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52. Promoting diaspora investment in fragile settings: The case of Somalia
- Author:
- Guido Lanfranchi
- Publication Date:
- 08-2023
- Content Type:
- Policy Brief
- Institution:
- Clingendael Netherlands Institute of International Relations
- Abstract:
- This policy brief analyses the extent to which diaspora investment can support economic development and livelihoods, with a particular focus on fragile settings. Using the case study of Somalia, the brief explores some of the main advantages and risks associated with this tool. On the one hand, diaspora investment can channel finance into productive activities in the diaspora’s country of origin, supporting the creation of revenue streams, while also generating returns for diaspora investors. On the other hand, particularly in fragile settings, these investments can also undermine social cohesion and even increase the likelihood of violent conflict, especially if they are channelled along identity lines. On the basis of this analysis, the brief offers the following recommendations to donor governments interested in promoting diaspora investment in Somalia and beyond: (i) to ensure effectiveness, donors should gather comprehensive, in-depth data on the needs and preferences of both potential investors in the diaspora and investees in the country of origin; (ii) to avoid exacerbating tensions and conflict, donors should be as inclusive and transparent as possible in their engagement with stakeholders, most notably in the selection of beneficiaries; (iii) any efforts to promote diaspora investment in fragile settings should be grounded in a thorough understanding of the specific context in which they are implemented, in order to understand both the economic and political implications of such investment.
- Topic:
- Economics, Politics, Diaspora, Investment, and Fragility
- Political Geography:
- Africa and Somalia
53. Strengthening Regional Value Chain between India and South Korea: Emerging Opportunities for Trade and Investment Cooperation
- Author:
- Durairaj Kumarasamy
- Publication Date:
- 03-2023
- Content Type:
- Working Paper
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- The changing dynamics of supply chains and their impact on shaping international relations in East Asia have become crucial issues for scholars and policymakers. Asia’s two major economies, India and South Korea, are reassessing their strategy on the changing dynamics of the supply chain. India is to redesign its developmental strategy to establish India-centric supply chains in key industries. India has stressed its endeavour to become a self-reliant economy by introducing a highly ambitious Production-Linked Incentive (PLI) scheme to attract FDI in strengthening and establishing the supply chain linkages in India, whereas South Korea has adopted a strategy to mitigate supply chain-related risk through greater emphasis on developing strong self-reliance and promoting economic diversification by enhancing its economic ties with India. In addition, the pandemic-induced supply chain disruptions further reinforced South Korea toward diversification and resilience of its supply chain. South Korea’s development experience and deep investment relations with India can explore the untapped potential of bilateral trade and investment linkages. To ensure supply chain resilience both India and South Korea focus on critical sectors such as semi-conductors, steels, secondary batteries and chemicals, along with new technology areas like AI, 6G, Digital Infrastructure and renewable energy for cooperation. In this regard, the study explores the trade and investment relationship between India and South Korea and identifies the potential sectors to engage in the sustainable value chain between them.
- Topic:
- Investment, Trade, Economic Cooperation, Supply Chains, and Value Chains
- Political Geography:
- South Asia, India, Asia, and South Korea
54. How Indonesia Used Chinese Industrial Investments to Turn Nickel into the New Gold
- Author:
- Angela Tritto
- Publication Date:
- 04-2023
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. With a generous multiyear grant from the Ford Foundation, Carnegie has launched an innovative body of research on Chinese engagement strategies in seven regions of the world—Africa, Central Asia, Latin America, the Middle East and North Africa, the Pacific, South Asia, and Southeast Asia. Through a mix of research and strategic convening, this project explores these complex dynamics, including the ways Chinese firms are adapting to local labor laws in Latin America, Chinese banks and funds are exploring traditional Islamic financial and credit products in Southeast Asia and the Middle East, and Chinese actors are helping local workers upgrade their skills in Central Asia. These adaptive Chinese strategies that accommodate and work within local realities are mostly ignored by Western policymakers in particular. Ultimately, the project aims to significantly broaden understanding and debate about China’s role in the world and to generate innovative policy ideas. These could enable local players to better channel Chinese energies to support their societies and economies; provide lessons for Western engagement around the world, especially in developing countries; help China’s own policy community learn from the diversity of Chinese experience; and potentially reduce frictions.
- Topic:
- Development, Industrial Policy, Belt and Road Initiative (BRI), Investment, and Innovation
- Political Geography:
- China, Indonesia, and Asia
55. China’s Response to Türkiye’s Volatile Authoritarianism
- Author:
- Ceren Ergenç and Kenan Göçer
- Publication Date:
- 05-2023
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- This paper investigates Türkiye’s evolving relations with China’s Belt and Road Initiative (BRI), a large-scale program of infrastructure investment and project financing proposed by Chinese President Xi Jinping in 2013. The paper digs deeply into cases from two sectors—transportation and energy—focusing on how heightened and changing local expectations among Turks for these prospective BRI projects have shaped choices and outcomes, including China’s. In so doing, it explores how these shifting Turkish perceptions affect the implementation of BRI projects in Türkiye. This paper has several goals: it seeks to understand the reasons behind these local changes, the role of the state and private sector in Türkiye in these changes, and the way China has responded so far. Of course, domestic factors are not the only ones that shape the implementation of BRI projects in Türkiye or elsewhere; regional and global trends have had an impact too.
- Topic:
- Foreign Policy, Infrastructure, Authoritarianism, Belt and Road Initiative (BRI), and Investment
- Political Geography:
- China, Turkey, Middle East, and Asia
56. Multilateral development banks are key to unlocking low-carbon investments in developing economies
- Author:
- Steven Fries
- Publication Date:
- 04-2023
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- Over the next three decades, emerging markets and developing economies (EMDEs), and especially middle-income countries, are projected to account for much of the growth in global economic activity and energy use. While a decisive move to low-carbon technologies and energy efficiency would advance both their development goals and a stable climate, the countries have yet to fully tap this opportunity. The multilateral development banks (MDBs) are in a unique position to help lower barriers to low-carbon investments in EMDEs and unlock these sustainable development opportunities. Their differentiating governance, financial and technical capabilities, and financing instruments would enable MDBs to support the necessary business environment and energy reforms and to cofinance low-carbon and energy efficiency investments alongside other investors to reduce and manage risks.
- Topic:
- Development, Economy, Multilateralism, Investment, and Carbon Emissions
- Political Geography:
- Global Focus
57. Energy investment in a time of inflation
- Author:
- Charles Lichfield and Joseph Webster
- Publication Date:
- 01-2023
- Content Type:
- Policy Brief
- Institution:
- Atlantic Council
- Abstract:
- High rates of inflation across the world are forcing central banks to reluctantly tighten monetary policy despite accompanying recession risks. Moreover, restricted credit access could jeopardize energy investments, particularly for capital-intensive clean energy projects, potentially rendering the world more vulnerable energy to price shocks, which are a significant contributor to the current crisis. This paper briefly considers the macroeconomic drivers of inflation in late 2022, including Russia’s war in Ukraine and uncertainties around energy supply, supply-chain resets, and lingering COVID-19 disruptions, before examining the persistent energy underinvestment of the past decade and how this has left markets exposed to varying degrees. As such, this paper also considers how private capital can accelerate cleaner energy adoption, suited to different markets’ unique conditions and needs. Borrowing costs will rise, but this doesn’t have to bring the transition to a standstill. With the Great Moderation of low volatility, interest rates, and inflation perhaps a relic of the past, assets offering inflation protection, such as infrastructure, may become increasingly attractive to investors. There is a fear that global inflation will sharply curtail energy investment into emerging markets. The fear is justified. Higher interest rates in developed markets mean higher rates of return which will lure emerging markets investors back to the US and Europe. Still, it’s not all bad news for emerging markets. Quasi-state actors like Pension and Sovereign Welfare funds are interested in very long term, high-yield projects—two criteria to which emerging market energy infrastructure correspond. Disruptions to interest rates and inflation, triggered in part by energy underinvestment, will cause disparate impacts in different markets. Inflation is not, perhaps, everywhere and always a monetary phenomenon. Energy investment faltered from 2014 to 2020, despite low interest rates. Meanwhile, aggregate supply shocks—first due to COVID, then from Putin’s invasion of Ukraine—have pressured energy production and prices, raising inflation and necessitating interest rate hikes. The consequences of persistent energy underinvestment are now becoming apparent. The need for new energy infrastructure cannot be met without private investment. This was the case when inflation was lower; it is even more important now.
- Topic:
- Environment, Markets, Oil, Governance, Gas, Economy, Investment, Inflation, and Energy
- Political Geography:
- Global Focus
58. Buy Before You Build: A Decision Framework for Purchasing Commercial Space Services
- Author:
- Peter Cunniffe, Megan Lewis, and Bryan Clark
- Publication Date:
- 10-2023
- Content Type:
- Special Report
- Institution:
- Hudson Institute
- Abstract:
- A recent wave of private investment in space creates new opportunities for government agencies to benefit from commercial innovation. Leaders of national security space acquisition organizations regularly express their intention to first buy commercial space capabilities and build government space systems only when they must.1 However, achieving greater use of commercial space services requires overcoming barriers that have thus far prevented the government from fully benefiting from private sector funding and creativity. This report assesses the increasingly wide range of commercial space services available to government agencies, identifies obstacles hindering greater use by the US government, and makes recommendations for overcoming them.2 While the report focuses on the US government use of commercial space services, its analysis and recommendations are relevant for governments of other space-faring nations.
- Topic:
- Defense Policy, National Security, Space, and Investment
- Political Geography:
- North America and United States of America
59. Opening the Global Gateway: Why the EU should invest more in the southern neighbourhood
- Author:
- Alberto Rizzi and Arturo Varvelli
- Publication Date:
- 03-2023
- Content Type:
- Policy Brief
- Institution:
- European Council on Foreign Relations (ECFR)
- Abstract:
- The southern neighbourhood should be a key focus for the EU’s Global Gateway infrastructure programme – but the bloc has so far directed relatively little of its investment to the region. Strategic goals for the EU in the Mediterranean include promoting ‘nearshoring’ to shorten key supply chains including of energy; and improving regional connectivity, decarbonising economic activity, and creating jobs. The EU can propose more attractive investment offers than China and other players. The Global Gateway’s use of grants rather than loans is central to this. Going beyond investments, the EU should promote inclusive growth by sharing technical know-how and supporting training to enhance the skills of workforces in the region. Protecting physical connections is of great importance. The EU should work hand in hand with southern neighbours to monitor Global Gateway-funded infrastructure.
- Topic:
- Security, Infrastructure, European Union, and Investment
- Political Geography:
- Turkey, Middle East, and North Africa
60. Made in Europe: An EU Green Industrial Plan to respond to the challenge of US and Chinese protectionism
- Author:
- Alekos Kritikos and George Pagoulatos
- Publication Date:
- 01-2023
- Content Type:
- Working Paper
- Institution:
- Hellenic Foundation for European and Foreign Policy (ELIAMEP)
- Abstract:
- The EU needs to urgently formulate a response to US and Chinese protectionism. US decarbonization legislation poses a threat of deindustrialization for Europe. Europe needs a plan to support EU green, industrial and technological competitiveness, while protecting European cohesion and the single market, and promoting European strategic autonomy. Relaxing EU state aid rules must be an inevitable first component of Europe’s response. But this would overwhelmingly benefit the stronger economies of Germany and France, undermining EU cohesion and the integrity of the single market. Thus, the second component of EU response must be a European Sovereignty Fund, of a size commensurate to the magnitude of the challenge. The new Fund must support value chain categories that include as many EU member states as possible. SURE, extended to encompass the energy crisis and green transition, should be an integral part of the mix, and so should promoting technological skills and reskilling for the “Clean Tech Economy”. Investment funding should seek to contribute to vertical integration, including as many stages in the supply chain as possible. It should contribute to the return of specific supply chains and production units from third countries to the EU and seek to include the EU’s weakest economies. Subsidies should rise if the investment is cross-border in nature and carry a bonus if made in an EU region with a low GDP per capita compared to the EU average. Funding could also promote European strategic autonomy by including cross-border partnerships of EU member states in the defence technology industry. It should involve new funding rather than simply recycling money from existing programmes, and certainly avoid deploying undisbursed resources from the Recovery & Resilience Fund.
- Topic:
- European Union, Investment, Industry, Protectionism, and Strategic Autonomy
- Political Geography:
- China, Europe, and United States of America