The growing success of efforts to contain the spread of Covid-19, the disease caused by the virus, may present yet another hurdle – How to end lockdown without causing a second wave? There is no modern analog for the shutdown of economic activity. Ending the lockdown needs unparalleled capabilities in testing, tracing and most importantly it needs researchers to deliver a new vaccine!
This paper makes the case for low and middle-income countries (LMIC) to be part of the clinical evaluation of the efficacy and safety of the COVID-19 future vaccine, the ramping up of regional manufacturing capabilities for local immunization and underscores the critical importance of reaching an advanced purchase agreement with manufacturers and suppliers as well as building up multilateral financial partnerships with key institutions before even a vaccine is made available in either North America, Asia and/or Europe.
In my previous post, I summarised a demand-side explanation of the British Industrial Revolution. In this post, I will outline a supply-side explanation put forward by economic historians Margaret Jacob and Joel Mokyr. According to the supporters of the supply-side explanation, Britain had a supply of human capital who were capable of using science and engineering knowledge to solve practical problems. Besides having a comparative advantage in human capital over continental Europe, by the eighteenth century, Britain had the necessary institutional environment that promoted the principles of the market economy. Interaction between the forces of market economy and science made the practical applications of scientific discoveries more successful in Britain. This did not happen in continental Europe, because, for centuries, the political and religious establishment had been restricting the advancement of science if it conflicted with their political agenda and Western Europe was politically fragmented.
China’s recent emergence in the world economy was underpinned by a massive process of labour reallocation delivered by the country’s nascent labour market. After several decades in which labour was allocated and rewarded centrally, according to communist principles, a number of market-oriented reforms led to greater flexibility and responsiveness to demand and supply. Given the large pool of underemployed workers eager to increase their incomes, in particular in rural areas – over 150 million people according to some estimates –, the potential for growth from industrialisation and exports was considerable.
This note summarises the research presented in a policy workshop held last week in Brussels. The studies were conducted under the ‘Economic Analysis of Collective Bargaining Extensions’ (CoBExt) project, funded by the European Union, and focused on the cases of Greece, Italy, Portugal and Spain.
In my introduction, I presented a comparison of collective bargaining (CB) across the four countries. Despite generally low trade union density rates, particularly in the private sector, these countries exhibit very high CB coverage, precisely because of widespread and nearly automatic (explicit or implicit) extensions. The exceptions to these practices were Greece and Portugal but only during their adjustment programmes, when extensions were entirely suspended (Greece) or made conditional on representativeness criteria similar to other EU Member States (Portugal). In Greece, firm-level CB agreements were also boosted through the suspension of the favourability principle, which allowed for greater differentiation in working conditions across firms.
Despite Western sanctions and oil-price volatility, Russia is currently on sturdier economic footing than most of its critics ever could have imagined just a few years ago. But while prudent fiscal and monetary policies have laid the groundwork for long-term sustainable growth, the government must resist the temptation of short-term stimulus.
Russia has a way of illustrating universal problems. Consider the goal of economic development. Political leaders have an interest in delivering economic prosperity very quickly, and yet the policies needed to enable sustainable long-term growth can take quite a while to bear fruit. The political and policy clocks are rarely synchronized.
The latest American sanctions salvo against Russia announced on 6 April amounts to a major escalation in the economic war which – with real, and potentially nuclear, war being unthinkable – has been the preferred response of US and EU to the geopolitical challenge from Russia that began with the annexation of Crimea in 2014. There is more to these sanctions than geopolitics, however. They also teach us an interesting lesson about globalisation.
To understand that lesson, we must first establish how these new sanctions differ from the previous ones imposed at various times since 2014. In economic terms, the only kind of sanctions that count are those targeting (Russian) companies rather than individuals, whether big business owners (‘oligarchs’) or officials. Until this month, the scope of sanctions against various Russian companies was tightly defined and limited. Typically, sanctions prohibited lending to those companies (except for the shortest maturities) and, in the case of the oil companies on the list, the transfer of certain technologies that would help the Russian oil industry accelerate development in new areas such as deep-water and tight oil drilling. In the case of the companies included on the latest US sanctions list – owned by two Russian tycoons, Oleg Deripaska and Viktor Vekselberg – the measures are much more comprehensive. Any type of transaction with those companies is prohibited.