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1. Development and Metric Validity of “Escala De Fricção Logística (EFL)” for Assessment of Military Boarder Organizations’ Supply

Author:
Tassio Franchi, Angela Nogueira Neves, Luis Fernando Tavares Ferreira, and Eduardo Xavier Ferreira Glaser Migon
Publication Date:
09-2024
Content Type:
Journal Article
Journal:
AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:
Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:
This article aimed to create and conduct a metric evaluation - with the establishment of evidence of construct validity and internal reliability – the Escala da Fricção Logística (EFL), adjusted for the Amazonian environment. Methodologically, the research is divided into two studies; the first, focused on the creation of the instrument, which followed already consolidated recommendations for measurement scales by theory. A second, in which the metric evaluation of the theoretical structure foreseen for the EFL is carried out. The items were evaluated through confirmatory factor analysis, with extraction by partial least squares, in order to generate evidence of construct validity and internal reliability. For this analysis, the EFL was answered by 110 military personnel who served in border organizations. The results indicated that the scale with 16 items divided into three factors - individual, environment and equipment - is valid and reliable to assess the logistical friction in the Amazon frontier region. An instrument is available that can be useful to generate data for the improvement of public policies in the areas of Defense and Transport.
Topic:
Border Control, Borders, Supply, Military, and Evaluation
Political Geography:
Brazil and Amazon Basin

2. Was Something Structurally Wrong at the FOMC?

Author:
Alan S. Blinder
Publication Date:
10-2024
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
There is little doubt that the Federal Reserve was late to start raising interest rates as inflation rose in 2021–22. The Federal Open Market Committee (FOMC) made a substantial, though perhaps understandable, error in failing to raise interest rates until March 2022. Much of that policy error can be attributed to faulty forecasts of inflation, which the Federal Reserve shared with many other forecasters. It was not an outlier. But the error was not quite as consequential as the Fed’s sharpest critics allege. Even if the FOMC had started to hike rates earlier, the econometric evidence suggests that the effects on peak inflation would likely have been small. Supply constraints, not excess demand, ruled the roost. They came, driving inflation higher; and then they went, pulling inflation down. Blinder says that the FOMC’s August 2020 framework shoulders more of the blame for the inflationary surge than it should—probably because the new wording revised both of the Fed’s goals, low inflation and high employment, in dovish directions. For that reason alone, the framework will almost certainly be changed in 2025, given the high inflation since. But how? Blinder suggests that the August 2020 change in the employment goal, from symmetry to “shortfalls,” is sensible and probably not too important anyway. But the change in the inflation goal, from a 2 percent point target to flexible average inflation targeting (FAIT), was probably consequential. It may have made the FOMC slow on the draw as inflation gathered steam, and it may have kept monetary policy too tight for too long in 2024. In both directions, Blinder argues, a 1.5 to 2.5 percent target range would be a better choice. To answer the question in the title of this Policy Brief, that may be the structural flaw the Fed should fix.
Topic:
Economics, Monetary Policy, Federal Reserve, Interest Rates, and Supply
Political Geography:
North America and United States of America

3. Economic impacts of electricity supply shortages in South Africa

Author:
Hiroaki Suenaga
Publication Date:
12-2024
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This study examines the sectoral impacts of electricity supply shortages in South Africa, using the cost share information available from the 2015 social accounting matrix. A simulation conducted under each of two technological assumptions, Cobb-Douglas and Leontief, reveals that a productivity decline in the electricity, gas, steam, and hot water supply (EGSH) sector increases the price of the EGSH sector substantially, while it affects the other sectors marginally due to the small cost shares of the EGSH factor in these sectors. The total cost of supplying the baseline final demand increases by ZAR19 billion or 0.46% of the baseline gross value added (GVA) when EGSH productivity declines by 10%. This cost impact expands to ZAR150 billion or 3.57% of GVA when EGSH productivity is halved. Large shares of these cost increments are incurred by the EGSH and manufacturing sectors, owning to the direct physical impact of productivity decline for the former and a large share of its sectoral GVA in the aggregate economy for the latter. The simulation also indicates that the equilibrium wage should increase by a greater extent for workers with a lower education than for those with a higher education if the baseline final demands are to be met at the higher EGSH output price after the sector’s productivity decline
Topic:
Economy, Manufacturing, Electricity, Supply, and Productivity
Political Geography:
Africa and South Africa

4. What Mode of Supply Will Matter the Most for the Future of Services Trade?

Author:
Lucian Cernat
Publication Date:
09-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This Policy Brief looks at the latest trends in services trade and tries to show their importance, in its various manifestations, for virtually all countries in the world. The paper starts with a short history of trade in services across centuries. Fast forward to today’s realities, the paper uses the most comprehensive datasets documenting the latest trends in global trade in services by modes of supply, trying to fill a gap in trade policy analysis and providing new insights on the importance of different modes of supply for various countries. The paper concludes with some recommendations aimed at creating a bridge between the various policy priorities shaping the future of globalisation in coming years.
Topic:
Globalization, Services, Trade, and Supply
Political Geography:
Global Focus

5. Enhancing small state preparedness: Risks of foreign ownership, supply disruptions and technological dependencies

Author:
Mikael Mattlin, Shaun Breslin, Elina Sinkkonen, Liisa Kauppila, and Annika Björkdahl
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
The post-Cold War liberalist view, according to which interdependences supported a virtuous cycle of mutual gains, has given way to a realist-tinged view that regards economic interdependence as a cause of insecurity and an element in conflicts. In this new environment of increasing great power competition and technological decoupling, all states are not created equal. Major states such as the United States and China can be system shapers, whereas small states tend to be system takers. Unlike smaller states, they have a greater ability to use their investment leverage, supply chain dominance and control of core technologies. For smaller states with open economies, such as Finland and Sweden, these capabilities of major powers create vulnerabilities in the form of security risks of foreign ownership, supply disruptions and critical technological dependencies. The report explores how small states can mitigate such risks. A series of innovative Delphi backcasting exercises in Finland and Sweden brought together 113 sectoral experts and generalists to ponder ways to prevent dystopian scenarios from unfolding. The target years of the scenarios extended from 2027 to 2035, encouraging ideas on both short- and longer-term solutions. Instead of aiming for a consensus of expert views, the process sought to produce a variety of effective means and measures that a small state could choose to adopt. The exercise consisted of nine scenarios, presented as comic art. The narratives on the risks of foreign ownership focused on 1) acquisitions of gaming companies gathering personal data, 2) transfers of real estate ownership in Lapland and 3) venture capital investments in emerging technology start-ups. The scenarios on supply disruptions dealt with 4) discriminatory practices limiting access to antibiotics, 5) political retaliation limiting access to water treatment components and 6) sanctions on wind power materials, components and minerals. As for high technology dependencies, the cases included 7) the maintenance of military technology, 8) the cybersecurity of health technology and 9) the supply of chemicals for research and development activities. According to the report, small states have the least leeway in navigating the risk environments created by technological dependencies, whereas the toolkits to tackle the potential dangers of foreign ownership and supply disruptions are more extensive. Although different issues and insecurities require different bespoke solutions, all the risk categories call for active mitigation efforts. Most of the suggested Finnish and Swedish expert solutions can be clustered into three alternative approaches: protectionist/interventionist, liberal and technologically oriented. Protectionist/interventionist solutions would expand the state’s powers in controlling, guiding and limiting economic activities. Key suggestions included: covering acquisitions and greenfield investments in national foreign direct investment screening screening real estate acquisitions with a wide range of countries of origin imposing country-specific limitations to real estate acquisitions screening venture capital investments in emerging technologies initiating a national security act to limit foreign control rapidly imposing country- and company-specific limitations to bids in critical industries increasing tariffs supporting domestic or EU-level production through subsidies and industrial policy friendshoring the production of critical goods expanding the scope of supply stockpiling in pharmaceuticals and water treatment components The more liberal approach towards national preparedness would focus on solving the challenges primarily through carrots instead of sticks – to avoid limiting entrepreneurial freedoms and interfering with the dynamics of the capitalist market economy. The proposed solutions included: initiating value debates to guide individuals’ choices when accepting investments formulating a national innovation strategy to boost domestic companies’ operating conditions in emerging technology fields teaching “technology literacy” to guide the use of foreign-owned products engaging all stakeholders in making decisions on foreign ownership diversifying the sources of critical goods such as antibiotics enhancing awareness of risks and making “plan Bs” in supply chain management deepening the EU’s single market to offer genuine scalability opportunities for start-ups The third, more technologically oriented approach would rely on new innovations or technical solutions to enhance small state preparedness. Key ideas included: innovating new medicines to replace antibiotics prioritising non-conventional technologies such as small modular reactors (SMRs) enhancing domestic capacity to produce key components with 3D printing researching alternative materials to replace critical chemicals developing the recycling, recovery and transportation of critical chemicals adopting geofencing and coding solutions to enhance cybersecurity designating emerging technologies as focus areas in higher education increasing the adaptability of technical solutions through standardisation These three approaches prioritise different key solutions for enhancing small state preparedness. However, they represent generic policy preferences rather than ready-made policy recommendations. Ideally, states can formulate their own pick-and-mix toolkit by combining elements from the different approaches. The complementary nature of some of the expert views was also suggested by the fact that many – even most – respondents argued for diversification as a solution to various challenges. For example, and regardless of the chosen strategy, tendering rules could be improved by placing quality over price, taking geopolitical risks into account and allowing multiple winners in contrast to the currently dominant winner-takes-it-all logic, which leads to overly concentrated supply chains. Moreover, at least minor legislative tightenings were widely proposed to be made on foreign ownership – especially with regard to that of nationals of authoritarian states. These changes were, however, typically proposed to be complemented with such balancing acts as long-term leases and incentives to develop and acquire domestic products and companies. Ultimately, by highlighting alternative approaches to small state preparedness, this report seeks to encourage democratic discussion on a broader political choice: what type of state and economy do we want in the future? It is not only their identity that guides what states do; adopted policies and means also shape state identities over time.
Topic:
Security, Science and Technology, Supply, and Geoeconomics
Political Geography:
China, Finland, Asia, Sweden, and United States of America

6. De-risking and decarbonising: a green tech partnership to reduce reliance on China

Author:
Alicia Garcia-Herrero, Heather Grabbe, and Axel Källenius
Publication Date:
10-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Trade in renewable energy goods is a global public good; all countries gain when others cut emissions, and all suffer from climate change if decarbonisation is delayed. Yet this trade depends on China, which controls most of the world’s production of solar panels and electric vehicle batteries, and some of the global trade in wind turbines. These supply chains are vulnerable to disruption, natural disasters and weaponisation by China, which has already exercised its dominant position in some critical raw materials to put pressure on other countries. Part of the European Union and United States response to reduce reliance on China is reshoring production, but this is economically inefficient given their limited access to critical raw materials and high production costs. Moreover, Chinese firms are far ahead of the rest of the world in green tech manufacturing and innovation, and in extraction and processing. To reduce reliance on China, incentive-aligned governments and businesses should form a green tech partnership. This would produce green tech with the aim of decarbonising faster, while ensuring greater diversification of resources and improving security of supply. Each partnership economy would use its comparative advantage within a new green-tech supply chain. The aim is to supplement, not substitute, the Chinese supply chain, since both will be needed to meet rising global demand for green tech, including in China. Although such international coordination is difficult, the partnership would offers benefits to many different countries. Emerging economies that are rich in critical raw materials and/or have moderate wages would gain economic development opportunities. The US and the EU should share technology and provide financing, as they will gain from reduced dependence on China and from sourcing than is still cheaper than reshoring. China would have more room to use its clean tech to meet its own decarbonisation targets. The partnership could be organised through a combination of trade and investment agreements, together with tech transfer and financial agreements, under some form of inter-governmental oversight. The dependence of all countries on China for green tech is so great that non-market incentives might also be needed, such as subsidies or, preferably, a system of carbon pricing within the partnership.
Topic:
Partnerships, Green Technology, Risk, Renewable Energy, Supply, and Decarbonization
Political Geography:
China, Europe, and Asia

7. Recent Marriage and Labor Supply Pattern of Young Chinese Women

Author:
Yoon Jae Ro and Jeonghwan Yun
Publication Date:
09-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
In this paper, we examine the impact of a sibling gender on educational attainment, earnings, family formation for a recent cohort of women in China. Family characteristics such as number of siblings, sibling gender composition, and parents’ characteristics may play an important role in children’s life as the presence of a sibling can affect parents’ treatment of the remaining children. Especially male siblings can affect children’s outcome through various pathways as male sibling may pull parental investment of resources away from girls, because boys may be seen as the “higher return” investment (Becker, 1991). We investigate the effect of having a (male) sibling on a daughter by exploiting the change in fertility trend in China induced by the One Child Policy (OCP).
Topic:
Economics, Labor Issues, Women, Marriage, Supply, and Gender
Political Geography:
China and Asia

8. How COVID-19 medical supply shortages led to extraordinary trade and industrial policy

Author:
Chad P. Bown
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Early in the COVID-19 pandemic, a global shortage of hospital gowns, gloves, surgical masks, and respirators caused policymakers around the world to panic. This paper examines international trade in this personal protective equipment (PPE) during the crisis, with a focus on China, the European Union, and the United States. As the pandemic first hit, China increased imports and decreased exports of PPE, removing considerable quantities of supplies from global markets. For the European Union and United States, the decrease in their imports from China was not immediately replaced by increased trade from other foreign suppliers. Early shortages led to EU and US export controls on their own, domestically produced PPE and other extraordinary policy actions, including a US effort to reserve for itself supplies manufactured in China by a US-headquartered multinational. By April 2020 China’s exports had mostly resumed, and over the rest of the year its export volumes of some products surged, more than doubling compared to pre-pandemic levels. But China’s export prices also skyrocketed and remained elevated through 2020, reflecting severe and continued shortages. This paper documents these facts. It also explores these and other government actions, such as US trade war tariffs and the emergence of US industrial policy in the form of over $1 billion of subsidies to build out its domestic PPE supply chain, as well as potential lessons for future pandemic preparedness and international policy cooperation.
Topic:
Industrial Policy, Economy, Trade, COVID-19, Health Crisis, and Supply
Political Geography:
Global Focus

9. Wages, Skills, and Skill-Biased Technical Change: The Canonical Model Revisited

Author:
Audra J. Bowlus, Lance Lochner, Chris Robinson, and Edna Suleymanoglu
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
The canonical supply–demand model of the wage returns to skill has been extremely influential; however, it has faced several important challenges. Several studies show that the standard approach sometimes produces theoretically wrong-signed elasticities of substitution, yields counterintuitive paths for skill-biased technical change (SBTC), and does not account for the observed deviations in college premia for younger vs. older workers. This paper shows that these failings can be explained by mis-measurement of relative skill prices and supplies (based on standard demographic composition-adjustments) and by inadequate ad hoc functional form assumptions about the path for SBTC. Improved estimates of skill prices and supplies that account for variation in skill across cohorts within narrowly defined groups help explain the observed deviation in the college premium for younger vs. older workers, even with perfect substitutability across age. Re-estimating the model with these prices and supplies produces a good fit with better out-of-sample prediction and robustly yields positive elasticities of substitution between high and low skill workers. The estimates suggest greater substitutability across skill and a more modest role for SBTC. We implement two new approaches to modelling SBTC. First, we study the extent to which recessions induce jumps or trend-adjustments in skill bias and find evidence that both features are important (but differ across recessions). Second, we link SBTC to direct measures of information technology investment expenditures and show that these measures explain the evolution of skill bias quite well. Together, these approaches suggest that the ad hoc assumptions for SBTC previously employed in the literature are too crude to fit the data well, leading to the incorrect conclusion that SBTC slowed during the early-1990s and under-estimates of the elasticity of substitution between high and low skill workers.
Topic:
Economics, Human Capital, Supply, Skills, and Wages
Political Geography:
Global Focus

10. Demand and Supply Shocks of COVID-19 and International Production Networks: Evidence from Japan’s Machinery Trade

Author:
Mitsuyo Ando
Publication Date:
03-2021
Content Type:
Research Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper investigated the impacts of COVID-19 on international production networks in machinery sectors by shedding light on negative supply shocks, negative demand shocks, and positive demand shocks. Specifically, we examined changes in trade in the periods of falling trade during the first wave of COVID-19 using Japan’s machinery trade at the most disaggregated level and decomposed them into two intensive margins, i.e. the quantity effect and the price effect, and two extensive margins, i.e. the entry effect and the exit effect. Our empirical results demonstrated that i) trade relationships for parts and components are robust, and international production networks are almost intact, so far; ii) the intensive margin, mostly the negative quantity effect, induces the largest negative effects in the transport equipment sector amongst four machinery sectors; iii) positive demand shocks for specific products that are related to teleworking, disinfection, and stay-home activities partially explain sectoral differences; iv) direct negative supply shocks from China, suggested by a negative quantity effect and a positive price effect, exist in February 2020, with possible indirect negative supply shocks and substitution of source countries; and v) negative demand shocks are confirmed from negative quantity and price effects in many cases. As of October 2020, Japan’s machinery trade seems to have largely recovered. If the COVID-19 pandemic lasts long, however, prolonged negative demand shocks would hurt production networks in East Asia.
Topic:
Demand, Manufacturing, Economic Development, Pandemic, Industry, COVID-19, and Supply
Political Geography:
Japan and Asia