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Editorial comments from Chief economist of Export Development Canada, Petrer Hall View original comment and video on EDC website at http://edc.ca
Published by eluna on Thu 21 of Nov., 2013
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Five years beyond the financial and economic crisis, weariness with hyperbole and economic shock-talk should come as no surprise. But it stands that the world has experienced a long list of unprecedented occurrences that have caused turbulence, uncertainty and as a result, a fuzzy picture of the near-term future. One of these is quantitative easing (QE), a never-before-used retrospective remedy for the Great Depression that gained currency in the 2008-09 cash crunch. With global growth returning, there is a lot of debate about unwinding QE. Should we worry?

QE is nothing if not dramatic. Unleashed on the US economy in three waves, it ended up injecting a $2 trillion mountain of cash on top of a monetary base that was less than $1 trillion in 2008. The latest phase involves injecting an additional $85 billion into the economy monthly. It is hard to do justice to the magnitude of these moves with mere words. It is equally hard to gauge the impact of these moves on real economic growth. Academics will likely be analyzing this program for decades to come. But most people can't wait that long; can we assess its market impacts with what we currently know?

What seems obvious is that certain key asset prices moved significantly with the onset of the first wave of QE. Subsequent rounds appear to have had additional, although more muted, effects. Between early 2009 and late 2012, key increases were obvious in stock markets, currencies and key commodities, and at the same time there was an obvious compression in bond markets - with a noticeable bias toward high-yielding, emerging market paper.

At the very mention last May that the Fed was considering tapering its current round of monthly bond purchases, markets went into an immediate tailspin. Each of these asset classes reversed movements seen in the previous four years, as traders sought to price in the expected effects of the unwind. The turbulence exacerbated slowdown that was already underway with the uncertainty of tightening liquidity, compounded by a depreciation in currencies.

Since then, expectations of imminent tapering have faded. Initially expecting a gradual reduction of the Fed's monthly purchases to commence in September, markets now believe that changes won't come until next April at the earliest. At this point the extent to which markets have priced in these moves is unclear. Key to their current actions is the collective expectation of the timing, the duration and extent of the unwind. At the same time, market moves are likely being tempered by the fact that tapering will only occur if preceded by a convincing increase in growth and easing elsewhere.

Whatever the net effects, emerging markets are likely to experience both volatility and some tightening of liquidity. The effects will not be even, though. Countries that experienced a greater influx of 'hot money', more rapid extension of domestic bank credit and wide current account deficits will likely be more affected as monetary policy tightens. On the top of the list are Turkey, Sri Lanka and India. Three of the major emerging markets are in the top 10.

Clearly, the return to global growth will bring challenges. Liquidity will tighten as growth ramps up, but in a way that has never really been experienced before. It is likely to be an interesting ride, and one that favours those that have access to a steady source of liquidity.

The bottom line?
As quantitative tightening sets in, get ready for a new acronym - and yet another journey through uncharted economic waters.

http://www.exportwise.ca/article1002

Published by eluna on Mon 04 of Nov., 2013

Sino-slowdown is among the top topics on the summer chat circuit.

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Sino-slowdown is among the top topics on the summer chat circuit. Small wonder—current performance is well shy of the record-setting 30-year winning streak that has vaulted the ancient land into the number two spot on the global GDP charts. The abruptness of the about-face is disarming.

Is there a simple explanation, or is something more serious underway?

Although China’s modern ascendancy has long since exhausted known superlatives, it still grabs attention. It’s hard to fathom two decades of pre-crisis growth averaging 11 per cent each year.

Many have long questioned the sustainability of this juggernaut, but it wasn’t until last summer that growth wobbled. Growth is now clocking in at seven per cent, well shy of the government’s own scaled-back projections for 2013.

Should we worry? Put in context, a slowdown in China is probably overdue. China’s rise was heavily dependent on growth in the rest of the world, which was excessive in 2004–08. It’s been anything but robust for at least five years.

Crisis-inspired public policy measures—by some estimates amounting to over 25 per cent of GDP—have filled in the growth gap, buying time ahead of the elusive global recovery.

Continuation of expansionary policy is a key assumption in the global outlook. However, China’s new government has recently noted concern about excess capacity and questioned the effectiveness of policy measures.

It has even intimated that slower growth might not be so bad. These sentiments are indeed a game-changer.

LABOUR PAINS

A further growth limiter is China’s tightening labour supply. Slow labour force growth is nothing new in China, but through its expansion the economy has been able to count on an army of unemployed and under-employed citizens numbering in the hundreds of millions.

Years of rapid growth have soaked up a lot of this excess, igniting wage growth in key coastal manufacturing centres. The one-child policy has ensured that this problem won’t go away soon.

Is it time to rethink the China outlook?

Undeterred, China is responding to the labour challenge. India, Indonesia, Bangladesh and Vietnam have all been recent recipients of significant Chinese investments in manufacturing facilities—a process that is creating the means for China to create considerable growth capacity beyond its borders.

At the same time, China’s citizens are getting wealthier, creating a home-grown growth source that is transforming China’s economy, and will soon make its mark on the rest of the world.

Global recovery is a further reason for believing in sustained strong Chinese growth. Past excesses are melting away, and momentum is once again starting to build. As it does, international trade will again ramp up, and China is in a strong position to benefit.

The bottom line? Many are fretting about recent Chinese weakness, but growth fundamentals are still strong. For now, higher growth awaits a resurgence in the OECD economies.


http://www.exportwise.ca/article970

Published by eluna on Wed 30 of Oct., 2013

The ASEAN region will undoubtedly be a force to be reckoned with in the coming economic cycle.

We Canadians are not the same as we used to be. More and more, Canadian business is seeing the world as its stage. The transformation stepped up in 2003, and since then, diversification of trade to emerging markets has flourished. With the world economy on the verge of a new growth cycle, there is increased curiosity – and not just in Canada – about the planet’s next big market.

This same curiosity has turned Canada’s eyes toward the ASEAN economies. The 10-nation association has a collective GDP of $2.2 trillion – about 20% greater than Canada’s – and an impressive population base of just over 600 million. Add to that the collective growth dynamic, which in the next cycle will have very few rivals. Prospects like this are hard to ignore.

With this in mind, the Canada-ASEAN Business Council was formed last year at the 44th ASEAN Economic Ministers’ meeting, producing the first annual Canada-ASEAN Business Forum meeting two weeks ago in Singapore. The gathering attracted 220 regional and Canadian business leaders, government officials and prominent local media personalities. Canada’s Minister of International Trade officiated, and was joined by his contemporary Mr. Lim Hng Kiang from Singapore and Saskatchewan Premier Brad Wall. Expert speakers covered issues from trade structure to prospects for future bi-directional trade and investment, delving into various key needs in the region and industry-specific opportunities. The depth of the sessions was matched by the overall enthusiasm.

During the proceedings, the Asia Pacific Foundation of Canada presented the illuminating findings of their 2013 Survey of Canadian Businesses in ASEAN. It showed that there is a significant Canadian presence in the region that in general, has facilities spread broadly across Association members with a reasonably long history of commercial involvement. There is also a diverse industrial representation, led (but not dominated) by professional services, manufacturing and oil & gas operations. Most of the Canadian operations are small and medium-sized enterprises, who are on balance highly satisfied, quickly profitable, upbeat about their prospects in spite of regional business risks, and proving it by diverting a good share of their regional investment to ASEAN economies.

Results like this suggest strongly that there is much greater Canadian potential in the region. In one session at the Forum, former Secretary-General of ASEAN Dr. Surin Pitsuwan challenged the audience to double Canada-ASEAN trade in the coming five years. Is it possible? In the 2000-2008 period, Canadian exports to ASEAN grew by 9 per cent annually – just under the average pace to emerging markets as a whole. Post-crisis, the rate of growth is exactly the same. Doubling trade in five years would require notching that pace up to 15 per cent annually. Given the potential of the region and its average import growth, not an unachievable target by any stretch of the imagination.

Really? Consider a few facts: China is running out of labour, but instead of giving in to lower growth, is investing heavily in manufacturing facilities in ASEAN. These factories will likely serve the global market, but will be focussed on the needs of the swelling Chinese middle class – currently growing by over 40 million annually. The ASEAN middle class will also benefit – in Indonesia alone, it is growing by some 7 million annually. Stack these numbers against Canadian population, and they’re stunning.

The bottom line?
The ASEAN region will undoubtedly be a force to be reckoned with in the coming economic cycle. It has fast-growing customers, has a rapidly-growing domestic base, has a rich population base that could prove to be a great release valve for Canada’s population-constrained future and an attitude of greater openness that suggests great promise for outward-bound Canadians.

http://www.exportwise.ca/article954

Published by eluna on Mon 21 of Oct., 2013


GLOBALISATION” has become the buzzword of the last two decades. The sudden increase in the exchange of knowledge, trade and capital around the world, driven by technological innovation, from the internet to shipping containers, thrust the term into the limelight.

Some see globalisation as a good thing. According to Amartya Sen, a Nobel-Prize winning economist, globalisation “has enriched the world scientifically and culturally, and benefited many people economically as well”. The United Nations has even predicted that the forces of globalisation may have the power to eradicate poverty in the 21st century.


Others disagree. Globalisation has been attacked by critics of free market economics, like the economists Joseph Stiglitz and Ha-Joon Chang, for perpetuating inequality in the world rather than reducing it. Some agree that they may have a point. The International Monetary Fund admitted in 2007 that inequality levels may have been increased by the introduction of new technology and the investment of foreign capital in developing countries. Others, in developed nations, distrust globalisation as well. They fear that it often allows employers to move jobs away to cheaper places. In France, “globalisation” and “délocalisation” have become derogatory terms for free market policies. An April 2012 survey by IFOP, a pollster, found that only 22% of French people thought globalisation a “good thing” for their country.

However, economic historians reckon the question of whether the benefits of globalisation outweigh the downsides is more complicated than this. For them, the answer depends on when you say the process of globalisation started. But why does it matter whether globalisation started 20, 200, or even 2,000 years ago? Their answer is that it is impossible to say how much of a “good thing” a process is in history without first defining for how long it has been going on.

Early economists would certainly have been familiar with the general concept that markets and people around the world were becoming more integrated over time. Although Adam Smith himself never used the word, globalisation is a key theme in the Wealth of Nations. His description of economic development has as its underlying principle the integration of markets over time. As the division of labour enables output to expand, the search for specialisation expands trade, and gradually, brings communities from disparate parts of the world together. The trend is nearly as old as civilisation. Primitive divisions of labour, between “hunters” and “shepherds”, grew as villages and trading networks expanded to include wider specialisations. Eventually armourers to craft bows and arrows, carpenters to build houses, and seamstress to make clothing all appeared as specialist artisans, trading their wares for food produced by the hunters and shepherds. As villages, towns, countries and continents started trading goods that they were efficient at making for ones they were not, markets became more integrated, as specialisation and trade increased. This process that Smith describes starts to sound rather like “globalisation”, even if it was more limited in geographical area than what most people think of the term today.

Smith had a particular example in mind when he talked about market integration between continents: Europe and America. The discovery of Native Americans by European traders enabled a new division of labour between the two continents. He mentions as an example, that the native Americans, who specialised in hunting, traded animal skins for “blankets, fire-arms, and brandy” made thousands of miles away in the old world.

Some modern economic historians dispute Smith’s argument that the discovery of the Americas, by Christopher Columbus in 1492, accelerated the process of globalisation. Kevin O’Rourke and Jeffrey Williamson argued in a 2002 paper that globalisation only really began in the nineteenth century when a sudden drop in transport costs allowed the prices of commodities in Europe and Asia to converge. Columbus' discovery of America and Vasco Da Gama’s discovery of the route to Asia around the Cape of Good Hope had very little impact on commodity prices, they argue.

But there is one important market that Mssrs O’Rourke and Williamson ignore in their analysis: that for silver. As European currencies were generally based on the value of silver, any change in its value would have had big effects on the European price level. Smith himself argued this was one of the greatest economic changes that resulted from the discovery of the Americas:


The discovery of the abundant mines of America, reduced, in the sixteenth century, the value of gold and silver in Europe to about a third of what it had been before. As it cost less labour to bring those metals from the mine to the market, so, when they were brought thither, they could purchase or command less labour; and this revolution in their value, though perhaps the greatest, is by no means the only one of which history gives some account.”

The influx of about 150,000 tonnes of silver from Mexico and Bolivia by the Spanish and Portuguese Empires after 1500 reversed the downwards price trends of the medieval period. Instead, prices rose dramatically in Europe by a factor of six or seven times over the next 150 years as more silver chased the same amount of goods in Europe (see chart).





The impact of what historians have called the resulting “price revolution” dramatically changed the face of Europe. Historians attribute everything from the dominance of the Spanish Empire in Europe to the sudden increase in witch hunts around the sixteenth century to the destabilising effects of inflation on European society. And if it were not for the sudden increase of silver imports from Europe to China and India during this period, European inflation would have been much worse than it was. Price rises only stopped in about 1650 when the price of silver coinage in Europe fell to such a low level that it was no longer profitable to import it from the Americas.

The rapid convergence of the silver market in early modern period is only one example of “globalisation”, some historians argue. The German historical economist, Andre Gunder Frank, has argued that the start of globalisation can be traced back to the growth of trade and market integration between the Sumer and Indus civilisations of the third millennium BC. Trade links between China and Europe first grew during the Hellenistic Age, with further increases in global market convergence occuring when transport costs dropped in the sixteenth century and more rapidly in the modern era of globalisation, which Mssrs O’Rourke and Williamson describe as after 1750. Global historians such as Tony Hopkins and Christopher Bayly have also stressed the importance of the exchange of not only trade but also ideas and knowledge during periods of pre-modern globalisation.

Globalisation has not always been a one-way process. There is evidence that there was also market disintegration (or deglobalisation) in periods as varied as the Dark Ages, the seventeenth century, and the interwar period in the twentieth. And there is some evidence that globalisation has retreated in the current crisis since 2007. But it is clear that globalisation is not simply a process that started in the last two decades or even the last two centuries. It has a history that stretches thousands of years, starting with Smith’s primitive hunter-gatherers trading with the next village, and eventually developing into the globally interconnected societies of today. Whether you think globalisation is a “good thing” or not, it appears to be an essential element of the economic history of mankind.

Suggested Reading:

Alvey, J. E. (2003). 'Adam Smith’s Globalization (but anti-Secularization) theory'. Massey University, Department of Applied and International Economics Discussion Papers.

Bateman, V. N. (2012). Markets and Growth in Early Modern Europe. Pickering & Chatto.

Bayly, C. A. (2004) The Birth of the Modern World 1780-1914: Global Connections and Comparisons. Blackwell.

Fisher, D. (1989) 'The Price Revolution: A Monetary Interpretation'. The Journal of Economic History, 49(4), 883-902.

Hopkins, A. G. (ed.). (2002). Globalization in World History. W. W. Norton.

O’Rourke, K. H., and Williamson, J. G. (1999). Globalisation and History: The Evolution of a Nineteenth-century Atlantic Economy. MIT Press.

O’Rourke, K. H., and Williamson, J. G. (2002). ‘When did globalisation begin?’. European Review of Economic History, 6(1), 23-50.


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CCSjpWEgqqOct 18th, 17:03


In a trading relationship, both parties are trying to gain an advantage to improve their bottom line.

In the USA the multinational financial sector and many politicians have traded a high wage economy for a low wage service economy.

We lose eventually.

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TheDanceOct 18th, 01:51


Given the vast span of centuries and the varied consequences — the benefits and damages that resulted among trading groups, evidently this topic is not a clear-cut argument to resolve. From the history of gift economies to larger trading groups (families, clans, villages, societies, cities, regions, nations), whether we call those exchanges "globalization" or not, will always depend on our perspective and interests.

Perhaps it would advance the enquiry, if we nudge the focus more toward the actual consequences of today's speed, automation and impact of the multinational corporations as being key factors characterizing today's globalization.

I would ask, How is globalization today, qualitatively different from long ago iterations of the phenomenon? The complicated monetary systems people and governments are challenged to grapple with now, the financially- displaced large populations, the hue and cry for "growth and more growth" (which is unsustainable), the dominant media today communication everything — good, bad and in-between instantly, which taken altogether help to generate and maintain heightened loads of fear and angst people have been feeling all over the world. If we pay attention, all this is registering to us collectively, that something needs to change for the better. Could it be why we are engaging the subject in this space?

Our ecosystems and humans need time to process changes, filter and see if some new-fangled thing/idea/way makes sense to us collectively — see what its effects, benefits or consequences are to society; get used to something. People feel jerked about, destabilized. Too much speed is not in our best interests. Fish need time to recover from overfishing (just one example), or else what are the restaurants and their patrons going to do? Why must we 'moderns' keep pushing things beyond their natural limits? Could learned ignorance and greed be a factor? These are just some of the forms in which the gaping, glaring inequities have been materialising all over the place.

At present rate, we urgently need to dial-it-back, man. This whole abstract, idealistic notion of globalization in its current iteration, really has gone too far, too fast. It's neither wise nor sustainable.

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AWells202Oct 15th, 20:23


I don't think globalisation can be given a starting point, it developed from a number of causes as the world became more communicated.

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david dentonOct 12th, 09:16


I have a date for you 1776

http://getwd50.blogspot.co.uk/2013/10/ignoring-wealth-of-nations.html

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Questioner senseOct 7th, 21:08


The Great Global Depression will crash the global economy in the spring of 2015. It will continue at least 20 years.This will be the beginning of the end of the wild global capitalism and the beginning of social, tame and socialized capitalism.

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York EarwakerSep 30th, 10:08


Globalisation started when the naked ape took its first tentative steps out of Africa.

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lakshmaSep 29th, 16:34


This article posed the right questioned what is globalisation and when did it start? and has rightly referred to Adam smith's economic globalisation process through history in his celebrated Book Wealth of nations but the explanation offered by the present author only reflect his half baked understanding of Adam smith basic theory of law of value in determining the market prices, distribution of various component parts of value/prices imbedded in commodity as revenue to the owners of factors of production and to the state, and the driving forces of market competition and globalisation process on the basic assumption of free global world. The other aspect of the same matter i.e. the relationship between money and prices. the author has equated silver with money simplicitor and therefore silver with prices of commodities and the inflation is explained with an increase or decrease of silver in market and further an increased flow of silver in to Europe with discovery of silver mines by Spanish Americas led to increased money in market and with it the European inflation! This is unacceptable distortion of Adam smith theory requires correction or else it distorts the right approach to understand the driving forces globalisation and also in understanding the barriers to growth with justice and equity at macro level.

The proponents and opponents of globalisation emanates from misunderstanding the basic theory of law of value as propounded by Adam smith and as supplemented by Marx excluding his unacceptable political analysis of natural economic process. Both sides take undue weight to one or other aspect market reactions by not analysing the impact of political decision making on the natural economic process i.e. by ignoring the central assumption of Adam smith free market competition and in its application to present global political economy.

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reggierocksonrocksSep 28th, 12:44


When globalization started and what side of the border you stand on may not be as important as the transaction costs associated with globalization.

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doctorperSep 27th, 00:10


Globalization is a good thing. At least, much better than the closed economy of Argentina, the favorite example of a "well-managed" economy according to Joseph Stiglitz.

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Aliwa HMSep 26th, 10:48


why does it matter wether globalization stsrted years ago , or even definning for how long it has been going on.

our concern should focus on the object itself, is globalization good thing or it is bad , benefits outweigh dwonsids? it depends on from which side you are looking.

what is the outcome of globalization , in my point of view the poor countries remains poor and poverty in the whole worled rose up specillay in those countries.

the matter is more complecated than it seems specially the thierd world countries wher the lack of democracy and corruption reach to peack. globalization makes those countries coveted to the frist world countries .

may we addmite that ther is integration between people indeveually but not beween countries.

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jgziegler6in reply to Aliwa HMOct 8th, 10:58


well, if globalization is essentially the economic history of people, then it is important to know when it started because that helps us evaluate it (as the article basically says).

" the poor countries remains poor and poverty in the whole worled rose up specillay in those countries."

Ignoring your many typing errors, let's address your error in judgement. Yes, it has increased the gap between rich and poor in the developed world, but if the poor gain 2% , and the rich 200%, the poor still gain. Meanwhile, tell the millions in China and India who grew up in dirt poverty, and now have comfortable middle class lives that globalization is good.

Capitalism is here to stay, get over it. Focus instead on securing democracy...

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TheDancein reply to jgziegler6Oct 18th, 00:52


Isn't it obvious the writer's first language is not English? It's reasonable, intuitive and practical to know when to overlook the small stuff. Compliments to the writer in making the content of the comment clear and understandable.

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heatedSep 26th, 00:17


Globalization of markets will and has become exponentially faster, as humans develop easier methods of transporting monies, capital goods and knowledge.

The IMF realizes that increased technology and foreign investment has increased economic inequities within many countries. Especially third world countries who lack sufficient labor and environmental laws.

Do the benefits of globalization outweigh the drawbacks? Well it depends if you are receiving or giving. Understand?

Fair trade must trump free trade if the playing field is to be level.

Quality over quantity often means a greater expense and a smaller profit to retain sustainability for the planet earth and its inhabitants. This is a hard sell for those who wish power and profits over anything, self-serving??

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Will KellySep 25th, 18:27


Given the fact that the world is round you would have to conclude that globalisation was and is an inevitability; and like rain, the argument as to "good" or "bad" is irrelevant as it has the character of both. It is a power for construction and destruction and it is the latter we must conclude that interests the New World Order engineers in the UK and the US.

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YoniSep 24th, 22:24


There have been several waves of globalization. I give a broad definition to the term, including anything that has promoted contact, links and trade between peoples previously unconnected, irrspective of whether the result was positive, negative or mixed.

The first wave was about between 4,000-5,000 years ago. when Egypt and Mesopotamia established trading links. Until then there had been no contact between the world's earliest civilizations (Egypt, Mesopomtamia, China, India).

The next wave was between 2,000-3,000 years ago. The Phonecians sailed from their homeland in the Levant. They reached as far north as Cornwall, circumvented Africa and sailed as far east as India, discovering and colonizing new lands, and establishing a major maritime system enabling an unprecedented exchange of goods and ideas over a vast area, from Central Africa in the south, to Connwall in the north, and as far east as India. At the same time China and India established the first links between them. Alexander the Great inherited and nurtured this trading empire, realizing what a priceless treasure it was. By 2,000 years ago Rome, which had inherited most of Hellenestic Empire, had established trade with China.

The next band of globalizers were the Jews and the Vikings, who had a near monopoly on transcontinental trade during the Dark Ages. The former thanks to the fact they had an established networking governed by Talmudic law, the most advanced commercial law in existence in the Western world at that time. The vikings, the period's undisputed masters of maritime technology raided and traded across a vast area, from Canada to Russia. The name Russia comes from the ancient Norse De Rus, which means the rowers.

At the same time the Moslem Empire developed major trade links connecting North Africa and Spain with the Middle East, East Africa, India and south east Asia.

Colombus was the next major globalization catalyst. catalyst. Spain and Portugal, followed shortly afterwards by Holland and England embarked on voyages of discovery, trade, conquest and loot, ending up with 19th century imperialism.

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Ken E ZenSep 24th, 18:42


Financial and industrial Globalization has allowed expansion to those best equipped. It has past from society to society. The choice always is will it be by commerce, war or both. In the past it generally has been both. The last globalization has occurred from West to East after extensive war. Edwards Deming taught japan throughout the late 40's and into the fifties of efficiency and capitalism who was then emulated by Taiwan, South Korea, and China which spawned Vietnam, Malaysia and others. If it were not for Sunni Sharia society, I would suggest the Middle East.www.blogtalkradio.com/hedgemastermb

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Rajeev PandeySep 24th, 17:30


Globalisation started in real terms with continental shift where it became imperative to evolve interdependency for survival and progress. The basic theme hasn't changed till date. All we have done over the millenniums is to add rules to it to gain maximum favours out of it.

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guest-lowmjasSep 24th, 14:50


I see no mention of the Roman Empire and some of the standards they imposed. Probably more important than a common coinage for trade is a common sense of time ("Caesar's Calendar") without which it is almost impossible to negotiate late fees, due dates, interest, or any common references for contract and legal purposes.

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Prasanna K ChoudharySep 24th, 13:43


For the first time in the history of humankind, unseen high-energy particles have become the chief instruments of production and communication. Although this transformation has been going on for the last 150 years, it was only in the last decade of the previous century that these particles had acquired their prime role in the day-to-day production and communication. These micro-particles can only be globally appropriated in a productive way (in contrast to the old, gross instruments of production, be it Paleolithic stone tools or modern industrial machines which were appropriated either individually or collectively in the production process). The more the instruments of production are subtle, the more universality they inhere (and vice verse). The universal/global appropriation of subtle particles (molecules, atoms, electrons, protons, positrons, photons, quarks, gluons etc.) forms the objective basis of the current globalization, and it delineates the difference between current and previous globalization. Quantum science and knowledge economy are both pushing humankind towards new forms of community that are open, flexible and diverse - communities comprising multiple identities and a variety of pluralities in a coherent whole. Even individuals today are becoming increasingly conscious of their own multiple identities. All internet sites create around themselves global communities consisting of people of different nationalities and orientation. These newer virtual forms of communities are actively interfering in real world affairs. Real and virtual are constantly changing their place. How will the 'coherent virtual world' impact the 'binary real world of conflicts, wars, and terror' and how will they interpenetrate, remain to be seen. Despite many ups and downs this globalization (given its objective basis in quantum revolution) is going to stay and further deepen. The current age of globalization may be taken to begin with the internet (Peter Drucker, so far as I remember, regarded late sixties or early seventies as the beginning of the new knowledge age). While this new globalization (like earlier ones) provides enough opportunities for new communities and societies to rise and challenge the existing power equations, social and economic inequalities in new forms will create new upheavals around the world. We are currently living in the 'Times of Troubles' ( Arnold Toynbee's words), characteristic of the historic age of transitions. Such period are marked by violent turbulence, resurrection of old fault-lines and re-organisation of contending forces.

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guest-lsonssoSep 24th, 13:26


My response would be to think about Globalization in terms of conceptionalizing the world as a whole whose parts relate to each other. Columbus indeed stands for this idea, but I would make a different argument. For more, see my own blog post.

http://blogs.utexas.edu/culturescontexts/2013/09/24/when-did-globalisati...

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GusGSep 24th, 11:40


Can't believe that you write a Whole Article on "Globalisation ", without having read and referred to two of the Latter day "Kings & Queens", as researchers and writers on the subject! (i.e. Thomas L. Friedman and Amy Chua" ) of Lexus & olive tree, World on Fire and Longitudes & Attidudes book fame! etc etc.

Therefore your coverage is cursory and scant! :-(

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WhyIaskSep 24th, 11:20


When globalization started? How can you discuss this without reference to the beginning of trade across Asia, between Europe and China via Persia and India - what became known later as the "Silk Road". This mostly caravan-based trade goes back to at least the 2nd millenium BC, in other words 4- to 5,000 years ago.

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WhyIaskin reply to WhyIaskSep 24th, 12:29


There is no "Edit" button so I am adding a P.S. by using the "Reply" button. In Richard Foltz's book "Religions Of The Silk Road", the subtitle of the book is "Premodern Patterns of Globalization". And the title of a section is "A Premodern Globalization Network", where reference is made to a cultural transfer between Central Asia and India "more than 3,000 years ago". Thus identifying ancient "pre- Silk Road" trade networks with globalisation is not my idea.

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Published by eluna on Wed 16 of Oct., 2013


Seaborne movements of goods are a great bellwether of global trade. In the pre-crisis period, freight rates spiked on two separate occasions, exposing the pressures that growth in world trade were putting on existing shipping capacity. Crisis saw those rates plunge in 2009, only to revive as public stimulus pumped up the economy. That didn’t last long, and sluggish growth, together with delivery of a deluge of new ships, saw rates plunge. At long last, they are rising again. Time to celebrate?

Some think so. Last week, container shipping giant Maersk declared that the global trade cycle had bottomed out, predicting an upsurge of trade growth in 2014. Its prediction carries a lot of weight – the company single-handedly carries 15 per cent of all seaborne containers. It is backing up its prediction by taking delivery of the first of ten triple-E container ships, the largest container vessels yet, with a capacity of 18,000 twenty-foot equivalent units (TEU). Do other data agree with this assessment?

The Harpex index tracks container freight rates across a broad class of container ships. It shows that prices have improved significantly since the start of the year. However, late-2012 rates were down significantly from 2010 and 2011 average rates, and recent growth has only recovered a fraction of the loss. Moreover, growth has been spurred solely by higher rates for smaller-capacity vessels. Rates for ships carrying 4000-plus TEU are actually falling. Interpretation of the diverging movements is difficult, though, as the super-sized ships are a recent phenomenon. For the moment, the positive movement in prices is encouraging.

Chinese freight rates are not as encouraging. Depressed throughout 2011, rates surged in early 2012, only to tumble through mid-2013. Rates then staged a mini-climb, but not enough to suggest a new up-trend. The Shanghai sub-index follows the same pattern, although the recent monthly trend is decidedly lower. Not all Chinese shipping is showing the same trend, though. Bulk freight rates are up sharply since mid-year to the highest levels since early 2012. The index for coal shipments alone is up over 50 per cent since July, a hint that upstream production is improving. Is China alone?

In short, no. In recent weeks, the Baltic Dry Index is surging, currently more than double its mid-summer level. The current reading is now level with late-2011 rates, and the current trajectory is saying something about bulk freight movements globally. The trend is all classes of vessel, from Handysize to Capesize. Although recent movement is the best news in a long while for the industry, it still leaves freight rates well below normal, and a fraction of the late-cycle heights.

The industry may have to be satisfied with lower overall rates, while grateful for recent growth. Tight shipping constraints at the peak of the last cycle led to a torrent of new orders, which are now being delivered. These orders were predicated on a continuation of rapid trade growth not only between emerging markets and their wealthy developed-market customers, but also in the ultra-rapid pace of growth among emerging markets – more commonly called South-South trade. While these trends are expected to resume, excess shipping capacity is expected to be the norm for a number of years to come, moderating the predictive power of shipping activity.

The bottom line?
The global shipping industry provides a great illustration of the excesses of the last global growth cycle. Current shipbuilding suggests that the industry will likely face surplus capacity – and by extension, weak prices – for a number of years to come. What’s bad for the industry could be good for trade flows, though, as there will be plenty of capacity to absorb the coming trade cycle. We can only hope that this time around, global port capacity will keep pace.

----------------------------

This commentary is presented for informational purposes only. It is not intended to be a comprehensive or detailed statement on any subject and no representations or warranties, express or implied, are made as to its accuracy, timeliness or completeness. Nothing in this commentary is intended to provide financial, legal, accounting or tax advice nor should it be relied upon. Neither EDC nor the author is liable whatsoever for any loss or damage caused by, or resulting from, any use of or any inaccuracies, errors or omissions in the information provided.

http://www.exportwise.ca/article948

Published by kmd on Thu 19 of Sep., 2013

Les BRICA fragilisées

Par Peter G. Hall, Vice-président et économiste en chef
Le 19 septembre 2013

Voilà que les puissantes économies BRICA ralentissent nettement la cadence. On leur accolait d’emblée le terme « résilience » – vu leur résistance durant la période de l’après-crise –, et bon nombre d’observateurs désignaient ces économies en plein essor comme des moteurs de la croissance mondiale. Pourtant, 2013 a marqué la seconde année de difficultés pour cet auguste groupe, et ce, alors même que les pays de l’OCDE renouent résolument avec la croissance. Certains spécialistes vont même jusqu’à prédire la fin des beaux jours des économies BRICA, ce qui était impensable il y a tout juste quelques mois. La rapide croissance des BRICA pourrait-elle tirer à sa fin?
Lors des cinq années précédant la crise, les économies BRICA ont dans l’ensemble inscrit une croissance moyenne annuelle avoisinant
9 %. Ce taux était d’à peine 7 % de 2008 à 2011, ce qui demeure tout compte fait très impressionnant. Toutefois, la croissance globale est descendue à 5,6 % en 2012 et même plus bas cette année. Si ces chiffres sont remarquables pour les nations de l’OCDE, ils mettent les marchés émergents au bord de la crise.
De fait, la croissance léthargique des États-Unis et de la zone euro durant la période de l’après-crise a profondément terni la performance commerciale des économies BRICA. Pour compenser cette atonie, les BRICA ont individuellement lancé un éventail de mesures de relance extraordinaires sur les plans budgétaire, monétaire et du crédit, mais les récentes séries de mesures n’ont pas été aussi efficaces. De plus, chacune des économies BRICA a dû suivre la ligne étroite tracée entre, d’une part, s’attaquer à une demande en berne et, d’autre part, alimenter l’inflation – ce qui a compliqué la mise en œuvre des politiques. Parallèlement, les niveaux plus élevés d’endettement des ménages résultant des politiques pèsent maintenant sur la consommation.
La Chine illustre bien cette dynamique. Les formidables plans de relance déployés après la crise ont aggravé les excès dans les secteurs immobilier et financier. Le gouvernement chinois, en hésitant de prime abord à étendre ces mesures et en tolérant pour la première fois une croissance moins vigoureuse, a en fait avivé les craintes. Et pour cause : un ralentissement de l’économie chinoise aurait des répercussions évidentes sur les autres pays BRICA. Alors, la situation actuelle, somme toute peu réjouissante, persistera-t-elle?
Les BRICA doivent manifestement composer avec certains des maux accompagnant les « crises de croissance », mais aucun n’est pour le moment menaçant. Après tout, il est normal que des économies en effervescence butent contre des obstacles, même majeurs. Pour autant, la plupart des économies BRICA affichent des bilans satisfaisants, même si ces bilans ne sont pas aussi positifs qu’avant la crise. La Chine et la Russie, en particulier, disposent de nombreuses options en matière de politiques pour éviter une décélération trop rapide.
La plupart des pays BRICA utilisent d’ailleurs cette marge de manœuvre. Ainsi, la Chine s’est attelée au rééquilibrage de son économie afin de rendre la consommation des ménages moins tributaire du commerce et de l’investissement. De leur côté, le Brésil, l’Inde et l’Afrique du Sud consacrent des sommes colossales pour combler des déficits chroniques en infrastructure. Dans certains cas, le cycle des politiques a des effets positifs. Par exemple, les dépenses préélectorales en Inde et en Afrique du Sud devraient améliorer la situation. Le Brésil devrait lui aussi passer à l’action pour respecter les échéances établies pour les grands rendez-vous sportifs à venir. Après les élections de 2014, on pourrait voir un renforcement des perspectives de stimulation de la compétitivité au terme de réformes difficiles et parfois impopulaires. Les importantes réserves de trésorerie de la Russie permettent d’espérer que la diversification industrielle et l’infrastructure qui lui est nécessaire verront le jour.
Même si le potentiel de croissance à moyen et à long termes reste relativement important, les perspectives à court terme des BRICA se trouvent bonifiées par l’accélération de la reprise américaine et une amélioration conjoncturelle dans la zone euro et au Japon. De plus, ces perspectives bénéficient de la croissance favorisée par les politiques. Les économies BRICA devraient donc regagner l’activité commerciale perdue lors de la crise et les années d’après-crise et, ce faisant, accroître le dynamisme de leur économie intérieure.
Conclusion? Le ralentissement des économies BRICA assombrit la performance à court terme des exportations canadiennes vers certains marchés, même si les expéditions vers la Chine et l’Inde dépassent considérablement celles à destination des États-Unis. Il est peu probable que les entreprises exportatrices ayant connu ces dernières années des niveaux élevés de ventes vers les marchés émergents se laissent décourager par la morosité actuelle. D’ailleurs, il y a de bonnes chances que l’on assiste à une amélioration des perspectives de croissance à court terme pour les pays BRICA. Les craintes devraient donc rapidement céder la place à des possibilités accrues.
Ces rapports, qui compilent des renseignements publics, ne visent pas à fournir des conseils précis et les lecteurs ne doivent pas les considérer comme une source sûre. Aucune mesure ou décision ne doit être prise sans la tenue de recherches indépendantes et l'obtention de conseils professionnels. Bien qu'EDC fasse des efforts raisonnables pour s'assurer que les renseignements contenus dans ces rapports sont exacts au moment où ils sont versés sur son site Web, elle n’en déclare ni n’en confirme ni l'exactitude, ni l'opportunité ni l'intégralité. Elle se dégage de toute responsabilité à l'égard des pertes ou des dommages pouvant résulter de leur inexactitude ou des erreurs ou omissions qu'ils peuvent contenir. ~~

https://www.exportwise.ca/article935

Published by luciepellenz on Thu 25 of July, 2013

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Crisis brought a twinkle to the eyes of expansionary policy buffs in 2009. Wide-open fiscal wallets had market-watchers hailing the return of Keynesianism as new, exciting public projects were announced around the globe. Plunging borrowing costs added considerably to the festivities. But the party ended abruptly in mid-2010 when rapid economic slowing led to greater scrutiny of the effectiveness of the new programs, and their impact on the stability of fiscal and monetary systems.

Worry about fiscal soundness prompted a policy reversal that pre-empted true recovery. Near-collapse of fiscal finances on the periphery of the European Union ushered in restrictions so draconian that the resulting economic weakness has made fiscal targets elusive – threatening a vicious spiral of ever-greater cutbacks. Meanwhile, monetary policy could hardly be more stimulative, and significant tightening over the medium term is a well-accepted given.

Quite contrary to original intentions, ‘policy drag’ has now become prominent among a number of factors weighing on current sentiment. References to protracted sluggish growth, referred to frequently as the ‘new normal’, are usually quickly twinned with the need for a lengthy period of policy tightening. These are often accompanied by gloomy fiscal projections extending well beyond the medium term, and established rules-of-thumb on the restrictive effects of higher interest rates.

Behind the scary headlines and gloomy looks of policymakers, the results of recent actions are already beginning to beat expectations. Higher US growth and an about-face in its beleaguered housing market have boosted fiscal finances and led to positive revisions to projections. States that a few years ago were virtually bankrupt are now struggling to manage surpluses. Growth always has this effect. In contrast, expectations have remained static in Japan. Europe, however, has yet to turn the corner. Will it fall victim to a vicious spiral that negates the policy success elsewhere?

Not so fast. Dividend payments from Europe’s courageous tightening may not be long off. According to both the IMF and OECD, additional fiscal restrictions as a share of GDP will in 2014 be a fraction of the 2011-2013 average if current plans are maintained, a dynamic that will likely produce not only higher-than-expected economic growth, but also fiscal performance. At the same time, central banks are generally highlighting the need to maintain monetary stimulus until the economy improves.

Analysts generally agree that fiscal and monetary policy in the largest economies is about right. A recent Consensus Economics survey shows that the only deviations are in the US, Italy and the Netherlands, where analysts feel fiscal policy is too restrictive, and in Germany, where 65 per cent of analysts believe that monetary policy is too loose. Most respondents also believe that current policies will be maintained. The exception is again in the US, where tightening monetary policy is expected, and looser fiscal policy is seen as necessary. France and Italy also believe that fiscal policy should be more stimulative, while Japanese analysts think that fiscal policy should, and will, be more restrictive.

The bottom line?

Fiscal policy is already a drag on growth, and will be, but perhaps not for as long as many now believe, given the speed with which fiscal dynamics can flip around. Monetary policy is generally expected to tighten, but in a way that does not undermine, but rather lend support to nascent economic growth. Suffice it to say that in the coming months, getting the mix of policy right will require a significant amount of surgical precision. For analysts, correctly gauging the impact of policy movements will be more important than usual to the accuracy of near-term economic forecasts.

http://www.edc.ca/EN/Knowledge-Centre/Subscriptions/Weekly-Commentary/Pages/policy-drag.aspx

Published by luciepellenz on Thu 18 of July, 2013
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Cross-border direct investment flows are a critical ingredient in the modern international trade recipe. These flows provide us with access to key resources and fast-growing markets, and allow for production systems that are better aligned to country or regional economic attributes owing to the efficiencies of global supply chains. As such, it is essential to keep a close eye on global investment movements. What can we say about recent activity?

Global foreign direct investment movements are tracked by UNCTAD, and figures for 2012 were released just three weeks ago. High level numbers point to some surprising movements. For the world as a whole, cross-border investment was down 18 per cent last year, following back-to-back post-crisis gains in 2010 and 2011. Developed markets bore the brunt of the decline in inflows, off 32 per cent from 2011 levels. They also put 23 per cent less on the table for investments elsewhere. At the same time, investment flows to emerging markets were also down, but by a more modest 4.4 per cent – enough to enable emerging markets to surpass developed markets’ investment inflows for the first time ever. Emerging markets now account for 52 per cent of global direct investment inflows.

Results across emerging markets are not even. Direct investment inflows were down in all of the BRICS and Mexico. Brazil was the only large market with a modest drop. All the rest excepting Russia sustained double-digit declines in 2012, with South Africa down 24 per cent, India down 29 per cent and Mexico – considered to have been a stable investment zone – saw inflows drop by a shocking 41 per cent, and simultaneously outflows more than doubled. Offsetting these large-market declines were increases – some very dramatic – in a broad variety of less stable emerging markets.

The story for developed markets is negative, with very few exceptions. Inflows to the EU were down 41 per cent in 2012, and outflows were down 37 per cent. Alongside talk of ‘reshoring’, total US inbound investment was down 26 per cent, and the more substantial outward flows were down 17 per cent. Other OECD nations saw inward investment shrink much more modestly, and thanks to a surge of Japanese foreign investing, outward flows from other OECD countries bucked the trend, adding a further 11 per cent to their post-crisis up-trend.

On balance, the numbers are disheartening, suggesting a debilitating recoil in additions to global production capacity. Taken in context, though, the setback makes some sense. Acute fears of a damaging domino effect in Europe related to the collapse of the Greek government created a ‘you-first’ mentality among corporations that were generally cash-rich. This was stoked further by fears of a broadly-based slowdown in emerging markets. A more recent rise in consumer and business confidence in the leading OECD nations, coupled with tightening capacity constraints in the US economy, could be indications that in 2013, companies are parting with more of their ready cash.

On an even brighter note, Canada’s record in 2012 was very positively off-trend. According to the UNCTAD figures, inward foreign direct investment rose 9.6 per cent, still well off the pre-recession peak, but the third successive increase. Similarly, Canadian direct investment abroad posted an 8.2 per cent gain in 2012, a sign of Canadian corporations’ sustained commitment to external markets.


The bottom line?

Global investment can be volatile, and last-year’s movement may prove to be an overreactive blip. Investment does follow growth, and recent upward estimates of the latter bode well for a positive investment response. It’s nice to see that Canadian investors are ahead of the game.

http://www.edc.ca/EN/Knowledge-Centre/Subscriptions/Weekly-Commentary/Pages/global-investment.aspx

Published by luciepellenz on Thu 11 of July, 2013
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There’s a sour seasonality that has become entrenched in recent global economics. In the past few years, summer has become a disarmingly punctual momentum-killer of global production. Perhaps the most critical question in EDC’s Summer 2013 Global Export Forecast is whether we are in for yet another summer drubbing, or whether this is the year we break with that sorry tradition.

What makes it difficult to accept the new pattern as a trend is the wide variety of unpredictable events that caused it. Full-blown crisis hit the world economy in the summer of 2008. Stimulus made the following year an exception, but the end of the stimulus growth-surge killed growth in the summer of 2010. Knock-on effects of the Arab Spring and a shocking series of natural disasters quashed a decent surge of momentum in the summer of 2011. And last year it was the unexpected collapse of the Greek government and immediate fears of a widespread, debilitating domino effect that again undermined early-year momentum in the summer months. Will this summer be any different?

A glance at worrisome developments might elicit a well-practiced summer sigh. Mass protests are currently underway in Brazil and Turkey, conflict is intensifying in Syria, and the toppling of the Morsi government in Egypt has further unsettled the Middle East and prompted a spike in oil prices. To add to the uncertainty, the mere mention of an exit plan from quantitative easing has roiled global stock markets, depreciated a wide array of currencies, prompted a spike in bond rates and weakened key commodity prices. Agreed, it’s a different set of issues, but it’s so timely that it looks like an evil spell.

Before we get too resigned to a repeat, there is a significant, albeit less newsworthy, upside. Notice the perceptible increase in momentum that is thus far undeterred by recent events. Growth in private sector activity is most obviously increasing in the US, but both Europe and Japan have seen growth estimations increase in recent weeks in response to policy measures, but also to key growth fundamentals. And at long last, confidence is rising. It is up in 6 of the past 8 months in Europe. Japan’s Tankan Index is at its highest level since early 2008, and the same goes for US consumers, who, in the last two months, have convincingly broken out of their protracted recessionary pessimism.

It was a growth-and-confidence conundrum that kept the post-Depression economy from getting back on its feet again. As such, it is quite significant to see a simultaneous resurgence of these dual factors on a broad regional basis that seems to be occurring ostensibly on its own, without the aid of a new, flashy set of innovative policy measures. At this moment, it has the appearance of a homemade antidote to the event-related summer slowdowns that have become almost systemic.

EDC’s summer forecast believes that current momentum will continue. In spite of some early-year softness, global growth is generally expected to remain resilient over the summer months and into the fall, averaging 3.3 per cent this year and rising to 4.1 per cent in 2014. Developed markets will see greater growth improvement, rising from 1.4 per cent in 2013 to 2.3 per cent next year, although emerging markets will still crank out superior overall performance at 5.1 and 5.8 per cent in the next two years, respectively. As such, Canadian exports are forecast to rise 7.4 per cent in 2013. Lower commodity prices will weigh on growth next year, with the forecast pegged at 4.7 per cent.

The bottom line?
Time will tell whether this summer’s negative shocks will again send the economy scurrying for cover. This time around, the world economy seems to be mounting its most credible assault on the doldrums since 2009. It’s a critical moment, one that has been a long time coming.

http://www.edc.ca/EN/Knowledge-Centre/Subscriptions/Weekly-Commentary/Pages/summer-break-blues.aspx

Published by luciepellenz on Thu 04 of July, 2013
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Labour market woes are likely to loom large in the historical chronicle of the current period. Choose any developed country, and its story reads the same: protracted high unemployment, significant hidden unemployment and underemployment. True, employment is always a lagging indicator of the economic cycle, but today’s lags are fast becoming legend. In some cases, unemployment is still rising almost five years after the onset of crisis. Will employment ever turn around, and if so, when?

Unemployment rates usually peak first and plunge fastest in the US. Not this time. Unemployment hit double-digits in October, 2009, and made little significant progress until early 2012. In Europe, Germany stands alone with an unemployment rate that has declined steadily since mid-2009. The UK rate did not peak until November, 2011, and has since only edged down marginally. For the EA-17 as a whole, rates have yet to peak. Then, for each country and region, there are the folks the surveys miss – discouraged workers who have left the labour force, and the underemployed. Small wonder confidence remains low. Is there any way out?

A key development in economic cycles is the usual catalyst for job recovery: the ‘productivity pop’. Typically, output rises, and until they are convinced that it’s the real thing, firms and industries delay the hiring process. Instead, they get all they can out of current workers, machinery, buildings and their own ingenuity, and then, as orders swamp these initiatives, they go out and hire. But what they realize in the interval is a significant increase in productivity that is actually an economy-wide event.

This ‘productivity pop’ has been obvious across countries in the post-recession periods of all recent cycles. This time is a bit different. There was a discernible pop in 2010 in a number of countries, but it ended pretty quickly, and it certainly failed to initiate a strong run of hiring. Why? Well, growth at that time was heavily influenced by public stimulus programs. As such, the job growth was targeted, primarily affecting the parts of the economy touched by stimulus. Second, the stimulus programs were temporary, hardly inspiring permanent hiring. Third, the world economy was plagued by unplanned interruptions, which created additional reticence to hire.

Since that initial flash, productivity growth has been fairly muted, riding the ups and downs of world growth that have been all too frequent in the past three years. As such, we haven’t seen a sustained wave of hiring reminiscent of a true recovery period. Rather, public sector austerity has suppressed growth across OECD nations, and the job market remains in ‘wait-and-see’ mode. Can we expect a productivity pop this time around that will eventually initiate a return to a recovery-wave of hiring?

Low growth is making this elusive, and prospects for a growth surge in Europe, Japan and most of the rest of the OECD are thin. The only anomaly is the US economy. Underlying growth – that is, economic activity net of public austerity – is actually clocking in at a recovery-style pace somewhere between 4 and 5 per cent, after accounting for inflation. Given recent hiring numbers, there may well be a productivity pop in the works already, but one that overall numbers are masking. If so, a wave of recovery-style hiring may not be far off – an event that would be a needed upside surprise for a world still convinced that job markets are going to be very weak for a long time to come.

The bottom line?
Hiring – the bane of the current economic malaise – needs a signal from the productivity numbers to get going. That may already be in the works in the US. If so, and the effects begin to spread elsewhere, we may be lamenting labour shortages sooner than we now expect.

http://www.edc.ca/EN/Knowledge-Centre/Subscriptions/Weekly-Commentary/Pages/productivity-pop.aspx

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