Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Wednesday, December 19, 2018 10:56:13 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Trade war due to deeper malaise

By
06th-Oct-2018       
Comments
Share your thought
Post a comment »
Read all () »

Jomo Kwame Sundaram and Anis Chowdhury :
The world economy remains tepid and unstable a decade after the 2008 financial crisis, while growing trade conflicts are symptoms of deeper economic malaise, according to a new United Nations publication. While the global economy has picked up since early 2017, growth remains hesitant, with many countries operating below potential. The year ahead is unlikely to see much improvement as the world economy is under stress again, with rising tariffs and volatile financial flows.
Underlying such threats to global economic stability is the failure to address fundamental weaknesses in global economic governance which have been fostering global economic inequities and imbalances.
Addressing new challenges
UNCTAD's Trade and Development Report 2018: Power, Platforms and the Free Trade Delusion (TDR 2018) makes proposals to address recent economic trends and challenges. The report examines how economic power is increasingly concentrated in fewer big international firms, its impact on the ability of developing countries to benefit from the international trading system, and the distribution of gains from new digital technologies.
TDR 2018 notes that since 2008, many advanced countries have shifted from domestic to external sources of growth, with the eurozone becoming a trade surplus region. While advanced economies have not done enough to rebalance the global economy, 'normalizing' unconventional monetary policies could rile capital and currency markets, with potentially vicious economic consequences in the more vulnerable emerging market economies.
Among countries relying on domestic demand, too many depend on higher debt and asset price bubbles, instead of raising wages. Meanwhile, growth is constrained by the omnipresent threat of financial instability, although the bigger emerging market economies are doing better this year, and commodity exporters can benefit while prices are high. While Brazil, India, China and South Africa depend heavily on domestic demand, many other developing economies do not. With downside, including financial risks rising in several countries, TDR 2018 warns of gathering economic storm clouds.
The current $250 trillion debt stock - 50 per cent higher than a decade ago - is thrice the size of annual global output. Private, particularly corporate debt has been mainly behind this borrowing spree, but without financing corresponding real investments. Meanwhile, growing indebtedness has increased inequality through the financial markets.
Horns of trade dilemma
International trade remains dominated by large firms through their control of global value chains, with the top one per cent of each country's exporting firms accounting for more than half its exports. The spread of such chains accelerated trade growth from the end of the 20th century until the 2008 financial crisis, with some developing countries growing fastest. But the ratio of trade to growth has been rising, with much more trade associated with the same output increase. This has mainly benefited large firms by increasing market concentration and intellectual property.
Meanwhile, except for China, manufacturing's share of value added has generally declined as the shares of pre- and post-production activities have risen. Such rents captured at both ends of the value chain have affected income distribution more generally.
Recent tariff increases are disrupting a trading system increasingly involving such value chains, although trade growth in 2018 is likely to reach 2017 levels. However, heightened uncertainty and reduced investment could have more damaging medium term consequences, particularly threatening for countries already facing financial distress.
Distributional consequences
By changing the profitability of firms in tradeable sectors, tariff hikes have distributional consequences affecting demand. After decades of disruptive trade liberalization, tariff war will not restore the status quo ante, but could cause massive disruptions.
Instead, UNCTAD argues that through global policy coordination, governments could avert continuing deterioration of income distribution and employment, at the root of recent economic crises. Hence, while globalization has rarely produced 'win-win' outcomes, neither trade nationalism nor further trade liberalization are appropriate.
After all, free trade has limited policy space for developing countries and reduced protections for working people and small businesses, while further enriching big firms.
TDR 2018 deems trade wars symptomatic of the deteriorating economic system and multilateral architecture, due to corporate political capture and rising inequality, with money used to gain political power and political power used to make money. As inward-looking options do not offer a way forward for most, the challenge is to make multilateralism work for all.
To avoid the errors of the 1930s, UNCTAD urges addressing new challenges while referring to the 1948 Havana Charter, the first multilateral effort to create a managed international trading system.
This must involve trade promotion contributing to both full employment and rising wages, restricting rentier corporate behaviour, while ensuring sufficient policy space to achieve the Sustainable Development Goals.
Courtesy: IPS

Tariff
Add Rate

News Archive

Inside The New Nation

Entertainment »

I always try to push negativity aside: Sunny Leone


Adult film star-turned-Bollywood actor Sunny Leone, who is often a target of sexist and disparaging remarks by people, says she is disturbed when "nonsense" gets highlighted."I always try to push negativity aside, but there are some things which I can't because I am also a human and I have feelings."I ...

Cricket »

Australia wins 2nd Test vs India by 146 runs, series 1-1


AP, Australia :Australia trounced India by 146 runs in the second Test to level the four-Test series 1-1 on the final day on Tuesday.Needing 287 runs to win, India resumed the day on 112-5 and was all out in a hurry for 140 in the second innings, and Australia was ...

Sports »

WTA changes rules affecting players returning from pregnancy


AP, St. Petersburg :The women's tennis tour approved rule changes Monday that are meant to ensure players are not penalized after they return from pregnancy or an injury that causes a long absence.The changes were prompted, in part, by the experiences of former No. 1 players Serena Williams and Victoria ...

Editorial »

The administration must prove its ability to hold free and fair polls


NEW United States ambassador in Dhaka Robert Earl Miller said that his country expected the upcoming December 30 elections in Bangladesh to be free, fair and credible as he paid a courtesy call on Prime Minister Sheikh Hasina. The US Ambassador informed the PM that his country would send 32 ...

Business & Economy »

Parveen Haque Sikder, EC Chairperson of National Bank Limited, inaugurating its 201st branch at Hili Land Port on Tuesday. Ali Haider Mortuza, Vice-President, other officials of the Bank, local businessmen and elites were also present.


International »

Former FBI chief lashes out at Trump, Republicans for telling `lies`


CNN, Washington :Washington (CNN)Former FBI Director James Comey slammed Republicans on Monday for not speaking out against President Donald Trump's attacks on the FBI and strongly defended the agency's conduct, following his second round of questioning at a closed-door congressional interview."Somebody has to stand up and speak for the FBI," ...

Chittagong »

A discussion meeting was held at Chattogram University of Engineering and Technology (CUET) marking the Victory Day on Sunday. Prof Dr Md Rafiqual Alam, VC of the University was present as Chief Guest.


City »

Vice-Chancellor of Dhaka University Prof Dr Akhtaruzzaman poses for photo session with the recipients of Provost Awards of Bijoy Ekattor Hall of DU in its auditorium on Tuesday.


Entertainment »

Ankhi Alamgir enthrals Kolkata audience


Entertainment Report :   In the beginning of current year popular singer Ankhi Alamgir performed in Utsab at Jodhpur Park in Kolkata. In the meantime, she also went to Kolkata for several times. On December 14, she got the opportunity to perform as a leading singer of Bangladesh at outdoor pool ...

Business & Economy »

Choudhury Atiur Rasul, Chief Financial Officer of Agricultural Marketing Company Limited (AMCL), a sister concern of PRAN Group, receiving the 'ICMAB Best Corporate Award-2017' in the Miscellaneous Manufacturing Category from Finance Minister Abul Maal Abdul Muhith, at a programme held at a hotel in the city on Saturday. Dr. M Khairul Hossain, Chairman of Bangladesh Securities and Exchange Commission and Suvod Kumar Karn, President of South Asian Federation of Accountants were also present.


.

Cricket »

Shakib Al Hasan plays a shot during the first Twenty20 International match between Bangladesh and West Indies at Sylhet International Cricket Stadium on Monday. Shakib scored 61 runs.


Cricket »

Fizz moves to top five in ODI rankings


Mustafizur Rahman has made a big leap to enter into the top five ranks of ICC ODI bowling rankings. Other Bangladeshi players have also made progress in the rankings after the end of Bangladesh-Windies ODIs.The Fizz moved five places to no.5 in the rankings. He has career-best 695 points against ...

Editorial »

Dhaka must involve ASEAN nations for early Rohingya repatriation


MALAYSIAN Prime Minister Mahathir Mohamad on Sunday asked the ASEAN nations to take tough measures for creating pressure on Myanmar and its de facto leader Aung San Suu Kyi to end atrocities against the Rohingya Muslims. More than 720,000 Rohingyas have fled Myanmar's strife-torn Rakhine State to Bangladesh since August ...

International »

Indian troops enforce lockdown to foil Kashmir public march


AP, Srinagar :Soldiers and police fanned out across Indian-controlled Kashmir on Monday to enforce a security lockdown for a second straight day to stop anti-India protests and foil a call by separatists for a march toward India's main military garrison in the disputed region.Government forces patrolled streets in the region's ...

Cricket »

Sri Lanka 275-9 at stumps on day 1, 1st Test vs New Zealand


AP, New Zealand :Tim Southee took 5-67 as New Zealand exploited an influential toss to contain Sri Lanka to 275-9 Saturday on the first day of the first cricket Test at the Basin Reserve.A late unbeaten half century by wicketkeeper Niroshan Dickwella helped swing the day a little in Sri ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news