COAL ECONOMICS IN THE MOVIE “THE STARS LOOK DOWN”
May 10, 2007 at 1:27 pm | Posted in Economics, Financial, Globalization | Leave a comment
The Stars Look Down
(1940)
Starring: Michael Redgrave, Margaret Lockwood
Director: Carol Reed
This 1940 British movie masterpiece revolves around resource economics issues with special reference to coal and coal-mining.
The classic study “Coal Question” by William Stanley Jevons is mentioned in a university debate by the Michael Redgrave character within the movie.
Author: Jevons, William Stanley
(1835-1882)
Title:
The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal-Mines
Published: London: Macmillan and Co., 1866.
(Second edition, revised)
First published: 1865
Chapter I
INTRODUCTION AND OUTLINE.
DAY by day it becomes more evident that the Coal we happily possess in excellent quality and abundance is the mainspring of modern material civilization. As the source of fire, it is the source at once of mechanical motion and of chemical change. Accordingly it is the chief agent in almost every improvement or discovery in the arts which the present age brings forth. It is to us indispensable for domestic purposes, and it has of late years been found to yield a series of organic substances, which puzzle us by their complexity, please us by their beautiful colours, and serve us by their various utility.
I.1
And as the source especially of steam and iron, coal is all powerful. This age has been called the Iron Age, and it is true that iron is the material of most great novelties. By its strength, endurance, and wide range of qualities, this metal is fitted to be the fulcrum and lever of great works, while steam is the motive power. But coal alone can command in sufficient abundance either the iron or the steam; and coal, therefore, commands this age—the Age of Coal.
I.2
Coal in truth stands not beside but entirely above all other commodities. It is the material energy of the country—the universal aid—the factor in everything we do. With coal almost any feat is possible or easy; without it we are thrown back into the laborious poverty of early times.
ISRAEL CONFERENCE: BEGIN-SADAT CENTER
May 10, 2007 at 4:49 am | Posted in Israel, Middle East, Zionism | Leave a comment
BESA Conference in Israel:
“US-Israel Relations”
May 20-21, 2007
Wednesday, May 9, 2007
DORNBUSCH BOOK ON POLICYMAKING: WORLD BANK
May 10, 2007 at 1:29 am | Posted in Books, Economics, Financial, Globalization | Leave a comment
Policymaking in the Open Economy:
Concepts and Case Studies in Economic Performance
by Rudiger Dornbusch (Editor)
Edi Series in Economic Development
A World Bank Publication
Editorial Reviews
Review
“…this volume is a valuable collection that will certainly provide much of interest to both policymakers and government officials in developing countries and teachers of development studies.”–Choice
About the Author:
Rudiger Dornbusch is at the Massachusetts Institute of Technology.
Product Details:
Hardcover: 272 pages
Publisher: A World Bank Publication (December 18, 2001)
Language: English
ISBN-10: 0195208846
ISBN-13: 978-0195208849
Policymaking in the Open Economy:
Concepts and Case Studies in Economic Performance
Edi Series in Economic Development
by Rudiger Dornbusch (Editor)
KUWAIT: MONTHLY OIL AND MONEY MARKET REPORT
May 9, 2007 at 10:17 pm | Posted in Arabs, Economics, Financial, Globalization, Middle East, Oil & Gas | Leave a comment
Monthly Oil and Money Market Report
“KAMCO Research”
KAMCO Research Kamco_Research@kamconline.com
Wednesday, May 9, 2007
Kindly find attached the second issue of our:
Monthly Oil & Money Market Report for April 2007.
Kind regards
Investment Research Department
Investment Advisory & Research Division
Monthly Oil and Money Market Report
“KAMCO Research”
KAMCO Research Kamco_Research@kamconline.com
Wednesday, May 9, 2007
Street Address:
KIPCO Asset Management Co. K.S.C (Closed)
Al-Shaheed Tower
Floors: Ground, M1-M2, 2, 12 – 14
Khalid Bin Waleed Street, Sharq
Kuwait Postal Address:
P.O. Box 28873, Safat 13149, Kuwait
Telephone & Fax:
| General: | (+965) 805 885 |
| Asset Management: | (+965) 246 8299 |
| Financial Services: | (+965) 244 7195 |
| Client Relations: | (+965) 249 1923 |
| Marketing: | (+965) 243 6723 |
| Investment Research: | (+965) 241 8074 |
| Fax: | (+965) 244 5918 |
Email Addresses:
| General | info@kamconline.com |
| Marketing | marketing@kamconline.com |
| Asset Management | tpm@kamconline.com |
| Corporate Finance | cf@kamconline.com |
| Client Relations Department | clientrelations@kamconline.com |
Wednesday, May 9, 2007
Monthly Oil and Money Market Report
INTERGAS IV CONFERENCE: CAIRO
May 9, 2007 at 6:11 pm | Posted in Economics, Financial, Globalization, Middle East, Oil & Gas | Leave a comment
INTERGAS IV Conference
15 – 16 May 2007
CICC
Cairo International Conference Centre
Under the High Patronage of H.E. Eng. Sameh Fahmy, Minister of Petroleum and Mineral Resources, Egypt.
Only 2 weeks to go until Egypt’s largest ever Oil & Gas Conference and Exhibition.
To book your place CLICK HERE
INTERGAS IV Conference, 15 – 16 May 2007, CICC
We are pleased to announce that attending the opening ceremony for Intergas IV are:
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Representative for H.E. Viktor B. Khristenko, Minister of Energy & Industry, Russia H.E. Mohamed bin Dhaen Al Hamili, Minister of Energy, U.A.E |
This prestigious event brings together international companies and high level Egyptian officials to discuss current and future strategies within within Egypt’s hydrocarbon industry. The key focus will be investment opportunities and driving projects forward. Industry leaders will give delegates an invaluable insight into the market place and plans for the future.
| Speakers include: H.E. Sameh Fahmy, Minister of Petroleum and Mineral Resources, Egypt H.E. Maged George, Minister of State for Environment Affairs, Egypt Eng. Sherif Ismail, Chairman, EGAS Eng Abdel Aleem Taha, Chairman, EGPC Eng. Sanaa El Bana, Chairperson, ECHEM Zainul Rahim, Chairman, SHELL COMPANIES IN EGYPT Eng. Enrico Cingolani, General Manager, IEOC Hesham Mekawi, Chairman, BP EGYPT Ian Hewitt, President, BG EGYPT Luigi Marcon, Head of the Regional Office (Cairo), EUROPEAN INVESTMENT BANK Hesham Raafat, CEO, ORIENTAL PETROCHEMICALS COMPANY Stephanie Hudson, Director – Global Industry Co-ordination Team (Oil & Gas) Project and Export Finance, STANDARD CHARTERED BANK Hussein Khattab, Chief Executive Officer, E-Methanex Jean Abiteboul, Executive Director, CHENIERE LNG INTERNATIONAL Ikhlas Abdul Rahman, Country Manager, PETRONAS |
For the full programme click here
Hot topics covered in the agenda include:
The latest news and future plans of international operators in Egypt’s hydrocarbon sector
Financing energy projects in Egypt
Maximising Egypt’s position as a key player in international oil and gas markets
Opportunities in the domestic hydrocarbon market in Egypt
The thriving Egyptian petrochemicals industry – opportunities for national and international players
To make the most of your participation in INTERGAS, make sure you attend the social events that will provide the ideal setting for you to exchange ideas and strengthen relationships with your industry peers in a friendly atmosphere.
There are still a very limited number of sponsorship opportunities available, for more information of how you can raise your company’s profile at INTERGAS IV contact:
Ed Renshaw today on +44 20 7978 0081
To register for further information on the strategic conference please click here
Exhibition – Come and Join us at INTERGAS IV 15 – 17 May 2007
The INTERGAS IV Exhibition has been sold out for months and the participants are anticipating a fantastic event. All the major companies in Egypt and more than 200 from around the world look forward to welcoming you on to their stands. Please click here to see the latest floorplan.
Visiting the INTERGAS IV Exhibition is easy and complementary for all trade visitors. On arrival at the Cairo International Conference Centre you will be given a personalised badge and a copy of the official INTERGAS IV Catalogue. The exhibition is open to trade visitors at the following times:
15th May 13:00 18:00
16th May 10:00 18:00
17th May 10:00 16:00
For further information please email Estelle Bourguignon,
ebourguignon@thecwcgroup.com
or call tel: +44 20 7978 0079
INTERGAS IV Technical Sessions, 17 May 2007
Held alongside the exhibition at the Cairo International Convention Centre, the INTERGAS IV technical sessions will be held throughout the day on 17th May. The technical sessions will allow more than 200 participants to attend with Q&A opportunities designed to enhance levels of specific expertise within the industry. The presentations will cover the latest technologies and best working practices For the call for abstracts please click here
eMEESHeadlines
Conference Announcement: INTERGAS IV
MEES Announcements announcements@mees.com
Wed, 9 May 2007
QIZ: QUALIFIED INDUSTRIAL ZONE
May 9, 2007 at 4:53 am | Posted in Economics, Financial, Globalization, Israel, Middle East | Leave a comment
Qualified Industrial Zones (QIZ)
Qualified Industrial Zones (QIZ) is a unilateral act by the USA in an innovation designed to encourage Jordanian exports to the U.S market, thus inviting National and International Companies to take advantage of this unprecedented initiative enabling Jordan to offer a unique opportunity to all Manufacturers. This concept allows goods manufactured in these Zones to enter the USA Duty free & Quota free thus offering a unique opportunity to all International Manufacturers to move their Industries to these Zones.
The advantages of the QIZ are numerous:
– Assures Duty and Tariff free access to the US market.
– No Quotas on export to U.S. market for products manufactured in the QIZ.
– Total Income and Social Tax exemption.
– Imported materials are not subject to Custom Duties.
– No restriction on Project ownership.
– No restriction on Foreign Currency transactions.
– No time limits or renewal requirements for QIZ’s.
– Full repatriation of capital , profits and salaries.
U.S. customs tariff on certain goods entering the USA that will be saved by the Investor in the QIZ for certain items are as follows:
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1-From 25% up to 48% on Footwear:Waterproof , with metal Toe-cap, covering the knee, Sports Footwear, designed for use without closure, Work Footwear, Footwear with open toes or open heels, Footwear of the slip-on type, and parts of Footwear. |
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2-From 20% up to 33.6% on Woven Fabrics, Textiles, Garments, Swimwear, Body suits, Shirts, Trousers, Suits, Jackets, Raincoat, Underwear, Blouses, Skirts, Blazers, Ski-suits, Anoraks, for both women & men. |
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3-From 18% up to 34% on Tableware, Kitchenware, other Household and Toilet articles of Porcelain or China, Hotel or Restaurant ware, Glassware ,Ceramic tableware, Glass ceramics, Drinking glasses, other Glassware of Lead crystal. |
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4-From 6% to 20% on Trunks, Suitcases, Attache Cases, Wallets, Handbags. |
| 5-From 10% to 20% on Cheeses. |
Qualifying your product:
To qualify a product in the QIZ, contents of any product produced in the QIZ must represent a minimum of 35% of the appraised value.
There are three methods to comply with the requirements:
| First: | of the 35% minimum QIZ content, the breakdown must be not less than: 11.7% from a Jordan QIZ 8.0% from Israel (7% for high tech goods). The remaining content, to reach the 35% total required, may come from either a Jordan QIZ, Israel, USA or West Bank/Gaza. |
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| Second: |
The Jordanian and Israeli manufacturers may each maintain at least 20% of the total production cost of the QIZ manufactured goods (excluding profits). Production costs may include (Raw materials, Packing materials),Wages and Salaries, Design and R & D. |
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| Third : | Mixing and matching of the two above methods is also allowed. |
Important Note:
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In apparel manufacturing, imported fabric can be considered as local (made in QIZ) raw material if double substantial transformation occurs locally. Double substantial transformation in the case of fabric can be cutting and sewing. It is important to note that the cost of the fabric that is cut and sewn locally will be admissible when calculating the 35% minimum value added content requirement (the primary requirement). It will not, however, be taken into consideration when calculating the respective share of each country under the first method. |
The first zone designated in Jordan as QIZ was the Al-Hassan Industrial Estate in March 1998. The success of that Zone was phenomenal as all the area was occupied by Local and International Manufacturers. The demand for these areas are increasing tremendously as International Manufacturers have become aware of the advantages to move their facilities to such Zones. Due to that success other areas in Jordan were designated as QIZ including the Ad-Dulayl Industrial Park, a park which is ready to accommodate industries right away.
INDONESIA ECONOMICS
May 8, 2007 at 2:08 am | Posted in Asia, Economics, Financial, Globalization, Research | Leave a comment
Bulletin of Indonesian Economic Studies
Volume 42, Issue 3 December 2006
pages 295 – 319
SUMMARY
The growth of Indonesia’s GDP accelerated in the second quarter of 2006, thanks to the buoyant performance of the communications, construction, transport and agriculture sectors.
From the demand perspective, growth was supported by increased government spending and net exports. Macroeconomic stability has continued to improve, and Jakarta’s stock exchange has been outperforming others in the region, reflecting positive market sentiment in response to stable government, the improved growth rate, and the steady decline in inflation and interest rates. With these positive macroeconomic signs and high commodity prices in international markets, a sense of optimism has started to emerge in some sectors, but there are also concerns that economic reform has stalled. The challenge for the government is to balance its political need for short-run ‘wins’ with the imperative for long-run macroeconomic stability. Among the ideas for generating a quick win, the ambitious proposal for development of a large-scale bio fuel industry has gained much attention, but it is very unlikely to be a short-term panacea for the problems of high unemployment, poverty and dependence on increasingly costly fossil fuels.
The government has had to deal, once again, with the highly controversial issue of rice imports. The rice import ban imposed by the government last year was the main cause of surging rice prices in 2006. These in turn – not the 2005 fuel price rises, as has often been claimed – were the primary trigger for the significant increase in poverty reported in September. Removing the rice import ban is therefore likely to help reduce poverty.
The announcement of a number of policy packages intended to boost lagging investment, particularly in infrastructure, may well reflect genuine intentions on the part of the government, but what really matters is implementation. There seems to have been a loss of momentum in this regard for various reasons, including a lack of capacity in the bureaucracy, and the fact that many officials have a clear incentive to oppose reform.
This strongly suggests the need for a major civil service overhaul, extending far beyond the present focus on anti-corruption efforts. The need for such an initiative is also apparent in the failure of the bureaucracy to prevent or deal adequately with the mud flow disaster in Sidoarjo in May. Reform is also necessary in relation to the legislatures, where delays in enacting or amending key laws often reflect a pay-off to members from being able to frustrate governments’ legislative intentions.
THE POLITICAL AMBIENCE FOR ECONOMIC REFORM
The economy has long since recovered from the severe economic crisis of 1998-99 and is now relatively stable, but there is growing scepticism about the government’s capacity to implement reform. Moreover, decentralisation has created tensions between central government objectives and policies and the roles played by local governments, which have become far more important than previously. The government’s increasingly apparent inability to deliver on its well-publicised reform agenda means that hopes that it could restore economic growth to pre-crisis levels have proven unduly optimistic. In these circumstances managing expectations has become a key issue, as by now public debate seems dominated by pessimism. Good news and stories about government successes hardly ever appear in the media, reflecting the low level to which confidence in the government has fallen. Interestingly, criticism is most often directed at min-isters – particularly those in the economic team – and rarely at the president. This may be because trust in the president, although declining, remains high. Alternatively, critics may only be aiming to bring down particular ministers, rather than the government itself.
Improving macroeconomic stability is easier than implementing micro economic and institutional reform, because the former is in almost everyone’s best interest, whereas the latter always faces challenges from groups whose interests are harmed by reform.
Moreover, the benefits of reform generally materialise in the medium or long term, while the political cost that potential losers from reform can impose on governments is often immediate.1
In fact, the government has been successful in handling a number of difficult issues that previous administrations were not able to resolve, including bringing peace to Aceh, settling the dispute with ExxonMobil over the Cepu oil field (Sen and Steer 2005: 299; Manning and Roesad 2006: 159-60), and finding a way to end the impasse with Cemex over its stake in PT Semen Gresik.2 Yet it has not been able to exploit these success stories so as to convince the public that significant progress is being made. Although commentators concede that macroeconomic stability has improved, their primary criticism is that this has not resulted in job creation on the scale needed to reduce unemployment and poverty.
Growing public impatience for reform, combined with strong opposition from those who stand to lose from it, has left the president feeling under strong pressure to register some ‘quick wins’ in order to gain public trust. The challenge for the economic team, therefore, is to achieve this without jeopardising macroeconomic stability. If it fails, there is a risk that pressure for populist economic policies will build, further weakening the government’s commitment to reform. Such pressure is likely to generate only inferior quick fixes aimed at maintaining public support for the government.
In a retreat at Losari, Central Java, in early July, the president gave a presentation entitled ‘(Post Crisis) New Deal and Bio Energy Action Plan’, based on the notion that Indonesia needs a major initiative that will create a large number of jobs within a short period. We discuss the bio fuel initiative in detail below; suffice it here to note that it envisions a quick pay-off in terms of reduced unemployment and poverty, without the need to introduce reforms that would generate strong political resistance. But the threat to macroeconomic stability is great. The scale of the proposal is enormous, and it seems potentially more appropriate for dealing with long-run rather than short-run objectives.
In our view there is no quick fix for the unemployment problem; solving it without confronting the politically painful process of labour market reform will be impossible (Manning and Roesad 2006: 163-9).
GROWTH AND MACROECONOMIC TRENDS
Economic growth
Sectoral performance. After declining steadily for five consecutive quarters, GDP growth rebounded in the second quarter of 2006 to grow by 5.2% year-on-year (y-o-y), up from 4.7% in the previous quarter, and somewhat better than predicted by many observers (table 1). The upturn in growth overall was significantly affected by unusually high growth in agriculture, which is unlikely to be sustained.
http://www.informaworld.com/smpp/section?content=a759283828&fulltext=713240928
BANK FOR INTERNATIONAL SETTLEMENTS BIS REVIEW NOS. 43-40 2007: GLOBALIZATION & FINANCIAL DEVELOPMENT
May 7, 2007 at 11:25 pm | Posted in Economics, Financial, Globalization | Leave a comment
Please find BIS Review No 43 attached as an Adobe Acrobat (PDF) file. Alternatively, you can access this BIS Review on the Bank for International Settlements’ website by clicking on http://www.bis.org/review/index.htm
What’s included?
BIS Review No 43 (7 May 2007)
Mervyn King: The MPC ten years on
Christian Noyer: From Maastricht to the present and beyond
Nils Bernstein: Recent economic and financial developments in Denmark
Lucas Papademos: Economic performance, institutions, and human values
________________________________
please e-mail press.service@bis.org
Please find BIS Review No 42 attached as an Adobe Acrobat (PDF) file. Alternatively, you can access this BIS Review on the Bank for International Settlements’ website by clicking on http://www.bis.org/review/index.htm
What’s included?
BIS Review No 42 (4 May 2007)
Christian Noyer: Financial innovation, monetary policy and financial stability
Christian Noyer: A central banker’s personal perspective on hedge funds
David Dodge: Brief overview of the Canadian economy
Davíð Oddsson: Economic and financial developments in Iceland
Ardian Fullani: Financial stability in Albania
Shamshad Akhtar: Monetary policy in Pakistan
X P Guma: Higher education in South Africa
________________________________
please e-mail press.service@bis.org
Please find BIS Review No 41 attached as an Adobe Acrobat (PDF) file. Alternatively, you can access this BIS Review on the Bank for International Settlements’ website by clicking on http://www.bis.org/review/index.htm
What’s included?
BIS Review No 41 (2 May 2007)
Ben S Bernanke: Embracing the challenge of free trade – competing and prospering in a global economy
David Dodge: Bank of Canada’s views on the Canadian economy and its monetary policy objective
Davíð Oddsson: The commercial banks are more resilient
Rasheed Mohammed Al Maraj: Brief review of Bahrain’s financial market developments
Audrey E Anderson: Effective conglomerate and consolidated supervision in the Caribbean
Frederic S Mishkin: Globalization and financial development
_______________________________
please e-mail press.service@bis.org
Please find BIS Review No 40 attached as an Adobe Acrobat (PDF) file. Alternatively, you can access this BIS Review on the Bank for International Settlements’ website by clicking on http://www.bis.org/review/index.htm
What’s included?
BIS Review No 40 (27 April 2007)
Jean-Pierre Roth: Review of the Swiss economy in 2006 and the outlook for 2007
Ben S Bernanke: The importance of financial education
Stefan Ingves: Communication – what demands are made of an independent central bank?
David Dodge: Summary of the latest Monetary Policy Report
Rundheersing Bheenick: Launch of the Monetary Policy Committee at the Bank of Mauritius
Donald L Kohn: Industrial loan companies
________________________________
please e-mail press.service@bis.org
BIS Review No 40 available
Press, Service Press.Service@bis.org
“Publications, Service” Publications@bis.org
Friday, April 27, 2007
GLOBALIZATION 1870-1914 VERSUS GLOBALIZATION TODAY
May 7, 2007 at 3:41 pm | Posted in Economics, Financial, Globalization, History | Leave a comment
Globalization and New Comparative Economic History
NBER Reporter: Research Summary Winter 2006
Alan M. Taylor
Globalization is probably one of the most overused words in economics, as it is in many other realms of academic and public debate. Nonetheless, it cannot be avoided, if only because an understanding of the modern world requires us to confront it. Economically, its potential benefits seem all too apparent: for example, the fast growing industrializing economies of Asia are well connected to global markets for goods and capital. Conversely, no economically isolated country has prospered. As UN Secretary General Kofi Annan has pointed out “The main losers in today’s very unequal world are not those that are too exposed to globalization, but those who have been left out.”My recent research has focused on the causes and consequences of globalization, and is based on an interdisciplinary approach that straddles international economics, economic growth, and economic history. Methodologically, an historical approach has appeal because the global “economic laboratory” provides data not only across space (for cross-country comparisons) but also across time (from previous centuries to the present era). Historical data contain more variation than contemporary data alone, providing a wealth of information to be exploited. An emerging sub-field of New Comparative Economic History is devoted to exploring relationships in the very long-run in the economic environment (institutions, regimes, policies, and so on) and economic outcomes (growth, inflation, trade, capital movements, and so on). In that vein, I have been working to address several important questions that help us understand economic globalization over the last 100-150 years, allowing us to understand the economic outcomes of today with a deeper perspective.
In this research summary I highlight two strands of this work: the evolution of global capital markets and the evolution of world trade. These topics address such issues as: how can we measure the extent of globalization? What explains the rise and fall of globalization in different eras and in different countries? What are the costs and benefits of globalization?
The Ebb and Flow of Global Capital
The forces of economic globalization appear particularly strong at present, but economic historians have been at pains to point out that we are now living in the second era of globalization, not the first. The first stretched from roughly 1870 until the start of World War I in 1914 and saw unprecedented integration in international market for goods, capital, and labor.
Since a key issue for the intellectual enterprise of New Comparative Economic History is whether the past can provide useful lessons for the present, we have first to answer the question of whether this past era in any way resembles the present. A first challenge is to assess quantitatively when and where the extent of market integration in the past bore any resemblance to that seen today.Much of my own research, including a large project in collaboration with my fellow NBER Research Associate Maurice Obstfeld, has been concerned with this question of measuring market integration over time, with a focus on global capital markets.(1) There is no agreed upon method for evaluating market integration, although we have made some progress recently using nonlinear theoretical and empirical models to better estimate transactions costs in markets using high-frequency price data. For most applications both price and quantity criteria remain relevant. Each have their weaknesses — quantities may flow, and prices may converge, between locations despite large obstacles — and auxiliary assumptions and information must be carefully considered using either criterion. Yet what we find, broadly, is that global capital markets were just as impressive in their degree of integration a century ago as they are today. Some very simple quantity criteria can sum up the story.
For example, we can look simply at the ratio of the stock of foreign investment in the world to global GDP. Plotted over time, this series has a distinctive shape. It rose dramatically from 1870 to 1914, from 7 percent to 18 percent. From 1914 to 1950 it fell precipitously to just 5 percent. It rose slowly but stayed fairly low through the 1980s, and it then surged quickly in the last two decades of the twentieth century from 25 percent to 92 percent. The data suggest that we have indeed lived through two eras of globalization, and using this yardstick, the international movement of capital one hundred years ago was no less impressive than that witnessed today. The data also reveal two major reversals in the twentieth century: a steep decline in capital movement in the interwar years and a steep rise in the 1980s, creating a distinctive “U-shape” pattern when these data are plotted.More formal tests are possible. For example, turning from stock data to flow data, we can look at the correlation of saving and investment rates across countries and across time. As the seminal work of Martin S. Feldstein and Charles Y. Horioka points out, a small open economy need not see any correlation of domestic investment and saving in the short run, so any correlation between the two may be considered prima facie evidence of capital market frictions.(2) We can gain some preliminary insight if we apply this methodology across time and space, using annual data from 1870 to the present. We suppose that investment is driven by where the best profit opportunities are, at home or abroad; saving is driven by consumption choices, which the household can in principle de-link from firm investment choices; and the difference between saving and investment is the current account. We need only to add the caveat that, in the long-run, the two must be correlated: the long-run budget constraint of the economy dictates that “on average” the current account be in balance, allowing for initial wealth.Econometric results show that the correlation between saving and investment almost never goes to zero — indeed, the long-run budget constraint tends to keep the measure between a minimum of 0.5 and a maximum of 1 for reasonable model simulations under a wide range of parameters. Yet this range still provides a useful yardstick. Sure enough, we find correlations in the data close to the low of 0.5, implying low frictions, in both eras of globalization: a century ago and today. We find high correlations close to the high of 1, implying high friction, in between: during the interwar period and the Bretton Woods era (the latter being the period studied by Feldstein and Horioka). The familiar story of two globalizations — and the same “U-shape” — emerges again.
The “U-shape” pattern, which recurs in many other tests based on a variety of data and empirical methodologies, also conforms to the broad contours of the history of macroeconomic policymaking in the world’s major economies that are the main focus of the study (quite different patterns apply to developing countries). In the two eras of globalization, capital controls were notably absent and were typically frowned upon; in between, at the bottom of the “U,” capital controls became prevalent and came to be judged as the norm. How and why the history of policymaking followed these twists and turns then becomes an important question.
A central concept in international macroeconomics presents itself as a candidate explanation: the “trilemma.” The trilemma posits that economic policy cannot simultaneously achieve three goals — a fixed (or even managed) exchange rate, which may be desired for stability purposes; international capital mobility, which may be desired for access to foreign capital; and autonomous monetary policy, which may be desired for managing the business cycle or providing a lender of last resort. The logic is that under a fixed exchange rate and capital mobility, simple interest parity means that the local interest rate must equal the “world” interest rate, and monetary policy is rendered ineffective (or impossible). Something has to give if monetary policy is to be enabled: either the exchange rate must float or capital controls must be applied to suspend parity and admit interest differentials. Prevailing narratives that tell the history of the world in four parts (that is, the macroeconomic history since 1870) build on the trilemma’s logic.(3) In the classical gold standard (1870-1914) monetary policy was subordinated to the goals of capital mobility and a fixed exchange rate. In the interwar period, perhaps because of increasing democratic pressure, governments felt the need to use autonomous monetary policy; what gave was the peg (the collapse of the gold standard) or, in some cases, capital mobility. But the economic chaos and instability of the interwar period was intolerable to those planning the contours of the postwar global economy at Bretton Woods, and fixed exchange rates were still viewed as a sine qua non for a stable world economy. The new arrangements would sacrifice capital mobility to keep currencies on “adjustable” pegs to the dollar and yet preserve monetary policy autonomy. Still, this system could n ot endure: capital movements (often disguised) grew in the 1960s, the adjustability of pegs invited speculative attacks, and importing rising inflation from the U.S. anchor currency imposed costs on the other players. From 1971 onwards, the major economies have floated, adapting to (even encouraging) capital mobility, and resolving the trilemma in the only other way that preserves policy autonomy.The trilemma sounds like a nice story, but what is its explanatory power and historical relevance? This hitherto unexplored question can be addressed be examining the degree of correlation between “local” and “world” interest rates, controlling for the type of exchange rate regime and capital control regime in operation. Tested in this way, the trilemma finds strong support in all historical eras from the Gold Standard to the present and under a wide variety of macroeconomic regimes. These findings provide an evidentiary base for our accounts of global macroeconomic history; they also give much-needed empirical weight to the idea of the trilemma, one of the most fundamental constraints that economic policymakers have all too often ignored, to their peril.The Rise and Fall of World TradeThe historical patterns of globalization seen in capital markets also carry over to goods markets and the history of international trade. Circa 1870, the ratio of world trade to GDP stood at 10 percent, rising to 21 percent by 1914, falling to 9 percent by 1938, and then rising to 27 percent by 1992: a first phase of globalization followed by that twentieth-century “U-shape” again. What can explain this rise and fall (and rise) of world trade? This has been another major goal in my research.(4)
To understand trade patterns in the long run requires that we adopt a theoretical model and estimate its parameters using long-run data. Two models stand out as leading contenders for this job. First, the Heckscher-Ohlin model, in which trade happens as a result of differences in countries’ factor endowments; second, the so-called gravity model, in which countries export differentiated products in proportion to their own country size and subject to distance-related transport costs.(5) Getting the Heckscher-Ohlin model to match real-world data has generated endless problems with postwar data: relative abundance (or scarcity) of a particular factor is a poor predictor of whether said factor will tend to be exported (respectively, imported) by any given country. Instead, the so-called factor content of trade goes the “wrong” way. And, even more perplexing, the volume of trade is far too small to be consistent with the model — the so-called paradox of “missing trade,” which can only be solved (or assumed away) theoretically with strong anti-trade axioms of home bias. It thus might be expected that with data from distant history, from the period 1870-1939, we might also encounter problems with the theory. This is broadly true, although we can find some weak support for the model as it applies to natural resources — arguably the factors that were uppermost in Heckscher and Ohlin’s minds.(6)Turning to the gravity model, however, results in something more like an empirical success with historical data, as I have found in research with various collaborators.
Again, this matches the empirical success of the gravity model using postwar data. Yet if our goal is to understand why trade rose and fell so markedly over time, an unadorned gravity model is not much help, since relative country sizes and distances change little over time. Instead we need to include other measures of policies, institutions, and the changing economic environment, and some obvious candidates stand out here for the late nineteenth and early-to-mid twentieth century: the rise and fall of the gold standard, a monetary arrangement which was believed to be a stimulus of world trade; the transportation revolution, which dramatically lowered long-distance shipping costs before 1914 through technological change in shipping and the construction of major canals; changes in tariff policy, particularly after 1914 when trade policy activism became common; and the impact of wars, particularly the two World Wars which affected a large fraction of the world economy.The results of these studies give little hope that a monocausal explanation will suffice to explain the history of world trade. We find that the gold standard made a difference, and when two countries both go onto the gold standard their bilateral trade rises by 42 percent, which helps to account for much of the rise in trade before 1914, and much of its disappearance by 1939. There are direct parallels here, of course, with the contemporary debate over the impact of common currencies on trade, especially the long-run impacts of the euro. We also find that the decline of transport costs likewise made a big difference in the 1870-1914 period, explaining a large fraction of the trade boom; but after 1914, trade costs rose (relative to wholesale prices) helping to turn the boom into a bust. Interwar tariff policy, especially in the 1930s, was also an important culprit in the collapse of world trade. Finally, war matters. In very recent work, we have found that wars have a profound — and very persistent –effect on trade between countries.(7)
In wartime perhaps 90 percent or more of trade between countries simply disappears; but even after the war ends, we find that it takes about ten years for trade to return to normal “peacetime” levels. This also helps to explain the precipitous drop in interwar trade and the slow post-1945 recovery: globally about 10 to 20 percent of world trade was probably destroyed by the “war effect” alone. We also find large “negative externalities” from war, in the sense that even neutral countries suffer a drop in trade when their trading partners enter a conflict. A speculative and rough estimate of the costs of such “lost trade” finds that they might be significant in welfare terms, of the same order of magnitude as the costs of lost human capital (measured by lost wages attributable to deaths or injuries). We have therefore been able to document a quantitatively important cost of war that is subject to large spillovers, and that has been little understood until now.
Future Research
Historical research on the past evolution of the global economy sheds new light on the causes and consequences of economic integration and the problems and challenges it may cause for people, firms, and policymakers today and tomorrow. In recent years we have arrived at new insights using the systematic, quantitative, cross-country and cross-time approach of the New Comparative Economic History, but there remain many unanswered questions. Understanding the frictions in the global economy is a central task for students of international trade and finance in the past and present.(8)
Methodologically, we shall continue to develop better techniques to assess how globalization has evolved, and how well integrated markets are at any given time.(9) We can then better understand how close we are to a hypothetical single market in goods and capital or how severe is “market failure.” These assessments also need to take into account the wide ranges of policies and institutions that have operated across time and space and which have encouraged or inhibited international trade and finance.
The latest research casts doubt on simple generalizations that globalization is always beneficial or always harmful; rather, its benefits appear to be greater in countries that climb up the ladder of institutional quality. In time we will develop a more detailed knowledge of how globalization has worked in different contexts. We will then be better placed to know whether the promises of prosperity held out by the process of globalization will be shared by only a few, or — as Kofi Annan and many others hope — by many.
*Taylor is a Research Associate in the NBER’s Programs on the Development of the American Economy, International Trade and Investment, and International Finance and Macroeconomics, and a professor of economics at the University of California, Davis.
1. This research was recently published in book form: M.Obstfeld and A.M.Taylor, Global Capital Markets: Integration, Crisis, and Growth, Japan-U.S. Center Sanwa Monographs on International Financial Markets (Cambridge: Cambridge University Press, 2004). We gratefully acknowledge the financial support of the Sanwa Prize in International Economics and Financial Markets. The related background papers, all of which appeared as NBER Working Papers, were published as follows: M.Obstfeld, J.C. Shambaugh, and A.M.Taylor, “The Trilemma in History: Tradeoffs among Exchange Rates, Monetary Policies, and Capital Mobility,” NBER Working Paper No. 10396,
March 2004, and Review of Economics and Statistics 87 (August 2005), pp.423-38; “Monetary Sovereignty, Exchange Rates, and Capital Controls: The Trilemma in the Interwar Period,” NBER Working Paper No. 10393, March 2004, and IMF Staff Papers 51 (Special Issue 2004): pp.75-108; M.Obs tfeld and A.M.Taylor, “Sovereign Risk, Credibility, and the Gold Standard: 1870-1913 versus 1925-31,” NBER Working Paper No. 9345,
November 2002, and Economic Journal 113 (April 2003), pp.1-35; “Globalization and Capital Markets,” NBER Working Paper No. 8846, March 2002, in Globalization in Historical Perspective, M. D. Bordo, A. M. Taylor, and J. G. Williamson, eds. (Chicago: University of Chicago Press, 2003); A.M.Taylor, “A Century of Current Account Dynamics,” NBER Working Paper No. 8927, May 2002, and Journal of International Money and Finance 21 (November 2002), pp. 725-48; A.M.Taylor, “A Century of Purchasing Power Parity,” NBER Working Paper No. 8012, November 2000, and Review of Economics and Statistics 84 (February 2002), pp.139-50; M.Obstfeld and A.M.Taylor, “The Great Depression as a Watershed: International Capital Mobility in the Long Run,” NBER Working Paper No. 5960, May 1999, in The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, M. D. Bordo, C. D. Goldin, and E. N. White, eds. (Chicago: University of Chicago Press, 1998) 2. See M.S.Feldstein and C.Y.Horioka, “Domestic Saving and International Capital Flows,” Economic Journal 90 (1980), pp. 314-29.
3. For an influential example, see B.J.Eichengreen, Globalizing Capital: A History of the International Monetary System (Princeton, N.J.: Princeton University Press, 1996).
4. The relevant published papers are as follows, and all appeared first as NBER Working Papers: A.Estevadeordal, B.Frantz, and A.M.Taylor, “The Rise and Fall of World Trade, 1870-1939,” NBER Working Paper No. 9318, November 2002, and Quarterly Journal of Economics 118 (May 2003), pp. 359-407; A.Estevadeordal and A.M.Taylor, “Testing Trade Theory in Ohlin’s Time,” NBER Working Paper No. 8842, March 2002, in Bertil Ohlin: A Centennial Celebration, 1899-1999, R. Findlay, L. Jonung, and M.Lundahl, eds. (Cambridge: MIT Press, 2002); A. Estevadeordal and A.M.Taylor, “A Century of Missing Trade?” NBER Working Paper No. 8301, May 2001, and American Economic Review 92 (March 2002), pp.383-93.
5. For a thorough survey of these models see R.C.Feenstra, Advanced International Trade: Theory and Evidence (Princeton, N.J.: Princeton University Press, 2004).
6. The application of the Heckscher-Ohlin model to the late nineteenth century works rather better when its price predictions, rather than quantity predictions, are put to the test. See K.H.O’Rourke, A.M.Taylor, and J.G.Williamson, “Factor Price Convergence in the Late Nineteenth Century,” NBER Historical Working Paper No. 46, November 1996, and International Economic Review 37(1996), pp. 499-530; and K.H.O’Rourke and J.G. Williamson, Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy (Cambridge: MIT Press, 1999).
7. R. Glick and A.M.Taylor, “Collateral Damage: Trade Disruption and the Economic Impact of War,” NBER Working Paper No. 11565, August 2005.
8. See, for example, M. Obstfeld and K. Rogoff, “The Six Major Puzzles in International Finance: Is There a Common Cause?” NBER Macroeconomics Annual (2000), pp. 339-90; and J.E.Anderson and E. van Wincoop, “Trade Costs,” Journal of Economic Literature, 42 (2004), pp. 691-751.
9. In this area, one of the most promising avenues appears to be the use of nonlinear models of price adjustment to infer transaction costs. See E.Canjels, G. Prakash-Canjels, and A.M.Taylor, “Measuring Market Integration: Foreign Exchange Arbitrage and The Gold Standard, 1880-1913,” NBER Working Paper No. 10583, June 2004, and Review of Economics and Statistics 86 (November 2004), pp. 868-82; M.P.Taylor and A.M.Taylor, “The Purchasing Power Parity Debate,” NBER Working Paper No. 10607, July 2004, and Journal of Economic Perspectives 8 (Fall 2004), pp. 135-58; A.M.Taylor, “Potential Pitfalls for the Purchasing-Power Parity Puzzle? Sampling and Specification Biases in Mean-Reversion Tests of the Law of One Price,” NBER Working Paper No. 7577, March 2000, and Econometrica 69 (March 2001), pp. 473-98; M.Obstfeld and A.M.Taylor, “Nonlinear Aspects of Goods-Market Arbitrage and Adjustment: Heckscher’s Commodity Points Revisited,” NBER Working Paper No. 6053, June 1997, and Journal of the Japanese and International Economies 11 (December 1997), pp. 441-79.
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Globalization and New Comparative Economic History
1967 MIDDLE EAST WAR: BOOKS
May 7, 2007 at 12:06 am | Posted in Arabs, Books, History, Israel, Middle East, Military, Zionism | Leave a comment
1967: Israel, the War, and the Year that Transformed the Middle East
by Tom Segev (Author), Jessica Cohen (Translator)
Product Details:
- Hardcover: 688 pages
- Publisher: Metropolitan Books
- (May 29, 2007)
- Language: English
- ISBN-10: 0805070575
- ISBN-13: 978-0805070576
Six Days of War: June 1967 and the Making of the Modern Middle East
Product Details:
- ISBN: 9780195151749
- Subtitle: June 1967 and the Making of the Modern Middle East
- Author: Oren, Michael
- Publisher: Oxford University Press
- Publication Date: April 2002 Michael B. Oren is the author of The Origins of the Second Arab-Israeli War, and has written extensively on Middle Eastern history and diplomatic affairs. He received his Ph.D. from Princeton University in Middle East studies, and has served as Director of Israel’s Department of Inter-Religious Affairs in the government of the late Prime Minister Yitzhak Rabin, and as an advisor to the Israeli delegation to the United Nations. He is currently a Senior Fellow at the Shalem Center in Jerusalem.
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