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Posts Tagged ‘globalization

[LINK] “Higher Education Widens Global Inequality”

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The Everyday Sociology Blog featured a guest post from American university student Audrey P. Scott talking about international students.

American colleges and universities are becoming increasingly more like multi-national corporations. Their products? Students trained to further market growth through wide ranges of advanced skills— a prospect that may seem positive to the economically savvy. Universities teach students to improve the world, making a dime while at it. High school microeconomics, however, teaches us that sometimes efficiency and production do not equate with another important factor: equity.

As American colleges focus more on profit, they invest less on shrinking the international equality gap. Consequently, they diminish economically diverse international participation in their universities. Colleges either need to expand their need-blind financial aid to international students or improve multinational schools to better cater to poorer populations. Many are doing neither.

Early last year, my college search process brought me dozens of emails promising global incorporation at different schools. Nearly all of them highlighted the diversity and of their student bodies. Not one, unsurprisingly, spoke of the economic disparities of their international students. While many see education as an equalizer, the truth is that higher education exacerbates global inequality.

It starts with the admission process. According to US News and World Report, 62 American institutions offered need-blind admission to domestic students in 2014. This may seem low, but comparatively only five schools—Harvard, Amherst College, Yale University, Massachusetts Institute of Technology (MIT), and Princeton University—offered the same benefit to international students, who also lack American governmental aid. In fact, although the number of international students “enrolled in US institutions has increased by 23%”, their college admission rates are still lower than those for domestic students. The 2012 international student acceptance rate at MIT, for example, is only 3 percent, which makes even the domestic student’s low 10.8% acceptance rate seem large.

These discrepancies between foreign and domestic aid allow universities to select wealthy students rather than more qualified applicants who may not be able to afford full tuition. And U.S. institutions make a fortune off of other countries’ wealthy students. In 2014-2015 alone, international student tuition generated approximately twenty-seven billion dollars. To put this in perspective, only four percent of total university students in the United States are international, and the money collected greatly exceeds the GDP of countries like Afghanistan and is over four times the company General Mills’s annual income. This wealth may not be initially apparent, but it can be felt by the students on these campuses.

Written by Randy McDonald

February 12, 2016 at 4:30 pm

[LINK] “South Korea Planning to Pull Firms From North Factory Park”

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Bloomberg’s Sam Kim notes the continued breakdown of inter-Korean relations, as South Korea pulls out of the Kaesong industrial park in the north. A more recent news report suggested the North nationalized the holdings of the South there.

South Korea is pulling out of an industrial complex jointly run with North Korea, taking aim at their last remaining symbol of economic cooperation to punish Kim Jong Un for a recent nuclear test and rocket launch.

“An extraordinary measure is needed to force North Korea to give up its nuclear arms,” South Korean Unification Minister Hong Yong Pyo told reporters Wednesday. The government did not want companies and funds for the Gaeseong factory park used for North Korea’s nuclear and missile development, Hong said.

The withdrawal, which takes effect immediately, will impact more than 120 South Korean companies employing about 54,000 North Korean workers at the complex that sits just north of the heavily armed border.

South Korea is seeking to dry up North Korea’s coffers at a time China, while condemning Kim’s actions, has been reluctant to support tougher sanctions — including on energy imports — that could destabilize an ally. South Korea is also considering opening its soil to a U.S. ballistic missile defense system opposed by China.

Gaeseong has long been viewed as a source of hard currency for the isolated government in Pyongyang, which had no immediate response to the decision. North Korea has received 616 billion won ($514 million) in cash since the complex began in the early 2000’s, including 132 billion won last year alone, Hong said. South Korea’s government and private citizens have invested more than 1 trillion won, he said.

Written by Randy McDonald

February 11, 2016 at 2:45 pm

[LINK] “Ireland and Iceland: when cosiness kills”

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At A Fistful of Euros, Sigrún Davíðsdóttir describes the similarities of the Icelander and Irish banking crises, product of recklessness by a minority of well-connected people.

The fate of the Irish and the Icelandic banks are intertwined in time: as the Irish government decided on a blanket guarantee for the Irish banks, the Icelandic government was trying, in vain, to save the Icelandic banks. In spite of the guarantee six Irish banks failed in the coming months; the government bailed them out. The Icelandic banks failed over a few days. Within two months the Icelandic parliament had decided to set up an independent investigative committee – it took the Irish government almost seven years to set up a political committee, severely restricted in terms of what it could investigate and given a very limited time. The Irish report now published is better than nothing but far from the extensive overview given in Iceland: it lacks the overview of favoured clients and the favours they enjoyed.

A small country with a fast-growing banking sector run by managers dreaming of moving into the international league of big banks. To accelerate balance sheet growth the banks found businessmen with a risk appetite to match the bankers’ and bestowed them with favourable loans. Lethargic regulators watched, politicians cheered, nourishing the ego of a small nation wanting to make its mark on the world. – This was Iceland of the Viking raiders and Ireland at the time of the Celtic tiger, from the late 1990s, until the Vikings lost their helmets and the tiger its claws in autumn 2008.

In December 2008, eleven weeks after the Icelandic banking collapse, the Icelandic parliament, Alþingi, set up an independent investigative committee, The Special Investigative Commission, SIC, to investigate and clarify the banking collapse. Its three members were its chairman Supreme Court justice Páll Hreinsson, Alþingi’s Ombudsman Tryggvi Gunnarsson and lecturer in economics at Yale Sigríður Benediktsdóttir. Overseeing the work of around thirty experts, the SIC published its report on 12 April 2010: on 2400 pages (with more material online; only a small part of the report is in English) the SIC outlined why and how the banks had failed.

In November 2014, over six years after the Irish bank guarantee, the Irish Parliament, Oireachtas, set up The Committee of Inquiry into the Banking Crisis, or the Banking Inquiry, with eleven members from both houses of the Oireachtas; its chairman was Labour Party member Ciarán Lynch. The purpose of the Committee was to inquire into the reasons for the banking crisis. Its report was published 27 January 2016.

[. . .]

In one aspect, the Irish Banking Inquiry differed fundamentally from the Icelandic one: the Irish was legally restrained from naming names. Consequently, the Irish report contains only general information on lending, exposure etc., not information on the individuals behind the abnormally high exposures.

This is unfortunate because in both countries, the high-risk banking was centred on a small group of individuals. In Ireland these were mostly property developers and some well-known businessmen; in Iceland the favoured clients were the banks’ largest shareholders, a somewhat unique and unflattering aspect that puts Iceland in league with countries like Mexico, Russia, Kazakhstan and Moldova.

The SIC had no such restraints but could access the banks’ information on the largest clients, i.e. the favoured clients. The report maps the loans and businesses of the banks’ largest shareholders and their close business partners, also some foreign clients. Consequently, the SIC report made it a public information that the largest borrower was Robert Tchenguiz, owed €2.2bn, second was Jón Ásgeir Jóhannesson, famous for his extensive UK retail investments, with €1.6bn. Björgólfur Thor Björgólfsson, Landsbanki’s largest shareholder (with his now bankrupt-father) owed €865m. These were loans issued by the banks in Iceland; with loans from the banks’ foreign operations these numbers would be substantially higher.

Written by Randy McDonald

February 8, 2016 at 8:26 pm

[LINK] “In a global economy adrift, leaders don’t know where to take us next”

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In an opinion piece, the CBC’s Don Pittis notes the lack of a consensus as to how to fix the world economy. The idea of a guaranteed minimum income, some handout of money from governments to citizens that would lead to increased spending, is raised by Pittis as being far from the most speculative solution to stagnation.

Many commenters — especially those who sounded as if they had money and assets — rejected a return to inflation, even though so many economists say it’s the only way of heading off one of those “cleansing depressions.” In fact, a surprising number backed the depression option; though were it to come to that, I suspect they may find they don’t like it so much.

Most of all, as with so much other economic commentary, there was no single obvious solution.

There was definitely no consensus on a strategy that governments could use to fix the economy while keeping voters and other powerful interests happy.

And here is the problem. For leaders who make policy, it is almost impossible to try radical and unproven medicine that might work, for the simple reason that it might instead precipitate a crisis for which they would be blamed.

So long as the global economy seems to be muddling on, governments and central bankers prefer to kick the can down the road just a little further, and keep praying for a miraculous, spontaneous cure.”

Written by Randy McDonald

February 8, 2016 at 7:56 pm

[LINK] “In the Fastest-Growing African Economy, Government is the Fuel”

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Bloomberg’s William Davison notes how Chinese investment and government spending are driving Ethiopia’s booming economy.

Ethiopia is the new flavor of the month for Africa watchers.

The East African nation led the pack of fastest-growing economies — not just in Africa, but in the world — in 2015. While many African nations are struggling to cope with plunging currencies and falling revenue from commodities, Ethiopia’s economy grew 8.7 percent last year and is set to expand 8.1 percent in 2016, according to International Monetary Fund estimates. Globally, only Papua New Guinea grew faster last year, at 12.3 percent.

Much of Ethiopia’s success is due to the dominance of the state in the economy. The nation exports very little compared to its African peers and capital controls mean the currency, the birr, has retained its value despite the global downturn.

“The fact that much of the spending is on capital projects, especially infrastructure, means that government spending has been the key driver of the boom,” said Getachew Teklemariam, an independent economist based in the capital, Addis Ababa. “It is unimaginable to think of Ethiopia as one of the fast-growing countries in the world without government spending.”

It’s that spending by state-owned companies such as the Commercial Bank of Ethiopia, Ethio Telecom and Ethiopia Electric Power that’s led to a 70 percent boost in capital investment in the past three fiscal years to 155.2 billion birr ($7.3 billion). The government is building everything from industrial parks to sugar factories and power lines.

Written by Randy McDonald

February 7, 2016 at 3:15 pm

[BLOG] Some Wednesday links

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  • blogTO notes underground constructions, from subways to roads, which never took off.
  • Centauri Dreams suggests that an analysis of KIC 8462852 which claimed the star had dimmed sharply over the previous century is incorrect.
  • The Dragon’s Gaze looks at the greenhouse effect of water vapour in exoplanets and wonders if carbon monoxide detection precludes life.
  • Lawyers, Guns and Money notes the economic radicalism of early Marvel.
  • Marginal Revolution argues China’s financial system should remain disconnected from the wider world’s so as to avoid capital flight.
  • The Numerati reacts to the recent snowstorm.
  • Personal Reflections examines Australia Day.
  • The Planetary Society Blog depicts an astronomer tracking a comet.
  • The Russian Demographics Blog notes that Ukraine now hosts one million refugees.
  • Towleroad notes that gay refugees are now getting separate housing in Germany.
  • Window on Eurasia talks about the worrying popularity of Chechnya’s Kadyrov and suggests that when the money runs out Russia’s regions will go their separate ways.

[ISL] “Seychelles Plans Blue Bonds to Develop Sustainable Fisheries”

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Bloomberg’s Paul Richardson writes about the Seychelles’ green fisheries initiative.

Seychelles, an Indian Ocean archipelago off the East African coast, plans to offer so-called blue bonds, which fund the development of sustainable fisheries, to investors later this year.

The country’s Treasury is in talks with multilateral agencies including the African Development Bank and the World Bank to facilitate the sale of $10 million of the government-backed debt, Finance Minister Jean-Paul Adam said in a phone interview Jan. 22 from the capital, Victoria. The securities are modeled on green bonds, which channel their proceeds to projects that save energy, curb pollution and recycle resources.

“If you’re going to finance a fishing business it will be generally seen as a risky business and will be costed accordingly,” Adam said. “We hope to absorb this risk. And the involvement of the multilateral agencies will help reduce the cost so we get an affordable interest rate.”

Seychelles is considering the debt as its $169 million of bonds due January 2026 outperform other sub-Saharan African nations, returning 2.6 percent this year compared with an average loss of 2.9 percent among 17 countries on the continent tracked by Bloomberg. The commercial fishing industry in Seychelles, which has Africa’s biggest tuna-canning factory, is dominated by companies including Thai Union Group Pcl, Thailand’s largest seafood exporter. Fisheries account for about 1 percent of the country’s $1.4 billion economy, according to World Bank and African Development Bank data.

Written by Randy McDonald

January 26, 2016 at 11:51 am

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