Tag: Economics

Leveling the Afghan Playing Field

Afghan farmer works in the field
An Afghan farmer works in the field.

NEW YORK – Afghanistan’s security and political situation remains plagued by uncertainty, stemming from the withdrawal of United States and NATO combat troops, the upcoming presidential election, and the stalled peace negotiations with the Taliban. Recognizing that continued economic insecurity will exacerbate this perilous situation, the government has announced a new package of economic incentives aimed at attracting foreign direct investment.

The package includes the provision of land to industrialists at dramatically reduced prices, tax exemptions of up to seven years for factory owners, and low-interest loans of up to ten years for farmers. Such incentives are targeted at foreign investors and the local elite, with the aim of stopping or even reversing capital flight. But the new measures ultimately amount to more of the same: a fragmented policy approach that will prove inadequate to solve Afghanistan’s fundamental economic problems.

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After the Arab Spring: Creating Economic Commons

Oil Fields.
Oil Fields. Photo:Jingletown/flickr.

If the latest Arab awakening was about jobs and justice, then political reforms, unless accompanied with a levelling of the economic playing field, are unlikely to be sufficient on their own. The latent demographic pressures across the Arab world and the resulting youth unemployment have created an employment challenge that is both real and urgent. During the next decade an estimated 100 million jobs need to be created in the Middle East. The public sector, already bloated and inefficient, is unprepared to meet this employment challenge. Sooner or later, Arab policymakers will have to return to addressing a longstanding development challenge facing the region: economic diversification. In fact, the challenges of demography and diversification are intertwined. Without developing a robust private sector and without reducing the region’s dependence on natural resources, the gains that the Arab world has made in literacy and health cannot be translated into lasting economic prosperity.

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The Triumph of Politics in Europe

A European flag and a Greek flag
Will Europe's politicians save the Euro? Photo: YoungJ523/flickr

MADRID – Economics, particularly economic theories, always yield in the end to political imperatives. That is why Europe’s fast-changing political landscape, reshaped by electoral insurrections in France and Greece against German-backed fiscal austerity, is bound to affect Europe’s economic policies as well.

Such an imperative has been at work throughout Europe’s postwar history. Indeed, Europe’s shift from the modest customs union of the European Economic Community to the single market and common currency of today’s European Monetary Union was itself a fundamentally political move, one with strategic implications, of course. France wanted to tame German power by harnessing it to the European project, and Germany was prepared to sacrifice the Deutsche Mark for the sake of France’s acceptance of a united Germany, the nightmare of Europe’s recent past.

An economically robust Germany is, without doubt, vital to the European project, if only because history has shown how dangerous an unhappy Germany can be. Indeed, it was thanks to the euro – and the captive European market that goes with it – that Germany today is the world’s second-leading exporter (China surpassed it in 2009).

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A Reading List on: Economics and Security

Books in perspective
Books in perspective.  Photo: Oldtasty/flickr

The intersection between economics and security is large and growing. Fighting wars and fulfilling security objectives has always had economic implications — in far more than just blood and treasure — and economic developments are having ever more rapid and dramatic consequences for traditional and emerging conceptions of security.  This syllabus will help keep you up to date.

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Business and Finance

Some Links on the Euro Crisis

One Euro? Photo: Jose Glez y Lopez/flickr

With the massive protests in Spain over the weekend and calls from respectable quarters for Greece to leave the Euro – which, as Daniel Knowles of the Telegraph succinctly illustrates (echoing Barry Eichengren’s working paper), could have genuinely catastrophic results – the future of the Eurozone is very much in question today in the world media.

Last August, Lorenzo Smaghi, writing for Foreign Affairs, offered an optimistic assessment that put a lot faith in the new financial governance structures – mainly the European Financial Stability Fund (EFSF) – implemented that summer, but that optimism now seems to have been overtaken by events.

Whereas Charles Calomiris, in Foreign Policy, was telling us in January that the Euro was dead, in the May/June print edition of Foreign Affairs, Henry Farrell and John Quiggin offered a proposal to save it – “and the EU.”

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