As part of the International Economics course, and in close collaboration with study association AEclipse, Assistant Professor Julian Emami Namini of Erasmus School of Economics welcomed Phillip A. Luck, Deputy Chief Economist of the U.S. State Department, for a guest lecture on Friday 7 June 2024.
Economic challenges
In his lecture, entitled "Beyond Borders: Understanding Geoeconomics in a Globalised World”, the Deputy Chief Economist discussed several economic challenges that have signification spatial and political aspects. For example, demographic change and migration. The number of forcibly displaced peoples has never been higher. Due to a combination of factors those forcibly displaced reaches hundred million and is expected to continue to grow.
At the same time, differences in population growth rates are changing the geography of the world population. Though 2050, more than half of all population growth will be in Africa. By 2100, more than 40% of the world’s population will be on the African continent. The population of China is expected to halve, while the population of Nigeria will likely quadruple.
Significant disruptions on global trade
War is also reshaping the economy. The Russia-Ukraine war, and subsequent sanctions, have changed the economic relationships of Europe, Russia, and China. Despite this change in direct trade, sanctioning countries have seen a large increase in trade with other countries around Russia. These new trade flows largely offset the decreased in exports to Russia in values, demonstrating the challenge of sanctions enforcement in a global economy. The war in Gaza also has had significant disruptions on global trade, highlighting importance of geographic chock-points.
Another shock to the global economy has been the growth of China and its enormous investments in strategic sectors including microelectronics, ship building, steel, clean energy, and electric vehicles. These investments made by the government allow firms to sell into global markets below cost and have prompted protectionist measure. China’s use of industrial policy, along with its limited domestic demand, have created overcapacity: capacity not supported by market forces and in excess of projected market demand.
According to Phillip A. Luck, all the geoeconomics challenges today have one thing in common: they cannot be solved without collective action and sound, evidence-based, economic policy. ‘The world is complicated and to face these challenges we will need bright young economists for years to come!’
- More information
On Tuesday 11 June, the Dutch central bank (De Nederlandsche Bank) released its latest Financial Stability Report (in Dutch). The report states that lower inflation combined with a rebounding economy is having a positive effect on financial sector stability. At the same time, uncertainty is increasing. Geopolitical tensions or persistent inflation may lead to a financial market correction and heightened risks for banks, insurers and pension funds in the Netherlands. ‘Geo-economic fragmentation can hit our financial sector through the economy and other channels,’ central bank president Klaas Knot said. ‘The turmoil in today’s world demands a strong European Union more than ever. Strengthening the European single market, the capital markets union and the banking union will make the Dutch economy more resilient.’
For more information, please contact Ronald de Groot, Media & Public Relations Officer at Erasmus School of Economics: rdegroot@ese.eur.nl, +316 53 641 846.