globalEDGE Blog - Page 184

Eugenio Proto, an Associate Professor at Warwick University, and Aldo Rustichini, an Economics Professor at the University of Minnesota, found that the relationship between national income and national life satisfaction is “hump shaped.” They discovered that there is a clear positive relation in poorer nations, then flattens out at around $30,000-$35,000, and then turns negative. The relationship between national income and life satisfaction are critical to policymakers.

Singapore opened its first “green” factory two months ago setting up a milestone for Singapore’s green industry. The news brought great attention to a broader area—Asia, and people soon realized that most manufacturers in Asia have begun to turn “green” in recent years. This is becoming a trend in Asia that cannot be held back.

Throughout the past year China has announced its plans to open industries to foreign companies. Since the Shanghai free trade zone was introduced in September 2013 China has made many attempts at opening up parts of the economy in hopes of stimulating economic progress in the country. Within the Shanghai zone the government is testing free trade in Chinese currency as well as allowing interest rates to be set by market forces. This provides a great opportunity for foreign companies who wish to harness the mass market China provides.

In 2001, economist Jim O’Neill identified the world’s strongest emerging economies as the BRIC countries, which is an acronym that stands for Brazil, Russia, India, and China.  Thirteen years later, O’Neill has offered another acronym defining today’s emerging economic powerhouses – the MINT countries.  Mexico, Indonesia, Nigeria, and Turkey all show signs of strong future GDP growth and the potential to become major players in the global economy.

As students all over the country depart from the cozy homes of their parents to go back to school a question with a seemingly obvious answer is asked - why? The start of a new semester signals a new beginning that entails learning and growth for another four months. The obvious answer to why so many young people do this every fall and winter is that school provides them with necessary skills in order to make a living in the world—a world that is becoming ever more competitive. However, little research has been done on exactly what return someone may receive for the skills they possess. The OECD published a recent paper taking a stab at this question.

In December of 2013, American Airlines and US Airways have completed their long awaited merger to create the world’s largest airline. Earlier in 2013, the merger was blocked by the United States Justice Department due to concerns that the merger would adversely affect competition in the airline industry of the United States. In order to reach a settlement, American Airlines and US Airways agreed to give up several hundred gates at airports across the United States. Now the companies expect to save over one billion dollars in synergy with the merger. This merger will undoubtedly have a variety of effects on the global airline industry.

As the rupiah reached a five-year low on Dec. 23, 2013, the Indonesian government began to worry about the nation’s economy. It soon announced increased levels of foreign investment in the country's power plants, advertising, and pharmaceutical industries in order to boost the slowing economy. However, some people are concerned that this move will bring many challenges to the nation .

In what is deemed the last continent for major growth in the fast food industry, several chains are finding that expansion into Africa is going to be tougher than what was once expected. Infrastructure costs, food imports, and meat shortages have led to high prices at many quick serve restaurants across Africa. This has lowered optimism among some fast food executives about the prospects of expansion into the vast African continent, though there are others who believe now is the time for growth, even with the early setbacks.

Inflation has been credited with being the main reason for Moody’s Investor service choosing to downgrade Venezuela. In terms of currency, inflation has been more than fifty percent year to date, even after President Nicholas Maduro created the law to make businesses cut the cost of consumer goods. The high risk of a collapse and the economic imbalances of the Venezuelan economy have also been cited as a reason for the downgrade because the caused currency and bond ceiling ratings to move to a “speculative” grade. The government is planning on devaluing the Venezuelan currency in 2014. The current account surplus has also decreased by thirty five percent for the past three quarters in comparison to the three quarters last year. All of these statistics point to an economic collapse, but there might just be a way out.  

As the Eurozone Crisis has progressed and European Union countries have continued to struggle to devalue their currencies, with the goal of making exports less expensive for importing markets, many countries are now adopting "Americanized" labor policies of dismantling workplace protections to reduce labor costs. In Portugal, the 1.9 million workers that were protected by collective bargaining agreements have now diminished to merely 300,000, while Spain has agreed to ease restrictions on collective layoffs and unfair dismissal. The motive for these actions, as encouraged by the German government, European Commission, and the International Monetary Fund, is to restore competitiveness, increase employment, and recover solvency.