Global investment prospects face multiple risks

2019 ◽  
Keyword(s):  
Product Market ◽  
Relative Price ◽  
Market Reforms ◽  
Consumer Spending ◽  
Short Term ◽  
Content Type ◽  
Corporate Power ◽  
Multiple Risks ◽  
Tradable Goods

Significance The research highlights increasing corporate power, and tariff and non-tariff barriers, and raises the prospect that if unchecked these trends will reduce investment and trade. Particularly, they risk ruining the multi-decade investment momentum fuelled by the falling relative price of tradable goods. Impacts Regulation could cut the profitability of major US tech firms and the wages they pay, reducing consumer spending disproportionately. A US-China goods trade deal will have scant impact on curbing the worldwide rise of non-tariff barriers. Policymakers are likely to focus on short-term reflation ahead of labour and product market reforms.

Staff Background Paper for the G20 Surveillance Note - Priorities for Structural Reforms in G20 Countries

Policy Papers ◽  
2016 ◽  
Vol 2016 (43) ◽  
Author(s):  
Keyword(s):  
South Africa ◽  
Saudi Arabia ◽  
Product Market ◽  
Social Spending ◽  
Market Reforms ◽  
Structural Reforms ◽  
Short Term ◽  
Fiscal Space ◽  
Near Term

provide a powerful lift to growth—both in the short and the long term—if they are well aligned with individual country conditions . These include an economy’s level of development, its position in the economic cycle, and its available macroeconomic policy space to support reforms. The larger a country’s output gap, the more it should prioritize structural reforms that will support growth in the short term and the long term—such as product market deregulation and infrastructure investment. Macroeconomic support can help make reforms more effective, by bringing forward long-term gains or alleviating their short-term costs . Where monetary policy is becoming over-burdened, domestic policy coordination can help make macroeconomic support more effective. Fiscal space, where it exists, should be used to offset short-term costs of reforms. And where fiscal constraints are binding, budget-neutral reform packages with positive demand effects should take priority. Some structural reforms can themselves help generate fiscal space. For example, IMF research finds that by boosting output, product market deregulation can help lower the debt-to-GDP ratio over time. Formulating a medium-term plan that clarifies the long-term objectives of fiscal policy can also help increase near-term fiscal space. With nearly all G-20 economies operating at below-potential output, the IMF is recommending measures that both boost near-term growth and raise long-term potential growth. For example: ? In advanced economies, these measures include shifting public spending toward infrastructure investment (Australia, Canada, Germany, United States (US)); promoting product market reforms (Australia, Canada, Germany, Japan, Korea, Italy) and labor market reforms (Canada, Germany, Japan, Korea, United Kingdom (UK), US); and fiscal structural reforms (France, UK, US). Where there is fiscal space, lowering employment protection is also recommended (Korea). ? Recommendations for emerging markets (EMs) focus on raising public investment efficiency ( India, Saudi Arabia, South Africa), labor market reforms (Indonesia, Russia, Saudi Arabia, South Africa, Turkey), and product market reforms (China, Saudi Arabia, South Africa), which would boost investment and productivity within tighter budgetary constraints particularly if barriers to trade and FDI were eased (Brazil, India, Indonesia). Governance (China, South Africa) and other institutional reforms are also crucial. Where policy space is limited, adjusting the composition of fiscal policy can create space to support reforms ( Argentina, India, Mexico, Russia). ? Some commodity-exporting EMs (Brazil, Russia, Saudi Arabia, South Africa) are facing acute challenges, with output significantly below potential and an urgent need to rebuild fiscal buffers. To bolster growth, Fund staff recommends product market and legal reforms to improve the business climate and investment; trade and FDI liberalization to facilitate diversification; and financial deepening to boost credit flows. IMF advice also aims to promote inclusiveness and macroeconomic resilience. The Fund recommends a targeted expansion of social spending toward vulnerable groups (Mexico), social spending for the elderly poor ( Korea), and upgrading social programs for the nonworking poor (US). Recommendations to bolster macrofinancial resilience include expanding the housing supply (UK), resolving the corporate debt overhang (China, Korea), coordinating a national approach to regulating and supervising life insurers (US), and reforming monetary frameworks (Argentina, China).

Summer of crisis will drive Cuban migration

2016 ◽  
Keyword(s):  
Economic Crisis ◽  
Black Market ◽  
Market Reforms ◽  
Short Term ◽  
Domestic Production ◽  
Content Type ◽  
Pull Factor ◽  
Price Controls

Significance However, while US policies are a pull-factor for migrants, recent domestic problems also provide powerful reasons to leave Cuba, which has fallen into the worst economic crisis since the 1990s. Impacts Reversing the decline of domestic production will require a deepening of market reforms. However, short-term political concerns over rising discontent will encourage a return to price controls. That will rekindle the black market and undermine the credibility of long-term reform plans.

Thailand’s democratic deficit will dampen GDP growth

2018 ◽  
Keyword(s):  
Public Spending ◽  
Gdp Growth ◽  
Democratic Deficit ◽  
National Strategy ◽  
Consumer Spending ◽  
Short Term ◽  
Domestic Activity ◽  
Content Type ◽  
The Government ◽  
The Impact

Subject Outlook for the Thai economy. Significance Thailand's GDP grew by 3.9% last year, the most since 2012, and is expected to remain at around 4.0% this year, with stronger public spending supporting surging tourism and solid consumer spending. Thailand’s National Strategy aims to raise GDP growth to 5-6%, but this ambition faces rising short-term risks and longer-term structural impediments. Impacts Despite rising pressure on the government to hold elections, protests will not grow, limiting the impact on spending and tourism. Automobiles, semiconductors and other electronics -- key Thai exports -- will be hit by deteriorating US-China relations. The Bank of Thailand is one South-east Asian central bank keen to ‘normalise’ rates, but higher rates could dampen domestic activity.

Peru's fiscal adjustment may take place in 2016

2015 ◽  
Keyword(s):  
Credit Rating ◽  
Important Criterion ◽  
Consumer Spending ◽  
Short Term ◽  
Foreign Investors ◽  
Content Type ◽  
Direct Taxation ◽  
Tax Legislation ◽  
Fiscal Adjustment ◽  
Decision Making Processes

Subject Peru's fiscal policy. Significance On January 1, Peru's new tax legislation entered into effect. The move is part of the government's counter-cyclical fiscal and monetary strategy that aims to boost short-term growth and combat the slowdown in both domestic and foreign demand. The government's expectation is that tax cuts will have the effect of increasing corporate investment and consumer spending. Impacts Government attempts to stimulate investment are unlikely to have an impact on the decision-making processes of large foreign investors. Structural impediments may complicate raising the threshold of direct taxation -- an important criterion for eventual OECD membership. In spite of a growing fiscal deficit, Peru's credit rating will remain strong.

Hi-tech competition will colour EU-US friendly ties

2016 ◽  
Keyword(s):  
United Kingdom ◽  
State Aid ◽  
Short Term ◽  
Content Type ◽  
Corporate Power ◽  
The United Kingdom ◽  
The Us ◽  
Us Government ◽  
The Eu

Significance Earlier, on August 30, the Commission said the Irish government's tax arrangements with Apple constituted illegal state aid that required a payment of 13 billion euros (14.4 billion dollars) to the Irish authorities. The cases have given rise to suspicions that the EU authorities are unfairly targeting US companies. Impacts Short-term relations with the US government will deteriorate but -- if the Microsoft experience is any guide -- without lasting damage. The Apple ruling may bolster the Commission's reputation, as concerns over corporate power and inequality resonate with the EU public. Once it is outside the EU, the United Kingdom may have few attractions as a hub for US internet operations.

Product market competition, market munificence and firms’ unethical behavior

2019 ◽  
Vol 13 (2) ◽  
pp. 468-488 ◽  
Author(s):  
Jingbo Yuan ◽  
Zhimin Zhou ◽  
Nan Zhou ◽  
Ge Zhan
Keyword(s):  
Market Power ◽  
Unethical Behavior ◽  
Market Competition ◽  
Product Market ◽  
Market Concentration ◽  
Product Market Competition ◽  
Short Term ◽  
Content Type ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to examine the effect of product market competition on firms’ unethical behavior (FUB) in the Chinese insurance industry and to further explore the boundary conditions of the main effects. On the basis of China’s commercial foundation, the study constructs a conceptual framework of FUB by drawing from the perspective of horizontal competition. Design/methodology/approach Data were collected from 52 property insurance firms at the branch level observed over the six-year period, 2011-2016. Within this framework, market power and market concentration were used to describe product market competition at firm and industry levels, respectively. The moderating effect of market munificence was analyzed to reveal the theoretical boundaries of the main effect. By drawing upon cost–benefit analysis and social network theory, the study used negative binomial model and Poisson model to quantitatively examine the relationship. Findings The relationship between product market competition and FUB is curvilinear. Especially at the firm level, market power exhibits a U-shape relationship with FUB; at the industry level, market concentration exhibits a U-shape relationship with FUB. In addition, market munificence positively moderates the impact of firm’s market power on FUB, whereas, market munificence negatively moderates the impact of industrial market concentration on FUB. Research limitations/implications This paper explored a new type of unethical behavior that concerns consumers or the third party by emphasizing horizontal competitive contexts; it also provides a better understanding of the FUB–financial performance relationship from the perspective of competition. The moderating effects suggest that when the cause of FUB is different (market power vs market concentration), firms may make opposite ethical choice. However, the sample is from a single industry; it will be fruitful to further verify these findings in other industries such as the manufacturing sector. Moreover, the definition of FUB is confined to explicit forms such as participation or collusion but there is no way to measure the implicit forms of FUB. Practical implications First, the governance of FUB should not only focus on the firms themselves, but also take into account the industrial market structure. Second, proper use of governance measures for FUB can increase firms’ benefits from “compliance with the law”, enticing firms to decrease FUB. The third, firms with weak market positions, facing fierce competition, should not be involved in FUB for short-term benefit; indeed, a low-cost strategy can be adopted as the dominant competitive strategy. While, in cases of highly concentrated market structure, firms should strive to avoid involvement in FUB through collusion with other rivals. Social implications As it is a very common phenomenon that firms in competitive relationships may adopt FUB toward third parties or consumers, this trend has become a hot topic in the economic and social development in China. The study’s conclusions reveal that a more proactive and ambitious ethical decision is desirable for all kinds of firms; moreover, firms should make a rational choice between “short-term interest” and “long-term survival”. When firms identify the compliance of business ethics as an opportunity to differentiate themselves and perceive the benefits of decreasing FUB as outweighing the costs, the level of FUB will be inhibited, and social welfare will increase. Originality/value The primary contribution of this research resides in identifying product market competition as a previously unexplored predictor of FUB, thus revealing the dark side of product market competition. In addition, nonlinear relationships between product market competition and FUB indicate that situations of competition exert an important influence on FUB both at the firm and industry level. This paper’s conclusion provides a more meticulous theoretical explanation for FUB. This research demonstrates that the traditional ethical framework is not sufficient to explain FUB in a horizontal competitive context. Indeed, resource constraints and competitive pressures should also be considered.

Do product market reforms raise innovation? Evidence from Micro-data across 12 countries

2021 ◽  
Vol 169 ◽  
pp. 120841
Author(s):  
Anastasia Litina ◽  
Christos Makridis ◽  
Georgios Tsiachtsiras
Keyword(s):  
Product Market ◽  
Market Reforms ◽  
Micro Data

scholarly journals Credit card cue effect

2019 ◽  
Vol 38 (2) ◽  
pp. 368-383
Author(s):  
King Yin Wong ◽  
Michael Lynn
Keyword(s):  
Credit Card ◽  
Design Methodology ◽  
Credit Cards ◽  
Well Being ◽  
Financial Security ◽  
Consumer Spending ◽  
Content Type ◽  
Moderation Effect ◽  
Show Evidence

Purpose The extant literature has mixed results regarding the credit card cue effect. Some showed that credit card cues stimulate spending, whereas others were unable to replicate the findings or found that cues discourage consumer spending. The purpose of this paper is to investigate how consumers’ sensitivity to the pain of payment affects their mental associations about credit cards and how the differences in credit card associations moderate the credit card cue effect on spending, providing a possible explanation for the mixed results in the literature. Furthermore, this paper examines the role of consumers’ perceived financial well-being, measured by their perceptions of current and future wealth and their sense of financial security, in mediating this moderation effect. Design/methodology/approach An experimental study was conducted with a sample of 337 participants to test the hypothesized model. Findings After being shown credit card cues, spendthrift participants had more spending-related thoughts and less debt-related thoughts, perceived themselves as having better financial well-being and consequently spent more than tightwad participants. Originality/value To the authors’ knowledge, this is the first study to investigate the direct link between an exposure to credit card cues and perceived financial well-being, and one of the few to show evidence of the moderating effect of consumers’ sensitivity to the pain of payment on spending when credit card cues are present. This study suggests that marketers may use credit card cues to promote consumer spending, whereas consumers, especially spendthrifts, should be aware of how credit card cues may inflate their perceived financial well-being and stimulate them to spend more.

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