Economics

Emerging Markets

  • Brazil
    Trump Creates a Trade Opening for Brazil
    President Michel Temer’s decision to send troops into Rio de Janeiro officially killed not only Brazil’s pension reform, but also remaining hopes that he might tackle the litany of structural changes to the tax, labor, education and regulatory systems that economists and investors see as the country’s economic salvation. Yet these now-defunct reforms aren’t the only way to bolster growth. Trade matters as much or more for juicing gross domestic product, as the influx of goods, services and competition can help attain the economic holy grail of rising productivity. And given the U.S. protectionist pullback, opening to the world could, for once in Brazil, be politically popular in this election year. Brazil has always been a reluctant trader. Despite its natural resource bounty, it remains one of the world’s most closed economies. Its handful of formal trade agreements give it preferred access to just 10 percent of global markets and contain hundreds of exceptions, diminishing their reach and heft. These self-created handicaps keep Brazil out of the more profitable parts of global supply chains, instead largely stuck supplying raw materials to other nations’ factories. And the relatively heavy taxes on imports drive up costs for local companies and consumers alike. Yet Brazil’s lofty barriers also mean that reform could bring much more bang for the buck. A 2014 McKinsey study estimated that by opening its economy, Brazil could add 1.25 percent to annual GDP growth, more than labor or regulatory reforms would bring, and similar in scope to a total tax overhaul. These economic benefits from trade matter even more as Brazil’s population ages. From 1990 to 2012, new workers drove more than half of all GDP gains, some 1.8 percent a year. Yet this demographic bonus is ending -- in less than a decade, Brazil’s children and elderly will outnumber its breadwinners -- and that will cause a once-reliable engine of growth to sputter. Brazilian politicians understand the costs of protection. They give national aerospace champion Embraer the freedom to import equipment and components free of the tariffs other industries face. Their jets are now globally competitive. This stands in sharp contrast to Brazil’s automakers, which enjoy no such privileges. Brazilian cars as a result take twice as long to make and are 40 percent more expensive than those in Mexico. Their paltry exports go largely to captive Mercosur trading partner Argentina. The political timing for opening up may finally be right. Trump’s penchant for threatening -- if not breaking -- so many extant trade deals could spark reconsideration of an issue that used to be all but taboo in Brazil’s politics. In a country where fewer than two in 10 people like the U.S. president, anti-Trump issues can be in vogue. And by pulling back, the U.S. has given Brazil space to shape new accords more to its liking. The power struggle that sunk the Free Trade Agreement of the Americas in the mid-2000s has faded with America’s absence. EU-Mercosur talks are the place to start. After nearly two decades of on-again, off-again talks, the participants are trying to break through standoffs on agriculture and rules of origin. Trump’s recent tariff hikes on steel and aluminum tariffs, hitting industry on both sides of the Atlantic, could foster the camaraderie needed to overcome the last sticking points. Also ripe for a Brazilian rethink is the Pacific Alliance. Founded by Mexico, Colombia, Peru and Chile, the ambitious agreement goes after not just tariffs but also barriers to investment, services and the movement of people. Brazil’s participation would jump-start aspirations for Latin American economic integration. Most ambitious would be joining the revised Trans-Pacific Partnership, opening nearly a third of the world’s markets to Brazil’s companies, and changing the way government procurement, intellectual property protection, and public and private credit work in the Southern Cone nation. Dropping barriers would bring turmoil to some sectors, no doubt. In the 1990s Brazil unilaterally reduced tariffs on many goods -- leading imports to double as a percentage of the economy even as exports stagnated. Many unproductive companies faltered and failed, and some of their former employees have yet to recover. Brazil’s clothing and shoe factories and gas production are similarly vulnerable to more opening, even as car makers and other advanced manufacturers stand to gain. Yet for Brazil to grow faster for longer, it has to become more globally competitive. The now-stymied internal structural reforms are one path; economic opening is the other. And as Embraer and the many agro-businesses show, when given a bigger and more level playing field, Brazil’s companies can thrive. But they need the preferred access to markets that trade agreements would bring. Law and order and anti-corruption promises dominate the early presidential campaign slogans. Yet polls show Brazilians care most about their pocketbooks. Trade’s promise of cheaper and better goods could appeal to middle- and upper-class Miami-bound shoppers and poorer Bolsa Familia recipients alike. And for the broader economy, it would bring a much-needed win. View article originally published on Bloomberg View.
    Blog Post by Shannon K. O'Neil March 15, 2018 Latin America’s Moment
  • Labor and Employment
    David A. Morse Lecture: The Future of Work - A Conversation With Guy Ryder
    Play
    International Labour Organization Director-General Guy Ryder discusses the future of work, including the impact of automation on jobs, education and skills development for emerging sectors, and the challenges presented by labor migration.
    Event with Guy Ryder September 20, 2017 Women and Foreign Policy Program
  • Development
    Women’s Empowerment Starts at the Bank
    In a meeting room in Delhi, India, with walls painted green and sun streaming in through beige curtains, more than 30 women sit on wooden benches to hear about the positive power of saving. “The cricket is saving and will be ready,” says their instructor, a jovial man wearing a white striped shirt. He’s holding a large picture book that tells a story easily understood by those who might not read. Welcome to the next frontier of women’s economic advancement: financial inclusion. Otherwise known as helping women enter the formal financial system, one bank account at a time. Financial inclusion plays a critical role in reducing poverty and boosting economic development. Yet despite the economic and social benefits of access to formal financial institutions, as many as 2 billion people take part only in the informal economy. While this arrangement allows some of the world’s poorest to manage their daily expenses, usually through loans from family members or moneylenders, it denies them the stability of a savings account, insurance and established credit. Women are among those with the least access to banking. Data from the World Bank’s Global Findex report shows that only 58 percent of women have an account. At least 1.1 billion women and girls — one billion — around the world are excluded from the formal financial system. And this is costly for all of us. Read the full article in TIME online >>
    Blog Post by Gayle Tzemach Lemmon April 21, 2017 Women Around the World
  • Economics
    How Liberia’s New Generation Of Female Entrepreneurs Is Revitalizing The Economy
        As a child, Odelia Acolyte fled her home of Liberia to neighboring Nigeria to escape the bloodshed of civil war. But she returned home frequently to visit family and always felt that what would help people in her country most would be to give them a job. “When I would go home, I would always find people sitting around,” says Acolyte, “I wanted to be part of change in society.”         That dream stayed with her for close to a decade, and following her return to Liberia, she became the first person in her immediate family to graduate from college, earning a sociology degree from United Methodist University in Monrovia in the capital. The idea remained alive even after she found a prized job with a local telecommunications company in Monrovia, one of only a limited number of formal, private sector jobs in a country where the International Labour Organization estimates that nearly 20% of men and 35% of women are unemployed.     Read the full article in Fast Company.
    Blog Post by Gayle Tzemach Lemmon April 14, 2017 Women Around the World
  • Financial Markets
    CFR Sovereign Risk Tracker
    The CFR Sovereign Risk Tracker can be used to gauge the vulnerability of emerging markets to default on external debt. 
    Report by Benn Steil April 7, 2017 Greenberg Center for Geoeconomic Studies
  • Energy and Environment
    Water Access is a Gender Equality Issue
    Anne Connell is the assistant director of the Women and Foreign Policy program at the Council on Foreign Relations Wednesday, March 22, is World Water Day, an internationally-celebrated day dedicated to collaboration between the United Nations, governments, and non-governmental organizations to tackle the world’s water crisis. Ensuring universal access to safe water by 2030 is identified as a critical component of the 2030 Agenda for Sustainable Development’s mandate to eradicate extreme poverty. The global water crisis is not only deadly—lack of access to clean water claims more lives each year than AIDS, breast cancer, terrorism, and all the world’s conflicts combined—but is incredibly economically costly. And the opportunity cost of water shortage, contamination, and inadequate infrastructure falls disproportionately on women and girls. In communities around the world, women and girls spend much of their days walking long distances to seek out safe water, fetching or drawing it, and carrying heavy containers back to their households. In sub-Saharan Africa, for example, an average trip to collect water covers over 3 miles and takes 33 minutes each way—and in a number of countries, such as Mauritania, Somalia, Tunisia, and Yemen, the trip takes longer than an hour each way. In South Africa alone, women collectively walk the equivalent distance of sixteen times to the moon and back every day just to collect and transport the water their families and communities need to survive. Water availability also affects whether or not girls—especially those from poor, rural, or marginalized families—are educated. The gender gap in water-related work begins early in life: young girls between the ages of five and nine spend an estimated 40 million more hours a day on household chores than boys, and girls aged ten to fourteen years old spend 120 million more hours each day. If, like in many sub-Saharan African communities, fetching water takes several hours, it considerably shortens the time girls have available for schooling and disincentives families from prioritizing girls’ education. The burden of water collection is not only felt by women and girls themselves, but has far-reaching effects on broader prosperity. The 200 million hours women and girls spend every day collecting water globally is time that could be spent carrying out income generating activities and contributing to the formal economy. Indeed, experts estimate that lack of ready access to clean water causes annual economic losses of up to 7 percent of GDP in some countries: in India, for example, it’s estimated that the time women spend every year fetching and carrying water is equivalent to a national loss of income of 10 billion rupees, or $160 million.   Women carry metal pitchers filled with water from a well outside Denganmal village, Maharashtra, India, April 21, 2015. REUTERS/Danish Siddiqui   Given these strong connections between lack of access to clean water and other development areas—including gender equality—governments, multilateral organizations, and private sector leaders are investing in projects to build and repair wells, bring water sources closer to communities, and install solar pumping technologies. Evidence suggests that these efforts would be strengthened by investment in women’s access to and ownership of water tools and technologies: when women run water cooperatives or own water pumps, for example, they are significantly more likely than men to invest profits and time saved back into their communities. In one program in Nigeria, a social enterprise model for women-run water centers not only reduced the time spent collecting water for over 6,000 women, but successfully provided better access to clean, affordable water for over 30,000 people and led to improved economic, health, and educational outcomes across the community. Efforts geared toward improving the management of the world’s resources and extending access to safe water should thus capitalize on the central roles women already play in water management. It is clear that lessening the burden of unpaid water work that falls on women and girls is not only essential as a matter of human rights—it unleashes a range of positive economic and development outcomes.
    Blog Post by Guest Blogger for Women Around the World March 22, 2017 Women Around the World
  • Economics
    Facebook Live on International Women’s Day
    Yesterday, I sat down with my colleague Stewart Patrick, the James H. Binger Senior Fellow and Director of the International Institutions and Global Governance Program, to commemorate International Women’s Day and discuss the work of CFR’s Women and Foreign Policy program. Our conversation reviewed the considerable progress made in the two decades since the landmark 1995 UN Fourth World Conference on Women in Beijing and the unfinished business that still remains. We discussed the future of the global women’s movement, the effect of women’s participation in peace and security efforts, and women’s economic participation as a driver of global growth. We also fielded questions from participants around the world in our live, interactive discussion, including those that addressed the pressing and topical issues of the day: the future of women’s political leadership, the U.S. role in ending child marriage around the world, and the status of women and children in the global refugee crisis. You can view the video of our discussion below or on Facebook.
    Blog Post by Rachel B. Vogelstein March 10, 2017 Women Around the World
  • Middle East and North Africa
    Improving Women’s Economic Participation in MENA Nations
    This post is co-authored by Alyssa Dougherty, research associate for women and foreign policy, at the Council on Foreign Relations. The female labor force participation rate in the Middle East and North Africa (MENA) is the lowest in the world and has seen little improvement in the past four decades, despite evidence that equal access to jobs boosts GDP, contributes to long-term growth, and targets income inequality. As it stands now, MENA countries won’t reach the current global average for at least 150 years when it comes to women’s labor force participation. As the region confronts a youth bulge (almost 65 percent of MENA’s population is under the age of thirty), armed conflict, extremism, political turnover, and declining oil prices, MENA governments can look to women’s economic advancement as one promising solution to bolstering and diversifying their economies and addressing internal pressures. In 2015, the McKinsey Global Institute released a report which found that supporting women’s economic advancement could add 12 trillion dollars to global GDP by 2025. A report by the International Monetary Fund (IMF) provided similar analysis, citing 1 trillion dollars in additional output that could have been possible if MENA governments had narrowed the gender gap between 2000 and 2011. Despite widely cited research which suggests that empowering women economically can reduce poverty, lower birth rates, and benefit child welfare, several factors continue to impede Arab women’s full participation. Barriers such as limited mobility, the need for male permission to travel, lower salaries, closed industries, inadequate access to entrepreneurial opportunities, and harassment in public spaces inhibit women’s entrance into the labor market. Even laws designed to protect working women often lead to preferential treatment for male candidates, as such laws can result in additional costs for employers. Morocco and Djibouti are the only countries in the region to pass laws targeting gender discrimination during the hiring process. In light of these persistent barriers, a report from the Brookings Doha Center titled “Equality and the Economy: Why the Arab World Should Employ More Women” advises MENA governments to address the stigma of women’s economic participation as early as primary school where stereotypes are defined and ultimately reinforced. “Enhanced employment and empowerment of women in Arab economies and societies can be achieved through political, legal, and regulatory reforms,” the report notes. “However, without larger changes in societal and cultural attitudes, top-down reforms will have a limited impact.” There is a paradox of education in play. In MENA countries, women are more likely to be unemployed as their level of education increases, as opposed to men who benefit from advanced degrees. In Bahrain, Dubai, Oman, Qatar, and Saudi Arabia, girls consistently outperform boys in both math and science, just as women outnumber men in universities by 108 percent. Despite promising upward trends of female representation in higher education, 75 percent of Arab women are still excluded from the labor market. Young women are particularly vulnerable, with 44 percent actively seeking work yet remaining unemployed. Their fate, it seems, is more closely tied to labor market fluctuations, as demonstrated recently in North Africa, where recession coincided with a 9 percent increase in female youth unemployment. Ultimately, women’s economic participation and its many social benefits will never be fully realized without a shift in institutions, an evolution of the private-sector, and a change in gender-focused attitudes. Promoting the positive relationship between advancing women in the workforce and GDP growth is one way to address the economic challenges of the region and fully tap the talent of the entire population, not just half of it.
    Blog Post by Gayle Tzemach Lemmon and Guest Blogger for Women Around the World February 27, 2017 Women Around the World
  • Economics
    Women Around the World: This Week
    Welcome to “Women Around the World: This Week,” a series that highlights noteworthy news related to women and U.S. foreign policy. This week’s post, covering from February 10 to February 20, was compiled with support from Anne Connell and Alyssa Dougherty. U.S.-Canada collaboration on women in business Last week, U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau launched a new binational Council for the Advancement of Women Business Leaders and Female Entrepreneurs, tasked with a broad mandate of advancing women in the workplace. Details about the council—spearheaded by first daughter Ivanka Trump, whose influence reportedly led to the inclusion of a proposed childcare policy in President Trump’s campaign platform—are yet to be announced. The meeting drew comparisons between the two leaders’ respective commitments to gender parity: while Trudeau has made equality a cornerstone of Canadian foreign and domestic policy and in 2015 appointed a cabinet that was 50 percent women, President Trump has nominated only four women out of twenty-three cabinet positions requiring Senate confirmation, well below that of the last four U.S. presidential administrations. Gender pay gap in Romania Recent research on the gender pay gap in the European Union (EU) suggests that the eastern European nation of Romania may close the pay gap faster than any other country in the bloc. Women’s salaries in Romania are presently 9 percent lower than men’s, but experts suggest that this gap could be closed completely by 2018 among women aged 25 to 34, with the growing hospitality industry most likely to achieve equal pay first. Romania is also home to the second-highest percentage of women working in information and communications technologies (ICT) of any country in Europe, with women comprising 29 percent of the ICT workforce. As burgeoning energy, electricity, and ICT fields contribute to rapid growth in Romania, the nation’s economy stands to gain from increasing numbers of young women entering these fields. A new European parliament report suggests, however, that while Romania’s pay gap is almost four times lower than the EU average, the country continues to rank poorly when compared to EU neighbors on other measures of economic equality: fewer than 4 percent of Romanian CEOs are female, and data show that women disproportionally bear the burden of unpaid household and care work. Underrepresentation of women in Indonesian politics Indonesian women continue to be underrepresented in political life, comprising less than 7 percent of candidates in last week’s regional elections, despite Indonesian legislation requiring political parties to ensure that 30 percent of its candidates are women. In practice, many parties either ignore the law or recruit wives, daughters, relatives or low-ranking female civil servants to be placed low on party lists, without resources to support their candidacies. Women’s participation in this month’s elections has been further complicated by instability that has permeated national politics, with the rise of extremist fringe political groups that have shaken the Indonesian political establishment, and a rising conservative voter base discouraging women from entering politics.  
    Blog Post by Rachel B. Vogelstein February 22, 2017 Women Around the World
  • China
    How Serious Is the Threat to Global Financial Stability From a Border-Adjustment Tax?
    Neil Irwin’s column on the border-adjustment tax spurred an interesting debate. Irwin notes that a 25 percent rise in the dollar (or even a somewhat smaller rise) would have an impact outside the United States, as the dollar is a global currency. Dean Baker and Jared Bernstein note that the dollar moves around a lot without destroying the global economy. The projected moves in the dollar are no larger than the dollar’s 20 percent or so move over the last three years. Baker: "Movements of this size happen all the time. They certainly can cause problems, but the financial system generally deals with it." Fair enough.* I still worry though. There is a difference between a 20 percent move (off a long-term low) and a 30 or 40 percent move. And there is a difference between normal exchange rate volatility and large, sustained currency shifts. I would note that the 20 percent rise in the dollar in late 2014 and early 2015 contributed to the change in China’s currency regime—and China’s shift to managing against a basket roiled global markets from August 2015 to February 2016. The world survived, but it wasn’t totally smooth. Let me focus on two specific reasons for concern: One. Balance sheet mismatches in emerging economies.** Two. Dollar pegs, or basket pegs heavily weighted to the dollar. One. Balance sheet mismatches. These are the old bane of emerging economies. Countries over-borrow in foreign currency. Their currency depreciates. And the country cannot pay its debts back. This was a big part of the story of the Asian crisis. And of subsequent defaults in Ecuador, Russia, and Argentina. But things have changed since the 1990s. The governments of most large emerging economies have more foreign currency assets than foreign currency debts. Central bank foreign exchange reserves exceed foreign currency bonds issued by the government. This is the case in China’s central government—it has $3 trillion in foreign currency reserves and almost no foreign currency denominated bonds. And the governments of Brazil, Russia and India all also have more foreign currency reserves than foreign currency debt. The Saudis have issued a lot of dollar debt recently. But the Saudi government is still net long the dollar—foreign currency bonds are $17.5 billion (plus some loans), reserves are still $536 billion. The governments of big emerging markets are generally not big borrowers in dollars anymore. Even those with current account deficits. There are some (partial) exceptions. Turkey is an interesting case, though the government of Turkey has only a modest amount of foreign currency debt (roughly $30 billion). But it is close because Turkey really has very few reserves. Around $55 billion of the central banks $106 billion in reserves (foreign currency and gold) have in effect been borrowed from the banks (see Paul McNamara; or the footnotes in Turkey’s SDDS reserves disclosure), and thus aren’t a hedge for the government. Argentina too after its recent bond issue. Yet, in broad terms, emerging market governments are better positioned to withstand big foreign currency moves than in the past. (On the flip side, foreign investors have taken on more local currency risk—they are the ones who stand to lose.) As many have noted, the FX risks within emerging markets now largely lie on the corporate side. Emerging market firms stepped up their dollar borrowing even as emerging market governments stepped down. I wouldn’t assume that just because firms were able to withstand a twenty percent move in the dollar they can easily withstand a forty percent move—especially if U.S. rates move up. The actual risk though likely varies. A lot of the biggest emerging market corporate issuers of dollar denominated bonds likely have state backing—PEMEX ($100 billion in debt, not all in dollars), Petrobras (over $100 billion in debt), Rosneft, Gazprom, the Chinese state banks, the big Chinese airlines, and the like. And most of these countries hold enough reserves to cover the foreign currency debts of their big state companies as well as the direct foreign currency debts of the state. But that doesn’t mean that a further rise in the debt burden of state companies wouldn’t be painful. Those most exposed are countries where there are big, broader foreign currency mismatches throughout the corporate sector. Turkey for example. Any rise in the dollar effectively shifts wealth from Turkey’s firms to Turkey’s households—at least those with dollar deposits.*** At some point the strain will become too big, and the banks will have to restructure their corporate loan book and absorb losses. Turkey’s banks are already hurting from a decline in the lira, which reduces their equity buffers (the banks have big foreign currency balance sheets, but keep their equity in lira—so the equity base shrinks relative to their total liabilities as the currency weakens). And there are a set of countries and companies that are exposed not so much to the dollar’s value relative to other large exporters of manufactures (Japan, China, Korea and Europe) but to the dollar price of commodities. That though is a subject for another time. The impact of the border adjustment on global commodity prices (notably oil) is a hotly debated topic, and I am not convinced that it will be as mechanical as some have argued. The other risk comes from the world’s remaining dollar pegs. A stronger dollar pulls up the value of a lot of other currencies, as many countries still peg to the dollar -- even though a reasonable number of de facto dollar pegs have either broken or transformed into basket pegs over the last two and a half years (the Kazakh tenge for example, or the Nigerian naira) I will set aside the questions around the Saudi peg. A stronger real effective riyal would hinder the Saudis’ efforts to diversify their economy away from oil, but I never took those efforts all that seriously. What really matters for Saudi Arabia in my view is not so much the value of the dollar against the G-3, but the value of oil in Saudi riyals. Dollar/oil matters more than dollar/yen—or put differently, dollar/yen only matters to the extent it changes dollar/oil. The hardest questions involve China. It doesn’t float now. And strictly speaking it doesn’t manage its currency against the dollar. Rather it tightly manages its currency against a basket. China would have to decide how it wants to react to a border adjustment. It won’t happen automatically. And it is easy to see how this could be an important source of future instability. Consider the following. China could decide to maintain a basket peg, and thus let the renminbi adjust to the border adjustment in proportion to the global market adjustment (and specifically moves in the dollar/euro and dollar/Asia). Because of the weight of the dollar, the Hong Kong dollar and the Saudi riyal in China’s basket, the renminbi would move by say 2/3rds as much as the dollar moves against the major advanced economies (Mexico and China dominate the dollar basket versus emerging markets—and neither enters into China’s own basket—China for obvious reasons and Mexico because direct trade is limited). So if the dollar appreciated by about 15 percent against the majors, the mechanical operation of the basket would produce a roughly 10 percent appreciation in the renminbi against the dollar. That would offset less than half the border adjustment on China’s exports (a full offset of a 20 percent border-adjustment on imports, given the math, requires a 25 percent move). And other countries would also gain relative to China, as their currencies would depreciate more. Would the market—which in China, is primarily domestic institutions that can move funds across the border more easily than international investors—believe that China wouldn’t move by more? Or would it start to speculate that China ultimately would want a full adjustment? Would China’s controls be effective if domestic exporters and importers believed that a further depreciation was imminent? And if China did a full adjustment—a one off reset of the level of the basket—how would other currencies respond? Would China trigger even bigger depreciations elsewhere in Asia? It doesn’t seem to me all that hard to see how there is an overshoot in Asia, given the large role that China plays in Asian trade. I know that goes against the conventional wisdom that the border adjustment won’t be perfectly offset because capital flows exceed trade flows, which is true, but incomplete—as it doesn’t quite capture the dynamics around America’s largest single source of imported goods and the biggest single contributor to the dollar’s trade-weighted index. China’s currency is heavily influenced by trade flows, including financial outflows disguised as trade flows—and of course by expectations about the yuan’s future course against the dollar. Those would be destabilized by a border adjustment. China doesn’t have giant domestic foreign currency mismatches. There are a few (the airlines) but they are manageable in the big scheme of things. The risk to China comes from the potential impact of outflows (and the policies introduced to stem outflows) on domestic financial stability. And the risk to the world in turns comes from the trade impact from a complete break in China’s peg and a major depreciation of the renminbi. One that overwhelms any border adjustment. * Small aside on the border adjustment: a border adjustment eliminates the incentive to game the system by shifting profits offshore, but it does so by exempting profits on exports from any onshore tax. It basically abandons the notion of trying to tax the intellectual property (IP) rents on export income, or the economic rents from the export of natural resources for that matter. And it could create incentives for other kinds of gaming. I am convinced that the current system is heavily gamed in ways that hurt U.S. exports of IP and high-margin products (the active ingredient in pharmaceuticals for example), but the proposed border-adjustment gets rid of some of the games by in effect not taxing certain kinds of hard-to-tax income. ** I am assuming that large financial institutions in the advanced economies have matched books (whether directly, or through cross-currency swaps and similar hedges), and thus do not have any worrying balance sheet mismatches. That is also just an assumption. At the same time, the moves in the dollar/euro and dollar/yen have put balance sheets to test. *** Turkey’s central bank publishes data on the foreign currency book of its corporate sector. Others should too.
    Blog Post by Brad W. Setser February 14, 2017 Follow the Money
  • Development
    The Women Driving International Development
    Voices from the Field features contributions from scholars and practitioners highlighting new research, thinking, and approaches to development challenges. This article is authored by Dana J. Hyde, CEO of the Millennium Challenge Corporation. In the global fight against poverty, we can’t afford to give up the $12 trillion that could come from gender equality. As CFR Senior Fellow Rachel Vogelstein has written, improving gender equality and strengthening the economic standing of half of the world’s population is the key to unlocking broad-based economic growth. Changing gender norms and addressing gender disparities is not easy. But as CEO of the U.S. Government’s Millennium Challenge Corporation, I am encouraged by the inspiring women who are leading the way to advance growth and lift communities out of poverty around the world. I think about the female plumbers in Jordan who are helping to preserve precious water resources in their communities; the female farmers in Senegal who received formal rights to their land are told me they are now planting crops to increase their families’ income; and the female community leaders in the Philippines who managed implementation of locally driven development projects. CEO Dana J. Hyde and others with female plumbers who participated in MCC-backed training in Jordan. (Photo courtesy of MCC) I am proud to lead a team of development experts where more than half of the senior leadership team and more than half of our agency are women. And in an extraordinary first, women currently lead four of MCC’s major U.S. Government partner agencies, including the U.S. Agency for International Development, the Peace Corps, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency. I am also inspired by a unique cadre of women among MCC’s implementing partners – a local entity known as a Millennium Challenge Account (MCA) leads MCC projects in our partner countries. These MCAs are entirely locally staffed and include a locally appointed Chief Executive Officer. As MCC CEO, I have been honored to work alongside seven female MCA CEOs who have managed the implementation of more than $2 billion in U.S. development projects. Women like Pamela Bwalya, the CEO of MCA-Zambia, represent what women can and will bring to the table in a more equal world. Growing up in Zambia – which ranked 116th out of 145 countries on the World Economic Forum’s 2015 Gender Gap Index – she faced regular discrimination. She remembers people around her saying that it was better to send boys to school than girls; and in her professional life, she continued to experience institutional gender discrimination that lay roadblocks along her career path. Pamela Bwalya, CEO of MCA-Zambia. (Photo courtesy of MCC) But with her family’s encouragement, Pamela persevered. Following university in South Africa, where she earned a master’s degree in economics, she returned to Zambia and rose to become the deputy director in the Government’s Ministry of Finance and Planning. When Zambia signed a $355 million compact with MCC, Pamela was appointed CEO of the MCA. Today, she leads a team implementing projects that will benefit more than one million men and women across the country. Former MCA-Moldova CEO Valentina Badrajan led implementation of a $262 million compact between MCC and the Government of Moldova. Our partnership helped jumpstart the Eastern European country’s lagging agricultural sector. In a blog post for MCC, Valentina says that women often must have more knowledge or experience than men to achieve the same positions, and that she herself faced challenges throughout her career. As MCA CEO, she led projects that explicitly addressed gender disparity and actively involved women. The compact, for example, funded training events and workshops to enhance women’s business skills and promote entrepreneurship. Valentina Badrajan, former CEO of MCA-Moldova. (Photo courtesy of Valentina Badrajan) Women like Pamela and Valentina—and their counterparts in other MCC partner countries—have become role models for me, and I hope for women around the world. Their drive and determination have helped them overcome challenges and become leaders in their communities. By unleashing the potential of women like them, the United States and its partners can take a vital step forward toward building a better future for everyone. Hear Pamela and Valentina’s stories, along with those of other women leading MCAs, in MCC’s “Women on a Mission” podcast series.
    Blog Post by Guest Blogger for Women Around the World January 10, 2017 Women Around the World
  • International Organizations
    Steering a World in Disarray: Ten Summits to Watch in 2017
    After a tumultuous 2016, the world holds its breath for what the coming year may bring. Angry populism is on the march. Great power relations are tense. The Middle East has imploded. Meanwhile, President-Elect Donald J. Trump proposes to upend U.S. foreign policy in areas from trade to climate, alliances to nonproliferation, terrorism to human rights. In a world in disarray, can multilateralism deliver? Ten major summits during 2017 will help provide an answer. Here’s what to look for at each. European Union Summit (March 25, 2017, Rome). Last June, British voters caused a geopolitical earthquake by voting to leave the European Union (EU). UK Prime Minister Theresa May promises to invoke Article 50 by the end of March, starting the clock on the arduous, two-year negotiations over “Brexit.” That same month, leaders of the remaining twenty-seven EU member states gather in the Eternal City to commemorate the sixtieth anniversary of the Treaty of Rome (1957), which established the European Economic Community among the original six (Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany). They are billing the somber summit as the culmination of a six-month “political reflection on the future of the European Union,” intended to convince EU citizens that the bloc remains capable of controlling migration, providing security, and delivering economic growth. They have their work cut for them, given rising nativism, growing terrorist fears, high unemployment, and looming elections in several EU states, notably France and Germany. Host Italy, meanwhile, faces an uncertain future following the resignation of Prime Minister Matteo Renzi after a failed referendum. G7 Summit (May 26–27, Toarmina, Italy). Italy plays host again in late May, when leaders of the seven most important advanced market democracies (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) plus the EU gather in this historic city on Sicily’s stunning Ionian coast. Appropriately—given the setting at the crossroads of the Mediterranean—the agenda will focus on the global migration crisis, which has hit Italy hard, as well as efforts to stabilize North Africa and the Middle East, from which many migrants and refugees have fled. But the real drama at Donald Trump’s first G7 summit will be whether Western powers remain united toward Russia, which they suspended from the G8 in 2014, after its annexation of Crimea. The EU has already extended sanctions on Russia for another six months. But Trump has vowed to reset ties with Moscow and may go against his own party’s push for renewed sanctions. NATO Leaders Summit (Date TBD, Brussels). U.S.-European differences could also be on display when Trump and the leaders of the other NATO members gather at the alliance’s gleaming new headquarters in Brussels. The alliance, unlike the building, is in need of repair. Baltic and East European states have been unnerved by Trump’s depiction of NATO as “obsolete” and his suggestion that U.S. defense guarantees be contingent on greater burden-sharing. The alliance may also be divided over how to confront and deter Russia, particularly if Trump continues to insist (with a certainty that has “horrified” close U.S. allies who know better) that Moscow did not hack the 2016 U.S. election. Conference on the Ocean (June 5–9, New York). Thanks to the personal interest of Secretary of State John Kerry, the world has devoted unprecedented attention over the past four years to protecting marine environments from pollution, overfishing, and acidification. The critical question now is whether this momentum will continue. In early June the United Nations will host “Our Oceans, Our Future.” This high-level meeting will support implementation of Sustainable Development Goal (SDG) 14, designed to encourage conservation and sustainable use of the oceans, seas, and marine resources therein. The world will be looking to the Trump administration for signals about where it stands when it comes to protecting a vast ecosystem critical to supporting life on Earth. G20 Summit (July 7–8, Hamburg, Germany). The new geopolitics and geoeconomics of the Trump era will come into sharper focus in July, when the biggest developed and developing countries meet in Hamburg. Chancellor Angela Merkel, this year’s host, has emerged as the world’s most important defender of globalization. She has chosen “shaping an interconnected world” as the theme of this year’s summit. Her priorities include fostering economic resilience, advancing sustainable development, empowering women, implementing the Paris climate agreement, and advancing peace and development in Africa. Beyond the final communiqué of commitments, observers will be focusing on interactions between President Trump and his major non-Western counterparts, particularly Vladimir Putin of Russia, Xi Jinping of China, and Narendra Modi of India. BRICS Summit (September, Xiamen, China). At the end of the summer, five of the world’s biggest emerging economies—Brazil, Russia, India, China, and South Africa—will gather in China for the ninth BRICS summit. The choice of location is noteworthy. The coastal city of Xiamen was one of the nation’s first special economic zones, serving as a window to the global economy and a destination for foreign investment. Xiamen also sits right across the Taiwan Strait from Taiwan itself, which thanks to President-Elect Trump has reemerged as a flashpoint in Sino-American relations. Look to President Xi to use the summit to advance solidarity within the heterogeneous BRICS bloc, as well as elevate its diplomatic profile as a potential geopolitical and economic counterweight to the West. Opening of UN General Assembly (September 12–25, New York). In September, President Trump will deliver his maiden speech to the United Nations. Back in 2012, he complained about the “cheap 12 inch sq. marble tiles behind the speaker at UN,” tweeting that he would be happy to replace them with “beautiful marble slabs” if asked. More recently the president-elect has suggested he has more thorough UN remodeling in mind. “The United Nations has such great potential,” he tweeted after the Security Council’s December 23 vote against Israel’s settlement policy. “But right now it is just a club for people to get together, talk and have a good time. Sad!” World leaders will be paying close attention to both the tone and substance of his remarks. These may include a declaration that henceforth U.S. contributions to the UN’s regular and peacekeeping budgets (currently assessed annually) will be treated as purely “voluntary.” For incoming Secretary-General Antonio Guterres, keeping U.S.-UN relations on an even keel will be a constant test. ASEAN and East Asia Summits (April and November, Philippines). The coming year will be a big one for President Rodrigo Duterte of the Philippines, which holds the rotating chair of the ten-nation Association of South East Asian Nations (ASEAN). The Filipino strongman will host two ASEAN summits, in April (in Manila) and November (at Clark Air Base in Luzon). The latter event will coincide with the East Asia Summit, where President Xi will surely tout his newly cozy relationship with Duterte. Less certain is whether President Trump will bother to show up and (if he does) what message he will send Duterte, Xi, and other attendees about maritime disputes in the South China Sea, as well as U.S. staying power in the region. The new Chinese-Filipino partnership suggests that rather than hedging against China’s rise, neighbors may be drawn into its orbit. This trend could accelerate if Trump offers no alternative to the Trans-Pacific Partnership that he has scorned, leaving the Chinese-led Regional Comprehensive Economic Partnership as the only viable alternative. UNFCCC COP 23 (November 6–17, Bonn). The sleepy former capital of West Germany will host 2017’s last major multilateral summit, the annual conference of parties to the UN Framework Convention on Climate Change. Despite the location, the conference will in fact be organized by Fiji—marking the first time that a small island state has been given the honor. The conference should provide a bellwether for gauging the U.S. commitment to the global climate change agenda, including whether the new president follows through on his pledge to cancel the Paris Accord. Fiji’s prime minister has already invited the president-elect to visit his nation to see the effects of climate change. Abdicating leadership in climate negotiations would be costly for the United States, as China—which has already donated $224k to support Fiji’s presidency—is poised to fill the void. There will be no shortage of international events to watch closely in 2017 as the world seeks clues for how the incoming Trump administration will navigate often thorny diplomatic questions and handle surprises that could upend the goals of a number of these meetings. Officials are advised to ring in the New Year in style before the hard work begins.
    Blog Post by Stewart M. Patrick December 30, 2016 The Internationalist
  • Americas
    This Week in Markets and Democracy: Asian Trade Openness, Palm Oil Abuses, Global Magnitsky
    Trade Rules Favor Asia, Not the United States Asia’s rise in the global trading system continues. Recent World Economic Forum data shows that the ten Association of Southeast Asian Nations (ASEAN) members now outrank the European Union (EU) and United States on trade openness, reflecting deeper integration into the global economy aided by investment and trade deals. But ASEAN and other countries may have a tougher time accessing markets if protectionism in the United States and EU prevails. The rankings back up at least some of the recent political rhetoric—the United States ranks 120 out of 136 countries in terms of foreign market access, facing average tariffs of almost 5 percent—the seventh highest in the world. Children Still Forced to Work on Palm Oil Plantations Even companies with the best intentions sometimes struggle to free their supply chains from abuse. The latest scandal comes in palm oil, an ingredient used in everything from pizza to toothpaste. Despite standards set through the Roundtable on Sustainable Palm Oil, an association of hundreds of businesses and non-profits committed to cleaning up the industry, Amnesty International has uncovered ongoing exploitation and abuse. At Wilmar, the world’s largest palm oil producer, unrealistically high production quotas force workers to put in eleven-hour days and recruit their spouses and children to help—all for pay as low as $2.50 a day. This belies the “sustainable” claims of Nestlé, Colgate, Unilever, and many of Wilmar’s other top-tier customers. To really improve conditions for workers, brands will need to invest more in auditing and training to help their suppliers uphold labor standards. A New Way to Take on Human Rights Abusers President Obama now has before him bipartisan legislation authorizing the United States to sanction human rights abuses and corruption taking place abroad. The Global Magnitsky Human Rights Accountability Act, named after Russian whistleblower Sergei Magnitsky, expands a 2012 law sanctioning Russian officials involved in the torture and death of the thirty-seven-year old lawyer who exposed a massive tax fraud scheme, and died in police custody in a Moscow prison. The global version Congress just passed (tucked into an annual defense bill), allows the U.S. government to impose financial and visa sanctions on any foreigners who violate human rights and freedoms, carry out extrajudicial killings and torture, or commit “acts of significant” corruption. The legislation provides a powerful tool for the executive branch to hold human rights abusers accountable.
    Blog Post by Shannon K. O'Neil December 16, 2016 Development Channel
  • United States
    Is the Emerging Market Currency Plunge Really About Trade?
       
    Blog Post by Benn Steil and Emma Smith December 12, 2016 Geo-Graphics
  • Human Rights
    Fighting Corruption by Combating Sexual Extortion
    This blog was coauthored with Lauren Hoffman, a former intern with the Women and Foreign Policy program. Today, December 9, is International Anti-Corruption Day, organized by the United Nations Development Program (UNDP) and the United Nations Office on Drugs and Crime (UNODC) to fight corruption. As they report, "every year $1 trillion is paid in bribes while an estimated $2.6 trillion are stolen annually through corruption – a sum equivalent to more than 5 percent of the global GDP." This year’s theme, “United Against Corruption,” highlights corruption as one of the largest impediments to achieving the Sustainable Development Goals (SDGs).  Immigration officers have been caught exchanging sex for a green card or approval of a refugee application. United Nations peacekeepers have bartered relief goods for sex. Teachers have demanded sex in exchange for good grades. Nine out of ten women working in Tanzania’s public sector reported that senior male officials had used their positions of power to extort sexual favors from them. There is a growing prevalence of online threats, including blackmail and coercion, in the United States and elsewhere. Sexual extortion, or what law enforcement officials commonly call sextortion, is a type of corruption in which “sex rather than money is the currency of the bribe,” and it affects women and girls (and some men and boys) around the world. Despite its prevalence, it’s rarely prosecuted (as either corruption or a sexual crime), it’s less likely to be reported than other forms of corruption, and it’s not tracked by most corruption measures. Greater public attention is needed to address sextortion as a serious crime that causes physical and mental harm and undermines confidence in public institutions. While there is anecdotal data on the prevalence of sextortion, it’s not systematically recorded. The shame and stigma associated with sexual crimes may prevent victims from coming forward, and when they do, they often face barriers in the criminal justice system to file and pursue a sextortion claim. Regional and global instruments also don’t capture sextortion: none of the most common tools used to measure corruption include sex-disaggregated data, and so do not track how men and women are affected differently by corruption. From what data is available, we know that poor women are especially at risk of “petty” corruption (when officials sell public services rather than deliver them by right), because they may be more dependent on public officials for access to such services as health care, water, or education, and, with lower literacy levels, they may have less awareness of their entitlements to public programs, making them more susceptible to extortion. In cases where sextortion is reported, it’s not always prosecuted. While international tools like the United Nations Convention Against Corruption (UNCAC) and the Convention on the Elimination of all Forms of Violence Against Women (CEDAW) clearly prohibit sextortion, in some countries, domestic laws don’t recognize sexual exploitation as a form of corruption. In other countries, laws exist that could be used to protect against sextortion but judges or lawyers don’t apply them, viewing the sexual extortion as “consensual” and therefore non-violent, or as a lesser form of corruption than financial abuse. Both views miss the significant harm caused by sextortion - to the individual, and to the strength of the public institutions. To reduce overall corruption, protect women and girls from the harms caused by gender-based violence, and improve trust in public institutions, countries should recognize and address sextortion as a significant but often ignored form of corruption and abuse.   Women collect water from a tank at a camp for displaced people, January 10, 2011. REUTERS/Albert Gonzalez Farran/UNAMID/Handout   A first step is better data. Data will help in the design of more effective anti-corruption laws and programs that recognize and target sextortion. Corruption tools should track it, and local and national complaint mechanisms should have clear procedures for reporting and investigating sextortion. A second step is stronger anti-corruption laws and policies at national level. This will enable countries to improve accountability by increasing their prosecution of sextortion crimes. Through a 2015 study to “name, shame, and end” sextortion, the International Association of Women Judges analyzed gaps in criminal justice systems around the world to address sextortion, and recommended steps to strengthen domestic laws and policies. There are also UN and NGO resources to help organizations and countries raise awareness about sexual exploitation and abuse and improve their systems to prevent and address it. A third step is to encourage survivors to come forward. Ending the silence around sextortion will help create an environment where survivors feel supported to report abuses of power. They will be further encouraged to seek justice if their complaints are handled properly by judges, prosecutors, and police committed to stop the abuse of power through sexual exploitation. This International Anti-Corruption Day, while countries around the world recommit to promoting good governance, they should recognize that their anti-corruption efforts will be stronger when they acknowledge sextortion as a crime and prioritize efforts to prevent and address it.  
    Blog Post by Jamille Bigio December 9, 2016 Women Around the World