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161. Enhancing Resilience in a Chaotic World: The Role of Infrastructure

Author:
Carlo Secchi and Alessandro Gili
Publication Date:
06-2023
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
Global infrastructure is at a crossroads. Sustainability and climate-resilience imperatives, new geopolitical headwinds, technology and connectivity issues, as well as the ongoing reconfiguration of global value chains, all call for a rethink in how infrastructure is designed, built and maintained. Leading world economic powers are envisaging new infrastructure plans that could fit in new trade and industrial strategies, with the ultimate goal to increase sustainability, economic competitiveness and resilience. Meanwhile, the use of digital technologies entails new risks for the security of critical infrastructure. How are global value chains changing, and how does this affect infrastructure? How could more resilient infrastructure transform economies? How to enhance the quality and sustainability of new and existing infrastructure? And how to safeguard security in critical infrastructure?
Topic:
Climate Change, Infrastructure, Economy, Sustainability, and Resilience
Political Geography:
Global Focus

162. Section 232 reloaded: the false promise of the transatlantic ‘climate club’ for steel and aluminium

Author:
David Kleimann
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
In using the removal of Section 232 ‘national security’ tariffs on steel and aluminium imports as a bargaining chip, the United States demands that the European Union engage in negotiations on “global steel and aluminium arrangements to restore market-oriented conditions and address carbon intensity”. The US demand has reportedly been inspired by a blueprint that would establish an international institutional arrangement – labelled a ‘climate club’ – which would externalise market-access restrictions afforded by US Section 232 tariffs to the customs borders of club members. While the declared objective is to incentivise non-members to adopt low-carbon steel (and aluminium) production methods the US blueprint suffers from various design flaws including inefficient incentives, WTO inconsistency and incompatibility with the EU Carbon Border Adjustment Mechanism. The effectiveness of the proposed US scheme is severely compromised by the plethora of policy objectives it pursues, which go far beyond the goal of incentivising industrial decarbonisation in third countries, including secondary (ie protectionism) and tertiary (ie global power competition with China) objectives. The initial negotiation proposal submitted by the United States Trade Representative (USTR) to European Commission trade negotiators incorporates many if not all the problematic elements of this blueprint, setting the US on a collision course with the negotiation proposal put forward by the European Commission. This paper concludes that the adoption of the scheme proposed by USTR would result in a step backwards for international climate and trade cooperation, whereas not adopting the EU proposal would make for a missed opportunity. Given the sharply diverging negotiation positions and associated respective domestic constraints on both sides, however, policymakers should start to engage stakeholders now to manage expectations towards a low-ambition negotiation result, if any.
Topic:
Security, Climate Change, Industrial Policy, Governance, European Union, Economy, Trade Policy, and Transatlantic Relations
Political Geography:
Global Focus

163. A new measure of aggregate trade restrictions: cyclical drivers and macro effects

Author:
Julia Estefania-Flores, Davide Furceri, Swarnali A. Hannan, Jonathan Ostry, and Andrew K. Rose
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
This paper presents a new measure of aggregate trade restrictions (MATR) using data from the International Monetary Fund’s Annual Report on Exchange Arrangements and Exchange Restrictions. MATR is strongly correlated with existing measures of trade restrictiveness but is more comprehensive in terms of country and time coverage. It is available for an unbalanced sample of up to 157 countries during 1949-2019. We use MATR to re-examine how trade restrictiveness varies with the business cycle, and how the macroeconomy looks in the aftermath of changes in trade restrictiveness. For the sample as a whole, MATR is typically a-cyclical but this average finding is heterogeneous across income groups: aggregate trade restrictions are a-cyclical in advanced economies but are counter-cyclical in emerging market and developing economies, especially in response to increases in unemployment. As to macroeconomic effects, increases in MATR are robustly associated with declines in GDP and in labour productivity (as well as being adverse for a range of other macroeconomic indicators).
Topic:
Industrial Policy, Economy, Multilateralism, and Trade Policy
Political Geography:
Global Focus

164. Global trends in countries‘ perceptions of the Belt and Road Initiative

Author:
Alicia Garcia-Herrero and Robin Schindowski
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Drawing on global media reports, we conduct a sentiment analysis of the image of China’s Belt and Road Initiative (BRI) and the evolution of its image over time. Our main finding is that perceptions of the initiative deteriorated significantly in many geographies from 2017 to 2022. The notable exception is in sub-Saharan Africa where the BRI’s image remains positive, even if slightly less so than in the past. This is notwithstanding increases in debt levels with China, much of which now face potential restructuring. Furthermore, we find significant inter- and intra-regional differences in the average sentiment towards China’s landmark project, as well as a much worse image of the initiative in countries which, until today, are not part of the BRI. Finally, we focus on the European Union, Africa and China’s immediate neighbourhood to better understand the complexities behind the perceived benefits and challenges associated with China’s Belt and Road Initiative.
Topic:
Bilateral Relations, European Union, Geopolitics, Economy, and Trade
Political Geography:
China, Europe, and Asia

165. The hidden inequalities of digitalisation in the post-pandemic context

Author:
Cristiano Cadagnone and Maria Savona
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Digitalisation has a ‘hidden’ impact on employment, particularly on the invisible conditions of some jobs, as perceived by workers, that are relatively less explored in the literature and that could represent a substantial social cost, particularly in the aftermath of the financial crisis and the COVID-19 pandemic. We start by summarising a few main challenges of digitalisation, with a focus on the additional challenges brought about by the pandemic, the rise of platforms and alternative work arrangements, and the current attempts to regulate these. We then discuss the hidden aspects of inequality linked to the unmeasured side effects of digitalisation. Mental health in particular should be taken into account, particularly in the post-pandemic context, which has led to a significant amount of working from home. Also, the reduction of tasks previously done in the workplace in favour of remote working might limit social interactions, creativity and innovation potential. We conclude by suggesting areas for policy interventions.
Topic:
Labor Issues, Economy, Automation, and COVID-19
Political Geography:
Europe and Global Focus

166. The Economic Effects of the English Parliamentary Enclosures

Author:
Leander Heldring, James A. Robinson, and Sebastian Vollmer
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
In 1808, the English agriculturist Arthur Young stumbled on something interesting. He noticed that the adjacent Cambridgeshire parishes of Childersley and Hardwicke in England had startlingly different economic outcomes, even though they were divided only by a hedgerow. In Hardwicke, wheat yields were 16 bushels per acre, whereas in Childersley, on the other side of the hedgerow, they were 24 bushels per acre—50 percent higher. What could explain the difference? It wasn’t economic fundamentals, because Childersley consisted of similar soil. Rather, Young attributed the difference to the fact that the land in Hardwicke remained in “common field” while the land in Childersley was enclosed.
Topic:
Agriculture, History, Economy, Enclosure, and Parliament
Political Geography:
Europe and England

167. Disease Mix and How Economic Freedom Matters for Health Outcomes

Author:
Vincent Geloso, Kelly Hyde, and Ilia Murtazashvili
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
We investigate the institutional foundations of public health. We argue that a key distinction in analysis of disease is between diseases of commerce (diseases associated with movement of people and with affluence) and diseases of poverty (primarily noncommunicable diseases that depend on wealth and income). We show that the mix of disease – the ratio of communicable diseases and those associated with longevity to diseases of poverty – increases in economically free countries. We argue that increasing burdens of diseases of commerce reflects the quality of institutions, as those diseases are better than living shorter, brutish lives where diseases of poverty claim many lives. This analysis also highlights an institutional trade‐​off: economically free institutions reduce certain types of disease while contributing to others.
Topic:
Health, Infectious Diseases, Economy, Institutions, and Public Health
Political Geography:
Global Focus

168. Balance of Trade, Balance of Power: How the Trade Deficit Reflects U.S. Influence in the World

Author:
Daniel Griswold and Andreas Freytag
Publication Date:
04-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The U.S. trade deficit is a misunderstood symbol of U.S. economic strength and influence in the world. The deficit is not driven by unfair trade abroad or industrial weakness at home and, as the Trump years show, cannot be “fixed” through higher tariffs. Instead, the trade deficit is driven by a persistent net inflow of foreign capital, which reduces interest rates and fuels economic output. Contrary to myth, the trade deficit is not a cause of deindustrialization or a loss of manufacturing jobs. In fact, the current balance of trade points to America’s continuing influence in global affairs—as a haven for global investment, as a robust producer and buyer of global goods and services, and as the provider of a strong dollar that remains at the center of the global economy. Policymakers should reject measures that restrict trade and foreign investment and instead seek to expand America’s commercial ties to the rest of the world.
Topic:
Foreign Policy, Economy, Trade, and Trade Deficit
Political Geography:
North America and United States of America

169. Course Correction: Charting a More Effective Approach to U.S.-China Trade

Author:
Clark Packard and Scott Lincicome
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Over the past several years the U.S.-China economic relationship has soured and become subordinated to broader concerns about national security and geopolitics. After a decades‐​long reform agenda in China that lifted hundreds of millions out of grinding poverty, Chinese president Xi Jinping has increasingly turned inward—reembracing Maoist socialism and heavy‐​handed central planning. Washington’s response to these worrisome developments has been reflexively hawkish economically, scattershot, and woefully inadequate for the economic challenge that China presents.
Topic:
National Security, Bilateral Relations, Economy, and Trade
Political Geography:
China, Asia, North America, and United States of America

170. The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire

Author:
Adam Brzezinski, Yao Chen, Felix Ward, and Nuno Palma
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The Columbian voyage of 1492 marked the beginning of three centuries in which vast amounts of monetary silver were shipped from America to Spain. During that time, Spain’s money supply was subjected to the vagaries of the sea. Maritime disasters that resulted in the loss of silver‐​laden ships gave rise to random contractions in the amount of money that arrived in Spain. We studied these maritime disasters to obtain estimates of the causal effects of changes in the money supply on economic output and prices.
Topic:
Imperialism, History, Economy, and Maritime
Political Geography:
Europe and Spain