Tuesday 28 Sep 2021 | 01:57 | SYDNEY
What's happening on
  • 27 Sep 2021 12:00

    AfPak’s back, alright

    Pakistan needs to think carefully about its relationship with Afghanistan. The world is watching.

  • 27 Sep 2021 06:00

    Dankeschön Frau Merkel

    A former Australian ambassador to Germany reflects on the Chancellor’s significant impact in the Indo-Pacific.

  • 24 Sep 2021 12:00

    Afghanistan: The Hazara dread

    What the Taliban takeover means for one of the most persecuted peoples in the world.

Global Economy

The ebbs and flows of global economic conditions, trade and capital flows, thus have substantial implications for the Australian economy, and Australia’s major regional trading partners. Understanding the broad trends, and identifying emerging challenges and opportunities within the global economy, is central to the work of the International Economy Program at the Lowy Institute.

The highly integrated nature of the modern global economy became especially evident during the 2008 global financial crisis. What began as a localised problem within the residential asset-backed securities market in the United States, eventually brought down major financial firms across the Western world, and ultimately pushed the United States and Europe into a deep and prolonged recession. Although global economic growth has recovered somewhat since 2008, it is still much lower than pre-2008 trends, and the hangover from the crisis has manifested itself in the form of high unemployment levels throughout much of the developed and developing world, as well as an increasing level of inequality both within and between countries.

Understanding the economic rise of Asia, and particularly of the growing middle class within Asia, is also crucial to the broader work of the Lowy Institute. Political economy analysis on major players in the region, chiefly China, India and Indonesia, features heavily in the work of the East Asia Program and the International Security Program.  

Economic diplomacy: After AUKUS in trade, aid and technology

Waiting line China is now the top export and import partner for 12 of the other 20 members of the Asia-Pacific Economic Cooperation (APEC) group and a top one-way partner for five others. The US score on this measuring stick is two and one. This is one very basic way of seeing how China’s bid

Can the China model be accommodated in the CPTPP?

On 16 September, China officially applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) comprising Australia and 10 other members. The free-trade pact is the most extensive in the region, and accounts for almost 14 per cent of global GDP. Before pulling

Beyond Fortress Australia

The reality of living in a pandemic has dawned on Australia. Covid cases at the time of writing are high and still climbing. The virus is here to stay. Equally clear is that ring-fencing the country from the world — the ‘Fortress Australia’ policy — is no longer viable

Iran’s energy diplomacy

Much is made of Iran’s use of proxy or allied groups to exert “hard power” influence throughout the Middle East where Tehran believes its interests are under threat (Lebanon), or sees an opportunity to exert greater influence (Syria, Iraq), or to act as a spoiler (Yemen). But far less is made

The right climate for Indonesia-United States cooperation

Indonesia is feeling a little ignored. The recent visit by US Vice President Kamal Harris to Vietnam and Singapore led to speculation that Indonesia was not a priority for the Biden administration. “Snubbed again, Joe?” read one local headline. A few weeks beforehand, US Defence Secretary Lloyd

Candour, at last, on China – but then what?

The most important foreign policy speech by a cabinet minister so far this year was delivered last Monday. That Treasurer Josh Frydenberg was the speaker was a little surprising. A little less surprising was that he identified an ascendant, muscular China as a first order threat to the country’s

Economic diplomacy: Australia Inc’s new world order

Risky business Australia’s sovereign wealth fund – the Future Fund – was established 15 years ago when the rivers of gold from selling iron ore to China were just starting to flow and country was only about half-way through its record-setting 28 years of economic growth. The Future Fund’s

China’s digital currency takes shape

China’s financial system is changing. The country’s new Digital Currency Electronic Payment (DCEP) – a digital payment and processing network run by the Central Bank of China – and its digital currency, the digital yuan (e-CNY), is expected to completely replace physical cash. Unveiled

Did 9/11 change our world?

We asked six experts, “Did 9/11 define our world? If so, how? If not, what did?” After each of their responses to these questions, editor Lydia Khalil challenges the experts with questions that delve deeper into their rationales and reasons

Economic diplomacy: After Kabul, Australia looks to India

Suitcase intelligence Bob Carr recalls in his Diary of a Foreign Minister how a senior Australian intelligence official told him bluntly in 2013 that the war against the Taliban was failing. “We spent a billion dollars in Uruzgan province … We could have achieved the same result if I had been

China puts its golden goose on notice

In recent years, China’s digital economy has seemed like a house undergoing full-scale renovation. At this moment, it appears to be in the demolition stage. In a series of regulatory smackdowns, the magnitude ranging from sledgehammers to wrecking balls, Beijing has appeared willing to lay waste

Economic diplomacy: Burning down the house

Follow the money Forget Extinction Rebellion, carbon border adjustment mechanisms and doctors’ wives in inner city Liberal seats. When Prime Minister Scott Morrison locked onto the existential message in this week’s United Nations climate change report it seems to have been about how foreign

Australia and India: A time to refocus on trade talks

Australia’s former Prime Minister Tony Abbott has just completed a packed visit to India from 2–6 August as Prime Minister Scott Morrison’s special trade envoy. Abbott should have reason to be encouraged by his interactions and his meetings with a cross section of decision-makers in India,

Economic diplomacy: Going for gold in 20 years and counting

Silver medal winner Prime Minister Scott Morrison last week became the latest national leader to bank the immediate short-term political benefits from the projected long-term economic and soft power value of hosting the Olympic Games. Morrison declared after Brisbane won a competition against no

When the chips are down: Biden’s semiconductor war

Export control policy in the semiconductor sector – an industry that supplies the world’s computer, smartphone, appliances and medical equipment industry with electronic chips – was at the forefront of Donald Trump’s tech war against China. The addition of China’s top chipmakers, such as

China’s numbers game harms us all

Speaking before a crowd at Tiananmen Square that gathered in celebration of the 100th anniversary of the Chinese Communist Party (CCP), Xi Jinping triumphantly declared that the goal of building China into a “moderately prosperous” society had been completed. Though without a clear measurable

The G20 “diplomacy dividend”

The last 18 months have been trying times for the Group of 20 (G20). The Covid world continues to challenge the effectiveness of multilateralism – the practicalities as well as the policy issues. While the government-to-government track of the G20 appears held together by a hybrid of in-person and

EU the new kingpin in global trade order

Under President Donald Trump, the United States launched an assault on the rules-based multilateral trading system, repeatedly threatening to withdraw from the World Trade Organisation (WTO), sabotaging its enforcement mechanism and blatantly violating its rules by arbitrarily imposing tariffs on

OPEC Standoff: Resetting market share

The 1 July OPEC meeting ended in deadlock. Although all the major oil producers agreed in principle to collectively boost production by 400,000 barrels per month from August through the end of 2021, they failed to agree on how long the production agreement should last, putting the whole deal on hold

Australia sweeps the table in the UK trade deal

Australian trade negotiators often enter talks with difficult demands and a comparatively weak hand. Agriculture, where they seek concessions from the other side, is politically sensitive meaning they are asking their counterparts to do what is hard. In exchange, they have little to offer because

The battle for Africa

In his first overseas trip as US President, Joe Biden has flagged he intends to rally European allies in a critical “battle between democracies and autocracies”, and “make it clear to Putin and to China that Europe and the United States are tight”. Biden is not the only one in

Economic diplomacy: Trade deals for a fast-growing family

Worker vs worker vs student Almost five million Kiwis have always been at least cousins. And Scott Morrison’s distinctive contribution to regional security has been his embrace of about 10 million other islanders as “our Pacific family”. But in a week of rhetoric about international

New push for WTO trade reform

With the World Trade Organisation (WTO) Doha Round of negotiations stalled nearly 20 years after its launch, it takes an optimist to see the prospect of the multilateral rules-based trading system being brought back from the brink. Dramatic shifts in geopolitical and economic weight across the WTO

Patent waiver for vaccines is a plus, but no panacea

The United States has thrown its support behind demands from developing countries to temporarily waive intellectual property (IP) rights for Covid-19 vaccines. Other rich countries, including Australia, that are yet to change their position at the World Trade Organisation should also do so with the

London and Hong Kong: Financial centres in parallel peril

There is a curious parallel between Hong Kong and London as financial centres in potential decline due to the recent loss of a unique position. Historically both cities were crucial nodes in the global network of the British Empire. More recently both functioned at a critical junction between the

China’s innovation dilemma

It has long been conventional wisdom that China would struggle to become an innovative nation. China’s controlled society, with lack of freedom of speech and expression, propaganda and censorship, together with an education system that emphasises rote learning and memorisation have been judged to

Economic diplomacy: Patent politics and trade deal twists

Biden’s jab First it was new carbon emission cuts, and then a global minimum corporate tax. But it is hard to beat the Biden administration’s move to shaft the pharmaceutical industry lobby over vaccine patents for putting the US back at the heart of global public policy. The devil will be in

Australia keeps calm while China carries on

Now that the Morrison government has cancelled Victoria’s Belt and Road agreement with China, Australia is bracing for retaliation from Beijing, probably by way of further trade sanctions. When that retaliation arrives, what should Australia do about it? There’s an old saying that “living

Taiwan: Renewing a southbound vision

For all the talk of cross-Strait military tensions – which are real – in the economic realm, Taiwan’s fortunes have been bound to those of China. Recognising the need to diversify, when Tsai Ing-wen was elected in 2016, she initiated what was dubbed a “New Southbound Policy”, with the

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