Russia certainly seems unwavering in its actions in the Eastern Ukraine. It directly violated Ukrainian sovereignty through the annexation of The Crimea, and has continued to destabilise the region by allegedly arming anti government rebels. In light of the recent events involving Malaysian Airlines MH17, The West is considering a new wave of economic sanctions. Below is a video from The Financial Times discussing both the plausibility and effectiveness of further sanctions.
This is a map of the world showing each country’s highest valued export. It’s interesting to look at the intercontinental differences. The more ‘developed’ West tends to focus on secondary goods and services as their most valued exports. Whereas, those countries that are (under) developing tend to focus on primary products.
There are various theories surrounding the link between primary product exports and under development, but that’s an issue for another post (I’ve briefly mention it in an earlier article https://lsveconomics.wordpress.com/2014/05/01/the-natural-resource-curse/ ).
If you’re interested in learning more about the ‘natural resource curse’ then I suggest the following articles:
The link to the original article is http://www.businessinsider.com/every-countrys-highest-valued-export-2014-5
Two brilliant articles from The Economists outlining the continuing problem of rent-seeking.
From a historical perspective, Mercantilism was essentially an economic system built around rent-seeking. During The Enlightenment classical economists like Adam Smith proposed the notion that rent-seeking was creating an inefficient and distorted economy. As a result Mercantilism was gradually abandoned in favour of Capitalism. Yet, rent-seeking is a still a problem today and will continue to be a problem until there is complete transparency in every transaction. Which will obviously never happen.
The recent events in Russia have shown the power of speculation in economics. Sanctions imposed on little over 20 individuals have caused huge capital flows out of Russia, causing growth estimates for the first quarter of 2014 to be revised down to nearly 0%. I find that remarkable. Obviously, the direct consequence of those 20-30 individuals having their foreign assets frozen was not $70bn being withdrawn from the Russian economy. Indeed, the direct effects of such sanctions were extremely limited. But, the direct consequences are almost irrelevant. The West has shown it is willing to act against Russian aggression. This is the real economic weapon at The West’s disposal. Creating instability and uncertainty in the Russian economy is a sanction in itself and will only enhance any further sanctions the West decides to impose.
A discussion on Russia, Pensions, and Banks.
I find these figures amazing. Unfortunately, I couldn’t find a graphical representation of them.
A one point to note about the period 1000-1820 is that population growth only really took off when nations began escaping the Malthusian Trap at various intervals after 1700. Thus, in the period 1000-1700, countries experienced significantly lower growth levels than that in 1700-1820. This is hidden by the way the data is presented.
An Economics Blog 