Author Archives: Edward Hugh

About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

Going Too Far

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Last night I went to see the film Luther – which unsurprisingly enough is a biographical epic which focuses on the life and works of Martin Luther. I have always felt a strange attraction to Luther, not for his religion, but for the ‘here I am, I can do no other’ part. This post, however, has little to do with the film, except in that it is about how small changes in our ways of thinking can have big impacts.

You see all through the film I couldn’t help thinking about the recent act of ‘personation’ carried out by the Spanish radio station cadena COPE, and about just how stupid the people behind it really seem to be.
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BT Contract For Huawei

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China’s Huawei Technologies, one of the world’s leading networking and telecommunications equipment suppliers (and big Cisco rival), has just announced that it has signed a contract with British Telecom for the deployment of its multi-service access network (MSAN) and Transmission equipment for the BT 21CN network. This seems to be an important step forward for Huawei.

The contract is signed today after going through a two year rigorous procurement and authentication process. This is one of the single largest procurement programs undertaken in the communications industry, to underpin BT’s GBP10 billion 21st Century Network programme over the next five years. This rigorous authentication process was used to assess Huawei’s capabilities, which included the quality of Huawei’s products and solutions, direction of Huawei’s corporate development strategy, management system, quality control system, project management capability and corporate social responsibility.

Huawei believes that the 21CN project and BT’s investment in Huawei’s innovation will spearhead the development of more new products and services for the British telecommunications industry and is of strategic importance to both UK businesses and economy. This will not only generate more new job opportunities within Huawei UK but also for our local service partners.

Battle Of The Standards

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An intereresting piece in the FT today about 3g standards and China. Basically there are three competing technologies: the European-backed WCDMA and US-supported CDMA-2000 standards, and the Chinese TD-SCDMA technology. There is a wikipedia entry on TD-SCDMA. Basically the Chinese system doesn’t imply the payment of license and patent fees (what a surprise) and it offers an asymmetrical data rate, i.e. it offers different speeds for downlink and uplink. The interesting isssue is, I suppose, after all the talk about China soon being the number one market in this, and the number one market in that, to ask the question just how much “upstream standards clout” will all this scale advantage eventually imply. Normally, third world economies would be expected to conform to first world standards eventually, but will the Chinese case be different?

IMF Continues Debt Relief

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Today’s news is of course welcome news for everyone who cares about poverty in the third world, but going back to my Evo Morales post during the week, this policy will only really bring the benefits it could do if it is combined with a systematic drive to change the demographic profile of these countries, and this means, as well as writing-off debt, more expenditure on health and on education (and in particular on equality of opportunity female education). Really, what I think has been wrong with the IMF approach in the past has been a ‘one ring to fit them all’ policy. What we can see I think now is that this is inadequate: we need a two speed globalisation. One speed for the countries like Argentina, Chile, Turkey, Thailand etc, which are on the ramp and ready to take off, and another for those countries which need help with social spending (in order not to provoke an explosion in the political subsystem) while they get the demographic imbalances straighter. So we need a debt-pardoning-plus approach.

The International Monetary Fund’s board on Wednesday approved 100 per cent debt relief on $3.3bn owed to the fund by 19 of the world’s poorest countries.

In a statement issued after the board meeting, Rodrigo Rato, managing director, said: “This is an historic moment, which will allow these countries to increase spending in priority areas to reduce poverty, promote growth and to make progress towards achieving the millennium development goals.”

Continue To Denationalise Tamiflu!

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Following up on my spoof post about the complexity of making bets when it comes to new pharma products, worries about Tamiflu continue. The original issue was one of unexplained deaths in Japan, which were, more or less, subsequently explained. Now there are questions about its efficacy in the case of the H5N1 flu strain, and this is important since Tamiflu is known to have side effects. All in all, something to treat with caution.

The study raises new questions about the drug, which more than 50 governments have ordered in significant quantities in recent months to stockpile as a potential prophylactic and treatment in the case of a flu pandemic.

An accompanying article in the Journal reinforced calls for alternative approaches to treatment for a pandemic, including the stockpiling of the rival drug zanamivir, or Relenza.

Dr Anne Moscona wrote that individuals’ stockpiling of Tamiflu was “potentially dangerous” because it could lead to insufficient doses and inadequate courses of therapy, in turn accelerating the development of resistance.

So maybe Brad Delong’s hypothetical government would have been better off nationalising Zanamivir (or maybe not). The thing is it is really hard to know in advance, and that is an in-principle problem. At the end of the day this is why the private sector solution may be better, because at least you have different horses in the race.

Great Leap Forward II

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Updating on my post from yesterday, Dave Altig at MacroBlog reproduces a map (first posted by Sun Bin) of services as a component of GDP. As Dave points out China has clearly be come a significant outlier among would-be-developed economies in its reliance on manufacturing share. Even with the most recent data added in China is still very services-light. So: yes China needs financial reform, yes China needs to shift to a more domestic-consumption-driven model, and YES China needs to get into services, and bigtime.

France and Globalisation

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Consultants KPMG and French employers’ group Medef have just published a survey on attitudes to globalisation and outsourcing. Interestingly a higher percentage of employers than previously said they saw no benefit in moving jobs to countries with cheaper labour markets (56% compared with 29% last year), while 74 per cent said broader foreign investment had helped safeguard jobs in France. Is this an example of ‘double entendre’? Is it a real reflection of attitudes to globalisation, or a ‘packaging’ exercise where it is easier to advocate something as ‘new investment’ rather than ‘moving jobs’. At the same time the FT says,

But for those SMEs with a low turnover, or which lacked innovation, the lower-cost economies were still seen as a danger.There is a growing gulf between the strategies of such companies and larger or more innovative rivals, the report said.

Merkelmania

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As Emmanuel rightly noted, “the other big winner of the (EU) summit is of course Angela Merkel”. As he also goes on to note, “the Süddeutsche Zeitung may be overdoing it with a “the Angela-summit” title, but Merkel has emerged, somewhat unexpectedly considering her lack of experience at the European level….”.

Well, it seems that the snowball-effect is working apace. The EU observer informs us today that “German chancellor Angela Merkel has been crowned the queen of the EU budget by the press”, and in another article asks whether our Angela might not in fact become the saviour of the EU constitution.

My reaction to all this is “now just hold on a minute”. Angela Merkel has just been elected to the head of a pretty complicated coalition government in a country which has some hard problems to solve and some difficult decisions to take. My guess is holding all of that together is going to be occupying a lot of Angela Merkel’s energy and attention by the time we get through to 2007, and discussion of her future role in dynamising EU institutions is, to say the least, rather premature. I don’t know if any of our German based readers have any observations to make about this?

The Great Leap Forward

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And this time it’s one that has been achieved in a little under 24 hours. China’s economy is now – officially speaking in any event – 17% bigger than it was yesterday. It will now be a neck and neck race for 4th place in the world economy league this year (the UK is the current holder) and a foregone conclusion next year.

Over the years a lot of people have suggested that China’s growth numbers were ‘rigged’, what they never contemplated howeveris that they may have been rigged downwards.

Also, as I noted here, China is now the world’s number one investment destination, and the number one exporter of ICT products.

Bo Malmberg and Evo Morales

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Bo Malmberg is a demographer and he works at the Stockholm-based Institute For Future Studies. Evo Morales is the ‘flamante’ President of Bolivia. OK, this much is clear, now where’s the connection?

Well, Brad Delong says of Morales’ election, citing Pyrrhus of Epirus, Another Such Victory and We Are Lost, while the Financial Times informs us that the result of the election is likely to cause consternation in the United States.

However, rather than allowing ourselves to fall victim to too much schadenfreude, maybe we would better employ our energies trying to understand why Morales is happening, and why right now. This is where Bo Malmberg comes in handy.
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