International Economics: IB Economics

The headline to this article looks to be remarkable: can an economy be doing "too well". However, the reason for it might be that for all the talk of a successful green transition and job creation in the US, the economy is only operating beyond the full employment level of national income because of borrowing, and the inflationary effects of this mean that the standard of living of the average US worker hasn't really been improved at all. 

How frustrating! I've just taught this to one Year 13 group, and now the BBC comes along with the perfect article about the impact of weak currencies on the cost of living. This is a brilliant real world example, with the falling value of the naira driving up inflation in Nigeria and changing consumption patterns. 

However, Nigeria isn't alone: many sub-Saharan African economies have depreciating currencies and this is reducing the purchasing power of consumers and impacting their standard of living. 

The current pro-growth agenda and the policymaking farrago that has accompanied it are discussed here, with the author being of the view that in focusing on the detail we're missing the bigger picture, which is that the use of GDP as a measure of economic well-being.

He argues that it omits many aspects of life such as sustainability and the distribution of income and wealth which have vital roles to play in determining individuals' satisfaction. 

This BBC article could possibly also go onto the Microeconomics board because it highlights the importance of property rights in development, but I've put it here because of the overall developmental context of mapping.

It's important to recognise how quickly societies change and not having information on that can lead to sub-optimal outcomes. Additionally, though, as well as not appearing on maps many of these people are also likely to lack formal identity documents and this will also adversely affect their developmental prospects, and the ability of policymakers to help them too.

This Opinion piece for the Guardian highlights the damage that corruption, and poor governance can do to a country's development prospects, and the standard of living enjoyed by its citizens.

The Luanda Leaks and the furore surrounding the wealth of Isabel dos Santos, places these issue, and institutional concerns back at the centre of the current development debate. 

And before we in the West get too smug about this sort of thing, we ought to reflect upon the fact that Western elites turn a blind eye to this sort of thing and Western companies - notably financial institutions facilitate it. 

The World Bank celebrates the New Year by highlighting the importance of a simple piece of infrastructure - an irrigation system - to the developmental prospects of Nangarhar village. 

It highlights the centrality of water to development and, if you watch the clip, the beauty of the Afghan countryside. It appears that Eric Newby was right!

This clip looks at the World Bank's involvement in building flood defences in Bihar province, again increasing resilience and enhancing the standard of living in one of the poorest parts of India, It' another example of how the efforts of international organisations are ever more focused on mitigating the worst effects of climate change and promoting sustainable development. 

The Sri Lankan central bank has set out how the debt crisis has adversely affected the economy and the trajectory of the recovery, forecasting a 2% decrease in growth this year before 3.35 growth in 2024. They also highlight the fact that real incomes have been significantly reduced, with economy shrinking by nearly 8% last year and inflation peaking at 70%. However, compared to the IMF forecast, this look optimistic.

Equally, the problem hasn't entirely gone away: according to the article "Sri Lanka owes about $7bn (£5.7bn) to China and around $1bn to India" although these debts have been restructured and the IMF and World Bank have provided emergency funds worth around $3.6bn. 

Awful news from the World Bank: absolute poverty is set to rise for the first time in over 20 years, with the coronavirus pandemic pushing another 115 million people back into a situation where they are living on less than $1.90 per day, and there are even suggestions that this number could rise in 2021 too.

Proof, if ever it were needed that whilst we quite often simplify, and assume that primary products are homogenous, this isn't actually the case. 

And in this instance - in the coffee market - this is significant. Whilst the demand for low grade coffees, used to make instant coffee, has remained high, this isn't the case for small scale producers of high quality coffees, who are more likely to sell to independent cafes, or small roasters. As a result, the livelihoods of some of the latter group are under threat, with adverse implications for their standard of living.

It's a classic application of income elasticity of demand - with the demand for inferior goods increasing as incomes fall, and the demand for luxury goods collapsing by more than the fall in incomes, and a salutory tale about the risks associated with primary product specialisation. 

Joseph Stiglitz with an exceptionally critical view of the Trump Presidency argues that on most indicators of well-being, the President is betraying ordinary Americans. 

Life expectancy is falling, inequality is rising, the trade deficit is still growing, manufacturing employment isn't growing as rapidly as it was under Obama and growth, whilst above 2%, isn't the 4 or 6% that the President has, on occasion, promised. Will it matter to the average American voter?