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August 2005
Issues: Business | Economic Development
| Exchange Rate | Financial
& Monetary Policy | Labor and Employment
Industries: Agriculture
| Automobile Industry | Banking
| Textile Industry
E-Journal Feature:
 International
Development Goals: Moving Forward. An Electronic Journal of the
U.S. Department of State. August 2005.
Leaders of the world's eight major economies (G8), at their annual
meeting in July 2005, called on all nations to recommit themselves
to supporting economic progress and good governance in the developing
world, particularly in Africa—the only continent not on track
to meet by 2015 any of the goals agreed on at the international
Millennium Summit in 2000 and put forth in the Millennium Declaration...
The United States is the world's largest donor of official development
assistance, the largest donor of emergency humanitarian relief,
the largest donor of private charitable funding, and the chief
source of private financial flows to the developing world. Through
the Millennium Challenge Account, the United States will continue
to make resources available to countries that provide incentives
for economic growth through policies that promote good governance,
trade, and investment. Growth also requires healthy, well-educated
citizens who can enjoy economic opportunities and political freedoms.
Here, also, the United States is doing its part by advancing the
largest health initiative in the history of the world to combat
communicable diseases.
Issues:
B1 - 2005 Cost-of-Doing-Business Index
Milken Institute, August 11, 2005
"Hawaii, New York and Massachusetts are the most expensive states in the nation in which to do business, according to the 2005 Milken Institute Cost of Doing Business Index.... The Index measures wage costs, taxes, electricity costs and real estate costs for industrial and office space. Each state is measured on the five individual categories, and those weighted scores are compiled to make the overall index." Fulltext
B2 - Making Development Work
Hahn, Robert W.; Tetlock, Paul C.
Policy Review, August-September 2005, # 132, pp27-39
”Foreign aid, consisting of labor and capital that flow to particular countries will tend to be good if those assets are spend twisely and bad if they are not… The potential perverse incentives of aid are well known. Recipient-countries that use aid productively may not receive any more. Aid bureaucracies that solve problems effectively could put themselves out of a job. These perverse incentives prevent policymakers from spending aid wisely… While problems with foreign aid are legion, the problems in developing countries are too important to be ignored.” Robert W. Hahn is co-founder and executive director of the American Enterprise Institute–Brookings Joint Center for Regulatory Studies and a resident scholar at AEI. Paul C. Tetlock is an assistant professor of finance at the University of Texas at Austin, McCombs School of Business. Fulltext
Exchange Rate
B3 - China’s Currency: U.S. Options
Jonathan E. Sanford
CRS Report for Congress, July 29, 2005,online edition,22p
“ In recent years, the United States and China have disagreed whether China’s national currency, the yuan or renminbi, is properly valued compared to the U.S. dollar and whether China is manipulating its currency. 1 The United States has pushed China to raise the value of its currency. Chinese officials say they want to make their exchange rate system more flexible, but China also needs long-term stability in its currency value in order to avoid dislocations. Chinese officials also say they will not bow to foreign pressure. China announced a new exchange rate procedure on July 21, 2005. This report summarizes this controversy, it describes actions and positions taken by the United States, China and other countries, and it discusses various approaches the United States might use to address this concern.” Jonathan E. Sanford is a Specialist in International Political Economy Foreign Affairs, Defense and Trade Division of the Congressional Research Service. Fulltext
Financial & Monetary Policy
B4 - Free Markets and Their Umpires: The Appeal of the U.S. Regulatory Model
Isabel M Bjork,;Catherine R Connors
World Policy Journal, Summer 2005, v22, #2, pp51-59
"In promoting economic reforms abroad, free market enthusiasts too often overlook the vital role of an umpire in ensuring a level playing field. Yet interestingly, other countries and multinational institutions have adopted, with modifications, the US-bred model of the independent regulatory agency--an innovation that Americans take for granted--in such sectors as energy, water, and communications. Here, Bjork and Connors explain how and why the US regulatory model has spread to both advanced and developing societies, albeit, with some accompanying difficulties, and with adaptations to suit local circumstances." Isabel M, Bjork has provided international legal assistance in Southeast Europe for Pierce Atwood for the last four years, advising in various restructuring projects; she previously worked on international aid projects and defended large securities cases. Catherine R. Connors is a Pierce Atwood partner who has worked in Central and Southeast Europe for a decade and is a leading appellate advocate in the United States. Fulltext
B5 - Truth and Consequences of Offshoring
Bivens, L. Josh
EPI Briefing Paper # 155, August 2, 2005, 17p
” A number of studies have been released by various organizations touting large economic benefits that will accrue to the American economy through the offshoring of white-collar work. A closer examination of these studies, however, shows that the promised benefits of offshoring are far overstated, while the likely economic costs are not addressed at all. Further, even the potential benefits to the American economy from offshoring are likely to be concentrated in the incomes of a relatively select percentage of American households. This briefing paper examines three studies claiming that the offshoring of white-collar work will result in large benefits to the U.S. economy. These studies—written by McKinsey Global Institute (MGI), Global Insight (GI), and Catherine Mann in a policy brief for the Institute for International Economics (IIE)…” Josh Bivens joined the Economic Policy Institute in 2002. His areas of research concern macroeconomics and the impact of globalization on the U.S. and developing economies. Fulltext
B6 -
Employment-Based Health Benefits: Trends in Access and Coverage
Fronstin, Paul
Employee Benefit Research Institute, EBRI Issue Brief # 284, August 2005, 28p
This Issue Brief examines the state of employment-based health benefits among workers with respect to offer rates, coverage rates, and take-up rates. It also examines how the state of employment-based health benefits has changed since the mid-1990s, reasons why workers do not have employment-based health benefits from their own employer, and how these reasons have changed since the 1990s. Paul Fronstin is director of the Health Research and Education Program at the Employee Benefit Research Institute. Fulltext
B7 - Employment and Unemployment Among Youth - Summer 2005
Bureau of Labor Statistics, August 19, 2005
"The number of employed youth 16 to 24 years old increased by 2.7 million to 21.7 million from April to July 2005, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. July is the traditional summertime peak for youth employment. This summer's increase in youth employment was slightly larger than last year's 2.3 million increase. Unemployment among youth rose by 290,000 between April and July 2005, compared with an increase of 631,000 from April to July 2004." Fulltext
Industries
Agriculture
B8 - The 20th Century Transformation of U.S. Agriculture and Farm Policy
Dimitri, Carolyn; Effland, Anne; Conklin, Neilson
Economic Information Bulletin #3, June 2005, 17p
The structure of farms, farm households, and the rural communities in which they exist has evolved markedly over the last century. Historical data on a range of farm structure variables—including the value of agricultural production, commodity specialization, farming-dependent counties, and off-farm work—offer a perspective on the long-term forces that have helped shape the structure of agriculture and rural life over the past century. All authors are affiliated with the Economic Research Service of the USDA: Carolyn Dimitri is a specialist on Organic Agriculture & Production, Anne Effland is a subject specialist on Farm & Commodity Policy and Neil Conklin is the Director of ERS’s Market and Trade Economics Division. Fulltext
Automobile Industry
B9 - Determinants of Supplier Plant Location: Evidence From the Auto Industry
Klier, Thomas
Federal Reserve Bank of Chicago, Economic Perspectives, 3Q/2005, pp2-15
“The auto industry in the United States directly employees over 1 million workers, and is so large that gross motor vehicle output alone represents more than 3 percent of the U.S. economy.” Below the assembly related part of the industry lies the supply structure feeding. “From numerous trade and business press stories, we know that the way auto suppliers relate to their assembly customers has fundamentally changed over the last 20 years. … In estimating models of supplier plant location, this article contributes to the current discussion of the changing geography in the U.S. auto industry. … This article utilizes detailed plant-based data on the U.S. auto supplier industry.” Thomas Klier is a senior economist in the Economic Research Department at the Federal Reserve Bank of Chicago. Fulltext
B10 - Dark Days at Daimler
Edmondson, Gail and David Welch
Business Week, August 15, 2005, # 3947, pp30-38
This article focuses on the financial problems that Mercedes-Benz has experienced since its 1998 merger with the Chrysler Corp. to form Daimler-Chrysler. “Jürgen Schrempp leaves behind a Mercedes beset by quality and profit woes. Now, Dieter Zetsche must take drastic measures to save the marriage with Chrysler -- or engineer a breakup… The monumental task is also sending a ripple of excitement -- and fear -- through Germany, from boardrooms to beer gardens. Retooling DaimlerChrysler is tinkering with Germany's heart and soul. And Dieter Zetsche looks set to give both a jolt.” Fulltext
Banking
B11 - Banks Flounder in Muddy Data-Regulation Waters
Fest, Glen
U.S. Banker Online, August 2005, online edition
In the spring of 2005, rules were developed to help clarify how firms should meet Section 501 customer-security guidelines of the Gramm-Leach-Bliley law. They define what constitutes "sensitive" data, what breach details need to be included in notices, and how banks should relay information to regulatory and law-enforcement authorities. Institutions of all sizes are now struggling to map out the boundaries of the new customer-notification guidelines. Fulltext
B12 - Implementing the Check 21 Act: Potential risks facing banks
Rice, Tara
Chicago Fed Letter, August 2005, v21, pp1-5
The articles discusses the implementation of the “Check Clearing for the 21st Century Act” which has already begun to spur changes in check processing in the U.S. It is designed to facilitate technological innovation by accelerating the transition to electronic check processing. Expected benefits to banks include reduced infrastructure and back-office processing costs as well as decreased processing time. However, the banking industry has identified a number of operational issues, which are generally not new risks, but variations of existing risks in payments processing. Tara Rice is a financial economist. Fulltext
Textile Industry
B13 - Saving America's Socks - But Killing Free Trade
Colvin, Geoffrey
Fortune, August 22, 2005, v152, #4, p.38
The US is becoming less competitive in many areas of the global economy, but instead of responding by becoming more competitive, the US is putting up walls and pretending it doesn't have to compete. If you thought the opposite was happening - that free trade was on the rise - that's understandable, what with the high-profile passage of CAFTA and the recent end of global textile and apparel quotas. The Bush administration desperately wanted Congress to approve CAFTA (the Central America Free Trade Agreement), which was no problem in the Senate but a big one in the House. Terrified by outsourcing, America doesn't like the sound of free trade these days. That's especially true if you represent Fort Payne, Ala., the self-proclaimed Sock Capital of the World. The obvious reality is that Fort Payne is no longer the Sock Capital of the World and will not be again in the lifetime of anyone now breathing. The world's sock capital is Datang, China. Fulltext
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