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The Nano- Diplomacy as a Success of Holland’s Trade?

Nargiz Hajiyeva

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In today’s globalized world, the development of nanotechnology being considered as a pivotal gateway to Europe is based on the rational large-scale run and implementation of innovations in nano-based high-tech factories and companies. In previous times, The Netherlands took the all-better round pro-active position in regard to nanotechnologies by inception varied kinds of national programmes focusing on the producing nano-based materials and electronics at the nanoscale.

Today, the Netherlands is one of the nation countries of inventors and entrepreneurs working in the field of nanotechnology. Ostensibly, the growing role and transparent functioning of nanotechnology in the Netherlands leads to immeasurable cross-over scientific solutions to health, security, renewable energy, sustainable mobility, and environmental issues.

It is undeniable fact that in the 21st century, the Netherlands has opted for the strategy of “Economic Diplomacy” in order to advance its economic development and show far more openness to the international marketplace through fostering exporting of nano-based materials and electronics. In today’s industrialized world, how is the “Dutch answer” considered with regard to the development of nanotechnology?! – “The Dutch answer” is to boost the rational manufacturing and transparent exporting of nano-scale materials and services to the international marketplace.

In the Netherlands having large-scale inventiveness, pragmatism and business fortitude, there are a number of nano-related organizations, factories and in particular, newborn companies (namely, Eurekite specialized in the manufacturing of nanofibers) which are committed to facilitating the future growth of nano-scientific innovations that focus on answering the societal, environmental and economic challenges happening in the contemporary world. 

In fact, the large-scale development and productive deployment of nanotechnologies are based on providing the Dutch national interests. Hence, it would be helpful to underline the major role of government, education, specialized institutions, and universities in order to interpret the causes of economic and societal development in depth. First and foremost, the prevailing role and interest of government influence the progress of major companies and factories in Holland. Because of the fact that the government (in particular, The Ministry of Foreign Affairs) supports the nano-related factories and start-up companies (for instance, Eurekite) which are dealing with the implementation of innovative projects and models through innovation credit, grants, and tax benefits. For example, the Dutch Ministry of Economic Affairs financially supports NanoNed Company.  From the prism of the maintenance of national interests, government as a basis of the Economic Diplomacy” also invests in national companies in order to not only does promote and represent their innovative breakthroughs on a foreign marketplace with the representation of “industrial attachés” but also provide the sufficient development of national economy.

It is unquestionable fact that to encourage the innovative breakthroughs not only does increase the economic growth, in particular, create the opportunities to new employment areas but also strive to mitigate varied kind of problems and find out solutions to the pivotal societal issues in regard to global food security, healthy life, ageing populations, and other kinds of related issues.

For instance, the Dutch government held the “National Icons” competition in order to select the far more innovative and cutting-edge projects and models of ambiguous entrepreneurs as winners of the competition. On the other hand, there is a huge golden “triadic nexus” in the Netherlands in the field of nanotechnology, government, universities and social entrepreneurs that fertile the soil for the targeted innovation. In essence, they work closely collectively within the atmospheric research of the Dutch chemical industry and strive to foster cooperation to keep the chemical industry much more competitive and drive the national prosperity in the future.  

One of the main causes of the economic effect is the Dutch Education. Education plays a pivotal role in the teaching of entrepreneurial skills, nanotech advancements, the fabrication of nanomaterials, and the development of innovative projects and models. Thus, the Dutch government sets up close relations with the universities. For instance, the University of Twente supported by MESA+ Institute for Nanotechnology is one of the biggest universities in the field of nano-based materials and innovations. 

In this regard, the Dutch government ensures financial support for promising students who are able to make technologically new innovations. For instance, Bahruz Mammadov from Azerbaijan was pursuing his MSc degree at University of Twente, as a result, he turned his own Master thesis into innovative project and discovered the new-fangled inspirational materials based on the implementation of nanofibers, afterwards, he was awarded the financial support by the Dutch government and founded his own scientific and creative company called Eurekite in Enschede, the Netherlands.  Eventually, the Dutch government closed the gap between education and chemical industries by supporting the scientific innovations of nano-based universities.

Another economic impact of the Nanotechnology is the creation of nano-future markets in   upcoming years in order to enable virtual financial tools (shares and stocks) to be traded with the foreign investors sufficiently. The high-tech factories are capital intensive and devote approximately € 2.5 billion a year in the field of research and development, (R&D) which is nearly 50% of all private R&D in the Netherlands and 10% of the sector’s added value. Furthermore, they have environmental ambitions that the chemical factories will lessen greenhouse gas emissions up to 40% by 2030, compared to the situation in 2005.  The Netherlands also keep the balance of trade with 60% chemical industry made a constructive contribution of nearly €60 billion to the balance of trade in 2012, which was larger than 60% of the total balance of trade of products and services in the Netherlands. According to the report of Statistics Netherlands, the GDP growth rate advanced 0.3 % in 2016 compare to the previous year with 0.2%. 

In conclusion, the positive economic impacts of nanotechnology in the Netherlands are mainly necessary for the future development of Holland trade and “Economic Diplomacy”. Indeed, the development of nanotechnology caused the improvement of the healthy life standards, green growth, productive utilize of renewable energy, agro-food security and smart and sustainable mobility within the Dutch Society. Therefore, nanotechnology is the main provider of economic development and foreign investment in the Dutch trade.

Ms. Nargiz Hajiyeva is an independent researcher from Azerbaijan. She is an honored graduate student of Vytautas Magnus University and Institute D'etudes de Politique de Grenoble, Sciences PO. She got a Bachelor degree with the distinction diploma at Baku State University from International Relations and Diplomacy programme. Her main research fields concern on international security and foreign policy issues, energy security, cultural and political history, global political economy and international public law. She worked as an independent researcher at Corvinus University of Budapest, Cold War History Research Center. She is a successful participator of International Student Essay Contest, Stimson Institute, titled “how to prevent the proliferation of the world's most dangerous weapons”, held by Harvard University, Harvard Kennedy School and an honored alumnus of European Academy of Diplomacy in Warsaw Poland. Between 2014 and 2015, she worked as a Chief Adviser and First Responsible Chairman in International and Legal Affairs at the Executive Power of Ganja. At that time, she was defined to the position of Chief Economist at the Heydar Aliyev Center. In 2017, Ms. Hajiyeva has worked as an independent diplomatic researcher at International Relations Institute of Prague under the Czech Ministry of Foreign Affairs in the Czech Republic. Currently, she is pursuing her doctoral studies in Political Sciences and International Relations programme in Istanbul, Turkey.

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Economy

Building Back Better: The new normal development path

Alek Karci Kurniwan

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Global stock markets such as Footsie, Dow Jones Industrial Average and Nikkei has decreased the profit since the outbreak of Covid-19 Pandemic in early 2020. Dow Jones fell to its lowest point, minus 35%, in April 2020 (Bloomberg, 4/27/2020). In US, more than 1 in 4 workers have lost their jobs since the coronavirus crisis shut down much of the economy in March.(National Public Radio, 28/3/2020).

Even the trend of Covid-19 death case has decrease, but still worried. Will the second wave happen? Because of that a new normal order is needed, when the spread of the pandemic stops and then the economy returns to normal.

There are at least two potential scenarios for the recovery of the economic crisis which were affected by Covid-19. The first scenario, gross domestic product will be pushed in such a way as to make the economy grow faster. By stimulating consumption, investment, government spending, and commodity exports.  At the same time, industrialization will grow stronger than the pre-Covid-19 conditions.

Environmental conditions that had improved during the emergence of Covid-19 might be polluted again. Carbon emissions are predicted to rise into the air, to pre-Covid-19 levels, and will even be higher than before. This is what is called the “revenge pollution” phenomenon. Like the recession and the global financial crisis in 2008, which is comparable to the scale of the crisis impact of the Pandemic Covid-19, even in very different kinds. Governments in the world responded with an economic rescue package and a stimulus worth by billions of USD. But in the last decade, greenhouse gas emissions have increased.

China has a real precedent. In response to the global financial crisis in 2008, the Chinese government launched a USD 586 billion stimulus package focused on massive infrastructure projects. That is why China’s industry has grown rapidly over the years. But for the environmental impact, their emission levels increased. Known as “airpocalypse” as the worst smog in city centers, such as Beijing in the winter of 2012 and 2013.

Besides, the world also creates a level of inequality that is far greater than that seen since the Second World War. The world shows a very striking difference between the super-rich and the very poor in terms of health, job security, education and other matters. As stated by Oxfam (2017), the wealth of 1% of the rich is equal to the combined wealth of 99% of the world’s population.

Then the second scenario, where we depart from the revenge pollution precedent after 2008. Pandemics give opportunities, when the economy back to begin normally and new rules, there is an opportunity to make the impossible to possible – or the last ignored things can be applied. This is the best time for the green agenda includes in the order that we want to renew.

Oxford University recently published an interesting study related to the global crisis recovery plan, entitled “Building back better: Green COVID-19 recovery packages will boost economic growth and stop climate change.” The focus of the research is to compare between green stimulus projects with traditional stimulus, such as the taken steps after the 2008 global financial crisis. The researchers found that, green projects create more work, provide higher short-term returns, and lead to long-term increased cost savings.

In economic development, to quickly recover from the crisis, the Government needs projects, which is called by experts with the term ‘shovel ready’ infrastructure projects. It exceeds labor-intensive projects, it also does not need high-level skills or extensive training, and gives profitable infrastructure for the economy. An example is the clean energy infrastructure, which produces twice as much work as a fossil fuel project.

We can see the need for bicycle-friendly and pedestrian-friendly infrastructure in cities. Then build a broadband internet network connection, because online systems for schools and work will be used massively. And the network for charging electric vehicles. Therefore, in the future we will definitely need more electricity. It also needs mass projects for solar, wind and biogas power plants.

According to WRI (2017), the main sources of global greenhouse gas emissions are electricity (31%), agriculture (11%), transportation (15%), forestry (6%) and manufacturing (12%). All types of energy production contribute 72% of all emissions. The energy sector is the most dominant factor causing greenhouse gas emissions. That’s how our lives are still dependent on fossil energy in the “old normal”. “New normal” should be able to replace old energy sources with renewable energy.

In April 2020, EU Ministers of environment launched “The European Green Deal” as the point of the post Covid-19 recovery process. At least 100 billion Euros were mobilized during the 2021-2027 period in the most affected regions for investment in environmentally friendly technology, decarbonate energy sector, and other new green norms.

CEOs of large companies such as Ikea, H&M and Danone have signed commitments representing the private sector in this alliance. The Contracting Parties understand that the fight against climate change is the point of Europe’s new economic policy, with an emphasis on renewable energy, zero emissions and new technology. This should be an example for the world in crisis recovery from the impact of the Corona virus pandemic. There is an opportunity to redesign a sustainable and inclusive economy.

In the Paris Agreement 2015, countries in the world have agreed to responsible for reducing the impact of climate change, with different portions and capabilities.The target is quite high, the world must reduce emissions by more than 45% if global warming is limited to 1.5 °C. Without the great new adaptation, the goals won’t be achieved easily.

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Of IMF’s Debt Trap and Chinese Debt Peonage

Abdul Rasool Syed

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With the mandate of fostering global monetary corporations, securing financial stability, facilitating international trade, promoting high employment and sustainable growth, and reducing poverty around the world, IMF formally came into existence in 1945 at Bretton Wood conference. Ever since its inception, the fund has been under severe criticism by economic luminaries, celebrated academicians, and the enlightened political scientists belonging to different parts of world exclusively to the third world countries.

For many observers, the problems of the fund are congenital; Bretton Wood produced a deformed infant and a little has been done through the years to overcome such deformities. The assertion is often made the fund was created by and for industrial countries with no concern for the developing countries. Much of the criticism on fund revolves around the conditions attached to its lending facility.

According to well-versed economists, when the fund prescribes austerity to the recipient country, the health budgets are cut down, children are forced to leave schools and the workers are thrown out of work. Education and health sectors suffer the worst consequences of IMF’s prescribed austerity drive. IMF with utter disregard to domestic affairs of the host country prescribes its own recipe to cure the ills of borrowing economy.

It dispatches a team to assess the economy of the host country, measure its performance, and to recommend corrective measures and remedial actions; of what Joseph Stieglitz– a former World Bank chief economist famously scorned as second-rate economists from first-rate universities–says, “They are well-meaning people and I am sure they want to help. But their visits are painful reminders of riots in Bolivia, Indonesia, and strikes in Nigeria…”

Another renowned economist Jeffery Sachs argues that the IMF’S “usual prescription is budgetary belt-tightening to the countries who are too poor to buy such belts”. Furthermore, it reminds me the prophetic words of Harry White former assistant to Secretary of the U.S treasury who once said “I don’t think the fund should butt into every country’s business and say “we don’t like this or that”.

Moreover, for the developing country like Pakistan, the IMF prescriptions are force-fed and according to one economist, we have to swallow the IMF prescribed medicine because we have no other choice. He adds that some of the recommendations of the fund are like a doctor stemming the bleeding of your arm by stopping your heart. Thus, such prescription incompatible with the domestic market of the borrowing country does not bear any fruit. It rather redoubles the difficulties for the host country to cope with its socio-economic challenges.

In addition, there is also a widespread perception in developing countries that by giving its own program, the fund entraps the borrowing country and thereby penetrates deep into its economic system. The fund’s undue intervention in the country’s internal economic dispensation results in economic chaos and uncertainty. The policymakers are therefore unable to craft economic programs in accordance with requirements of the home economy. Consequently, the country is forced to surrender its economic independence and financial sovereignty.

Another allegation leveled against the IMF is that it is a tool of U.S foreign policy that furthers its strategic and economic interests.
Being the only nation with an outright veto helps Washington sway decisions to its benefits. The U.S, therefore, exploits the fund to lure the borrowing country into a debt trap and thereby makes it as its lackey. Such entrapment helps U.S advance her imperialist agenda and meet her global interests. This can be plainly grasped in our relations with the fund, whose pockets are generous to us when we serve the interests of the U.S as it happened after 9/11 and penny-pinching otherwise.

The undue clout of Washington on IMF has raised many questions on its credibility.  Rightly did Lord Keynes describe the views of America on the future of IMF. He wrote in 1944, before Bretton Wood Conference. “In their eyes, the fund should have wide discretionary and policing powers and should exercise something of the same measure of the grandmotherly influence and control over the central banks of the member countries, that these central banks, in turn, are accustomed to exercise control over the other banks of their own countries”… this is how the game to control the economy of the borrowing country is played by U.S in cahoots with IMF.

It seems that China too is following the footprints of IMF. It is employing the same tactics to create its global hegemony as that of the U.S. by using its heavy influence on IMF. It has been keenly observed by political cognoscenti and leading defense analysts that China is colonizing smaller countries by lending them massive amounts of money that they can never repay. The country is accused of leveraging massive loans it holds over small states worldwide to snatch their assets and increase its military footprints.

Developing countries from Pakistan to Djibouti, the Maldives to Fiji all owe huge amounts to China. There are examples of many defaulters being pressured into surrendering control of their assets or allowing military basis on their land. This move of China is being dubbed by its detractors as “debt-trap diplomacy” or debt colonialism- offering enticing loans to countries unable to repay and then demanding concessions when they default. Sri Lanka provided a prime example of last year.

Owing more than $1 billion in debts to China, Sri Lanka was forced to hand over Hambantota port to the companies owned by the Chinese government on a 99 years lease. And Djibouti, home to US military base in Africa, also looks likely to cede control of a port terminal to a Beijing-linked firm. Apart, America is eager to stop the Doraleh container terminal falling into Chinese hands, particularly because it sits next to China’s only overseas military base.

While commenting on the Chinese debt- trap diplomacy, Rex Tillerson said” Bejing encouraged “dependency using opaque contracts, predatory loan practices, and corrupt deals that mire nations in debt and undercut their sovereignty”.

Additionally, China’s debt empire has also been rearing its head in the Pacific, prompting fears the country intends to leverage the debt to expand its military footprint into south pacific. Beijing’s creation of man-made islands in the disputed South China Sea for use as military bases suggests the concern may be warranted.

Another case worth mentioning here is of Tonga. It also carries some big debts and is struggling hard for the repayment. Tonga’s Prime Minister, Akilisi Pohvia voiced his concerns saying that Beijing was planning to seize assets from his country. Inter alia, a report from the Center for Global Development offers some insight into spreading China debt. It depicts that the infrastructure project loans to the likes of Magnolia, Montenegro, and Laos have resulted in millions or even billions in debts, which often account for huge percentages of countries’ GDPs.

Many of these projects are linked to the belt and road initiative- a bold project to create trade routes through the swathes of Eurasia, with China at the center. Mahathir Mohammad, the Malaysian Prime Minister while talking to press expressed his reservations about Chinese investment in the following words” We welcome foreign direct investment from anywhere certainly from China. But when it involves giving contracts to China, borrowing huge sums of money from China- and Chinese contractors prefer to use their own workers from China, use everything imported from China even payment is made in China. So we gain nothing at all”.

Therefore, Pakistan in dealing with both IMF and China must remain cautious so that it might neither fall prey to Chinese debt peonage nor to IMF’s debt trap. It may not be possible in case of IMF because a beggar cannot be a chooser while in case of engagement with China, we need to maintain caution and outline our own rules of engagement based on monitoring, evaluating, and allowing discussions to weigh the pros and cons of each and every development project.

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Armenia’s inability to solve pandemic-related economic problems

Orkhan Baghirov

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According to data from the Armenian government, in 2019 the country’s economy grew by about 7.6%,which was the highest figure since 2008. Further data from the Statistical Committee of Armenia show that the trade and service sectors were the main drivers of economic development. In the same period, 9% growth in industrial output and a 4% reduction in agricultural output were also recorded. Inspired by these growth numbers, during a cabinet meeting in January, Prime Minister Nikol Pashinyan said that he was confident that, as a result of the joint efforts of government members, even higher figures will be registered in 2020. However, as a result of subsequent pandemic-related events, his confidence disappeared and difficulties in solving economic problems have proven the inability of the Armenian government to act independently.

Since the declaration of an emergency situation on March 16, economic activity has significantly slowed, thus leading to the creation of various economic problems and a financial deficit. Even though some restrictions were softened in May, that did not lead to a noticeable increase in economic activity. As a result, the economic forecasts for Armenia in 2020 worsened. According to the European Bank for Reconstruction and Development, the economy of Armenia will contract by about3.5% in 2020 as a result of global uncertainty and falling demand. However, the Armenian government is more optimistic in its prediction of a decline in GDP of 2%.

One of the main problems created by the pandemic-related economic restrictions is the impossibility of implementation of government-approved budget projects for 2020. As the forecast for Armenia’s GDP worsens, it will lead to lower tax revenues than initially planned for. According to the Finance Minister, Atom Janjughazyan, with the forecast 2% decline of GDP at the end of the year, tax revenues will decrease by about 10% compared with the planned volume. If the economy diminishes by more than 2%,that will lead to an even greater reduction in tax revenues. Janjughazyan also noted that the government plans to keep budget spending unchanged in order to mitigate the negative consequences and create the preconditions for a quick recovery. Although this decision could help to prevent social discontent and avert some economic problems, it could have long-lasting economic consequences by significantly increasing the budget deficit. With a reduction in taxes generated of about 10%, the budget deficit will double, reaching 5% of the projected GDP or $676.4 million (1 Armenian Dram=0.0021 USD). To run the budgeted projects with such a high level of deficit, the government will have to amend the budget legislation in order to exceed existing restrictions.

Another financial problem for Armenia is related to the implementation of support programs. As the emergency situation has substantially impacted economic development, the government has had to implement support programs. Even though these programs have been important in supporting the economy, they have also created financial problems as the government does not have enough resources to implement them independently. To support the economy, the government approved a support package of $315 million. Of these funds, $168 million will be used for long-term economic development programs;$52.5 million for the elimination of economic problems, social tension and liquidity issues; and $42 million for the redistribution of reserve funds. So far, the Armenian government has approved 20 crisis measures for the implementation of support programs.

Financing the high budget deficit and extensive support programs creates financial problems as Armenia does not have sufficient financial resources. Therefore, Armenia must attract funds from other countries or international financial institutions. Based on the calculations of the Armenian government for financing the combined support programs and budget deficit,it needs to raise an additional$546 million. Armenia already has a large volume of external debt (40% of GDP in 2019) and raising additional funds will significantly increase that debt. Taking on an additional $546 million of debt will increase the government’s external debt by about 10%. Taking into account that, during 2019, the total public debt of Armenia increased by about 14.8%, the increase of external debt by about 10% from only one source shows how seriously it will affect the financial security of the country.

Armenia also is facing economic problems in the energy sector. On April 1,GazpromArmenia, the Russian-owned natural gas distributing company, declared that it was going to ask the Public Services Regulatory Commission (PSRC) for changes to gas prices in Armenia. It proposed to set the same price for all customers beginning from July 1. This change would eliminate the discount for low-income families, thus leading to a 35% increase in price for them but a2.2% decrease for consumers that use up to 10,000 cubic meters of gas per month. The Armenian government was dissatisfied with the offered gas rates as it was already dealing with pandemic-related economic problems and it requested that Russia decrease the price of gas that they sell to Armenia.

As the talks with Russia did not lead to desired results, the PSRC accepted the changes but kept the price for domestic users and low-income families unchanged. The PSRC wants the average weighted price of 1,000 cubic meter of gas be set at $266.7 USD,$16.43 below the price that Gazprom Armenia had proposed. The price of natural gas will increase from $212 to $224 per thousand cubic meters for agricultural companies, and from $242 to $255.92for consumers who use more than 10,000 cubic meters of gas per month. The new prices will enter into force on July 19, except for thermal power plants. Despite the fact that PSRC was able to prevent price changes for ordinary citizens, the new rates will create unemployment problems. In order to operate with accepted price changes Gazprom Armenia has to lay off about 1500 employees and reduce its annual revenues about 6%.

The inability of the Armenian government to solve its economic problems with its own financial resources or to diversify its energy imports will lead to significant economic problems. Many countries around the world are facing economic and financial problems and are therefore looking to obtain foreign assistance, and this reduces opportunities to access foreign finance by intensifying competition. Therefore, it is not currently easy for Armenia to attract financial resources. The dependence of the energy sector on the price policies of other countries also creates economic instability. Even though the PSRC was able to avoid natural gas price rises for ordinary citizens, it cannot prevent unemployment issues and price rises for businesses. Therefore, countries that are dependent on foreign financial assistance and are unable to implement independent economic and energy policies during the pandemic and in the post-pandemic period will face serious economic issues. Taking into account that social and economic problems were among the main drivers of the change of government in Armenia in 2018,the pandemic-related economic problems will also have political consequences.

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