Posts Tagged economics
Tyler Cowen, an economics professor at George Mason University, has recently published a book called An Economist Gets Lunch: New Rules for Everyday Foodies about how you can apply basic theories of economics to get the best meal for your money.
He tells Arabic Knowledge@Wharton, most people don’t realize there is not a shortage of food, but rather too many poor people unable to pay for it. Cowen also discusses how food prices and trade barriers in the Middle East helped drive the Arab revolutions.
“If you look at wheat and rice, there have been price spikes over the last five years and they’ve made food a lot harder for poor people to afford,” Cowen notes. “The so-called “Green Revolution” has somewhat slowed down. This is an unreported story. Crop yields are stagnant. It isn’t a problem we can solve overnight but it’s really one of the biggest problems in the world. It hardly gets any publicity. But for poor people in India, the Middle East and parts of Africa, it really matters.
“Some of the problems are we don’t have enough trade. It could be either legal barriers or just costly to transport or trade things. If there could be a shortage of rice in one place, it actually not that easy to ship a lot of rice in there because of bad roads and so on.”
Read the full interview here: http://bit.ly/MLzJxl
To the Nobel Peace Prize winner Muhammad Yunus, the Arab Spring was an expression of frustration by young people in the region of how little change was happening in their societies. He tells Arabic Knowledge@Wharton his advice to young demonstrators in the Arab world, and elsewhere, is to take responsibility for seeing that change happen.
“Young people see solutions are possible, they see a new life is possible. The old generation is still looking at the traditional way of handling everything. And that is the mismatch that will cause more problems. In 20 years from now the world will be completely different, because of that wave of technology, because of that wave of regeneration coming in.
“Just go ahead, take responsibility and make it happen. They will appreciate you for it. They’re not your enemies. Simply they don’t feel you are mature enough to handle that. Show them you are. It’s like any parent and their kids; they’ll treat them that way even if they are grown up. Not only have you grown up, you have much more experience and ideas than they do, in this short time, because your speed is much faster than theirs.”
Read the full story here: http://bit.ly/KZcDBN
Christine Lagarde, managing director of the International Monetary Fund (IMF), sees no alternative to the strict austerity policies being imposed on many peripheral European countries, says the double dip recessions in Italy and Ireland just announced come as no surprise, and notes that IMF reforms will shift 6% of current quotas to dynamic emerging and developing countries. Lagarde’s comments came in an exclusive interview with Knowledge@Wharton and media partner ParisTech Review.
Read the full story here: http://bit.ly/HWE788
The people of Tunisia and Egypt celebrated when their longtime leaders were toppled by Arab Spring revolution. But in the aftermath, the countries have struggled to regain a sense of economic and political normalcy.
As a result, the immediate beneficiaries of the Arab Spring, surprisingly, have been Morocco and Iraq, according to a new paper by students from the Lauder Institute of Management & International Studies at Wharton.
Both are attracting fresh foreign investment as countries such as Egypt and Tunisia see investors flee to countries that formerly took a back seat to their relative dominance, they write. They have done so because they already have established, aggressive programs to attract investors.
Morocco’s king seized the opportunity of turmoil elsewhere by embracing a new, stability-inducing constitution that is already paying dividends. In the case of Iraq, which continues to find its political footing and secure rising oil revenues, foreign investors are giving the country a fresh look since the unrest began in January 2011.
Read the full article here: http://bit.ly/zYrhQj
Since winning the Nobel Prize for economics in 2004, Finn Kydland has continued to refine his ideas, and says one of his theories regarding how governments plan policy has now become relevant in the wake of the global economic crisis.
“I think the biggest challenge is the lack of predictability of government policies,” he tells Arabic Knowledge@Wharton. “It has different facets. The theory with which I’m associated with is called the inconsistency of optimal government policy, or the time inconsistency, I should say.
“So what it says is even in the case of a benign government who’s trying to maximize welfare, the present value of its citizens’ welfare — imagine we can measure that — the resulting optimal plan is time-inconsistent, in the sense that there will always be this temptation to change in the absence of a commitment mechanism to make sure that it’s carried through over time. There will always be a temptation to change that plan, and if they continue to do so, theory suggests that that could be quite harmful to society.”
Read the full interview here: http://bit.ly/vD9DzC
The sudden, bloody end to Colonel Muammar Qaddafi’s 42-year rule of Libya has observers concerned about the risk of a power struggle in the North African country. But for the moment, the world’s focus is on Libya’s oil economy.
Libya has primarily relied on its oil resources — according to 2010 figures from the CIA world factbook, before its civil war, the country’s petroleum industry produced 1.789 barrels per day, and its oil exports accounted for 25% of its GDP.
That production fell to less than 400,000 barrels a day during the conflict. The most optimistic suggest full production capacity could be restored by early next year. The country has roughly 46 billion barrels of oil reserves — ninth largest in the world — and nearly 55 trillion cubic feet of natural gas reserves.
“Libya is fortunate in having a small population of a bit over 6 million and valuable oil resources; it has the potential to derive a large income from oil after an initial period of reconstructing the infrastructure,” says Ann E. Mayer, Associate Professor of Legal Studies and Business Ethics at Wharton. “But, the oil sector cannot offer enough jobs to satisfy all Libyans demanding employment.”
Mayer notes under Qaddafi, “the unemployment rate among Libyan citizens was high, in part because of the distaste that Libyans felt for accepting work in low status jobs that were seen to be demeaning, which were left for migrants to handle.” Most migrant laborers fled the country when civil war broke out.
The International Energy Agency (IEA) advised caution on expectations of renewed oil production in Libya. “If [Qaddafi’s death] leads to greater political clarity within Libya, and to a more stable operating and investment environment, then it may result in a more rapid restoration of the Libyan oil sector,” stated David Fyfe, head of the IEA’s oil industry and markets division.
“However, many logistical, operational, and security-related challenges remain in that country, so we are not changing our underlying assumptions on Libyan production recovery for now. We still believe it could take many months for production to regain pre-crisis levels.”
The thorny question of who takes control of Libya’s oil exports was first raised while fighting still raged in the country. Speaking with Reuters, the head of the country’s National Oil Company speculated that he would not remain in a potential reshuffle. Divisions between the Western and Eastern parts of the country also loom large in future control of the country’s oil resources.
Most analysts suggest that little stability will exist while a transitional government in forms, hindering any plans to get Libya’s oil flowing again. “The death of Qaddafi changes very little in the underlying dynamics of the oil picture on the ground,” said Barclays Capital analysts.
Juan Cole, a Middle East expert at the University of Michigan, told Reuters that strife in Libya between its tribes could be avoided through egalitarian economic policy. “A more or less democratic government that spreads around [Libya’s] oil largesse more equitably could easily overcome this divide, which is contingent and not structural,” Cole said.
Mayer says Libyan economic planners will also have to figure out how to address unemployment concerns, “which will include deciding whether or not to revive the former system of extensive reliance on a vast underclass of migrant workers, a system that is typical in oil-rich countries but that naturally creates social tensions and imbalances.
“Do they want to invite back the same diverse population of migrants? Do they prefer to try to integrate their economy with the economies of Egypt and Tunisia by favoring their nationals? Do they want to try to alter Libyans’ attitudes so that they will accept to work in jobs that were previously left for migrants? A lot will hinge on the answers to these questions.”
A Beautiful Mind’s John Forbes Nash, Jr., and ‘Father of the Euro’ Robert Mundell weigh in on a common Gulf currency and the Arab Spring
John Forbes Nash, Jr., Nobel Prize winner and subject of the film “A Beautiful Mind,” tells Arabic Knowledge@Wharton that there is no unified approach to supporting democracy efforts in the Middle East, while fellow Nobel Prize winner Robert Mundell says a common currency for the Arab Gulf nations is still a potent idea, and one that will eventually be instituted. “The zone is not just purely economical, it’s also social and defense as well,” he said.
Read the article here: http://bit.ly/kQGv2O