COMPLEX RESEARCH LABORATORY
Daily from global think tanks
Africa
(World Bank blogs) According to last month’s Global Trends: Forced Displacement in 2023, the East, Horn and Great Lakes of Africa region—or EHAGL, which includes Burundi, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Somalia, South Sudan, Sudan, Tanzania and Uganda—is host to an estimated 5.2 million refugees and asylum-seekers (around 14% of the global total), far higher than the region’s share in global population (5%). The majority of these refugees and asylum seekers originate from Burundi, Eritrea, Somalia, South Sudan and Sudan. The region also hosts an estimated 16.7 million internally displaced persons (IDPs) mainly from Ethiopia, Sudan, Somalia, and South Sudan (around 26% of the global total) and nearly 580,000 refugee returnees.
ASEAN – Vietnam
(Ahmed Albayrak – East Asia Forum) Southeast Asia’s energy transition is critical for global emissions reduction, but progress is behind schedule, with the region needing significant policy changes to meet net zero targets. Vietnam’s recent solar and wind expansion, which saw it produce 13 per cent of its electricity from these sources in 2023, can serve as a guide for ASEAN. Vietnam’s experience highlights that attractive pricing incentives, no local content requirements, policy certainty and a sound policy narrative are key to invigorating renewable uptake.
What other ASEAN members can learn from Vietnam’s renewable boom | East Asia Forum
Australia – India
(Lisa Singh, Ujjwal Krishna – Lowy The Interpreter) Australia and India are already working together to advance their clean energy ambitions, but not on the scale that the relationship finds itself in other spheres.
Time to jumpstart Australia-India clean energy cooperation | Lowy Institute
China
(East Asia Forum) Chinese governmental support for emerging industries such as electric vehicles (EVs) could potentially delay market consolidation, even though private firms are the principal driver of industry growth. But Chinese policymakers are unlikely to enact comprehensive economic reforms at the upcoming Third Plenum in view of global market challenges and the current political environment, favouring instead an approach that that targets particular problems that currently beset the economy.
Beijing treads carefully in correcting economic imbalances | East Asia Forum
(Yiping Huang – East Asia Forum) The Third Plenum of the 20th National Congress of the Communist Party of China kicks off on 15 July 2024. Rather than grand liberalisation, this Plenum will more likely announce strategies to tackle economic bottlenecks and improve productivity, innovation, economic growth and living standards, continuing China’s tradition of pragmatic, gradual economic reforms.
What to expect from China’s upcoming Third Plenum | East Asia Forum
(Sunny Cheung – The Jamestown Foundation) In June, the first pilot production line for photonics microchips in the People’s Republic of China (PRC) was launched at Shanghai Jiao Tong University’s Chip Hub for Integrated Photonics Xplore (CHIPX), as the country explores new approaches to chip design. The PRC sees photonic chips as a potential to underpin many of the technological solution, offering superior speed, energy efficiency, scalability, and higher bandwidth, paving the way for future technological advancements. Xi Jinping, as shown in the PRC’s 14th Five-Year Plan and other national strategies, has emphasized photonics, leading to substantial investments aimed at reducing reliance on foreign semiconductor technology and achieving global leadership. The PRC’s advancements by academic institutes and Huawei in photonic technology aim to revolutionize the nation and military with chips potentially 1000 times faster than their electronic counterparts. These developments carry significant national security implications, potentially reshaping the US-China technological competition and export control policy. The situation warrants close monitoring.
Illuminating the Future: Developments in PRC Photonic Microchip Production – Jamestown
(Tianlei Huang – Peterson Institute for International Economics) China’s boom-and-bust housing market is partly driven by local governments’ heavy reliance on expanding the real estate market to provide a major source of income. Since 2022, the downturn in the housing market has hurt local government finances and exposed a vulnerable system in need of reform.
Chinese local governments’ reliance on land revenue drops as the property downturn drags on | PIIE
China – USA
(Matthew Bruzzese – The Jamestown Foundation) The People’s Republic of China (PRC) has been relying on middlemen to obtain US technology for military programs, including hypersonic weapons. These intermediaries provide a flimsy cover for direct sales to military end-users, with some even openly listing military clients on their websites. Suzhou Rebes Electronic Technology, a PRC company, imports US-made radio frequency and microwave components, selling them to PRC defense entities and research institutions. Their marketing materials explicitly emphasize the military applications of these components. Simple measures, such as employing Mandarin-speaking analysts to monitor PRC companies’ public statements, could significantly enhance enforcement. Greater scrutiny and due diligence by US companies regarding the end-users of their products is necessary to prevent unauthorized military use in the PRC.
Egypt
(World Bank blogs) World Population Day seeks to draw attention on the urgency and importance of population issues, including the right to family planning and gender dynamics. As we mark the day, I can’t help but reflect on a recent visit to Egypt and the way that population issues can affect people – particularly children – in the country. The destiny of a girl born in Egypt today is like a tapestry woven with threads of tradition, ambition, and resilience. It is a journey marked by both challenges and triumphs, where each step forward is a testament to the indomitable spirit of young women. As her journey begins, so do the countless possibilities and challenges that will shape her life.
A New Dawn: The life chances of an Egyptian newborn girl (worldbank.org)
Food Security
(World Bank blogs) In the turbulence following the COVID-19 pandemic, one issue has consistently been a global concern: food security. Since the pandemic’s onset in 2020, food prices have experienced dramatic shifts, influenced by a number of factors. The World Bank’s Food Security Update, drawing from national and public sources across 160 countries, has attempted to track these fluctuations, and provide information to policymakers, economists, and stakeholders. This guidance has helped shape decisions aimed at promoting economic stability, food security, and social welfare. Now that over 100 editions of the Update have been published, what lessons have we learned thus far, and what lies ahead in our continued effort to track and respond to the impacts of food price shocks?
4 things we learned since kicking off our Food Security Updates (worldbank.org)
Global Economy and Finance
(World Bank Blogs) Imagine a world where strategic investments in health not only save lives but also drive economic growth and resilience. This vision was at the heart of the 7th Annual Health Financing Forum, where hundreds of participants and experts recently gathered to explore health financing in the post COVID-19 era. As we face the slowest five-year growth in 30 years, with financial stress, inflation, and heightened debt levels, innovative fiscal policies are critical. The economic slowdown, amplified by COVID-19’s lingering effects, underscores the need for public investments in health and other social priorities like education to support human capital.
Smart health taxes: A win for public health and the economy (worldbank.org)
(Cian Allen, Rudolfs Bems – International Monetary Fund) Interest rates in the United States are at 20-year highs and the dollar has appreciated sharply against other world currencies. Given the dollar’s outsized role in international finance and trade—and if history is any guide—emerging markets have good reason to be concerned. We know that rapid monetary tightening in the US and a strong dollar can lead to sudden capital flight and financial crises in the emerging world. The good news is that we have not seen an emerging market crisis. Our latest External Sector Report shows that capital flows into emerging markets have recovered from a post-pandemic low. Net capital inflows into emerging markets—excluding China—rose to $110 billion, or 0.6 percent of GDP, last year. That’s the highest level since 2018.
Emerging Markets Show Resilience Despite Global Monetary Tightening (imf.org)
(Kazuko Shirono, Berhe Beyene, Fozan Fareed, Christiaan Loots, Andrea Quevedo, Kameshnee Naidoo – International Monetary Fund) Greater availability of financial access related data in recent years is increasingly enabling policymakers to better track and monitor financial access trends and developments. However, data on barriers to financial access, including costs associated with using financial services—a key factor of financial exclusion—remain scarce. To gain insight into the costs of financial access faced by the low-income segments of population, this paper presents an analysis of a novel dataset on bank pricing containing information on fees and charges associated with various banking services—collected as part of the United Nations Capital Development Fund’s (UNCDF) Making Access Possible (MAP) program—based on a market research approach for 34 low- and middle-income countries in the ASEAN, SADC, and WAEMU regions. The results of our affordability analysis reveal that the costs of maintaining a bank checking account and conducting a few basic transactions can exceed 5 percent of monthly income for consumers in more than 10 percent of the countries in the sample, mainly in the WAEMU and SADC regions. These findings underscore the considerable challenge of affordability as a significant barrier to access to financial services, especially for low-income households and SMEs. The analysis also highlights the need to collect more granular data on the affordability aspect of financial access to facilitate more effective policymaking.
Understanding Barriers to Financial Access: Insights from Bank Pricing Data (imf.org)
(Jim Tebrake, Francien Berry, Darja Milic – IMF blog) As economies worldwide strive to reduce emissions and achieve sustainable growth, reliable data is crucial. It forms the foundation for informed decision-making, guiding policy development, implementation, and monitoring. Recognizing this, the Group of Twenty is stepping up efforts to enhance the scope and quality of climate-related data. Through the third phase of the Data Gaps Initiative, it seeks to better integrate climate data with macroeconomic statistics. Doing so allows us to better understand the environmental impact of economic activities and the effectiveness of climate policies. The Chart of the Week highlights one such useful metric: greenhouse gas emission intensities, which measures emission levels relative to industry output. This shows which industries are producing more pollutants per dollar of output and can guide efforts to reduce emissions in the most impactful areas.
Integrating Economic and Climate Data Will Strengthen Climate Policy (imf.org)
Global Infrastructure Hub
(Chris Legg – East Asia Forum) The Global Infrastructure Hub (GIHub), created by the G20 to bridge public and private sectors for infrastructure development, has faced funding and structural challenges. Despite its success in data, knowledge sharing and capacity building, its Australian corporate structure and voluntary funding model proved unsustainable. After exploring alternate options, such as becoming an independent international organisation or joining the OECD, GIHub ultimately integrated with the World Bank to preserve its legacy and continue its work on infrastructure development.
India
(World Bank blogs) As India’s economy surges forward, so does its demand for cooling. In a country where temperatures routinely soar above 40°C (104°F) in many regions, access to cooling is not just a matter of comfort but of public health and economic productivity. By 2038, India’s cooling demand is projected to grow eightfold, requiring a staggering 1.2 billion room air conditioners. Yet, this surge comes with a hefty environmental price tag: conventional cooling technologies are major contributors to greenhouse gas emissions and energy consumption. The challenge is clear: How can India sustainably meet its growing cooling needs? The answer lies in a massive upskilling initiative, leveraging cutting-edge technologies to train hundreds of thousands of technicians and engineers in sustainable cooling solutions.
Indonesia
(Gaffar Muaqaffi – East Asia Forum) In March 2023, UN Secretary-General Antonio Guterres emphasised the urgent need for a comprehensive response to the climate crisis, urging the public sector to take the lead. The Indonesian public sector’s substantial scale, capacity for leadership and role in policy implementation make it essential in combatting climate change. While some steps have been taken in the right direction, best practice approaches from other jurisdictions, like the OECD and Canada, should be emulated to improve environmental outcomes.
Public-sector leadership can power Indonesia’s climate change mitigation | East Asia Forum
(World Bank blogs) Indonesia’s economic landscape underwent a profound transformation in the 1980s when the nation pivoted from import-substitution towards export-oriented development strategies. This transition was accompanied by deregulation to better link Indonesia with the global economy. This spurred a significant structural transformation, with the share of agriculture in the labor force decreasing from two-thirds in 1993 to about one-half in 2014, while services expanded from 18 to 24 percent and manufacturing expanded from 14 to 20 percent. The rise of China has played a key role, growing from less than 5 percent to more than 15 percent of Indonesian export values; while Japan, which accounted for nearly one-third of exports value in the beginning of the period, fell to less than 10 percent by the end.
Local labor markets dynamics and export shocks: theory and evidence from Indonesia (worldbank.org)
Indonesia – China
(Daniel Peterson – East Asia Forum) Indonesia’s newly elected president, Prabowo Subianto, is set to maintain a relationship with China similar to his predecessor, Jokowi, despite Indonesia’s growing debt exposure to China. A lack of a coherent China policy, high levels of Chinese investment in infrastructure projects and trade, as well as the political legacy of Jokowi’s presidency, suggest that Prabowo will continue to cooperate with China. This is even if it risks compromising Indonesia’s official nonalignment.
Expect the expected with Prabowo’s incoming China policy | East Asia Forum
Latin America and the Carribean
(World Bank blogs) Fighting poverty has always been a complex task, and it’s only grown more intricate in the wake of COVID-19, with extreme weather and global tensions heightening the challenge. In Latin America and the Caribbean (LAC), although poverty rates today are slightly below those seen before the pandemic, the average masks stark differences between countries in the region. This variability underscores the urgent need to step up our efforts in monitoring the situation. To address this need, we have launched the biannual Regional Poverty and Inequality Update. It offers an in-depth look at poverty trends within LAC and aims to shed light on important trends to inform actions and policies that fight poverty and boost shared prosperity.
Malawi
(World Bank blogs) Malawians have seen a dramatic loss of forest cover from 47% in 1975 to just over 20% in 2021. As outlined in the World Bank’s 18th Malawi Economic Monitor, healthy watersheds play a critical role in driving economic activities such as agriculture, fishing, and hydroelectric power generation. However, the challenges posed by climate change and a rapidly growing population threaten the sustainability of vital resources.
Watershed management policies needed for-afe-Malawi’s economic stability and growth (worldbank.org)
Mediterranean, Middle East, and the Gulf
(Kelly Campa, Siddhant Kishore, Annika Ganzeveld, and Nicholas Carl – Institute for the Study of War) Gaza Strip: The IDF confirmed that it killed the commander of Hamas’ Khan Younis Brigade in an airstrike targeting senior Hamas officials in the southern Gaza Strip. The IDF said that it is still assessing whether the airstrike killed Hamas’ top military commander, Mohammad Deif – West Bank: A Palestinian fighter conducted a car ramming and shooting attack in central Israel, injuring four Israeli soldiers – Lebanon: Lebanese Hezbollah conducted nine attacks into northern Israel – Yemen: The Houthis claimed two drone and missile attacks targeting a commercial vessel.
Iran Update, July 14, 2024 | Institute for the Study of War (understandingwar.org)
Russia’s War in Ukraine
(Christina Harward, Angelica Evans, Nicole Wolkov, Kateryna Stepanenko, and George Barros – Institute for the Study of War) Russian officials and milbloggers reiterated complaints about poor security around critical infrastructure in rear areas of Russia in response to a July 13 Ukrainian drone strike against an oil depot near Tsimlyansk, Rostov Oblast – The Russian military command may have committed under-equipped units initially intended to act as an operational reserve to combat operations, possibly due to constraints on the Russian defense industrial base (DIB) or efforts to reinforce ongoing Russian grinding assaults in Ukraine – Ukraine signed a series of security agreements and received several aid packages amid and following the July 9-11 NATO summit – Ukrainian forces recently regained lost positions near Vovchansk, and Russian forces recently advanced near Avdiivka – Russian State Duma Defense Committee Chairman Andrei Kartapolov reiterated on July 14 that the Russian Ministry of Defense (MoD) is not planning to demobilize servicemembers that Russia mobilized in Fall 2022 before the end of the war.
Singapore
(Kai Ostwald – East Asia Forum) There is little reason to expect significant changes in the near term from Singapore’s new prime minister Lawrence Wong. But over the long horizon that has defined the tenures of Singapore’s previous prime ministers, Wong faces a major structural challenge. Singapore’s model of politics has been justified by its delivery of rapid growth and development. With Singapore now among the world’s richest countries, subsequent gains will necessarily be far more modest. Wong faces a question on which the future of Singaporean politics will hinge — if not growth and development, then what?
The long game in Singapore’s ‘next gen’ politics | East Asia Forum
Tanzania
(World Bank blogs) Somewhere deep in Tanzania, a familiar sight—a mother and child on a long journey for water. This, in fact, is a story of resilience in the everyday struggle for many for a basic human right: access to water and sanitation. And what if the mother or the child has a disability? The Sustainable Rural Water Supply and Sanitation Program (SRWSSP) is working to rewrite this reality with a focus on inclusivity and equal access for all, especially for marginalized communities and individuals with disabilities. Access to sustainable water supply and improved sanitation services is a challenge for rural populations in Tanzania. It is even more so for women and for people with disabilities. On top of the distance to travel, what if a waterpoint or a sanitation facility is not designed to be accessible? The SRWSSP, while structured to cater to the wider Tanzanian population, emphasizes the necessity to ensure inclusivity for all members of communities. A dedicated and focused approach is vital to genuinely embedding inclusivity within the WASH (Water, Sanitation, and Hygiene) services, by constructing facilities that are accessible to all – including persons with disabilities.
Inclusion in Tanzania’s Water and Sanitation: A Step Towards-afe-Equal Access (worldbank.org)
UK
(Justin Brown – Lowy The Interpreter) In line with its cautious approach, UK Labour said very little of note on the European Union during the recent election campaign. However, Sir Keir Starmer did state unequivocally that the United Kingdom would not rejoin the EU in his lifetime, nor seek to become an associate member of the single market or customs union.
What next for UK trade relations with the EU? | Lowy Institute
(Nick Childs, Ben Barry – IISS) As in most other areas of policy, the new United Kingdom Labour government is promising significant change on the defence and security front. But as it prepares to launch a new defence review, the challenges are great, the options are limited, and the need to make some tough choices may be looming.
UK defence: new options for change? (iiss.org)
United Arab Emirates – Angola
(Albert Vidal Ribe – IISS) The United Arab Emirates is deepening its economic ties with Angola – and elsewhere in Africa – by promising significant investments in critical sectors spanning energy, technology and maritime logistics. In turn, Angola offers the UAE the possibility of greater food security, potential access to critical minerals, a growing consumer market and the opportunity to deepen its influence on the continent amid waning Chinese investment.
Angola’s growing strategic significance for the UAE (iiss.org)
USA
(Lydia Khalil – Lowy The Interpreter) Anyone who cares about democracy and the rule of law should condemn the recent assassination attempt against current candidate and former US President Donald Trump. Even, in fact especially, if that political violence targets someone who themselves has incited violence and has already done so much to undermine democracy.
Trump attack will bolster his dark vision of America | Lowy Institute
(Daniel Flitton – ASPI The Strategist) Donald Trump has put out a statement that he’s “fine”. Early reports suggest one person in the crowd was killed, along with the gunman. Few details are known. But a shock like this will upend the campaign dynamic in the presidential race. Immediate questions will be asked after a person fired a weapon at a rally in Pennsylvania in what appears to be an assassination attempt.
Immediate questions after the attack on Trump | Lowy Institute
