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Friday, October 25, 2013

Columbia U. Conference on Investment Incentives

On November 13 and 14, the 8th Annual Columbia International Investment Conference will be held in New York City. Sponsored by the Vale Columbia Center on Sustainable International Investment, the conference is titled: "Investment Incentives -- the Good, the Bad, and the Ugly: Assessing the Costs, Benefits, and the Options for Policy Reform."

The meetings will focus primarily on location subsidies for foreign investment, and primarily in developing countries. But there will also be plenty of coverage of North America and the European Union, as well as discussion of global institutions and regimes. Louise Story, author of the very valuable New York Times series, "The United States of Subsidies," will moderate the first panel.

As the conference materials lay out in greater detail, "The aim of this year’s Conference is to advance our understanding about the role that incentives have played in attracting and retaining foreign direct investment; the policy rationales supporting or discouraging various types of incentives; the strategies that may be more effective at achieving the objectives of host governments; and the potential for future coordinated action on these issues."

I will be speaking during the Thursday afternoon panel on the topic of controlling investment incentives (what else?). There will be an outstanding roster of panelists, both academics and practitioners. If you're interested in the topic and will be in the vicinity, you should attend. Registration is free, but also required in advance. You can register at the link above.

Tuesday, October 22, 2013

Irish Austerity Exodus Continues

The Eurozone experiment in austerity continues to fail as the peripheral countries endure ongoing cuts. Following up on my post of August 15, it's time to look at the most recent Irish immigration data to update it through April 2013 (Ireland records population data from May 1 to April 30) and see how it affects the reported unemployment rate. The picture remains ugly, with emigration climbing once again, from 87,100 in 2011-2012 to 89,000 in 2012-13. Immigration increased by 3200, so net emigration fell by 1300, with net out-migration over the year declining by about 3% to 33,100. Here are the details:

  Year ending

April 2012April 2013



Net migration-34,400-33,100

of which Irish nationals-25,900-35,200
Source: Central Statistics Office Ireland

Take a good look at the last line: Net emigration by the Irish themselves increased by 35.9% and accounts for all net out-migration; there was net in-migration by non-Irish citizens of 2100 in 2012-13. Indeed, the Irish comprised 57.2% of all emigrants in the most recent report.

What was the effect of emigration on the unemployment rate? Once again in 2013, people in the age group closest to what we would consider prime-age workers (15-64, given how Ireland reports immigration by age groups; see Table 4 of the linked report) left the country at a higher rate than children and seniors, with total out-migration for those 15-64 of 35,300. That brings total out-migration for population years 2010-2013 to 126,000.

Since April 2013 data is a much better match for Ireland's official first-quarter 2013 unemployment data than April 2012 was, I am going to repeat my calculation from August, still using Q1 2013 unemployment of 13.7% as my base. Again, there were 292,000 officially unemployed in the first quarter; dividing by 0.137 gives an estimated workforce of 2,131,387. We now add 126,000 to numerator and denominator to get the maximum potential unemployment rate, which would exist if all 126,000 were in the labor force and unemployed: 418,000/2,257,387, or 18.5%.

Even if we add in only those in the most prime working-age group in the Irish statistics, those from 25 to 44 years old, we still find that the imputed unemployment rate exceeds the country's maximum during this crisis of 15.1%. 2013's 12,500 net out-migration in this age group brings the 2010-2013 total to 48,500; adding this to the numerator and denominator gives us 340,500/2,179,887 or 15.6%.

Paul Krugman points out that we can also see this by looking at Ireland's employment rate. Over 2.1 million were employed in the third quarter of 2007; in the second quarter of 2013, the number is still far depressed at 1,869,900, which represents a 1.8% increase from a year earlier.

Finally, the overall picture for the EU and the eurozone has deteriorated over the previous year: EU unemployment rose from 10.6% in August 2012 to 10.9% in August 2013 (most recent month available), while eurozone unemployment rose from 11.5% in August 2012 to 12.0% in August 2013. Both figures were down a hair from several months earlier. But in Greece, new records continue to be set, with unemployment in June 2013 (most recent month available) hitting 27.9%. By contrast, as Eurostat shows, unemployment has steadily declined in the United States and Japan.

Unfortunately and unsurprisingly, the evidence that austerity has failed in Europe still is not affecting EU policy, nor has it stopped the cacophony of voices in the United States calling for more austerity. While Republicans supposedly "lost" the government shutdown crisis, they succeeded in locking in sequester-level government spending until the next crisis, and sequester II will be here soon. God help us.

Cross-posted at Angry Bear.