that the current low interest-rate environment was already reducing customers’ sensitivity to list price, while the recent instability in the Middle East was refocusing attention on the risk of rising oil prices.
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“There is much more fragmentation” of the wide-body jet market, Mr. Lasou said. “Each aircraft type is covering a smaller range of routes. The market is becoming much more specialized.”
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The problem with TTIP | vox - 0 views
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The problem with TTIP
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The TPP is a deep international integration arrangement between the US and 11 other Pacific states, which would cover 40% of world GDP and over 30% of world trade. It seeks to address as series of issues that 21st century commerce, but arguably its most obvious feature is that it excludes China – the world’s largest international trader and before long the world’s largest economy. There are, of course, the ritual genuflections towards ‘open regionalism’ – China can join if only it will agree to the necessary policy requirements – but this is about as much use as saying the Chief Rabbi can dine with you while insisting that the menu contains pork.
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By signing TTIP Europe would be tying itself to a static rather than a dynamic part of the world economy and substantially reinforcing the US’s exclusionary policies.
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In the areas that are sound, it is mainly that TPP members will probably have to approach the US norms faster than desirable, and possibly faster than they can effectively administer. But there are also areas in which the TPP is not in the interests of most non-US members.
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However, it is generally accepted that TTIP is more important to Europe than to the US, which greatly strengthens the US’s hand in negotiations.
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it is widely accepted that the deeper intra-European integration fostered by the Single Market initiative was a major contributor to European prosperity between 1992 and 2007
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he US has strongly promoted Investor-State Dispute Arbitration in which foreign-owned private firms can seek settlements against governments for taking actions that are not prohibited by the agreements but which reduce the value of investments that the firms have made in member countries.
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For states that do not have a lot of, say, social or environmental legislation at the time TPP is signed, Investor-State Arbitration threatens to make progress in these dimensions difficult.
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f China, India or Brazil felt that these disciplines were too arduous or just did not fit, the world trading system would be effectively be split with arguably the most dynamic areas excluded. And given that the TPP would be attractive to smaller economies and that the latter would probably be offered quite accommodating terms, the split would probably deepen rather than the opposite.
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This reads very much like an agreement to cooperate to make sure that outcomes in the trading system are as the US and EU want them – and with around half of world GDP between them and a further 15% in the rest of TPP, it suggests that the choice facing other will be capitulation vs. exclusion. I fear the latter.
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Champions of the multilateral system must be much more explicit about its virtues and value – and among these I include Europe (middle-sized countries with a strong belief in negotiated outcomes and order) and China (which has been a massive beneficiary of open markets and non-discrimination to date).
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urope had better get on with an internally driven liberalisation, especially of services and utilities markets, to stimulate the recovery quite independent of the outside pressures of a trade negotiation;
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Russia restricting Austria's gas supplies - The Local - 0 views
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Russia restricting Austria's gas supplies
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According to the energy regulator E-Control, Gazprom supplied Austria 15 percent less gas than had been previously agreed. Similar issues have hit Poland, which has seen their supplies cut by 45 percent, and Slovakia, which has ten percent less gas than expected for the period.
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Poland on Thursday accused Russia's Gazprom of slashing gas deliveries by half, which analysts said was likely aimed at sending a message to the EU amid tensions over the Ukraine conflict.
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"There's no risk to Polish clients," PGNiG spokeswoman Dorota Gajewska said, but added that it was forced to suspend its so-called "reverse flow" transfers to Ukraine.
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The move caused the Russian ruble to plunge to another record low against the dollar on Thursday.
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"It also can be seen as a kind of response to EU sanctions, targeting the smaller EU members in Moscow's former sphere of influence, not its larger Western partner." "But it's a risky policy, as it further undermines Moscow's credibility in Western Europe. It's not the best idea: either you're a reliable supplier of gas or you're not," he said.
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The German locomotive has become Europe's liability - FT.com - 0 views
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It is true German exports to Russia and eastern Europe have declined since the beginning of the year. But, given that they never accounted for more than 4 per cent of total exports, this does little to explain the country’s lacklustre performance.
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The main problem is not weak export demand or the reluctance of consumers to spend money but the fact that companies are unwilling to invest in new productive assets. Investment now accounts for a smaller portion of output in Germany than in most other industrialised countries.
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Germany’s public investment in transport infrastructure and education has long been among the lowest in Europe.
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The country should also use its political clout to convince its partners and Brussels to implement a European reform agenda that targets investment and growth.
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IBM Wants to Invent the Chips of the Future, Not Make Them - NYTimes.com - 0 views
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For several months, IBM has been seeking to sell its chip-manufacturing operations
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The most likely buyer is GlobalFoundries, a large contract chip manufacturer, the person said, for a price of probably less than $2 billion.
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Ms. Rometty stated that while IBM’s priorities were in fields like data analytics and cloud computing, and it had agreed to sell its industry-standard computer server business to Lenovo of China for $2.3 billion, she added: “But let me be clear — we are not exiting hardware.”
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Selling its semiconductor-manufacturing operations would mesh with IBM’s well-established course of shedding hardware businesses with lower profit margins. Over the years, the company has retreated from printers, personal computers and disk drives, as well as its pending sale of smaller server computers. Designing chips and licensing technology, without manufacturing, can be lucrative. Qualcomm, a maker of chips for mobile devices, is the showcase example.
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IBM’s research agenda is a recognition that the end of the silicon era of computing, using complementary metal-oxide semiconductor technology, or CMOS, is finally on the horizon.
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“IBM is not giving up on silicon, but it is saying it’s time to place an array of bets, and to move beyond silicon.”
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BBC - Future - Taiwan's struggle to become an innovation leader - 0 views
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You may not have heard of the companies Quanta Computer, Compal Electronics, Pegatron, Wistron and Inventec, but together they make more than 90% of the laptops sold worldwide, including those sold by top brands such as Apple and Dell.
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With a population of a little over 23 million, the island has a relatively small domestic market, and its companies tend to be small and medium in size, rather than the government-backed giants of some of its neighbours.
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Last year Taiwan’s companies and individuals obtained 11,628 patents from the US Patent and Trade Office, compared to 14,196 for South Korea, despite Taiwan’s much smaller population.
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The euro is in greater peril today than at the height of the crisis - FT.com - 0 views
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The euro is in greater peril today than at the height of the crisis
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Two years ago forecasters were hoping for strong economic recovery. Now we know it did not happen, nor is it about to happen.
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Today the eurozone has no mechanism to defend itself against a drawn-out depression. And, unlike two years ago, policy makers have no appetite to create such a mechanism.
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Both Ms Le Pen and Mr Grillo want their countries to leave the eurozone.
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Unlike two years ago, we now have a clearer idea about the long-term policy response. Austerity is here to stay. Fiscal policy will continue to contract as member states fulfil their obligations under new European fiscal rules.
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And what about structural reforms? We should not overestimate their effect. Germany’s much-praised welfare and labour reforms made it more competitive against other eurozone countries. But they did not increase domestic demand. Applied to the eurozone as a whole, their effect would be even smaller as not everybody can become simultaneously more competitive against one another.
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hese serial disappointments do not tell us conclusively that the eurozone will fail. But they tell us that secular stagnation is very probable. For me, that constitutes the true metric of failure.
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Global flows in a digital age | McKinsey & Company - 0 views
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Global flows in a digital age
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Now, one in three goods crosses national borders, and more than one-third of financial investments are international transactions. In the next decade, global flows could triple,
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we find that countries with a larger number of connections in the global network of flows increase their GDP growth by up to 40 percent more than less connected countries do. The penalty for being left behind is rising.
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Exchanges of goods such as aircraft and automobiles, semiconductors, pharmaceuticals, and microelectronics, as well as professional services and foreign direct investment flows, are growing faster than others.
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Digital technologies, which reduce the cost of production and distribution, are transforming flows in three ways: through the creation of purely digital goods and services, “digital wrappers” that enhance the value of physical flows, and digital platforms that facilitate cross-border production and exchange.
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Developing economies now account for 38 percent of global flows, nearly triple their share in 1990. S
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oday, digital technologies enable even the smallest company or solo entrepreneur to be a “micromultinational,” selling and sourcing products, services, and ideas across borders. Individuals can work remotely through online platforms, creating a virtual people flow. Microfinance platforms enable entrepreneurs and social innovators to raise money globally in ever-smaller amounts.
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France and Europe: More special pleading | The Economist - 0 views
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Bureaucratic France has 90 public-sector staff per 1,000 people compared to 50 in Germany. Most enjoy almost total job security.
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France’s serial requests are treated as duplicitous by those who ask why big countries break rules that smaller ones have to obey (a game that first began when France and Germany bust the stability pact in 2002). The Hollande government has already been given one delay
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Another would mark the third time in seven years that France has missed targets.
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The best guess is that France will yet again get its way,
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France and Europe More special pleading
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Learning about global value chains by looking beyond official trade data: Part 1 | vox - 0 views
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Gross trade accounting: A transparent method to discover global value chain-related information behind official trade data: Part 1
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With the rapid increase in intermediate trade flows, trade economists and policymakers have reached a near consensus that official trade statistics based on gross terms are deficient, often hiding the extent of global value chains. There is also widespread recognition among the official international statistics agencies that fragmentation of global production requires a new approach to measure trade, in particular the need to measure trade in value-added. This led the WTO and the OECD to launch a joint “Measuring Trade in Value-Added” initiative on 15 March 2012, which is designed to mainstream the production of trade in value-added statistics and make them a permanent part of the statistical landscape.
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All the estimation methods used in recent efforts to measure trade in value-added are rooted in Leontief (1936). His work demonstrated that the amount and type of intermediate inputs needed in the production of one unit of output can be estimated based on the input-output structures across countries and industries.
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If one is only interested in estimating the domestic value-added embedded in a country’s or sector’s gross exports, applying Leontief’s insight is sufficient. However, for many economic and policy applications, one also needs to quantify other components in gross exports and their structures. In such circumstances Leontief’s original insight is not sufficient, as it does not provide a way to decompose intermediate trade flows across countries into various value-added terms according to their final absorption,
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Our gross trade accounting framework in fact allows one to further decompose each of the four major parts of gross exports above into finer components with economic interpretations
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By the gross statistics, presented in column 1 of Table 1, the trade is highly imbalanced – Chinese exports to the US ($176.9 billion in 2011) are five times that of US exports to China ($35.1 billion in 2011). If we separate exports of final goods and of intermediate goods (reported in columns 2a and 2b of Table 1), we see that most of the Chinese exports consist of final goods, whereas most of the US exports consist of intermediate goods.
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In other words, the US exports rely overwhelmingly on its own value-added (only 2.1% from China and 5.8% from other countries in 2011), whereas the Chinese exports use more foreign value-added, especially value-added from third countries (with 3.2% from the US and 23.1% from Japan, Korea, and all other countries).
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As a consequence of these differences in the structure of value-added composition, the China–US trade balance in this sector looks much smaller when computed in terms of domestic value-added than in terms of gross exports.
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By identifying which parts of the official data are double counted and the sources of the double counting, our gross trade accounting method provides a transparent way to bridge official trade statistics (in gross terms) and national accounts (in value-added terms) consistent with the System of National Accounts standard.