Brookings: Topics - Globalization

Widening the Panama Canal and the Future of Global Trade Mapping

Adie Tomer and Joseph Kane — Fri, 17 May 2013 16:25:00 -0400

Up and down the Atlantic coast, US ports are abuzz. Dredging machines, tunnel excavators, and highway pavers from Miami to New York are preparing metropolitan economies and their ports for a newly expanded Panama Canal. As the thinking goes, an expanded Canal promises bigger ships, bigger cargo loads--and each metro wants a piece of the bigger business.

But lost in this port-related arms race is what the newly-widened Panama Canal means for the US economy . Too many metropolitan areas simply assume they’ll immediately acquire new freight business when the expanded Canal opens, or that there will be more business at all. These billion-dollar assumptions ignore a more fundamental question: how and where will the Panama Canal affect US’ global goods trade?

Answering that question requires a broader view, one less predicated on ship size and more on economy size. It also requires metropolitan areas to gain a better understanding of their goods trading relationships, and how those relationships power their local economies.

It’s time to have a frank conversation about what investments like the Panama Canal mean for US trade and economic growth.

First, let’s start with a little context. The Panama Canal, set to celebrate its 100th birthday next year, is one of the world’s most important trade assets. It primarily helps connect US Atlantic and Gulf ports to their trading partners in Asia, Oceania, and South America. Driven by those major markets, the Canal already moves over 330 million tons of freight each year.

However, the Canal suffers from capacity constraints. The world's largest ships can no longer fit through certain locks, meaning the Canal was ill-prepared for its second century. In response, Panama initiated a major overhaul including two new locks, plus widening and deepening several existing channels. When complete in 2015, larger container ships will expand potential trade volumes between the Americas and Asia--and more seamlessly connect global markets in the process. The promise of these larger ships is the inspiration behind the Atlantic ports’ major capital projects.

Yet, as ports carry out such extensive projects, questions and skepticism linger over the future direction of freight movement and the long-term economic implications. How will ports handle the extra time it takes to load and unload the new mammoth ships? How will Pacific port investments in the United States and Canada counter the investments at the Atlantic ports? These uncertainties complicate analysts’ and policymakers’ abilities to identify exactly how the expansion will shift the precise location and scope of all freight flows.

The country and its metropolitan leaders need a way to remove these uncertainties. And it begins with a better understanding of our current goods trading relationships at the metropolitan scale.

As it stands, metropolitan data is scant. There is no geographically-consistent database of what goods metropolitan areas consume and what goods they export. Similarly, there is no database of geographic trading relationships with their domestic and international peers, or which ports facilitate the international side of the trade ledger

Imagine if the United States didn’t know how much electronics it imported from China, or how much oil it imported from the Middle East. That’s the situation metropolitan economic and freight leaders face.

It’s time to get a better handle on these regional trade relationships. Local, state, and federal officials should know which metropolitan areas trade the most goods with Asia, and are therefore the most sensitive to the Panama Canal’s capacity. They should also know how these goods flow between markets—whether they’re more reliant on Pacific or Atlantic ports, and how a capacity change on either coast could shift that equation.

This kind of knowledge also extends beyond just the Panama Canal. As other freight investments come online across the United States and the world, public and private sector leaders should have the statistical tools to know what’s at stake. A more thorough understanding of the country’s metropolitan trading network would help inform local investment decisions like we’re seeing in Baltimore and Norfolk. It would also inform a national freight strategy that prioritizes investments with the highest returns.

The metropolitan reaction to the Canal widening is a microcosm for what the country misses when it comes to freight planning. In a relatively fact-free zone, it’s easy for local ports to justify these major investments. But dredging a port or building a tunnel costs significantly more than simply upgrading our knowledge base.

Even with global trade slowing its growth since the Great Recession, there’s little question that goods volumes will continue to rise in the coming decades, whether through the Panama Canal or elsewhere. It’s time we make sure our metropolitan economies have the knowledge to succeed in that environment.

The Brookings Metropolitan Policy team will aim to address that knowledge gap over the coming year. Working with a team of outside experts, we've assembled a geographically-consistent, globally-oriented goods trade database. In turn, the analytics from that database will help us provide public and private sector leaders with a better understanding of exactly what, where, and how metropolitan areas trade goods and the implications for their local economies. We are excited to start sharing those results this fall.

Authors

Adie Tomer
Joseph Kane

Twelve Ways to Build Trust in the ICT Global Supply Chain

Darrell M. West — Thu, 18 Apr 2013 00:30:00 -0400

Editor's Note: This paper was released in conjunction with the Building Trust in the Global Supply Chain event at Brookings on April 18, 2013. It is a part of the Center for Technology Innovation's Issues in Technology Innovation paper series.

The globalization of commerce and trade has created many benefits. Supply costs have been reduced for many products. Computers and other items can be made of parts from a number of different locales. Countries can specialize in particular goods and companies can focus on the things they do best. Raw materials may come from one area, while manufacturing and production lie elsewhere, and sales and marketing take place in still another place. In this as well as other examples, contemporary commerce involves a complex interchange of hundreds or thousands of individuals, organizations, technologies, and processes across a variety of different continents.

But long supply chains and inadequate or nonexistent product evaluation before deployment, create a situation where widespread vulnerabilities exist in products and networks that can be exploited by others during design, production, delivery, and post-installation servicing. There are industry-wide risks associated with procurement, transportation, and management. Everything from raw materials and natural disasters to market forces, national laws, and political conflict can be problematic. Problems in one area can cascade elsewhere and magnify risks dramatically for the system as a whole.

In this paper, West discusses twelve ways to build trust in the Information and Communications Technology (ICT) global supply chain. With the assistance of a group of leading experts brought together at the Brookings Institution in February, 2013 plus follow-up interviews, he explores the operational threats and technological vulnerabilities that we face, and makes recommendations to identify best practices, standards, and third-party assessment for supply chain assurance.

West argues that vulnerabilities in the supply chain and product development, generally, facilitate a myriad of attack and exploitation techniques, such as unauthorized remote access after product deployment for many malicious activities, degradation of ICT networks, and damage to critical infrastructures. West suggests that developing agreed-upon standards, using independent evaluators, setting up systems for certification and accreditation, and having trusted delivery systems will build confidence in the global supply chain as well as the public and private sector networks that sustain them. These and other types of evaluations make information available to purchasers and therefore give them a firmer basis for product selection.

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Authors

Darrell M. West

Discussing the Global Investment in American Jobs Act of 2013

Martin Neil Baily — Thu, 18 Apr 2013 09:30:00 -0400

Introduction

I would like to thank Chairman Terry, Ranking Member Schakowsky and the members of the Committee for the opportunity to present my testimony today on the Global Investment in American Jobs Act. I have had the opportunity over the past twenty years or more to do research on issues of productivity, competitiveness and the impact of foreign investment, looking not only at the United States but also at Europe, Japan, Korea and many emerging markets.

The American economy today is improving but fragile. Real GDP growth is expected to be around 3 percent in the first quarter of this year but only about 1 percent in the second quarter and be well below 3 percent for the second half of the year because of the impact of payroll tax increases and the sequester. The number of jobs is increasing but too slowly. After flat-lining in the middle quarters of 2012, business investment picked up in the fourth quarter, but we need a lot more investment in order to create the jobs needed to raise living standards.

To a great extent, the performance of our economy over the next 10 years or so depends on the contributions here at home of U.S. workers and companies. The competitive position of this country in the global economy will play a vital role and I applaud the House for proposing a comprehensive review of how to make the U.S. economy a more attractive place to invest for foreign companies. In the years after World War II, it was American companies that went overseas, bringing with them technology and business expertise as well as capital. These companies helped spread prosperity to the rest of the world, a process that is still happening. But today successful, productive companies from around the world are investing in America, bringing jobs, capital and, in some cases, new technologies and business efficiencies. The auto company that exports the most outside North America is BMW. Toyota makes the bestselling cars in America in its factories here; and Siemens is helping fix the electric power grid.

The inflow of foreign direct investment slowed as a result of the Great Recession, not surprisingly, but there is tremendous potential to increase that flow now and in the future, bringing additional jobs and boosting the economic recovery. Making America a location that attracts good foreign companies is very important and, by the way, those same factors will also make it more attractive for U.S. multinational companies to locate more of their investment here at home.

The Pattern of Foreign Direct Investment

Figure 1 below shows the inflow of foreign direct investment to the United States and the outflow of direct investment by U.S. companies overseas. The figure shows that the magnitudes of the inflow and outflows are comparable, although the outflow has been larger than the inflow for all but one year since around 2001. There was a surge of foreign investment into the U.S. market at the time of the technology boom in the 1990s, which dropped sharply when that boom subsided. The level of foreign inflows has not reached its 2000 peak since then. Is it a problem that the outflows exceed the inflows? The U.S. economy attracts huge amounts of capital from around the world every year. The McKinsey Global Institute estimated that between 2000 and 2007, 85 percent of the international capital available in the world (in the form of total current account surpluses) came to the United States, largely in the form of purchases of financial assets. Almost certainly, the U.S. economy became too reliant on foreign capital at that time. The capital inflows were the counterpart to the large current account and trade deficits and the easy access to funds contributed to the housing boom and subsequent bust. Direct foreign investment inflows are different, however, in that they are stable and brings jobs and production. Bringing in more foreign direct investment, even while we rely less on foreign purchases of U.S. financial assets, would be a plus for the economy.

Figure 1: Foreign Direct Investment in the United States and U.S. Direst Investment Abroad, Annual Flows, 1990-2011 (in billions of dollars)

Source: U.S. Department of Commerce

Figure 2 below looks at direct investment inflows to China compared to the United States. Over the entire period from 1995 to the present, direct investment in the United States was far greater than the flow into China. Of course, China traditionally put up barriers to foreign investment and even today many companies report that it is hard place in which to invest and do business. In 2012, however, based on the first three quarters of data, direct foreign investment into China exceeded the flow into the United States. Is this a matter of concern? Yes and no. China’s economy is growing rapidly and will likely become larger than the U.S. economy in the future. It is not surprising that multinational companies want to access China’s labor pool and its market. It is also notable that the direct investment flowing into China is not coming primarily from U.S. multinationals. Some American companies, like GM or Ford, have set up business in China, but most of the investment in China is from Taiwan, Korea and elsewhere, not from the U.S. On the other hand, the recent weakness in investment inflows in the past few years, visible in Figures 1 and 2, may be indicative of the lack of relative attractiveness of the United States to foreign investors.

Figure 2: Foreign Direct Investment into China and the United States

Source: World Bank, OECD. * Figures for 2012 obtained by annualizing the first three quarters.

Figures 3 below shows information about the stock of foreign direct investment located in the United States by industry and, below that, by country. Two points are notable. First, a disproportionate fraction of foreign investment coming to the United States is in the manufacturing sector. This important sector makes up less than 10 percent of the economy today but a much larger share of foreign investment stock. Over the past twenty years or more there has been concern that the U.S. economy is not devoting enough of its investment to manufacturing, having an adverse impact on competitiveness and contributing to the large chronic trade deficit. It is notable that foreign-based multinationals have shown greater willingness to invest in manufacturing operations and are adding to competitiveness. Second, by far the largest proportion of the foreign investment (71 percent) comes from European countries, with the next largest coming from Asia, notably Japan, but also Korea. The UK, Netherlands, Switzerland, Germany and France are the largest investors from Europe. This pattern of investment coming from Europe and Asia is not perhaps surprising since these economies are among the most developed with global leading companies, strong technologies and efficient business practices. These countries are also strong allies of the United States. The economic problems in Europe and Japan help explain the decline in the inflow of investment. When foreign companies are stressed at home they are less willing to invest here.

Figures 3: The Cumulative Stock of Foreign Investment in the United States by Industry and by Geography.

The Pros of Foreign Investment in the United States

1. Foreign companies can bring new technologies and efficient operations. Overall, the U.S. economy remains the global leader in both productivity and technology, but there are large variations by firm and by industry. We cannot expect to be the country that is the source of every innovation or every good business idea, and we are not. Research that compares productivity across countries has found that the biggest benefits of innovation come from its dissemination through the economy. American innovations in computers and semiconductors now contribute to economic growth around the world. German innovations in auto parts are used by the American auto industry. Foreign direct investment is crucial to distributing innovations and allows the U.S. economy to benefit from the global pool of new ideas.

2. Foreign direct investment provides capital for jobs in America. American corporations are on average very profitable, partly because they are well-run compared to companies world-wide, but also because they set high target rates of return before they are willing to invest. U.S. corporate strategy has emphasized being lean in the use of capital and avoiding making large, risky investments unless the expected returns are high. Without making any judgment on this practice, it means that there are opportunities in America for investment and job creation where projected returns are pretty good but where U.S.-based companies are reluctant to commit the necessary capital. Foreign companies based in Asia now own and operate much of the steel capacity based in the United States. As I will discuss shortly, the energy boom is attracting many foreign companies to build highly capital intensive new plants making petrochemicals in America. Infrastructure is an area where foreign investment could make a contribution to U.S. economic performance.

3. Foreign direct investment increases the competitive intensity of the U.S. economy. A basic tenet of economics since Adam Smith has been that competition benefits consumers. Markets with a dominant single producer or with an oligopoly of companies that reach tacit agreements to limit price competition will result in prices that are too high. More recently, economic research has stressed the dynamic benefits of competition in putting pressure on all market participants to cut costs and develop new and innovative products. Global companies that have established their positions in their own domestic markets can provide important competitive pressure to American industries where the domestic companies have become complacent.

The Cons of Foreign Direct Investment in the United States

1. Foreign investment can displace jobs and production in domestic companies. There is little question that the arrival of Asian and European auto companies producing in North America has resulted in a decrease in the number of jobs in the traditional American companies in the industry. Many of those jobs were unionized. Many Americans look back to a time in history when domestic companies dominated the economy and foreign competition was minor. Much of the apprehension is about imports and the trade deficit, but the changing identity of companies producing in the U.S. market is also a concern.

2. Foreign takeovers of American companies can be motivated by a desire to capture American technology. The fight among countries and companies to take advantage of technology is older than the industrial revolution. Alexander Hamilton orchestrated an effort to bring European technology to post-revolutionary America, while today China is doing its utmost to push its economy into the twenty-first century by grabbing as much technology from around the world as it can. One reason that American companies have been reluctant to invest more in China is because of concerns about violations of property rights. The U.S. government, of course, already has in place safeguards to prevent the capture of vital technologies by foreign entities and all foreign takeovers have to be vetted. The hard question is whether or not this process is striking the correct balance between protecting vital American interests and excluding foreign investors who could contribute positively to our economy.

3. In the event of an economic downturn, foreign-owned companies may protect home country workers and operations at the expense of their U.S. operations. Some multinational companies produce the same, or very similar, products in different locations around the world. These companies have a choice about how to allocate production in situations where they have overcapacity. If workers in their home country have reached agreements to protect their own jobs, the company may decide to keep full employment at home and cut production elsewhere. This concern is a legitimate one, but should not be overstated. Shifting production is costly and most foreign-owned companies with significant operations in the United States are concerned about the long term sustainability of their U.S. operations.

Balancing the Arguments

Although there are real concerns about foreign direct investment, the benefits greatly outweigh the costs. On balance, international trade is beneficial to Americans but the case for expanding trade is a hard one to make to skeptical voters. By contrast, the case for encouraging foreign investment is much easier to make. New green field investments clearly create jobs and benefit local communities. Takeovers of domestic companies by foreign companies are also generally beneficial, providing an infusion of capital and new management that can prevent established companies from failing and allow them to make investments.

How to Make the United States More Competitive

1. Get the macroeconomics right. Chronic U.S. trade deficits since the early 1980s have been sustained by an equal shortfall of domestic saving over investment. The best policies in the world will not restore American competitiveness in the long run as long as there is gap between national saving and investment. Reducing investment is not the right approach. Alternatively, national saving will need to increase once the recovery has taken a firmer hold. There are few if any tools by which government can influence private saving; thus, the increment to national saving will be achieved most effectively by reducing or eliminating the federal budget deficit over the next ten years. It is clear from the past that insufficient levels of national saving drove up the exchange rate, priced U.S. exports out of foreign markets and swelled the volume of imports.

2. Work for trade agreements. Balance in international trade needs to be a more focused objective of U.S. foreign policy. In past negotiations, the United States traded access to U.S. markets for foreign political support or access of U.S. financial firms to foreign markets, to the detriment of admittance for U.S. exports. A major German auto company is siting an assembly plant in Mexico because that country’s free trade agreements will allow it to use the plant as an export platform to Latin America and elsewhere. In addition to obtaining more trade agreements, there is also a need to develop greater international consensus on appropriate guidance for exchange rates.[1]

3. Improve the Corporate Income Tax. The mobility of capital, technology, and production facilities makes the national taxation of production as opposed to consumption increasing impractical. The marginal rate of corporate taxation in the United States is too high, particularly in relationship to the tax rates of other countries, inducing firms to locate overseas. The United States needs to follow the lead of other countries in shifting toward greater reliance on consumption-based taxation.[2]

4. Improve skills. Both American companies and foreign companies investing in the United States say that the skills of the U.S. workforce are comparatively weak. It lags behind many other countries in developing effective vocational education and job training programs, and the educational attainment of young workers is falling behind that of countries like Canada, Japan and Korea. Furthermore, U.S. 15-year-olds rank 25th in math and 17th in science in PISA scores among OECD nations. Germany is an example of a country that has used a high-quality vocational education system to improve the skills of its workforce. While there is no space here to elaborate on what changes should be made, greater attention needs to be paid to reversing the deterioration in workforce skills.

5. Repair and improve infrastructure. Similarly, the country suffers from a deteriorating physical infrastructure that raises the costs of production. The extraordinarily low level of current interest rates suggests that now is a good time to borrow funds to finance the repair and modernization of those systems. The adoption of such a program is constrained by a concern that it is simply an excuse for added deficit spending. That issue can be addressed within a capital budget framework in which each investment is financed with amortized debt for which a portion comes due in each year and is repaid with an explicit tax or dedicated revenue source over the duration of the bond issue. Such financing, if matched by a credible dedicated revenue source, would not add to concerns about an unmanageable level of general fund debt.

6.Take advantage of the energy boom. U.S. natural gas resources have nearly doubled since 2003, driven by the development of shale deposits nationwide. The United States has the second largest recoverable shale gas reserves in the world at 24 tcm (trillion cubic meters), after China’s reserves of 36 tcm. However, the United States is substantially ahead of the rest of the world in having started to tap these reserves at increasing scale. By 2020, shale gas is expected to add 10-15 billion cubic feet per day over current levels and grow to over 25 percent of total gas production. Along with shale gas, light tight oil (LTO) production has also developed rapidly. Current LTO production estimates for 2020 are between 5 and 10 million incremental barrels per day, although even higher numbers are possible. There are environmental dangers involved in this new wave of energy production but with the right regulation it should be possible to develop the oil and gas fields responsibly. It is expected that natural gas will be priced in the United States at $4-6 per million BTUs, well below the $12 price range in Europe and $16 in Asia. Oil prices are set globally, but it is likely that U.S. domestic prices will carry a differential below imported oil and the greater security of domestic supply will be an attraction for users. Cheap natural gas will also keep electricity prices down.

The energy revolution is already making America more competitive. Global companies are investing in new plants here to take advantage of the low price of energy and natural gas as a feedstock. For example, in 2012, Shintech Louisiana LLC, a Japanese company, invested an additional $1.3 billion in a PVC plant in Louisiana.[3] Methanex Corp. (Canada) invested $550 million in the United States in summer 2012 to construct a methanol production facility in Louisiana. This was the corporation’s first U.S.-based facility in over a decade.[4] Sasol Ltd. (South Africa) agreed in December 2012 to build an “integrated gas-to-liquids (GTL) and ethane cracker complex” in Louisiana. This project alone is estimated to create 1,253 jobs directly, “with salaries averaging nearly $88,000, plus benefits,” and thousands of additional indirect job gains. Total investment is estimated to be between $16 billion and $21 billion, with ultimate value approximated at $46 billion by a Louisiana economic impact study.[5] Foreign direct investment is thus making an important contribution towards exploiting new energy sources for the benefit of the economy.[6]

Conclusion

The Obama Administration has been working to make it easier for foreign companies to build new plants and create jobs here. An interagency effort is underway to create one-stop-shopping for companies and I applaud the effort by this subcommittee to seek out ways to make America a more attractive location for foreign companies to invest. More needs to be done to coordinate federal agencies and states and localities in terms of permitting and meeting environmental requirements. Companies also report that the process of obtaining permits is much too slow and too complex.

On balance, foreign direct investment coming to the U.S. economy has been beneficial, generating jobs, making-capital intensive investments and diffusing technology developed in other countries to our economy. There are legitimate concerns about protecting our technology and workers, but these challenges can be met. America is already an attractive place for foreign companies to invest and policymakers should make sure our competitiveness is sustained and enhanced.

[1] A greater reliance on market-determined exchange rates would be preferable in most cases, but countries differ widely in their stages of development and ability to rely on such mechanisms.

[2] The United States also attempts to tax the foreign income of U.S. companies, albeit with a deferral. Most other countries use a territorial-based system in which income is taxed only in the country in which it is earned.

[3] Mark Crawford, “Hot United States FDI Sectors: Advanced Manufacturing,” Area Development Online, http://www.areadevelopment.com/LocationU.S.A/LocationU.S.A2012/U.S.-FDI-sectors-advanced-manufacturing-262000987.shtml.

[4] “At the Epicenter of the U.S. Industrial Rebirth,” Louisiana Economic Development,” http://www.louisianaeconomicdevelopment.com/led-news/articles/at-the-epicenter-of-the-us-industrial-rebirth.aspx.

[5] “Sasol Announces Largest Manufacturing Investment In Louisiana History, Creating More Than 7,000 Direct And Indirect Jobs,” Louisiana Economic Development, December 3, 2012, http://www.louisianaeconomicdevelopment.com/led-news/news-releases/sasol-announces-largest-manufacturing-investment-in-louisiana-history,-creating-more-than-7,000-direct-and-indirect-jobs.aspx?c=News%20Releases&id=39.

[6] There are exaggerated claims being made about the extent to which the energy boom will improve U.S. competitiveness and create manufacturing jobs. The discovery of new ways to extract natural gas and oil may make the U.S. self-sufficient in energy and reduce the trade deficit, but it will also increase the value of the U.S. dollar, partially or fully offsetting the cost advantage of cheap energy. This is an example of the “Dutch Disease” that afflicted Dutch manufacturing some years ago when large gas reserves were discovered.

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Testimony Prepared for the Hearing: Discussion of the Global Investment in American Jobs Act, 2013

Authors

Martin Neil Baily

Publication: United States House of Representatives, Subcommittee on Commerce, Manufacturing, and Trade, Committee on Energy and Commerce

Image Source: © Paul Vernon / Reuters

Getting to Scale : How to Bring Development Solutions to Millions of Poor People

Laurence Chandy, Akio Hosono, Homi Kharas and Johannes F. Linn, eds. — Mon, 15 Apr 2013 00:00:00 -0400

Brookings Institution Press 2013 240pp.

The global development community is teeming with different ideas and interventions to improve the lives of the world’s poorest people. Whether these succeed in having a transformative impact depends not just on their individual brilliance but on whether they can be brought to a scale where they reach millions of poor people.

Getting to Scale explores what it takes to expand the reach of development solutions beyond an individual village or pilot program, but to poor people everywhere. Each of the essays in this book documents one or more contemporary case studies, which together provide a body of evidence on how scale can be pursued. It suggests that the challenge of scaling up can be divided into two: financing interventions at scale, and managing delivery to large numbers of beneficiaries. Neither governments, donors, charities, nor corporations are usually capable of overcoming these twin challenges alone, indicating that partnerships are key to success.

Scaling up is mission critical if extreme poverty is to be vanquished in our lifetime. Getting to Scale provides an invaluable resource for development practitioners, analysts, and students on a topic that remains largely unexplored and poorly understood.

ABOUT THE EDITORS

Laurence Chandy

Akio Hosono

Akio Hosono is the director of the Research Institute of the Japanese International Cooperation Agency.

Homi Kharas

Johannes F. Linn

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{9ABF977A-E4A6-41C8-B030-0FD655E07DBF}, 978-0-8157-2419-3, $29.95 Order
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The Obama-Peña Nieto Meeting: Critical Issues in the Upcoming U.S.-Mexico Talks

Thu, 11 Apr 2013 16:00:00 -0400

Event Information

April 11, 2013
4:00 PM - 5:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

Next month, President Barack Obama will meet with Mexico’s newly elected President Enrique Peña Nieto. While the two leaders met briefly last November, this meeting—Obama’s first in Latin America since his own re-election—will address major issues of concern to both nations including trade and investment, energy, border security and infrastructure, illicit drug trafficking and public safety. With significant political and economic consequences at stake, the Obama-Peña Nieto meeting will take place as both leaders face complex and contentious domestic challenges that have a direct impact on the bilateral relationship.

On April 11, the Latin America Initiative at Brookings hosted a discussion on the critical issues that will dominate the Obama- Peña Nieto meeting. Arturo Sarukhan, Brookings distinguished affiliate and former ambassador of Mexico to the United States, provided opening remarks on the larger political context for the bilateral meeting. A panel discussion followed featuring contributors to the forthcoming book, The End of Nostalgia: Mexico Confronts the Challenges of Global Competition (Brookings, May 2013). Brookings Nonresident Senior Fellow Diana Villiers Negroponte moderated the discussion.

Power Struggle: Implications of the Changing Global Gas Market for the Middle East and Asia

Mon, 01 Apr 2013 00:00:00 -0400

Event Information

April 1-2, 2013

Four Seasons Hotel, Doha, Qatar

Second Annual Brookings Doha Energy Forum

The Brookings Doha Center (BDC) and Brookings Energy Security Initiative (ESI) convened the second annual Brookings Doha Energy Forum in Doha, Qatar. This year’s forum, from April 1-2, explored the theme “Power Struggle: Implications of the Changing Global Gas Market for the Middle East and Asia.”

The private, closed-door conference was the second in a series that examines the relationship between the Middle East and the emerging global powers of the 21st century. This year’s forum shed light on three principal themes:

The increasing prominence of Middle East-Asia energy relations;
The implications of political and economic change in the region for energy production and consumption; and
The prospects for investment in the region’s energy infrastructure. The Forum addressed these questions with a primary focus on natural gas.

The 2013 Forum’s Keynote Address was given by H.E. Sheikh Hamad bin Jassim bin Jabor Al-Thani, prime minister and minister of foreign affairs of the State of Qatar. Following the keynote address, opening remarks were given by H.E. Dr. Mohammed bin Saleh Al Sadah, Qatari minister of energy and industry; H.E. Eng. Ali bin Ibrahim Al Naimi, Saudi Arabian minister of petroleum and mineral resources; and Andrew Swiger, senior vice president of Exxon Mobil Corporation.

The Brookings Doha Energy Forum was attended by decision-makers and experts from major Gulf producers, the United States, Europe, and key Asian powers, including China, India, Japan, and South Korea. Attendees include a range of high-ranking officials, experts, leaders of national oil companies, and representatives of the corporate sector.

“The world is facing structural shifts in international gas flows at the same time it is witnessing rapid and unprecedented change in the Middle East,” said Salman Shaikh, director of the Brookings Doha Center. “The 2013 Forum will bring together senior figures in the energy industry—including officials, executives, and analysts—to discuss these changes from a constructive, multidimensional platform.”

"Global natural gas markets are at a critical juncture,” said Charles Ebinger, director of the Brookings Energy Security Initiative. “The shifting dynamics of gas supply and demand are rewriting the traditional energy producer-consumer relationships, a shift that has still unclear geopolitical implications. Through its 2013 Doha Energy Forum, Brookings is placing itself at the center of this critical issue."

The Brookings Doha Energy Forum is a product of the BDC-ESI Energy Partnership, which aims to address issues arising out of the nexus between the changing global energy landscape and the growing importance of local politics in the world. This collaboration links the expertise of the Energy Security Initiative with the Brookings Doha Center’s experience and scholarship on political transitions in the Gulf and broader Middle East.

Event Materials

Al Naimi Opening Remarks Doha Energy Forum

Participants

Panelists

Dakar Consensus: Equitable, Quality Learning for All

Allison Anderson and Rebecca Winthrop — Mon, 25 Mar 2013 13:37:00 -0400

More than 120 education stakeholders from civil society, youth, private sector, foundations, academics, governments and the United Nations met last week in Dakar, Senegal to review global education progress achieved since 2000, discuss the remaining challenges, and develop recommendations around an education goal for the post-2015 development framework.

Gordon Brown succinctly captured the spirit of the conference discussion in a blog based on a video message he delivered to the Dakar conference, writing that “universal learning is a goal of goals, or a super goal,” because without education we cannot unlock the other development goals, such as employment opportunity, gender equality, environmental care and good health. He concludes that “this is not just about education. It is about achieving the promise of globalization: that there is opportunity for all. Education should be reversing, not reinforcing, inequalities. Let us make sure that with stepping stone targets for education that focus not just on enrolment but on learning too, we can make the next 15 years even more successful for education than the last.”

In their deliberations, the delegates reviewed a wide range of existing proposals and inputs, including recommendations from the U.N.-led global thematic consultation on education, on how to address these challenges. Despite differences on a range of issues, a clear consensus on four priorities emerged during the discussion. The organizers summarized the deliberations as a call for: “equitable, quality life-long learning for all.” The four areas of consensus include:

Equity: A post-2015 education goal must include a clear focus on reaching the marginalized, and in particular populations affected by conflict and disaster were frequently mentioned, as were people living in poverty, ethnic minorities, rural girls and those living with disabilities.
Quality Learning: The goal must also include a strong emphasis on improving the quality of learning outcomes and experiences, something which the existing Millennium Development Goals (MDGs) have failed to do.
Expanding Access to More than Just Primary Education: The goal must include a continuum of learning opportunities from early childhood on.
Cross-Cutting Nature of Education: The post-2015 development agenda must include education as a cross-cutting issue that supports other development goals. One way for this to be operationalized is to produce targets that integrate education is into other development sectors such as health and the environment. The idea of conceiving of education as helping building resilience across a range of other issues was introduced in this light.

A similar consensus around these themes of equity, learning and the need for a learning continuum from early childhood through adolescence was cited in the summary report of the global thematic consultation on education: Education in the Post-2015 Development Agenda. This report, which is still in draft form, presents the main themes from the education consultations that have taken place since late 2012, including the global online forums focused on equitable access to education, quality of learning, global citizenship, jobs and skills, and governance and financing of education. The report highlights two priority themes, or imperatives, for the post-2015 development goals on which there is consensus within the global education community: equitable access and equitable quality education, and specifically learning, within a rights-based approach that focuses on tackling inequalities.

Priority One: Equitable Access

As the report from the global thematic consultation on education notes, equitable access to all levels of education remains a key gap in the education agenda. The education Millennium Development Goal focuses on universal primary enrollment; however, there is abundant evidence that education begins at birth and continues in post-primary opportunities, whether through secondary schooling or nonformal technical and vocational education. Thus, the global education report asserts the need for a “foundational commitment” in the post-2015 framework to a goal focused on equitable access across the learning continuum. Within the report, the learning continuum is conceived of as universal coverage for early childhood care and education, from birth to school entry (0 to 8 years), through to basic education, or nine years of schooling that includes lower secondary education.

Priority Two: Equitable Quality Education, Specifically Learning

The global education report states that good quality equitable education and learning emerge “at the heart of the post-2015 education agenda” and that there is an emerging consensus on an education goal with learning as a proxy measure of quality. The report notes that this could be couched in broad terms such as ensuring that all children are prepared for school entry and “leave school with measurable learning standards and the skills, knowledge and values to become responsive, active and productive members of society and the world.”

This is in line with the recent vision laid out by the Learning Metrics Task Force (LMTF)— a global effort engaging over 800 people, the majority from the global south, across 70 countries— in its report, Toward Universal Learning: What Every Child Should Learn. The report presents a broad, holistic framework for learning beyond literacy and numeracy. While being able to read and write are critical for enabling all girls and boys to access a broader education, these core skills are far from sufficient. In addition to reading and numeracy, children need to learn relevant transferable skills such critical thinking, problem solving, civic values, mental health and well-being, and 21st century skills such as communication and technological literacy, to prepare them for the workforce and to be active, productive members of their communities.

The global education report and discussion in Dakar also highlighted the importance of having equity as a cross-cutting aspect underpinning these two priority areas of equitable access and equitable learning, with a strong focus on marginalized and vulnerable groups. In particular, gender equality and the needs of children and youth affected by emergencies have been singled out.

The Next Challenge: Targets and Metrics

As noted in the global report and discussed at the Dakar conference, now that there is broad agreement on the themes of an education goal, the challenge will become setting targets and metrics. Across all discussions, there is a debate about balancing global and country-level goals and metrics. It is clear that global goals must reflect national priorities and that more attention must be paid to neglected contexts such as conflict and post-conflict contexts, as well as to those countries with the least promising education metrics. However, one of the lessons from the Millennium Development Goals is that clear internationally comparable measures of progress have acted as a significant spur to global progress. Striking this balance between such goals and allowing for national or regional-level discretion is one critical question, not just for education in the post-2015 framework, but for all policy areas.

The Learning Metrics Task Force (LMTF) met last month to discuss these challenges and identified a small number of measures for tracking at the global level that should feed into the discussion of targets and metrics moving forward. The task force emphasized the need to operationalize these while simultaneously helping to build measurement capacity at the national level. The six areas for measurement that are important to enable children and youth to constructively participate in a globalized world are:

Access to and completion of learning opportunities through enrollment and completion indicators.
Early childhood experiences that result in readiness for primary school through a school readiness indicator.
The ability to read and understand a variety of texts through a learning to read indicator and reading to learn indicator at the primary and secondary level.
The ability to use numbers and apply this knowledge to real-life situations through numeracy indicators at the primary and secondary level.
An adaptable, flexible skill set to meet the demands of the 21st century through an indicator still to be developed (e.g. collaborative problem solving).
Exposure to a breadth of learning opportunities across all seven domains (physical well-being, social and emotional, culture and the arts, literacy and communication, learning approaches and cognition, numeracy and mathematics, science and technology) through an indicator still to be developed.

Information for these areas of measurement would be collected using internationally comparable assessments in some cases, such as reading comprehension and mathematics, and using alternative assessments for others. Data collected against these domains of measurement should describe average achievement levels in addition to progress over time and equity across groups (girls/boys, urban/rural and wealth levels, at a minimum). The work of the LMTF on this front will continue to inform the discussion on targets and metrics within the education community and an open consultation process will begin in mid-April.

The Dakar meeting discussions and outcomes will result in a synthesis report that combines all of the consultation outcomes to date, which will eventually inform the deliberations of the secretary-general’s High Level Panel (HLP) this spring and the secretary-general’s report to the U.N. General Assembly this fall. An explicit education goal focused on equitable access to learning opportunities should resonate well with the HLP as it addresses issues that are integral to ensuring sustainable development, equity and inclusive growth in the post-2015 development agenda. It is also a goal that is relevant to high, medium and low-income countries alike. The focus on equity, learning and a learning continuum from early childhood through to adolescence will also bind together the education discussion within the process to develop sustainable development goals with the post-2015 development framework. For the education community, this prioritization of equitable, quality life-long learning within the post-2015 development agenda will help bring a more coherent approach to the post-2015 development framework and the Education for All goals by addressing the most notable gaps and weaknesses between them.

Authors

Image Source: © Finbarr O'Reilly / Reuters

U.S.-China Study Group on G-20 Reform

Thu, 07 Mar 2013 14:34:00 -0500

The China Institutes of Contemporary International Relations, the Center for American Progress, and the Stanley Foundation formed a study group in late 2011 to evaluate the role of the G-20 in the U.S.-China bilateral relationship and the influence of the relationship on the G-20 and to propose recommendations that could improve the efficacy of this important body. The Chinese and American experts listed below held two conferences over the course of 2012, in Santa Monica, in February and in Beijing in October. At the end of these meetings, participants in the group agreed to 20 recommendations.

Read the U.S.-China Study Group's recommendations » (PDF)

Participants in the G-20 Study Group

Tim Adams, Managing Director, The Lindsey Group and former Sherpa and Undersecretary of the Treasury under President George W. Bush

Sabina Dewan, Director of Globalization and International Development, Center for American Progress

DU Yanjun, Director of the Department of International Exchanges, China Institutes of Contemporary International Relations (CICIR)

Elizabeth Economy, C.V. Starr Senior Fellow and Director for Asia Studies, Council on Foreign Relations

Matthew Goodman, Simon Chair in Political Economy, Center for Strategic and International Studies and former Director for International Economics in the Obama White House

Nina Hachigian, Senior Fellow, Center for American Progress

Adam Hersh, Economist, Center for American Progress

HUANG Ying, Associate Professor, the CICIR Institute of World Economic Studies

Bruce Jones, Senior Fellow and Director of the Managing Global Order (MGO) project at the Brookings Institution and Director of the Center on International Cooperation at New York University

LI Zheng, Assistant Professor, the CICIR Institute of American Studies

LIN Hongyu, Director of the Department of International Politics at the China University of International Relations

LIU Bo, Deputy Director of the Department of International Exchanges, CICIR

Stewart Patrick, Senior Fellow and Director, International Institutions and Global Governance Program, Council on Foreign Relations

Keith Porter, Director of Policy and Outreach, the Stanley Foundation

QIAN Liwei, Associate Professor, the CICIR Institute of American Studies

David Shorr, Program Officer, the Stanley Foundation

Randy Schriver, Armitage International

WANG Wenfeng, Deputy Director of the CICIR Institute of American Studies

YUAN Peng, Assistant President, CICIR and Director of the CICIR Institute of American Studies

ZHAI Kun, Director of the CICIR Institute of World Political Studies

ZHANG Wenzong, Assistant Professor, the CICIR Institute of American Studies

ZHU Feng, Deputy Director, Center for International & Strategic Studies, Peking University

ZHU Liqun, Vice President, China Foreign Affairs University

Publication: Center for American Progress, China Institutes of Contemporary International Relations and The Stanley Foundation

Image Source: © Kevin Lamarque / Reuters

The Thistle and the Drone : How America’s War on Terror Became a Global War on Tribal Islam

Akbar Ahmed — Tue, 05 Mar 2013 00:00:00 -0500

Brookings Institution Press 2013 424pp.

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On March 14, Brookings hosted the launch of The Thistle and the Drone with a presentation by author and Brookings Nonresident Senior Fellow Akbar Ahmed, and a panel discussion with Sally Quinn, editor-in-chief of the Washington Post’s "On Faith," and former Pakistani minister Mowahid Shah. See video clips from the launch event»
You can watch an introductory video to the March 14 launch featuring commentary by Ambassador Anthony Quainton, Diplomat in Residence at American University, and Khalid Aziz, Former Chief Secretary North-West Frontier Province, Pakistan. You can also read coverage of the event in The Nation. Watch the video here »
For more from Akbar Ahmed on The Thistle and the Drone, read his post on Brookings Up Front Blog.

The United States declared war on terrorism in the wake of the 9/11 attacks. More than ten years later, the results are decidedly mixed. In The Thistle and the Drone, world-renowned author, diplomat, and scholar Akbar Ahmed reveals a tremendously important yet largely unrecognized adverse effect of these campaigns: they actually have exacerbated the already-broken relationship between central governments and the tribal societies on their periphery.

As this groundbreaking study demonstrates, it is the conflict between the center and the periphery and the involvement of the United States that has fueled the war on terror. No one is immune to this violence—neither school children nor congregations in their houses of worship. Battered by military or drone strikes one day and suicide bombers the next, people on the periphery say, “Every day is like 9/11 for us.”

In the third volume of his trilogy that includes Journey into Islam (2007) and Journey into America (2010), Ahmed draws on forty current case studies for this analysis. The United States, dominated by ideas of a “clash of civilizations” and “security,” has become directly or indirectly involved with these societies. Although al Qaeda has been decimated, the U.S. is drifting into a global war against tribal societies on the periphery of nations. Beginning with Waziristan in Pakistan and expanding to similar tribal societies in Central Asia, the Middle East, North Africa, and elsewhere, he offers an alternative and unprecedented paradigm for winning the war on terror.

WATCH: Professor Ahmed traces the history of tribal Pakistan »
Listen to Professor Ahmed discuss The Thistle and the Drone with Steve Inskeep on NPR »
Listen to an interview with Maureen Fielder and Professor Ahmed, on Interfaith Voices »

Praise for The Thistle and the Drone:
“In the end, I was close to tears. Lagrimas caudales or “flowing tears,” to use the apposite phrase of Blas de Otero, seems to be what the book’s conclusions lead to. Thus lagrimas for the tribes, for the soldiers, and for the United States. Professor Ahmed gives us the only way out of this dangerous dilemma, a way to coexist with the thistle without the drone.”—Colonel Lawrence Wilkerson, former chief of staff to Secretary of State Colin Powell and Professor of Government and Public Policy at the College of William and Mary

"The Thistle and the Drone is a must read. It unveils what few understand and demythologizes the war on terror for what it is; a failed, overly simplified response to the highly complex role that tribalism plays in America's war on terror."—The Right Reverend John Bryson Chane D.D., The 8th Episcopal Bishop of Washington DC, Senior Advisor, Interfaith Relations, Washington National Cathedral

"Professor Ahmed combines a clear professional anthropological expertise with an equally clear, critical and humane moral perspective. This is an unusual and groundbreaking book, which should be compulsory reading for Western governments."—Dr. Rowan Williams, former Archbishop of Canterbury and Master of Magdalene College, University of Cambridge, UK

“Yet another brilliantly written masterpiece—a must-read for all, particularly Muslims who have an interest in understanding the roots of the conflicts that go back in history but have become accentuated since 9/11. Only Akbar Ahmed can give us these insights into the post-modern era we live in and the conflicts that bedevil our times through this highly readable and deeply engaging narrative."—Jafer Qureshi, Co-convenor of the UK Action Committee on Islamic Affairs

"In this groundbreaking and startling book, Akbar Ahmed bravely uncovers an inconvenient truth, a fearful reality which endangers us all and in which we are all implicated. It should be required reading for those working in the media, policy-making and education—and, indeed, for anybody who wishes to understand our tragically polarised world."—Karen Armstrong, author of The Case for God

Read about The Thistle and the Drone at The Washington Post »

Read about The Thistle and the Drone at Time »

ABOUT THE AUTHOR

Akbar Ahmed

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Policy Understanding of Economic Globalization

Diana Mutz and Edward D. Mansfield — Thu, 31 Jan 2013 00:00:00 -0500

The percentage of Americans who think it would be best for the United States to stay out of world affairs is at an all-time high since World War II, write Diana Mutz and Edward Mansfield. This isolationist trend in public opinion is happening at a time when few things are more inevitable than the rising tide of economic globalization.

In this paper, these scholars explore the factors driving mass attitudes toward two key features of globalization, international trade and offshore outsourcing. That the U.S. public is so ambivalent about globalization at the same time that the health of the U.S. economy remains heavily dependent on it makes it all the more urgent that the public and political leaders share an understanding of what is at stake, these scholars argue. Unfortunately, Mutz and Mansfield observe, there is a huge chasm between how the American public thinks about these issues compared to how social scientists and political leaders do so. The 2012 election may have only exacerbated this problem.

Based on a nationally representative survey that Mutz and Mansfield conducted immediately prior to the election, mass opinion is largely hostile to globalization, and the public consistently perceives its political leaders to be significantly more supportive of global economic involvement than they are themselves. Both Barack Obama and Mitt Romney were viewed by voters as more supportive of trade and outsourcing than the American public at large. Both candidates also considered China to be more of an economic opportunity, whereas the public viewed China as more of an economic threat. In this paper, the authors identify some major misconceptions about the sources of these attitudes, misconceptions that may serve as impediments to smoothing a path toward economic globalization.

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Policy Understanding of Economic Globalization

Authors

Diana Mutz
Edward D. Mansfield

Conflicts in the U.S.-China Economic Relationship: Opposite Sides of the Same Coin?

Barry P. Bosworth — Thu, 06 Dec 2012 17:47:00 -0500

ABSTRACT

In recent years, discussions between the governments of China and the United States have centered on each country’s external imbalances, large trade surpluses for China and deficits for the United States, and the need for structural reforms to achieve more sustainable patterns of growth in future years. This paper argues that reductions in external imbalances suggest that some restructuring has occurred. However, a more detailed examination of economic developments within each country offers less basis for optimism. China has experienced a large appreciation of its real exchange rate and an external surplus less than half that of the years preceding the global recession. However, the domestic counterpart has been even-higher rates of investment as opposed to lower rates of saving and a more sustainable growth of public and private consumption. For the United States, a reduction in the external deficit has been associated with an extreme contraction of domestic investment rather than increased saving. It is noteworthy that the economic trade between the two countries has become even more unbalanced than in the years before the recession, and the bilateral deficit now accounts for two-thirds of the U.S. global current account deficit.

The concluding section argues that further reduction in the trade deficit through the expansion of U.S. exporting capabilities is critical to its future performance. The section discusses policy changes that would slow the process of shifting production facilities out of the United States and promote improved export competitiveness. Those measures include further devaluation of the dollar, reform of corporate taxation, and increased investments in education and physical infrastructure.

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Conflicts in the U.S.-China Economic Relationship: Opposite Sides of the Same Coin?

Authors

Barry P. Bosworth

Image Source: © Carlos Barria / Reuters

Global MetroMonitor 2012: Slowdown, Recovery, and Interdependence

Emilia Istrate and Carey Anne Nadeau — Fri, 30 Nov 2012 00:00:00 -0500

While the global economic recovery slowed in 2012, the world’s largest metropolitan economies continued to have very different growth experiences. Disparities loom both across major world regions and within them, reflecting differences in metro industrial structure, national growth rates, and metro starting points.

An analysis of GDP per capita and employment changes from 2011 to 2012 for the largest 300 metropolitan economies worldwide, which account for nearly one-half (48 percent) of global output but contain only 19 percent of world population, shows that:

Three-quarters of the fastest-growing metropolitan economies in 2012 were located in developing Asia, Latin America, and the Middle East and Africa. By contrast, almost 90 percent of the slowest-growing metro economies were in Western Europe and North America. These recent trends reflect the accelerating shift of economic growth from developed metro areas in the global West towards developing metropolitan areas in the global South and East.
Compared to their countries, more than half of metro areas outperformed on employment growth in 2012, but only 40 percent achieved faster GDP per capita growth. Fifty-six (56) metro areas were pockets of growth in their countries, with both GDP per capita and employment expanding at a faster pace than national averages.
Almost three-quarters of the 300 metro areas had higher levels of employment and/or GDP per capita in 2012 than in 2007. Most metro areas in the developing Asia- Pacific and Latin America regions suffered no recession in the last five years or fully recovered to pre-recession levels, while only five North American metro areas managed to recover in both employment and GDP per capita. About 46 percent of metro areas, mostly in North America and Asia-Pacific, achieved higher employment and/or GDP per capita growth rates in 2011-12 than before the worldwide downturn.
Growth rates of both GDP per capita and employment slowed between 2011 and 2012 compared to the previous year for half of the 300 metro areas. Only in developed Asia- Pacific metro areas did combined GDP per capita growth accelerate last year, and among developed economies only North American metro areas achieved faster aggregate job growth in 2012 than in 2011.
Both national and local factors influence metropolitan economic growth. The previous year’s metro GDP per capita, the previous year’s national GDP per capita growth, and industry performance most affect annual changes in metro GDP per capita growth in the short-term. Over the long run (2000 to 2010), factors including national GDP per capita growth, initial metro GDP per capita, metro industry specialization, and metro human capital stock influence changes in a metro area’s standard of living.

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Authors

Emilia Istrate
Carey Anne Nadeau

Image Source: © Aly Song / Reuters

The Metropolitan Future of Brazil and the United States

Bruce Katz and Julie Wagner — Fri, 30 Nov 2012 09:33:00 -0500

Editor’s Note: During the Global Cities Initiative’s international forum in São Paulo, Bruce Katz delivered remarks on metropolitan areas and their potential to power national economies worldwide. The remarks were written by Katz and Julie Wagner.

The Metropolitan Future of Brazil and the United States
(This presentation is also available in Portuguese)

Good morning everyone. It is a pleasure to be back in Sao Paulo with JP Morgan Chase, our partner in the Global Cities Initiative. I am grateful for their support and leadership.

I first want to thank Governor Alckmin and Mayor-elect Haddad for their participation today and we fully welcome the opportunity to work with both of them and the city and state in the coming months and years.

This has been an extraordinary week for our delegation of mayors and business, civic, and university leaders from 10 major American cities and metropolitan areas.

We have seen firsthand the proud history and infectious energy and vibrancy of this great city and macro-metropolis. We are grateful to Luiz Felipe D’Avila and the Centre for Public Leadership for co-sponsoring this forum today. We also owe a debt to others who have hosted and guided us this week—the State of Sao Paulo, particularly the State Secretariat for Metropolitan Development, Insper, the Commercial Association of Santos and the Port of Santos and the Brazil-U.S. Business Council, and the U.S. Embassy and Ambassador Shannon.

As Aod said at the outset, São Paulo is the first stop outside the United States in our five year Global Cities Initiative. That is a deliberate choice. The relationship between the United States and Brazil is a critical one. Despite barriers, the economic and social ties between our two countries are strong and growing stronger. Trade is booming. Investment is up. Tourism and business travel have never been higher. And the recent state visits by presidents Obama and Rousseff send a clear signal that this is a partnership of the highest order.

Yet there is hard work to do in both our countries. The U.S. and Brazil are undergoing major economic transitions. By global standards, both of us under-perform on exports, far trailing other countries. The U.S. is shifting slowly back towards a more productive, sustainable economy after our worst downturn in 80 years; Brazil is moving forward towards a more open, outward looking economy.

Against this complex backdrop, our delegation comes bearing a simple proposition. The answers to national challenges lie, in great part, below the national level.

We live in a century where cities and metropolitan areas are driving national economies and the global economy. The U.S. and Brazil have 84 and 85 percent of our respective populations living in our cities and metropolitan areas … and these communities generate 91 percent of the GDP in the U.S. and 88 percent of the GDP in Brazil. There is, in essence, no American or Brazilian—or German or Chinese—economy; rather our national economies represent networks of powerful city and metropolitan economies.

Today, I will make three main points.

As the world urbanizes, cities and metropolitan areas have emerged as the engines of national economies.

As our economies globalize, cities and metropolitan areas act as the centers of international trade and investment.

To prosper today, cities and metropolitan areas need to drive their economic destiny. In our federal republic, where power is shared across national, state and local governments, that requires new thinking about who does what.

But, first things first; we cannot put forward a metropolitan playbook without first understanding what a metropolis is. And the best way to do that is from the ground up.

On the right side of the screen you see the São Paulo metropolis, 20 million strong, 10^th most populous in the world.

On the left side of the screen you see Chicago, Mayor Daley’s hometown, with a population of 9.5 million, 26^th largest in the world.

Both of these metro areas cluster around core cities but cover large land masses and encompass multiple jurisdictions.

The São Paulo metro is more than 8,000 square kilometers in size, with more than half of your population living in the city proper and the remainder residing in 38 other municipalities.

Chicago is close to 19,000 square kilometers in size with one third of the population living in the central city and the remainder spread across, incredibly, three states, 14 counties encompassing hundreds of separate municipalities and townships.

The assets São Paulo and Chicago need to compete nationally and globally are spread across their regions:

Clusters of workers;

Key colleges and universities;

Major hospitals and health care facilities;

A network of urban green space; and

The infrastructure—roads, rail and transit and airports—needed to move people, and freight

In other words, metro areas are the natural, organic geographies of the economy, clustered around central cities for sure, but also benefitting from the assets offered by satellite cities and suburban, exurban and rural areas.

With that background, let me start with an irrefutable observation: cities and metropolitan areas are the 21^st century engines of national economies.

Since 1950, the world’s urban population has more than quadrupled in size. Now sized at 3.6 billion people, it is expected to surpass 5 billion by 2030.

In 1950, 29 percent of the world’s population lived in cities and their metropolitan areas. By 2009, the share surpassed 50 percent. By 2030, urban settlements will harbor more than 60 percent of the world’s population.

In many respects, the world is becoming more like us. The United States and Brazil are two of the most highly urbanized countries with city and metro concentrations surpassing those of both mature economies in Germany, Britain, and Spain and emerging economies like China, India, and South Africa.

Cities and metros do not just house people; they power economies. Today Brookings released our annual Global Metro Monitor that tracks the economic performance of the world’s top 300 largest metropolitan economies.

Incredibly, we find that these metropolitan areas house a little under one fifth of global population but generate nearly half its total output. Put simply: Metros around the world punch way above their weight.

Why are they so powerful?

Because they cluster and connect firms, large and small, with ports and airports, transport and energy infrastructure, and a broad range of supportive institutions that supply skilled labor, advanced research and customized capital. And when that happens, productivity improves, entrepreneurship rises, employment and wages increase.

The dominance of metros holds true for both our countries, which house 13 and 76 of the top 300 global metros, respectively.

Your thirteen top metropolitan areas are home to one third of Brazil’s population, concentrate half of Brazil’s manufacturing output and your population with college education and account for 56 percent of national GDP and 63 percent of financial services output.

These metros range from Sao Paulo, 11^th largest economy in the world, to Baixada Santista, 295^th largest.

Eleven of your metro areas are state or national capitals; this state is home to three of the 13 large metro areas.

Metro São Paulo takes its place among the world’s most populous and economically powerful metros.

You are home to one tenth of Brazil’s population, account for one-fifth of Brazil’s GDP and generate 57 percent of the GDP of this state.

For America’s part, our top 76 metros form the real heart of the U.S. economy.

Housing 61 percent of our population, they concentrate a majority of our manufacturing output, gather our most educated people, and generate more than 68 percent of our national GDP.

They also make an outsized contribution on financial services and the production of patents.

In the U.S., the top 76 metros range from New York, L.A., and Chicago to less well known communities like Allentown, Little Rock, and Harrisburg.

This leads to my second point: as economies globalize, cities and metropolitan areas act as the centers of international trade and investment.

Metros and trade are inextricably linked, and have been for millennia. The Silk Road that connected Asia, Europe, the Middle East, and Northern Africa. The Hanseatic League that grew from Hamburg and Lubeck to include 170 cities that monopolized trade in Northern Europe between the 13^th and 15^th centuries. The great Italian city-states of Venice, Pisa, Genoa, and Amalfi.

These historic networks offer essential lessons:

As a recent Brookings report concluded:

“Trade is essential to metros—it is how they grow their economies. And metros are essential to trade—they provide the specialization and market access that facilitates exchange among producers and consumers.”

The top Brazilian and U.S. metros are our nations’ logistical hubs, concentrating the movement of goods and people by sea and by air. In Brazil, 61 percent of foreign waterborne trade, measured by tonnage, passes through the seaports of the top metros; in the United States the equivalent share is over 66 percent. Passenger travel is even more concentrated; in both countries, close to 82 percent of international air travel passes through the airports of the top metropolitan areas.

Significantly, the top cities and metros in both our countries are magnets for foreign direct investment, particularly “greenfield FDI” where foreign entities invest in new facilities or expansions of existing facilities rather than just purchase domestic companies.

From 2003 through September 2012, Brazil’s 13 accounted for 77 percent of greenfield FDI projects in Brazil and 59 percent of the jobs created through this key growth vehicle. The top 76 U.S. metros also accounted for 77 percent of Greenfield FDI projects and 70 percent of the jobs created.

Brazil’s 13 are responsible for a third of all national goods exports; the share is substantially higher for the top U.S. metros. Brookings research on U.S. exports shows that our top U.S. metros dominate the trade in manufacturing and services … and, given their edge in sectors like chemicals, consulting and computers, are on the front lines of commerce with China, Brazil, and India.

In sum, our research has shown the collective centrality of our top cities and metros to the trading position of our nations.

Yet metro economies do not exist in the aggregate; they have distinctive starting points and vary considerably in their trading prowess and intensity. What makes São Paulo special on the global stage—your distinctive offer, your special investment potential—is different from what defines and drives Rio or Curitiba or Salvador.

São Paulo is Brazil’s premier global metropolis and the numbers reflect that. Your metro houses 10 percent of Brazil’s population but:

Your airports handle 26 percent of all passenger traffic in Brazil and 33 percent of all air cargo.
Your macro metro neighbor, Santos, which we visited yesterday, is the busiest container port in South America and 43rd in the world.
You are Brazil’s largest metropolitan exporter, producing 27 percent of all metropolitan exports of goods

And from 2003-2011 you received 19 percent of all greenfield FDI in Brazil … in fact, more FDI than New York, LA, Chicago, Houston and San Francisco combined.

You trade with the world’s most prosperous cities, in the United States and elsewhere, but in particular ways given your distinctive industry clusters and sectors.

Given your substantial concentration in financial services (with 19 of the 25 top international banks present and the world’s third largest financial exchange), you interact naturally with New York and Miami in the U.S., London, Madrid, and Frankfurt in Europe and Shanghai, Tokyo and Hong Kong in Asia.

Despite the outward movement of industry, you still serve as Brazil’s main global platform for advanced manufacturing sectors like automotive, linking you closely with Detroit in the U.S., Milan and Stuttgart in Europe, and Nagoya in Japan.

The shape and structure of your economy puts São Paulo in an exclusive club of “global cities,” a definition drawn in the 1990s when the process of trade, investment, and globalization was seen as empowering a few command and control finance metros of the world.

But today, our notions of “globalizing cities” are more expansive, recognizing that all cities are fueled, to different degrees, by global investment and connected, in distinctive ways, via global commerce and exchange, global product and labor supply chains.

The energy cluster in Rio finds common interest with the energy cluster in Houston through investments by Exxon Mobil, Chevron and Petrobras … and then further with energy firms in Amsterdam, Dar es Salaam, and Bogota.

Campinas’ hi-tech sector naturally links with the hi-tech cluster in San Jose’s Silicon Valley via elite universities, advanced R&D institutions, and global tech giants like IBM, Hewlett-Packard and Dell … and then further with tech clusters in Tokyo, Bangalore and Dublin.

As headquarters of Embraer, São Jose dos Campos links via supply chains to Palm Bay, Florida, Harbin, China and Lisbon, Portugal.

In short, a new global map is being drawn in the world, not of nation to nation trade but of metro to metro exchange.

That leads to my final point: To prosper in the global economy today, metros need to drive their global economic destiny.

We have a three part playbook:

The playbook starts at home, with cities innovating locally to exploit their distinctive competitive advantages in the global economy.

In the U.S., cities and metropolitan areas are acting with intentionality in the aftermath of the Great Recession to devise and implement what we call “metropolitan business plans.” The purpose: build on their distinctive competitive advantages in the traded sectors of the economy, given the crippling effect on housing and consumption.

The elements of business planning are fairly simple and straightforward

Each metropolis does a market assessment of their unique economic profile and potential … what goods and services they trade, which nations they trade with, where trade trends are likely to head given market dynamics here and abroad.

Armed with this information, metros then set goals and objectives that build on their distinct advantages, devise strategies to meet those goals and establish metrics to gauge progress.

All these efforts are undertaken by a consortium of corporate, government, university and civic institutions that cut across jurisdictions, sectors, and disciplines and “collaborate to compete” globally.

Let me give you an example of how these business plans are helping cities and their metros grow jobs and restructure their economies.

Los Angeles, represented here by Mayor Antonio Villaragoisa, has devised an ambitious plan to grow exports by identifying and proactively supporting export ready firms in leading trade sectors like aerospace, computers, professional services, and film and television. The L.A. system of trade is moving from a story of fragmentation, where no clear institution defines or drives decision-making, to a reality of coordination and collaboration, responsiveness and flexibility under one Los Angeles Regional Export Council. The result: More firms will export more goods and services to more places producing more and better jobs.

We believe business planning holds great potential for São Paulo and other Brazilian metros. Obviously, fixing the basics is a critical first step for economic growth: safe streets, quality schools, efficient transport and sound governance. But a business plan might focus on increasing foreign direct investment in infrastructure necessary to reduce congestion, improve mobility, and enhance accessibility to jobs.

The key is not what you focus on … but to decide your focus based on evidence and in a collaborative manner and then to hold yourself accountable through continuous assessment and measurement.

Having innovated locally, cities must network globally—creating and stewarding close relationships with trading partners in both mature economies and rising nations.

The new global reality is leading to intricate networks of trading cities which grow together by linking together and learning together.

These networks obviously start with firms and ports that do business with each other.

But, over time, networks extend to supporting institutions—governments, universities, business associations—that provide support for companies at the leading edge of metropolitan economies.

The city of Houston and the city of São Paulo, for example, executed a formal agreement earlier this year that commits each city to increase commercial relations, intensify scientific and technological connections, and facilitate information to tackle shared challenges.

Enterprise Florida, the principal export and investment organization in that state, opened an office in São Paulo in 2011 to help Florida companies expand trade. APEX-Brasil, Enterprise Florida’s Brazilian counterpart, has its only U.S. location in Miami’s free trade zone. There it executes projects like providing clean and renewable fuels to IndyCar, the American based auto racing body.

The Ohio State University and the University of São Paulo have partnered to support the exchange of students and collaborative research. Areas of recent focus: natural and mathematical sciences, medicine, and teacher training. In 2014 Ohio State anticipates opening its third “Global Gateways” office in the world in São Paulo to further capitalize on these linkages.

Here is the simple message: We can see a network of trading cities emerging right here in São Paulo and it is a future characterized by multi-layered relationships across multiple dimensions and disciplines, interests and institutions.

Finally, having innovated at home and networked globally, cities and metros must advocate nationally for federal and state policies and practices that will support metro growth.

Metros are engines, but they do NOT act alone.

Only national governments can set the rules of the road: enhancing access to foreign markets, enforcing trade agreements, opening up borders to immigrants and protecting intellectual property. They can also help match domestic firms with potential global customers, provide export promotion support, and commit resources to modernizing logistics hubs.

As the world evolves as a network of trading cities, it is only natural that cities become more articulate and aggressive about the support they need from higher levels of government.

In the United States, cities have found a receptive partner in the Obama Administration. Key federal agencies—the International Trade Administration, the Ex-Im Bank, the Small Business Administration—have been central partners in guiding business plans with a particular focus on boosting exports.

Similar alliances could be built here. As part of the Global Cities Initiative, the ESADE Business School mapped the trading system in São Paulo. Their research clearly shows the central role of your federal and state governments in advancing the internationalization of your economy. True success will come when these higher level entities align closely with your distinct assets and advantages.

Going forward, the advocacy of cities must extend beyond accessing the export promotion and finance programs of federal and state governments. They must get to the heart of the matter.

The United States has had a North American Free Trade Agreement in place for 20 years with our partners, Mexico and Canada.

We have recently concluded important Free Trade Agreements with Colombia, Panama, and Korea.

President Obama was in Southeast Asia this month discussing the possibilities of a Trans-Pacific Partnership.

The 2011 Agreement on Trade and Economic Cooperation signed by President Obama and President Rousseff provides a platform to build on.

As they have expressed, we need a new vision for our Hemisphere … and for our two countries.

We are both growing with healthy demographics.

We both have an enormous pool of natural assets.

We both have a shared imperative to reorient our economies.

Empowered with the right policies, enabled with the right frameworks, we have the potential to grow together this century, powered by our major population and economic centers.

So that’s our playbook:

Innovate locally. Network globally. Advocate nationally.

Let me end where I began.

From the beginning of time, cities have been centers of commerce, formed along the roads and routes of trade.

And so it is today.

The cities of our nations are powering our nations.

They are giving physical shape to the globalizing economy, seamlessly integrating the exchange of people, goods, services, energy, capital, ideas, and culture.

The promise of the Global Cities Initiative broadly is to capture and channel this energy into lasting, sustained networks and partnerships.

Our pledge as we leave here today is to work with you, partner with you, and ensure that the United States and Brazil bind together not just as two nations but as living, vibrant, powerful networks of trading cities and metropolitan areas.

Authors

Publication: Global Cities Initiative, São Paulo, Brazil

No Global Safety Net if United States Jumps Off the Fiscal Cliff

Emilia Istrate — Fri, 30 Nov 2012 12:30:00 -0500

This week, the Organization for Economic Co-operation and Development (OECD) released a new forecast of the global growth for the next two years. The good news is that emerging markets might pick up slightly, but nothing to the levels seen before the global recession. The bad news is that the problems in the Eurozone area are here to stay, at least for the immediate future. As OECD Secretary-General Angel Gurria put it, “The world economy is far from being out of the woods.”

But what happened this year?

The slowing of the global recovery continued in both developed and developing countries in 2012. As our new Global MetroMonitor, a study of economic growth in the world’s 300 largest metropolitan economies, shows, growth rates decelerated last year for about half of these large metro areas. Ongoing problems in the Eurozone led an increased number of metro areas into at least a partial recession, not only in Eurozone countries but also in the United Kingdom and in Eastern Europe .The slowdown in the global economy also reduced growth rates in developing Asia-Pacific metro areas, though they are still growing faster than other metro areas around the world.

But the news is not bad all around.

The 300 largest metro economies worldwide accounted for nearly one-half of the global economy, but for more than one half of the global economic growth between 2011 and 2012. And these 300 metro areas concentrate only 19 percent of the world population.

Beneath the grim global and national outlooks, we see pockets of growth at the metropolitan level. Fifty-six metro economies did better than their countries in 2012 on both of the indicators used in our study. Further, they are not concentrated in any one country or one world region; they are spread around the world, from 12 in developing Asia-Pacific to five in the Middle East and Africa. North America had seven, two fewer than Western Europe.

In terms of recovery, almost three-quarters of the 300 metro areas had higher levels of employment and/or GDP per capita in 2012 than in 2007. Most of the metro areas in developing Asia-Pacific and Latin America had no recession or had fully recovered to their pre-recession peaks.

Which brings us to the U.S. fiscal cliff.

The U.S. recovery remains fragile, with only three U.S. metro areas (Dallas, Knoxville, and Pittsburgh) having recovered to their pre-recession peaks. North American metro areas represented almost two-thirds of the largest metro economies still below 2007 levels of both GDP per capita and employment. If upcoming debates over the fiscal cliff and long-term solvency derail their progress, it could severely threaten not only the American economy but also the broader global recovery.

Authors

Emilia Istrate

Publication: The Avenue, The New Republic

Image Source: Kevin Lamarque

Metropolitan Trade: Cities Return to Their Roots in the Global Economy

Alan Berube and Joseph Parilla — Mon, 26 Nov 2012 00:00:00 -0500

Economic theory, world history, and contemporary experience show that metropolitan areas (i.e., city-regional economies) and trade are inextricably linked. Trade is essential to metro areas—it is how they grow their economies. And metro areas are essential to trade—they provide the specialization and market access that facilitates exchange among producers and consumers. This report examines how the intersection between metro areas and trade is motivating a new—yet old—approach to economic growth in an age of increasing international exchange and rapid urbanization.

Cities, not nations, were the original global commercial nodes. From the first urban civilizations in Mesopotamia, to the Silk Road connecting cities from the Mediterranean to central China, to the Crusades-era city-republics of modern day Italy, to the medieval network of maritime trading cities that formed Northern Europe’s Hanseatic League, cities were the indispensable actors of global trade before the rise of the nation-state. They enhanced trade by providing the physical space, constant interaction, and economic specialization needed to facilitate exchange between previously isolated actors.
Two centuries of economic theory reveal how metro areas both facilitate trade, and are themselves an outcome of trade. Adam Smith observed that large markets give rise to the division of labor upon which specialization and trade depend. This eventually led to Ricardo’s theory of comparative advantage and the Heckscher-Ohlin model of factor endowments that helped explain trade patterns among cities and nations. Marshall, meanwhile, explained how metro areas exhibit agglomeration economies that enhance their productivity and capacity for trade. And Krugman observed that in a world of mobile capital and labor, metro areas remain critical nodes for trade because their exporting firms can benefit from both scale economies and access to large local markets.
Metro areas depend on trade for their own prosperity. The goods and services produced by a metro area’s firms that are consumed elsewhere—its exports—inject income from outside the region into the local economy. In turn, that income supports the purchase of local goods and services, creating a “multiplier effect” that increases regional employment and income. Moreover, exporting—especially to international markets—entails high fixed costs and demands high firm productivity. As a result, exporting metro economies are overall more productive and wealthier.
Trade is becoming increasingly important to global and national economies, thanks in part to the growth of metro areas. The rapid advancement of technology, the growth of multinational corporations, and the concomitant rise of Latin America and Asia have helped to triple trade’s share of global output since 1950. Metro areas, meanwhile, increased their share of world population from just 30 percent in 1950 to more than 50 percent today. Urbanization enhances the productivity and export potential of countries, while upgrading jobs and incomes for their populations that can ultimately translate into demand for higher-value imported goods and services. In 2012, the world’s 300 largest metro economies contain approximately 19 percent of global population but account for 48 percent of world GDP.
Trade defines a metro economy’s global economic character. Not all cities are “global cities” in the way that researchers have defined the term, but all cities are touched by the process of globalization by virtue of their distinctive specializations and positions in complex global supply chains. Not only New York, London, and Tokyo, but also São Paulo, Buenos Aires, and Seoul lead in the production of advanced services. Madrid, Hong Kong, and Dubai are centers of media and information. Nagoya, Hannover, and Milwaukee are globally significant manufacturing hubs. And U.S. metro areas such as Wichita, Greenville, and Portland rank among the nation’s most trade-oriented economies by virtue of their world-class local industry clusters.
Metro areas are critical actors for helping boost national and global trade. Beyond national platform-setting activities like trade agreements, currency policy, and investment in research and development, forward-thinking metro leaders—in some cases together with state and national partners—are increasingly adopting strategies to enhance their global trade position. At one level, they are investing in the key assets that drive trade: building an innovation ecosystem in Shenzhen; improving human capital for the aerospace industry in Wichita; and using inherited land and infrastructure to build a world-class inland port in San Antonio. At another level, they are organizing for trade: conducting a detailed market assessment to inform new export strategies in Portland; coordinating regionally and with higherlevel governments to drive inward investment in Rio; and financially supporting the global trade ambitions of small/medium-sized enterprises in Hong Kong and Singapore. Finally, they are boosting trade by building structured relationships with trading partners, including cultivating sustained, market-oriented linkages with Beijing and Shanghai in the San Francisco Bay Area.

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Authors

Alan Berube
Joseph Parilla

An American President in the Age of Globalization

Strobe Talbott — Mon, 19 Nov 2012 00:00:00 -0500

The announcement by the Norwegian Nobel Committee in October 2009 that Barack Obama had won the Peace Prize came as a surprise to just about everyone, including the recipient. The president, barely nine months into his new job, knew that the award was an encouragement of his aspirations, not recognition of his accomplishments. He said as much in accepting the prize at the Oslo ceremony two months later.

Over the ensuing three years, Obama negotiated a new strategic arms treaty with Russia, made progress in stamping out the high command of Al Qaeda, and coped deftly with “black swan” events like the Arab Awakening. But on two challenges of existential importance, he has come up short: strengthening the global nuclear non-proliferation regime and leading an international effort to slow the process of climate change. Obama had given priority to both goals in his 2008 campaign and first inaugural address but was thwarted on both, largely because of partisan opposition in Washington.

Obama had hoped to use momentum generated by the 2010 ratification of the “New Start” arms treaty to persuade the Senate to do something it should have done 11 years earlier: ratify the Comprehensive Test Ban Treaty, CTBT, a pact that would, if it had entered into force, be the culmination of a 50-year American initiative. Instead, the dynamic on Capitol Hill was the opposite of momentum: Republicans who had reluctantly approved New Start opposed CTBT, largely so as to deny Obama another victory.

On climate change, the House of Representatives passed a bill to reduce carbon emissions in 2009; but the Senate, then controlled by Democrats, never voted on the House bill or a Senate version because they could not break a Republican filibuster. Some GOP stalwarts – notably including Richard Lugar of Indiana, Lindsey Graham of South Carolina and Susan Collins of Maine – had long acknowledged the threat posed by climate change. But they were outnumbered by colleagues who saw the alarm as a hoax designed to enlarge government’s role. That view was reinforced by polls at the time showing a decline in the number of Americans who accepted the overwhelming scientific evidence that the peril was real and growing worse by the year.

Republican hostility to a sitting Democratic president during Obama’s first term has been more intense, sustained and unified than anything we’ve seen in modern times. During Obama’s inauguration, senior Republicans met privately to develop a strategy to ensure failure in virtually everything he hoped to do. Shortly before the Democrats lost control of the House of Representatives in 2010, the Republican leader in the Senate, Mitch McConnell of Kentucky, stated outright that his top political priority was to deny President Obama a second term.

This breathtaking rejection of the principle of compromise – call it the audacity of irresponsibility – reflects the extreme polarization of American politics, which in turn reflects the dark underside of what’s most uplifting about the Obama phenomenon. The same attributes of the 44th president that have made him a prodigy in the eyes of many Americans – and much of the rest of the world – have also made him a target of unprecedented mistrust and hatred.

Campaigning in 2008, Obama drew appreciative laugher from friendly audiences when he referred to himself as “a skinny black guy with a funny name.” His victory was as much a credit to the evolution of the country as it was to him. But there was still a race barrier for him to overcome, and it remained four years later.

Obama is not just an African-American – he’s half-African, and he spent part of his childhood in Indonesia to boot. His middle name isn’t funny to Americans who associate it with the late unlamented dictator of Iraq. For some, the name screams “not one of us” – a red flag to nativists, birthers and the 17 percent of Americans who believe their president is Muslim.

During the 2008 campaign, he identified himself as a “citizen of the world.” Obama is not the first president to make that claim. Jack Kennedy and Ronald Reagan did, too. But Obama is the first to do so before he was elected. Moreover, he did it on foreign soil, at the Tiergarten in Berlin in July 2008. The venue was part of his message: He was campaigning for the leadership of his own nation by demonstrating his appeal to and identification with people of other nations, regions and cultures.

In the early 1980s, when Obama was in his 20s, he worked as a community organizer in Chicago. On several occasions during his campaign he cited that experience as a lesson useful to organizing the community of nations in an increasingly interdependent world.

In short, Obama supports global governance, even though he carefully avoids that phrase since it makes many Americans think of black helicopters and is even more toxic than “citizen of the world.“

For all these reasons, Barack Hussein Obama has – by virtue of his identity, his biographical narrative, and his worldview – the ideal credential to lead the US in the age of globalization. For many Americans, his ascension to the White House has been a dream come true. For others, however, it continues to be a nightmare, a confirmation of their deepest fears about Obama and globalization itself.

So what now? Will Obama succeed in his second term where he was frustrated in his first? The answer depends on how hard he tries and how willing the Republicans in Congress are to work with him.

On global warming, Obama’s hand may be strengthened. His tenure in office no longer depends on voters in the coal-producing precincts of Ohio and Pennsylvania. Also, as of this past summer, opinion surveys show an upward trend in public concern about climate because of what people experience firsthand: freak droughts in the Corn Belt, falling water tables in the Southwest, catastrophic fires in the Rockies and a tropical storm devastating the Northeast in late October. Ironically, Sandy provided an election-eve pair of boons for Obama: Michael Bloomberg, an Independent and New York City’s mayor, endorsed the president; and Chris Christie, Republican governor of New Jersey, praised Obama for his handling of the disaster.

Another test of Obama’s courage of his convictions is whether he makes an all-out effort to ratify the CTBT.

The overarching question about Obama’s second term is whether he can reassure his domestic constituency and his global one that America is governable. Traveling around the world, I’ve been struck by the level of interest in – and anxiety about – this year’s U.S. elections. The suspense wasn’t just about who would win, but whether winners and losers in the races for the White House and Congress can break the multiple impasses that have so crippled national governance in recent years.

Much will depend on whether the federal government can avoid hurtling over the edge of the so-called fiscal cliff. If so, it will augur well not just for the U.S. economy but for the world’s. It will also help restore American leadership of global governance, by that or any other name. While that won’t get Obama another Nobel Prize, it will make him, and the Norwegians, feel better about the one he collected three years ago.

Authors

Strobe Talbott

Publication: Yale Global Online

Global Manufacturing: Entering a New Era

Mon, 19 Nov 2012 09:30:00 -0500

Event Information

November 19, 2012
9:30 AM - 11:30 AM EST

Saul/Zilkha Rooms
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

A decade into the 21st century, the role of manufacturing in global and metropolitan economies continues to evolve. After 20 years of rapid globalization in which manufacturing production shifted to emerging markets, demand for consumption is growing there, too. Emerging market demand, in fact, has unprecedented momentum as 1.8 billion people enter the global consuming class. At the same time, a robust pipeline of product innovation and manufacturing processes has opened new ways for U.S. manufacturing companies to compete.

On November 19, the Metropolitan Policy Program at Brookings hosted a forum to release a report from the McKinsey Global Institute that examines the role of manufacturing in advanced and developing economies and the choices that manufacturers grapple with in this new era of global competition. Following presentations by the authors, an expert panel discussed the key trends shaping manufacturing competitiveness, global strategies, the next era of manufacturing innovation, and what these changes imply for growth and employment in manufacturing across the globe.

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Global Manufacturing: Entering a New Era

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20121119_global_manufacturing

The World After November’s Political Transitions in the U.S. and China

Javier Solana — Mon, 29 Oct 2012 00:00:00 -0400

On November 6, either Barack Obama or Mitt Romney will emerge victorious after an exhausting electoral race, setting the wheels in motion for the coming four years. An ocean away, on November 8, more than 2,000 members of the Chinese Communist Party (CCP) will gather in Beijing. Approximately a week later, the members of the Politburo Standing Committee will walk out in hierarchical order, preparing to take charge of a growing country of 1.3 billion people.

The leaders of the world’s two largest economies are changing. So is the world itself. The Middle East, in particular, is experiencing a moment of intense transformation. While reconstruction – both literal and figurative – is commencing in some parts of the region, countries like Syria are aflame. Others, such as Iran, with its moribund revolution, have never ceased rumbling. Amidst a crumbling economy, the country remains belligerent, using its Lebanese proxy, Hezbollah, to launch at least one successful drone flight above Israel and reportedly initiating recent cyber attacks.

As a result, relations among regional actors remain tense. After his speech at the United Nations appealing for a “red line” on the Iranian nuclear program in the spring or summer of 2013, Israeli Prime Minister Binyamin Netanyahu called an early general election, which could potentially give him a strong mandate for action against Iran. Egypt, meanwhile, is finding its own equilibrium, both domestically, drafting a new constitution, and in terms of foreign policy.

Read the full article at project-syndicate.org »

Authors

Javier Solana

Publication: Project Syndicate