Final Current Event Project
Shawn Huang
European Central Bank's Quantitative Easing
- I made the prediction that the ECB's quantitative easing policy would help "ameliorate" the situation but not actually solve the issue. I also made the suggestion of implementing fiscal policy in combination with monetary policy in order to spur healthier, longer-lasting economic growth.
- For the most part, the economy in Europe has not returned to its relatively healthier states like that of before the '08-'09 recession. News sources like Al Jazeera also recommend implementing fiscal policy for it can "stimulate real growth and generate jobs" (Polychroniou). Monetary policy, on the other hand, will only create "bubbles... and... distortions" (Polychroniou).
- Germany, with its recent domestic consumption boom, has seen healthier recovery compared to its neighbors. This consumption boom will be discussed in further detail in current event #5.
- The class helped me understand the role of monetary policy and the effects of open market operations, such as quantitative easing, on the economy.
- Money supply, interest rates, investment/consumption- all of these concepts are involved in the ECB's QE policy.
- 1 year- Europe will continue to stagnate, but will not fall back into deep economic recession.
- 5 years- More European nations will begin the recovery process. Some that do not choose to adapt to the economic situation with appropriate fiscal policy or structural (economic) changes will continue to struggle.
- 10 years- More powerful European nations, like Germany and Britain, will likely have returned to economic states prior to '08-'09, while weaker (economically) European nations will continue their recovery, using "already recovered" nations as springboards.
Trans-Pacific Partnership
- I predicted that the TPP, though a necessary and beneficial trade agreement, would encounter great difficulty in passing the U.S. Congress.
- For the most part, I have been correct. The Trans-Pacific Partnership is an economic alliance proposed by President Obama, hoping to establish free trade with countries in Eastern Asia, Southeastern Asia, and Latin America. However, due to a Republican-controlled Congress, the proposal has continued to be shot down. Additionally, Congress is not allowed to amend terms of the TPP once the agreement lands in their hands, which consequently, makes it even more difficult to push through Congress.
- This class helped me understand the role of trade in various countries' economies and its effect on each nation's domestic market.
- Comparative advantage, production possibilities frontier, specialization- all of these are concepts involved in the Trans-Pacific Partnership.
- 1 year- the TPP will continue to encounter resistance in Congress.
- 5 years- Depends on the election. If the Republicans win, it's difficult to say if the TPP will ever be brought up again. If the Democrats win and fail to control Congress, then it will probably be a cycle of what's going on right now.
- 10 years- If the TPP fails to gain approval from the United States within a decade, then the other countries will start to seek other options, and the TPP may just fade away into history like the League of Nations.
China's Free Trade Zones
- I made the prediction that China, if it chooses to reshape its economy through Free Trade Zones, will continue its rise as a major global power. It will also allow China to pursue more stable economic growth, controlled less by the government and more by the market.
- As of now, China is still growing as a major economic power. Its presence in Southeast Asia, the Middle East, West Asia, and Africa is getting increasingly significant. Its involvement in economic organizations like BRICS, and its contributions in economic development projects with countries like Pakistan, Russia, and Kazakhstan will continue to propel China's economy forward.
- This class has helped me understand the role of free markets and trade and their effects on a country's economy and growth.
- Free market organization, trade, government intervention, externalities, specialization, consumption/production- all of these are concepts involved in China's push towards establishing more free trade zones.
- 1 year- China will continue to attract international businesses using free trade zones in Shanghai.
- 5 years- China will establish more free trade zones in locations such as Beijing, Tianjing, and Guangzhou. All of which will cultivate a free market atmosphere in China.
- 10 years- China will loosen some of its own domestic regulations on Chinese firms and allow greater connection between international businesses and Chinese businesses as well as between free trade zones and international free zones such as Hong Kong.
South Korea and the AIIB
- I predicted that it would be in the best interest of South Korea to join the AIIB. South Korea would gain access to funds that could be used towards large-scale infrastructure projects. At the same time, it would improve its relationships with China, which would be a huge benefit to South Korean-Chinese trade.
- As of April 11, 2015, South Korea joined the AIIB, as according to my prediction.
- This class has helped me understand the role of trade and investment and their effects on a country's economic development
- Trade, investment, loanable funds, government spending, GDP- these are all concepts involved in South Korea's decision for membership in the AIIB.
- 1 year- South Korea will be able to fund larger-scale infrastructure by borrowing money from the AIIB.
- 5 years- South Korea's continued participation in the AIIB will allow it to gain a greater voice in the bank's decisions. South Korean-Chinese trade relationships will continue to see improvements (trade volume may increase).
- 10 years- South Korea may be promoted to a more significant role as a member of the AIIB (greater voice in decisions on loans).
Germany's Domestic Economic Renovation
- I predicted that Germany's economic resurgence would be able to lead the European Union out of its slump. The boom in the country's construction industry, increasing overall consumption and investment, would significantly boost consumer confidence. Firms will be more likely to invest in the country once they see that more profits can be realized.
- As of now, Germany's economy is the strongest (and with the greatest growth potential) in the European Union. Its economic recovery has been faster than that of other countries in the European Union.
- This class has helped me understand the role of consumption, investment, and GDP and their effects on a country's economic recovery/growth.
- Consumption, investment, GDP, production- these are all concepts involved in Germany's economic recovery.
- 1 year- Germany's economy will exit stagnation.
- 5 years- Germany's economy will continue healthy growth through infrastructure projects and foreign businesses beginning to invest in the economy.
- 10 years- The number of foreign businesses invested in the German economy will increase to a point where it provides a form of stability for the country.
China's Investment in Africa
- I predicted that China's investment in Africa will bring about greater Chinese involvement in the African countries' economies. Greater volumes of trade will benefit both China and Africa as they exploit their respective comparative advantages. The United States, on the other hand, will experience a disadvantage in the African theatre as it watches China's influence grow.
- As of this moment, China's influence in Africa is certainly greater than America's. China has invested in several infrastructure projects (railroads, mining, ports) in countries like Tanzania, Zambia, Ethiopia, and Nigeria. The United States, on the other hand, is still working on improving relations with the governments in Africa.
- This class has helped me understand the role of comparative advantage and specialization in determining beneficial trade terms between China and Africa.
- Comparative advantage, absolute advantage, trade, production possibilities frontier, investment, specialization, GDP, GNP- these are all concepts involved in China's investment in Africa.
- 1 year- China will continue investment and construction projects in Africa.
- 5 years- More and more Chinese firms and laborers will pour into Africa. Resource extraction, refining, and shipping will become more efficient in African country.
- 10 years- Chinese GNP and African GDP will see significant increases after most of the infrastructure projects reach completion. China's influence will have grown noticeably, while the United States, unless it decides to invest more in Africa, will continue to fall behind in that theatre.