Culture, Governments and the Global Economy - Page 1

While we all share one world, how much does the culture of a country matter as to how it drives the government strategy towards economy?

This is interesting for a comparison:

China "has embraced the international economy with two hands," remarked Harley Balzer, Associate Professor, Department of Government and School of Foreign Service, Georgetown University at a 17 October 2005 Kennan Institute seminar. "Russia has an open economy, but its international integration is thin." Balzer argued that over time China's economic policies have been strongly influenced by coalitions of entrepreneurs, government officials, and investors, while in Russia policy has increasingly been dominated by the central government.

According to Balzer, the biggest global change during the past twenty years was not the end of Communism, but rather the impact of China and Russia on the international economy. In the late 1970s, modernization theory suggested that Russia was better positioned for industrial development: universal literacy, newspaper saturation, large numbers of educated professionals, and a large R&D community were seen as indicators that Russia would be an industrial power in the 21st century. China was an overwhelmingly peasant society just emerging from the Cultural Revolution. During the following thirty years, economic and political changes confounded this prediction. Balzer noted that China's GDP has grown much more rapidly over the past 15 years than has Russia's, and that China has caught up with Russia on many important development indicators. He attributed China's greater economic success to its "thicker" integration with the international economy.

Balzer compared the attitudes of Russian and Chinese elites as one important factor in their different approaches to the global economy. Russia began its reforms as a co-equal superpower, and many in Russia view globalization as Western or American infiltration. China began its reforms following the Cultural Revolution with a political elite less invested in the old system. Approaching globalization with a "nothing to lose" attitude and a realization that there could be much to gain aided the leadership's decision to promote integration with the world economy.

Balzer continued by comparing Russia's and China's initial steps toward international integration. Following the collapse of the USSR, the Russian government initiated an extensive reform process that greatly increased the country's political and economic openness. However, Russia's economy has come to rely heavily on exporting natural resources. Balzer argued that the Chinese government has not developed a better industrial policy than Russia, but rather has "lost control" in certain key regions and sectors, allowing them to become thickly integrated with the global economy. He emphasized that "success in the global economy depends not on a country's degree of openness but on the quality of its integration."

Balzer cited four areas that demonstrate China's thicker international integration and Russia's ambivalence. First, China has been more open to internationalizing science and education. Although China and Russia currently devote equal proportions of their GDP to education, China is no longer suffering as much from "brain drain." Specialized programs in China promote educational, scientific, and technological development, such as special housing and research funding offered by the Chinese government to qualified Chinese scientists who return from abroad. Secondly, Balzer argued that China's policies produced intense competition among its regions for FDI and international linkages. Chinese regions competed to host special economic zones and put pressure on the central government to expand the zones and open them further to international integration. By contrast, Russia's special economic zones became ways to circumvent taxes rather than fostering production.

A third reason for China's success involves the leading sectors in the two economies. Balzer pointed out that "finished goods represent only 9 percent of Russian exports to China, while they constitute 90 percent of Chinese exports to Russia." Dependence on exporting raw materials narrows Russia's opportunities for economic integration, while China has evolved into a global producer of manufactured goods and is increasingly moving up technology chains in a variety of industries. Fourth, Balzer noted that while corruption rankings indicate that it is an enormous problem in both countries, corruption seems, at least thus far, to be doing less damage in China. The difference, he argued, is in the nature and quality of the corruption. Russia's natural resource economy leads to rent-seeking, unproductive corruption, while corruption in China occurs in conjunction with real investment in industry and infrastructure.
According to Balzer, the common argument that China succeeded with gradual market reforms while Russia failed due to excessively rapid reforms misses the key point. China is not an example of effective state-led reform, because its greatest successes are in areas where the state has largely lost control and been forced to accommodate development coalitions and international market forces. In large part, China's leaders "are taking credit for simply getting out of the way." However, "when Russian commentators suggest that they need to emulate China's policies, they generally have in mind policies based on strong governmental controls, rather than the diverse and often highly independent local and regional economic activity linked to the international economy that accounts for China's success," he concluded.

- See more at: https://www.wilsoncenter.org/publication/encountering-the-global-economy-after-communism-russia-and-china-compared#sthash.fvkuBTHC.dpuf

 

 

 

 

One Belt, One Road initiative. I just learned about this!

https://www.clsa.com/special/onebeltoneroad/

Key to One Belt, One Road’s success is the development of an unblocked road and rail network between China and Europe. The plan involves more than 60 countries, representing a third of the world’s total economy and more than half the global population. We have ranked each country’s relationship with China from 1 to 5 based on political, economic and historical factors.  China’s ultimate goal is to extend the initiative to Africa and Latin America.  

 

The G20 Summit hosted by China comes off as a dud, according to this:

Recognising that economic growth has been too slow for too long and for too few, the communiqué does set out an agreed longer-term vision for the G20. This so-called “Hangzhou Consensus” calls on the G20 to deliver more inclusive economic growth through co-ordinated macroeconomic policy, open trade and innovation. In short, it reaffirms the group’s core mandate: to make globalisation work for the benefit of all.

The consensus is followed by a raft of vague commitments for action. Ranging from innovation and the “new industrial revolution”, to issues of business financing, international tax avoidance, anti-corruption measures, open trade and implementation of the sustainable development goals, the commitments fall short of expectations.

https://www.gov.uk/government/news/pm-uk-should-become-the-global-leader-in-free-trade

And then, can PM Theresa May really deliver "an economy that works for everyone"?  She says:

That is why we need a proper industrial strategy that focuses on improving productivity, rewarding hard-working people with higher wages and creating more opportunities for young people so that, whatever their background, they go as far as their talents will take them. We also need a plan to drive growth up and down the country, from rural areas to our great cities.

If we are to take advantages of the opportunities presented by Brexit, we need to have our whole economy firing. That’s why this committee’s work is of the highest priority, and we will be getting down to work immediately.

Hmm? Shades of Ayn Rand peeking through with the above highlighted thought in that AR says, "...Since man has to sustain his life by his own effort, the man who has no right to the product of his effort has no means to sustain his life. The man who produces while others dispose of his product, is a slave."

OK, who really has a grasp on facts when it comes to discussing the economy? Who has studied macro and micro economics and actually remembers what the heck is important?

The TPP sounds like it will be a win for increasing US and other country exports to the Asian markets, like China, with the goals to balance out the huge importing vs exporting situation seen in resources and manufacturing with for example, China. Doing away with regulations and tariffs are supposed to make USA and other countries' economic products, competitive. Level field. USA certainly  is not cowed by a level field!

So, what is the objection and who is doing the objecting? I now think I understand the enthusiasm of Australia who is literally beefing up their feedlots, because feeding China is going to be a big money maker for them.

There is a lot to read for the real information, for sure: https://ustr.gov/tpp/#issues

As Tory economics (given the preponderance of both Conservative AND neo-Conservative, i.e. 'less-than-Socialist' "new" Labour political influence) during my lifetime in the UK, has caused the disintegration of "British Industry" and real productivity, in favour of service and financial roles and mac-jobs, May is a fine one to talk about planning around Brexit leading to better opportunities for the young ... and I do not see how allowing China to come in and build and control nuclear power stations, as this Government is now doing, is particularly "safe" in any sense of that word.

Can you rephrase that in simpler terms... I don't relate to what is the meaning from: Tory economics and such?

And I would worry about anyone building nuclear power stations by a foreign country.... yikes! ...Even more. I did not know that such a thing was being considered or is happening!

Bad enough that the Brits own my water! LOL

Since the 60's we in the UK have had a majority of Parliamentary Terms in which either the Conservative (Tory) Party were elected into government, or the Tories were in Coalition with Liberals, or the 'only' Opposition, the Labour Party has been in power but pursuing a Right-of-Centre agenda.

All these Governments have had this in common: that they saw UK manufacturing industries decline under their economic policies, and did not succeed in preventing this; some might say they did not try to prevent it. Certainly all our major investment areas have been bled until they died: the car industry, textiles, etc are mere shadows of their former selves, and the extent to which they export has faded along with them. Our NATIONALISED industries, coal, rail and so on, have been decimated, as deliberate policy. We have not seen them replaced by major production of anything else, say, the new technologies' hardware, plastics. Stuff that IS still made here is manufactured for / owned by overseas companies. So ALL that is left for Britain to sell on the international market are banking / financial services, IT operational 'expertise', stuff like that. Oh, and armaments.

Britain might own your water Bee but we rarely own our own; and the French have all our gas and electricity these days.

You forgot the EPL (or is it the BPL?). Then again, that too is being bought up by foreigners.

"Is being." ? Thought it mostly had been. LOL

What is EPL or BPL?

Mindboggling! I don't care for the idea of foreign interests owning my water, myself. Lots of folk here still have private wells, but "city water" is considered more desirable due to quality and uninterrupted supply. 

Some facts on who owns UK Water:

UK water companies in foreign hands

Severn Trent is just one of several utilities companies now under foreign control. This is because utility companies have proved to be a strong investment, as they’re a good way to receive a steady income.

After the UK water industry was privatised in 1989 several new companies were formed and many of these have now been sold off.

In 2006 Thames Water was bought by a consortium which included the Australian investment group Macquarie and a Chinese wealth fund.

Yorkshire Water, which now supplies 4.7 million people, was snapped up in 2007 by another consortium, this time made up of Citigroup, HSBC, and the Singaporean sovereign wealth fund GIC.

Northumbria Water was also bought in 2011 by the Hong Kong-based company Cheung Kong Infrastructure Holdings.

 

Where your water company is based

 

The table below shows which water companies are owned by overseas investors. There are now 12 water companies, out of the 23 in the UK, which have foreign owners not including the proposed Severn Trent deal.

Water company	British or overseas ownership	Who owns it?
Affinity Water (formerly Veolia Water Central, Veolia Water East, Veolia Water Southeast)	Overseas	US-based Morgan Stanley and UK-based Infracapital (investment fund managed by M&G).
Anglian Water (includes Hartlepool Water)	Overseas	Osprey Acquisitions Limited - a consortium of several companies based in the UK, US and Canada.
Bristol Water	Overseas	Split between Canada-based Capstone Infrastructure, Spain-based Grupo Agbar and Japan-based Itochu Corporation
Cambridge Water	Overseas	Hong Kong-based Cheung Kong Infrastructure Holdings
Cholderton and District Water	British	Independent water company
Dee Valley Water	British	Independent water company
Dwr Cymru Welsh Water	British	UK-based Glas Cymru
Essex and Suffolk Water	Overseas	Hong Kong-based Cheung Kong Infrastructure Holdings
Northern Ireland Water	British	Government-owned company
Northumbrian Water	Overseas	Hong Kong-based Cheung Kong Infrastructure Holdings
Portsmouth Water	British	UK-based South Downs Capital Ltd
Scottish Water	British	Government-owned company
Sembcorp Bournemouth Water (formerly Bournemouth and West Hampshire Water)	Overseas	Singapore-based Sembcorp
Severn Trent Water	British	Severn Trent Plc
South East Water	Overseas	Canada-based CDPQ and Australia-based Utilities Trust of Australia
South Staffs Water	Overseas	US-based KKR
South West Water	British	UK-based Pennon Group
Southern Water	British	UK-based Southern Water Capital Limited
Sutton and East Surrey Water	British	UK-based East Surrey Holdings Limited
Thames Water	Overseas	Australia-based Kemble Water Holdings Ltd, part of the Macquarie group.
United Utilities	British	Independent water company
Wessex Water	Overseas	Malaysia-based YTL Corporation
Yorkshire Water	Overseas	Citigroup, HSBC, and Singapore-based GIC.

 

http://www.bbc.com/news/business-37403368

 

And then this is recent news: http://www.bbc.com/news/business-37403368

Regulator Ofwat has proposed opening the retail water market in England to more competition.

Currently, households have no choice in which water company supplies them. Ofwat says greater competition could mean innovation and lower prices. 

Under the proposals, firms could buy water in batches from existing providers and sell it on to households.

Companies could also offer bundles of services, selling gas, electricity or broadband alongside water. 

In theory it could mean that banks, supermarkets or phone companies could also sell water.

I would beware of this if I were you! Those "theories" have a way of filling some middle man's bankroll, and emptying yours! Has cable made television cheaper? No. Deregulation of phone networks? No. Deregulation of Electricty? No. 

It is always a cheap intro lead-in and then the next years are steady increases that never go away. Wait, that sounds like Obamacare, too! LOL