International Economics: IB Economics
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June 18, 2022 6:02 AM
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Inside Sri Lanka's economic crisis - BBC Newsnight

From www.youtube.com - June 16, 2022 7:00 PM

Sri Lanka is in the grip of severe fuel and food shortages that have brought people out onto the streets to call for the removal of the country's president.  The developing nation has been hit hard by global supply chain issues but many blame economic mismanagement and corruption within government.

For the first time in history the country was forced to default on it's foreign debt last month and has received emergency diesel shipments from India. Now they are asking for an economic bailout worth billions of dollars from the International Monetary Fund. Speculation is growing that other developing nations will soon be facing the same problems.

Graham Watson's insight:

Newsnight's Ben Chu investigates what is happening in Sri Lanka - noting the collapse of the rupee - a 50% depreciation against the dollar in the last few months - and an official inflation rate of 30%.

 

He wonders whether the fate of Sri Lanka is indicative of what is going to happen in other developing economies, although he also looks at the impact of poor policy choices, notably tax cuts, on the island economy, 

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International Economics: IB Economics
Economy
A collection of articles relating to the 'international' elements of Economics and relating to IB, Pre-U and A-Level Economics.
Curated by Graham Watson
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Scooped by Graham Watson
Today, 3:46 AM
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US ‘flying blind’ at critical moment for economy, experts warn, with no jobs data amid shutdown | US economy | The Guardian

US ‘flying blind’ at critical moment for economy, experts warn, with no jobs data amid shutdown | US economy | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - October 3, 11:47 AM
Data was collected for closely-watched jobs report before shutdown, but Trump officials so far defy calls to publish it
Graham Watson's insight:

This is troubling: as a result of the government shutdown, the Bureau of Labor Statistics (BLS) latest labour market data hasn't been published. This comes at a time when President Trump has fired the BLS commissioner for "faking" the data. Of course, in Trump's America to "fake" something means to produce something that the President doesn't agree with - e.g. "fake news".

 

The worry is that without this and next week's inflation data - which I suspect will or will not be published depending upon whether it's favourable or not - economic agents have less certainty and that will adversely affect economic growth. Similarly, if there's a loss of faith in the accuracy of the data, then something similar will happen. 

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Scooped by Graham Watson
October 3, 10:50 AM
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Trump looks to Nixon’s playbook - good for him, bad for the economy? | US economy | The Guardian

Trump looks to Nixon’s playbook - good for him, bad for the economy? | US economy | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - October 3, 7:00 AM
History suggests that bullying the Fed for political gain can have serious consequences for the rest of us
Graham Watson's insight:

The history of US monetary policy is highlighted in this excellent article that's really looking at how President Trump is seemingly trying to compromise the independence of the Federal Reserve. The last time the President overtly sought to influence monetary policy saw Richard Nixon browbeat the Fed into a more accomodatory stance and inflation rose to 12% and took another 8 years to get back down to 5%. 

 

That said, we're dealing with the school bully, rather than someone reasonable, and even the salutory tale that tackling inflation required a base rate of 20%, a recession and unemployment of 10% won't, I suspect, have any effect on the President. In the first place, it's at the end of the article and he would never read that far, in the second, he knows best.  

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October 2, 2:25 AM
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Hurricane season brings financial fears in the Caribbean

Hurricane season brings financial fears in the Caribbean | International Economics: IB Economics | Scoop.it
From www.bbc.co.uk - October 1, 7:02 PM
As islands brace for this year's big storms, many homes don't have household insurance.
Graham Watson's insight:

Whilst superficially this article is just about the effect of a majhor supply-side shock on Caribbean economies - in the form of hurricanes - you might also use this to explore the concept of insurance and the difference between risk and uncertainty, as well as whether climate change has a role to play in all of this.

 

It is clear from the article that the insurance market is close to ceasing to exist with few homeowners taking out, or being able to afford the higher risk premia. However, is there a solution? 

 

If the evidence suggests that hurricanes have become more frequent and more powerful as a result of climate change, this is exactly the sort of thing that could be resolved through international co-operation, with developed nations effectively intervening to subsidise the insurance market in vulnerable developing economies. That said, this isn't something that President Trump is ever going to buy into....

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Scooped by Graham Watson
September 29, 3:30 PM
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Trump renews threat to impose 100% tariffs on non-US made movies

Trump renews threat to impose 100% tariffs on non-US made movies | International Economics: IB Economics | Scoop.it
From www.bbc.co.uk - September 29, 12:26 PM
The president believes the American film-making industry has been "stolen" by other countries.
Graham Watson's insight:

The daily Trump has arrived just in time. This time it's the pledge to levy a 100% tariff on non-US made films, to protect the US film industry. 

 

Again, though, there's an abject lack of certainty: to what films will it apply? Will it only apply to films shown in cinemas? And what about a streaming? 

 

Just another example of why it might be better to think before making vague policy pronouncements. 

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September 29, 3:15 AM
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Alternative data suggest uneven inflation amid Trump’s numbers skepticism | Gene Marks | The Guardian

Alternative data suggest uneven inflation amid Trump’s numbers skepticism | Gene Marks | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - September 28, 10:00 AM
With BLS figures under scrutiny, indices from Truflation, Zillow, Adobe and ISM show a more nuanced picture of prices
Graham Watson's insight:

I've just been looking at potential sources of inaccuracy in inflation data, and this piece shows that it's not a uniquely British problem. Gene Marks looks at some alternative American measures of inflation that suggest that CPI might not capture all of the nuances of rising prices there.

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Scooped by Graham Watson
September 27, 4:26 AM
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Kitchen sink drama: Trump’s latest tariffs leave experts scratching heads | Tariffs | The Guardian

Kitchen sink drama: Trump’s latest tariffs leave experts scratching heads | Tariffs | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - September 26, 3:43 PM
President places new duties on cabinets, vanities and sofas but national-security justification prompts puzzlement
Graham Watson's insight:

Apparently President Trump's latest tariffs - on drugs, kitchen cabinets and sofas - have been imposed on "national security" grounds. "Experts scratching heads"? I wouldn't bother to dignify the actions of someone quite so clueless. 

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Scooped by Graham Watson
September 26, 3:02 AM
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China makes landmark pledge to cut its climate emissions | BBC News

From www.youtube.com - September 25, 5:00 PM

China, the world's biggest source of planet-warming gases, has for the first time committed to an absolute target to cut its emissions.

In a video statement to the UN in New York, President Xi Jinping said that China would reduce its greenhouse gas emissions across the economy by 7-10% by 2035, while "striving to do better". The announcement comes at a time the US is rolling back on its commitments, with US President Donald Trump on Tuesday calling climate change a "con job".

But some critics said China's plan did not go as far as hoped to keep global climate goals in reach.

Graham Watson's insight:

This BBC clip looks at China's pledge to cut its carbon emissions, its first concrete targets, by 7-10% by 2035 although critics suggest it won't be enough to hit climate change targets. 

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Scooped by Graham Watson
September 25, 2:09 PM
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US economic growth revised up on strong consumer spending

US economic growth revised up on strong consumer spending | International Economics: IB Economics | Scoop.it
From www.bbc.co.uk - September 25, 11:47 AM
Growth was revised up to 3.8% in the period from April through to June - up from the previous estimate of 3.3%.
Graham Watson's insight:

The latest US economic growth and labour market data seem to confound expectations, although in the latter case the President has made it clear, by firing the previous statistician, that he's only interested in labour market data that supports his point of view. 

 

Economic growth has been revised up by 0.5% and labour market data implies fewer layoffs than might have been thought. However, I'm a skeptic. When was the last time that growth data was revised up by such an amount? 

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Scooped by Graham Watson
September 22, 4:45 PM
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Trump’s Fed pick doubles down on calls to aggressively cut interest rates | Federal Reserve | The Guardian

Trump’s Fed pick doubles down on calls to aggressively cut interest rates | Federal Reserve | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - September 22, 2:37 PM
Stephen Miran says rates should be below 3% by end of year and dismisses fears of US president’s tariffs stoking inflation
Graham Watson's insight:

One wonders how this affects the credibility of monetary policy, with President Trump's recent appointee to the Federal Reserve Board speaking out about the future direction of monetary policy and the 'overstated' effect of the President's tariffs on inflation.

 

I'm happy to cede economic expertise to Mr.Miran but in suggesting that the Fed's 2% inflation target is "too restrictive", isn't he over-reaching and entering into territory that's not really his remit? I wonder what the markets make of this? However, irrespective of this, it's already clear that he's seems willing to do his master's bidding. The other members of the board must love that. 

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September 22, 4:36 PM
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Rising Heat, Rising Risks: How Climate Change Threatens Health and Economy in Bangladesh

From www.youtube.com - September 22, 2:10 PM

With rising temperature, Bangladesh is facing physical and mental health risks, along with declining productivity leading to economic loss. Bangladesh ranks second globally in exposure to elevated temperatures, and its capital, Dhaka’s heat index increased about 65 percent higher than the national average. How does increasing exposure to excess heat affect the physical and mental health outcomes of individuals and their productivity in the short term? 

Graham Watson's insight:

This World Bank clip looks at how climate change and rising temperatures have impacted the GDP of Bangladesh and also worsened the standard of living by worsening healthcare outcomes. Neither is good for the economy's developmental prospects. 

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Scooped by Graham Watson
September 21, 8:07 AM
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Why Trump’s attacks on the Fed’s independence are so dangerous | Federal Reserve | The Guardian

Why Trump’s attacks on the Fed’s independence are so dangerous | Federal Reserve | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - September 21, 7:00 AM
The Federal Reserve cut interest rates this week. But the aggressive action Trump seeks could dramatically backfire
Graham Watson's insight:

Steven Greenhouse sets out in a level-headed way, the damage that President Trump's attacks on the Federal Reserve could have on the reputation of the central bank, and subsequently the implications of this for US macroeconomic stability. 

 

He argues that the likely implications of the politicisation of monetary policy are likely to be higher inflation, itself in large part driven by the President's own policies - notably his tariffs and his tax giveaways to the rich. 

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Scooped by Graham Watson
September 19, 2:05 AM
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Canada and Mexico announce new partnership amid Trump trade war

Canada and Mexico announce new partnership amid Trump trade war | International Economics: IB Economics | Scoop.it
From www.bbc.co.uk - September 18, 9:38 PM
The two also commit to a shared partnership with the US ahead of a review of a key North American free trade agreement.
Graham Watson's insight:

Ha ha! If you stand up to bullies, you make them look foolish. In this case, Canada and Mexico have committed to a closer trade relationship with one another and are planning to boost trade too. Whilst the article is light on specifics, it seems that President Trump's trade policy has driven them closer together. 

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September 18, 2:19 AM
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Could the Federal Reserve interest rate cut boost the US housing market?

Could the Federal Reserve interest rate cut boost the US housing market? | International Economics: IB Economics | Scoop.it
From www.bbc.co.uk - September 17, 7:02 PM
Borrowing costs are not guaranteed to come down much more than they already have, even after this week's rate cut.
Graham Watson's insight:

US interest rates were, as expected, cut last week, however, I don't think that this sort of article is really justified. Will a 0.25% interest rate cut really affect the housing market.

 

As economists, we'd say - yes, at the margin - but with borrowing costs unlikely to fall dramatically, I think the headline of this piece is ill-judged. 

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Scooped by Graham Watson
October 3, 10:54 AM
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Government shutdown could cost US economy billions of dollars a week, analysts say | US economy | The Guardian

Government shutdown could cost US economy billions of dollars a week, analysts say | US economy | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - October 2, 4:24 PM
According to one report, each week of shutdown could cost up to $7bn, with another suggesting a $15bn loss in GDP
Graham Watson's insight:

A lovely example of opportunity cost for Year 12. What's the opportunity cost of the government shutdown in the US? Estimates range between $7 and $15bn per week, with commentators expecting each week of the shutdown to cost around 0.1% of economic growth in Q4, and this report hasn't even attempted to incorporate all of the indirect effects - such as the possibility of an adverse effect on private sector investment. 

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Scooped by Graham Watson
October 2, 3:19 AM
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Is solar-powered farming driving Pakistan's water crisis? | REUTERS

From www.youtube.com - October 2, 12:08 AM

As Pakistan undergoes a solar revolution, farmers are increasingly ditching diesel and grid power for sun-powered tube wells. The solar boom has coincided with the rapid depletion of water tables in Punjab, Pakistan's most populous province.

Graham Watson's insight:

A development dilemma: solar power has increased agricultural productivity in Punjab province, but has simultaneously depleted water tables. Farmers are irrigating paddy fields more regularly, and growing more water-intensive crops.  

 

Solar power is a cheap renewable source of power, but has apparently caused farmers to sink more wells, albeit the official data suggests that the demand for water remains unchanged. 

 

It's an interesting clip - albeit spoilt for me because the AI voice gives it an other-worldly quality...

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Scooped by Graham Watson
September 30, 2:17 AM
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Why the US government might shut down and what to know

Why the US government might shut down and what to know | International Economics: IB Economics | Scoop.it
From www.bbc.co.uk - September 29, 1:06 PM
If no deal is struck by the end of Tuesday, the US will have its first shutdown in nearly seven years.
Graham Watson's insight:

We've reached the brink of that almost uniquely US phenomenon: a government shutdown, when failure to agree on spending plans sees US government services grind to a halt. It's become an increasingly common feature of US politics, although it seems odd that lawmakers are happy to cut tax credits to make health insurance cheaper at a time when they're making tax cuts for the rich. 

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September 29, 10:09 AM
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German identity doesn’t rely on cars – Brussels should face down the mighty automakers | Tania Roettger | The Guardian

German identity doesn’t rely on cars – Brussels should face down the mighty automakers | Tania Roettger | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - September 29, 12:00 AM
Mercedes-Benz and other big manufacturers want to overturn the EU’s 2035 ban on petrol cars. This would be as disastrous for jobs as for the climate, says Berlin-based journalist Tania Roettger
Graham Watson's insight:

I've put this here rather than in the Microeconomic section of the board because it reflects a fundamental truth about the German economy; it has given car manufacturers a remarkable amount of power to determine the future direction of policy - something highlighted in Wolfgang Munchnau's excellent book "Kaput! The End of the German Miracle".

 

However, this article in today's Guardian merely underscores this - rather than adapting to rising demand for electric vehicles and supply-side constraints on their manufacture, German car makers are lobbying the EU to overturn a proposed 2035 ban on sales of new petrol cars. 

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September 28, 3:09 AM
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‘Huge energy challenges’: how can India make the leap to become a green, clean country? | India | The Guardian

‘Huge energy challenges’: how can India make the leap to become a green, clean country? | India | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - September 28, 12:00 AM
As deadly heatwaves become more frequent, demand for life-saving cooling is further straining India’s generation capacity
Graham Watson's insight:

A look at how one of the world's 'dirtiest' economies is looking to sustain growth and simultaneously ensure a green transition to cleaner fuels. In this case, the Guardian looks at the Indian economy and its response to the increased demand for power as a result of extreme weather events. 

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September 26, 3:08 AM
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Is Trump right that Russia’s economy is on the brink of collapse? | Russia | The Guardian

Is Trump right that Russia’s economy is on the brink of collapse? | Russia | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - September 25, 7:36 AM
While VAT is going up to finance the war and fuel is in short supply, few expect Putin to adjust his war plans
Graham Watson's insight:

The Guardian unpicks President Trump's claim that the Russian economy is close to collapse, noting that VAT is rising to finance the war and that's there's some evidence that fuel is in short supply. But let's look at other evidence:

 

  • Aspirin is a causal factor in increased diagnoses of autism
  • Climate change "is a con"
  • London is going to adopt sharia law

 

I'm not sure I've much faith in the prognostications of a President capable of so many demonstrable falsehoods in one day. And neither should the media. Don't publish, or seek to give any credibility to the rantings of this fool. But read the article by all means.

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September 26, 2:59 AM
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Trump announces new tariffs on trucks, drugs and kitchen cabinets

Trump announces new tariffs on trucks, drugs and kitchen cabinets | International Economics: IB Economics | Scoop.it
From www.bbc.co.uk - September 25, 8:21 PM
The US president said the move aims to help protect American manufacturers from foreign imports.
Graham Watson's insight:

Here we go, Roger Random formulating trade policy again, oblivious to the fact that businesses want certainty. However, higher tariffs are being imposed on trucks, drugs and various types of furniture, notably kitchen cabinets. 

 

Higher prices for consumers, or lower quality products, what's to like about these tariffs? Well, very little. Just a quick use of AI will tell you that around 270,000 people work in furniture manufacture in the US, out of a total labour force of 170 million. That's 0.16% of the labour force. I suspect the figures are similar for trucks. And what about people who don't want to buy Mack or Peterbilt Trucks? You can also easily discover the market share of heavy trucks accounted for by US firms too...

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Scooped by Graham Watson
September 25, 9:41 AM
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The next big financial crisis may be brewing. Warning signs are already there | Larry Elliott | The Guardian

The next big financial crisis may be brewing. Warning signs are already there | Larry Elliott | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - September 25, 6:00 AM
The longer the period between crises, the greater the complacency. That complacency is pushing share prices ever-higher, says Guardian columnist Larry Elliott
Graham Watson's insight:

This Larry Elliott piece sounds a note of great caution; he wonders if we're on the brink of another financial crisis. This time he thinks that the disconnect between the real economy and the stock market has resulted in the over-valuation of shares and that at some point there's going to be a correction. 

 

His view is that growth in both the US and the UK - not to mention Europe - is flat and that if this triggers either a share sell-off or a decrease in the consumption levels of the rich in the US - where the top 10% of income earners account for 50% of all consumer spending - then we could go into recession. 

 

Of course, all of this is further complicated by the on-going dispute over the role of the Federal Reserve, and President Trump's attempts to politicize its role in the economy. Lower interest rates could keep unemployment low but at the cost of even higher inflation, something that Wall St doesn't seem to have factored in. 

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September 22, 4:40 PM
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Vanuatu’s Climate Resilient Transport Project Boosts Community Access and Safety

From www.youtube.com - September 22, 1:41 PM

In partnership with the Government of Vanuatu, the World Bank is helping deliver safer, more reliable transport on Espiritu Santo Island. The upgraded 65 km South Santo Road and 11 new bridges, as part of the Vanuatu Climate Resilient Transport Project, are now connecting tens of thousands of people to schools, health centers, markets, and jobs, even during floods. Designed to withstand extreme weather and disasters, this work is making daily travel safer, faster, and more affordable for local communities. 

Graham Watson's insight:

The importance of good roads to development is made abundantly clear in this World Bank clip looking at how a $140m investment in South Santo has the potential to significantly boost the quality of life for the citizens of Vanuatu. 

 

Not only does this foster inclusive growth, but it will also improve educational and healthcare outcomes, and also the resilience of rural communities in the face of climate change and extreme weather events.  

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September 22, 2:29 AM
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Wealth tax would be deadly for French economy, says Europe’s richest man | Bernard Arnault | The Guardian

Wealth tax would be deadly for French economy, says Europe’s richest man | Bernard Arnault | The Guardian | International Economics: IB Economics | Scoop.it
From www.theguardian.com - September 21, 10:35 AM
LVMH owner Bernard Arnault, who could take €1bn hit, says proposed 2% levy ‘aims to destroy liberal economy’
Graham Watson's insight:

The UK government isn't the only one facing issues with the public finances; in France, too, there's the prospect of spending cuts and tax rises, not least in the form of a 2% wealth tax.

 

Unsurprisingly, Europe's richest man, Bernard Arnault, opposes such a move - not least because it might cost him around 1 billion euros. Of course, such taxes are controversial, not least because they rarely raise the revenues expected. However, any notion that M.Arnault's estimated $169bn wealth is the result of a unique level of effort on his part, should be dispelled too. 

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September 19, 12:07 PM
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Emergency care and the Acute Care Transformation Initiative

From www.youtube.com - September 19, 9:07 AM

This video highlights the importance of emergency care delivery across the life course in diverse settings and describes a new WHO initiative to bring the transformative Basic Emergency Care program to scale. 

Graham Watson's insight:

Proof that healthcare is an important part of development with this World Health Organization initiative, the Basic Emergency Care programme, designed to improve emergency healthcare in developing economies. If it can succeed in its aims, and be rolled out at scale, it should enhance life expectancy and thus development.

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September 18, 2:09 PM
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Changing Lives & Landscapes: Colombia’s Sustainable Cacao Story

From www.youtube.com - September 18, 12:59 PM

In Colombia’s Orinoquia region, sustainable cacao farming is transforming lives - boosting rural economies, protecting biodiversity, and empowering women. Casa Luker, a leader in Colombia’s cocoa market, has joined forces with the International Finance Corporation (IFC) and the BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL) to expand sustainable cacao production and increase women’s participation as producers, innovators, and leaders in the value chain.

Graham Watson's insight:

This International Finance Corporation clip looks at how cocoa (cacao, if you must) has become an important part of fostering developmwnt in the Orinoquia region. 

 

Not only is cocoa a sustainable crop but it is also allowing for increased female participation in the labour force and both are clearly desirable outcomes and help to prompt economic growth, improving living standards. 

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