Category Archive: Sources

  1. Limite-Limificaças

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    This is an archived version of the PW Sources newsletter from Saturday, March 30, 2024. Sign up to receive PW Sources directly to your inbox here.

    FISCAL POLICY

    As the Lula administration tries to balance spending with fiscal rules compliance, some investors have cast doubt on the government’s target of erasing Brazil’s primary fiscal deficit by next year.

    In a PW essay from last October, CLARA BRENCK and PEDRO MARQUES examine the fiscal rule debate in Brazil:

    “Like other Latin American economies, Brazil’s alternative measure for inflation control was based on the “macroeconomic tripod”: the floating exchange rate regime, inflation targeting, and establishment fiscal targets as part of a Fiscal Stabilization Program signed with the IMF. The arrangement made fiscal surpluses necessary to control public debt resulting from above-average real interest rates. The tripod was expected to promote inflation control, balance of payment equilibrium, and public debt stability in the medium run. Price stabilization, therefore, is at the origins of the rule-based fiscal policy in Brazil. Given the dependence on export revenues and foreign capital inflows, Brazil (and other Latin American countries) have always been sensitive to boom and busts in the global economy. When the latter experiences exceptional growth, it is likely that the former will have additional room for fiscal intervention. By contrast, when global economic trends recede, developing economies are exposed to liquidity shocks, an increased risk of balance of payment crises, and weakened capacity for tax collection and revenue generation. These changes, in turn, can affect fiscal rules compliance.”

    +  “We analyze carbon emission sources and industrial structure in several developing countries and revisit global climate policy instruments to set up a more comprehensive decarbonization effort in developing countries. We advocate for the targeted use of green fiscal policy.” By Joao Paulo Braga, Erin Hayde, and Julia Torracca. Link

    +  “It is important that the Brazilian G20 presidency vigorously defends proposals for debt relief or forgiveness for low-income countries—especially in a context of fiscal adjustment widely encouraged by the international monetary and financial systems.” By Bruno De Conti, Pedro Rossi, Arthur Welle, and Clara Saliba. Link. And Fernando Haddad on Brazil’s transition to a green economy. Link.

    +  “Redistributive efforts undertaken by the Workers’ Party government (2000–2016) could not increase the wage share of income.” By Fernando Rugitsky and Pedro Romero Marques. Link. And from 2021, Lena Lavinas, Barbara Weinstein, and André Singer discuss Brazilian social policy in PW. Link.

    NEW RESEARCHERS

    Open Source Software

    ANAMIKA SEN recently obtained her PhD in economics from the University of Massachusetts, Amherst. In an article coauthored with Curtis Atkisson and Charlie Schweik, she examines the cost-benefit distribution of Apache Software Foundation policies on entering open source software products. 

    From the paper:

    “In the early days of OSS, small groups of like-minded individuals would come together to work on a project of mutual interest. These self-governing projects were left to their own devices for survival, trying to maintain development and grow a user base on their own, operating under idiosyncratic norms and rules (Schweik and English, 2012). In the last 20 years, organizations have emerged as second-order actors in the production of OSS. They provide various collective services to aid OSS projects, such as legal, technical, and financial support (Riehle and Berschneider, 2012). A recent paper by Izquierdo and Cabot (2020) reports over 100 OSS nonprofit foundations exist today offering differing levels of support services. The Apache Software Foundation (ASF) – the focal nonprofit in this study – is one of the oldest such organizations with one of the largest numbers of associated OSS projects. A key service the ASF provides is the “incubation of podlings,” which is a mechanism and social process within the foundation to nurture OSS projects that are interested in becoming a project formally associated with the ASF. To achieve their goal of integrating new projects into the
    ASF community, the ASF Incubator program has created policies or requirements that protect both ASF’s interests and, according to Apache, make OSS projects more sustainable (Khudairi, 2019).”

    + + +

    +  “The idea of a self-coordinating competitive market was emphasized far more by the Progressive policy-makers and technocrats who did battle with the courts, albeit largely by asserting special exceptions to it.” New on PW, Sanjukta Paul on the National Industrial Recovery Act of 1933, its judicial reception, and the maturation of the self-coordinating market ideal. Link

    +  “Though it coincided with the period of market reform, it was government restructuring rather than markets which encouraged the rise of China’s science, technology, and innovation sector.” Also new on PW, Yutao Sun, Cong Cao, and Yuehang Liu on the structural reconfigurations backing China’s investments in R&D. Link

    +  On April 23rd at 12pm ET, join us for a for a discussion on profits, prices, and the green energy transition, on the occasion of the publication of Brett Christophers’s The Price Is Wrong, with Christophers, Melanie Brusseler, Kyle Chan, and Robinson Meyer. Link.

    +  “However scarce the physical cocoa owned by commercial traders at those warehouses may be now, as traders are being served delivery notices for the expiring March futures contract, that record-high futures price truly is the price of the real stuff.” By Elaine Kub. Link

    +  Matthew Soener suggests that IMF programs are linked to greater greenhouse emissions in the global South when borrowing conditions are inflexible. Link.

    +  Ezra Oberfield, Esteban Rossi-Hansberg, Nicholas Trachter, and Derek T. Wenning on the spatial expansion of large banks in the ’80s and ’90s as determining conditions of local bank competition and interest rates for individuals and firms. Link.

    +  “The Savings and Loan crisis of the late 1980s and early 1990s caused major disruptions in the flow of mortgage capital and encouraged the growth of the secondary mortgage market.” By Kevin Fox Gotham. Link.

    +   “Exchange theorists argue: ‘Individuals do not assess rewards and costs, and make decisions or choices, as independent monads in a Hobbesian situation, but rather as ‘selves’ in an interpersonal matrix or field of at least partly matched or common symbols and intimate exchanges of information.’ The ‘intimate exchanges of information’ made by pretelegraphic entrepreneurs, like those made by modern business executives, usually consisted of local, regional or national, and international components. However, given the relatively small volume of pretelegraphic long-distance information flow, the local component was probably more important in relative terms between 1790 and 1840 than it is today. If so, and if group ‘influentials’ affected information receipt and attitude formation, while membership in informal and formal face-to-face groups tended to be locally restricted, then entrepreneurial attitudes in a pretelegraphic city ought to have resembled one another to the extent that group memberships, or private-information fields, overlapped one another.” By Allan Pred. Link.

  2. Forest Fire

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    This is an archived version of the PW Sources newsletter from Saturday, March 23, 2024. Sign up to receive PW Sources directly to your inbox here.

    PETROCARIBE

    In January, Haiti paid Venezuela $500 million to settle $2.3 billion in arrears from PetroCaribe loans. Between 2005 and 2014, PetroCaribe became the largest single source of concessional finance to Caribbean countries, more than doubling US foreign assistance to the region.

    In a 2019 article, GUSTAV CEDERLÖF and DONALD V. KINGSBURY examine the mechanics of PetroCaribe trade agreements:

    “The agreement defined two payment procedures for oil shipments, working to undermine the structural inequality existing between importing and exporting states. The first was a pricing mechanism where, depending on the current 8 market price, a fraction of the cost would be paid over an extended term. This fraction ranged from 5 percent with prices below 20 US dollars per barrel to 50 percent with prices exceeding 100 dollars. The deferred payments would be placed in the ALBA Caribe Fund to be used for regional development projects. The second option was a ‘commercial offset mechanism,’ which allowed members to countertrade oil for goods to completely counteract any structural economic inequality. Cuba offered medical services while Nicaragua, the Dominican Republic, Guyana, and Jamaica reportedly had offset 2.73 billion US dollars by early 2014, sending 2.2 million tons of rice, coffee, beans, vegetable oils, sugar, meat, milk, pasta, animal fodder, and clinker to Venezuela in lieu of money, as well as 111,931 cows, calves, and bulls. Key here was a view of oil, medical services, and agricultural products as complementary use-values: dependence on Venezuela for oil signified interdependence and ‘mutual control’ while dependency under market-regulated exchange constituted a relation of Caribbean subjugation.”

    +   “An estimated $4.2 billion borrowed for development and not one completed project.” The Anakawona Collective on the 2019 protests around the PetroCaribe embezzlement scandal in Haiti. Link. And Henry Mace interviews Robert Fatton on the current crisis. Link

    +  “After 2003, the Chávez energy team crafted new international trade and energy alliances with non-traditional partners such as China, Russia and Iran. These were intended to guarantee new markets for Venezuelan oil products and lift the international oil price through output agreements.” By Julia Buxton. Link. And see a new PW essay on disputes between Venezuela, ExxonMobil, and Guyana over newfound oil reserves. Link.

    +  “By 2014 PDVSA debt had reached US$40 billion. Much of the borrowed money has been used to shore up the overvalued bolivar and to sustain the company’s role in social and economic programs.” Daniel Hellinger on “landlord states” and Hugo Chavez’s fiscal regime. Link.

    NEW RESEARCHERS

    Personal Forecasts 

    MUHAMMED BULUTAY is a PhD candidate in economics at the Technical University of Berlin and the Berlin School of Economics. His working paper studies household perceptions of the European Central Bank’s forecasting performance. 

    From the paper:

    “Central banks publish their macroeconomic forecasts not only to inform the public about the future of the economy, but also to manage expectations. However, disagreements about the future persist between central banks and private agents. For central banks, disagreement is particularly troubling when it comes to future inflation, because inflation expectations can translate into inflation and deanchoring can hinder the transmission of monetary policy. For private agents, it is inefficient not to adopt the central bank’s inflation forecast because forming personal forecasts is costly in terms of time and resources. Information about the accuracy of past forecasts lowers inflation expectations, reduces uncertainty about future inflation, promotes trust in the ECB, and discourages the consumption of certain goods, such as major items (e.g., cars, furniture) and clothing. Using instrumental variable estimation to account for endogeneity, I identify the causal relationship between trust in the ECB and inflation expectations. This analysis shows that the information shifts inflation expectations through its effect on trust in the ECB. In terms of marginal effects, a one standard deviation increase in trust in the ECB reduces inflation expectations by 5.3% to 8.5% and inflation uncertainty by 2.4% to 7.1%.”

    + + +

    +  “Guyana has again become a battleground for geopolitical ambitions.” New on PW, Raphael Padula, Matheus de Freitas Cecílio, Igor Candido de Oliveira, and Caio Jorge Prado on ExxonMobil-led oil discoveries in Guyana. Link.

    +  “Why Milei opted to provoke both governors and political factions that had supported him in the runoff election remains unclear. The possibility that the decision was simply a consequence of Milei’s political ineptitude in building alliances should not be underestimated.” Also new on PW, Sara Cufré and Gustavo Robles review the Argentine president’s first hundred days in office. Read in English or Spanish

    +  “In the make-or-break phase of the energy transition, the market structure and regulatory setting of the utility industry will be all-important.” A new post from the Center for Active Stewardship, by Nolan Lindquist. Link.

    +  Dani Rodrik examines shifting perspectives on free trade between the nineteenth and twentieth centuries. Link.

    +  “The data disclosed so far provides ample grounds for suspecting malfeasance.” Prasenjit Bose’s preliminary analysis of newly released data from India’s electoral bonds scheme. Link

    +  “Tel Aviv serves as a coordinating point in a globally-integrated imperial project with dizzying financial and demographic porousness.” By Kaleem Hawa. Link.

    +  Rodrigo Oliveira, Alei Santos, and Edson Severnini find that evidence from Brazil contests common criticisms of affirmative action. Link.

    +  “The Gaitanistas’ prominence in Colombian crime and conflict both makes their participation essential for the success of ‘total peace’ and confounds efforts to include them.” A new report from the International Crisis Group. Link. Also see Jerónimo Ríos Sierra’s PW essay on Gustavo Petro’s negotiations with the ELN. Link

    +   “The island of Haiti, both on the Spanish and French side, still grows about every plant described by Oviedo when he first informed the Europeans of the crops of the Indies. In the Dominican Republic these provide abundance; on Haiti they make possible survival. Cuba, largely resettled only in late years, knows and uses the fewest root crops. The food potential of the traditional conuco planting, or provision ground, is hardly appreciated by ourselves, be we agricultural scientists, economists, or planners, because its tradition as well as content are so different from what we know and practice. Yields are much higher than from grains, production is continuous the year around, storage is hardly needed, [and] individual kinds are not grown separately in fields but are assembled together in one planted ground to which our habits of order would apply neither the name of field nor garden. And so we are likely to miss the merits of this system. The conuco system can make intensive use of steep slopes and thereby may encounter erosion hazards that should not be blamed on the system itself, as commonly they have been.” By Carl O. Sauer. Link.

  3. Buffalo Bill

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    This is an archived version of the PW Sources newsletter from Saturday, March 16, 2024. Sign up to receive PW Sources directly to your inbox here.

    AGRICULTURAL MECHANIZATION

    On March 6, Egypt agreed to float its currency in exchange for a $5 billion increase in its current loan program with the IMF. It remains to be seen how long the Egyptian pound may remain flexible, as the inflationary effects of a devalued currency will chafe against Egypt’s enormous bread subsidies—already strained by the war in Ukraine, a plunge in remittances, and more domestic farmland transitioning to flex crops.

    In a 2002 book, TIMOTHY MITCHELL details how foreign direct investment mechanized Egypt’s agriculture and shifted production from staple foods to luxury consumption:

    “The demand for mechanization had intensified among large landowners in the later 1970s, due to a supposed shortage of agricultural labor that lasted into the early 1980s. This ‘shortage’ took the form of a temporary rise in the wages of male agricultural laborers, particularly in regions close to large cities, caused by the higher wages available for urban construction work during the building boom of that period and by labor migration to the oil-rich countries of the Gulf. Agricultural wages, having averaged only one-third of the average real wage for all economic sectors during the first half of the 1970s, for a while began to catch up with urban wages. Large farmers, given the artificially low prices they received for their crops, were unable or unwilling to pay the higher wages. The larger cause of the labor ‘shortage,’ in other words, was the unequal distribution of land into large farms requiring hired labor (small farms use mostly family or cooperative labor) and the low agricultural prices imposed by the state. Rather than addressing these problems, however, the government, large farmers, and international development agencies turned to the high-payoff program of mechanization. The high payoffs did not take the form of increased yields but of higher profits to the new machine owners and their importing agents and foreign manufacturers. The demand for rural male labor was reduced once again, and the inequalities between agricultural laborers and landowners were kept in place. It is these inequalities that mechanization and other ‘high-payoff’ inputs consolidate, and that accounts of the Nile valley and the need to transform its ‘traditional’ agriculture keep from view.”

    +  “Egypt’s credit policy seems to be heavily weighted toward large-scale livestock production whereas most of Egypt’s livestock is held by small farmers.” By Mohamed Abd El Azim and Ibrahim Soliman. Link. And Habib Ayeb and Ray Bush make the case for food sovereignty in Egypt and Tunisia. Link

    +  “In 1997, more than 800,000 fellahin lost their landholding titles that allowed them to cultivate land on the basis of permanent rent contracts.” Detlef Müller-Mahn on informal sector activity in the aftermath of agrarian counter-reform in Egypt. Link.  And Mohammed Soliman on Egypt’s growing informal economy. Link.

    +  “With state-market relations driven by rent seeking, the performance of economic sectors varied according to their proximity to those rents.” Robert Springborg on development under Egypt’s military regime. Link. And Richard Solomon’s new PW essay explores Egypt’s negotiations with the IMF, food import dependence, and the military. Link.

    NEW RESEARCHERS

    Bureaucrats and Industrial Policy 

    PHILIPP BARTESKA is a PhD candidate at the London School of Economics. His job market paper, coauthored by Jay Euijung Lee, studies the relationship between bureaucracy and industrial policy in South Korea. 

    From the abstract:

    “What makes an industrial policy successful? This paper finds that the effect of an industrial policy changes tremendously with the implementing bureaucrat. We study Korean bureaucrats who promote exports on appointments to 87 countries between 1965, when Korea was one of the world’s poorest countries, and 2001. We exploit the rotation of bureaucrats between countries to show that individual bureaucrats matter greatly in boosting exports. Moving from a bureaucrat at the 20th percentile to the median is associated with a 40% increase in exports. This effect is comparable to that of opening an office, implying that this industrial policy has no effect under a 20th percentile bureaucrat. We exploit differential import demand growth to study a mechanism via which better bureaucrats increase exports: transmitting information about market conditions. Under better bureaucrats Korean exports increase more with a product’s import demand. Finally, we investigate whether experience can bridge the gaps between bureaucrats. We isolate quasi-random variation in experience exploiting a product’s import demand growth during the bureaucrat’s first appointment. In subsequent appointments exports increase in products with greater bureaucrat experience. This highlights that organizational capacity grows endogenously, implying a novel channel for path dependence in organizational capacity.”

    + + +

    +  “An IMF rescue and devaluation of the Egyptian pound in turn are unlikely to substantially civilianize the public sector because the regime’s political survival rests on military management of the economy.” New on PW, Richard Solomon on Egypt’s military economy and the IMF. Link

    +  “The language of climate change remains an elite, technical language. It is opaque and impenetrable to most people, and it excludes the working class.” New on the Polycrisis, Tim Sahay interviews Chris Shaw on the challenges of building a working-class climate coalition. Link.

    +  Ndongo Samba Sylla challenges dominant assumptions about governments issuing debt denominated in foreign currencies. Link.

    +  “Because the transmission of evidence is relational, the messenger can matter as much as the method. That is, the question of who is providing the evidence becomes crucial, too.”  Ranil Dissanayake, Janeen Madan Keller, and Erin Collinson on how research effectively reaches policymakers. Link.

    +   Benjamin Braun, Donato Di Carlo, Sebastian Diessner, and Maximilian Düsterhöft on how monetary regimes such as the ECB influence structural policy beyond their mandate. Link.

    +  “The CAA is an outcome of the new politics of Hindutva constitutionalism.” Hilal Ahmed on the Citizenship Amendment Act (CAA) in India, from June 2020. Link. And Shoaib Daniyal on how the newly-implemented CAA will affect West Bengal ahead of national elections. Link

    +  “We find that for-profit hospitals are more likely to treat high-cost patients than not-for-profit hospitals.” A new study on for-profit psychiatric hospitals in California. Link

    +   “In the 1610s and 1620s, a new computational technology took hold in England: printed mathematical tables for compound interest and discounting (‘present value’) problems. Historians of finance and accounting have long recognized these paper tools as predecessors of essential modern techniques like ‘discounted cash flow.’ Yet the history of these tables remains hazy. This article turns to one obscure but influential text—Ambrose Acroyd’s Tables of Leasses and Interest (1628)—as a guide to these questions. Two key facts emerge. First, despite the prominence of similar calculations in financial applications today, these early tables were not confined to England’s nascent financial sector. Rather, their foremost use related to agricultural property, specifically in assessing certain payments (‘fines’) landlords charged tenants for farm leases. Second, among the leading ‘early adopters’ were institutions of the Church of England.  Mathematical tables like Acroyd’s emerged out of long-running conflicts between church landlords and tenants over how to determine just and reasonable fines on church lands.” By William Deringer. Link.

  4. French Doors

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    This is an archived version of the PW Sources newsletter from Saturday, March 9, 2024. Sign up to receive PW Sources directly to your inbox here.

    GOLD MINING

    Last year, the Brazilian senate enshrined the controversial Milestone Thesis (marco temporal) into law, whereby indigenous groups can only make land claims on territories they occupied before October 1988. The new legislation opens the door to road-building, dam construction, and mining activities in indigenous communities. 

    In a 2022 essay, MARCELO FIRPO DE SOUZA PORTO and DIOGO ROCHA examine indigenous labor in the gold mining sector after 1971:

    “With the end of the Bretton Woods agreement in 1971, gold stopped being a financial backing of the international financial system to become a commodity. At the first moment, this turn caused a strong increase on the price of gold and a run to the various auriferous reserves in the world, including in Brazil and the Tapajós region by means of artisanal gold prospection, which incorporates investments in its mechanization that amplify the socio-environmental impacts. As this process was poorly regulated by the State and had intense participation of economic agents from the lower circuits of capitalism, neo-extractivism involving illegal gold prospection has strong connections with illicit activities, which results in an even more violent dimension of its expansion. Gold prospection workers, often natives of the indigenous peoples and riverbanks communities, end up subordinated to local entrepreneurs who finance and organize an activity that is increasingly mechanized and expensive. On a local level, the neo-extractivism of gold prospection reproduces the inequalities and injustices that characterize this market on a global level in the relationship between the countries involved, but it aggravates the aspects of violence and spoliation typical of the colonial pattern that persists and is re-updated.”

    + “Government focus has been on the creation of environmental laws rather than technical assistance programs on the ground.” Rodolfo Sousa, Marcello Veiga, Dirk Van Zyl, Kevin Telmer, Sam Spiegel, and Jeff Selder on regulating Brazil’s gold sector. Link. And Sousa and Veiga on the Global Mercury Project’s efforts to train informal miners in the Tapajós river basin.  Link.

    + “By presiding over the legalisation of domestic illicit financial flows, the Bolivian state abandons higher tax revenues to perpetuate a long-running political settlement.” By Fritz Brugger, Felicitas Fischer, and Joschka J. Proksik. Link. And an edited volume on governing extractive industries in Bolivia, Ghana, Peru, and Zambia. Link.

    + “The three large-scale gold mining companies currently produce approximately 30% of the gold, while small-scale mining operations account for approximately 70% of the national production.” A 2013 chapter on gold mining in Colombia. Link. And see Kari Lydersen and Adriana Cardona-Maguigad’s multi-part investigation into the social conflicts resulting from artisanal, illegal, and large-scale mining. Link

    NEW RESEARCHERS

    Corporate Tax Codes

    JORDAN RICHMOND is a PhD student in economics at Princeton University. His job market paper, coauthored by Lucas Goodman, Adam Isen, and Matthew Smith, studies how limiting interest deductions influences firms’ investment and financing choices. 

    From the abstract:

    “The 2017 law known as the Tax Cuts and Jobs Act (TCJA) implemented an interest limitation for big, high-interest firms. Using an event study design comparing big and small high-interest firms, we rule out economically significant impacts of the interest limitation on investment and leverage, and find evidence that the interest limitation led firms to increase their equity issuance. A triple difference design that accommodates size-varying impacts of other TCJA policy changes yields similar results, as does a regression discontinuity design focusing on marginal firms that are just large enough to face the interest limitation. Our results indicate many firms do not use debt as their marginal source of financing and provide evidence consistent with capital structure models with fixed leverage adjustment costs. Furthermore, our results suggest limiting interest deductions is unlikely to have large impacts on investment or to address concerns about rising corporate debt levels.”

    + + +

    +  “Since Petrobras has a long tradition of ensuring industrial safety in exploring oil, expanding this tradition would allow us to invest in new energy sources.” New on PW, Hugo Fanton interviews Cibele Vieira about the history of Petrobras in the context of Brazilian development. Read it in English or Portuguese

    +  “In the Gujarat of this time, state authority did not only rely on a ‘deep state’; it also ruled over people through the network of the Sangh Parivar and, more specifically, through vigilante groups which had penetrated and permeated society in such a way as to fashion a ‘deeper state.'” Christophe Jaffrelot on surveillance in BJP-ruled Gujarat, India. Link

    +  “Sisi’s economic path is predicated on denying the people access to channels of dissent.” Hesham Sallam on a decade of Abdel Fattah al-Sisi’s rule in Egypt. Link.

    +   L. Price and R. Mapes on oil exploration in the Guyana/Suriname Basin since 2015. Link.

    +  “The vast majority of the companies that took part in the UK pilot decided to keep the policy in place—54 out of 61 organisations, with 31 confirming that the change is permanent.” Autonomy reports on the 2022 UK 4-day week pilot, one year on. Link.

    +   Tobias Franz, Diana Gómez, C. Julián Idrobo, and Olga Corzo on maritime infrastructure and the Tribugá Port project on Colombia’s Pacific coast. Link

    +  “Price increases in the 1970s were driven by contingent events propagating through politically constructed markets.” By Brian Judge. Link.

    +  “In the first six months of 2023 alone, nearly 400 children in Gaza were denied permits to travel to the West Bank for critical healthcare, leaving many to die.” An al-Shabaka roundtable from November, featuring Yara Hawari, Tariq Kenney-Shawa, Fathi Nimer, and Alaa Tartir. Link.

    +   “On May 21, 1963, American farmers voted down an administration proposal that would have required significant cuts in grain output in exchange for higher guaranteed prices. The farm programs inherited from the New Deal had not successfully controlled production (despite the goal of ‘supply management’) because a technological revolution in agriculture had raised farm productivity to unforeseen levels, and farmers were never really beholden to restrictions on output, only to limits on the acreage under cultivation. From the 1930s to the 1960s, the United States maintained farm prices higher than world market prices, and, at considerable expense, stored the portion—the surplus—that it could not sell, donate, or dump. At the peak of this storage regime, in the late 1950s, the government ran out of room in the usual holding spots—warehouses, elevators, and terminal markets—and started shoving grain into abandoned movie theaters and empty Texas oil tanks. By 1959, owing to commodity storage costs, agricultural expenditures made up the third largest item in the federal budget, following only defense outlays and interest on the debt.” By Sarah T Phillips. Link.

  5. Speed Trial

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    This is an archived version of the PW Sources newsletter from Saturday, March 2, 2024. Sign up to receive PW Sources directly to your inbox here.

    LEADING TECHNOLOGIES

    The CHIPS and Science Act aspires to draw the manufacturing of US leading technologies back into domestic supply chains. Speaking on the policy’s implementation, Secretary of Commerce Gina Raimondo stated earlier this week that the US is on track to manufacture 20 percent of leading-edge logic chips by 2030. 

    In a 1976 memo for the US Department of Defense, FRED BUCY argued that preserving the US lead in strategic technologies—especially amid concerns around Soviet technological theft—required export controls to target technology transfers rather than commodity exports: 

    “U.S. export control law applies to reexportation of strategic goods and technical data of U.S. origin to a third country by the receiving firm. Major allies of the U.S. do not have a similar law. They limit export control enforcement to acts performed within their own boundaries. Thus, strategic technology originated in these countries can be reexported through third countries to Communist nations without restriction. There is cause for concern for strategic technology possessed by foreign firms that have subsidiaries in non-Communist nations. This uncertain control and enforcement environment among several countries dictates that the key elements of a high-velocity strategic technology—one which has experienced a revolutionary gain—should not be exported to these countries. A nation that allows strategic technology to be passed on to Communist countries should be restricted from receiving further strategic technology of U.S. origin.”

    +  “Bucy explained that the point of export controls was ‘not to interdict trade, but to delay an adversary’s acquisition of commercial technology of military significance for as long as possible.’ ” From Mario Daniels and John Krige’s 2022 book. Link. And see Ella Coon’s review of the text in PW. Link.

    +  “In designing the controls, the US is making an implicit assumption that industry and partner resistance will eventually give way to alignment with US regulations.” Reva Goujin and JP Kleinhans on a package of stricter export controls against China, announced last October. Link. And William Alan Reinsch, Matthew Schleich, and Thibault Denamiel examine the impacts of the 2022 export controls. Link

    +  “Simple observations of a geographical concentration of high-technology establishments cannot be taken prima facie as evidence of the new industrial cluster arguments.” Philip McCann and Tomokazu Arita on industrial clustering and the semiconductor industry. Link

    NEW RESEARCHERS

    Education and Extreme Poverty

    AMORY GETHIN is a recent PhD graduate from the Paris School of Economics. His job market paper quantifies the role played by education in the decline of global poverty.

    From the paper:

    “In my benchmark specification, I find that private returns to schooling can account for about 50% of global economic growth and 70% of income gains for the world’s poorest 20% since 1980. They also explain 40% of the reduction in the share of the world’s population living in extreme poverty. On the whole, education has been a major source of global inequality reduction, driving a large share of income gains in low-income countries and among the poorest individuals in all world regions. This progressive nature of global educational expansion has intensified over time and has been most pronounced among recent cohorts. Given the predominant role that governments have had in providing education and other basic services to low-income households, this puts public policies at the center of the fall of global poverty. Combining measures of direct government redistribution from a companion paper with indirect investment benefits from education estimated in this paper brings the total contribution of public policies to global extreme poverty reduction to at least 50%.”

    + + +

    +  “Countries can realize success with industrial policy rooted in the petroleum sectors in spite of the machinations of predatory elites.” New on PW, Jesse Salah Ovadia on the oil and gas sectors in Angola and Nigeria. Link

    +  “The ELN has become significantly more powerful since 2017. In addition to gaining territory in the peripheries, the group has almost entirely consolidated several areas once under the control of the FARC-EP. ” Also new on PW, Jerónimo Ríos Sierra on the Petro government’s negotiations with the Colombia’s largest active guerrilla. Read it in English or Spanish.

    +  “The IMF’s latest assessments of debt stress indicate that 10 countries were in debt distress, while 52 countries were in severe to moderate debt stress—currently totaling USD 3 trillion in debt, a doubling since 2010.” By Rajko Kolundzic. Link.

    +  Banks raise their US real estate loss provisions amidst a commercial property crisis. By Rich Asplund. Link.

    +  “We show that less-educated Americans differentially demand “predistribution” policies (e.g., a federal jobs guarantee, higher minimum wages, protectionism, and stronger unions), while more-educated Americans differentially favor redistribution (taxes and transfers).” Ilyana Kuziemko, Nicolas Longuet-Marx, and Suresh Naidu on changes in the Democratic Party’s voter base. Link.

    +  Noah Barkin and Gregor Sebastian on Germany and China’s “zero-sum” economic relationship. Link

    +  “As climate change creates greater uncertainty and impacts the quality of farm produce, farmers say guaranteed support from the government is essential to help them move beyond rice and wheat cultivation.” Vaishnavi Rathore on climate crisis and farmers’ protests in India. Link

    +   A Kaufman Hall report on the role financial reserves play in not-for-profit healthcare. Link.

    +   “This accelerated shift toward heavy industries in the throes of the Great Depression ultimately proved to be an epochal event in the nature of Yokohama’s role as a port of foreign trade. In the bargain, Yokohama’s primary function was transformed from a specialization in silk exports to the importation of goods and materials related to heavy industry. The port’s imports recovered faster than its exports, with the former finally surpassing the latter by 1935. Heavy chemicals went from 49 percent of the total value of manufacturing output in Yokohama in 1929, to 75 percent in 1935, then 83 percent in 1938. At the same time, the share of Yokohama’s exports occupied by heavy industrial manufacturing also grew from 15 percent of the port’s total export values in 1929 to 39 percent by 1935, then 50 percent in 1938. These new industries were fed by a growing Keihin industrial corridor, with machine parts occupying 39 percent, chemicals 24 percent, and metals 20 percent of the city’s total manufacturing values, respectively, by 1938. Thus, the 1930s were not simply a time of economic crisis for Yokohama, but also a time of profound and fundamental transformation in the nature of the city’s economy and consequently its role within the global economy.” By Jeffrey C. Guarneri. Link.

  6. Metaphysical Drawing

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    This is an archived version of the PW Sources newsletter from Saturday, February 24, 2024. Sign up to receive PW Sources directly to your inbox here.

    MILITARY BIAS

    In light of Israel’s assault on Gaza post-October 7 and growing instability in the region, S&P Global and Moody’s have both downgraded Israel’s credit rating to “negative.” Israeli finance minister and extremist settler Bezalel Smotrich called the revisions “alarmist” and politically motivated. 

    In a 1996 paper, economists SHIMSHON BICHLER and JONATHAN NITZAN suggest that the militarization of Israel’s economy from the late 1960s bolstered the profitability of large corporate conglomerates at the expense of small firms:

    “To the extent that the government maintained or even increased the military-related profitability of the large firms, it contributed toward undermining the long-term viability of the Israeli economy. Much like the transformation of U.S. big business, as predicted by Kalecki (1967) and later analyzed by Melman (1985), the growing ‘military bias’ since the early 1970s became the dominant structural process of Israel’s ‘big economy.’ This ‘military bias’ shifted the industrial focus toward areas in which Israel did not have and could not have any competitive edge. It raised the domestic and foreign debt and increased Israel’s dependence on the United States. Most significantly, through its effect on the aggregate concentration of profit, it turned the large conglomerates into a decisive political force. Indeed, since the early 1980s, a growing number of mainstream Israeli economists started to express concern about the backward link between the ‘military bias’ of Israeli industry and the course of Israel’s foreign policy: defense spending was no longer seen as a mere political issue, but also as a reflection of economic pressures exerted by the ‘angry elements’ that came to dominate many boardrooms in the ‘big economy.’ The evolution of military spending in Israel was hence part of a double-sided structural transformation. On the one hand, the level of military expenditures was influenced by the progressive ‘military bias’ and increasing concentration of the Israeli economy. On the other hand, these latter developments were themselves partly the outcome of high military spending.”

    +  “In Israel, the military budget at the margins is also employed as a political-economic instrument to help manage the economy and to provide a favorable election climate for incumbents.” From Alex Mintz and Michael D. Ward’s 1989 article. Link.

    +  Andrew Cockburn traces the growth of the military-industrial complex in the US: “Education came in first by a wide margin, producing 26,700 jobs, followed by health care at 17,200. Defense, generating 11,200 jobs, ranked last.” Link. And James Cypher on military Keynesianism. Link

    +  “Israel’s move into high-technology military production resulted in slower growth of civilian output than otherwise would have occurred.” By Paul Rivlin. Link. And in the Financial Times, how companies have benefitted from Europe’s recent defense revival. Link.

    NEW RESEARCHERS

    Disaster Shocks 

    REBECCA MARIA MARI is a senior economist at the Bank of England and a recent PhD graduate from the London School of Economics. Her doctoral thesis studies the effects of natural disasters on credit markets and public investment.

    From the abstract:

    “Three main questions are explored using natural disasters, private credit, and public investment alternatively as shocks and conditioning assumptions in the study of private capital development at local level. What is the role of local private capital endowment on the private sector’s responsiveness to public investment? How do credit market imperfections affect the firm’s response to investment subsidies and the selection of the policy’s optimal target group? What is the impact of a negative shock to the entrepreneur’s home on their small-medium business? This thesis provides three main novel insights. The first one is the crucial role of private capital stock endowment at local and firm-level in determining the effectiveness of different types of public investment in mobilising private investment and labour demand. The second one is the significant impact of natural disasters on local economies not just through physical destruction and factor relocation, but also through indirect effects generated by credit market imperfections and wealth effects. The third one is the effectiveness of public policy in fostering private capital development at local level, which is shown to be related to the degree of complementarity between the public investment and the pre-existing private capital stock.”

    + + +

    +  “The increased weight of the global South among countries making up the G20 indicates a changing balance of forces within the group.” New on PW, Bruno De Conti, Pedro Rossi, Arthur Welle, and Clara Saliba on Brazil’s G20 presidency. Read it in English or Portuguese

    +  “For a maturing technology like wind, year over year trends in costs are no longer driven by an idealized process of ‘learning’  but rather by the gales of creative destruction (Schumpeter) endemic to any capital intensive industry.” A new post from Nolan Lindquist of the Center for Active Stewardship. Link. And see Lindquist’s December PW essay on offshore wind and tech forecasting. Link

    +  Chloe Tarrabain on the racial and gender dimensions of migrant labor in temporary work agencies. Link.

    +   “While Beijing has bested Washington in production and trade dominance, several factors—such as the petrodollar—obstruct China’s attainment of financial dominance in the UAE, thereby preventing bifurcation.” By Toufic Sarieddine. Link.

    +  Fritz Brugger on gold trading and formal value chains in Bolivia. Link.

    +   “The Moscow-centric approach, with the focus on Mikhail Gorbachev and Boris Yeltsin, has its limits. The Soviet Union fell in the end over the issue of Ukraine.” Serhii Plokhy in conversation with Katherine Younger. Link.

    +  Vincent Ialenti’s ethnographic fieldwork studies the corporate ownership “mankala” model backing Finland’s nuclear energy companies. Link.

    +   A new study by Janine Heck, Lars Jahnke, and Jen Leker analyzes sustainable energy incentives in the chemical industries of Germany, Austria, and Switzerland. Link.

    +   “Progress was also not linear. In the immediate wake of the sit-down strikes, the UAW experienced rapid growth. In less than a year, membership surged from 30,000 to nearly 400,000, driven by the example of the strike, active organizing efforts, grassroots frustration with low wages and lack of shopfloor autonomy, and the path-breaking protections provided by the National Labor Relations Act (1935). ‘This organization during the past year expanded its membership and its functions at a pace unheard of before in the history of the entire labor movement,’ the IEB reported in January 1938. In 1938, however, the U.S. economy nosedived, and many of these new members were laid off, robbing the union of stability. Membership rolls fluctuated wildly, as did the union’s finances, causing regular deficits. Leaders – most of them relatively young men who had been in the plants themselves until recently – learnt on the job. They also vied for influence within the new organization.” By Timothy Minchin. Link.

  7. Strahler

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    This is an archived version of the PW Sources newsletter from Saturday, February 17, 2024. Sign up to receive PW Sources directly to your inbox here.

    ELECTORAL BONDS

    On Thursday, a few months ahead of nationwide elections, India’s Supreme Court banned electoral bonds—anonymous political donations sold by the State Bank of India. Since the Modi government introduced electoral bonds in 2017, more than $1.9 billion in secret donations have been distributed to political parties. 

    In a 2022 analysis, the Association for Democratic Reforms finds that Modi’s Bharatiya Janata Party (BJP) was the scheme’s largest beneficiary from 2017 to 2021: 

    “As per the annual audit report of BJP submitted with the Election Commission, the party had received Rs 210 crore worth of contributions in the form of electoral bonds for FY 2017-18. This was a whopping 95% of all the electoral bonds purchased in 2017-18. For FY 2018-19, BJP had received Rs 1450.89 cr worth electoral bonds and Indian National Congress had received Rs 383.26 cr worth electoral bonds. The BJP has redeemed Rs 4230 cr worth electoral bonds from 2017-18 to 2020-21, which is 65% of the total amount during these years. This is nearly six times that of second placed Indian National Congress, which has redeemed Rs 716 crores til 2020-21. The two regional parties of Biju Janata Dal & Yuvajana Sramika Rythu Congress Party occupy the next two places followed by Trinamool Congress. Given the anonymity provided to donors and political parties by the electoral bonds scheme, it has emerged as the most popular mode of donations to political parties for FY 2019-20. More than 62% of the total income of seven National Parties came from Donations through Electoral Bonds (Rs 2993.826 cr).”

    +  “The 2019 general (Parliamentary) election in India emerges to be the most expensive election ever, anywhere.” The Centre for Media Studies’ report on India’s first general elections following the 2017 campaign finance reforms. Link. And Aseema Sinha and Andrew Wyatt examine industrialist interests in Parliament after 2019. Link

    +  “Not only did the government dismiss the Reserve Bank of India’s initial objections to electoral bonds, it also ignored most of the bank’s subsequent suggestions to make the scheme less vulnerable to fraud and less prone to destabilising the Indian currency.” From the first installment of Nitin Sethi’s ten-part investigation into the scheme, based on Right to Information appeals. Link to the piece, link to the series. 

    +  “The banning of company donations in 1969—without adequately substituting for it with public funding—was a key moment in the path-dependent evolution of political finance because it strengthened ties between political parties and the black economy.” Milan Vaishnav and Devesh Kapur’s 2018 book on the history of political finance in India. Link

    NEW RESEARCHERS

    Conditional Cash Transfers in Peru

    HA LUONG is a PhD candidate in Economics at the University of Barcelona. Her job market paper studies how conditional cash transfers shape gender role attitudes in Peru. 

    From the abstract:

    “This paper explores the impact of conditional cash transfer (CCT) programs on children’s gender role attitudes, with a focus on Juntos, the largest CCT program in Peru. Using data from the Young Lives Survey and employing the fuzzy regression discontinuity design, I find that the program reinforces traditional gender role attitudes among children in beneficiary households. These attitudes align notably with children’s behaviors, particularly among girls. Beneficiary girls allocate more daily time to caregiving and unpaid household labor, which, in turn, is associated with their lower test scores in reading and mathematics. Investigating potential mechanisms reveals that beneficiary mothers are more likely to prioritize their time on home production over paid work or self-employment. This shift in mother’s time priority serves as a channel for perpetuating traditional gender role attitudes among children. By offering novel insights into the impact of social policies in a developing context, this paper contributes to our understanding of the complex relationship between policies and gender norms.”

    + + +

    +   “With much of the media attention on the Houthis, little has been said about Ethiopia’s renewed interest in securing Red Sea access.” New on PW, Kaleb Demerew on the history of Red Sea power struggles. Link.

    +   The Just Energy Transition Partnership (JETP), a climate finance framework endorsed by world leaders, struggles to raise capital. Link. And a JETP report from the Rockefeller Center on addressing finance gaps for developing countries. Link.

    +   A decomposition on the rise of the populist radical right in Europe shows evidence of voters prioritizing nativist cultural positions. By Oren Danieli, Noam Gidron, Shinnosuke Kikuchi, and Ro’ee Levy. Link.

    +   “The marginal cost debate served as part of the foundation for various fields of modern economics, particularly institutional, regulatory, and public choice economics as well as law and economics.” By Brett M. Frischmann and Christiaan Hogendorn. Link

    +   “In 2011, the major German electricity-producing utilities faced an existential crisis: a sudden and unexpected volte-face on nuclear power regulation.” Gregory Ferguson-Cradler on “transition risk.” Link

    +   Ron Boschma, Ernest Miguelez, Rosina Moreno, and Diego B. Ocampo-Corrales on technological breakthroughs in Europe from 1981 to 2010. Link.

    +   “Exports as a share of GDP have constantly risen to become the most important growth engine in the Korean economy. This long-term trend, however, has coincided with a decline in the labor income share.” By Tanadej Pete Vechsuruck. Link. And see Kang-Kook Lee’s recent PW essay on South Korean growth models. Link

    +   Katherine Walla on US Commerce Secretary Gina Raimondo’s plan to set AI standards in an effort to compete with China’s high-tech manufacturing investments. Link.

    +   “A nationalist class conscious tradition stemming mainly from the Mexican Revolution of 1910-1914 survived and even thrived among Mexicans in Los Angeles. This tradition derived from the Partido Liberal Mexicano (PLM). Many of the PLM members who fought in support of the revolution in northern Mexico belonged to the IWW and often PLM members organized Mexican workers for the IWW. In its Fresno Local 66 during 1909 and 1910 the IWW, for example, while unable to create an ongoing union, organized many Mexican migratory agricultural and railroad workers. The famous Frank Little headed the Fresno organizational efforts and the Mexican IWW organizer, Jesús González-Monroy, was also a PLM leader. In Los Angeles in 1910-1911, the IWW exerted influence in strikes of Mexican street railway and gas workers.” By Douglas Monroy. Link.

  8. Horse Notations

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    This is an archived version of the PW Sources newsletter from Saturday, February 10, 2024. Sign up to receive PW Sources directly to your inbox here.

    PRICES

    The inflation slowdown in the United States stabilized in the last half of 2023 at approximately 3.1 percent. A January report by Liz Pancotti and Lindsay Owens of Groundwork Collaborative attributes most of the rise in prices during the last quarter to corporate profits. 

    In 1972, former Chief Economist to the Subcommittee on Antitrust and Monopoly of the Senate Judiciary JOHN MALCOLM BLAIR proposed an “excess-profits” tax, designed to induce competitive pricing and alleviate the inflationary effects of concentration where antitrust enforcement could not reach.

    “A precedent for preempting those corporate profits that by some designated standard are deemed to be ‘excessive’ is provided by the excess profits in which earnings above a certain specified return on investment or greater than those earned during a base period are returned to the Treasury. Its scope, however, could be broadened beyond disincentives to profiteering through a ‘forgiveness’ feature under which the tax owed would be forgiven to the extent that price reductions were made. With such a feature the objective of the tax would be to return monopoly profits to the public either through tax revenue or lower prices at the corporation’s discretion. The corporation would have full discretion in determining whether it simply wanted to pay the tax or whether it wanted to obtain ‘forgiveness’ through price reduction on all or any part of its output.” 

    +  “Whether or not price increases are happening, shortages are a constraint on conducting additional economic activity.” Nathan Tankas on “non-price” adjustments to demand. Link. And Sandy Brian Hager and Joseph Baines find that the structure of tax obligations in the US has contributed to a concentration of ownership in the corporate sector. Link.

    +  “Firms in the US increased their markups and profits in 2021 at the fastest annual pace since 1955.” By Mike Konczal and Niko Lusiani. Link. And a Bain report advises companies on “opportunistic” pricing strategies amid inflationary pressures. Link

    +  Geoff Barnard and Patrice Ollivaud critique the use of decompositions of GDP inflation, as were employed in Groundwork Collaborative’s report. Link.

    NEW RESEARCHERS

    Pre-Colonial Egyptian Agriculture

    AMR KHAIRY AHMED recently received his PhD in Human Ecology from the Department of Human Geography at Lund University. His dissertation studies the integration of industrial infrastructure in Egypt. 

    From the abstract:

    “How did fossil-fuelled technology find its way to Egypt on its way to global dominance? This thesis presents a socioecological history of energy technologies in agrarian production in pre-colonial Egypt (1820s—76). It situates them in the nineteenth century, understood as the beginning of the epoch of the Capitalocene; and in Egypt’s case, this is simultaneously part of the rise of Britain’s fossil empire. The thesis studies how the steam engine—and eventually the modern factory—was integrated into the Egyptian economy and society during this period, focusing on material aspects, as well as cultural dimensions. Several overlapping microhistories take the investigation to its conclusion in 1876 and bring the overarching research question down to the ground of Egyptian life. Historical analysis here identifies two phases for Egypt’s transition to steam technology in agrarian production. First, the predatory but frustrated empire-building project of Mohamed Ali that sought to compete with Britain, thwarted through the massive imbalance in coal endowments. Second, originating from this moment, the gradual growth of the dependency of Egypt on European fossil and financial capital, and its simultaneous integration into industrial capitalism.”

    + + +

    +   “Argentina has never before had to choose between China and the United States.” New on PW, an interview with Maia Colodenco on Milei’s foreign policy agenda, available to read in English and Spanish

    +   On Friday, Israeli Prime Minister Netanyahu ordered evacuations of Rafah in advance of an IDF military offensive. Link. As has been widely noted, there is nowhere safe to evacuate to: four months of a historically brutal bombing campaign decimating civilian infrastructure has driven 1.3 million Palestinians into crammed tent dwellings at the southernmost edge of the Gaza Strip. Link to a NYT article from January using satellite imagery to document the growth of the humanitarian catastrophe in Rafah. Link to a thread by Itay Epshtain recalling the role of Rafah in documents published in October outlining a strategy for its campaign in Gaza. Link to Moody’s statement on its downgrading of Israel, link to Seth Ackerman’s newsletter on the volatility of domestic Israeli politics, link to Tim Sahay’s interview with Guy Laron from November on the failure of the Netanyahu doctrine, and link to Amal Saad’s thread on Rafah.

    +   Brad Setser on China’s currency management. Link.

    +   “To finance internal war, the government proposed to raise the value-added tax on non-essential items from 12 to 15 percent.” Michele Bertelli on militarization in Ecuador. Link

    +   “Just as in 1936, when the colonial police went to great lengths to explain women revolutionaries, Delhi is struggling to understand what it means when women—young women, middle-aged mothers and older dadis—come out onto the streets.” By Atiya Hussain. Link

    +   “The non-state actors in this alliance are acting in accordance with their own political beliefs and strategic interests rather than following Iranian diktat.” Amal Saad in The Guardian on the Resistance Axis. Link

    +   “During the Anti-extradition Movement in Hong Kong, a wave of new unions surfaced—18 newly registered unions in 2019 and 491 in the first half of 2020.” By Anita Chan and Sallie Lau. Link

    +   “The Sindhi Sikhs exhibit a severe disillusionment with the Congress’ violation of Harmandir Sahib in 1984, which led to the assassination of Prime Minister Indira Gandhi and the backlash against the Sikh community. In Tej Kaur’s interview, she displayed a continuing palpable fear because she had been a witness to the anti-Sikh pogrom of 1984. While Mehrwan Singh, Hotusingh and Dayal Singh also referred to 1984 in their interviews, their articulations of the historical moment were accompanied by disillusionment and anger towards the Congress. Dayal Singh echoed Mehrwan Singh’s appreciation of the ‘government’ at the time of resettlement in India and his later antagonism towards Congress: ‘It helped us with groceries and shelter for two years. Congress was good. In fact the BJP [Bharatiya Janata Party] did not even exist then. However 1984 ruined everything. We lost our people and faith in the government.'” Rita Kothari & Jasbirkaur Thadhani on post-Partition politics in India. Link.

  9. Ascension

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    This is an archived version of the PW Sources newsletter from Saturday, February 3, 2024. Sign up to receive PW Sources directly to your inbox here.

    FOREIGN INVESTMENT

    New data released by China’s General Administration of Customs in January provides insight into China’s economic relationship with Latin America and the Caribbean. Since the pandemic, China has substantially recalibrated its direct investment, moving away from large-scale infrastructural projects associated with the Belt and Road Initiative (BRI). 

    A new report by MARGARET MYERS, ÁNGEL MELGUIZO, and YIFANG WANG contextualizes China’s declining investment in the region. 

    From the text

    “The term ‘new infrastructure,’ which emerged as a concept in 2018 and featured in China’s 14th Five-Year Plan (2021-2025), is woven throughout Chinese policy documents, alongside other modernization-related lexicon. It is understood in relation to “new industrialization,” for instance, which featured in the 2022 20th Party Congress, and refers to the realization of ‘informatization, urbanization and agricultural modernization.’ Both ‘new infrastructure’ and ‘new urbanization’ would appear to support ‘China-Style Modernization,’ which the Chinese Communist Party (CCP) aims to achieve by 2035. In China’s 2022 Government Work Report, ‘new infrastructure’ was positioned alongside ‘new urbanization’ and ‘major project construction,’ which together were dubbed the ‘Two News and One Major.’ China’s focus on ‘new infrastructure’ also coincides with a growing focus on ‘small and beautiful’ projects along the BRI. China has described these projects as smaller investments of a shorter overall duration, and which are better aligned with countries’ social welfare needs. According to Wang Jian, director and researched at the Institute of International Studies of the Shanghai Academy of Social Sciences, this concept gained traction as China recognized the need for enhanced ‘[prudence in assessing] the environmental and financial sustainability of projects…[a]gainst the backdrop of global economic downturn, the appreciation of the US dollar, and the further shrinking of the fiscal space for some developing countries to undertake large-scale projects.’ “

    +  “A large greenfield project involving opencast mining or oil extraction in an environmentally sensitive area is more likely to generate debate (and, therefore, a political backlash) than is an acquisition in which a Chinese company becomes part of a larger entity.” By Adriana Erthal Abdenur. Link. Also see a Reuters report on China’s rising greenfield investments in European EV manufacturing. Link.

    +  A 2022 report by Myers and Brian Fonseca examines China’s educational partnerships in Latin America and the Caribbean. Link.

    +  “In July 2020, to deal with the breakup of global supply chains and the economic downturn, the central government proposed establishing ‘a new development’ pattern centered on ‘internal circulation.’ ” Sit Tsui, Erebus Wong, Lau Kin Chi, and Wen Tiejun on China’s domestic economy. Link. And James Fok argues that China’s weak domestic markets have necessitated more private savings invested internationally. Link.

    NEW RESEARCHERS

    Inequities in Cancer Treatment

    SASMITA BEHERA recently obtained her PhD in health economics from the National Institute of Technology, Rourkela in Odisha, India. A recent paper, co-authored with Jalandhar Pradhan, analyzes inequities in out-of-pocket expenditures for cancer patients in India. 

    From the abstract:

    “Cancer patients in India often face the burden of paying out-of-pocket (OOP) for their treatment that is not covered by any health insurance. Moreover, inequities in OOP payment are also found among these patients. This study aims to determine horizontal and vertical inequity in OOP expenditure associated with cancer hospitalisation in India and analyse the demographic and socio-economic determinants of these expenditures. Data has been retrieved from 75th round of the National Sample Survey Office (NSSO), conducted by the Government of India between July 2017 and June 2018. The result of vertical inequity shows that the predicted mean OOP expenditure is more for lower-income quintiles, indicates a regressive nature of health financing for cancer treatment in India. Non-schedule caste and tribe (SC/ST) people have a higher percentage of OOP expenditure as compared to their SC/ST counterparts in the poor and middle-income quintiles, whereas for the richer income quintiles, OOP expenditure is higher for SC/ST population. The mean OOP cost is also higher for the male respondents than the female across all the quintiles. The result of GLRM shows that predicted OOP expenditure is significantly associated with residence, gender, insurance coverage, and level of care.”

    + + +

    +   Yen Chen on the immediate and long-term impacts of the UAW-Detroit Three 2023 National Contracts on the U.S. automotive sector. Link.

    +   “Spending on basic school infrastructure such as HVAC raises test scores but not house prices, while capital spending on athletic facilities raises house prices but not test scores.” Barbara Biasi, Julien M. Lafortune, and David Schönholzer on school capital investment. Link. And see David Backer’s PW essay on green investment in school infrastructure. Link

    +   First direct estimates of the Bolsa Familia transfer program on relative state-level GDP in Brazil, from the Federal Reserve Bank in San Francisco. Link.

    +   “Four firms would have experienced a collective $1.6 billion drop in operating profits in 2022 had the market been integrated.” Catherine Hausman on the US electricity transmission network. Link

    +   Yu Luo, Ming-ang Zhang, and Sihan Zhang leverage the implementation of the Golden Tax Project III in China to explore how tax enforcement contributes to the improvement of air quality. Link.

    +   “Through the utilization of the geographical factors, the Houthi insurgents managed to execute maritime operations and challenge the superior coalition with limited naval capabilities and unconventional tactics.” By Khaldoon Ahmed Hasson Abdulla. Link

    +   “The Kenyan High Court ruling provides the international community an opportunity to replace its plans for a mission that has almost no chance of bringing sustainable security or democracy to Haiti with support for a Haitian-led transition to democracy.” An interview with Brian Concannon. Link.

    +   “As America’s entrance into the war restructured Haiti’s trade, customs revenues fell precipitously. Customs receipts in 1941–42 were lower than at any point in the previous 20 years, including every year of the Depression. The fall came because the war diverted high-tariff imports like cars and cement. Unlike previous revenue shortfalls in the decade, customs remained persistently low for years. Anticipating a sustained shock, President Élie Lescot’s administration rushed to find new sources of revenue. ‘Before many weeks of war had passed, it became evident that new methods would have to be devised and special arrangements made in order to enable the country to ride out the storm.’ The administration appealed to the United States for help, received a line of credit from the Export-Import Bank, and passed a special tax on the country’s largest export, coffee. But its efforts were insufficient.” By Craig Palsson. Link.

  10. Memory

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    This is an archived version of the PW Sources newsletter from Saturday, January 27, 2024. Sign up to receive PW Sources directly to your inbox here.

    BABRI MASJID

    On Monday, Indian Prime Minister Narendra Modi inaugurated the Ram temple in Ayodhya, Uttar Pradesh, marking a triumph for the Bharatiya Janata Party (BJP) and far-right Hindu groups including the Vishva Hindu Parishad (VHP) and the Rashtriya Swayamsevak Sangh (RSS). The temple was built on the site of the Babri Masjid, a 16th-century mosque illegally destroyed by 150,000 Hindu extremists in 1992, in a campaign which incited communal violence across the country. 

    In a 1994 book, NILANJAN MUKHOPADHYAY examines the political actors involved in the temple campaign and the 1992 demolition. 

    From the text:

    “The manifold growth of the BJP in 1989 stemmed from two factors. First, by shrewdly aligning itself with the anti-Congress opposition parties, and sensing that the Indian electorate was keen to jettison the Congress if a viable alternative appeared in the offing. Second, the BJP also reaped the benefits of the Vishva Hindu Parishad’s (VHP) Ram temple agitation. It projected itself as the only political party that considered the temple agitation to be a legitimate one, and a right one at that, to undo the ‘historical wrong.’ The BJP was also aided in its rise to the pivotal position by the inability of other non-Congress parties to assess the ultimate plan of the BJP. This was evident in the manner in which non-Congress opposition parties forged alliances with the BJP, solely to defeat the Congress and paid scant regard to what the BJP could gain from such alliances. This included the communists, who forged indirect political alliances with the BJP, in the general elections of 1989 and in the elections for state assembly in Haryana in 1987. The BJP’s new thrust began in 1986, when Advani was elected president. Shrewdly, the BJP did not get directly embroiled in the VHP agitation. Instead, the party waited for the agitation to gain momentum, and when the political developments started snowballing towards a crisis, the BJP cleverly played the ‘temple card’ and reaped electoral benefits from the supporters of the temple agitation. From the time the VHP launched its temple agitation and started its campaign, the BJP had virtually two machineries at its disposal: its own cadre drawn from the RSS fold, and the neo-converts to the VHP fold.” 

    +  “The VHP’s case is based on false history.” AG Noorani in 1989. Link. And see Noorani’s two-volume The Babri Masjid Question 1528-2003, an extensivedocumentation of the political and legal battles around the mosque. Link

    +  “One of the most sinister features of the recent Hindutva movement has been the foregrounding of the militantly communal Hindu woman.” Tanika Sarkar in 1991 on the RSS women’s wing. Link. And Sudha Pai on caste and communal violence in Uttar Pradesh after 1992. Link

    +  “A high court in independent India, swearing by the lofty ideals of the Constitution, relies on the ‘faith and belief of the Hindus’ to decide a property dispute, thereby retrogressing to pre-modernity.” Anand Teltumbde on the 2010 Supreme Court decision. Link. And a recent op-ed by Ashoka Mody on the decline of secularism. Link

    NEW RESEARCHERS

    Armed Conflict and Deforestation

    TATIANA CANTILLO is a postgraduate researcher at the Land, Environment, Economics and Policy Institute in the University of Exeter. A recent paper co-authored with Nestor Garza studies the impact of the Colombian internal armed conflict on local development processes and deforestation during the 21st century.

    From the introduction:

    “The existing literature does not offer a consensus on the direction of the relationship between armed conflict and deforestation dynamics. Some authors have found that higher conflict intensity is linked to higher deforestation, whilst others have found that the armed conflict has slowed down deforestation. These contradicting results are due to differences in armed groups’ strategies within different spatial and temporal scales. However, to the best of our knowledge, the explicit (theoretically supported) mechanisms by which armed conflict and deforestation change over time and space have not been determined. That is why we develop a novel spatiotemporal theoretical and empirical framework of deforestation determinants in the context of an armed conflict, which we then test using dynamic spatial econometrics.”

    + + +

    +   “The good old days of high economic growth, low inflation, low interest rates, and low exchange rates were over; they had always depended on massive foreign capital inflows.” New on PW, Özgür Orhangazi on the roots of Turkey’s economic crisis. Link

    +   “Rather than a basic provision from the state, welfare provisions are marketed and advertised as a benevolent gift from the BJP government, indeed as the beneficence of Modi himself.” New on the Polycrisis, Tim Sahay speaks to Ravinder Kaur about Hindu nationalism and the BJP’s branding campaigns. Link

    +   In a new JFI report, Jack Landry analyzes the anti-poverty impacts of Congress’s new proposal for an expanded child tax credit. Link

    +   “Globalization of arms production has not led to a convergence of national defense industries into a liberal-market model.” Chonghyun Choi on the South Korean defense industry. Link.

    +   Zhun Xu on the characteristics of land transfer and the current state of farmland concentration in rural China. Link.

    +   Sebastian Diessner on central bank losses and monetary-fiscal coordination in Europe and Japan. Link

    +   “The new labour codes are an addition to the series of ‘reforms by stealth’ carried out by the government, to enhance flexibility in the labour market in the guise of promoting employment.” Adwitiya Mishra and Aasheerwad Dwivedi on India’s labor reforms. Link. And see Chirayu Jain’s PW essay on the subject. Link

    +   Margaret Myers, Ángel Melguizo, and Yifang Wang on minerals, metals, and changes in Chinese foreign direct investment in Latin America. Link. And see Juan Pablo Spinetto in Bloomberg on China’s Latin America strategy. Link

    +   “It is clear from our study that the official history writing and commemorative practices in Iran have not focussed on the World War I famine, nor on other severe famines. Despite its casualties being counted in the millions, other dramatic events have overshadowed the Great Persian Famine (GPF). The Islamic Revolution of 1979 was a watershed when it comes to how Iran’s official history has been narrated and which traumas of the past have been recognised and commemorated. While official memorialisation had a vastly different focus before and after the revolution, the GPF was written out of official history during both periods. In the pre-revolution period, powerholders had an interest in maintaining good relations with the former imperial powers, who had been instrumental in causing the GPF.” By Zahra Edalati. Link.