After the elections that took place in Greece over the weekend, many European leaders breathed a sigh of relief…for a couple of hours. With the narrow defeat of the anti-austerity, anti-bailout opposition party, the results lessened the possibility that Greece would backtrack on commitments recently assumed as part of its second aid package, and decreased the chances of a chaotic exit from the Euro zone.
The World Region
Whenever we think of textile workers nowadays, we tend to think about cheap labor—particularly women sewing in overcrowded factories. In fact, the textile industry nurtures the narrative of how maquiladoras in the south have robbed manufacturing jobs from countries like the U.S., or how China has inundated the global market with cheap goods.
Recent data show that poverty is falling around the world. Today, 43 percent of people are considered to be living in “poverty” (on less than $2 per day), compared to 30 years ago when almost three-fourths of the developing world’s population was doing so.
Have you ever thought of international migration as being closely intertwined with issues of taxation, public welfare and inequality? That is actually the case both in home and destination countries.
Imagine a low-income country in the developing world suddenly discovering a large endowment of natural resources within its borders. Perhaps a large oil reserve is found just offshore, or a deposit of valuable natural minerals is uncovered just below the earth’s surface. Surely, such a discovery would be a blessing, as it would expand the country’s total stock of capital.
The volatility in commodity prices continues. Sure, they have come down in the last few days on Eurozone crisis fears but, all in all, they remain volatile, and in the case of food, very high. One of the reasons for this is that world commodity markets–particularly those for agricultural commodities—have become highly distorted.
“So what?” you may ask. Well, distorted price levels and excess price volatility are detrimental to producers and consumers alike.
Trade logistics, or the capacity of countries and companies to ship goods to international markets, is a key ingredient for economic competitiveness, growth, and poverty reduction. Poor logistics performance creates a deadweight loss for producers and consumers alike, and results in a net waste of resources. Improved trade logistics, on the other hand, would give a welcome boost to the economy at a time of fragile recovery from the global recession.
First, the good news: The world has become considerably less poor. Today, 43 percent of people are considered to be living in poverty—that is, living on less than $2 per day—compared to 30 years ago when almost three-fourths of the developing world was doing so. Even more heartening is that extreme poverty—that is, living on less than $1.25 per day to meet the most basic human needs—has declined even more.
One of the most distressing aspects of the frail economic recovery from the global crisis has been lagging job creation. In developed and developing countries alike, millions of people remain unemployed (some 200 million by ILO estimates), and many who still have jobs live in fear of losing them or seeing their incomes and benefits stagnate. Fortunately, the worst may be over in several parts of the world.
Perhaps it is not surprising that trade with emerging economies is often more complicated, time consuming, and costly than one would want. In addition to lacking some of the necessary physical infrastructure to transport goods, emerging economies frequently have complex and opaque regulatory requirements that create additional delays and increase transaction costs at their borders.