• January 28, 2010

Automobiles, e-commerce and immigration

This week’s recommended reading and some latest stats and facts…

First up, some research:

• Economists almost always decline to involve themselves with the specifics of particular industries and goods, preferring instead to talk about widgets and other abstractions. However, that’s not very realistic when you look at economic history or think of, for example, the central nature of the construction and automobile industries in the ongoing economic downturn. In that vein, the OECD has just released a study called “The automobile industry in and beyond the crisis“. After setting out the importance of the industry, it examines the collapse in car sales during the crisis and looks ahead to the future of the industry, country by country. In particular, Western European manufacturers – and those in Japan and Korea – have capacity significantly above domestic demand, meaning that their export performance will be critical in determining the health of these industries. China – and to a lesser extent India – are not unpredictably growth markets for the industry.
• Secondly, some interesting academic research in the Journal of International Economics on the long-term effects of colonialism. The paper, called “The erosion of colonial trade linkages after independence”, is available in its gated (official) form on ScienceDirect, but a just-as-good version is available to all from Sciences-Po. The authors use the fact that most countries today were part of empires as late as 1945 to examine bilateral trade since then. They find little short-run effect on trade, except in the case of “hostile separation”, but thirty years after independence, trade with the colonizer shrinks by more than 60%. It seems to be more the unwinding of trade diversion rather than economic revenge, as the effect extends to “Commonwealth partners”, fellow colonised countries.
• Edgar Morgenroth presented a paper at the ESRI a couple of years ago on how immigration into Ireland has boosted imports of consumer goods from the home countries – think Polish food taking up Spar’s shelf real-estate. Giovanni Peri and Francisco Requena-Silvente consider the alternative: an increase in exports to home countries. They present evidence from Spain suggesting that doubling the number of immigrants leads to a 10% increase in exports to their country of origin, an effect that is larger when the countries are “culturally different”.
• Lastly, the OECD welcomes Chile into its club of high-income members with an inaugural review, highlighting two priorities for its policymakers: solidifying its economic growth base and tackling inequality.

To close, a few things we didn’t know last week:

• According to Eurostat’s latest review of IT and business, e-commerce accounted for 12% of enterprises’ turnover in the EU27 in 2008. Also, by January 2009, four out of five enterprises had a broadband internet connection.
• Speaking of differences across industries, the euro area is currently seeing its industrial sector expand – by 1.6% between October and November 2009 – while its construction output fell by 1.1%.
• Closer to home, 2009 saw a big hit in tourism, with almost 900,000 fewer trips to Ireland in year to November 2009.

• January 28, 2010
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• Recommended Reading

• January 21, 2010

China, the EU (Greece), the US and the economics of paying for news online

To my shame, my Recommended Reading section on the blog has fallen somewhat by the wayside of late. While I can’t promise I’ll fully rectify that overnight, I can do my bit here and now. Without further ado, here are ten articles on the world economy that I’ve found interesting in the last week:

1. From the excellent VoxEU, an important step in understanding some of the massive implications of urbanisation and economic growth in emerging markets comes in a paper called ‘How Green is China?‘. Per capita emissions in China’s most polluted city are still just a fraction of what they are in the typical US city.
2. Patrick Love, over on the OECD Insights Blog, gives some perspective on the development of Haiti, formerly the Jewel of the Antilles.
3. Some mildly good news – recessions won’t drive up violent deaths that much, according to researched cited on the Irish Economy blog.
4. Over at Reuters, Felix Sammon discusses the economics of the New York Times’ generally much-discussed introduction of a paywall. It leads him to discuss the concept of bundling, itself closely related to price discrimination, for example in the digital TV market, as per the commentator a couple of days ago.
5. Today, an Englishman, an Irishman and a South African had an exchange of views about which major currency has the best/worst long-term prospects, largely on the back of developments in relation to the Greek economy. None of us, however, thoguht to mention the Canadian and Australian dollars!
6. Mark Perry is always good for a provocative post – he doesn’t disappoint on the EU-vs-US debate that seems to have risen, unprompted, in the past couple of weeks, as the successor to the Sachs-Easterly-Collier debate that raged among economists last summer. I have a whole host of reasons I disagree with him, but that’s the subject for a full blog-post in itself (makes note on to-do list).
7. On a completely unrelated topic, Tim Harford, the Undercover Economist has a nice short explanation of heavy traffic on Mondays and rainy days.
8. The Conference Board is one of the world’s premier sources for data on productivity. Their latest report on productivity shows the strong gains in emerging markets, some the WSJ views as an economic threat.
9. All this talk of emerging markets and China – what with its booming economy at the moment, is China headed for a crash?
10. And all this talk of productivity and competitiveness… I talked a couple of weeks ago about the 2010 Lisbon Strategy adopted by the EU almost 10 years ago, designed to make the EU the most competitive economy in the world by now. Charles Wyplosz argues it’s time for a new model of competitiveness for the EU.

And a non-economics link to boot: it turns out “status updates” are at least a hundred years old!

• January 21, 2010
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• Recommended Reading