Dec 22, 2010
Yet a few companies have managed to penetrate markets controlled by anti-development leaders. Coca-cola is one example. Another is cell phones. Cell phones are now everywhere in Africa. Prices are lower and coverage better than in Canada. Why did governments let this happen?
Governments can benefit from more business as it generates tax revenues. In the Central African Republic, 40% of tax revenues apparently come from Orange, a French cell phone company. The government surely benefits from these revenues. And so does everyone else (Aker and Mbiti 2010). But in Bihar, India’s poorest state, a "property developer laments how crooked officials in his state prefer “taxing” inputs—the first investments made—to demanding a share in the output of an enterprise, a practice he says is more common in Bengal" (Economist, 4 Nov 2010). If corruption is there to stay, the latter type would at least allow for some competing businesses to flourish.
Development can happen but businesses, and above all foreign companies, must learn how to convince bad governments that they will enjoy the future tax revenues more than the monopolistic rents.
Dec 20, 2010
Dec 14, 2010
Dec 9, 2010
Dec 8, 2010
Dec 1, 2010
Governments do not now pursue income maximisation at the expense of everything else. Virtually all governments impose unnecessarily distortionary taxation... They subsidise culture and education in excess of the strict utilitarian minimums. They impose progressive income taxation and distort value-added taxation in the name of income distribution. Moreover voters demand such things. The short answer therefore is “of course not”. The real question is should we try to quantify the touchy-feely things like income distribution, cultural values, quality of life, man’s inhumanity to man? There I’d say that the effort is worthwhile (and already undertaken to some extent in the Human Development Index approach). However, as the piercing analysis of Martin Ravillon shows such indices must be interpreted with care. The best strategy is probably to have a number of them developed by a range of government and non-governmental agencies.
But happiness and income seem to go hand in hand. Hence it might not be such a drastic change to target happiness. But as Harold James notes, it is not clear if we are measuring short or long term wellbeing. In Latin, these are two different words. Felix is the short-term state of happiness while beatus is the longer term state. He said we should try to measure the latter.
Nov 30, 2010
Nov 29, 2010
Suzuki, the largest foreign carmaker in India, with annual sales of 1m vehicles, pays around 12% tariffs on parts imported from Japan. South Korea’s FTA with India means that Suzuki’s rival, Hyundai, pays just 1-5%. Osamu Suzuki, the Japanese company’s boss, feels “handicapped”.Source: The Economist: Japan’s big companies are shipping production abroad
Nov 26, 2010
Alas, I found myself at the end of a long line of aspiring fashionistas (the most dedicated ones had arrived at 5:30am), all wearing colour-coded bracelets, which 'give you access to 15 minutes of exclusive shopping'. I got myself an orange bracelet for 10:25, went back to the office, sneaked back out in the middle of the morning and went back to the store.
Was it all worth it?? Absolutely…until I actually saw how much our fellow Londoners and Parisians paid for the exact same dresses: £99 = €149 = CHF249…
Why such a huge price difference? Did they calculate their price using the exchange rate of 4 years ago, when the GBPCHF was at 2.5? Could it be higher sales tax? Not really, since Swizerland has a lower sales tax than these two places (7.6% compared to 19.6% in France or 17.5% in the UK). Is it import tariffs on textiles? These are at 800 CHF per kg, this is just a few francs per dress. So it must be something else…
Maybe its simply H&M’s pricing strategy that takes into account the Swiss’ high salaries. To take into account Swiss’ higher salaries, we can calculate the price of the dress in Big Mac, using the famous indicator from the Economist. It turns out that the dress is actually cheaper in Geneva, costing only 38 Big Macs, while in France and the UK, you would need to sacrifice around 44 Big Macs to buy that dress! Still, it’s a good idea to do your shopping in London if you live in Geneva.
Any other interesting theories out there?? One thing is certain though…no matter how much people around the globe actually ended up paying for these lovely items, we can all comfort ourselves knowing that we can always re-sell them on ebay: current top fetching price? $700! Anyone want a lovely leopard mini-clutch???
Written by Maria, with the 'obvious' help of PL
Nov 25, 2010
The Gambia has said it is cutting all ties with Iran and ordered all Iranian government representatives to leave within 48 hours. Officials from the small West African nation gave no reason for the move. But last month Nigeria said it had intercepted an illegal arms shipment in Lagos from Iran, destined for The Gambia (rocket launchers and grenades in containers labeled as building materials). Senior Iranian official Alaeddin Borujerdi has said the move was taken under US pressure.
But why was Iran so "nice" to the Gambia anyway? Was it using it as a transhipment hub to dodge UN trade sanctions? And if it is indeed US pressure that put an end to the ties, what did the US offer, better weapons?
Nov 24, 2010
Many scholars have suggested that British institutions and culture are more conducive to growth and poverty alleviation than those of France or other colonizers. Systematic tests of this hypothesis have plagued by unobserved heterogeneity among nations due to variable pre- and post-colonial histories. To deal with this problem, we focus on the West African nation of Cameroon, which includes regions colonized by both Britain and France. Taking advantage of the artificial nature of the former colonial boundary, we use it as a discontinuity within a national demographic survey. We show that rural areas on the British side of discontinuity have higher levels of wealth and local public provision of improved water sources. Results for urban areas and centrally-provided public goods show no such effect, suggesting that post-independence policies also play a role in shaping outcomes.
Hat tip: FP.
Nov 23, 2010
Nov 21, 2010
Now that Ireland seems to have given in to demands to accept money from the Eurozone's “Emergency Fund” and the IMF and cries of “bailout” are sure to make the rounds again, let's see who is actually being bailed out. In Germany, where I am from, people like to grumble about profligate Greeks and now the Irish who are receiving “our” tax-money. In fact, a lot of the money will go to large European banks, who will be bailed out 100 Cents on the € on loans they have imprudently (or prudently, depending on your perspective) made to Ireland. A couple of days ago, Deutsche Bank CEO Josef Ackerman warned about the consequences of an Irish collapse, adding that “Europe is worth every price”. He would think so, wouldn't he? According to Peterson Institute via FT, Deutsche Bank has around a quarter of a Billion Euros worth of Irish sovereign debt on its balance sheet. At least Germans can take comfort in the fact that some of their money will “stay in the country”. With Portuguese debt, things are even more “win-win”. If Portugal has to ask for help, Germans will be able to redistribute € 1.6 Billion to WestLB and € 400 Million to Deutsche Bank. Truly great incentives in sovereign lending.
Civil society and media zoomed in on Foxconn recently not because of its prodigious workforce or its profits. Rather, it is the seventeen young workers who perished from suicides between January and August 2010 that forced the world to reflect on the plight of frontline workers at Foxconn and other factories.
Two examples from a recent report:
Sun Danyung, aged 25, an engineer at Foxconn, lost one of the 16 fourth generation iPhones in July 2009. After leaving an online message to his friends stating that the investigation over the incident was one of the most humiliating experiences in his life, he jumped from the 12th floor of his apartment building. Likewise, 19-year-old Ma Xianqian, was bullied before his death. He was forced to clean the shop floor and toilet as punishment, according to his elder sister.
The average wage is at the border of subsistence, 12 working hours daily, with a regime of one day of rest per 13 worked, a military-like treatment all the time, humiliating punishments for even the smallest mistakes and distractions...
Slaves or workers? in the name of communism China seems to be creating a system of alienation worst than capitalism, colonialism or other previous system.
Nov 20, 2010
The US Coalition for Enforcement of Antidumping and Countervailing Duty Orders said it had gathered "compelling evidence of how certain manufacturers (in China) are evading duties"... Chinese manufacturers of steel wire products evade antidumping duties via third countries... The coalition, comprising six companies manufacturing steel wire products, claimed the resulting duty evasion costs the US "at least $84 million annually" and "threatens jobs."
Nov 19, 2010
Roberto Rigobon and Alberto Cavallo at MIT have come up with a method to scour the Internet for online prices on millions of items and then use them to calculate inflation statistics for a dozen countries on a daily basis. The two have been collecting data for the project for more than three years, but only made their results public this week... Currently, Labor Department workers visit or call thousands of stores and other establishments to collect prices. That is "the way they were doing it 70 years ago," Mr. Rigobon said. "We can do better."
Nov 18, 2010
Nov 16, 2010
As Gylfason and Wijkman write on Vox, only one man gets all the cash: "President Obiang has governed Equatorial Guinea since 1979, having been re-elected a few times with 98% of the vote... State-operated radio declared President Obiang to be a god who is in permanent contact with the Almighty and can decide to kill without anyone calling him to account and without going to hell".
In 2004, a crazy British aristocrat built an army of mercenaries and tried to take control of the country and its oil. The coup d'état was an utter failure (a movie based on "The Wonga Coup" is due to come out next year). But imagine if a benevolent dictator overthrowed the government and distributed the wealth equally. Half a million people would suddenly earn $30,000 a year. That would be quite a natural experiment!
Nov 15, 2010
Nov 13, 2010
One reason why this is the case, as noted by Tyler Cowen, is that poor countries have abundant cheap labor. But still, aren’t we missing something is we say bye to the best things in life by developing?
Nov 12, 2010
Nov 11, 2010
Nov 10, 2010
Nov 9, 2010
A brewer from Mauritius has tried to enter the Malagasy market. It built a new brewery outside the capital and started a massive ad campaign to launch its beer. Two days before the opening of the factory, two official documents were missing and the factory could not start producing. Rumor has it THB gave a €2 million bribe to government officials to retain the beer monopoly.
The same process occurs in all sectors and development doesn’t happen. No need to look further to understand underdevelopment. The question is how do you root out corruption?
Nov 8, 2010
Oct 21, 2010
Would that really work?
Oct 13, 2010
I did not think that Paul Krugman was still writing academic papers. Nor have I seen any evidence in the last decade that he still has any sense of humor... A quick look at the acknowledgments, however, clears things up. The original manuscript was written in July 1978, when Krugman was an active researcher and being a curmudgeon wasn’t part of his professional identity.Wow! While some actually take the time to actually criticize the paper, this was one cheap shot by a brilliant pop economist on another. Chicago will always be Chicago I guess...
In one hand, of course I feel happy this people are been rescued and meeting with their families. But I'm fed up with all this media and propaganda. I do not exactly understand why this has been for months in the frontpage of BBC and other media around the world. The Chilean Government is using this as a reality show to cover all the other problems in the country... and particularly one big problem: This accident should have never happened. This is the real issue. Not the millions of dollars they have expend in saving these people, but the money and legislation that should be available to ensure decent working conditions. I'm glad that these 33 are alive, but the 400 a year that are 6 feet under are anonymous. And this is way worse in the rest of Latin-America and the developing world.
Oct 12, 2010
Google is using its vast database of web shopping data to construct the ‘Google Price Index’ – a daily measure of inflation that could one day provide an alternative to official statistics.Google has not yet decided whether it will publish its index, but "Mr Varian said that the GPI shows a “very clear deflationary trend” for web-traded goods in the US since Christmas." The full article is here.
Sep 20, 2010
Sep 13, 2010
Sep 7, 2010
I am skeptical about indiscriminate foreign aid packages. Some researchers (for example Jean-Paul Azam of the University of Toulouse) actually claim that the overall impact of foreign aid is negative and that it increases civil wars and homicides: the foreign aid can be used to buy weapons, or catastrophes can be deliberately provoked by warlords in order to attract foreign aid and then take over the resources. I am also skeptical about the Paul Romer project of creating a Norwegian colony that would act as an African Hong-Kong whose development would actually spread to the rest of Africa by some unclear epidemic mechanism. None of those schemes addresses the above problems; and the Iraq experience is a cautionary tale against neo-con inspired political engineering. On the other hand, it would be extremely valuable to be able to partition countries such as Sudan, Congo, Rwanda, Ivory Coast or Burkina Faso into smaller and more ethnically homogeneous ones. In addition to being good for the economy it would above all save millions of lives.Anybody agree? You can read more experts answers here.
Aug 20, 2010
The strong franc, which has risen more than 10% against the euro this year, has also had a negative effect on a sector most people don’t think of as an export: tourism.Tourism accounts for 3.4% of GDP but for 6% of employment (200,000 full-time jobs, four times as many as watchmaking).
Cutting prices? Really?The importance of tourism to Switzerland helps explain why the Swiss National Bank went to extraordinary efforts this year to try to prevent the franc from strengthening too quickly against the euro.Tourism is highly price sensitive. The Swiss Alps must compete with neighboring Austria, Italy, France and Germany, which also offer plenty of mountains and ample opportunities for skiing and hiking, and all use the euro. Swiss hoteliers are responding by cutting prices and in some cases quoting prices in euros.
Aug 16, 2010
Aug 12, 2010
Ethiopia maybe? Or is it tariff evasion?
YEREVAN, AUGUST 9: Five thousand 461 tones of coffee has been imported to Armenia in the first half of 2010 (... compared to) 4 thousand 861 tones (last year ...). The main part of the coffee (...) has been imported (...) mainly from Indonesia... This January-June coffee has been imported from Cameroon, Columbia, Salvador, Utopia, Guatemala, Honduras, India and Russia as well.
Aug 11, 2010
......apparently it's not because it contains interesting and informative articles......but because we are all slaves to fashion and want everyone to think that we are smart and sophisticated........
Aug 10, 2010
Source: NY Times via Marginal Revolution.SafeGuard Guaranty Corp., an insurance start-up based in North Carolina, recently released what it’s billing as the first world’s first divorce insurance product. The casualty insurance is designed to provide financial assistance in the form of cash to cover the costs of a divorce, such as legal proceedings or setting up a new apartment or house. It is sold in “units of protection.” Each unit costs $15.99 per month and provides $1,250 in coverage. So, if you bought 10 units, your initial coverage would be $12,500 and you’d be paying $15.99 per month for each of those units. In addition, every year, the company adds $250 in coverage for each unit.
Aug 9, 2010
Source: BBC ( I don't know how old this is). ht: Ferdinand
Aug 8, 2010
But Time is being less negative: "That Haitian political class, it should be remembered, has its own epic shortcomings, whether measured by incompetence or venality. Haiti's traditional elite has shown an utter failure — and a lack of will — to reform a medieval land-ownership system".
Aug 7, 2010
Aug 6, 2010
Source: Philippines Daily Inquirer
Aug 5, 2010
In June, an investigation by the Malaysian newspaper the Star blew the lid off the sand smuggling trade. The paper's reporters followed a Malaysian dredging company working on the Johor River, about 50 miles inland from the Singapore Strait. The company had won a transport license by claiming it was shipping extracted sand internally, to the Malaysian ports of Tanjung Pelepas or Danga Bay. The shortest route to the destination, however, took ships through Singaporean waters. Once the sand was extracted, the barges sailed downriver to the Malaysia-Singapore border and passed through customs. The barges never made it to the claimed destination -- they simply stopped at the Singaporean jetty of Pulau Punggol Timur, presented freshly forged paperwork, and unloaded their cargo.This can be seen in the smuggling gap in official trade statistics, as Singapore declares more imports from Malaysia than the latter declares. It is curious that in 2008, the gap in kg is the other way round...
Aug 4, 2010
"We economists like to ponder questions such as “why does popcorn cost so much at the movies?” and there is plenty we can say on the subject that is both true and counterintuitive. But the armchair does preclude one obvious research angle, which is to ask the people who run the cinemas."That's Tim Harford confessing in the FT.
Aug 2, 2010
"Iran's isolation could mean new opportunities for our border region," says Osman Celik, the deputy chairman of Van Provincial Chamber of Commerce, as he shows off the commemorative plates from his last trip to Iran. "Turkey voted against the UN sanctions, but she's going to have to abide by them. So formally Turkey will probably give the impression to the world that she's abiding by them. But the illegal trading will probably gain some power, and people in the border will find a way to help their Iranian friends."
An Iranian dealer in Istanbul reveals how serious business is done. On the surface, he says, his business is legal. But just 10% of his goods go to Iran legally. "I export strategic equipment, like aeroplane parts, to Iran. Those companies would never sell their goods to Iran - because they have American investors. How do we do it? We buy the equipment under the name of a Turkish company and the paperwork shows the destination is another country. But in fact the load ends up in Iran. We charge them 80% over the market price, but they need it - so they pay."
Jul 29, 2010
The first one is Identity Economics by Akerlof and Kranton, which, while summarizing the duo’s research, makes the case for adding an identity component to economics’ utility function. It argues that we humans take decisions and set objectives based on who we want to be. Failing to reach such identity results in utility loss. Hence, better stick to who you really are to maximize your utility. Whites should not try to act black. White men can’t jump and end up unhappy.
The authors claim that this new tool explains a wide range of phenomena, such as gender and racial discrimination, which traditional economics had left unanswered.While their ideas are good, their bold statements of a new paradigm are quite annoying. Nothing in the book is really illuminating. All in all, Identity Economics provides an interesting framework to analyse economic phenomena but a boring read.
The second book I read was Natural Experiments of History, a volume edited by Jared Diamond and James Robinson. As natural experiments always make an entertaining read in economics articles, I thought this volume would provide many such insightful stories from historians and anthropologists looking at Polynesian islands, settler colonies, banking system evolutions etc…
But again I was a bit disappointed. Non-economists write to describe, not to test a hypothesis, which makes it hard to follow their reasoning. The chapter by Diamond turns out to be material from Collapse. The 3 chapters written by economists, i.e. Nathan Nunn’s on Africa’s slave trade (see graph below), Acemoglu’s on the spread of the French revolution, and Banerjee’s on colonial institutions in
The book aims at convincing historians to use comparative methods, i.e. natural experiments, instead of focusing on just one topic when doing research. This might actually work. For the uninitiated reader, this book provides many enlightening stories.
Jul 28, 2010
Gypsies believe the lower half of the human body is invisibly polluted, that supernatural de lement is physically contagious, and that non-Gypsies are spiritually toxic. I argue that Gypsies use these beliefs, which on the surface regulate their invisible world, to regulate their visible one. They use superstition to create and enforce law and order. Gypsies do this in three ways. First, they make worldly crimes supernatural ones, leveraging fear of the latter to prevent the former. Second, they marshal the beliefthat spiritual pollution is contagious to incentivize collective punishment of antisocial behavior. Third, they recruit the belief that non-Gypsies are supernatural cesspools to augment such punishment. Gypsies use superstition to substitute for traditional institutions of law and order. Their bizarre belief system is an efficient institutional response to the constraints they face on their choice of mechanisms of social control.
Jul 27, 2010
Despite the millions of differences between the two countries the key difference is that Sweden has an independent monetary policy and Finland is part of the euro zone. The consequences of which are perfectly seen in the following graphs which should make it into the next editions of textbooks that describe the Mundell-Fleming logic à la IS-LM-BP.
Figure 1: Real effective exchange rate based on 50 trading partners, source: BIS
As the crisis unfolded, most countries started reducing policy rates. So did Sweden. While the ECB reduced also its main rate the change for Sweden was more pronounced. Together with other monetary policy measure this lead to a strong depreciation of the Swedish krona. Thus Sweden could gain very early a competitive advantage over its main trading partners while Finland could not (See figure 1). The otherwise close to parallel pattern of the real exchange rate of the two countries diverged and Sweden managed to attain a real depreciation close to 20% while Finland saw no gain in competitiveness until 2010. Only the recent drop in the euro’s value, due to fears about the rising debt level in several EMU members has started to improve the competitive position of Finish exports.
The real depreciation helped Sweden to cushion the drop in demand and led to a much lower reduction in real exports compared to Finland (Figure 2).
Figure 2: Real export growth, source: OECD
The former experienced a peak drop of -13% while the corresponding value for Finland is - 28%. As a consequence the net trade balance of Sweden dropped only slightly from 8 to 7 percent of GDP while Finland’s net trade balance dropped from 5 to 3 percent of GDP (despite a lower drop of GDP in Sweden compared to Finland!).
Figure 3: Primary government balance in % of GDP, source: OECD
Finland on the other hand saw no alternative to the use of fiscal stimuli while Sweden did not need to increase debt significantly. The primary government surplus quickly became a deficit and contributes currently the fact that Finish debt to GDP outpaces the Swedish ratio despite the fact that for the last 10 years the contrary was true.
Finland pays a high price in this crisis for not having an independent monetary policy in terms of foregone GDP and servicing cost of increased debt.
The short sighted conclusion from this comparison is that it is preferable not to peg but to maintain a flexible exchange rate. But this conclusion is deeply flawed for several reasons. First, it considers one particular, negative shock and says nothing about the past benefits of being EMU member nor does it tell us anything about what might happen in response to a potential positive shock. Second, the counter factual is likely to be wrong. In a world where Finland has not been part of the EMU many others may not have been. Thus in the counter-factual it is likely that all these other “would-be non-EMU-members” could have forced interest rates down further and most countries end up with a threat of higher inflation and no competitive gain and no boost of net exports.
Nevertheless, ceteris paribus, being a Swedish policy maker or citizen (who will have to repay the debt) appears to be the more appealing option these days. Too bad that being nearly the same is just not the same.
Jul 15, 2010
A paper by Diego Comin, Erick Gong, and Bill Easterly was just published in the AEJ Macro. They collected crude but informative data on the state of technology in various parts of the world in 1000 BC, 0 AD, and 1500 AD.1500 AD technology is a particularly powerful predictor of per capita income today. 78 percent of the difference in income today between sub-Saharan Africa and Western Europe is explained by technology differences that already existed in 1500 AD – even BEFORE the slave trade and colonialism.
Jul 9, 2010
To answer that question, "Freedom Fries", a new paper in AEJ Applied looks at the case of the deterioration of US/France relationships following the invasion of Iraq. From 2002–2003, France’s favorability rating in the US fell by 48 percentage points and this, the authors find, may have reduced bilateral trade by about 9% and trade in inputs by about 8%.
Jul 7, 2010
Zimbabwe's coalition government declared the US dollar legal tender last year to eradicate world record inflation of billions of percent in the local Zimbabwe dollar as the economy collapsed.
Low-denomination US bank notes change hands until they fall apart, and the bills are routinely carried in underwear and shoes through crime-ridden slums.Some have become almost too smelly to handle, so Zimbabweans have taken to putting their $1 bills through the spin cycle and hanging them up to dry with clothes pins alongside sheets and items of clothing.It's the best solution — apart from rubber gloves or disinfectant wipes — in a continent where the US dollar has long been the currency of choice and where the lifespan of a dollar far exceeds what the US Federal Reserve intends.
Full story here. ht: Tyler Cowen
Jun 30, 2010
Israel’s blockade of the Hamas-ruled Gaza Strip has been a bonanza for Palestine Food Industries Co., the only functioning juice maker in the Gaza Strip, with sales increasing ten-fold as the embargo kept out competition.
Now, as Israel relaxes its restrictions, the company has joined fellow manufacturers including Pepsi-Cola bottlers Yazegi Group in demanding that Hamas protect local industries and refuse imports of juice, soda and snack foods. Officials of the Islamic movement have heeded the calls and are barring entry of such items as Israeli grapefruit juice and potato chips.“The policy of the government is to protect and maintain local products and industry and employ a large number of workers who have no job due to the siege,” Ziad Zaza, the Hamas economy minister, said in an e-mailed response to questions about the restrictions on Israeli goods.
Jun 29, 2010
Among banks it is UBS who did better, with a 66% accuracy, as calculated by Miroslav (not comparable with our percentage).
JP Morgan 59%
Goldman Sachs 53%
Jun 21, 2010
Keeping the yuan pegged to the dollar has been “a great source of stability” for China and the world... While Barack Obama welcomed the move, “he is not an economist." The yuan climbed the most in 18 months against the dollar today after the central bank said June 19 it will increase the currency’s “flexibility.” The announcement was ahead of a G20 summit this week where leaders will discuss how to sustain the global recovery and prevent a repeat of the financial crisis. Mundell, credited as the intellectual “father” of the euro, has previously called for the euro to be fixed against the dollar, saying exchange-rate swings were a cause of the global financial crisis. The central bank’s announcement followed pressure from trading partners including the US, where lawmakers threaten legislation that could penalize Chinese imports. Mundell called the Chinese move “political.”ht: Bunk
Jun 18, 2010
I compared export growth in a World Cup year between the host and the failed bidders and found that it is 10% higher for hosts on average, conditional on export growth in the 2 years before the Cup, and this is significant at the 5% level.
Jun 17, 2010
Madagascar’s government was anxious to attract foreign investment, and it understood that a credibility deficit held it back… Faced with this obstacle, the Malagasy authorities were open to unconventional arrangements. To boost investment in agriculture, they were ready to lease a Connecticut-size tract of land to Daewoo, a South Korean corporation, for 99 years…Romer’s proposal fit in with these adventurous ideas.…
Romer made his pitch for a charter city, and Ravalomanana responded that he wasn’t sure one was enough; if Romer could identify two rich countries willing to play the role of government trustee, it might be better to launch two parallel experiments. The president and the professor agreed that the new hubs should be open to migrants from nearby countries as well as to locals. They rose to examine a map of Madagascar on the study wall. Ravalomanana suggested building the first city on the island’s southwestern coast, which was largely uninhabited because of its dry heat. To Romer, the site sounded very much like the coastal locations that appeal most to the world’s affluent as vacation spots.
Jun 16, 2010
But something seems at play. As it is hosting the World Cup, South African wine exports are booming. What's more, CNN reports a spike in sales to countries competing in the tournament! How is this happening? Not only are soccer fans all of a sudden more curious about SA wines but wine retailers around the world, from Kansas City to Jamaica, are organizing tastings and offering special deals on SA wines, using the World Cup as an excuse.
So, rather than being a trade liberalization signalling mechanism, as suggested by Rose and his co-author, it could be an informational effect that has lasting consequnces on the extensive margin of trade. Worth a new paper!
Jun 14, 2010
Jun 10, 2010
This boosted cross-Channel food deliveries. The Guardian reports (via TC) :
...due to the strength of the euro against the pound, hundreds of Britons living in France are now using the internet to order their food, including many French specialties, from British supermarkets.Simon Goodenough, the director of Sterling Shopping, a delivery firm based in Northamptonshire, says his company has 2500 British customers in France and is running five delivery vans full of food to France each week... "we have delivered bottles of Bergerac wine bought from Sainsbury's to a customer in Bergerac. We even have a few French customers who have now heard about what we do. They love things like curries and tacos, which they just can't get in France... A lot of people are using us to get things they really miss, such as bacon and sausages."
Jun 8, 2010
Jun 7, 2010
I read today lots of business occurs especially across the border. The amount of trade with the neighboring regions of Baden-Württemberg and Bavaria in Germany is about 20CHF Bn per year, the same as the total export of Switzerland to the US. Much of this trade is accompanied by strong capital flows: of about 2000 swiss firms operating in Germany, half of them are concentrated in these two regions (including giants like Swiss Re and Novartis). In the neighboring France (Rhône-Alpes region), Switzerland exports about 2.3 CHF Bn of goods including chemicals, plastics, electronics and electricity. This is the same value of export to India. While cross border investments relate to retailing and pharmaceuticals, there are also about 70,000 transfontaliers (50,000 are french working switzerland and 20,000 are Swiss living in France and working in Switzerland). In neighboring Italy (Lombardy) Switzerland exports about 5.2 CHF Billion of goods, including pharmaceuticals, foods... No wonder the SNB feels a bit nervous about the exchange rate vis à vis the Euro.
Jun 6, 2010
Sometimes, advocates of “sin” taxes contend that consumers of certain products impose adverse budgetary externalities on the rest of us — that if the consumption induces, say, smoking- or obesity-related illness, it raises health care costs, which we all pay for through higher taxes or insurance premiums. Yet this argument has a flip side: If consumers of these products die earlier, they will also collect less in pension payments, including Social Security. Economists have run the numbers for smoking and often find that these savings may more than offset the budgetary costs. In other words, smokers have little net financial impact on the rest of us.
Jun 4, 2010
PS: As expected, Nullagine is also running short of alcohol supply.
Jun 3, 2010
Seems like Antanas Mockus won't be Colombia's next president after all... But there is still a chance as the contest will go to a second round in June.
Mockus is the mathematician and philosopher who, with no political experience, ran for mayor of Bogotá as the city was choked with violence, lawless traffic, corruption, and gangs of street children who mugged and stole. He focused on changing hearts and minds - not through preaching but through artistically creative strategies that employed the power of individual and community disapproval. And man was he successful!
In his struggle against corruption, he closed down the transit police because many of those 2,000 members were notoriously bribable. Initially, he hired 20 professional mimes to to control traffic in Bogotá's chaotic and dangerous streets. They shadowed and mocked pedestrians who didn't follow crossing rules and poked fun at reckless drivers. The program was so popular that another 400 people were trained as mimes. He also decided to paint stars on the spots where pedestrians (1,500 of them) had been killed in traffic accidents. Traffic fatalities dropped by more than half, from an average of 1,300 per year to about 600.
As Bogotá women were afraid to go out at night, he launched a "Night for Women" and asked the city's men to stay home in the evening and care for the children; 700,000 women went out on the first of three nights. . "At that time, we were also looking for what would be the best image of a safe city, and I realized that if you see streets with many women you feel safer".
When there was a water shortage, Mockus appeared on TV programs taking a shower and turning off the water as he soaped, asking his fellow citizens to do the same. Water use is now 40% less than before the shortage.
He also asked people to pay 10% extra in voluntary taxes. To the surprise of many, 63,000 people voluntarily paid the extra taxes. In 2002, the city collected more than three times the revenues it had garnered in 1990.
Another Mockus inspiration was to ask people to call his office if they found a kind and honest taxi driver; 150 people called and the mayor organized a meeting with all those good taxi drivers, who advised him about how to improve the behavior of mean taxi drivers. The good taxi drivers were named "Knights of the Zebra."
Read his full profile here. ht: freakonomics
Jun 2, 2010
Jun 1, 2010
The figure shows the distribution of missing exports to Israel. From non-Muslim countries, missing trade appears as noise, beautifully distributed around zero. But when looking at Muslim countries, which ban trade with Israel, missing exports seem uniformly distributed at positive values. As I blogged a while ago, there are good reasons to believe the $50 million missing exports from Malaysia to Israel are actually smuggled out of Malaysia.
May 31, 2010
May 30, 2010
Whilst there is no suggestion that the Governor was aware of, or involved in, any alleged corruption by the note printing company or its agents, it is certainly not a good look to be associated with a deal in which it is alleged that bribery of foreign government officials took place.
In addition to the case of the Indonesian currency printing contract, there is evidence that bribery was also involved in trying to win a Chinese government contract. Incredibly, the Australian government is blocking the RBA Governor from appearing before the parliamentary committee responsible for economic matters to explain his level of knowledge of the dodgy practices......