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1731. Transportation and Communication Infrastructure in Latin America: Lessons from Asia

Author:
Barbara Kotschwar
Publication Date:
04-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In Latin America, inadequate transportation infrastructure has been identified as an increasingly important impediment to the region's further integration in global trade and a significant factor preventing countries from properly taking advantage of the multitude of regional, plurilateral, and bilateral trade agreements signed in the past decade and a half. This paper examines transport and communications infrastructure initiatives in Latin American and Asian regional trade arrangements and finds several lessons Asia can teach Latin America.
Topic:
Development, Economics, International Trade and Finance, Communications, and Infrastructure
Political Geography:
Asia and Latin America

1732. Global Imbalances and Foreign Asset Expansion by Developing Economy Central Banks

Author:
Joseph E. Gagnon
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Over the past 10 years, central banks and governments throughout the developing world have accumulated foreign exchange reserves and other official assets at an unprecedented rate. This paper shows that this official asset accumulation has driven a substantial portion of the recent large global current account imbalances. These net official capital flows have become large relative to the size of the industrial economies, and they are a significant factor contributing to the weakness of the economic recovery in the major industrial economies.
Topic:
Development, Economics, Emerging Markets, Globalization, Markets, Monetary Policy, and Financial Crisis

1733. Spillover Effects of Exchange Rates: A Study of the Renminbi

Author:
Arvind Subramanian, Aaditya Mattoo, and Prachi Mishra
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper estimates the impact of China's exchange rate changes on exports of competitor countries in third markets, known as the "spillover effect." Recent theory is used to develop an identification strategy in which competition between China and its developing country competitors in specific products and destinations plays a key role. The variation is used—afforded by disaggregated trade data—across exporters, importers, product, and time to estimate this spillover effect. The results show robust evidence of a statistically and quantitatively significant spillover effect. Estimates suggest that, on average, a 10 percent appreciation of China's real exchange rate boosts a developing country's exports of a typical 4-digit Harmonized System (HS) product category to third markets by about 1.5 to 2 percent. The magnitude of the spillover effect varies systematically with product characteristics as implied by theory.
Topic:
Development, Economics, and Markets
Political Geography:
China

1734. Chinese Investment in Latin American Resources: The Good, the Bad, and the Ugly

Author:
Theodore H. Moran, Julia Muir, and Barbara Kotschwar
Publication Date:
02-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
China's need for vast amounts of minerals to sustain its high economic growth rate has led Chinese investors to acquire stakes in natural resource companies, extend loans to mining and petroleum investors, and write long-term procurement contracts for oil and minerals in Africa, Latin America, Australia, Canada, and other resource-rich regions. These efforts to procure raw materials might be exacerbating the problems of strong demand; "locking up" natural resource supplies, gaining preferential access to available output, and extending control over the world's extractive industries. But Chinese investment need not have a zero-sum effect if Chinese procurement arrangements expand, diversify, and make more competitive the global supplier system. Previous Peterson Institute research (see Moran 2010) and new research undertaken in this paper, show that the majority of Chinese investments and procurement arrangements serve to help diversify and make more competitive the portion of the world natural resource base located in Latin America. For a more comprehensive analysis, the authors conduct a structured comparison of four Peruvian mines with foreign ownership: two Organization for Economic Cooperation and Development-based, and two Chinese. They examine what conditions or policy measures are most effective in inducing Chinese investors to adopt international industry standards and best-practices, and which are not. They distill from this case study some lessons for other countries in Latin America, Africa, and elsewhere that intend to use Chinese investment to develop their extractive sectors: first, that financial markets bring accountability; second, that the host country regulatory environment makes a significant difference; and third, that foreign investment is a catalyst for change.
Topic:
Economics, International Trade and Finance, and Natural Resources
Political Geography:
China, Canada, Latin America, and Australia

1735. To Stay Ahead of China, Stay Engaged in Asia

Author:
Michael Beckley
Publication Date:
01-2012
Content Type:
Policy Brief
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
Despite the hype about the rise of China, current power trends favor continued U.S. dominance. National power has three main material components: wealth, innovation, and military power. Over the last twenty years, China has fallen further behind the United States in all of these areas.
Topic:
Security, Defense Policy, Economics, International Trade and Finance, and Bilateral Relations
Political Geography:
United States, China, and Asia

1736. Liquidity in times of crisis: Even the ESM needs it

Author:
Daniel Gros and Thomas Mayer
Publication Date:
03-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
This paper argues that the new permanent European rescue fund, the European Stability Mechanism (ESM), should be provided with a liquidity backstop by having it registered as a bank – and be treated as such by the European Central Bank. If the crisis were to become acute again, the ESM would stand ready to intervene in secondary markets, potentially with almost unlimited amounts of funding. Access to central bank financing will be crucial in a future crisis, because in such a crisis risk aversion is likely to be extreme, and even the ESM might not be able to raise at very short notice the huge sums that might be required to prevent a breakdown of the financial system. Hundreds of billions of euro might be needed just to top up the programmes for Greece, Ireland and Portugal – and Spain and Italy may require more than a thousand billion euro. Sums of this order of magnitude cannot be raised quickly by a new institution. Simply increasing the headline size of the ESM might thus be of little use.
Topic:
Debt, Economics, Monetary Policy, and Financial Crisis
Political Geography:
Greece, Spain, Italy, Portugal, and Ireland

1737. Renewables and the EU Internal Electricity Market: The case for an arranged marriage

Author:
Jonas Teusch
Publication Date:
03-2012
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
This Policy Brief argues that pursuing the renewables objective could contribute to the completion of the internal electricity market, help to overcome opposition to transmission projects and decrease the market power of incumbents. Conversely, an integrated internal electricity market means less price volatility in specific regional markets, which allows for more efficient deployment and grid integration of renewables.
Topic:
Economics, Energy Policy, and Markets
Political Geography:
Europe

1738. Europeanization in Turkey. Stretching a Concept to its Limits?

Author:
Tanja A. Börzel and Digdem Soyaltin
Publication Date:
02-2012
Content Type:
Working Paper
Institution:
The Kolleg-Forschergruppe (KFG)
Abstract:
Research on Europeanization and domestic change has moved south-eastwards and was provided with another real-world experiment when it has meet with Turkey. This paper explores to what extent Europeanization approaches travel to Turkey, which does have a membership perspective that looks, however, ever less credible. The first part outlines the main findings of research on 'External Europeanization' focusing on factors that have limited or at least qualified the domestic impact of the EU in the Central and Eastern European (CEE) and Western Balkan (WB) accession countries. The paper, then, discusses to what extent Europeanization approaches need further qualification when applied to Turkey, which squares on democracy with the Western Balkans (with the exception of Croatia), but whose statehood is less limited. We argue that existing Europeanization approaches, largely, account for the overall moderate degree of Europeanization in Turkey. Yet, selective and differential domestic changes are mostly related to the extent to which EU conditionality helps domestic actors gain or hold political power and push their own political agenda. The paper concludes by summarizing the major implications Turkey's accession to the EU has for Europeanization approaches and discussing why Turkey is not a case sui generis.
Topic:
Democratization, Economics, and Politics
Political Geography:
Europe, Turkey, and Balkans

1739. Maritime Transport and Destabilizing Commodity Flows

Author:
Hugh Griffiths and Michael Jenks
Publication Date:
01-2012
Content Type:
Working Paper
Institution:
Stockholm International Peace Research Institute
Abstract:
Maritime transport dominates international trade in licit and illicit goods. It accounts for the majority of seizures and suspect shipments of military equipment and dual-use goods (goods that have both civilian and potential military applications, including in the development of weapons of mass destruction and missiles) originating from or destined for embargoed states such as Iran and North Korea. It is the primary means of delivering shipments of conventional arms to actors involved in conflicts in c. Sea transport plays a major role in global flows of narcotics and associated chemical precursors. It is also the main mode of transport for other illicit and potentially destabilizing commodities, such as smuggled tobacco, oil and counterfeit goods.
Topic:
Security, Economics, International Trade and Finance, Communications, Maritime Commerce, and Infrastructure
Political Geography:
Africa and North Korea

1740. Socio-Psychological Motives of Socially Responsible Investors

Author:
Julia M. Puaschunder
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
Weatherhead Center for International Affairs, Harvard University
Abstract:
The 2008/09 World Financial Crisis underlined the importance of social responsibility for the sustainable functioning of economic markets. Heralding an age of novel heterodox economic thinking, the call for integrating social facets into mainstream economic models has reached unprecedented momentum. Financial Social Responsibility bridges the finance world with society in socially conscientious investments. Socially Responsible Investment (SRI) integrates corporate social responsibility in investment choices. In the aftermath of the 2008/09 World Financial Crisis, SRI is an idea whose time has come. Socially conscientious asset allocation styles add to expected yield and volatility of securities social, environmental and institutional considerations. In screenings, shareholder advocacy, community investing, social venture capital funding and political divestiture, socially conscientious investors hone their interest to align financial profit maximization strategies with social concerns. In a long history of classic finance theory having blacked out moral and ethical considerations of investment decision making, our knowledge of socio-economic motives for SRI is limited. Apart from economic profitability calculus and strategic leadership advantages, this article sheds light on socio-psychological motives underlying SRI. Altruism, need for innovation and entrepreneurial zest alongside utility derived from social status enhancement prospects and transparency may steer investors' social conscientiousness. Self-enhancement and social expression of future-oriented SRI options may supplement profit maximization goals. Theoretically introducing potential SRI motives serves as a first step towards an empirical validation of Financial Social Responsibility to improve the interplay of financial markets and the real economy. The pursuit of crisis-robust and sustainable financial markets through strengthened Financial Social Responsibility targets at creating lasting societal value for this generation and the following.
Topic:
Economics, International Trade and Finance, Markets, Sociology, and Financial Crisis