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Argentina: Open for Business

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“High-Beta” is one of the most used analogies to describe the Argentine economy. There is a mathematical reason for that. Argentina is not the economy with the worst performance in a medium-term perspective compared to a large sample of developed and emerging countries. But it do…   Become a member to read the rest of […]

ZAMBIA: A string of positive news

ZAMBIA: A string of positive news | Speevr

President Hakainde Hichilema today, 27 September, announced the return of Denny Kalyalya as governor of the Bank of Zambia (BoZ) with immediate effect. The move puts the BoZ in a safe pair of hands and bodes particularly well for relations with the International Monetary Fund (IM…   Become a member to read the rest of […]

LATAM PULSE

LATAM PULSE | Speevr

This week, Peru’s government is in another muddle of its own making – this time over a threat to nationalize natural gas resources – while Congress will keep the Pedro Castillo administration on the backfoot. In Mexico, energy policy in the downstream sector returns to the politi…   Become a member to read the rest […]

SOUTH KOREA: Front-runners emerge in party primaries ahead of presidential race

SOUTH KOREA: Front-runners emerge in party primaries ahead of presidential race | Speevr

With the presidential primary season underway, Gyeonggi province governor Lee Jae-myung leads former prime minister Lee Nak-yeon in the race to be the ruling Democratic Party (DP)’s candidate. For the opposition People Power Party (PPP), former prosecutor-general Yoon Seok…   Become a member to read the rest of this article

WEEKLY POLITICAL COMPASS

WEEKLY POLITICAL COMPASS | Speevr

Exploratory talks about a “traffic light” coalition are likely ahead in Germany. Huawei’s chief financial officer has returned to Canada. Meanwhile, Japan’s ruling party will hold its leadership election, Turkey’s parliament will return from its summer recess, Brazil’s president …   Become a member to read the rest of this article

The risks of an uneven economic recovery in an unequal world

The risks of an uneven economic recovery in an unequal world | Speevr

The COVID-19 pandemic has impacted the world’s most vulnerable populations through lost lives, health, jobs, incomes, assets, and education. The World Bank’s High-Frequency Phone Surveys (HFPS) help identify the main fault lines along which the pandemic’s unequal impacts are emerging in developing countries (country-level indicators produced with this data are shown in an interactive dashboard). The pandemic intensified inequalities between higher-income and lower-income countries, men and women, and workers from different socioeconomic groups. While the initial impacts of the pandemic reinforced preexisting inequalities, the world must now turn its attention to the risks of an uneven economic recovery and the long-term threat it poses to social mobility and inequality.

Early insights (using harmonized multicountry HFPS data) from April-June 2020 suggested extremely large impacts on incomes, jobs, food security, and children’s education, associated with the stringency of policy measures undertaken during the pandemic. On average, more than one-third of those working before COVID-19 across 52 countries stopped working; more than 60 percent of households reported income losses across 30 countries. A pattern of widening gaps between rich and poor countries emerged early on: Income losses, disruptions to children’s education, and food insecurity were much more common among households in poorer countries. In addition, emergency social transfers were inadequate to offset impacts on income in low-income countries. For example, per capita social protection spending on COVID-19-related measures was $4 on average from March 2020 to May 2021 in low-income countries, compared to nearly $850 per capita in high-income countries.
Within developing countries, the economic impacts seemed to reinforce preexisting inequality patterns. Large segments of the population who were at a disadvantage in the labor market before the shock—women, younger workers, and workers with less education—were much more likely to lose their jobs in the first three months of the pandemic (Figure 1). Income losses were also more likely among respondents with no college education and households with self-employed or casual workers. Access to learning while schools were closed was more severely limited for children in larger households and in households where the survey respondent was less educated. There were some exceptions to these patterns. For example, in some low-income countries, educated workers were more likely to stop working, as they tended to be employed in the urban service sector that was strongly affected by the pandemic.

Men and women also experienced the pandemic with significant differences. While men were more likely to die from COVID-19, women were affected more in other dimensions of well-being. Women disproportionately suffered from mental health impacts and experienced a higher risk of dying during childbirth or having stillbirths. Women shouldered increased responsibility for additional care needs with school closures and increased illnesses among family members, which affects their ability to return to work as economies reopen. As women lost paid work at a higher rate relative to men, their unpaid work went up; and women entrepreneurs were at a greater risk of having their businesses closed than men. Evidence also suggests a steep increase in violence against women during the pandemic.
COVID-19 hit in a world where inequality was already pervasive and socioeconomic mobility was not improving. It may worsen these trends through three main channels:

Lasting impacts of job and business losses, which can be particularly severe for vulnerable workers.
Higher likelihood among poor households to adopt strategies to cope with income losses that reduce their productivity over time.
Disruptions to schooling unequally affecting children from different socioeconomic strata.

Evidence from past crises shows that those who are most affected may take longer to recover. Our analysis of the HFPS data shows early indications of this occurring from the current pandemic.

After severe dips in April-June 2020, income and employment saw a partial rebound by September 2020 in the 17 countries in our sample where policies restricting mobility became less stringent. Encouragingly, food security and employment improved at a similar rate for countries at different income levels. However, the improvements by September did not restore employment to pre-pandemic levels and were not enough to significantly reduce the gaps in initial job losses between women and men, non-college- and college-educated, and young and older workers. For example, female employment had only recovered 30 percent of what was lost between pre-pandemic and May-June (versus 49 percent for men). Furthermore, a detailed analysis of six countries shows that male, younger, and college-educated workers in these countries were less likely to lose their jobs and more likely to find a new job if they lost one.
Particularly among poorer households, much of the recovery may also be driven by lower-quality jobs. In six countries, self-employment accounted for 83 percent of the increase in employment rates from May to September for primary-educated workers, compared to 58 percent for workers with tertiary education.  In some countries (such as Nigeria), agricultural employment increased sharply, suggesting individuals took on farm work to cope with other job losses.
While food security continued to improve, data from September 2020-January 2021 for eight countries indicates that disparities by gender and location in employment persisted even as policy stringency improved. There were warning signs about a stagnating recovery—in a sample of 14 countries, the recovery in employment appears to have stalled in the last quarter of 2020.
The pandemic has underscored the need for building an effective and equitable public health system, investing in safety nets and social insurance, and instituting fiscal policy that raises resources fairly and efficiently to finance investments. The first priority is ensuring widespread and equitable access to vaccines. Second, governments need to help children and parents transition back to school and facilitate reentry of workers most likely to remain unemployed. Older and low-educated workers might also require more support to deal with the consequences of rapid technological change. To reverse gender disparities, there must be a concerted, multisectoral effort to empower women and girls worldwide. These recommendations are a first step in what should be a coordinated global effort to prevent the growth in socioeconomic inequities and disparities across income, age, and gender that may result from the COVID-19 pandemic. Making our societies more equitable and resilient to future crises requires taking on structural inequalities today.

Supporting families supports the economy: Social nets are economic foundations

Supporting families supports the economy: Social nets are economic foundations | Speevr

“Why I won’t support spending another 3.5 trillion… There’s not a rush to do that right now. We don’t have an urgency. Don’t you think we ought to debate a little bit more, talk about it, and see what we’ve got out there?”
– Senator Joe Manchin in the Wall Street Journal
It is time to change the narrative around social infrastructure investments for families. We beg to differ with people like Senator Manchin. It is urgent that our country invest in high-quality care, family leave, and universal pre-K not only because it helps children thrive in high-quality early environments, but because it enables parents to enter the workforce—raising families out of poverty. Remarkably, in 2017, the United States ranked 30th out of 33 member nations of the Organization for Economic Co-operation and Development in public spending on families and children, which includes policies such as child payments and allowances, parental leave benefits, and child care support. A 2019 study by the Pew Research Center noted that of the 41 industrial countries surveyed, only the U.S. did not have a policy around paid parental leave.

The proposed $3.5 trillion bill before the U.S. Congress right now could go a long way toward bringing the United States into alignment with other industrialized nations around the globe. It calls for a universal pre-K program for 3- and 4-year-olds; enhanced child care for working families, a total of 12 weeks of guaranteed paid parental, family, and personal leave, and a child tax credit totaling $3,600 for each child under 6 and $3,000 for each one under age 18.
What the science shows on social infrastructure policies
The scientific evidence shows why investments in each of these policies are an investment in the future—not just in the long run with respect to child outcomes, but in the short run with respect to parental employment. The COVID-19 pandemic laid the problem bare. Women represented half of the workforce in 2020—a number that post-pandemic fell by 56 percent. When child care was unavailable, women became the default option, drastically reducing family income. Reduced family income appears to lead to lower social and cognitive outcomes for children. Current work by Professor Kim Nobel and her team is investigating through a randomized controlled study whether paid allowances from $20 to $333 per month would raise achievement outcomes for children as has been clearly shown in prior research.
The science also speaks to the longer-term improved outcomes of high-quality child care, family leave, and universal pre-K for the children. With respect to early child care, the evidence is substantive. The small-scale Perry and Abecedarian research experiments demonstrated that high-quality child care could lead to higher levels of education, employment, and health and lower levels of incarceration as adults. These studies demonstrated that participants’ lives could be changed with responsive, supportive, and stimulating child care experiences. The larger-scale Infant Health and Development Program noted similar benefits when combined with home visiting. These programs stressed high-quality language interactions (back and forth conversations, shared book readings, and rich vocabulary), nutrition (prenatal and beyond), and healthy parenting strategies (feeding and sleeping routines, strategies to deal with misbehavior, and so on). A large and comprehensive study of early child care, the NICHD Study of Early Care, found that high-quality child care starting in infancy is linked to higher outcomes on math and reading tests that persisted until age 15, and higher levels of education and employment at 26 years of age.
Taken together, the scientific data strongly suggests that supporting families supports the economy. It helps to fill jobs today and it helps to prepare children for the workplace of tomorrow.
With respect to paid family leave (PFL), several studies indicate that it improves the infant’s health and early development, maternal well-being, and longer-term maternal employment.  A series of studies using rigorous quasi-experimental designs and representative national samples indicated that infants had higher levels of cognitive and behavioral skills when mothers spent their first six to 12 months at home with them. More recent rigorous quasi-experimental research of California’s PFL found improvements in the infants’ overall health and reductions in asthma, as well as higher levels of coping with the challenges of parenting, parental engagement, and an increased likelihood that skilled women return and stay in the workforce after the birth of their child.
Finally, scaled studies of universal pre-K highlight that rigorous high-quality experimental programs support children through large gains in academic skills, and moderate to small gains in social skills and executive functioning; follow-up studies have shown long-term gains such as modestly higher academic skills in upper elementary school and  higher levels of high school graduation and college entrance. In addition to improving child outcomes, access to subsidized care increases employment among parents of young children. Thus, research suggests that investing in family leave, increased access to high-quality child care, and universal pre-K will boost children’s cognitive and social skills.
The critical child care shortage
These promising studies from the child care literature mask another critical issue. The U.S. system depends on parent fees to pay for child care, and thereby limits the salaries of child care providers. Child care workers who are entrusted with the nation’s youngest children are, on average, paid less than $11 an hour. Indeed, on a list of professions from the U.S. Bureau of Labor Statistics, child care workers rank right between laundry and dry-cleaning workers and parking lot attendants. Child care centers now struggle to recruit teachers given they can earn more at almost any other job, leaving many centers unable to open post-pandemic. Parents of young children, especially mothers, cannot return to the workforce without child care, leaving many employers unable to fill positions. Furthermore, the low salaries make it difficult for programs that try to provide high-quality care to recruit and retain highly qualified teachers.
If child care programs do not open—or if children are in custodial rather than in high-quality environments—child care programs cannot deliver on the promise of better outcomes. With limited access to child care, employers find it more difficult to fill open position, families with young children face financial loss, and children lose their opportunity for an academic and social booster.
Taken together, the scientific data strongly suggests that supporting families supports the economy. It helps to fill jobs today and it helps to prepare children for the workplace of tomorrow.

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GERMANY: Scholz is the election winner, but the proof is in the coalition talks

GERMANY: Scholz is the election winner, but the proof is in the coalition talks | Speevr

As counting continues after the Bundestag elections, the race between the two main parties remains close. Both the Social Democrats (SPD) of Finance Minister of Olaf Scholz and Armin Laschet’s Christian Union (CDU/CSU) could each form a government with the Greens and the center-r…   Become a member to read the rest of this article

How does control of the seas affect global trade and security?

How does control of the seas affect global trade and security? | Speevr

The vast majority of global trade today moves by sea, so control of the world’s oceans has become critical for both commerce and security. In this episode, Brookings Senior Fellow Bruce Jones joins David Dollar to discuss evolutions in sea-based trade, including the growing size of container ships, threat of modern piracy, explosion of data flows, and the transformation of global value chains.
Jones draws on his experience visiting ports around the world and sailing on one of the largest container ships to illustrate the mechanics of sea-based trade. He shares details from his travels in this conversation and his new book, “To Rule the Waves: How Control of the World’s Oceans Shapes the Fate of the Superpowers” (Scribner, 2021).

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