Mohamed A. El-Erian writes that ensuring a Stronger and Fairer Global Recovery is required for a better and more satisfactory tomorrow. The two ginormous economies of the World would lead it that way. Here is what he says about that.
Ensuring a Stronger and Fairer Global Recovery
2 April 2021
Although tough trade-offs are sometimes unavoidable, there is a way for policymakers to maintain a robust global economic recovery in 2021 and beyond while simultaneously pulling up disadvantaged countries, groups, and regions. But it will require both national and international policy adaptations.
CAMBRIDGE – An old joke about tricky trade-offs asks you to imagine your worst enemy driving over a cliff in your brand-new car. Would you be happy about the demise of your enemy or sad about the destruction of your car?
For many, the shape of this year’s hoped-for and much-needed global economic recovery poses a similar dilemma. Absent a revamp of both national policies and international coordination, the significant pickup in growth expected in 2021 will be very uneven, both across and within countries. With that comes a host of risks that could make growth in subsequent years less robust than it can and should be.
Based on current information, I expect rapid growth in China and the United States to drive a global expansion of 6% or more this year, compared to a 3.5% contraction in 2020. But while Europe should exit its double-dip recession, the recovery there will likely be more subdued. Parts of the emerging world are in an even tougher position.
Much of this divergence, both actual and anticipated, stems from variations in one or more of five factors. Controlling COVID-19 infections, including the spread of new coronavirus variants, is clearly crucial. So is distributing and administering vaccines (which includes securing supplies, overcoming institutional obstacles, and ensuring public uptake). A third factor is financial resilience, which in some developing countries involves preemptively managing difficulties from the recent debt surge. Then come the quality and flexibility of policymaking, and finally whatever is left in the reservoirs of social capital and human resilience.
The bigger the differences between and within countries, the greater the challenges to the sustainability of this year’s recovery. This reflects a broad range of health, economic, financial, and socio-political factors.
In a recent commentary, I explained why more uniform global progress on COVID-19 vaccination is important even for countries whose national immunization programs are far ahead of the pack. Without universal progress, leading vaccinators face a difficult choice between risking the importation of new variants from abroad and running a fortress economy with governments, households, and firms adopting a bunker-like mindset.
Uneven economic recoveries deprive individual countries of the tailwind of synchronized expansion, in which simultaneous output and income growth fuels a virtuous cycle of generalized economic well-being. They also increase the risks of trade and investment protectionism, as well as disruptions to supply chains.
Then there is the financial angle. Buoyant US growth, together with higher inflation expectations, has pushed market interest rates higher, with spillovers for the rest of the world. And there is more to come.
European Central Bank officials have already complained about “undue tightening” of financial conditions in the eurozone. Rising interest rates could also undermine the dominant paradigm in financial markets – namely, investors’ high confidence in ample, predictable, and effective liquidity injections by systemically important central banks, which has encouraged many to venture well beyond their natural habitat, taking considerable if not excessive and irresponsible risks. In the short term, high liquidity has pushed cheap funding to many countries and companies. But sudden reversals in fund flows, as well as the growing risk of cumulative market accidents and policy mistakes, could cause severe disruptions.
Finally, uneven economic recovery risks aggravating the income, wealth, and opportunity gaps that the COVID-19 crisis has already widened enormously. The greater the inequality, particularly with respect to opportunity, the sharper the sense of alienation and marginalization, and the more likely political polarization will impede good and timely policymaking.
But, whereas the old joke hinges on the unavoidability of tough trade-offs, there is a middle way for the global economy in 2021 and beyond – one that maintains a robust recovery and simultaneously lifts disadvantaged countries, groups, and regions. This requires both national and international policy adaptations.
National policies need to accelerate reforms that combine economic relief with measures to foster much more inclusive growth. This is not just about improving human productivity (through labor reskilling, education reforms, and better childcare) and the productivity of capital and technology (through major upgrades to infrastructure and coverage). To build back better and fairer, policymakers must now also consider climate resilience as a critical input for more comprehensive decision-making.Sign up for our weekly newsletter, PS on Sunday
Global policy alignment also is vital. The world is fortunate to have benefited initially from correlated (as opposed to coordinated) national policies in response to the COVID-19 crisis, with the vast majority of countries opting upfront for an all-in, whatever-it-takes, whole-of-government approach. But without coordination, policy stances will increasingly diverge, as less robust economies confront additional external headwinds at a time of declining aid flows, incomplete debt relief, and hesitant foreign direct investment.
With the US and China leading a significant pickup in growth, the global economy has an opportunity to spring out of a pandemic shock that has harmed many people and, in some cases, erased a decade of progress on poverty reduction and other important socio-economic objectives. But without policy adaptations at home and internationally, this rebound could be so uneven that it prematurely exhausts the prolonged period of faster and much more inclusive and sustainable growth that the global economy so desperately needs.
Another distinguishing element of the furniture pieces is the way they reference architecture, with the Bench 01 recalling an arched bridge. The structures are also meant to be self-supporting and simply slotted together.
“We’re looking for the architecture in a furniture object,” said studio co-founder Christian Vennerstrøm Jensen.
“The idea is that you can build our work and take it apart again,” he continued. “The bench is joined by elements into a structure that is stable and strong enough for you to sit on, and the bedside tables are simply stacked together.”
Bench 01 is made of solid walnut timber that is CNC routed, while the pair of Bedside Tables — one right, one left — is smooth Portuguese rosa marble with “a deliberate overzealous use of material” and hidden backlighting.
Bahraini-Danish was founded in 2016, with Jensen working from Copenhagen and co-founders Batool Alshaikh and Maitham Alumbarak from Bahrain.
The Buildings Research Establishment (BRE) has been a trailblazer in its field for a century. Much of the language it uses to describe what it does today is very familiar to chartered accountants. It is in this article mainly about how exporting building-research excellence from the UK could positively affect sustainability throughout the world.
ICAEW member Andrew Herbert is the Interim Chief Financial Officer at BRE Group Limited. He talks very much in terms of measures, standards and accountability, and says sustainability, safety, security and quality will combine to create a roadmap for building design and construction of the future.
“The organisation was set up by the UK Government after WW1 to look at the built environment and how it could be improved,” says Herbert. “That’s an ongoing journey.”
Perhaps one of the most famous milestones for the Buildings Research Establishment (BRE) was the work undertaken at the Hertfordshire site as part of Operation Chastise, or the Dambusters’ Raid. What BRE brought to the equation was a demonstration of how modelling advances technical understanding of a building and its properties. BRE continues to use models, both physical and software-based, to solve complex construction challenges. Today, that means wind tunnel testing and testing the spread of fire to make sure that building design, and construction, are based on science, and that they harness technology.
“We burn things, we break them, or we blow them up,” says Herbert. “On the site, we do a lot of testing of products related to the built environment. We might do fire safety testing on equipment, we might test to see if the lining to a tunnel does what it’s supposed to do, and also with beams, railways sleepers, and so on.”
On the security front, there is a fair bit of blowing up. “We do a lot of security work testing to make sure that building security works in a whole range of areas, both for UK companies but also internationally,” he adds.
The burning, breaking and blowing up is about half the work undertaken at BRE. The other half is about the impact that buildings have on the environment. “That means setting standards to ensure that when people build, they do what they say they will do, but the standards also to address the impact of the construction sector on the environment,” he says.
BREEAM is a tool designed by BRE that auditors can use to assess the environmental impact of a building. It has become a trusted mark of sustainability for buildings and communities in 77 countries around the world. “We also do lots of consultancy work for governments, not just the UK Government,” says Herbert.
“Another of our products – LPCB – is a standard developed by the insurance industry that we now own and run. This is a standard that makes sure things like suppression systems for fire safety do what they are supposed to do,” says Herbert. “The LPCB standard is actually enshrined in regulations across the globe. For example, a high-rise block built in the Middle East would have to adhere to the LPCB standard.”
BRE teams operate around the world, explaining to regulators the benefit of the BRE standards and tools. “Anyone can convince a building company that their product will achieve a certain result. How do you actually know that is true – particularly with safety products because we hope they don’t have to be used. Nobody wants the fire hose to come out or the sprinkler system to come on because you hope there’s not going to be a fire. But how do you know whether what’s been installed will perform on the day? The only way to rely on it is to have a set of agreed, independent, standards that everybody follows.” Apart from testing products, BRE regularly audits the processes of the factories in which these products are manufactured to make sure they are consistent and create a repeatable product.
BRE itself applies accountancy thinking to its processes. “We operate a risk-based approach ourselves at BRE. Each of our units has risk registers. The internal audit team takes the risk register information when they are preparing their internal audit plans, identifies the high-risk areas and spends more time in that area than in the low-risk areas. My head of risk and internal audit is also a qualified accountant,” says Herbert.
So where will the challenges for BRE lie given that the world is at a crossroads in so many respects, and the built environment will be an outward manifestation of the decisions governments and supranational organisations take now?
“Much of the work BRE has been doing over the last few years is with industry, trying to come up with a better way of building, often referred to as modern methods of construction – or offsite manufacturing methods. We secured a grant for just over £17m to work out what modern methods of construction means and how to get the industry to move in that direction,” says Herbert. “The building industry is very traditional. We still use a small brick, and we lay them, and that isn’t necessarily the most efficient way of building or delivering consistency.”
And traditional methods struggle to deliver that other necessity for change – data. Modern methods have a digital plan, so you always know where all the services are located, the types of materials used, their age and provenance. This makes maintenance so much easier and helps with testing in terms of safety and energy performance.
“Our hopes and expectations are that we will have that digital footprint which will give us a record of a building, that we can actually build more in a shorter space of time. That would help this new wave of construction,” says Herbert.
“There are many major infrastructure projects happening around the world, not just in the UK. The investment other countries are making is phenomenal. And certainly, BRE wants to be part of that process – to make sure that we set the right standards, that we can give people confidence that what’s being built adheres to those standards, and assists with the move to net zero.”
He points out that the UK offers the world really strong technical skills and scientific knowledge. “It would be great to disseminate that information in a much broader way. And we do. But there’s always more we can do,” says Herbert. “We want to be seen as an organisation that works across the globe, improving standards as we go.”
Reportlinker.com announces the release of the report “Construction Global Market Report 2021: COVID 19 Impact and Recovery to 2030”.
Construction Global Market Report 2021: COVID 19 Impact and Recovery to 2030
Major companies in the construction market include China State Construction Engineering Co Ltd; China Railway Group Ltd; China Railway Construction Corporation Limited; China Communications Construction Group Ltd and Vinci SA.
New York, Feb. 01, 2021 (GLOBE NEWSWIRE) — The global construction market is expected to grow from $11491.42 billion in 2020 to $12526.4 billion in 2021 at a compound annual growth rate (CAGR) of 9%. The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The market is expected to reach $16614.18 billion in 2025 at a CAGR of 7%.
The construction market consists of sales of construction services and related goods by entities (organizations, sole traders and partnerships) that construct buildings or engineering projects (e.g., highways and utility systems). Establishments that prepare sites for new construction and those that subdivide land for sale as building sites are included in this market. The construction market includes new work, additions, alterations, maintenance, and repairs. The construction market is segmented into buildings construction; heavy and civil engineering construction; specialty trade contractors and land planning and development.
Asia Pacific was the largest region in the global construction market, accounting for 42% of the market in 2020. North America was the second largest region accounting for 26% of the global construction market. Africa was the smallest region in the global construction market.
Building construction companies are increasingly using green construction techniques to build energy efficient buildings and reduce construction costs. Green construction refers to the practice of using sustainable building materials and construction processes to create energy-efficient buildings with minimal environmental impact. According to World Green Building Trends Survey 2015, about 51% of construction firms in the UK were involved in green construction projects. Certifications such as Leadership in Energy and Environmental Design (LEED) help construction companies to develop high-performance, sustainable residential and commercial buildings, and also offer a variety of benefits, from tax deductions to marketing opportunities. Sustainable construction materials such as natural paints and steel beams made from recycled material are being widely used in the UK. Other green construction techniques such as cross-ventilation for more natural environment, green construction software such as Construction Suite to ensure green compliance, and Green Globes management tool are also being used in the construction industry. For instance, some, Major companies using green construction techniques include Turner Construction Co, Clark Group, AECOM, Hensel Phelps and Holder Construction.
Construction costs have increased steadily due to rising material costs in the historic period. Companies in the industry experienced subdued growth in their profits with rising prices of materials such as crude oil, a key component of asphalt increased by 49%, softwood lumber, a major component used for buildings construction, which rose by 23% during historic period. In 2018, cement prices rose 2.5% and plumbing and fixtures increased by 3% in the US. High material prices adversely affected the construction market during historic period.
The construction market growth in the historic period was mainly driven by the increase in construction activity in emerging markets. Emerging markets which registered robust construction activity included China, Brazil, India, Saudi Arabia and Indonesia. For instance, China’s construction market grew from $1,653 billion in 2016 to $2,279 billion in 2019. This rapid growth in construction activity contributed to the growth of the construction market.
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Michael Young in an interview, with David Linfield who argues that international donors are benefiting existing power structures in the Middle East. It is all about Colluding With the Corrupters.
Corruption spread deep and for some time in the MENA region with social, political, and economic implications, but with differing penetrations rates. All because the area can divide into two types of governance. The autocratic monarchies live with side by side with the so-called republics. Few of these latter countries know a higher degree of corruption than the first-mentioned countries. In any case, all have made the fight against corruption a priority by passing laws and adopting strategies to combat crime. But in vain. Colluding with the Corrupters could quickly summarise a situation where such deviant behavioural attitudes originators can be traced back out of the region.
January 29, 2021
David Linfield is a visiting scholar in Carnegie’s Middle East Program. He is on sabbatical from the U.S. Department of State, where he is a career foreign service officer. Linfield recently wrote a commentary for Carnegie, titled “International Donors Are Complicit in Middle Eastern Elites’ Game.” In mid-January, Diwan interviewed him to discuss his article, and more generally to examine the anti-elite feeling that has permeated protests throughout the Middle East in the past year, notably in Iraq, Jordan, and Lebanon. The views expressed by Linfield are his own and not necessarily those of the U.S. government.
Michael Young (MY): You’ve just written a commentary for Carnegie, titled “International Donors Are Complicit in Middle Eastern Elites’ Game.” What is your argument in the piece?
David Linfield (DL): My argument is that the United States and other international donors have put significant clout and resources behind promoting economic liberalization in the Middle East, while they have been hesitant to put similar emphasis on political reforms. By political reforms I mean boosting transparency, combating corruption, and empowering elected officials. International actors have partly justified this approach by suggesting that economic reforms are a better way of promoting stability and less risky than political changes. But I contend that recent events in the region suggest that these policies are making violent, sudden change in the region more likely, not less so.
When adopted in the context of authoritarian political systems, economic reforms such as privatization have tended to benefit existing power structures, exacerbating economic inequality and citizen-state tensions. The World Inequality Database now ranks the Middle East as the most unequal region in the world. While economic inequality has decreased worldwide since the 1990s, it has remained constant in the Middle East.
By supporting policies that have inadvertently led to such entrenched inequality, while neglecting political reforms, international donors have contributed to citizens’ frustrations with their relative economic status while leaving them without peaceful institutional means of expressing their grievances. This is all a recipe for instability, which is the opposite of what donors want.
MY: You write that “[e]merging solidarity among previously competing groups, grounded in [economic inequality]” is a feature of the growing resentment of elites in the Middle East. Are you suggesting, to borrow from Marxist jargon, that we are seeing the emergence of a sort of class consciousness in certain countries that may have revolutionary potential?
DL: Most of the protests in the Middle East since 2018 have focused on economic inequality and corruption. Whereas previous demonstrations in the region tended to consist of a homogeneous ethnic group—whether from a particular religious sect, region, or group of tribes—these recent protests have been more diverse.
Common frustrations with inequality appear to have led people from lower-income communities to demonstrate in common cause—albeit sporadically and tentatively—against what they see as a corrupt and multisectarian elite that has failed them. We have seen this happen most explicitly in Iraq, Jordan, and Lebanon.
Some of the slogans used in recent protests in these countries do indicate the emergence of class consciousness. When the Jordanian Teachers Union threatened to strike in summer 2020, they framed their plight as a class struggle against those who had “looted the country.” The 2019 Lebanese protests included slogans like “down with the rule of the thieves.” Iraqi protestors in 2019 and 2020 told media outlets that their struggle was about taking the country back from “thieves.”
MY: In light of your assessment, how have the traditional fault lines among Middle Eastern populations that regimes have manipulated to retain power—things such as sectarian, tribal, or regional divisions—fared in what you describe as a changing environment?
DL: The traditional fault lines in Middle Eastern societies are still very much present. Emerging class-based tensions have not fully supplanted preexisting divisions based on ethnicity, religion, and tribalism, but rather now coexist alongside them more than before. That said, the trendlines I described earlier suggest that class-based divisions will continue to grow in relative importance and have the potential to reshape existing political alliances and divisions.
In addition to the demonstrations I mentioned earlier, another indicator of the power of class solidarity is a 2019 experiment by researchers from the University of Pittsburgh and the Lebanese Center for Policy Studies. The study, which assigned hundreds of Lebanese people into different conversation groups having varying compositions based on sect and class, found that when Lebanese people gathered with other members of the same class, they exhibited markedly less support for sectarian politics.
It’s too early to craft a comprehensive assessment of how emerging class-based tensions will interact with longer-standing societal divisions in the Middle East. One reason that we’ll have to observe for a longer period is that Covid-19 shifted the focus dramatically from political and economic challenges to the health crisis. But given that the pandemic exacerbated economic inequality, with lower-income communities bearing the brunt of related economic disruptions, we probably won’t have to wait long before class discussions reemerge.
MY: If the problem is that economic liberalization has reinforced elites, what are you recommending as an alternative approach by Western donors? And what makes you think that such an approach would have any chance of working?
DL: The alternative approach I’m recommending is for international donors to incorporate measures to promote transparency and combat corruption into existing economic liberalization efforts. These political reforms are also good for business and economic growth—as noted by the International Monetary Fund (IMF) and World Bank reports I cite in my article. The IMF’s recent insistence that Lebanon address corruption before receiving additional loans is a positive step to putting teeth behind their analysis.
Other helpful steps would include pushing to empower the many weak legislatures across the region beyond their current rubber-stamp roles, which would provide an alternative to protests for frustrated publics. If international donors put the same clout behind good governance that they have behind economic liberalization, they’ll make peaceful and durable progress more likely in the Middle East.
MY: Are you not reading too much into anti-elite solidarity? Ultimately, states in the region have shown that they will resort to violence in order to survive and societies have often gone back to being silent. Why will this change?
DL: Ruling elites in the region have demonstrated that they are willing to go to extreme measures to maintain their benefits. I am not suggesting that elites will somehow decide that they should altruistically begin to share resources with the rest of society. Rather, as your question implies, I am arguing that the elite behavior of concentrating power and resources is an unsustainable strategy that will ultimately foment violence and harm everyone’s interests, including those of the elite.
Autocratic regimes tend to resort to violence when they feel they have run out of other options, but rely more often on nonviolent coercion and intimidation to maintain daily control. By the time regimes turn to violence, it tends to be a prelude to their loss of control—or a stage where they are nearing that.
The strategy of international donors focusing their influence and resources on economic liberalization instead of good governance has not succeeded in bolstering stability and strengthening citizen-state relations. Instead, the policy has exacerbated class-based tensions and increased the prospects of unrest.
These trends are not linear: demonstrations in the region against economic inequality and corruption have ebbed and flowed. Ruling elites remain intent on doing everything they can to outmaneuver these latest challenges to their vested interests. Longer-standing societal tensions based on sect, region, and tribe also continue to simmer and remain exploitable by elites. But the overall direction of the region is still toward economic liberalization in the midst of authoritarian entrenchment. As long as that remains the case anti-elite solidarity is likely to build. International donors are inadvertently contributing to these increasing citizen-state tensions. Instead, they could be fostering more durable change that would make the region more stable and prosperous for everyone.
Originally posted on After 5: Hey there, This is my very first blog post and my first attempt to analyse a dataset post learning python. I have recently joined the Kaggle community as well as Github and slowly finding my way through them! As an Egyptian working in Finance, I found the Africa Economic, Banking and…
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