Tuesday 19 Mar 2019 | 05:01 | SYDNEY
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Global Economy

The ebbs and flows of global economic conditions, trade and capital flows, thus have substantial implications for the Australian economy, and Australia’s major regional trading partners. Understanding the broad trends, and identifying emerging challenges and opportunities within the global economy, is central to the work of the International Economy Program at the Lowy Institute.

The highly integrated nature of the modern global economy became especially evident during the 2008 global financial crisis. What began as a localised problem within the residential asset-backed securities market in the United States, eventually brought down major financial firms across the Western world, and ultimately pushed the United States and Europe into a deep and prolonged recession. Although global economic growth has recovered somewhat since 2008, it is still much lower than pre-2008 trends, and the hangover from the crisis has manifested itself in the form of high unemployment levels throughout much of the developed and developing world, as well as an increasing level of inequality both within and between countries.

Understanding the economic rise of Asia, and particularly of the growing middle class within Asia, is also crucial to the broader work of the Lowy Institute. Political economy analysis on major players in the region, chiefly China, India and Indonesia, features heavily in the work of the East Asia Program and the International Security Program.  

Jokowi hoping for good news from Papua

President Jokowi lifted an effective ban on foreign journalists reporting from Papua during his visit to the province over the weekend. Aside from being a positive step for press freedom, the move has been interpreted as an effort by Jokowi to boost his own image as a human rights defender and to

What the G20 can do about infrastructure

Infrastructure is now a standard item on the G20 agenda. Serious infrastructure shortages are ubiquitous. With global economic growth slow, ample construction capacity and interest rates at historic lows, there seems to be an opportunity to address the infrastructure gap. But many governments see

Is the G20 getting serious about climate change?

The G20 does not have a great track record when it comes to climate change. This is a problem, because the group includes the world's main greenhouse gas emitters. G20 countries have agreed to a global target not to warm the earth more than 2°C above pre-industrial levels as part of the UN

The secretive TPP: Never again

One aspect of the Trans-Pacific Partnership (TPP) that has come under criticism is the lack of transparency in the negotiating process. Could a more transparent model be used for these kinds of negotiations? In other areas of official decision-making, recent decades have seen a big shift towards

North Korea's new diplomacy

Russian state-run news agency Tass confirmed on 22 April that Kim Jong-un will be in Moscow for the 9 May Victory Day celebrations. The North Korean leader will be among 26 other heads of state who have so far confirmed their attendance. North Korean Foreign Minister Ri Su Yong (Flickr/UN Geneva)

Six ideas for rescuing Australian digital diplomacy

Australia's approach to digital diplomacy is second-rate and entirely inadequate for a nation that sees itself as 'a top 20 country'. Despite an expanded social media presence, Australia continues to lag far behind other countries – large and small – that are investing serious resources into

Economic history makes a comeback

When the economy is going well, we talk about the bright future. Why is it only when it is going bust that we look to the past? The Economist recently published an interesting article on the resurgence of economic history after the global financial crisis. No-one who reads about the international

China's economic march into Pakistan

The China-Pakistan Economic Corridor (CPEC) is nothing short of a 'fate changer', said Pakistani Federal Minister Ahsan Iqbal, the man behind the historic project. The excitement appears to be mutual, as China has shown equal enthusiasm for the project throughout a two-day visit by Chinese President

What to do about weak world growth

Forecasts prepared for the IMF's 'Spring Meeting' in Washington last week predict global growth of around 3.5% this year, about the same as in the last few years. This is not the 'slowing' discussed so often in earlier Fund documents, but nor is it the normal robust recovery that might be expected

Countering ISIS online

When you look at the global response to the threat of ISIS, a glaring gap is the cyber domain. The internet has been critical to the terrorist group's success. It allows it to communicate unfiltered to the rest of the world, for onward mass dissemination by the media. It helps the group radicalise

Does Australia do digital diplomacy?

After a decade of swimming against the tide, the Australian Government is slowly engaging in the world of digital diplomacy. The term 'DFAT the Dinosaur' no longer applies, a label slapped onto our foreign affairs department in 2010 after a series of public refusals to incorporate the internet

New World Economic Outlook report is out

This week we've had the IMF and World Bank spring meetings. Economic heavy-hitters from around the world descend on DC to attend committee meetings, seminars, briefings, and other policy-maker fun. Also, the IMF's World Economic Outlook is released. Chapter 4 in the most recent edition looks at

Is capital globally mobile?

The Australian Treasury has been busy. On top of its usual output, the last 18 months have included the Financial System Inquiry, hosting the G20, the 2015 Intergenerational Report and the tax white paper. All this while eliminating one-third of its workforce! But today I'd like to focus on the

Why Australia needs Austrade

Bruno Mascitelli is editor of the newly released The Austrade Story: Export and Investment Facilitation Under the Microscope. The Australian Trade Commission, or Austrade as it is commonly known, turns 30 in 2016. It came into existence in 1986 as a statutory government agency for export promotion

Inclusive growth should not be the G20's game

In 2002 David Dollar and Art Kraay, both at the World Bank at the time, published an article in the Journal of Economic Growth called 'Growth is Good for the Poor'. Dollar and Kraay showed that if an economy's growth increased by a percentage point, then growth of the incomes of the poor increased

The TPP and intellectual property rights

Earlier posts have discussed how the Trans-Pacific Partnership (TPP) – if it comes into force – will be part of the process of setting global rules across a wide range of issues, including intellectual property rights. The just-released Harper Competition Policy Review notes the importance

Post-2020 emission target a test for Australia

Failure to pay proper, high-level attention to negotiations under the UN's climate convention (UNFCCC) seriously endangers Australia's national interest in areas beyond climate change. This is the important headline conclusion from a timely Lowy Institute paper by Howard Bamsey and Kath Rowley. The

China's reserve-currency ambition

In mid-2009, with American finance reeling from the Lehman Brothers collapse, the nation's Treasury Secretary addressed his prestigious alma mater Peking University. 'How safe are China's investments in US Government debt?', challenged one student. 'Very safe', the Secretary answered to derisive

Is the Great Moderation over?

In what appeared to be a case of spectacularly bad timing, the Bank of England held a conference in September 2007 on 'sources of macroeconomic stability'. You see, from the early 1980s the business cycle in developed economies had become much less volatile. A term had been coined for this

One belt, one road? China's community of common destiny

More details emerged over the weekend about two Chinese big-ticket initiatives, 'One Belt, One Road' and Asian Infrastructure Investment Bank (AIIB). Speaking at the Boao Forum for Asia, President Xi Jinping outlined his vision for the region in a keynote address titled 'Towards a Community of

Cyclone Pam: A photo essay from a volunteer

By Eva Westfield, who was an Australian volunteer based in Port Vila. Consistently rated the most dangerous countries in the world in terms of disaster risk, Vanuatu is no stranger to the destruction caused by natural hazards. Talk of Cyclone Pam hitting Vanuatu started about a week before it

Australia needs a modern and globalised tax system

The Abbott Government will shortly release a discussion paper on the Australian tax system. It will be the first step towards the much anticipated tax white paper. International factors should figure prominently in the white paper — specifically, how to ensure that Australia has a resilient tax

UK budget: A test for 'expansionary austerity'

The 2008 global financial crisis provided a rare test-bed for macroeconomics — an opportunity to sort out some old controversies. One issue dominated the debate during the recovery phase: with national budgets and official debt pushed up by the crisis, should budget austerity be imposed as a

Do we need 'full-spectrum defence'?

The first thing to say about Alan Dupont's recent paper is that he is absolutely correct about the dire condition of Australian strategic policy. As he suggests, we lack a coherent answer to the most basic question of all: 'What do we want our armed forces to be able to do?' Until that question

China and the AIIB: Towards a new rules-based order?

Australia's likely decision to become a founding member of the Asian Infrastructure Investment Bank (AIIB) marks the loosening of America's 70 year command over global governance. US Secretary of State John Kerry and World Bank President Jim Yong Kim at the African Growth and Opportunity Act

Park Geun-Hye's presidency is adrift

Park Geun-Hye has been president of South Korea for just over two years, with almost three still go, and the emerging consensus here (I'm writing from South Korea) is that her presidency is already adrift. It is not a catastrophe – she is not the George W. Bush of Korea – but it is 

Giganto-capitalism: China takes another wrong turn

15 years ago, Beijing made an important strategic decision about its sprawling aviation manufacturing monopoly, AVIC. Dissatisfied with AVIC's slothfulness, and keen to promote competition, the state's planners split the company in half, creating two firms. Unimaginatively named AVIC-1 and AVIC-2

Negative interest rates: We are flying blind

We live in strange economic times. Depositors in Denmark are paying interest to their banks and borrowers are being paid when they take out a loan. The basic principles of finance have been turned on their head. One commentator has noted that 'something economists thought was impossible is

The G20 can help women enter the global economy

International Women's Day was celebrated yesterday, and there is cause for optimism with regards to progress in women's rights and important commitments undertaken to reduce gender inequality. Many international organisations came out in strong support of the day, including UN Women and the IMF. In

Ukraine: IMF sent in where others fear to tread

This week the IMF Executive Board will consider a proposal to provide Ukraine with a US$17.5 billion Extended Fund Facility. The IMF Managing Director explains that this program 'can succeed'. But it has to be said that the chances are low, given current geopolitical circumstances and Kiev's recent

India's budget: Will subsidies fall as predicted?

The new Indian Government brought down its first full-year budget last weekend. It has been keenly anticipated. Business Standard claimed: 'The market is expecting the Union Budget to be path-breaking, similar to the one in 1991, which led to the liberalisation of the Indian economy.'  As it

Bibi goes to Washington

For most of my professional life I have been addicted to Middle Eastern politics. In recent years, however, I have started to kick the habit, so I had not planned to get up at 3am Sydney time to watch Israel Prime Minister Benjamin Netanyahu deliver his much anticipated and controversial address

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