Aug 20, 2010

Swiss tourism and the falling franc

Jack Ewing has an interesting post on Swiss tourism at Economix, here's some paraphrasing:
The strong franc, which has risen more than 10% against the euro this year, has also had a negative effect on a sector most people don’t think of as an export: tourism.Tourism accounts for 3.4% of GDP but for 6% of employment (200,000 full-time jobs, four times as many as watchmaking).
The importance of tourism to Switzerland helps explain why the Swiss National Bank went to extraordinary efforts this year to try to prevent the franc from strengthening too quickly against the euro.Tourism is highly price sensitive. The Swiss Alps must compete with neighboring Austria, Italy, France and Germany, which also offer plenty of mountains and ample opportunities for skiing and hiking, and all use the euro. Swiss hoteliers are responding by cutting prices and in some cases quoting prices in euros. 
Cutting prices? Really?

Aug 16, 2010

Was Ricardo right?

Here is a short note I wrote on the gains of comparative advantage export specialization (CAES). I developed a new inidex and find that it accounts for 34% of the variance in GDP per capita across countries. Let me know what you think!

Aug 12, 2010

Finally Some Fiscal Sense

Finally, some sense in the debate surrounding the implementation of fiscal policy....

Is Armenia importing coffee from Utopia?

Armenpress reports:

YEREVAN, AUGUST 9: Five thousand 461 tones of coffee has been imported to Armenia in the first half of 2010 (... compared to) 4 thousand 861 tones (last year ...). The main part of the coffee (...) has been imported (...) mainly from Indonesia... This January-June coffee has been imported from Cameroon, Columbia, Salvador, Utopia, Guatemala, Honduras, India and Russia as well.
 Ethiopia maybe? Or is it tariff evasion?

ht: Frank

Aug 11, 2010

Marketing The Economist

So now we find out in this article why we read The Economist......

......apparently it's not because it contains interesting and informative articles......but because we are all slaves to fashion and want everyone to think that we are smart and sophisticated........

Aug 10, 2010

Divorce insurance

SafeGuard Guaranty Corp., an insurance start-up based in North Carolina, recently released what it’s billing as the first world’s first divorce insurance product. The casualty insurance is designed to provide financial assistance in the form of cash to cover the costs of a divorce, such as legal proceedings or setting up a new apartment or house. It is sold in “units of protection.” Each unit costs $15.99 per month and provides $1,250 in coverage. So, if you bought 10 units, your initial coverage would be $12,500 and you’d be paying $15.99 per month for each of those units. In addition, every year, the company adds $250 in coverage for each unit. 
Source: NY Times via Marginal Revolution.

Aug 9, 2010

World Bank reports

Bhanwar Gopal, an artist from the Barefoot College, prepares masks for plays and puppet shows with material from recycled World Bank reports. "We keep getting these reports that no one reads, so we decided to put them to some use," Mr Roy says. Traditional Rajasthan puppetry is a skill the college promotes strongly.

Source: BBC ( I don't know how old this is). ht: Ferdinand

Aug 8, 2010

Wyclef for president

Wyclef Jean of the Fugees announced last week he would run for the Haitian Presidency. Many commentators argue that he lacks the experience to run a country, including Laura Freschi at Aid Watch. Steve Burr-Renauld, 23, who hails from an affluent family in Port-au-Prince, doesn't think a hip-hop star has the credentials to run. "What if Jay-Z became President of the US?".

But Time is being less negative: "That Haitian political class, it should be remembered, has its own epic shortcomings, whether measured by incompetence or venality. Haiti's traditional elite has shown an utter failure — and a lack of will — to reform a medieval land-ownership system".

Aug 6, 2010

Why declare rice as mung beans?

Two Philippine companies, Plum Blossom Import-Export Food Corp. and Full Story Source Marketing were apparently importing rice from Vietnam and Thailand but misdeclaring it as mung beans to a corrupt customs agent. Why?  White rice imports require an import license from the National Food Authority and are subject to a 50% duty and 12% VAT. Mung beans, meanwhile, are zero-rated in both customs duties and VAT under the ASEAN Free Trade Agreement...

Source: Philippines Daily Inquirer

Aug 5, 2010

Smuggling sand to Singapore

Singapore is running out of space. Since the 1960s, its land area has grown from 581.5 to 710 sq. km, and further land reclamation is planned. For this it needs sand, lots of it. The problem is that most countries have  restrictions on sand export. A few months ago I blogged about Indonesian island sand being smuggled, and islands disappearing underwater as a result. As Foreign Policy reports, Malaysia may also be exporting it, despite a 10 year old blanket ban:
In June, an investigation by the Malaysian newspaper the Star blew the lid off the sand smuggling trade. The paper's reporters followed a Malaysian dredging company working on the Johor River, about 50 miles inland from the Singapore Strait. The company had won a transport license by claiming it was shipping extracted sand internally, to the Malaysian ports of Tanjung Pelepas or Danga Bay. The shortest route to the destination, however, took ships through Singaporean waters. Once the sand was extracted, the barges sailed downriver to the Malaysia-Singapore border and passed through customs. The barges never made it to the claimed destination -- they simply stopped at the Singaporean jetty of Pulau Punggol Timur, presented freshly forged paperwork, and unloaded their cargo. 
This can be seen in the smuggling gap in official trade statistics, as Singapore declares more imports from Malaysia than the latter declares. It is curious that in 2008, the gap in kg is the other way round...

Aug 4, 2010

Armchair economists

"We economists like to ponder questions such as “why does popcorn cost so much at the movies?” and there is plenty we can say on the subject that is both true and counterintuitive. But the armchair does preclude one obvious research angle, which is to ask the people who run the cinemas."
That's Tim Harford confessing in the FT.

Aug 2, 2010

How goods reach Iran despite the sanctions

BBC reports:

"Iran's isolation could mean new opportunities for our border region," says Osman Celik, the deputy chairman of Van Provincial Chamber of Commerce, as he shows off the commemorative plates from his last trip to Iran. "Turkey voted against the UN sanctions, but she's going to have to abide by them. So formally Turkey will probably give the impression to the world that she's abiding by them. But the illegal trading will probably gain some power, and people in the border will find a way to help their Iranian friends."

An Iranian dealer in Istanbul reveals how serious business is done. On the surface, he says, his business is legal. But just 10% of his goods go to Iran legally. "I export strategic equipment, like aeroplane parts, to Iran. Those companies would never sell their goods to Iran - because they have American investors. How do we do it? We buy the equipment under the name of a Turkish company and the paperwork shows the destination is another country. But in fact the load ends up in Iran. We charge them 80% over the market price, but they need it - so they pay."