ECONOMICS AND GLOBAL AFFAIRS
November, 2009
The Cross-Border Financial Impact of Violence
Working Paper
By Mohamad M. Al-Ississ, Former Research Fellow, The Dubai Initiative
This paper argues that violent events have two economic effects: a direct loss from the destruction of physical and human capital, and a reallocation of financial and economic resources. It documents the positive cross-border impact that follows violent events as a result of this reallocation. Thus, it reconciles the two existing perspectives in the literature on whether violence has a small or large economic effect. Our results show that, in globally integrated markets, the substitution of financial and economic activities away from afflicted countries magnifies their losses. This study evaluates certain factors affecting the impact of violence in non-event countries. Geographic distance from the event country is not monotonic in its effect on the valuation of equities of other countries. Also, the safer a non-event country is perceived to be relative to the event country, the greater the positive impact on its financial market. Finally, event countries with deeper financial markets are less susceptible to capital reallocation following an event.
November, 2009
Oil, Labor Markets, and Economic Diversification in the GCC: An Empirical Assessment
Working Paper
By Tarek Coury, Associate, The Dubai Initiative and Chetan Dave
In a bid to reduce their dependency on oil and natural gas revenues, GCC governments have recently invested considerable resources to diversify their economies.This paper provides an empirical assessment of economic diversification in the GCC for the period 1980-2005. In particular we assess whether oil and natural gas revenues, government policies and foreign flows of labor have contributed to greater economic diversification, proxied by real growth in non-hydrocarbon GDP per worker. To our knowledge, this is the first paper that analyzes economic diversification in the Gulf using panel data techniques that explicitly treat the GCC as an economic block.
We find that lagged hydrocarbon revenue is the only variable consistently associated with subsequent economic diversification; this is in contrast to government expenditures whose impact on diversification is negative, large, and significant. We also find that population growth has little impact on either growth of overall GDP per worker or non-hydrocarbon GDP per worker; we present an economic growth model that takes into account features of the labor market structure in the Gulf to explain this finding. Finally, we present some empirical evidence consistent with claims of greater macroeconomic and financial integration within the GCC.
November, 2009
What Accounts for the Success of Islamist Parties in the Arab World
Working Paper
By Michael Robbins, Research Fellow, The Dubai Initiative
Islamist organizations are generally considered to be the strongest and most credible opposition to incumbent regimes throughout the Arab world. Fear of Islamic takeovers has led regimes and other outside powers to justify not holding free elections, citing examples that include the Algerian election of 1991, the Iranian Revolution, the AKP victory in Turkey and the perceived popularity of Islamist opposition groups throughout much of the Arab world (Brumberg 2002). Yet, other analysts have questioned the actual strength of Islamist movements within the Arab world, noting that although Islamists may be the main challenger, few have actually been successful in taking power (Roy 1994).
November, 2009
What Accounts for the Success of Islamist Parties in the Arab World
Policy Brief
By Michael Robbins, Research Fellow, The Dubai Initiative
Islamist organizations are generally considered to be the strongest and most credible opposition to incumbent regimes throughout the Arab world. Fear of Islamic takeovers has led regimes and outside powers to justify the suppression of free elections by citing the Algerian election of 1991, the Iranian Revolution, the AKP victory in Turkey, and the perceived popularity of Islamist opposition groups throughout much of the Arab world (Brumberg 2002). Yet, other analysts have questioned the actual strength of Islamist movements, noting that although Islamists may be the main challengers, few have actually been successful in taking power (Roy 1994).
November, 2009
The Blueprint: A History of Dubai’s Spatial Development Through Oil Discovery
Working Paper
By Stephen J. Ramos, Research Fellow, The Dubai Initiative
While oil discovery brought revenue to Dubai and would change the city's physiognomy, moving it beyond the initial three settlements along the creek, it is clear that Dubai's status as a dynamic entrepôt for international trade and transshipment, its foundational infrastructure projects, and its "free port" policies to attract merchant communities from throughout the Gulf and the Indian Ocean, along with licit and illicit trade for re-export to Persia/Iran and India, were solidly established before "black gold" was struck in Fateh field.
AP Photo
Summer 2009
"Hard Decisions on Soft Power: Opportunities and Difficulties for Chinese Soft Power"
Magazine or Newspaper Article, Harvard International Review, issue 2, volume 31
By Joseph S. Nye, Harvard University Distinguished Service Professor and Wang Jisi
"But just as China's economic and military power does not yet match that of the United States, China's soft power still has a long way to go as demonstrated by a Chicago Council on Global Affairs poll. China does not have cultural industries like Hollywood, and its universities are not yet the equal of the United States. It lacks the many non-governmental organizations that generate much of US soft power. Politically, China suffers from corruption, inequality, and a lack of democracy, human rights and the rule of law. While that may make the "Beijing consensus" attractive in authoritarian and semi-authoritarian developing countries, it undercuts China's soft power in the West. Although China's new diplomacy has enhanced its attractiveness to its neighbors in Southeast Asia, the belligerence of its hard power stance toward Taiwan hurt it in Europe when China sought to persuade Europeans to relax their embargo on the sale of arms. Given the domestic problems that China must still overcome, there are limits to China's ability to attract others, but one would be foolish to ignore the gains the country is making."
October 30, 2009
"Why the Renminbi has to Rise to Address Imbalances"
Op-Ed, Financial Times
By Martin Feldstein, George F. Baker Professor of Economics at Harvard University
"China's policy of keeping the renminbi weak means that the US dollar must decline more rapidly against the euro, yen and other currencies to achieve the same overall trade-weighted fall of the dollar," says Martin Feldstein, member of the Belfer Center's board of directors. "China's weak renminbi policy therefore not only prevents remedying China's large current account surplus but also reduces Europe's exports," he says.
October 26, 2009
"The Global Impact of America’s Health Care Debate"
Op-Ed, Daily News Egypt
By Martin Feldstein, George F. Baker Professor of Economics at Harvard University
President Obama's health care proposals are meeting strong opposition from fiscally conservative Democrats as well as from Republicans, owing to their potential impact on future fiscal deficits, says Martin Feldstein, member of the Belfer Center's board of directors. "Because those deficits are the primary cause of America's current-account deficit," he says, the "health-care debate's outcome will affect governments and investors around the world."
AP Photo
October 23, 2009
"Three Pillars of Post-2012 International Climate Policy"
Policy Brief
By Sheila M. Olmstead, Former Research Fellow, Environment and Natural Resources Program, 2001–2002 and Robert N. Stavins, Albert Pratt Professor of Business and Government; Member of the Board; Director, Harvard Project on International Climate Agreements
Our proposal for a post-2012 international global climate policy agreement contains three essential elements: meaningful involvement by key industrialized and developing nations; an emphasis on an extended time path of targets; and inclusion of market-based policy instruments. This architecture is consistent with fundamental aspects of the science, economics, and politics of global climate change.
Fall 2009
"Bad Debts: Assessing China's Financial Influence in Great Power Politics"
Journal Article, International Security, issue 2, volume 34
Commentators and policymakers have articulated growing concerns about U.S. dependence on China and other authoritarian capitalist states as a source of credit to fund the United States' trade and budget deficits. What are the security implications of China's creditor status? If Beijing or another sovereign creditor were to flex its financial muscles, would Washington buckle?
