Michael From an and Dana J. Hyde write: Africa’s rise challenges the imagination. During the last decade, Sub-Saharan Africa was home to six of the world’s ten fastest-growing economies. During the next five years, the region’s GDP is expected to grow 30% faster than that of the rest of the world. And, during the next 35 years, the continent will account for more than half of the world’s population growth, according to the United Nations.

The African Growth and Opportunity Act (AGOA) has been tremendously effective since its enactment in 2000. By removing tariffs on exports to the United States from 39 Sub-Saharan countries, it has stimulated growth, encouraged economic integration, and created opportunity where it otherwise might not have existed.

Tariffs are no longer the biggest constraint on trade in Africa. Today, the chief impediments are supply-side constraints, which require well-designed strategies and capacity-building efforts so that AGOA’s members can take full advantage of the program’s benefits.

Making the most of AGOA will also require improvement in the infrastructure – physical and institutional – necessary for promoting investment and facilitating trade. The issues that need to be addressed include the lack of reliable, affordable electricity, high transportation costs, and weak and inefficient trade-related facilities.

Consider the challenges faced by Brazzaville, in Congo, and Kinshasa, in the neighboring Democratic Republic of Congo. These two cities, separated by the Congo River, are expected to grow to a combined total of nearly 20 million residents by 2025. But, because of poor infrastructure and inefficient customs procedures, only 1.1% of Congo’s imports come from its neighbor.

According to the World Bank, getting a container across the Congo River costs almost $4,500, and the total can top $10,000 once the cost of inland transportation is added. By contrast, moving an identical container with the same cargo from Malaysia to Singapore costs less than $1,000.

Africa needs to build its capacity to trade competitively in today’s global economy.

Even as we consider how to make the most of AGOA’s historic renewal, we need to look beyond 2025 and imagine what a deeper, more mature economic partnership might entail.

As President Obama made clear at the US-Africa Leaders Summit in Washington, DC, a year ago, the US is not new to Africa. We have been engaged in Africa for decades, not as a colonial power, but as a partner. And that partnership is based not on extracting resources from the region, but on unlocking growth for all.

Design by Polyp

Edmund S. Phelps writes:   Too many politicians and economists blame austerity – urged by Greece’s creditors – for the collapse of the Greek economy. But the data show neither marked austerity by historical standards nor government cutbacks severe enough to explain the huge job losses. What the data do show are economic ills rooted in the values and beliefs of Greek society.

Greece’s public sector is rife with clientelism (to gain votes) and cronyism (to gain favors) – far more so than in other parts of Europe.

There are serious ills in the private sector, too – notably, the pervasive influence of vested interests and the country’s business and political elites. Profits as a share of business income in Greece are a whopping 46%.  Insiders receive subsidies and contracts, and outsiders find it hard to break in. Astoundingly, young Greek entrepreneurs reportedly fear to incorporate their firms in Greece, lest others use false documents to take away their companies.

This stunted system springs from Greece’s corporatist values, which emphasize social protection, solidarity instead of competition, and discomfort with uncontrolled change.

Greece saw productivity gains after World War II – but mostly from increases in education and capital per worker, which can go only so far. Two important sources of broad prosperity are blocked by Greece’s system. One is an abundance of entrepreneurs engaged in detecting and exploiting new economic opportunities.  The other source of broad prosperity is an abundance of business people engaged in conceiving and creating new products and processes.

Some economists believe that these structural considerations have nothing to do with Greece’s current crisis. In fact, a structuralist perspective illuminates what went wrong – and why.

For several years, Greece drew on the EU’s aptly named “structural funds” and on loans from German and French banks to finance a wide array of highly labor-intensive projects. Employment and incomes soared, and savings piled up. When that capital inflow stopped, asset prices in Greece fell, and so did demand for labor in the capital-goods sector.

With competition weak, entrepreneurs did not rush to hire the unemployed. When recovery began, political unrest last fall nipped confidence in the bud.

The truth is that Greece needs more than just debt restructuring or even debt relief. If young Greeks are to have a future in their own country, they and their elders need to develop the attitudes and institutions that constitute an inclusive modern economy – which means shedding their corporatist values.

Europe, for its part, must think beyond the necessary reforms of Greece’s pension system, tax regime, and collective-bargaining arrangements. While Greece has reached the heights of corporatism, Italy and France are not far behind – and not far behind them is Germany. All of Europe, not just Greece, must rethink its economic philosophy.

Jean Claude Trichet writes:   Banks and banking rely on trust. But while trust takes years to establish, it can be squandered abruptly if a particular bank’s ethics are weak, its values poor, and its behavior simply wrong.

The events that triggered the 2008 global financial crisis, together with the subsequent scandals that have emerged – from the rigging of the London Interbank Offered Rate (Libor) to sanctions-busting and money-laundering – amount to a catalog of cultural failures within our financial institutions. Yes, extensive measures have been taken since the crisis to strengthen the financial system. But a profound weakness remains: To be blunt, it concerns the risk-taking culture that still prevails within some departments of global banks and in the financial system itself.

We fail to start our examination of banks with definition of what a bank is.  A bank takes in other peoples’ money, which is why banks have to be regulated.  They hold and invest that money.  Earning 10-12 percent if considered reasonable.  Banks now try to earn %25 percent. They simply can’t do that legally.

Too often, bank bosses’ promises to change the “corporate culture” and ensure their employees’ good conduct have not been matched by fully effective implementation. In too many cases, banks are still failing to fulfill their obligations in serving their communities and the public at large.

More regulation is not necessarily the best path forward: The rules and norms that define a “right” and “wrong” culture are beyond the wit of regulators and supervisory bodies  It is not enough to strengthen legal compliance.  Real change must go to the core of an institution’s day-to-day operations. Banks must change compensation practices that reward excessive risk; protect whistleblowers; recruit and train staff to reflect proper ethics; and ensure that their boards of directors play a more active oversight role.

Employees must understand instinctively what may be done and what should never be done. They must internalize a culture that values strict adherence to high ethical standards of conduct.

Banking regulators and supervisors also have a decisive role to play. They need to work with boards and senior management to ensure that major reforms are implemented and then consistently applied. Regular exchanges of views between oversight officials and the banks should be regarded as a crucial component of this process.

Keith Johnson writes:  The discovery of a giant natural gas field off the coast of Egypt is great news for that energy-starved nation, but it threatens to upend the grandiose energy dreams of neighbors like Israel and Cyprus.

Eni, an Italian energy firm, announced this week that it had discovered the largest gas field ever found in the Mediterranean, a “supergiant” basin that could hold as much as 30 trillion cubic feet of gas. If those early estimates are correct — and optimistic appraisals often give way to more sober analyses — it would be even larger than Leviathan, the giant offshore gas field that has fueled Israeli dreams of becoming a regional energy exporter. The new field, known as Zohr, will take at least three years to come online — and potentially longer if the country’s security situation continues to worsen — but it could then meet Egypt’s energy needs for decades and provide both an economic and political boost to President Abdel Fattah al-Sisi.

Fresh supplies of natural gas could help Sisi keep power plants and factories running, no small matter in a place where electricity blackouts sparked the political turmoil that helped bring down two of Egypt’s former leaders.

Eni’s new discovery, coupled with an announcement earlier this year by BP that it will invest $12 billion to develop existing Egyptian gas fields, amounts to a corporate endorsement of the economic reforms that Sisi has steadily pushed through. That includes paying off debt to foreign energy firms and starting to overhaul the domestic energy market by, for example, rolling back politically popular but ruinously expensive fuel subsidies.

If the gas find is potentially great news for Egypt, it could represent a blow to Egypt’s neighbors. Israel still has plans to turn its own massive offshore gas resources into a source of energy for the rest of the region. Israel and Egypt signed a deal last year under which Israel would export gas from the huge Leviathan field to Egypt; Israel inked similar deals to export gas to Jordan.

Cyprus, which had grand plans of its own to tap offshore gas fields and export fuel to Egypt and others, is putting a brave face on the news. Cypriot leaders, burned by disappointing drilling results in their waters so far, figure the massive Egyptian discovery augers well for the island’s own energy future because the Zohr prospect is just a few miles away from Cypriot waters and likely shares the same geology.

And the Zohr discovery won’t slam the door shut on Egyptian imports right away, leaving a few years of juicy prospects for other suppliers. Though Eni and Egyptian officials pledged to fast-track development of the field, it will take years to finance and build the infrastructure needed to fully tap it. Even that timeline could grow longer if Egypt’s security situation worsens, which could put a damper on foreign investment.

One final ripple from the Egyptian discovery could be a revival of talk about eastern Mediterranean countries supplying Turkey with natural gas. Both Cyprus and Israel looked at Turkey as a potential market, but politics as much as economics seemed to doom any deals.

The economics of long lives

Gerardo P. Sicat writes: My comments are occasioned by the passing away of my mother-in-law last Saturday, at the age of 102 years and eight months. My own mother, who passed away a few years back, had lived up to the ripe age of 96 years.

Both mothers were born in the decade of the 1910s when life expectancy at birth was likely well below 60 years. Then, antibiotics and public health standards were very low and incomes and facilities also much worse.

Long lives. Barring the occurrence of accidents, catastrophes, wars and other life-shortening natural events , the economic and social milieus in which we live, in addition to one’s genes, have much to do on how long one eventually lives.

The improvement of incomes (through economic development and growth) help to lengthen lives, for this affords the individual better nutrition, infrastructure (social, physical and economic), and improved leisure and comfort.

At the other end, developments in the medical sciences and the advancement of public sanitation have life-extending influences on everyone.

The economics of life. Economists have advanced the proposition that in general, people balance the incomes they earn against their total expenditures in their lifetime. However, during specific stages of their lives, the patterns of income and expenditure differ.

In the last stage of life, that income earning capacity declines and eventually stops. As one lives beyond those productive years, the net earnings beyond the expenses of the past (which are savings) represent the sustenance that tide us over to the end of life.

Development and the improvement of social networks. The network of support for old age in traditional societies is often the family or the clan. As productive life ends and infirmities develop, the family becomes the principal support for their old folks.

With economic development, society through government, finds ways of extending social support networks to supplement the role of the family.

The most important feature of such social support networks are social security and universal medical insurance. Social security is paid for by taxation of individuals, otherwise, it becomes unsustainable for a society to bear.

Universal medical insurance is often undertaken through the insurance principle of actuarial equivalence. In this setup, the premiums collected are calculated to match the benefits received.

Government-sponsored social support networks affect the life cycle income. They help to augment the capacity to generate savings for the individual. For instance, social security contributions can raise the saving process. As a result, they enlarge the stream of pension incomes in the post-retirement stage.

In the Philippines,the social security fund thus generated can only provide a stream low pension payments.

The average pensioner in the Philippines receives less pension incomes compared to the “miracle” economies in East Asia.  Her husband was hardworking, competent and brilliant. He would become the chief magistrate of the land. He had also taught law for years to supplement his government pay. After the husband died, she continued to receive his social security pension.

Two decades later, as if by an act of God, legislation granting pensions for survivors of members of the judiciary. For my mother-in-law, this changed the situation very much. The cost of senior sustenance was more than adequately covered. However, when her final illnesses worsened and her medical condition became serious, that pension and previous savings from it were easily and totally consumed.

My mother’s case was uniquely different from my mother-in-law’s. From the beginning, she was the traditional housewife. Her life’s income was integrated with that of my father who was a small proprietorial businessman.

When my father died,  my mother continued the business. But she had no no social security pension like most small businessmen. She survived on what little remained.

During the 1970s, my mother migrated to the US where she joined my sisters who had migrated right after John F. Kennedy’s immigration liberalization.

In the US, my mother was very useful although she did not secure formal employment. As an elderly person, she received some welfare benefits from the State where she lived enabling her to sustain her own upkeep in old age even as she lived with her children.

EU’s circular economy can help the union thrive.

Brittany Lyle writes:  Hawaii’s electricity prices are higher than anywhere else in the nation. The burdensome cost of power, paired with the island state’s plentiful sunshine, has led to an unparalleled adoption of residential rooftop solar energy. On the island of Oahu, where 80 percent of the state’s population lives, more than 12 percent of Hawaiian Electric Co. (HECO) customers have rooftop solar systems — about 20 times the solar penetration rate of any mainland utility. As homes increasingly morph into mini power plants, some residents are winding down their HECO bills to net zero.