Arent we to blame for it all ?? Salman Nathani-M00611168-Dubai Campus

The world has seen rapid growth and development over the last few centuries and the people have different cultures and nationalities have come together and started interacting with each other using different media. Businesses around the world are now not limited to a single state or a country but operate from several countries in order to make larger revenues and profits due to globalization (Kuepper, 2017).

Technology has brought about a situation where people are now closer than ever but still far from each other. It’s an era where some people are so poor that they cannot even feed their families and at the same time, there are people who do not even have time to think about the destitute.

Welcome to the age of Globalization, where one man’s fortune is another man’s misfortune, where some people sleep hungry while others waste food; some live in lavish villas while others sleep on the footpaths; some have the best jobs without adequate qualifications while some highly qualified professionals still remain unemployed and inequality is a routine activity.

The global economy is a boon or a bane, still remains a question unanswered. The growth and development across the countries has created huge differences between the people (S, 2017). The developed economies stay at the top of the table with maximum wealth and highest standards of living while the developing countries are struggling to prove that they are second to none and are good enough to compete with developed countries. But the global debate is about the issues facing the people and not the countries which are usually represented by the governments or the businessmen.

Everyone forgets about the underprivileged economies of some African, Asian or South American countries as the debate and competition between the developed and developing economies doesn’t come to a halt. The economies grow but the people suffer. Some call themselves rich but have poor hearts to have the least of sympathy for the weaker sections of the society.

The world is going through a phase where the limited resources of the planet are under the immense pressure from the population that is growing at a fast pace (Prb.org, 2017). The poverty percentages are high for many countries, despite the technological advancements, which claim that people now have better standards of living than ever before. Some countries have developed at the cost of other countries by exploiting their resources (Rinat, 2013), not only the natural resources but the most important ones – the Human Resources. Racism and inequality have become activities which one can see in almost all the domains.

The increasing population pressure on our available resources in increasing the unemployment and crime rates in several countries across the world (Pettinger, 2016). All these issues are important but the most important issue that must be addresses at the earliest is Poverty as it leads to not just poor health of the people but also promotes crimes and inequality in various parts of the world.

 

Bibliography

  1. Kuepper, J. (2017). Globalization and Its Impact on Economic Growth. [online] The Balance. Available at: https://www.thebalance.com/globalization-and-its-impact-on-economic-growth-1978843
  2. Pettinger, T. (2016). Examples of economic problems | Economics Help. [online] Economicshelp.org. Available at: http://www.economicshelp.org/blog/15276/economics/examples-of-economic-problems/
  3. org. (2017). Human Population: Population Growth. [online] Available at: http://www.prb.org/Publications/Lesson-Plans/HumanPopulation/PopulationGrowth.aspx
  4. Rinat, Z. (2013). Food for thought: How rich countries exploit the resources of poorer ones – and get away with it. [online] haaretz.com. Available at: http://www.haaretz.com/world-news/1.546450
  5. S, S. (2017). Difference between Developed Countries and Developing Countries (with Comparison Chart) – Key Differences. [online] Key Differences. Available at: http://keydifferences.com/difference-between-developed-countries-and-developing-countries.html
Advertisements

When the problem needs help solving itself, Poverty. Salman Nathani-M00611168-Dubai Campus

Poverty can be defined as a state in which people do not have adequate resources to take care of their basic needs like food, shelter and healthcare (Merriam-webster.com, 2017). Poverty in an economy reflects the inability of the economy to cater to the basic needs of the people and there are several factors that are responsible for it. The increasing difference between the rich and the poor, political instability and discrimination and inequality are some of the factors that lead to poverty (The Borgen Project, 2017). The ever increasing population makes the conditions worse (Conserve Energy Future, 2017).

There are several countries around the world that try to address the issue of poverty by defining a certain level of income, below which the people can be called poor, and they call it the poverty level of income. The people earning lower than this amount are said to be living below the poverty line while those earning more than this level are said to living above the poverty line. But, by living just above the poverty line, people cannot meet the important needs of their families like healthcare, higher education and personal growth. If a member of the family falls sick, even the people living just above the poverty line struggle to survive as it becomes difficult for them to decide whether to provide adequate healthcare and medical attention to one member of the family or to feed the other members of the family (Who.int, 2017).

The governments of a few countries have taken certain measures to support the people living below the poverty line or just above it by providing them with resources at subsidized prices. Some countries provide the people with nutritious food at very low prices so that nobody sleeps hungry but these measures have failed in many economies due to corruption and poor strategic planning. The governments also try to generate jobs for the people and promote primary and secondary education for children to control the situation in the future but poverty is one issue that needs the attention of the authorities today as it is the reason for most of the crimes that we observe today.

Dealing with poverty is not just the responsibility of the government. Every person should contribute his bit to the economy by supporting the underprivileged classes, for example, sponsoring the education of some children from the less privileged families, donating medicines or clothes. Poverty is a problem that has been created by the people of different sections of the society and therefore, it is the responsibility of the people to deal with this issue.

Generation of job opportunities and providing quality education to the children can help them become self-sufficient in the future. The governments of the countries need to make effective plans and strategies to fight the situation and then implement these plans in order to improve the standards of living of those living below the poverty line and Sustainable Development can help the cause (Ilo.org, 2017).

 

 

 

 

 

 

 

Bibliography

  1. Conserve Energy Future. (2017). Overpopulation: Causes, Effects and Solutions – Conserve Energy Future. [online] Available at: http://www.conserve-energy-future.com/causes-effects-solutions-of-overpopulation.php
  2. org. (2017). Poverty. [online] Available at: http://www.ilo.org/global/topics/poverty/lang–en/index.htm
  3. Merriam-webster.com. (2017). Definition of POVERTY. [online] Available at: https://www.merriam-webster.com/dictionary/poverty
  4. The Borgen Project. (2017). What are the Causes of Poverty? – The Borgen Project. [online] Available at: https://borgenproject.org/what-causes-global-poverty/
  5. Who.int. (2017). WHO | Poverty. [online] Available at: http://who.int/topics/poverty/en/

Technology is not just progress, its a limit. Salman Nathani-M00611168-Dubai Campus

A few decades ago, most of the people across the globe were not aware about the technologies but today, technology has reached a stage where people cannot ignore it. The people have not only started using the latest technology but have also become dependent on them (Ramey, 2012). They can now interact with each other even when they are sitting thousands of miles away from each other. The businesses can operate with ease as the market research process has become simple as all the information about the different markets and countries are available in a matter of minutes (Parker, 2015).

If a businessman living in London wants to expand his business to New York, he doesn’t have to visit the country to research about the political, economic, social, environmental, cultural or technological factors. He can simply use the internet to search for the information or directly contact some sitting in New York to get the relevant information. The world has become a small place, thanks to technology, but has it become a little too small?

The governments and other authorities can now track people at will and that is a big safety concern (Police Technology, 2017). Technological advancements aren’t always useful and can be misused by certain people. The human beings are not criminals that need to be tracked and the technological advancements have created a negative effect on the society and the trust of people on certain authorities is now deteriorating. It is important that the technology is used in the right manner and only to support mankind, not to interfere with their personal lives or to threaten their personal security (Shameem, 2016). Surveillance should be limited to the situations that are serious and threatening and not for general purpose or activities.

The people have become so heavily dependent on technology that they cannot live without their televisions or smart phones. Internet has become a necessity and even children have started using social media platforms like Facebook or Twitter. Technology has become an addiction and people can be found wasting their time on their smartphones or the laptops (Walton, 2017).

The result is not just negative for the individuals but also for the society and the economy. These activities make the employees in the organizations less productive as they find it difficult to concentrate on their work. If such an environment prevails in the important federal government jobs and duties, the society and the countries might be at a huge risk.

Some people are more interested in making friends online as they can hide their identities and talk whatever they feel like as there is hardly any probability of meeting those people. This kind of an environment has a negative effect on the health of people as they slowly move away from the real society and enter an area where everything is fake, even the identities of people. Technological advancements are therefore important, but must be controlled so that they do not have a negative impact on the society and its people.

 

Bibliography

  1. Parker, C. (2015). [online] Available at: https://www.linkedin.com/pulse/advancement-new-technology-positive-negative-colette-parker
  2. Police Technology. (2017). The Positive and Negative effects of Technology in Law Enforcement. [online] Available at: https://policetechnology.wordpress.com/the-postive-and-negative-effects-of-technology-in-law-enforcement/
  3. Ramey, K. (2012). Technological Advancements and Their Effects on Humanity – Use of Technology. [online] Use of Technology. Available at: https://www.useoftechnology.com/technological-advancements-effects-humanity/
  4. Shameem (2016). Technology Advancement And Its Effect On The Current Lifestyle. [online] Techclickr. Available at: http://www.techclickr.com/technology-advancement-and-its-effect-on-the-current-lifestyle
  5. Walton, A. (2017). Forbes Welcome. [online] Forbes.com. Available at: https://www.forbes.com/sites/alicegwalton/2017/06/30/a-run-down-of-social-medias-effects-on-our-mental-health/

What to do with Unemployment – Salman Nathani(M00611168)- Dubai Campus

The global world has seen several major issues like poverty and inequality but the reason for this is unemployment. A person commits a crime when he does not have enough resources and fails to take care of the needs of his family. How can an unemployed person take care of his daily needs, by committing crime, by killing people or by theft? Unemployment is the major cause of poverty and is defined as a situation in which a person does not have a paying job that helps him support his daily needs like food and healthcare (Boundless, 2017). The probability of an unemployed person committing a crime is far higher than the probability of an employed person committing a crime.

The major factors that lead to unemployment are increasing population, specialized jobs and technological advancements (Economicsonline.co.uk, 2017). The increasing population not just burdens the limited resources available with the human beings but also leads to unemployment. Just like the natural resources on this planet, the jobs are limited and with an increasing population, those jobs will not increase.

This means that some part of the population will remain unemployed in case the job requirements do not match the population level. The governments and the people should be aware about the situation and promote adequate population control measures like family planning.

Some people remain unemployed due to technological advancements (Reddy, 2017). With the improvements in technology, people and organizations have started depending on machines as they can complete the jobs with higher accuracy and at a much faster rate. This means that the work that was earlier being done by the human beings is now being done by the machines. People are required to run the machines, but overall number of jobs still decreases, leading to loss of jobs in certain sectors like manufacturing and banking and financial services.

Some technical jobs require highly skilled employees and the number of such employees is limited (Amadeo, 2017). There are also cases where people do not get the jobs as per their qualifications and prefer to stay unemployed as compared to doing survival jobs, contributing to unemployment.

The governments should take adequate measures to keep the unemployment rate under control and should try to create maximum jobs (Addington, 2017). There are always opportunities for people to grow and a person who starts from the bottom level and grow with the help of his efforts and reach a higher designation or job level in the future. The unemployment rates across the world can be addressed with the support of the governments and non-profit organizations.

Nothing is impossible and if the people are determined enough to remove an issue from the society and the economy, they will definitely succeed and create a better society in the future that is happy and self-sufficient.

There are several global political economic issues that the societies are facing today and every person, from every religion, caste, income group or country should make his contribution to make this world a better place for living, a place where everyone is happy and nobody sleeps hungry, a place where no child dies because his family could not afford healthcare and a place where no qualified person remains jobless because there are no jobs in the market.

 

Bibliography

  1. Addington, D. (2017). Government’s Proper Role in Creating Jobs: Top Five Actions to Take. [online] The Heritage Foundation. Available at: http://www.heritage.org/jobs-and-labor/report/governments-proper-role-creating-jobs-top-five-actions-take
  2. Amadeo, K. (2017). 9 Types of Unemployment: Which Is the Worst?. [online] The Balance. Available at: https://www.thebalance.com/types-of-unemployment-3305522
  3. (2017). Defining Unemployment. [online] Available at: https://www.boundless.com/economics/textbooks/boundless-economics-textbook/unemployment-22/introduction-to-unemployment-102/defining-unemployment-388-12485/
  4. co.uk. (2017). Unemployment types. [online] Available at: http://www.economicsonline.co.uk/Managing_the_economy/Unemployment_types_and_causes.html
  5. Reddy, C. (2017). What is Unemployment? Its Main Causes, Effects and Solutions – WiseStep. [online] WiseStep. Available at: https://content.wisestep.com/unemployment-causes-effects-solutions

At the origin of the 2007-2008 crisis

Almost 10 years after the crisis I think it is important to remember the causes of it in order not to repeat the same mistakes.

The globalisation of financial market began in the early 19th century and quickly some fundamental questions rose up such as the vulnerability of this globalisation to crises or the policies that must be took by governments. Because globalisation means that various financial actors are connected in different countries, this connection creates a sort of dependance.

As communication technologies became more and more sophisticated and powerful it increased this globalisation permiting financial flows to cross the entire world almost instentaneously. With these technologies banks and investors trade with the world beyond national borders exchanging large amount of secured data. This context saw a new type of financial product created : the derivate instruments, these products take into account the risk of a loan, so it allows banks, borrowers, investor, lenders, speculators, etc to play on the inequal repartition of informations. Idealy, in a totaly globalized markets the prices should be the same everywhere, it is not depending on the location, but financial markets aren’t truly global. If someone in China don’t know the risk of your product you can sell him a higher price than its real price for example. Consequently this system is based on trust.

We can say that the globalisation of financial markets is a new playground for financial actors seeking for profit, that is why it needs to be regulated.

After the Great Depression of the 1930’s the US government took mesures in order to prevent from another crisis, banks are prohibited from using the money of their customers to invest. Follows a 40 years period of gross without any crisis.

 

Reasons-of-Global-Economic-Crisis-of-2008-–-2010

 

Gradually some bankers and economists having a position in the government will start to deregulate the financial market: the 1934 law prohibiting investments is repeal, attempts to regulate the new derivates product are blocked.

Using this favorable context and the globalized financial markets a Ponzi pyramide is set up with the securitization. The lender provide a loan to home buyer materialized by a financial security, the lender sells this security to investments bank which aggregate various securities to create a CDO, the bank sells this CDO at investors allover the world.

Problems:

  • CDO is a way to hide dodgy securities
  • CDOs are rated based on their repayment capacity by notation agencies, this agencies are payed by the bank, the better the rate is the more they earn
  • Due to high rates subprimes (dodgy securities) are interesting for banks
  • All these things encourage the financial actors to take higher risks
  • Leverage: Banks borrow to buy CDOs

 

Another process to increase even more these profits is to take out insurance at the AIG, an institution which pay the investor at the amount of its losses if the CDO goes wrong. Investment banks such as Goldman Sachs, Lehman Brothers, etc used this to take out an insurance against there own CDOs, knowing that they were full of dodgy securities.

Even if the crisis started in the US the impact on the rest of the world was significant because of the globalisation, the american investments banks couldn’t have played alone, CDOs travelled abroad and european banks used the same mechanism to make profit. The non-regulation of the financial market was generalized and governments of different countries didn’t do anything. The IMF warned of the danger but due to the power of the lobbyists nobody listened.

The day Lehman Brothers was declared in bankruptcy banks around the world became suspicious about others and the financial markets seems to stop. One by one banks of different countries went bankrupt squeezed by the weight of their huge debts and possessing CDOs that is worth nothing. And then you know what happened …

– Théo Quint

Sources:

– Inside Job, Charles Ferguson, 2010

– Economist.com. (2017). [online] Available at: https://www.economist.com/news/schoolsbrief/21584534-effects-financial-crisis-are-still-being-felt-five-years-article [Accessed 17 Jul. 2017].

– Globalissues.org. (2017). Global Financial Crisis — Printer friendly version — Global Issues. [online] Available at: http://www.globalissues.org/print/article/768#Africaandthefinancialcrisis [Accessed 17 Jul. 2017].

– Bank, E. (2017). The globalisation of financial markets. [online] European Central Bank. Available at: https://www.ecb.europa.eu/press/key/date/2000/html/sp000912_2.en.html [Accessed 17 Jul. 2017].

 

To deal with the crisis in a Icelandic way

We are 8 years after the fall of Lehman Brothers. The all West is in crisis … All? No! A small island of irreducible Icelanders still resists to the finance. And life is not easy for banks and other bankers.

I think that we all eared about Iceland letting its banks fail and putting bankers in prison. Every time you read an article about Iceland recovery after the 2007 crisis it is polarized. The reason is that Iceland dealt with this crisis in an unconventional way which, depending on the arguments you keep, is in favour or against the EU policies, that is to say austerity. Some people will tell you that Iceland is the paradise on Earth, the land of justice when other will explain that the success of the country is all about luck, austerity and help from other countries. As you can imagine the reality is just between these two points of view. That is why we will divide what permitted Iceland to become one of the countries recovering the fastest and the better after the crisis in two parts: the external factors and the internal factors. And this in order to determine what is due to the action of the government and what is not.

 

icelantis

 

The crisis was a wave coming from the United-States but the sensibility of each country to this wave was linked to its own financial system. In Iceland the financial sector was deregulated in the 90’s with low-tax policy, the goal was to attract foreign investments and companies. The banks of the country – especially the tree biggest Landsbanki, Glitnir, and Kaupthing – began raising their interest rates on the loans encouraging people to borrow and making the island an international financial centre. Traders and individuals from all over the world borrowed in foreign currencies to the banks, especially in the United-Kingdom and Netherlands. In 2007 banks’ debts were worth 900% of Iceland GDP. “Iceland, in the decade and a half leading up to the crisis, was an example of collective madness”, said Willem Buiter, chief economist at Citigroup. When the crisis hit the island the consequences were disastrous. “Over 80 percent of the financial system buckled and almost all businesses on the island were bankrupted. The stock market fell by around 95 percent and interest payments on loans soared to over 300 percent. Over 60 percent of bank assets were written off within a few months after the banks collapsed and interest rates were hiked up to 18 percent in order to curb inflation rates”, according to World Finance. But Iceland managed to recover from the crisis.

Firstly the two external factors we will speak about are linked to the geographical position of the island. The Eyjafjöll volcano that paralyzed the air traffic in 2010 contributed to attract tourism by leading people to know about this particular country located on an oceanic breach. In 2010 the country welcomed 486,000 tourists for only 320,000 inhabitants. Tourism represents now almost one third of the exportations. Another external factor is an increase of mackerel in the Icelandic seas. This is linked to global warming, the Atlantic Ocean is becoming hotter and the mackerel migrated to the North. “Fishing is more important for Iceland than the car industry for Germany or the oil industry for Norway,” according to Sigurgeir Thorgeirsson, Iceland’s chief fisheries negotiator. It represents 23% of the exportations.

The other external factors are the drop of the krona and the loans from the IMF and the neighbouring countries. The IMF accorded a $2.1bn loan to Iceland in November 2008 – which is 50 times less than the one to Greece in 2010 – and the neighbouring countries $2.5. These loans helped the country to protect domestic deposits and reduce the devaluation of the krona in value. But at the same time this devaluation was helpful for the country because it regained competitiveness. Inside the country there was no difference for the people, they kept the same purchasing power but at an international level their work and production was worth less.

 

monopoly

 

Now that we have seen the external factors on which Iceland did not have the control we will focus on the internal factors, e.g. the decision making of the government. One of the first and most original action was to decide not to save the banks. Because the banks were “to big to save” Iceland decided to let the banks fail. In fact the banks were not “to big to save” in a sense that you can save the banks even if they were worth 10 times your GDP, but then you have a gigantic debt, like Ireland. The Icelandic government just chose not to impose this burden to future generations. And it is understandable. Why does a State would have to pay for the bad behaviour of private banks? So Iceland let its banks fail but at the same time guaranteed the deposits of its citizens, the ones that lost money were the foreign creditors (in majority in the United-Kingdom and the Netherland). These two countries in response asked Iceland to give back the money, the IMF and the European Commission sided with them. In the end the European Free-Trade Association decided that Iceland did not have to pay for the actions of its banks. “The ruling made it clear that the country where a banking company has its headquarters is not responsible for guaranteeing that company’s foreign liabilities” says Eva Joly, who advised Iceland Special Prosecutor in the criminal investigation after the crisis.

Then the bank CEOs, finance managers, banks’ lawyers, major shareholders and high-ranking civil servants responsible were condemned or at least put under investigation. The central bank of Iceland took the control of the banks to reform the financial sector. “After the crash, the government cleaned house in all the three banks, establishing new boards and management. Banks in Iceland are well capitalised with high equity levels and financial supervision has been strengthened immensely”, said Gudrun Johnsen, Assistant Professor of Finance at the University of Iceland, told World Finance.

However Iceland also applied austerity and budget cutting, and it is a key of its recovery. But austerity alone increases inequalities, the reason why Iceland was able to show good economical and social results at the same time is because it kept a strong welfare state. The role of these spending in social protection is to be an automatic stabiliser, as Joseph Stiglitz calls it, which permitted to sustain household demand. Benefits were redirected to lower income groups, according to Stefán Ólafsson from the University of Iceland.

As you can see on the following charts created from Eurostat’s database Iceland is performing very well. The country has the lowest unemployment and inequality rate compared to Germany, Greece, France, Italy, Sweden and the United-Kingdom.

 

graph1

 

graph2

 

The question raised is: do another country applying the same methods than Iceland would have been able to reach the same results? And the answer is obviously: no. For several reasons the case of Iceland is unique: it is a country with a small population living for the most part in a city, tourism due to the volcano and the rise of fishing is specific to the island and the country is not in the European Union. However the political courage of refusing to bail out the banks, searching for the culprits, judging them and regulating the banks must be an example for other countries.

– Théo Quint

 

Sources:

–       Toonpool.com. (2016). Icelantis By Tjeerd Royaards | Politics Cartoon | TOONPOOL. [online] Available at: http://www.toonpool.com/cartoons/Icelantis_27557 [Accessed 3 Dec. 2016].

–        Philippe Deschamps. (2016). Des Pirates à l’assaut de l’Islande. [online] Le Monde Diplomatique. Available at: http://www.monde-diplomatique.fr/2016/10/DESCAMPS/56432 [Accessed 3 Dec. 2016].

–        Philippe Deschamps. (2016). Le tourisme en Islande, une nouvelle bulle ?. [online] Le Monde diplomatique. Available at: http://www.monde-diplomatique.fr/2016/10/DESCAMPS/56431 [Accessed 3 Dec. 2016].

–        McDonald-Gibson, C. (2013). EU tackles Iceland over ‘mackerel wars’. [online] The Independent. Available at: http://www.independent.co.uk/news/world/europe/eu-tackles-iceland-over-mackerel-wars-8735538.html [Accessed 4 Dec. 2016].

–         O’Brien, M. (2016). The miraculous story of Iceland. [online] Washington Post. Available at: https://www.washingtonpost.com/news/wonk/wp/2015/06/17/the-miraculous-story-of-iceland/ [Accessed 26 Nov. 2016].

–        Lawless | AP, J. (2016). In volcanic Iceland, eruptions bring risk, and tourism boom. [online] Washington Post. Available at: https://www.washingtonpost.com/world/europe/in-volcanic-iceland-eruptions-bring-risk-and-tourism-boom/2016/11/21/42a8274c-afdc-11e6-bc2d-19b3d759cfe7_story.html?tid=hybrid_collaborative_1_na [Accessed 26 Nov. 2016].

–        Paul Krugman Blog. (1333). Screw Your Analysis to the Sticky Point. [online] Available at: http://krugman.blogs.nytimes.com/2012/04/03/screw-your-analysis-to-the-sticky-point/?_r=0 [Accessed 26 Nov. 2016].

–        Worldfinance.com. (2016). Failing banks, winning economy: the truth about Iceland’s recovery. [online] Available at: http://www.worldfinance.com/infrastructure-investment/government-policy/failing-banks-winning-economy-the-truth-about-icelands-recovery [Accessed 26 Nov. 2016].

–        Joseph Stiglitz (2009). The Global Crisis, Social Protection And Jobs. International Labour Review, Vol. 148, No. 1–2

–        Ec.europa.eu. (2016). Database – Eurostat. [online] Available at: http://ec.europa.eu/eurostat/data/database [Accessed 26 Nov. 2016].

–        Imf.org. (2011). IMF Survey: Iceland’s Unorthodox Policies Suggest Alternative Way Out of Crisis. [online] Available at: http://www.imf.org/external/pubs/ft/survey/so/2011/CAR110311A.htm [Accessed 26 Nov. 2016].

–        Cadtm.org. (2016). CADTM – Iceland refuses its accused bankers ‘Out of Court’ settlements. [online] Available at: http://www.cadtm.org/Iceland-refuses-its-accused [Accessed 26 Nov. 2016].

–        Eur-lex.europa.eu. (2016). EUR-Lex – l24012b – EN – EUR-Lex. [online] Available at: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=URISERV:l24012b [Accessed 26 Nov. 2016].

–        Imf.org. (2010). IMF Survey: Europe and IMF Agree €110 Billion Financing Plan With Greece. [online] Available at: http://www.imf.org/en/News/Articles/2015/09/28/04/53/socar050210a [Accessed 8 Dec. 2016].

 

How fair is fair trade?

Fair trade goal is to work with small farmers all around the world and provide them better purchase prices in order for them to live decently. As stated in the Fair Trade Principles, faire trade is “trading partnership, based on dialogue, transparency and respect that seeks greater equity in international trade”. The main organisation is Fairtrade Foundation; almost every fair trade good you will buy is controlled by it. The market of fair trade is important: “sales of Fairtrade products have grown to €7.3 billion (£6.3 billion) working with 1,230 producer organisations consisting of 1.6m farmers. “ says Bob Doherty in The Conversation based on the annual report of the Fairtrade Foundation.

The guarantee of a minimum price for the farmers regardless of the variation of the market allows them to have a long-term vision and access to credit services. There is also what is called a “social premium”. It is an addition given to the community of worker in order to be used for infrastructure projects such as schools for example.

 

We can think that fair trade is a little bit a marketing argument to capture the demand of the new world-conscious consumers in rich countries. However a study by the Center for Evaluation at Saarland University in Germany has show that it has a real impact on socio-economical development. For example the producers of cocoa in Ghana have seen their incomes increase in 5 years:

incomes farmer fairtrade

But incomes are not the more important thing. Some people are starving to death even if they are farmers. With Fairtrade farmers are able to improve the food security of their family throughout the year. Julio Mercado Cantillo, a banana farmer in Colombia, explains: “When we began growing bananas, it was tough. There were some days when we only had one meal. Since we joined Fairtrade, everything has changed. We now have all of our daily meals and we have also managed from the extra income from Fairtrade to buy farm animals which provides an extra source of food, and the opportunity to bring in more income by selling the animals.”

Ok so Fairtrade is much better than “normal” trade. Nevertheless we can go beyond that because the Foundation helps the farmers but the final goal must be to set these farmers on an equal footing with other producers. The vision of Fairtrade is still little bit paternalist.

Alan Schaller, journalist for The Independent, went to Ethiopia to study the Union Hand Roasted Coffee, a UK based coffee importer. The Union is not only paying the farmers a descent price it is working with them on the spot to improve biodiversity conservation and the quality of the product. In this manner the producers can sell their products at a higher price and compete with the high quality brands. “Relying on consumers to return to a coffee out of a belief in a certification stamp on a packet is not as effective as promoting a product that is highly competitive among the finest coffees being produced anywhere.” says Alan Schaller. The community of farmers advised by experts can later real world connections. The drawbacks are that this process takes years and needs a constant control by the Union. But this is what we should strive for.

– Théo Quint

 

Sources:

–       The Conversation. (2017). Food security: how Fairtrade helps level the playing field for small producers. [online] Available at: http://theconversation.com/food-security-how-fairtrade-helps-level-the-playing-field-for-small-producers-70937 [Accessed 16 Jul. 2017].

–       Fairtrade.net. (2017). [online] Available at: https://www.fairtrade.net/fileadmin/user_upload/content/2009/resources/2012_Fairtrade_Impact_Study.pdf [Accessed 17 Jul. 2017].

–       Schaller, A. (2017). The evolution Of Fairtrade: Why we need to go a step further. [online] The Independent. Available at: http://www.independent.co.uk/news/business/comment/fairtrade-movement-ethics-chocolate-coffee-a7623046.html [Accessed 16 Jul. 2017].

 

 

 

 

 

 

Is China really on the path to become the world leader of renewable energies?

At the G20 Summit in Hamburg 19 of the 20 members, excluding the United States, agreed that the Paris climate accord was irreversible and reaffirmed their commitment. With Donald Trump withdrawing from the Paris Agreement it seems that China wants to be the new leader on renewable energies and environment protection. This new role can be difficult to believe when we know the high level of air pollution in Beijing and the pollution of water in Hong Kong. Moreover China and the use are responsible for 40% of the world’s CO2 emission. In fact there are two different things to consider: the investment in renewable energies and the consciousness of environmental protection. And we will see that both are present in China nowadays.

 

The first thing to do is to stop viewing China as a retarded country about ecology because ours are not good examples either. Like conservation Dr Jane Goodall says “Is China still causing environmental destruction in Africa and Latin America? Yes. Did not European colonialism do exactly the same and aren’t many big corporations today doing exactly the same?“. And with the climatoscepticism of Donald Trump it is even worse.

China plans to invest $360 billion by 2020

Xi Jinping wants his country to invest in renewable energies because he understood that it is a new expanding market in which China can draw benefits. The time when China was the world’s factory is ending. The purchasing power of the population is rising and the coal is becoming more and more uneconomical. “Market forces favoring solar and wind power threaten to leave the United States behind, with the continued decline of coal, whereas China wants to benefit from new energy markets and plans to invest $360 billion by 2020. This would take the proportion of renewables in domestic energy to 50 percent by then.” According to Mark Robinson from Eco-Business.com.

But the government is not only thinking about the benefits of renewable sources of energy other measures are being implemented. For example Zheijang province they are restricting the number of cars in order to reduce air pollution and reduce massive queues. Protection of animal species is also taken into account like recovering the giant panda species to the point it’s no longer considered endangered and President Xi Jinping has declared its ivory trade will be shut down by the end of 2017.

Each year between 1 and 1.6 million Chinese people die early as a result of air pollution

Like I said before all these measures are going into the right direction but we must not forget that problems of air, soil and water pollution combined with excessive use of pesticides and are causing serious health issues in China. “Each year between 1 and 1.6 million Chinese people die early as a result of air pollution which is caused primarily by industrial and car emissions.” according to the University of Oslo. The study says that 40% of air pollution may be caused by household when people are cooking or heating. “In the villages we study people have been protesting against air pollution from factories in their vicinity, but they have little knowledge about the air pollution that is caused by their cooking.” says Mette Halskov Hansen. But the consciousness about environmental problems might change.

 

3038539-poster-p-1-chinas-air-pollution-solution

During winter 2013 the smog in Beijing was particularly thick which led to attract the attention of the public on the issue of air pollution. You can now even find apps allowing people to check air quality in real time.

People are more and more well informed about pollution. Thanks to the action of public protest, negative media coverage and the U.S. Embassy in Beijing the government now permits the public release of data about air, water and soil pollution. “Since the introduction of the new Environmental Protection Law in 2015, China’s courts have accepted 189 public interest environmental cases, mostly brought by environmental non-governmental organizations. The Ministry of Environmental Protection, which is responsible for implementation of the new law, has intensified local inspections of heavily-polluting industries and is now actively collecting public complaints on environmental issues.” for Mark Robinson.

00china-environment-1-superJumbo

Another unexpected source of environmental consciousness is religion. Because the Democratic Republic Of China was build on communism religions were banned. But recently president Xi Jinping encouraged the study of Chinese traditions, including religion. The goal is to compete against the influence of Western culture. The government thus tolerates the rise of religious environmentalism. In an article for The New-York Times Javier C. Hernàndez states that “Hundreds of millions of people in China have in recent years turned to religions like Taoism, Buddhism, Christianity and Islam, seeking a sense of purpose and an escape from China’s consumerist culture.” He interviewed an abbot from Mao Mountain, Mr. Yang, who is using Taoism to speak about ecology. Nothing new under the sun, Taoism and Buddhism are known to take into account the relationship between humans and nature. As one Taoist teaching says : “Humans follow the earth, the earth follows heaven, heaven follows Taoism, Taoism follows nature.” This type of thinking is different from the Western notion of saving the Earth. Religion is deeper than that, the goal is to live in harmony with nature and all living things.

 

– Théo Quint

 

Sources:

–       Phys.org. (2017). Is there a green awakening in China?. [online] Available at: https://phys.org/news/2017-05-green-awakening-china.html [Accessed 16 Jul. 2017].

–       Newshub. (2017). China now world leader in environmental protection – Jane Goodall. [online] Available at: http://www.newshub.co.nz/home/world/2017/06/china-now-world-leader-in-environmental-protection-jane-goodall.html [Accessed 16 Jul. 2017].

–       Hernández, J. (2017). China’s Religious Revival Fuels Environmental Activism. [online] Nytimes.com. Available at: https://www.nytimes.com/2017/07/12/world/asia/mao-mountain-china-religion-environment.html [Accessed 16 Jul. 2017].

–       Eco-Business. (2017). Will China and India lead on global climate action and environmental protection?. [online] Available at: http://www.eco-business.com/opinion/will-china-and-india-lead-on-global-climate-action-and-environmental-protection/ [Accessed 16 Jul. 2017].

 

Economic Impact of Terrorism

Economic impact of terrorism is decreasing. The cost of terrorism has reached 89.6 billion dollars in 2015, it decreased by 15 percent from 2014. It as well reflects the overall decline in the number of people killed by terrorism. Still, the 2015 economic impact of terrorism was still at the second highest level since 2000. The economic losses caused by terrorism approximately increased by 11 times in the last 15 years. World has seen two peaks in the economic impact of terrorism and now we are living with the third one. First significant impact of terrorism started in 2001 after 9/11 attacks, second peak took place in 2007 and main cause was the peak in the Iraq war. In 2001 the economic impact of terrorism costed globally 10 billion dollars as in 2007 it has reached 37 billion dollars. The present peak from 2014 to nowadays has the biggest impact on economics with the highest 106 billion dollars a year, so from 2001 to 2014 losses to terrorism risen by 96 billion dollars. The figures shows how economy can suffer from terrorism. In the years 2015/2016 transnational terrorism has widely touched peaceful countries, including OECD states.
How the economic impact of terrorism is calculated? It is calculated using Institute for Economics and Peace methodology. Which includes the direct and indirect cost of deaths and injuries as well as the property destruction from incidents of terrorism. The direct cost includes costs borne by the victims of the terrorist acts and associated government expenditure, such as medical spending. Indirect costs include lost productivity and earnings as well as the psychological trauma to the victims, their families and friends. Unit costs for deaths and injuries are sourced from McCollister et al (2010).
Ten most terrorism affected countries are all conflict-affected countries. Countries from Middle East and North Africa, Sub-Saharan Africa and South Asia. The largest economic impact from terrorism was felt in Iraq, which loses 17.3 of GDP every year that is almost a quarter of entire Iraq’s economy, in second place is Afghanistan with 16.8 percent. The most interesting is that economic impact of terrorism is significantly small compared to the other forms of violence at the global level in 2015. The impact of violence costs 13.6 trillion dollars or 13.3 percent of GDP globally.

Rokas Barkauskas

References

Denise-Marie. Ordway. Martin Maximino Journalist’s Resource (2015). The Relationship between terrorism and economic growth: Research. Available at: https://journalistsresource.org/studies/international/conflicts/relationship-between-economic-growth-terrorism-new-research (Accessed: 13th April, 2017).

Joe Myers, World Economic Forum (2015). What is the economic impact of terrorism? Available at: https://www.weforum.org/agenda/2015/11/what-is-the-economic-impact-of-terrorism (Accessed: 13th April, 2017).

National Consortium for the Study of Terrorism and Responses to Terrorism (No Date) Available at: http://www.start.umd.edu (Accessed: 13th April, 2017).

Institute for Economics and Peace (2016) Global Terrorism Index. Available at: http://economicsandpeace.org/wp-content/uploads/2016/11/Global-Terrorism-Index-2016.2.pdf#page=64&zoom=auto,-20,516 (Accessed: 13th April, 2017).

Sub-Saharan Africa Growth Challenges

Growth in Sub-Saharan Africa region is estimated to have slowed to 1.5 percent rate in 2016, it is the weakest pace in over two decades, as commodity market lowered the price and region struggled to adjust to it. Per capita basis, regions GDP shrunken by an estimated 1.1 percent. The greatest causers of the regions struggle is South Africa and oil exporters, which contributes two-thirds wealth to the region’s economy.
Growth is expected to pick up slightly to 2.9 percent in 2017, as Sub-Saharan region is still adjusting to lower commodity prices. In 2017 oil exporters will be weaker again, as countries that are not gaining resources from natural ways will remain in strong position. As a comparison large infrastructure investments will continue to support growth among countries with wide agricultural economy, as Côte d’Ivoire and Ethiopia growth is expected to be above 8 percent.
Sub-Saharan Africa is facing serious problems. Externally uncertain trade policies from US and Europe could lead commodity market to even more fragile position. It could lead to higher borrowing costs and cut off capital flows to the markets. Upcoming elections in France can become the most serious impact to the region’s growth. France’s Central Bank hold foreign exchange reserves of 14 African economies and is considered to be a key figure for political stability and counterterrorism in Sub-Saharan Region. Large part of French business groups has good relations in the region. Main economic activities is: mining iron and oil export. First round of French elections will take place on 23rd April, and it is almost certain that no candidate will win a majority, final election between two front runners will be held on 7th of May. There are two main opponents in upcoming elections Marine Le Pen of the National Party and Emanuel Macron, an independent candidate. As French government has very strong relations with their colonies for decades, the new French government’s foreign policy will have a significant impact on them. If Le Pen will come to power, the French National Party will change the relationship with Sub-Saharan Africa and lean towards francophone Africa. Other major factor in Sub-Saharan Africa is French security presence, which is huge, it plays a very significant role in managing civil disturbance and extremism. Current French government are fighting the Jihad’s from beginning of West Sahara desert towards to Sudan territory. Nevertheless, France have deployed troops for peacekeeping in various African Countries.
Other strong sections that France is involved is: aid and trade. Africa is the first on the list when the speech is leaning towards aid. France gives 55 percent of aid to Africa, which 41 of 5 percent goes to Sub-Saharan Africa. In this instance Le Pen’s argument is that aid which Sub-Saharan Africa receives, encourages migration flows to get larger. Le Pen is planning to divert the aid to more to the side towards francophone Africa’s development.
Although Sub-Saharan region should recover its economy in 2017/2018 by 2.8 percent GDP, the internal risks regarding the growth looks poor, security and humanitarian issues in some of the Sub-Saharan region, as well as failure to make better trade policies across the region could stop he growth. Also we cannot forget the external risk from upcoming France government elections that could disrupt free trade agreements and potential international trades.

Rokas Barkauskas

References

Ricardo, A.Aceves. (2017) Economic Snapshot of Sub-Saharan Africa.
Available at: http://www.focus-economics.com/regions/sub-saharan-africa (Accessed: 12th April, 2017).

The World Bank (2017) Global Economic Prospects: Sub-Saharan Africa.
Available at: http://www.worldbank.org/en/region/afr/brief/global-economic-prospects-sub-saharan-africa (Accessed: 12th April, 2017).

World Bank Group (2017) Global Economic Prospects Weak Investment in Uncertain Times.
Available at: http://pubdocs.worldbank.org/en/712231481727549643/Global-Economic-Prospects-January-2017-Weak-investment-uncertain-times.pdf (Accessed: 12th April 2017).