Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

January 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:

A reality check on rich-country inequality

This post reviews the ILO’s Global Wage Report and in particular its expanding dataset on internal inequality between top and bottom earners. While inequality has fallen in many countries, including Ireland, there is no strong evidence of a global trend in that direction. The figures contain an important reminder: even the poorest in wealthy countries live in conditions that average earners in most other countries would happily take. Read more

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!

Spotting the swallows – Ireland’s rental market in 2010

Ireland’s property market has had nothing but bad news for most of the past three years. This post reviews some of the data from the rental market during 2009, in particular comparing the stock on the rental market with the number of transactions it is processing. It finds evidence to believe rents will level off in Dublin and the other major cities in the next few months, although the outlook for smaller rental markets looks unchanged from a year ago. Read more

Long-term unemployment must rise to top of the agenda in 2010

Of the various economic problems that face Ireland, unemployment has been the one to show least signs of turning the corner. This post reviews the latest Live Register data, and finds some crumbs of comfort in the marked slowdown in new job losses recently. It also analyses the gender and age breakdown of the Live Register in 2009, finding men under-25 have had it toughest, before offering some thoughts on growth sectors for the future. Read more

Reforming taxes on work the big challenge to EU competitiveness

This post reviews the latest Paying Taxes report by the World Bank. It highlights a huge challenge for the EU, which aims to become the most competitive economy in the world, as very few of its member states have a globally competitive regulatory system. An analysis of the report’s figures shows the EU has attempted to build its success on efficient corporate tax systems, while labour taxes remain hugely inefficient. Read more