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Shoe Molds and Scuba Divers: How Natural Disasters Affect Our Supply Chains

Thomas Farole's picture

Like the massive earthquake in Japan earlier this year, the floods in Thailand are again exposing the vulerabilities of fragmented global supply chains.

Last month, a team of economists from PREM’s International Trade Department encountered some flooding side-effects during a visit to the Indonesian production site for ECCO, a Danish company that manufactures footwear. In order to transfer production to the factory in Indonesia, the workers needed the specific shoe molds used in the Thai factory. But there was a problem: The Thai factory was under three meters of water.

These specialized molds manufactured in the Thai factory would have taken several weeks to manufacture, which would have further delayed production. So ECCO hired scuba divers to enter the Thai factory and recover the molds. They then shipped them via air to other factories around the region, including ECCO Indonesia.

Shoemakers are not the only businesses with drowned components. Automotive producers are also hiring divers to rescue molds from underwater Thai factories, according to the Financial Times. Honda, for one, has said it will cut worldwide production by 50 percent because of a shortage of specialty parts. Reuters reports that computer hard drive prices have

Paul Collier and his Plundering Planet: When Both Economists and Environmentalists Don’t Get it Right

Otaviano Canuto's picture

Do you remember The Bottom Billion, Paul Collier’s 2007 book which became a classic? If you do, you will certainly like his latest work, The Plundered Planet. He came to launch his new book to the Bank this week, and I found it both fascinating and provocative. Let me give some examples of why.

Professor Collier, now the Director of the Centre for the Study of African Economies at Oxford University, declares a two-front war on economists and environmentalists at the same time. He is against what he calls “utilitarian economists,” because if left on their own, they would end up plundering the planet. But Collier also takes on “romantic environmentalists,” who would be unable to eradicate hunger in case they’re given the chance to rule the world. So as you can see, the book’s premises don’t really fit into the script of the blockbuster, Oscar-winning movie Avatar.

For Collier, who also worked as the Bank’s Research Director some years ago, Nature is the lifeline for the countries of the bottom billion – and thus cannot remain untouched. With a strong faith in the power of well-informed ordinary citizens, Collier proposes a series of international standards that would help poor countries rich in natural assets better manage those resources. Technology, which enlarges the capacity of ordinary citizens, is also necessary to turn Nature into assets. But of course, in order to be effective and benefit the bottom billion instead of just the few at the top, regulation, which requires governance, is another seminal element of the equation to create prosperity. If you leave regulation out of the equation, as some Libertarians do, the result is nature plundered. But if you end up with too much regulation – curbing the use of Nature – and thus preventing technology, then the result is hunger. And I’m certainly not one of those radical, romantic environmentalists who can imagine a bottom billion who is hungry but happy.

Brazil Announces Phase Two of the Growth Acceleration Program

Ihssane Loudiyi's picture

(All credits go to SECOM for this information)


President Luiz Inácio Lula da Silva announces US$ 526 billion in public and private investments over 2011-2014

Yesterday, Brazil launched phase two of the Growth Acceleration Program (PAC 2), announcing estimated investments of US$ 526 billion (R$ 958.9 billion) for the period from 2011 to 2014. PAC 2 includes new investment projects for the periods 2011 to 2014 and post-2014, as well as projects initiated during PAC 1 with activities that will conclude after 2010. For the period following 2014, the estimated investment is US$ 346.4 billion (R$ 631.6 billion). The two periods combined reach an amount of US$ 872.3 billion (R$ 1.59 trillion).

PAC is a strategic investment program that combines management initiatives and public works. In its first phase, launched in 2007, the program called for investments of US$ 349 billion (R$ 638 billion), of which 63.3% has been applied.

Similar to the first phase of the program, PAC 2 focuses on investments in the areas of logistics, energy and social development, organized under six major initiatives: Better Cities (urban infrastructure); Bringing Citizenship to the Community (safety and social inclusion); My House, My Life (housing); Water and Light for All (sanitation and access to electricity); Energy (renewable energy, oil and gas); and Transportation (highways, railways, airports).

“I consider PAC 2 as a portfolio of projects that the next administration can build from rather than starting from scratch, as there is no time to lose,” said President Luiz Inácio Lula da Silva during the announcement of the program.

PAC 2 Initiative in Detail...