International Economics: IB Economics

Larry Elliott argues that the G20 are showing signs of committing to tackling extreme poverty in the years ahead, arguing that poverty reduction is going to require both public and private sector investment, with the former crowding in the latter. 

However, without a concerted effort to improve infrastructure and improve public finances in developing economies and go some way to getting closer to achieving the Sustainable Development Goals (SDGs) by 2030. At present, we're going to fall well short in relation to both extreme poverty and zero hunger. 

This World Bank clip shines a light on the International Development Association and its remit, illustrating the extent to which it can intervene to tackle a wide range of development issues: climate change, childrens' rights, healthcare and so on. 

It underpins the developmental prospects of many of the world's most vulnerable and seemingly does so in a highly efficient way, generating returns of $3.50 for every $1 spent.  

This World Bank clip looks at how a shop in Tonga has recovered from repeated cyclones, a king tide  and then a tsunami - massive supply-side shocks. It shows how investment in resilient infrastructure can enhance sustainable development prospects. 

The Executive Director of the International Energy Agency, Fatih Birol, has called for a massive increase in investment in energy infrastructure, allowing for easier integration of green energy, such as solar power. He argues it needs to double to reach £492bn (more than $600bn) if we're to hit global climate change objectives. 

This World Bank clip looks at how after 30 years and 4,500 climate change policies there's an emerging consensus as to what work. The latest "Reality Check Report" looks at 25 case studies from across the globe, looking at how individual nations have made great strides in moving towards net zero carbon, using incentives and identifying possible source of investment and the appropriate interventions and legislation, and mobilising their populations in pursuit of climate change targets. 

This multi-layered World Bank clip looks at many aspects of development: poverty reduction, climate change, social safety nets and natural disasters that mean that 75% of the country are living below the poverty line. 

However, the World Bank's Social Support for Resilient Livelihoods Project is trying to tackle all of these problems - building human capital - via direct cash transfers and investment in climate-friendly public works. The hope is that such interventions will boost development, increase sustainability and make the economy more resilient. 

The BBC re-emphasizes the fact that when China sneezes the world catches cold, with recent Chinese data, notably in relation to youth unemployment and investment in property, suggesting that the Chinese economy is still fragile, and this is a bad thing for the global economy. 

Bear in mind that for much of the last few years, China has provided around 50% of total global growth. 

This World Bank highlights the barriers to developing economies adopting clean energy sources. The biggest obstacle seems to be the high fixed costs of renewable energy networks, and accessing the financing required to invest in this infrastructure. 

This is where the World Bank comes in: in encouraging developing economies to scale up to phase down - and helping them access the private sector investment funds to enable them to do this. 

The centrality of property rights to development is self-evident in this

World Bank clip which looks at Madagascan land reforms, focused on granting rural farmers land ownership rights. Property rights are a central feature of effective markets because clearly-defined ownership encourages investment in the land, and this raises productivity and offers the potential for people to break out of the poverty trap. 

Oil giant ExxonMobil is taking the EU to court, arguing that it has exceeded its authority in imposing windfall taxes on the sector. The one-off tax represents a 33% tax on profit, instead of the usual 20%, and Exxon sees this as deterring investment and undermining investor confidence in Europe.

I have to say that if this is the heart of the prosecution case, I don't think the legal challenge will get very far. 

This UN clip looks at how climate change represents a fundamental threat to Bangladesh's developmental prospects, and how investment in enhancing climate resilience has made the coastal zone safer and help protect development. 

Larry Elliott looks at the prospects for the global economy and argues that we are wishful if we think that the next few years are going to see a repeat of the 1920s, with a Fourth Industrial Revolution and rapid growth. 

Instead, he suggests that there are four problems that need tackling -the re-establishment of a relatively calm macroeconomic environment, the need for higher levels of investment, an attempt to tackle inequality and greater global co-operation. 

Without it, we're likely to see continuing economic problems - and countries from Sri Lanka to developed European economies suffering. 

It seems that it's Doomsday in Sri Lanka with the Prime Minister stating that the country has one day's worth of petrol left. Think of this: how would transport being at a standstill affect an economy? 

And then there's the admission that, in order to pay public sector salaries, the government are going to have to print money. What are the implications of this for inflation, the value of the Sri Lankan rupee and macroeconomic objectives more generally. And how is this likely to affect investment in the economy?

To many this seems like a financial crisis that has built up since the coronavirus pandemic. To be honest, having lived in Sri Lanka, I'd argue that the roots of the crisis go much, much deeper and reflect the dynastic nature of Sri Lankan politics post-independence. 

This World Bank clip looks at the importance of debt, particularly sustainable debt, in promoting development. Debt can play an important role in generating the funds for investment but it needs to be carefully managed, and the role of the World Bank’s International Development Association (IDA) is to co-ordinate this, and ensure fiscal sustainability in doing so, although there are concerns that in some countries debt has grown at an unsustainable rate. 

This is an interesting little piece, which notes that the level of inward capital flows into China has slowed to the extent that "China recorded a deficit of $11.8bn (£9.6bn) in foreign investment in the three months to the end of September - the first time since records began in 1998".

In short, it's the first time in 25 years that China's investing more overseas, than foreign firms are investing in China, largely as a result of ongoing political uncertainty, slower growth in China and higher interest rates there. It's also notably that none of the businesses cited say that they're 'retreating' from China, it's just that they are reinvesting profits elsewhere. 

This Bloomberg clip looks at how, perhaps a decade-late, the US are striving to challenge China's access to Africa's raw materials, and the spread of the Belt and Road Initiative. 

Given the importance of some of these raw materials to new technologies, US firms such as KoBold Metals are starting to invest in the continent, and this requires significant infrastructure investment. 

I'm currently reading Ed Conway's "Material World" - it's excellent! This story links to that - with the news that the EU are looking to move away from an over-reliance on China for lithium and start refining their own lithium, with Dutch company AMG Lithium.

Not only will the factory have a regional multiplier effect, but it's also intended to help the EU electric car sector catch up with China, by reducing the cost of producing electric vehicles, an area where China, notably BYD, appear to have a significant cost advantage. 

Just a nod to Europe's rail system too, with a report from the Wuppertal Institute and T3 Transportation noting that between 1995 and 2020, the length of motorways grew by 60% and that of railways fell by 6.5%, indicating transport priorities, and with obvious implications for climate change targets. 

Foxconn has withdrawn from a deal to build a semi-conductor plant in India, causing some to worry about the country's technology industry. The Indian partner, Vedanta, is committed to building the factory but will now have to look for a new partner. 

The US economy is still growing, albeit at a slower rate, with the quarterly rate of growth at 1.1%, lower than the previous quarter as a result of weakening business investment. 

Add this to higher interest rates and rising prices and commentators are waiting to see where the economy is headed, and this has wider implications for the global economy too.

And is the EU lagging behind the US as a result of the newly-introduced Inflation Reduction Act? It seems to be the case that businesses are being encouraged to invest in the latter, with even Volkswagen noting that it is having more success in building a new factory there, largely as a result of the subsidies offered. 

No surprises here - however, the first oil deal struck with the Taliban in Afghanistan has been agreed by Chinese company the Xinjiang Central Asia Petroleum and Gas Company (CAPEIC).

One the one hand you have to hope that this is going to enhance development prospects in the country; on the other, you'd also be slightly sceptical about the extent to which the local population are going to benefit and the message sent out to the Taliban's leaders.