The Unassuming Economist

From Pro-Market:

In an interview with ProMarket, Harvard economist Dani Rodrik explained where globalization went wrong, how trade agreements serve rent-seeking by politically well-connected firms, and why the only solution to the rise of political populism is an economic populism that reimagines the institutions of capitalism.

Q: A recent report by the United Nations Conference on Trade and Development argued that the hyperglobalization of the past 30 years has led to a sharp increase in market concentration, which in turn led to a proliferation of rent-seeking. Do you agree with the assessment that globalization has increased rent-seeking?

I’m not saying that it has increased rent-seeking. I’m agnostic on that. I think it’s changed the relative power of different groups of rent-seekers and that the terrain over which the rent-seeking is taking place is different. I don’t want to make a blanket statement that we’re in a world where rent-seeking has increased. I think it’s always been there. I think what has happened is a combination of changes in our ideas and changes in the financial power and other powers of different groups, and this combination is reflected in the various parts of our global economy.

I think that by fetishizing globalization and exaggerating its benefits and understating its downsides, we have essentially privileged and prioritized a set of powerful interests. The fact that pharmaceutical companies or foreign investors find it so easy to get what they want is in part because of our existing narratives, or existing ideas, about how the world does or should work.

Q: You differentiate between two kinds of populism—political populism, the kind of autocratic populism we see from the likes of Putin in Russia and Erdoğan in Turkey—and economic populism, which you write is “occasionally necessary” and which you seem to suggest as a potential remedy to our current predicament. What is economic populism, and how is it different from political populism?

I think economic populism is a populism that takes aim at the sources of economic inequality and at concentrations of economic power. Today in the US, economic populism would take the form of bringing the financial sector down to size, reducing the influence of Wall Street in political institutions, and having much greater regulation of the financial sector. It would mean taking aim at concentrations of power in high-tech and digital industries. It would mean taking aim at our current pattern of trade agreements, which often privilege particular corporate interests and investors. All of that would be economic populism that tries to reshape the distribution of economic power and tries to reduce the concentration of economic power but does not try to turn the political system into an authoritarian one, does not necessarily concentrate political power or undermine liberal norms of pluralism and tolerance.

See my profile of Dani Rodrik here.

R package for M4 Forecasting Competition – Hyndsight (Rob Hyndman’s Blog)

2018 & 2019 Economic Outlook for the Top Oil Producing Countries – Focus Economics

Big Data and Economic Nowcasting – No Hesitations (Frank Diebold’s Blog)

The Poorest Countries in the World – Focus Economics

STILL MORE on NN’s and ML – No Hesitations (Frank Diebold’s Blog)

Use and misuse of information in supply chain forecasting of promotion effects – IIF Blog

ML, Forecasting, and Market Design – No Hesitations (Frank Diebold’s Blog)

Emerging Markets 2018 Economic Outlook – Focus Economics

Averaging for Prediction in Econometrics and ML – No Hesitations (Frank Diebold’s Blog)

Economic Goodness-of-Fit – Dave Giles’ Blog

Forecasting global economic growth in 2018 – Brookings

Comparing Interval Forecasts – No Hesitations (Frank Diebold’s Blog)

How do you forecast? Practitioners’ insights needed – IIF Blog

From a new IMF report on Iran’s female labor force participation:

“Iran has made tremendous strides in eliminating gender gaps in education and health indicators. For about a decade now, there has been virtually no gap between male and female enrollment in primary and secondary education. The gender gap in tertiary education enrollment is small and, in some fields of studies such as engineering and science, women are now in the majority (IMF, 2016a). Years of schooling attained by women have expanded by 40 percent within in one generation (World Bank, 2016a) to reach an average of 9 years. The fertility rate in Iran has fallen sharply in the last 30 years and has been below two children per woman since the 2000s, and on par with the average of advanced economies. Life expectancy at birth for women is higher than men by 2 years (76.7 versus 74.5 years).

Despite these laudable achievements, female participation in the labor force is low. Female labor force participation (FLFP) was 16.2 percent in 2016, lower than countries with similar income per capita, including within the MENAP region. Some 83.8 percent of all females over the age of 10 are inactive and out of the labor force—the fourth highest rate in the world—3.2 percent of women were unemployed, and only 13 percent were working. Women represent 13.3 percent of legislators, senior officials and managers and hold 3.1 percent of seats in the parliament. Iran has two Vice Presidents who are women.

Once in the labor force, women in Iran are also more likely to be unemployed. In 2016, the female unemployment rate of 18.9 percent was twice as high as males. Although the average male and female unemployment rates are broadly in line with the MENAP region average, the female unemployment rate exceeds the emerging market average (EM) of 11 percent. Furthermore, a woman in Iran is likely to remain unemployed longer. While 30 percent of men remain unemployed for less than 3 months (versus only 11 percent of women), almost 48 percent of women remain unemployed for more than 19 months (versus only 28 percent of men).

Iran’s highly educated female population represents an untapped source growth and productivity gains. Increasing FLFP can significantly boost GDP, productivity, tax collections and alleviate the expected burden of aging (see IMF, 2016b). Section B presents several factors contributing to the low rate of FLFP in Iran. Section C analyzes the macroeconomic impact of reforms to reduce gender gaps in the labor market using an overlapping generations model. It examines the macroeconomic impact of three reforms: reducing the gender wage gap, reducing the obstacles for women to join the labor force, and subsidizing childcare costs to low- and mid-income female workers in the formal sector.”

Continue reading here.

From a new IMF report on Iran:

“The comparatively low share of oil exports to GDP reflects Iran’s relatively large and diversified economy. Natural resources dominate Iran’s exports representing almost 53 percent of total exports but account only for 12.3 percent of Iran’s GDP. Iran exports more products than the average of MENA countries but many of its products are closely related to the oil sector (such as plastic and rubber products).

Iran needs to expand and intensify its trade with more partners if it is to increase non-oil exports and achieve the Sixth Development Plan target of growing non-oil exports to 15 percent of GDP by 2020. Examining Iran’s main exports in three broad goods categories highlights the opportunities for Iranian non-oil exports:

• Polyethylene (top export of plastic and rubber category, representing 11.6 percent of Iran’s non-oil exports). Iran mainly exports this good to China (84 percent) and Turkey (10 percent). However, the large European market—which imported US$ 9.5 billion of polyethylene in 2015 and accounted for 35 percent of the global market — is largely underexploited.
• Car parts (top export of the transportation category, representing 0.1 percent of Iran non-oil exports). Iran mainly exports car parts to a small set of countries in Europe, namely Turkey (72 percent), France (24 percent), and Russia (3 percent).
• Pistachios (top export of the vegetable category, representing 5.9 percent of Iran non-oil exports). Iran exports pistachios to a large share of world buyers.

“Improving Iran’s export competitiveness, attracting more foreign direct investments, removing barriers to trade and developing bilateral and multilateral trade agreements would aid Iran in reaching its targets for the development of the non-oil export sector.”

Continue reading here.

On cross-country:

• Mapping the literature of ‘policy transfer’ and housing – UK Collaborative Centre for Housing Evidence
• Mapping the literature on housing taxation in the UK and other OECD countries – UK Collaborative Centre for Housing Evidence

On the US:

• Mortgage Design in an Equilibrium Model of the Housing Market – NBER
• What to Expect From the Housing Market This Spring – New York Times
• California’s Housing Prices Need to Come Down – Citylab

On other countries:

• [Canada] Toronto’s Tale of Two Markets Is Hot Condos and Cold Houses – Bloomberg
• [China] China looks to Reits to ease housing woes – Financial Times
• [China] Does Housing Unaffordability Crowd Out Elites in Chinese Superstar Cities? – Shanghai University of Finance and Economics
• [Germany] Berlin loosens law for short-term home rentals – Reuters
• [Japan] Land ho, a sign of life in Japan – Financial Times
• [Netherlands] Revolutionary housing project brings Dutch youth together with refugees – UNHCR
• [Netherlands] Airbnb rentals in Netherlands are worsening the housing crisis – Global Property Guide
• [United Kingdom] High housing costs deter workers moving to London – Financial Times
• [United Kingdom] Brexit and the City: Tracking the fortunes of London’s financial districts – Reuters
• [United Kingdom] Brexit and the City – the real estate agent’s view – Reuters

Photo by Aliis Sinisalu