The Dangerous Inadequacies of the World’s Crisis-Response Mechanisms

The Dangerous Inadequacies of the World’s Crisis-Response Mechanisms. Brookings Institution. Adam Triggs. May 4, 2018

 The paper war-games crisis scenarios based on past crises to test the adequacy of the global financial safety net: the international institutions and arrangements designated to help economies facing an economic or financial crisis. It calculates the size of the safety net in aggregate terms and from the perspective of each G-20 economy. It explores whether the safety net is large enough, how the different components of the safety net would need to interact during a crisis and how this differs for different countries and regions. For some widespread shocks, the paper finds that the safety net struggles to provide even the same level of support as it has in the past. Even for smaller shocks, multiple components of the safety net need to be coordinated, a process complicated by the differing objectives, mandates and interdependencies of each component. The paper shows how the safety net’s coverage has become patchier, leaving many emerging market and developing economies exposed. It explores what the G-20 could do to strengthen the safety net, reporting the results from in-depth interviews with 61 leaders, central bank governors, ministers and officials from across the G-20, including Janet Yellen, Kevin Rudd, Ben Bernanke, Haruhiko Kuroda, Jack Lew, Mark Carney and 55 others. [Note: contains copyrighted material].

 [PDF format, 47 pages].

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Making America First in the Digital Economy: The Case for Engaging Europe

Making America First in the Digital Economy: The Case for Engaging Europe. Atlantic Council.  Frances Burwell. May 8, 2018

 In an age of transatlantic tensions over the Iran deal, trade balances, and steel tariffs, digital policy is uniquely poised to offer opportunities for greater US-EU cooperation. At the same time, the digital arena also has the potential to be a policy minefield, with issues such as privacy, digital taxation, and competition policy still unresolved. Making America First in the Digital Economy: The Case for Engaging Europe addresses these challenges and explores how the US-EU digital agenda fits in the larger transatlantic relationship. [Note: contains copyrighted material].

 [PDF format, 24 pages].

What’s Happening to the World Income Distribution? The Elephant Chart Revisited

What’s Happening to the World Income Distribution? The Elephant Chart Revisited. Brookings Institution. Homi Kharas and Brina Seidel. April 2, 2018

 In 2013, Christoph Lakner and Branko Milanovic published a graph—quickly dubbed the “elephant chart”—that depicts changes in income distribution across the world between 1988 and 2008. The chart has been used to support numerous reports of rising inequality fueled by increased globalization. Every time a populist movement rises, every time the elite gather in Davos, every time Oxfam publishes a new report on inequality, the elephant chart resurfaces. [Note: contains copyrighted material].

 [PDF format, 34 pages].

Getting Out from “In-Between”: Perspectives on the Regional Order in Post-Soviet Europe and Eurasia

Getting Out from “In-Between”: Perspectives on the Regional Order in Post-Soviet Europe and Eurasia. RAND Corporation. Samuel Charap et al. March 8, 2018.

 Russia’s relations with the West are in deep turmoil. While the competitive dynamic between Russia and the West has come to a head in Ukraine, all of the “in-between” states — Ukraine, Belarus, Moldova, Georgia, Armenia, and Azerbaijan — are objects of a contest among outside powers. This contest has become a negative-sum game, benefiting none of the parties: The West and Russia now find themselves locked into a dangerous and damaging competition, while the states in the region remain to varying degrees unstable, unreformed, and rife with conflict. Both Russian and Western policy toward these states has seemingly reached a dead end. Continuing with the status quo will likely perpetuate instability, poor governance, and a long-term Cold War-like atmosphere in West-Russia relations. However, without a credible alternative to the status quo, both the West and Russia seem doomed to continue it. The RAND Corporation convened a working group composed of experts and former policy practitioners from the United States, the European Union, Russia and the in-between states to consider proposals to foster cooperation, reduce tensions, and increase stability. The papers collected here outline these findings and recommendations. [Note: contains copyrighted material].

 [PDF format, 72 pages].

Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share

Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share. Brookings Institution. David Autor and Anna Salomons. March 8, 2018

 Is automation a labor-displacing force? This possibility is both an age-old concern and at the heart of a new theoretical literature considering how labor immiseration may result from a wave of “brilliant machines,” which is in part motivated by declining labor shares in many developed countries. Comprehensive evidence on this labor-displacing channel is at present limited. Harnessing a model from Acemoglu and Restrepo (2018), the authors first outline the various channels through which automation impacts labor’s share of output. They then turn to empirically estimating the employment and labor share impacts of productivity growth—an omnibus measure of technological change—using data on 28 industries for 18 OECD countries since 1970. Their main findings are that although automation has not been employment-displacing, it has reduced labor’s share in value added. They disentangle the channels through which these impacts come about by considering both the effects occurring within the advancing industry and spillovers onto the industry’s suppliers and customers, and by separately estimating the wage, output, and price responses to automation. Their estimates highlight that the labor share-displacing effects of productivity growth, which were absent in the 1970s, have become more pronounced over time, largely because of a weakening wage response. This finding is consistent with automation having become less labor-augmenting over time. [Note: contains copyrighted material].

 [PDF format, 75 pages].

What Is the U.S. Trade and Development Agency?

What Is the U.S. Trade and Development Agency? Center for Strategic & International Studies. Daniel F. Runde et al. January 30, 2018

 The U.S. Trade and Development Agency (USTDA) is a small independent federal agency whose mission is to help American “companies create U.S. jobs through the export of U.S. goods and services for priority development projects in emerging economies.” USTDA links American businesses to export opportunities in emerging markets by funding activities such as project preparation and partnership building in sectors including transportation, energy, and telecommunications. Since it was established 25 years ago, the agency has generated a total of $61 billion in U.S. exports and supported over 500,000 American jobs. In connecting American business to such opportunities, USTDA also links American technology’s best practices and ingenuity with U.S. trade and development policy priorities.

 USTDA is an instrument to enable American-led infrastructure development in emerging economies and, therefore, frequently sees increasing competition from government-backed Chinese firms and the challenge they can pose to American commercial engagement under the flag of One Belt, One Road (OBOR). OBOR is paving the way for Chinese engineering, procurement, and construction companies to prepare and develop infrastructure projects in OBOR countries in a way that favors Chinese standards, thereby exerting significant pressure to select Chinese suppliers. This creates a potentially vicious cycle—the more China builds, the faster their standards become the international norm, and, ultimately, this cycle could foreclose export opportunities for U.S. businesses and harm American competitiveness in global infrastructure development. U.S. exporters are increasingly requesting USTDA intervention at the pivotal, early stages of a project’s development, to compete in markets, such as the OBOR countries, where they frequently face Chinese competition. Of note, 40 percent of USTDA’s activities in 2016 were in OBOR countries across South and Southeast Asia, Central Asia, the Middle East, and Africa.

 Although there are other agencies that may seem to do work similar to USTDA, there are various aspects that make it a unique agency. This paper provides a brief description of USTDA, its origin and evolution, the impact on the U.S. economy and its proactive collaboration across U.S agencies. Finally, it offers a set of recommendations for USTDA on how to improve its operations and strengthen its role in the developing world. [Note: contains copyrighted material].

 [PDF format, 9 pages].

Tax and Development: New Frontiers of Research and Action

Tax and Development: New Frontiers of Research and Action. Center for Global Development. Maya Forstater. February 8, 2018.

 This paper looks at estimates of the potential gains from taxing across borders, alongside largely domestic measures such as property tax, personal income tax, VAT, and tobacco taxes. It finds that while action on cross-border taxation could yield additional tax take in the region of one percent of GDP, in many countries measures targeting the domestic tax base might deliver something in the region of nine percent. The main enabler is political commitment. [Note: contains copyrighted material].

 [PDF format, 51 pages].