Blaming free trade for U.S. economic woes does not account for the difficulty of operating in a global marketplace increasingly dominated by mercantilism.
Television and film fanatics around the United States: rejoice. Yesterday, the Department of Commerce’s (DOC) Bureau of Economic Analysis (BEA) stated it was changing the method it uses to calculate Gross Domestic Product (GDP), in order to better reflect the economic contributions that come from the creation of copyrighted works, like films and television. In other words, GDP now encompasses the economic activity of the culture-aholic’s favorite sector (spoiler alert: the creative one!).
Prior to this change, the economic contributions of the film and television industry were treated as current expenses — or costs of business. GDP only captured the film and television industry downstream, based on the revenue generated by Hollywood’s tangible products. It did not include the impact on the economy based on investment in film and television. The change reflects that in economic terms, films and television works are an intangible asset. Long after they’re first developed, these creations continue to retain their value and deliver residual benefits; films and TV shows are licensed and sold to different markets for years after their original release so that nerds all over the world can enjoy Game of Thrones … Read the rest
On Monday, July 8, the Indian Prime Minister’s office, after consultations with India’s Department of Telecommunications and Department of Electronics, announced it would conduct a four-week review and reevaluation of the country’s controversial Preferential Market Access (PMA) mandate. The mandate imposed local content requirements on procurement of electronic products with “security implications for the country” by government and private sector entities. If the PMA had been implemented as originally envisioned, a specified share of each electronic product’s market—anywhere from 30 percent, rising possibly up to 100 percent by 2020—would have to be filled by India-based manufacturers, a requirement that could have eventually affected as much as half of the $50 billion spent annually on information and communications technology (ICT) products and services in India. In announcing the policy review, the Indian Prime Minister’s office acknowledged that, “Concerns have been raised in many quarters on different aspects of the PMA Policy, particularly relating to procurement by the private sector for electronic products with security implications.”
India conceived its PMA rules in an attempt to bolster domestic manufacturing of electronic products in India, a goal India has sought both to boost employment … Read the rest
Yesterday, President Obama announced the suspension of Generalized System of Preferences (GSP) benefits for Bangladesh. The suspension comes on the heels of outrage regarding labor conditions after an April factory collapse in the South-Asian nation killed more than 1,200 people. According to Obama, Bangladesh was not taking steps to protect internationally recognized standards of workers’ rights to its employees.
This removal of tariff breaks by United States makes a compelling statement, not only to Bangladesh, but also the rest of the world, about the importance of embracing accepted global standards to drive innovation and economic growth. As Bangladesh’s biggest trading partner after the European Union, the United States is well-positioned to leverage its trade policy in order to exert significant pressure on the Bengali government to reform its labor practices. As USTR Michael Froman stated, “The Obama Administration is committed to reflecting American values in our trade policy, including with regard to the rights of workers worldwide.”
GSP benefits are a privilege and should only extend to those countries that put into place policies that spur innovation and economic development. In other words, preferences need to go to countries that … Read the rest
Ever since former Secretary Clinton announced the New Silk Road Initiative in September 2011, the regional economic integration of the South-Central Asian region has been a priority of the U.S. State Department. Key to its implementation, however, is the participation of the private sector in spurring growth and creating jobs. As Secretary Clinton stated at the time, “We also know that governments alone cannot possibly solve Afghanistan’s economic problems, so we have to work to create an environment that attracts private sector investment.”
Facilitating such an environment is no easy task. Primarily, it requires the removal of impediments to the flow of goods and services. Recent progress on this initiative is encouraging; the region is becoming more integrated through trade liberalization. The reduction of non-tariff trade barriers, improved regulatory regimes, transparent and efficient border clearance procedures, and coordinated policies all accelerate the flow of goods, services, and people throughout the region. More importantly, the efforts of the South-Central Asian region to join the WTO–Kyrgyzstan and Tajikistan are the most recent ascensions–will also open markets and increase economic opportunity for the people of the region. Azerbaijan, Kazakhstan and Afghanistan are … Read the rest
On Monday at the G8 Summit, President Obama, U.K. Prime Minister Cameron, European Commission President Barroso, and European Council President Van Rompuy announced plans to launch negotiations for an ambitious trade deal between the European Union and the United States. The Transatlantic Trade and Investment Partnership (T-TIP) is an ambitious, comprehensive, and high-standard trade and investment agreement that promises to boost worldwide economic growth. During the negotiation announcement, Prime Minister Cameron said a successful deal could add £100 billion ($157 billion) to the EU economy, £80 billion ($125 billion) to the U.S. economy, and as much as £85 billion ($133 billion) to the rest of the world. While these numbers are impressive, as ITIF’s March 2013 report, Estimating the Benefits of a Transatlantic Trade Partnership found, citing data from the U.S. Chamber of Commerce, gains could be as high as $450 billion for the United States and $495 billion for the Europe Union, boosting both EU and US GDP by 3 percent. “We’re talking about what could be the biggest bilateral trade deal in history; a deal that will have a greater impact than all the other trade deals on … Read the rest
Evidence of technological change is all around us—smartphones, self-driving cars, amazing drug discoveries, and even drone warfare. With all of this novelty many futurists and other pundits breathlessly proclaim that technological change is speeding up. In fact, some go so far as to claim that the pace of innovation is not only accelerating, it is accelerating exponentially (which, anyone with a rudimentary understanding of exponents can see, is utter nonsense). Peter Diamandis, author of Abundance: The Future Is Better Than You Think, argues that “Within a generation, we will be able to provide goods and services, once reserved for the wealthy few, to any and all who need them. Or desire them.”
But is the rate of technological change really getting faster? Other commentators, including some notable academic economists, actually think the opposite—that we have run out of the “easy” technological advances and new breakthroughs will take much more work.
Questions about the rate of technological change may seem trivial—will I get one hoverboard or two?—but getting a handle on an answer is critical because in economic terms, technological change equals economic growth. And growth has powerful implications for … Read the rest
Making Innovation Part of Climate Hawks Policy Pitch
In a previous article I argued that climate policy advocates should make energy innovation part of their policy elevator pitch. A good opportunity to start is now available through the debate on reforming and re-authorizing the America COMPETES Act.
Within the climate advocacy community there are those that argue for aggressive clean energy innovation policy (such as myself) and those that argue for aggressive deployment of existing clean energy technologies (such as Center for American Progress’s Joe Romm and 350.org’s Bill McKibben). Each provides different policy emphasis and nuance. Today, deployment policies receive higher priority, reflected in it dominating the narrative among advocates as well as dominating the portfolio of U.S. public investments in clean energy. As a result, conflict occurs over what policy changes should be made.
As Grist’s Dave Roberts argues (correctly to a degree), both “camps” agree on a lot and everyone should aggressively work for clean energy to be a national priority to “lift all boats,”—both innovation and deployment of today’s technologies alike. How then should this consensus be reflected in our pitches to policymakers?
In my … Read the rest
As ITIF documents in 25 Policy Recommendations for the 2013 America COMPETES Reauthorization, Congress is currently considering a wide range of options for reforming U.S. high-skill immigration policy. The Senate Gang of Eight’s immigration reform legislation would create an additional 25,000 visas for foreign students graduating from U.S. universities with a Masters or Ph.D. in science, technology, engineering, and mathematics (STEM) fields. And the Startup Act 3.0 would make it 50,000 such visas for STEM graduates and introduce a “startup visa” for qualified immigrant entrepreneurs. As the Kauffman Foundation finds in Give me Your Entrepreneurs, Your Innovators: Estimating the Employment Impact of a Startup Visa, immigrant-entrepreneur founded startups could generate as many as 1.6 million new jobs after ten years (assuming that 75,000 visas are granted and that half the startups are technology or engineering companies).
To be sure, a startup visa could have a beneficial impact on U.S. economic and employment growth, but why limit this dynamic only to foreign entrepreneurs looking to invest in starting new businesses? Why not extend visas to foreign individuals investing substantially into ongoing federally funded research and development (R&D) activities at … Read the rest
Yesterday, US stocks experienced a brief plunge in price due to a bogus tweet on the Associated Press’ Twitter page regarding explosions taking place at the White House. While the market impact was literally momentary, the larger issue of investor confidence plays to the narrative that the financial markets are truly not the domain of the average investor. Yet another example that it’s not your grandfather’s stock market any longer. And such thinking impacts the average investor’s confidence in the system that financial innovation has wrought.
Here’s an excerpt from CNBC regarding the incident:
“When the market briefly skidded after a hacked AP Twitter account reported explosions at the White House, we saw the first real-time demonstration of robo-trading riding on the back of social media.
The plunge in the market was so quick that it obviously was not the result of individuals reading the phony news and deciding what action to take. Computers were making the trades-or, more precisely, ending the trades.
“It’s not so much that the computers initiated trades. What happened is that they canceled the orders, so the bids come out of the market. That causes … Read the rest