According to the news from The Economist, entitled “Economic Convergence: Economic Headwinds Return”, “Ten years ago, developing economies were catching up with developed ones remarkably quickly. It was an aberration.”

 

Reviewing the decade-and-a-half journey of China from a lagging economy to one that has surpassed many nations in Europe in terms of average income generation, the article describes the dire realities that beset the once sleeping-giant-turned-global-power. Using Hong Kong as the standard by which to measure economic growth, average incomes dip to 50% in Shenzhen, to 25% in Guandong and to a mere 10% in Yunnan. That is an overall average of less than 30% that of Hong Kong, which is essentially a small dot of an island compared to the gigantic mainland China teeming with so many millions of people.

 

The average annual rate of growth from 2000 to 2009 for developing nations was 7.6%, 4.5% higher than that seen in developed rich nations. That unprecedented rate practically narrowed down the gap between the developed and developing countries.

 

The once deprived populations of the world, a big majority of whom are found in Asia and living on less than the global poverty level of $1.25 daily income, surged on from a share of 30% of the world population in 2000 to less than 10% as of April 2014, according to the Center for Global Development based on new date from the World Bank. At that pace, it is estimated that in only 30 years, the average income per person would converge with that in America. This is certainly cause for great hope for many people on a global scale.

 

Sad to say, those hopes are now slipping away. An evaluation of data on GDP per person based on new computations of cost of living released in April by the World Bank’s International Comparison Programme (ICP) seems to show that convergence has slowed down drastically.

 

Since 2008, growth rates across the emerging nations have slowed down and matched those in developed economies. When the new ICP figures are applied, the average GDP per capita in the emerging world, measured on a purchasing-power-parity (PPP) basis, grew just 2.6 percentage points faster than American GDP in 2013. If China is removed from the estimates, the difference is only 1.1%. At that rate, convergence with rich-economy incomes will occur in a hundred years or more, longer than a generation. If China is included, emerging economies could expect to reach rich-world income levels, on average, in a little over half-a-century.

 

Japan, which achieved industrialization in the first part of the 20th century, grew to be the world’s second largest economy, next to USA. South Korea, Taiwan and several city-states like Singapore and Hong Kong also grew and developed into prosperous nations. The rush to achieve levels of growth close to those of developing nations became an addiction to these nations and others who needed to catch up as well. The price paid in terms of investments on human capital led to social and political problems as some nations had to export their workers to the industrialized or more prosperous nations. Ironically, the income generated by those workers help to sustain those nations during the crises that transpired.

 

In trying to explain the growth disparity, economists pointed to institutions being the key while others focused on “geography and climate”. Moreover, they said that “remoteness from economic centers and hot, disease-prone conditions could retard development,” which is the case in many of the Southeast Asian countries where the issues of rebellion and ethnic differences provide obstacles to development of the depressed country-sides.

http://www.theguardian.com/technology/2013/oct/30/online-fraud-costs-more-than-100-billion-dollars

 

On line fraude kost de wereldeconomie "vele malen meer" dan de oorspronkelijke schattingen in de verliezen van $12.100 (£62bn) een jaar, een wereldberoemde expert op veiligheid van de cyberruimte heeft gezegd.

 

Eugene Kaspersky zei het bedrag gestolen van banken, financiële instellingen, bedrijven en particulieren kan worden ten minste het dubbele de $12.100 naar schatting drie jaar geleden. Mede-oprichter van Kaspersky Lab, een anti-virus software bedrijf, zei dat de volgende grote cyber schok voor de economie van de wereld zou kunnen worden een online aanvallen op een staat nationale infrastructuur, zoals in de film Die Hard 4, waarin Bruce Willis cybercriminelen die dreigen gevechten te kappen en saboteren de Verenigde Staten vervoerssysteem tot stand brengen, elektrische centrales en aandelenmarkt.

 

Spreken op het Web Top in Dublin, de Russische internet veiligheid ondernemer zei: "drie jaar geleden werd ons verteld dat de jaarlijkse kosten van cybercriminaliteit ongeveer 100 miljard Amerikaanse dollars was. Ik zou zeggen dat vandaag dat cijfer wordt vermenigvuldigd vele malen, het is veel meer dan dat bedrag. "

 

Hij zei dat zijn veiligheid bedrijf werkt met verschillende mondiale financiële bedrijven om hen te beschermen tegen criminele hackers. "Ik denk dat nu de situatie nog slechter is dan het drie jaar geleden was. Over het geheel genomen lijkt het alsof het ruikt zoals, het klinkt als honderd miljard vermenigvuldigd vele malen meer.''

 

Zijn Moskou gebaseerde bedrijf had gestopt met hakkers stelen van honderden miljoenen euro's van een bank. "We erin geslaagd om te stoppen met deze on-line bankoverval die gericht was op ongeveer 100 miljoen euro of als je vier miljard Russische roebel. Dat was slechts één geval van poging tot cyber-overval dat het ons gelukt om te voorkomen dat omdat mijn jongens van op hen letten waren."

 

De Russische cyber veiligheid bewijs zei dat staten "cyber huurlingen,'' ervaren internet criminele hackers die stelen geld van banken, voor online spionage en sabotage projecten werden werven. De slechtste daden van cyber oorlogvoering zou toekomstige aanvallen op "kritieke infrastructuur" – elektrische centrales, ziekenhuizen, fabrieken en vervoer. "Gewoon eens een kijkje op Die Hard 4 omdat ze verhalen in het over deze soorten cyberaanvallen hadden. Deze productie werd gemaakt in 2007 en hoewel de helft van de film is niet waar het is niet volledige Holywood fantasie. De cyber-bit is geen fantasie meer omdat het is realiteit nu. Systemen met moderne elektrische centrales, fabrieken en enzovoort zijn veel ingewikkelder, en helaas ze niet in een 100 procent manier worden gemaakt, zodat ze kwetsbaar zijn,"Kaspersky zei.

 

In antwoord op een wereld waarin particulieren, bedrijven en landen des te meer worden blootgesteld aan cyber aanval, heeft Kaspersky opgeroepen tot lessen zo spoedig basisschool in internetbeveiliging worden ingevoerd. Zijn bedrijf is de uitrol van een onderwijsprogramma met Microsoft over de hele wereld te bereiken kinderen over cyber bescherming. "Van twee jaar oude kinderen leren over het Internet dus voor de rest van de wereld we moeten om kinderen te leren hoe zich te gedragen in de netwerken. Het is alsof we kinderen leren hoe zich te gedragen op de straat, hoe veilig de straat oversteken, niet te vertrouwen van iedereen. Het is zowel etnische als technische en het is zonder winstoogmerk. Het is eigenlijk technische dat later de ethische bit eerste komt."

Source: http://www.gulf-times.com/opinion/189/details/367093/uncertainties-in-the-us-haunts-global-economy

 

With the global economy growing more slowly than expected, worries about a potential US government shutdown and the possibility of a default are keeping nations around the world and investors, cautious.

 

Republicans in the US House of Representatives have so far refused to give in to President Barack Obama’s demands for straightforward bills keeping the government running beyond September 30.

 

House Republicans also challenged Obama on the debt ceiling increase, the amount the government is allowed to borrow; that the Treasury Department of the world’s largest economy says is urgently needed by October 17.

 

There is an October 1 deadline for Congress and the President to sign off on an emergency spending bill to avert a government shutdown. This is not the critical event that immediately leads to the risk of impending default – that comes on October 17 according to US Treasury Secretary Jack Lew – but it is significant enough that it can undermine investor confidence and further stymie an economic recovery.

 

Last week Lew cautioned Congress that the United States would exhaust its borrowing capacity no later than October 17, at which point it would have only about $30bn in cash on hand.

 

The fresh estimate adds another layer of pressure on lawmakers to raise the $16.7tn debt limit and comes as Congress struggles to pass a spending bill to keep the government funded beyond October 1, when the new fiscal year starts.

 

“If the government should ultimately become unable to pay all of its bills, the results could be catastrophic,” Lew warned in a letter to congressional leaders.

 

The fate of the debt ceiling is up in the air with Democratic and Republican lawmakers once again deeply divided over how to extend the Treasury’s borrowing authority.

 

The trouble lies in the Republican-controlled House of Representatives push for a bill that includes a delay or complete halt to the Affordable Care Act (nicknamed “Obamacare”) legislation passed in 2010 and set to start this year. The President and Democrat-controlled Senate have rejected negotiation over the add-in.

 

Congress is expected to continue debating the bill over the weekend, but time is running preciously low even for the routine of passing the legislation and sending it to the other house.

 

Undoubtedly, financial troubles in the US will rock global economy, which cannot afford it at a time of increasing risks to growth, particularly in Europe and major emerging markets such as China, India and Brazil.

 

In its last world economic outlook IMF projected global growth at 3.1% for 2013 and 3.8% for 2014, a downward revision of ¼ percentage point each year compared with the forecasts in the April 2013 WEO.

 

An early solution to the current uncertainties in the US would be in the interest of the gasping global economy.

 

As IMF stressed there is an urgent need for structural reforms across all major economies, to lift global growth and support global rebalancing. As in the past, this means steps to raise domestic demand in economies with large current account surpluses and measures that improve competitiveness in economies with large current account deficits.

This is an interesting book looking at the travel of one t-shirt sold at a Walgreens in the U.S. I had to read this book for my Globalization Debate class, and I can honestly say it was one of the better readings so far. It introduces the reader to the real world travels of a t-shirt from where the cotton was picked from (Lubbock, Texas), where the cotton was shipped and spun into yarn and made into a t-shirt (Shanghai, China), sent back to the U.S for the print, and then where t-shirts and other apparel go when the Salvation Army and Goodwill have too much. I liked how Rivoli wrote the entire book, where she accounted for the stories that are not always told to give the people she writes about a sense of agency. At the same time, she is still very realistic about what is going on in the world with globalization and the international market place. If I have anything that is negative to say about this book is that she is idealistic in her views, but sometimes that can be very refreshing.