globalEDGE Blog Archive October 2019

Over the past decade, undetected corruption has lead to instability throughout markets around the globe. In 2012, many banks began to struggle as a result of the London Interbank Offered Rate. More commonly referred to as LIBOR, this interest rate serves a much larger purpose than any other before it. The rate acts as a benchmark for almost all other interest rates to be based on throughout the world. However, due to the rate fluctuating for unknown reasons throughout past financial crises, suspicions emerged questioning its reliability. These speculations ended up leading to an investigation of a global market manipulation scandal that came to light in 2012.

With the rapid changes in our world, it can be difficult to predict how our economy will change in reaction to international and domestic events. Despite a multitude of negative factors and events in the world today, the global economy is set to grow by about 3% in the next few years.

On October 1st, the United States was authorized by the World Trade Organization (WTO) to impose $7.5 billion in tariffs on EU goods, primarily aircraft and agricultural items.  The Trump administration’s justification for this measure is due to claims that countries within the EU were illegally subsidizing the European owned aircraft producer, Airbus. Since the aircraft industry is dominated by two companies—Boeing, a U.S. company, and Airbus—the move to impose tariffs was to protect the interests of Boeing.  This decision comes behind numerous complaints filed through the WTO on behalf of the U.S., dating back to 2004.  It is widely considered the world’s largest-ever corporate trade dispute.  Despite reports from Airbus affirming they are now compliant with WTO rules regarding subsidies from the EU, the U.S. proceeded forward with the implementation of tariffs.

The pharmaceutical industry is defined as the discovery, development, and manufacture of drugs and medications. It’s widespread, including research, chemicals, and the regulation and involvement of government agencies.  However, the characteristics of the pharmaceutical industry differ by region.  Today, we’ll look at the key aspects of this sprawling industry in Europe, Africa, Latin America, and the United States.

On October 14, 2019, the United Kingdom’s Parliament was reinstated after a 5-week suspension. Prime Minister Boris Johnson is persistent in wanting the UK to secede from the European Union. During the Parliament disbandment, the Prime Minister was able to secure a deal, The Withdrawl Agreement Bill, with the European Union. Prime Minister Johnson wanted to put it through Parliament quickly and finally go through with Brexit. Parliament voted and approved the Bill, securing Brexit to go through in a week. But, Prime Minister Johnson told the House of Commons to vote on the Bill in a matter of hours. The House of Commons refused. Due to this refusal, the Bill now looks as though it won’t pass, so Prime Minister Johnson is calling for a general vote to re-elect Parliament. Prime Minister Johnson’s plan is to win a majority in Parliament and pass Brexit without a deal. With this Brexit scare seeming even more realistic every day, many companies around the world are making plans on what they will do when the UK finally secedes from the EU.

The preservation of natural environments and resources is immensely important in the most universal of ways. Preservation helps to stabilize and ensure the habitability of different regions, while also protecting the rest of the earth from rapid changes in the climate. While this is reason enough to advocate protection of the wilderness, destruction of natural areas can negatively impact the economy by disrupting supply systems and resource production. For these reasons, it is crucially important to observe and respond to natural disasters and threats as they occur.

As globalization continues, companies around the world are diversifying their supply chains and exploring outsourcing options. Expectations for supply chains are steadily increasing. The goal is for consumers to receive goods at lower prices and higher qualities in a timely manner. However, these are all contingent upon the political atmosphere. A company's supply chain in a particular country depends heavily on the restrictions on market access, transport and logistic services infrastructure, and the business environment.

The World Economic Forum has released the latest version of their annual publication, The Global Competitiveness Report, which turned 40 years old this year.  The 2019 report highlights the cycle of low levels of productivity growth in the world economy despite the injection of over 10 trillion dollars by central banks.  Although the overall tone of the report is negative, it emphasizes the ability of countries pursuing a holistic approach to socio-economic challenges to set themselves ahead on the economic frontier.

Expert analysts predict tough times ahead for the world’s global economy. Although only predictions, there are many factors throughout the world that support these anticipations of the future; undoubtedly, the most significant is the number of nations at risk of entering a recession. If the predictions were to end up being correct, factors like this would be the prime cause of what experts are calling a “global recession.” 

The Olympic Games have become a cherished tradition for millions of people all over the world. There is something special about a country uniting over one common goal: winning a gold medal at the Olympic Games. As incredible as the Olympic Games may seem to the viewers at home, the host countries often have an unpleasant experience with Olympic preparations. A country will work for over a decade to prepare for the games, and at the end of the Olympics, most host countries are stuck in debt. As Japan prepares its capital city, Tokyo, to host the 2020 Summer Olympics, they may be realizing they are going to lose more money than they will gain by hosting the Olympics. 

As mentioned in “Hong Kong Protests and their Potential Consequences” last month, the divide between Hong Kong and China over civil liberties remains fierce, with no resolution achieved as protests continue.  Daryl Morey, one of the NBA’s most respected general managers as apart of the Houston Rockets, has come under fire for a recent tweet he made in support of the democratic protests in Hong Kong, in which he shared: “Fight for freedom. Stand with Hong Kong.” 

In an increasingly connected world, people and businesses are more likely to have contact with other countries.  It is important to be educated on the status of industries around the world, and what makes up the economies of the countries that may be encountered through trade and business expansion.  Today we’re going to look at some of the strongest industries in three areas of the world: Asia, Europe, and Australia.

The iPhone 11 was recently released at another staggering retail price of between $699 and $1099. The iPhone 11 is claimed to be the most advanced phone that Apple has made, using their signature face-reading technology and increased camera power to draw in their customers. While there is still a strong demand for the newest phone by Apple, there is a new phone company that is making waves in the cell phone market.

Tobacco has been a large industry ever since it was brought to Europe centuries ago. The American plant took off in popularity, becoming a commonly used product worldwide to be smoked and chewed. One of the primary factors causing tobacco consumption is the addictive nicotine found inside. Smoking continued to rise in popularity until its peak in 1963, where roughly 11 cigarettes were purchased per person per day in the United States. Other countries appeared to have a slightly later peak in popularity for smoking. In 1972, Switzerland approached its peak, resulting in Swiss smoking temporarily surpassing the rates of the U.S. Other countries, such as Germany and Japan, also experienced their highest rates in the 1970s. The United States and Switzerland had significant declines in sales after their peaks, though many other countries did not experience these rapid declines in cigarette sales until the early 2000s. Nowadays, many countries that have the highest rates of smoking tend to be in Europe, such as France, Germany, and Greece.

Postcards could be dated back to the Victorian era in the UK. It was the first time that brightly colored photos were sent and received to share the joy of special occasions, travel destinations, and precious memories. However, there has been a steady decline in the sales of postcards, predominately due to the rise of social media and portable technologies. These platforms have led to instant sharing and convenience for postcard consumers.

Since writing a blog, “Worldwide Popularity of Streetwear Ascending,” in December of 2017, the global streetwear market and culture has continued to rise in popularity.  Beginning as a niche market that originated mainly within skateboarding and inner-city communities, the streetwear brand and aesthetic has become a mainstream influence that reaches star athletes and world-famous actors.  With appeal centered especially in Asia and the United States, streetwear captures two of the world’s largest audiences and is now rivaling the status of luxury brands like Italy’s Gucci and France’s Louis Vuitton.

In the continuously growing global market, two key factors have led to new competition in the technology industry: trade war, and artificial intelligence (AI). The Hanguang 800, Alibaba's first AI chip, has the potential to affect the global market as it continues expanding the possibilities of what the world may become through AI. This extremely advanced AI processor was not expected to be produced in China for at least another year; however, the trade war between the U.S. and China forged new competition in the technology industry, leading to increased innovation.

On Friday, September 20th, thousands of people poured through the streets of capitals and major cities all over the world to march for climate change. Over 150 counties held climate strikes organized by youth advocates and had participants of all ages. The climate strikes attracted the media and have caused numerous political and business leaders to promise change.

On September 13th, Saudi Arabia fell victim to a drone attack on their state-owned oil processing facility, a resource they proudly consider to be their kingdom’s “crown jewel,” as oil accounts for 50% of Saudi Arabia’s GDP and 70% of their export earnings.  The attack sent crude oil prices up 15% to about $69 a barrel, marking the highest price increase in over three decades. With such a heavy reliance placed on Saudi Arabia’s oil reserves, it is important for world leaders to keep in mind the damaging repercussions of escalating conflict in the Middle East, an issue that presents another big problem to the world economy, in addition to the U.S. and China trade dispute.