The federal Earned Income Tax Credit (EITC) will boost earnings for over 18 million low-income working families in the U.S. by more than $30 billion this year. This survey finds that the EITC provided a $737 million boost to the Chicago regional economy in 1998, and lifted purchasing power in the city of Chicago by an average of $2 million per square mile. Large numbers of Low-income working families lived not only in inner-city Chicago neighborhoods, but also in smaller cities throughout the region like Aurora, Joliet, Elgin and Waukegan. The survey concludes by describing steps that state and local leaders could take to build on existing efforts to link working families to the EITC, such as increasing resources for free tax preparation services, helping EITC recipients to open bank accounts, and expanding and making refundable the Illinois state EITC.

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Executive Summary

Chicago rebounded from four decades of population loss in the 1990s, and Census 2000 provides a snapshot of that recovery.

Chicago's rebound derives in large part from significant immigration flows, which have made the city one of the nation's most racially and ethnically diverse. Immigrants from Mexico now account for nearly half the city's foreign-born population, for example, yet Chicago also remains one of the foremost U.S. gateways for workers and families from Eastern Europe. Such inflows have made Chicago more youthful, and they are responsible for the residential and commercial revitalization of many of the city's neighborhoods. However, most new foreign-born residents are settling in the suburbs rather than the city, as they are in a number of other U.S. metropolitan areas.

Chicago made progress on income and poverty during the last decade, and all racial/ethnic groups experienced gains in homeownership. Yet in many respects the city still exemplifies our nation's residential and economic separation by race. Blacks, Hispanics, and whites live in largely segregated neighborhoods. Annual household incomes for blacks trail those for whites by more than $20,000. And families with children face particular challenges—more than a third live below or near the poverty line, and more than one in five Chicago children live in a family with no adult workers. In the time since Census 2000 was conducted, moreover, unemployment in the city has risen, and economic differences by race and class are likely magnified today.

Along these lines and others, then, Chicago in Focus: A Profile from Census 2000 concludes that:

• Chicago's population "rebounded" during the 1990s, but the region's outer suburbs are booming. Census 2000 reports the story: For the first decade since the 1950s, the City of Chicago saw its population increase, by 112,000 residents. Neighborhoods on the city's southwest and northwest sides grew rapidly with the addition of immigrant populations. At the same time, though, Chicago's suburbs added roughly seven residents for every net new resident in the city. Most of the growth was in the outer suburbs; wide areas of suburban Cook County and inner DuPage County lost population over the decade. As a result, the economic center of the region is shifting outward. Fewer than half of the region's workers commute to the city for their jobs, and a growing number of Chicago residents drive alone to work in the suburbs.

• The city owes much of its population growth and unrivaled diversity to new arrivals from abroad. While most Midwestern cities are home to a predominantly black/white population, Chicago boasts high racial and ethnic diversity. Whites, blacks, and Hispanics each make up at least a quarter of the city's population. This unique mix reflects Chicago's continued status as one of the nation's important immigrant gateways. The city added 160,000 new residents from abroad in the 1990s. Nearly half came from Mexico, and significant numbers also came from Eastern Europe and Asia. This diversity is not uniformly dispersed, however. Chicago's blacks and Hispanics, and blacks and whites, often live in very separate sections of the city.

• The city's residents are relatively young, but most have lived in Chicago for several years. Baby Boomers aged 35 to 54 are by far the nation's largest age cohorts, but people in their late 20s represent Chicago's largest age group. But Chicago is not a transient place. The city's youth belies the fact that nearly 85 percent of its residents have lived there for more than five years, one of the highest rates among the Living Cities. Despite a slight decline in the number of married couples with children living in the city during the 1990s, Chicago still has a higher share of these "nuclear" families than most other large cities. Whether these families remain in the city will influence Chicago's population trajectory in the current decade.

• Chicago's families made broad economic gains in the 1990s, though some residents—African Americans, in particular—still face hardships. Unlike many other U.S. cities in the 1990s, Chicago managed to retain its middle class, and the ranks of lower-income households declined modestly. Median household income in Chicago grew at a rate twice the national average. Poverty, especially for children, declined. Yet Chicago's black community faces continued economic challenges. Median household income for blacks was just $29,000 in 2000, versus $37,000 for Hispanics and $49,000 for whites. Chicago has the sixth highest black poverty rate among the 23 Living Cities. The ranks of the "working poor"—families with incomes below 150 percent of poverty—are significant. Behind these economic differences lies a racial education gap; only 13 percent of black adults in Chicago hold bachelor's degrees, compared to 42 percent of whites.

• Chicago maintains a unique mix of homeowners and renters. Forty-four percent of households in Chicago own their own homes, a rate lower than that for most large cities. Differences in homeownership between minorities and whites, however, are less stark here than in many other cities. Nearly 40 percent of racial and ethnic minority households are homeowners, and all groups—especially Hispanics—made significant gains in the 1990s. Rents rose during the decade, and median prices are similar to those in growing cities like Dallas, Phoenix, and Portland. But because Chicago's households tend to be larger, and more likely to rent, cost burdens remain a significant issue in Chicago. To be precise, roughly 225,000 households in Chicago devote at least 30 percent of their incomes to rent.

By presenting the indicators on the following pages, Chicago in Focus: A Profile from Census 2000 seeks to give readers a better sense of where Chicago and its residents stand in relation to their peers, and how the 1990s shaped the city, its neighborhoods, and the entire Chicago region. Living Cities and the Brookings Institution Center on Urban and Metropolitan Policy hope that this information will prompt a fruitful dialogue among city and community leaders about the direction Chicago should take in the coming decade.

Chicago Data Book Series 1
Chicago Data Book Series 2

The city of Chicago is increasing retrofits by using stimulus dollars to expand the opportunity for energy efficient living to low-income residents of large multi-family rental buildings. To aid this target demographic, often left underserved by existing programs, the city’s new Multi-Family Energy Retrofit Program introduces an innovative model for retrofit delivery that relies on private sector financing and energy service companies.

Chicago’s new Multi-Family Energy Retrofit Program draws on multi-sector collaboration, with an emphasis on private sector involvement supported by public and nonprofit resources. Essentially, the program applies the model of private energy service companies (ESCOs), long-used in the public sector, to the affordable, multi-family housing market. In this framework, ESCOs conduct assessments of building energy performance, identify and oversee implementation of cost-effective retrofit measures, and guarantee energy savings to use as a source of loan repayment.

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The Center for Neighborhood Technology, a Chicago-area nonprofit promoting urban sustainability, has a long-run vision of a Chicagoland building energy-efficiency system, which, if started up quickly, would help to effectively deploy relevant stimulus dollars in the near-term. Its activities focus on ramping up existing weatherization and retrofit programs in the short-term to take best advantage of current stimulus dollars while at the same time building the institutional capacity to launch and sustain a new regional initiative aimed at coordinating energy efficiency information, financing, and service delivery for the seven-county region over the long-term.

The Center for Neighborhood Technology (CNT) is using ARRA and other resources to work toward a long-run vision of a sustainable regional energy efficiency system. CNT envisions a centrally-coordinated initiative— either through a new stand-alone entity or a formalized network—to manage the financing, marketing, performance monitoring and certification, information provision, supply chain development, and customer assistance required to efficiently scale up the delivery of retrofit services for all types of buildings across the Chicago region.

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Last month, a team from the Metropolitan Policy Program, along with a delegation from the city of Chicago, traveled to Mexico City as part of the Global Cities Economic Partnership (GCEP). Launched at a 2013 event sponsored by the Global Cities Initiative (GCI), this novel partnership aims to expand growth and job creation in both cities  by building on complementary economic assets and opportunities.

Together with representatives from World Business Chicago, the Illinois governor’s office, and members of Chicago’s tech startup scene (organized by TechBridge), the Brookings team arrived in Mexico City just as, after a 20 year debate, reforms to devolve greater autonomy and powers to the largest metropolitan area in the Western Hemisphere were finalized.  Central to that reform is Mexico City’s enhanced ability to plan and implement its own economic development policy, underscoring the growing importance of city-regions assuming roles once solely the province of state and national governments: fostering trade, investment, and economic growth.

Chicago and Mexico City illustrate this trend through the GCEP. Emerging from a GCI analysis that identified unique economic, demographic and and social connections between the cities, Chicago Mayor Rahm Emanuel and Mexico City Mayor Miguel Angel Mancera established a novel city-to-city collaboration. Since signing the agreement, government, business, and civic leaders in both cities have been experimenting with new approaches to jointly grow their economies.  They have tried to foster more trade and investment within shared industry clusters; link economic development support services; and leverage similar strengths in research, innovation, and human capital.

This trip to Mexico City focused on one of GCEP’s early outcomes, a formal partnership between Chicago tech business incubator 1871 and Mexico City incubator Startup Mexico (SUM) that facilitates the early internationalization of firms in both cities. Both organizations advanced the creation of a residency program that will enable entrepreneurs from both incubators to have a presence in each other’s markets.

The GCEP approach of city-to-city global engagement has inspired other GCI participants to try their own models, forming economic alliances to ease global navigation and engagement. San Antonio, Phoenix, and Los Angeles also crafted agreements with Mexico City, each focused on different opportunities built off their distinctive economic assets and relationships. Portland and Bristol have investigated how to leverage their comparable “green city” reputations in the U.S. and U.K., connecting mid-size firms in their unique sustainability clusters for collaboration on research and joint ventures. Similarly, San Diego and London are testing how to promote synergies among companies, academic centers, investors, and workers in their shared life sciences subsectors such as cell and gene therapy.

Home to half of the world’s population, cities generate about three quarters of the world’s GDP, and now serve as the hubs for the growth in global flows of trade, capital, visitors, and information. The future prosperity and vitality of city-regions demands finding new approaches that take full advantage of these global connections.  

The Global Cities Economic Partnership emerged from work supported by the Global Cities Initiative: A Joint Project of Brookings and JPMorgan Chase. Brookings recognizes that the value it provides is in its absolute commitment to quality, independence, and impact. Activities supported by its donors reflect this commitment and the analysis and recommendations are solely determined by the scholar

Image courtesy of Maura Gaughan

INTRODUCTION

As a mechanism for controlling climate change, the Kyoto Protocol has not been a success. Over the decade from its signing in 1997 to the beginning of its first commitment period in 2008, greenhouse gas emissions in the industrial countries subject to targets under the protocol did not fall as the protocol intended. Instead, emissions in many countries rose rapidly. It is now abundantly clear that as a group, the countries bound by the protocol have little chance of achieving their Kyoto targets by the end of the first commitment period in 2012. Moreover, emissions have increased substantially as well in countries such as China, which were not bound by the protocol but which will eventually have to be part of any serious climate change regime.

Although the protocol has not been effective at reducing emissions, it has been very effective at demonstrating a few important lessons about the form future international climate agreements should take. As negotiations begin in earnest on a successor agreement to take effect in 2012, it is important to learn from experience with the Kyoto Protocol in order to avoid making the same mistakes over again and to design a more durable post-2012 international agreement.

The first lesson is that a rigid system of targets and timetables for emissions reductions is difficult to negotiate because it pushes participants into a zero sum game. To reach a given target for global greenhouse gas concentrations, for example, countries must negotiate over shares of a fixed budget of future global emissions. A looser target for one country would have to be matched by a tighter target for another. It is clear that this has been an important obstacle for much of the history of negotiations conducted under the auspices of the United National Framework Convention on Climate Change, not just the Kyoto Protocol. From the beginning, developing countries have refused to participate in dividing up a fixed emissions budget. Not only that, but many observers have argued that if such a budget were ever to be divided, it should be done on the basis of population rather than the historical emissions which were the basis of the Kyoto Protocol.

A second lesson is that it is difficult for countries to commit themselves to achieving specified emissions targets when the costs of doing so are large and uncertain. At its core, the targets and timetables approach requires each participant to achieve its national emissions target regardless of the cost of doing so. Countries facing potentially high costs either refused to ratify the protocol, such as the United States, or simply failed to achieve their targets. Countries on track to meet their obligations were able to do so because of historical events largely unrelated to climate policy, such as German reunification, the Thatcher government’s reform of coal mining in Britain, or the collapse of the Russian economy in the early 1990’s.

The third lesson is perhaps the most important of all: even countries earnestly engaged in a targets and timetables process may be unable to meet their targets due to unforeseen events. Two excellent examples are New Zealand and Canada. No one anticipated during the 1997 negotiations that a decade later New Zealand would be facing a dramatic rise in Asian demand for beef and diary products. The impact on increasing methane emissions in New Zealand has been so large that it has completely offset the reductions New Zealand was able to achieve in the earlier 1990’s via reduced methane from declining numbers of sheep and improved sinks of carbon due to growth in forestry. Similarly, no one expected that Canada would find its tar sand deposits so valuable that extraction would be viable at oil prices reached two years ago let alone at current world oil prices.

One reason there has been so much interest in a targets and timetables strategy has been a widespread misunderstanding about the precision of scientific knowledge regarding the climate. It is widely agreed among atmospheric scientists that atmospheric concentrations of greenhouse gases are rising rapidly, and that emissions should be reduced.1 However, there is little agreement about how much emissions should be cut in any given year, and there is no guarantee that stabilizing at any particular concentration will eliminate the risk of dangerous climate change. Yet it is often implied that climate science translates directly into a specific emissions target and a fixed emissions budget.2 On the contrary, however, the uncertainties still remaining in the science are important and should be a core consideration in the design of climate policy.

All of the lessons above illustrate problems inherent in the targets and timetables approach. First, it forces countries into confrontations during negotiations over shares of a fixed global emissions budget. Second, committing to achieve a rigid emissions target is difficult for countries facing uncertain and potentially very high costs. Third, unexpected events can force even well-intentioned participants into non-compliance. In the face of these problems, some observers have argued that the solution is more of the same: a broader protocol with tighter targets and deeper cuts. However, there is little reason to expect the outcome to be any different, and in the mean time emissions will continue to rise. A better approach would be to recognize that focusing on targets and timetables has undermined the ultimate goal of actual emissions reductions, and that it is critical to move negotiations in a new direction. The Hokkaido Summit to be held in Japan this year is an important opportunity to make that shift, and to move the focus of climate change negotiations in a more realistic direction.

In this paper, we discuss an alternative framework for international climate policy, the McKibbin-Wilcoxen Hybrid3—an approach that focuses on coordinated actions rather than mandated, inflexible outcomes. Rather than committing to achieve specified emissions targets, participating countries would agree to adopt coordinated actions that are clear, measurable and enforceable within national borders. Because it does not start from a fixed emissions target (although an emissions budget does guide the design of the actions we propose), the Hybrid avoids all three of the problems discussed above. Shifting to an approach based on agreed actions, rather than specific emissions outcomes, will be a critical step in the evolution of climate negotiations. It will also make national policy actions more feasible than fixed targets, since a target would be little more than a hopeful pledge given how little is known for certain about the costs of reducing emissions.

Moreover, a framework based on common actions rather than common targets is particularly useful for accommodating the needs of developing countries. Developing countries face even greater uncertainty about their future economic growth prospects and future emissions paths than developed countries, and certainly do not want to undermine their development prospects by committing to an excessively stringent emissions target.

To illustrate the differences between the targets and timetables approach and one based on the Hybrid, we present a number of numerical simulations of the world economy using the G-Cubed global economic model. We focus particular attention on two of the problems with targets and timetables: the high stakes involved in negotiating over emissions budgets, and the risks stemming from uncertainty about costs. We first show that the outcome of a Kyoto-style targets and timetables policy with global emissions trading depends significantly on the allocation scheme for the emissions targets. We present one set of results using an allocation based on historical emissions and another set of results based on an equal per capita allocation. The results show how different the national costs of the policy will be depending on how emissions rights are allocated. We then examine the performance of the Kyoto-style allocation under one source of uncertainty: the rate of growth in developing countries, particularly China and India.

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When Iran and the P5+1 signed a deal over Tehran’s nuclear program last July, members of Congress, Middle East analysts, and Arab Gulf governments all warned that the agreement would prompt Iran’s rivals in the region to race for the bomb.

In a report that Bob Einhorn and I released this week, we assessed this risk of a so-called proliferation cascade. We look at four states in particular—Saudi Arabia, the United Arab Emirates, Egypt, and Turkey—and Bob briefly explores each case in another blog post out today. In the paper, we argue that although the likelihood of a proliferation cascade in the Middle East is fairly low, and certainly lower than a number of critics of the Iran deal would have you believe, it is not zero. Given that, here are eight steps that leaders in Washington should take to head off that possibility:

1. Ensure that the JCPOA is rigorously monitored, strictly enforced, and faithfully implemented;
2. Strengthen U.S. intelligence collection on Iranian proliferation-related activities and intelligence-sharing on those activities with key partners;
3. Deter a future Iranian decision to produce nuclear weapons;
4. Seek to incorporate key monitoring and verification provisions of the JCPOA into routine IAEA safeguards as applied elsewhere in the Middle East and in the global nonproliferation regime;
5. Pursue U.S. civil nuclear cooperation with Middle East governments on terms that are realistic and serve U.S. nonproliferation interests;
6. Promote regional arrangements that restrain fuel cycle developments and build confidence in the peaceful use of regional nuclear programs;
7. Strengthen security assurances to U.S. partners in the Middle East; and
8. Promote a stable regional security environment.

Taken together, these steps deal with three core challenges the United States faces in shoring up the nonproliferation regime in the region.

The first is that the central test of nonproliferation in the Middle East will come from how the JCPOA is believed to be meeting its core objective of preventing Iranian nuclear weapons development and Iranian establishment of regional hegemony. It cannot be stressed enough that the decision to pursue nuclear weapons by any state, including those in the region, starts with a sense of vulnerability to core security threats and an inability to address those threats through any other means. The history of nuclear proliferation is one of tit-for-tat armament in the face of overriding security imperatives. Both finished and aborted nuclear programs bear the hallmarks of a security dilemma impelling states to make the political, economic, and security investments into nuclear weapons.

This is no less true for countries across the region than for Iran. To the extent that the overall security environment can be stabilized, there will be less impetus for any Middle Eastern state to develop nuclear weapons. The United States should focus on:

• Fully implementing and enforcing all sides of the JCPOA (nuclear restrictions, transparency, and sanctions relief);
• Creating a strong sense of deterrence toward Iran, manifest most clearly in the passage of a standing Authorization to Use Military Force if Iran is determined to be breaking out toward acquisition of a nuclear weapon;
• Providing security assurances and backing them up with the mechanisms to make them actionable like joint exercises, logistical planning, and cooperation with a range of regional and extra-regional actors; and,
• Working to promote a more stable regional environment by seeking the resolution of simmering conflicts.

But, these latter two factors also point to another resonant theme in our research: the need for the United States to be a player. After decades of involvement in the region, the United States has yet to settle upon the right balance between involvement and remove. Yet, establishing this equilibrium is essential. States in the region need predictability in their affairs with the United States, including knowing the degree to which our assurances will stand the test of time.

States in the region need predictability in their affairs with the United States, including knowing the degree to which our assurances will stand the test of time.

In part for this reason, the United States should not only pursue deeper security relationships, but also civil nuclear cooperation with interested states throughout the region. Such a relationship both ensures a closer link between the United States and its partners and discourages the spread of enrichment and reprocessing technology by disincentivizing countries from “going it alone.” In the Middle East, the United States would need to find a formulation that offers some flexibility (such as by building in language that would permit the United States to terminate any nuclear cooperation arrangements in the face of sensitive fuel cycle development by the other side).

The United States should also share intelligence more closely with its partners in the region. This is helpful in the short term, of course, but also helps the United States understand the mindset of and intelligence picture of its regional partners in a broader sense. It also helps leaders in Washington address concerns brought about by unfounded rumors or speculation as to Iran’s intentions or capabilities.

Changing how we do business

Even more important than how the JCPOA was negotiated will be how we transition from its restrictions and transparency mechanisms into a new world in 15 to 20 years. 

The United States seek to incorporate elements of the JCPOA into normal international monitoring practices and should negotiate new arrangements to help govern the future development of nuclear technology in the region. 

To achieve the former, the IAEA will need to make some changes to how it does business. For example, the IAEA determines how best to implement its monitoring mission, contingent on acceptance by the country being inspected. The United States and its partners should work with the IAEA (and other countries with significant nuclear activities) to make some parts of the JCPOA standard operating practice, such as online monitoring of enrichment levels. Other elements of the JCPOA may require agreements at the IAEA and beyond for how nuclear-related activities, including those that could have value for nuclear weaponization, are handled. It might be hard to get agreement, not least because there is clear language in the JCPOA that states that it will not be seen as a precedent for future nuclear nonproliferation efforts. However, it should still be the ambition of the United States to make such steps part of the norm. 

A far more difficult lift would be organizing a regional approach to the nuclear fuel cycle. This is not the same as creating a multilateral fuel cycle, though some elements that approach would be helpful. Rather, the United States should find ways to craft regional agreements or, failing that, moratoria on aspects of the fuel cycle that others in the region would find threatening. It would be easier to negotiate constraints some aspects than others. For example, spent fuel reprocessing is rare in the Middle East, with only Israel having been known to do it to a significant degree. It may therefore be an attractive first place to begin. Enrichment would be altogether more difficult, but it may be possible to convince states in the region to forego the expansion of their enrichment programs beyond their status quo. For Iran, it would continue to possess uranium enrichment but with constraints that limit the utility of this program for weapons production; its incentive would be to avoid creating the rationale for regional competition. For other countries in the region, it would involve holding off on enrichment, but also on the financial and political investment enrichment would involve—as well refraining from creating a security dilemma for Iran that could produce miscalculation in the future.

While some of these recommendations are more challenging (and may prove impossible), others are potentially easier. By taking a multifaceted approach, the United States increases the chances that no further weapons of mass destruction proliferate in the Middle East down the road. 

Editors’ Note: Richard Nephew and Bob Einhorn spoke about their new report at a recent Brookings event. You can see the video from the event here.

One year after its conclusion, the Joint Comprehensive Plan of Action (JCPOA) remains controversial in Tehran and Washington, with opponents unreconciled to the deal and determined to derail it. Republican attacks against the deal will keep the controversy alive for most of this election year.

But opponents have had to scale back their criticism, in large part because the JCPOA, at least so far, has delivered on its principal goal—blocking Iran’s path to nuclear weapons for an extended period of time. No one can dispute that Tehran has sharply reduced its capacity to produce fissile materials for nuclear weapons and would need at least a year to rebuild enough capacity to produce a single bomb.

Iran’s positive compliance record has not given opponents much ammunition. The IAEA found Iran in compliance in its two quarterly reports issued in 2016. True, Iran temporarily exceeded the agreed ceiling on heavy water but quickly rectified the infraction, which most observers attributed to the practical difficulty of ensuring that production overages are exported in a timely way rather than to an intention to circumvent the limit. Critics have also pounced on a German report that Iran’s illicit attempts to procure nuclear and missile items continued in 2015. But Tehran’s requirement to import all nuclear items for its permitted civil nuclear program through the JCPOA’s procurement channel—and stop procuring items outside the channel—did not kick in until January 2016, and neither Washington nor Berlin has information that illicit efforts continued after that time.

Murky missile issue

Iran’s ballistic missile tests present a more complicated compliance issue. Due to a compromise reached in the negotiations, missile activities are not covered in the JCPOA and Security Council resolution 2231 simply ”calls upon” but does not legally require Iran to cease those activities (as did the U.N. Security Council resolutions replaced by 2231). As a result, Iranians argue they are not legally bound to cease missile testing, and Russia and China essentially support their argument. 

The administration and Congress are right to oppose Iran’s provocative and destabilizing missile activities. But they are not on strong legal or political grounds to treat the issue as a compliance violation. Rather than invoking the Iran nuclear deal, Washington and its partners will need to counter Iran’s missile programs with other policy tools, including interdictions of procurement attempts, Missile Technology Control Regime restrictions, U.S. diplomatic efforts with suppliers, missile defenses, and sanctions.

An uncertain path ahead

So, from the standpoint of Iran implementing and complying with its nuclear commitments, the JCPOA has operated well for its first year. But challenges to the smooth operation and even the longevity of the deal are already apparent.

A real threat to the JCPOA is that Iran will blame the slow recovery of its economy on U.S. failure to conscientiously fulfill its sanctions relief commitments and, using that as a pretext, will curtail or even end its own implementation of the deal. Iranians are understandably frustrated that the benefits of sanctions relief have not materialized as quickly as expected. But international banks and businesses have been reluctant to engage Iran not because they have been discouraged by the United States but because they have their own business-related reasons to be cautious, including the inadequate regulatory standards of Iran’s financial system, low oil prices in an oil-dependent economy, and fear of running afoul of remaining U.S. sanctions. In an effort to ensure that Iran will reap the economic rewards it deserves, the Obama administration has bent over backwards to inform foreign governments, banks, and businesses of what sanctions relief measures entitle them to do, but Iranian officials continue to complain that it is not doing enough.

[W]e can say the nuclear deal is off to a promising start...[s]till, it is already clear that the path ahead will not always be smooth.

Legislation proposed in Congress could also threaten the nuclear deal. Many proponents of new sanctions legislation genuinely seek to reinforce the deal—for example, by renewing the Iran Sanctions Act without attaching poison pills. But for some other members of Congress, the bills are designed to undercut the JCPOA. In a July 11 statement of policy, the administration threatened to veto three House bills, stating that they “would undermine the ability of the United States to meet our JCPOA commitments by reimposing certain secondary economic and financial sanctions lifted on ‘Implementation Day’ of the JCPOA.” For now, the administration is in a position to block new legislation that it believes would scuttle the nuclear deal.

But developments outside the JCPOA, especially Iran’s regional behavior and its crackdown on dissent at home, could weaken support for the JCPOA within the United States and give proponents of deal-killing legislation a boost. So far, however, there are no clear indications that the JCPOA has contributed either to more moderate or more provocative behavior. Indeed, consistent with statements by Supreme Leader Ali Khamenei, there have been few changes in Iran’s behavior toward its neighbors in the last year.

A potential wildcard for the future of the JCPOA is upcoming governing transitions in both Washington and Tehran. There will be more continuity in policy toward Iran and the JCPOA if Hillary Clinton becomes president, although she is likely to take a harder line than her predecessor. Donald Trump now says he will re-negotiate rather than scrap the deal, but in practice that could produce the same result because a better deal will not prove negotiable. With President Hassan Rouhani up for re-election next year and the health of the Supreme Leader questionable, Iran’s future policy toward the JCPOA cannot be confidently predicted.

A final verdict on the JCPOA is many years away, not just because of the challenges mentioned above but also because of the crucial uncertainly regarding what Iran will do when key restrictions on its ability to produce weapons-grade nuclear materials expire after 15 years. However, we can say the nuclear deal is off to a promising start, as even some of its early critics now concede. Still, it is already clear that the path ahead will not always be smooth, the longevity of the deal cannot be taken for granted, and keeping it on track will require constant focus in Washington and other interested capitals. 

In an increasingly international and interconnected economy, Seattle was global before global was cool.

The region’s competitive global assets include internationally competitive firms, strategically important ports and one of the nation’s largest foreign-born populations.

Still, today’s unique economic moment demands an extra measure of purposeful global engagement.

As cities and metropolitan areas begin to emerge from the Great Recession, leaders are realizing the need to restructure the economy — to move from one based on debt and consumption to one powered by production and innovation.

At the same time, most economic growth over the next decade will occur outside of America’s borders. As of 2009, the combined economies of Brazil, India and China eclipsed that of the United States and now account for more than one-fifth of the global economy. By 2018, their share is expected to surpass one-quarter.

The developing world, with a rapidly rising middle class, represents a huge market opportunity for American firms. China and India alone are expected to increase their urban populations by more than 500 million over the next 20 years, which naturally leads to a rise in their consumer classes. By 2050, Chinese and Indian consumers will account for more than half of all middle-class consumption worldwide, up from just 2 percent in 2000.

These growing metropolises will also require massive investments in infrastructure and face huge challenges as they expand, challenges that U.S. firms have the expertise to solve — in transportation and mobility, in sustainability and clean energy, in information technology and software.

America’s metropolitan areas are uniquely positioned to take advantage of this dual challenge through increased trade and investment. The top 100 metro areas not only produce three-quarters of our gross domestic product, they also concentrate our most innovative firms, our research institutions and universities, and the majority of our skilled workers.

So how does the central Puget Sound region stack up? Recently, I came to Seattle as part of the Global Cities Initiative, a joint project of the Brookings Institution and JPMorgan Chase. This initiative aims to catalyze a shift in economic development priorities and practices that would result in more globally connected metropolitan areas and more sustainable economic growth.

The metro area has a strong platform for trade: firms such as Boeing, Microsoft, and Amazon; world-class research assets including the University of Washington and the Fred Hutchinson Cancer Research Center; and a strong legacy of globally oriented leadership, with a wide coalition, including public, private and civic leaders, actively promoting a regional strategy for global engagement.

The data bear this out: While Seattle is the 15th largest metro area in the United States, it has the sixth highest export total, sending more than $47 billion in goods and services abroad in 2012. These exports are overwhelmingly driven by globally competitive clusters in aerospace and information technology.

Partly due to this industry specialty, Seattle’s economy is also highly innovative and uniquely oriented toward science, technology, engineering and math: More than one-quarter of jobs in the metro are in STEM occupations, the fourth highest share of any metropolitan area in the country.

Still, in such a competitive and dynamic global economy, no metro area can afford complacency. In order to maintain its position in the global economy, Seattle needs to get serious about global engagement.

First, focus on global trade and investment. Continue the collaborative efforts of your public, private and civic leaders to focus economic development strategies on growth abroad. In Seattle earlier this month, regional leaders committed to expanding these efforts, joining the Global Cities Initiative’s Exchange, through which the metro area will develop a strategy to increase foreign direct investment in key industries.

Second, invest in what matters. To compete globally, metro areas must be strong at home. In Seattle, this means shoring up your workforce-development pipeline so that local residents have a path to good jobs in advanced industries. It also calls for a regional approach to financing and delivering transportation solutions that not only reduce congestion at home, but also improve your connections abroad.

Finally, metropolitan leaders must look beyond their own borders, identify their trading partners, and build relationships to increase both trade and investment. For example, as part of the Global Cities Initiative, Chicago and Mexico City entered into a first-of-its-kind economic partnership that builds on the extensive economic, social, cultural linkages between the two metros to make both more prosperous.

There are promising efforts under way in the region, as the King County Aerospace Alliance has started collaborating with Aéro Montréal so that the two aerospace clusters can be more competitive.

Simply put, in today’s economic landscape, every city is a global city. The success of regional economies hinges on their engagement throughout the global economy. Seattle has an enviable hand to play; but success is not inevitable.

This opinion piece originally appeared in the Seattle Times.

The Seattle city council voted to push up the city’s minimum wage to $15 an hour. If the wage hike is fully implemented, it will guarantee Seattle’s workers the nation’s highest minimum wage. The increase in the minimum wage will be phased in over a number of years. Big employers that do not provide their employees a health plan are the first that will face the $15 per hour minimum, a requirement that will be fully phased in around 2017. Large employers who offer health benefits will have to pay the $15 minimum starting in 2018. Small businesses with employees who receive tip income will have to pay the $15 per hour minimum a couple of years later, but the countable wage will include employees’ tips. By 2021 all employers in the city must offer a minimum wage of $15 an hour, regardless of the employer’s size.

The federal minimum wage is currently just $7.25 an hour, unchanged since 2009. If Congress does not raise the national minimum wage, Seattle’s minimum will be more than twice the federal minimum wage. Many states currently have a higher minimum wage than the federal one. As it happens, Washington has the nation’s highest state-level minimum wage, $9.32 per hour. Unlike the federal minimum wage law, Washington’s state law increases the state minimum wage every year in line with changes in the consumer price index. By the time Seattle’s $15 per hour minimum becomes effective for large employers in 2017, the Washington state minimum wage will be about $10 per hour, assuming consumer prices continue to rise 2% a year. Thus, large employers in Seattle will have to pay their minimum-wage employees 50% more than minimum-wage employees receive outside the Seattle city limits.

I strongly favor the Administration’s proposal to boost the U.S. minimum wage to $10.10 an hour. It will boost the spendable incomes of millions of poorly paid workers and their families, and I expect it will have only a small adverse effect, if any, on low-wage workers’ job opportunities and work hours. However, I am more cautious about the wisdom of raising a single city’s minimum wage to $15 an hour when nearby jurisdictions leave their minimum wages unchanged.

One reason for my caution is that a big minimum-wage hike can place Seattle’s low-wage employers at a competitive disadvantage compared with employers engaged in the same line of business but located in a nearby suburb. If compensation costs for low-wage workers represent a big percentage of a Seattle employer’s costs, and if the employer faces competition from businesses on the other side of the city limits, companies located in Seattle can lose customers to competitors outside the city.

Consider a business that mainly sells low-cost, fast-food meals. If it must pay $15 an hour to its low-wage employees, while its competitors less than a mile away are only required to pay $10 an hour, the companies outside Seattle can charge lower prices to their customers for shakes, burgers, and fries, and yet still make a profit. The lower cost establishments can capture a larger percentage of the local fast-food trade, reducing fast-food sales inside Seattle’s city limits. The same is true of the goods and services sold by laundry and dry cleaning establishments, inexpensive motels, and other businesses that depend on low-wage workers to stay competitive. The labor cost disadvantage caused by a higher minimum wage can hurt low-wage employment in Seattle and possibly reduce the value of some of the city’s commercial real estate.

To the extent that consumers have the option of buying goods or services from companies that are not required to pay a higher minimum wage, some of the hoped-for gains from a higher minimum wage will be lost. When customers can conveniently buy products or services from firms that face lower labor costs, the new businesses that they patronize will grow and the old, high-cost businesses they abandon will shrink. Low-wage workers may earn higher wages inside the Seattle city limits, but their employment opportunities in Seattle may shrink.

Seattle is a prosperous city, and its mayor was elected in part because of a promise to boost the pay of its most poorly paid residents. If a $15 an hour minimum wage has a chance of working and enjoying broad political support, Seattle is a good place to test the idea. I will be interested to see whether low-wage Seattle businesses continue to prosper even after they are required to pay a minimum wage that is 50% higher than the one faced by competitors in nearby suburbs. The risk of a big minimum-wage hike at the city level is that the city’s low-wage employers will be harmed in their competition with out-of-town businesses that sell the same products or services. The risk of this kind of harm is vastly smaller when the minimum wage is increased at the state or national level. If the Administration can persuade Congress to boost the national minimum wage, all employers—inside and outside a city’s limits—will be required to raise the pay they offer to their most poorly paid workers.

Note: An edited version of this post appears on Fortune.com

Last week international electronics mega-manufacturer Foxconn announced plans to invest $30 million in a new robotics plant in Harrisburg, PA. Foxconn, the notorious Chinese low-wage manufacturer of Apple’s iPhone, has become the poster child of U.S. outsourcing in the face of ruinous global labor cost competition. The calculus of manufacturing supremacy is seemingly simple: Low labor costs and taxes, proximity to a large consumer base, and manageable corruption levels equal a sure strategy to attract global firms.

So what’s going on in Harrisburg? Foxconn is beginning to realize what a number of global manufacturers have come to realize: Production sites that can leverage university, government, and private R&D, a market-ready STEM workforce, and a vibrant cluster of global manufacturing supply chains trump cheap labor and tax breaks. In this regard the Harrisburg region is a big win for Pennsylvania as well as Foxconn—a company trying to move away from a legacy of poor working conditions to one of high-value, high-skilled production.   

Harrisburg and the larger Rust Belt Pittsburgh-Youngstown region to the west are hotbeds of advanced manufacturing. Youngstown is home to the National Additive Manufacturing Innovation Institute—an internationally recognized hub for so-called “3D printing” that draws together public- and private-sector resources. Pittsburgh—with the University of Pittsburgh, Carnegie Mellon University, and firms like Google—has redefined itself from a gilded-era steel town to a modern technology leader in software and robotics. Indeed, Foxconn is investing $10 million in Carnegie Mellon’s world class advanced robotics R&D. Finally, also in the Rust Belt and including Harrisburg, Akron and Cleveland, cheap natural gas has helped push manufacturing job and firm growth in a region that was hit extremely hard by the recession.

While Foxconn may be one of the highest profile foreign firm to relocate to the United States it is certainly not, as we’ve discussed, the first. Again and again, global firms interested in high-end manufacturing are putting a renewed premium on geographic clusters of intensive innovation. To be sure, countries with low labor costs still maintain solid advantages in a number manufacturing industries that will help their economies grow—this is the benefit and reality of a global economy. But when it comes to advanced manufacturing, U.S. metro areas and regions that foster synergies between research, skills, and production will likely continue to be highly sought after from firms looking to move up the global value chain.

It has been nearly three years since the New Deal for Engagement in Fragile States (“the New Deal”) was endorsed at the Fourth High-Level Forum on Aid Effectiveness in Busan in 2011. Given the minimal progress of fragile states in achieving the Millennium Development Goals1 (MDGs) and that conflict and fragility are part of the deliberations on the post-2015 global development agenda, it is appropriate to assess New Deal implementation to date and see what early lessons can be learned. This review is intended to provide insights on current efforts and provoke thought and discussion on how implementation could be improved.

Since the New Deal was endorsed in Busan, a group of fragile states known as the g7+ has emerged to champion support for fragile states. The group started in 2010 with seven members but by May, 2014, its membership spanned 20 countries from four continents. The g7+ represents the first time a genuine constituency of fragile states has begun to engage with one other and with the international community about the causes of fragility and how to address it. Despite the modest progress that has been made and the enthusiasm of New Deal focal points among donors, civil society, and g7+ pilot countries, implementation of the New Deal to date is characterized by unmet conditions, unrealistic expectations about timeframes, and a lack of sustained dialogue about the causes of conflict and fragility. Overall, the Peacebuilding and Statebuilding Goals (PSGs) are being adopted into national development plans (Figure 1), but donors and civil society have concerns about the g7+ pilot countries’ commitment to use these goals as the basis for an inclusive and sustained dialogue about the causes of conflict and fragility. Conversely, although some elements of the TRUST component (Figure 1) are being implemented, g7+ pilot country governments have concerns about donors’ commitments to share risk and increase the use of country systems. Progress has been made in the implementation of the FOCUS elements (Figure 1), in terms of the number of fragility assessments conducted and compacts or mutual accountability frameworks established, but concern exists at the global level that there has been an overemphasis on the technical exercises and insufficient effort put toward political dialogue at the country level. The effort put into technical processes should not overshadow sustained political dialogue, and the tendency to rely on conditionality as the basis for New Deal partnership should be consciously avoided.

Greater investment should be made in rolling out the New Deal to reduce the amount of confusion surrounding it at the country level. This would perhaps best be accomplished by building the capacity within the different stakeholder groups, and especially by bolstering dedicated staffing for the New Deal. Donors and the g7+ should increase their domestic advocacy and educate stakeholders about the expectations inherent to New Deal participation, the potential risk-benefit tradeoffs, and the underlying assumptions about their willingness to do things differently. A combination of fewer conditions, increased investment, more inclusive political dialogue, and better domestic advocacy could render the New Deal a transformative approach to addressing the challenges and opportunities that exist in fragile and conflict-affected states.

This paper is an independent assessment of New Deal implementation. It is based on a review of New Deal documentation and interviews with focal points in g7+ pilot countries, lead donor agencies, and civil society. The interviews were conducted during April, May, and June 2014. This review focuses on the original seven pilot countries that volunteered to implement the New Deal: Afghanistan, the Central African Republic, the Democratic Republic of Congo (DRC), Liberia, South Sudan, Sierra Leone and Timor Leste. The review also includes Somalia, given that a compact was developed there in 2013.

In December over 190 countries will converge in Paris to finalize a new global agreement on climate change that is scheduled to come into force in 2020. A central part of it will be countries’ national pledges, or “intended nationally determined contributions” (INDCs), to be submitted this year which will serve as countries’ national climate change action plans. For Latin American countries, the INDCs present an unprecedented opportunity. They can be used as a strategic tool to set countries or at least some sectors on a cleaner path toward low-carbon sustainable development, while building resilience to climate impacts. The manner in which governments define their plans will determine the level of political buy-in from civil society and business. The implementation of ambitious contributions is more likely if constituencies consider them beneficial, credible, and legitimate.

This paper aims to better understand the link between Latin American countries’ proposed climate actions before 2020 and their post-2020 targets under a Paris agreement. We look at why Latin American climate policies and pledges merit attention, and review how Latin American nations are preparing their INDCs. We then examine the context in which five Latin American nations (Mexico, Brazil, Peru, Costa Rica, and Venezuela) are developing their INDCs—what pledges and efforts have already been made and what this context tells us about the likely success of the INDCs. In doing so, we focus on flagship national policies in the areas of energy, forests, cities, and transportation. We address what factors are likely to increase or restrain efforts on climate policy in the region this decade and the next.

Latin American countries are playing an active role at the U.N. climate change talks and some are taking steps to reduce their emissions as part of their pre-2020 voluntary pledges.

Latin American countries are playing an active role at the U.N. climate change talks and some are taking steps to reduce their emissions as part of their pre-2020 voluntary pledges. However, despite some progress there are worrying examples suggesting that some countries’ climate policies are not being implemented effectively, or are being undermined by other policies. Whether their climate policies are successful or not will have significant consequences on the likely trajectory of the INDCs and their outcomes. The imperative for climate action is not only based on Latin America’s contribution to global carbon emissions. Rather, a focus on adaptation, increasing the deployment of renewable energy and construction of sustainable transport, reducing fossil fuel subsidies, and protecting biodiversity is essential to build prosperity for all Latin Americans to achieve a more sustainable and resilient development.

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One of global society’s foremost structural changes underway is its rapid aggregate shift from farmbased to city-based economies. More than half of humanity now lives in urban areas, and more than two-thirds of the world’s economies have a majority of their population living in urban settings. Much of the gradual movement from rural to urban areas is driven by long-term forces of economic progress. But one corresponding downside is that city-based societies become increasingly disconnected—certainly physically, and likely psychologically—from the practicalities of rural livelihoods, especially agriculture, the crucial economic sector that provides food to fuel humanity.

The nature of agriculture is especially important when considering the tantalizingly imminent prospect of eliminating extreme poverty within a generation. The majority of the world’s extremely poor people still live in rural areas, where farming is likely to play a central role in boosting average incomes. Agriculture is similarly important when considering environmental challenges like protecting biodiversity and tackling climate change. For example, agriculture and shifts in land use are responsible for roughly a quarter of greenhouse gas emissions.

As a single word, the concept of “agriculture” encompasses a remarkably diverse set of circumstances. It can be defined very simply, as at dictionary.com, as “the science or occupation of cultivating land and rearing crops and livestock.” But underneath that definition lies a vast array of landscape ecologies and climates in which different types of plant and animal species can grow. Focusing solely on crop species, each plant grows within a particular set of respective conditions. Some plants provide food—such as grains, fruits, or vegetables—that people or livestock can consume directly for metabolic energy. Other plants provide stimulants or medication that humans consume—such as coffee or Artemisia—but have no caloric value. Still others provide physical materials—like cotton or rubber—that provide valuable inputs to physical manufacturing.

One of the primary reasons why agriculture’s diversity is so important to understand is that it defines the possibilities, and limits, for the diffusion of relevant technologies. Some crops, like wheat, grow only in temperate areas, so relevant advances in breeding or plant productivity might be relatively easy to diffuse across similar agro-ecological environments but will not naturally transfer to tropical environments, where most of the world’s poor reside. Conversely, for example, rice originates in lowland tropical areas and it has historically been relatively easy to adopt farming technologies from one rice-growing region to another. But, again, its diffusion is limited by geography and climate. Meanwhile maize can grow in both temperate and tropical areas, but its unique germinating properties render it difficult to transfer seed technologies across geographies.

Given the centrality of agriculture in many crucial global challenges, including the internationally agreed Sustainable Development Goals recently established for 2030, it is worth unpacking the topic empirically to describe what the term actually means today. This short paper does so with a focus on developing country crops, answering five basic questions: 

1. What types of crops does each country grow? 

2. Which cereals are most prominent in each country? 

3. Which non-cereal crops are most prominent in each country? 

4. How common are “cash crops” in each country? 

5. How has area harvested been changing recently? 

Readers should note that the following assessments of crop prominence are measured by area harvested, and therefore do not capture each crop’s underlying level of productivity or overarching importance within an economy. For example, a local cereal crop might be worth only $200 per ton of output in a country, but average yields might vary across a spectrum from around 1 to 6 tons per hectare (or even higher). Meanwhile, an export-oriented cash crop like coffee might be worth $2,000 per ton, with potential yields ranging from roughly half a ton to 3 or more tons per hectare. Thus the extent of area harvested forms only one of many variables required for a thorough understanding of local agricultural systems. 

The underlying analysis for this paper was originally conducted for a related book chapter on “Agriculture’s role in ending extreme poverty” (McArthur, 2015). That chapter addresses similar questions for a subset of 61 countries still estimated to be struggling with extreme poverty challenges as of 2011. Here we present data for a broader set of 140 developing countries. All tables are also available online for download.

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Executive Summary

Cities are creations of their states. Their boundaries, their powers, and their responsibilities are all substantially prescribed by state law. With the advent of the new federalism—beginning in the 1970s and resurgent today—the devolution of power from Washington to state capitals has increased the importance of state decision making for cities.

Yet, this shift occurred precisely as cities were losing political clout in state legislatures due to population decline within city limits and rampant growth in suburban jurisdictions.

This paper argues that in response to shifting population distributions within states, cities need to build new coalitions to effectively achieve their legislative goals within state legislatures. Case studies—New York City, Chicago, Detroit, and the three largest cities in Ohio (Cincinnati, Cleveland, and Columbus)—are used to more closely examine coalition-building methods.

Overall, the authors find:

• Cities' dependence on state government has increased as the federal government has ceded more power to the states. As cities' populations have declined, they have become weaker in state legislatures that have grown more powerful due to federal policy. In the peak year of 1978, about 15 percent of city revenues came from the federal government. By 1999 that had decreased to 3 percent. Concurrently, the federal government has shifted a number of programs to the states, which control the rules and revenue mechanisms cities operate under.

• Traditional political coalitions cities have used to achieve their state legislative goals are no longer as effective. Partisan (usually Democratic) coalitions are less reliable as focus has shifted to suburban swing districts. Moreover, as their power has decreased, cities' agendas have become more reactive, aiming to preserve the status quo in funding, infrastructure projects, and autonomy.

• Older, inner-ring suburbs are a logical new partner for cities in state legislatures. Increasingly, these suburbs, and some outer ones, have common interests with central cities as they address immigration, fiscal stress, and infrastructure woes. Such alliances would also better address metropolitan-wide issues on a metropolitan basis.

There remain many obstacles to forging such coalitions, however, including longtime distrust among big cities and their neighbors, racial disparities, and in some cases, growing investment in central cities while surrounding suburbs languish. Nonetheless, for cities to effectively influence their state governments more creative approaches to coalition building must be found.

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Since 2000, China has emerged as Africa’s largest trading partner and a major source of investment finance as well. Large numbers of Chinese workers and entrepreneurs have moved to Africa in recent years, with estimates running as high as one million. China’s engagement with Africa has no doubt led to faster growth and poverty reduction on the continent. It is also relatively popular: In attitude surveys, 70 percent of African respondents have a positive view of China, higher than percentages in Asia, the Americas, or Europe.

While China’s deepening engagement with Africa has largely been associated with better economic performance, its involvement is not without controversy. This is particularly true in the West, as typical headlines portray an exploitive relationship: “Into Africa: China’s Wild Rush,” “China in Africa: Investment or Exploitation?,” and “Clinton warns against ‘new colonialism’ in Africa.” 

My forthcoming study, "China’s Engagement with Africa: From Natural Resources to Human Resources," aims to objectively assess this important new development in the world. It has six main findings:

1. First, on the scale of China’s activities in Africa: The media often portrays China’s involvement as enormous, potentially overwhelming the continent. According to data from China’s Ministry of Commerce (MOFCOM), the stock of Chinese direct investment in Africa was $32 billion at the end of 2014. This represents less than 5 percent of the total stock of foreign investment on the continent. Stocks naturally change slowly. But the "World Investment Report 2015" similarly finds that China’s share of inward direct investment flows to Africa during 2013 and 2014 was only 4.4 percent of the total. Of course, direct investment is not the only form of foreign financing. The Export-Import Bank of China and China Development Bank have also made large loans in Africa, mostly to fund infrastructure projects. In recent years, China has provided about one-sixth of the external infrastructure financing for Africa. In short, Chinese financing is substantial enough to contribute meaningfully to African investment and growth, but the notion that China has provided an overwhelming amount of finance and is buying up the whole continent is inaccurate.

2. The second main finding from the study concerns China’s direct investment and governance. China has drawn attention by making large resource-related investments in countries with poor governance indicators, such as the Democratic Republic of Congo, Angola, and Sudan. These deals are certainly part of the picture when it comes to China’s engagement with Africa. But the more general relationship between Chinese direct investment and recipients’ governance environments is different. After controlling for market size and natural resource wealth, total foreign direct investment is highly correlated with measures of property rights and rule of law, as one might expect. This is true both globally and within the African continent. China’s outward direct investment, on the other hand, is uncorrelated with measures of property rights and the rule of law after controlling for market size and natural resource wealth. In this sense, Chinese investment is indifferent to the governance environment in a particular country. While China has investments in the Democratic Republic of Congo, Angola, and Sudan, those are balanced by investments in African countries that have relatively good governance environments. South Africa, for instance, is the foremost recipient of Chinese investment. Furthermore, some of the big resource deals in poor governance environments are not working out well, so Chinese state enterprises may well rethink their approach in the future.

3. A third main finding emerges from examining MOFCOM’s registry of Chinese firms investing in Africa. In the aggregate data on Chinese investment in different countries, the big state enterprise deals naturally play an outsized role. MOFCOM’s database on Chinese firms investing in Africa, on the other hand, provides a snapshot of what small- and medium-sized Chinese firms—most of which are private—are doing in Africa. Unlike the big state-owned enterprise investments, these firms are not focused on natural resource extraction. The largest area for investment is service sectors, with significant investment in manufacturing as well. Many African economies welcome this Chinese investment in manufacturing and services.

4. The fourth finding relates to infrastructure finance. In recent years infrastructure financing has expanded and helped many African countries begin to rectify infrastructure deficiencies. Africa has been receiving about $30 billion per year in external finance for infrastructure, of which China provides one-sixth. Chinese financing is a useful complement to other sources, particularly as traditional finance from multilateral development banks and bilateral donors is concentrated on water supply and sanitation. Likewise, private participation in infrastructure is primarily aimed at telecommunications. China has filled a niche by focusing on transportation and power.

   Chinese financing of infrastructure has also enabled Chinese construction companies to gain a firm foothold on the continent. Evidence suggests that Chinese companies have become highly competitive, crowding out African construction companies. This is an area where a trade-off seems to exist between, on the one hand, getting projects completed quickly and cheaply and, on the other, facilitating the long-term development of a local construction industry.

5. This point leads to the fifth finding of the study. There are a lot of Chinese workers in Africa; the total is disproportionately high when compared to the amount of financing that China has provided and compared to migrants from other continents. This is a tentative conclusion because the data on this issue are particular weak. But estimates of Chinese migrants in Africa exceed one million. Many migrants initially move to Africa as workers on Chinese projects in infrastructure and mining and then, perceiving good economic opportunities, stay on. Similar to the dilemma confronting the continent’s construction industry, African countries face a tradeoff here: Chinese workers bring skills and entrepreneurship, but their large numbers limit African workers’ opportunities for jobs and training. The popular notion that Chinese companies only employ Chinese workers is not accurate, but the overall number of Chinese workers in Africa is large. Africa may want to take a page from China’s playbook and limit the ability of foreign investors to bring in workers, forcing them to train local labor instead.

The popular notion that Chinese companies only employ Chinese workers is not accurate, but the overall number of Chinese workers in Africa is large.

6. A final important finding of the study is that the foundation for the Africa-China economic relationship is shifting. China’s involvement in Africa stretches back decades, but the economic relationship accelerated after 2000, when China’s growth model became especially resource-intensive. It made sense for resource-poor China to import natural resources from Africa and to export manufactures in return.

These patterns of trade and investment are now likely to gradually shift in response to changing demographics. The working-age population in China has peaked and will shrink over the coming decades. This has contributed to a tightening of the labor market and an increase in wages, which benefits Chinese people. Household income and consumption are also rising. Compared to past trends, China’s changing pattern of growth is less resource-intensive, so China’s needs for energy and minerals are relatively muted. At the same time, China is likely to be a steady supplier of foreign investment to other countries, and part of that will involve moving manufacturing value chains to lower-wage locations.

Africa’s demographics are moving in the opposite direction. In fact, they resemble China’s at the beginning of its economic reform 35 years ago. About half of Africa’s population is below the age of 20, which means the working-age population will surge over the next 20 years, and will probably continue growing until the middle of the century or later. Roughly speaking, Africa needs to create about 20 million jobs per year to employ its expanding workforce. Twenty years from now, it will need to create 30 million jobs per year. Africa’s demographics present both an opportunity and a challenge. It is unrealistic to expect the China-Africa economic relationship to change overnight. Nor would it be reasonable to expect large volumes of Chinese manufacturing to move to the continent in the near future; it would be more natural for value chains to migrate from China to nearby locations such as Vietnam and Bangladesh. But if even small amounts of manufacturing shift, this could make a significant difference for African economies, which are starting out with an extremely low base of industrialization. And it is useful to have a long-term vision that an economic relationship that started out very much centered on natural resources should shift over time to a greater focus on human resources.

For more on China’s engagement in Africa, check out the Brookings event hosted by the John L. Thornton China Center and the Africa Growth Initiative this Wednesday, July 13, at 3:30pm. 

Throughout the 2000s, Chinese demand for primary goods like oil, iron, copper, and zinc helped Africa reduce poverty more than it had in decades. Even so, China’s total investment in the continent’s natural resources has been smaller than many imagine, and, with growth moving away from manufacturing and toward consumption, China’s appetite for raw materials will continue to diminish. China’s shifting economic growth model aligns with Sub-Saharan Africa’s imminent labor force boom, presenting a significant opportunity for both sides. Maximizing mutual gain will depend on China and Africa cooperating to address a host of challenges: Can African countries limit the flow of Chinese migrants and foster domestic industries? Will Chinese investors adopt global norms of social and environmental responsibility? Where does the West fit in?

This study aims to objectively assess China’s economic engagement on the African continent, the extent to which African economies are benefiting, prospects for the future, and ways to make this relationship more productive. David Dollar marshals evidence about the scale of trade, investment, infrastructure cooperation, and migration between China and Africa, all of which are relatively recent phenomena. In addition, Dollar addresses the question of whether and how China’s involvement differs from that of Africa’s other economic partners. The concluding chapter provides some tentative recommendations for African countries, China, and the West.

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As much as the nostalgic might hate to admit it, a new year is coming up. And for climate change negotiators, 2015 is a big one: it’s the make-it-or-break it year for a serious, last-ditch effort at an international agreement to slow runaway climate change. 

A new year brings new, hopeful resolutions. Of course, just as ubiquitous are the pesky memories of past resolutions that one never quite accomplished.

Some resolutions fade, understandably. But failure is less forgivable when the repercussions include the increased exploration of fossil fuels at the expense of our warming world. To avoid the most destructive effects of climate change, we must keep two-thirds of existing fossil fuel reserves underground, instead of providing subsidies to dig them up.

One group not living up to its resolution: the G20 members —19 countries and the European Union that make up 85% of global GDP. At the 2009 G20 summit in Pittsburgh, the group agreed to “rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.” At the 2013 summit in St. Petersburg, they reaffirmed this resolution. Yet that same year, these countries funneled $88 billion into exploring new reserves of oil, gas, and coal.

Another resolution abandoned.

This year’s G20 summit will convene in Brisbane, Australia (November 15^th - 16^th) — a perfect opportunity to commiserate about the backsliding on the agreement and to develop a new approach that includes some means of holding each other accountable. So how can the G20 follow through on its laudable and necessary pledge?

1. Get help from the experts.

A new report by the Overseas Development Institute and Oil Change International criticizes the G20 for “marry[ing] bad economics with potentially disastrous consequences for climate change.” It points out that every dollar used to subsidize renewables generates twice as much investment as the dollar that subsidizes fossil fuels.

And the G20 can try harder to heed the doctor’s orders. This report outlines specific recommendations, including revamping tax codes to support low carbon development instead.

2. Set a timeline and stick to it.

National timelines for fossil fuel subsidy phase out would be different depending on the governmental structures and budgeting processes of individual countries. Also, countries can utilize the timeline of the incoming international climate treaty, by including a subsidy phase out as part of a mitigation plan to be measured and reported.

3. It’s easier with friends.

The G20 got it right that no one country should have to go it alone. Now it is time to strengthen its methodology for peer review of inefficient fossil fuel subsidies, and agree upon a transparent and consistent system for tracking and reporting.

That said, it can also be easier to cheat with friends. The new report tracks where investments from G20 state-owned energy companies are directed. As it turns out, G20 countries continue to fund each other’s fossil fuel exploration. Instead of cheating together on their own resolution, G20 members should leverage these relationships to advance investments in clean energy.  

4. Hold each other accountable.

The G20 is not the only group that has committed to phase out fossil fuel subsidies. The issue has received support from advocacy groups, religious leaders, and business constituencies alike. The public will be able to better hold leaders accountable if the G20 declares its commitment and progress loud and proud.

Moreover, G20 members and advocacy organizations can make the facts very clear: fossil fuel subsidies do not support the world’s poor, and the public ends up paying for the externalities they cause in pollution and public health. This accountability to addressing concerns of the people can help the G20 stand up to the fossil fuel industry.

5. If at first you don’t succeed…

True, phasing out fossil fuel subsidies is no piece of cake. There is no G20 standard definition of “inefficient subsidies” or timeline for the phase out. It also hasn’t helped that countries report their own data. They can even opt out of this unenforced commitment altogether. Yet the pledge is there, as is the urgency of the issue. New Year’s resolutions take more than just commitments — they take work. This week’s G20 Leaders Summit is a wonderful place to commit to phasing out fossil fuel subsidies. Again.

Event Information

The world’s top economies had much to discuss at the G-20 summit in Brisbane, Australia last month, including reinvigorating global growth, the reduction of trade barriers, financial regulation reforms, and global infrastructure. The G-20 meeting took place at a key time for U.S. international economic policy, as it came on the heels of President Obama’s prior stops at the APEC summit and the ASEAN summit. As the U.S. joins its G-20 colleagues in aiming to boost G-20 GDP by an additional 2 percent by 2018, there remain many questions about how G-20 countries will follow through with the goals set in Brisbane.

On December 3, the Global Economy and Development program and the Economic Studies program at Brookings welcomed U.S. Treasury Undersecretary for International Affairs Nathan Sheets in his first public address since being confirmed in September. Following the recent G-20 meeting, Sheets discussed his perspectives on priorities for international economic policy in the years ahead across key areas including trade, the international financial architecture, and the United States’ evolving economic relationships.

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Editor's Note: The paper is part of a book entitled, “The G8-G20 Relationship in Global Governance.”

Future global growth faces many challenges. The first is securing economic recovery from the global financial crisis and reviving strong growth. The euro area has experienced a double-dip recession. Growth remains subdued in other advanced economies. Emerging economies (including the BRICS countries of Brazil, Russia, India, China, and South Africa, as well as other major emerging economies) had been the driver of global growth, accounting for almost two thirds of global growth since 2008, but in 2013 they too were experiencing slowing growth. The second challenge is sustaining growth. Many countries have large and rising public debt, and face unsustainable debt dynamics (International Monetary Fund [IMF] 2012). Environmental stresses put the longer-term sustainability of growth at risk. The third challenge is promoting balanced growth. Large external imbalances between countries — China's surplus and the U.S. deficit being the most notable — put global economic stability at risk and give rise to protectionist pressures. Unemployment has reached high levels in many countries, and there are concerns about a jobless recovery. And economic inequality within countries has been rising. More than two thirds of the world's people live in countries where income inequality has risen in the past few decades.

Thus, promoting strong, sustainable, and balanced growth is central objective of the Group of 20 (G20). A core component of the G20 is the Working Group on the Framework for Strong, Sustainable, and Balanced Growth. Yet G20 policy actions since the onset of the global financial crisis in 2008 have focused mainly on short-term crisis response. Economic stabilization is necessary and risks to stability in the global economy, especially those in the euro area, call for firm actions to restore confidence. However, short-term stabilization only buys time and will not produce robust growth unless accompanied by structural reforms and investments that boost productivity and open new sources of growth. To be sure, several G20 members have announced or are implementing structural reforms. But the approach to strengthening the foundations for growth, meeting the jobs challenge, and assuring the longer-term sustainability of growth remains partial and piecemeal. Some elements of an approach are present, but the unrealized potential for a coherent and coordinated strategy and effort is significant. The G20 needs to move beyond a predominately short-term crisis management role to focus more on the longer-term agenda for strong, sustainable, and balanced growth. 

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2015 is a pivotal year for global development; this fall is a pivotal moment. Meetings this fall will determine the global vision for sustainable development for 2030.

Three papers being released today—“Action implications focusing now on implementation of the post-2015 agenda,” “Systemic sustainability as the strategic imperative for the post-2015 agenda,” and “Political decisions and institutional innovations required for systemic transformations envisioned in the post-2015 sustainable development agenda”—set out some foundational ideas and specific proposals for political decisions and institutional innovations, which focus now on the implementation of the new global vision for 2030. This blog summarizes the key points in the three papers listed below.

Fundamentals for guiding actions, reforms and decisions

1) Managing systemic risks needs to be the foundational idea for implementing the post-2015 agenda.

The key political idea latent but not yet fully visible in the post-2015 agenda is that it is not a developing country poverty agenda for global development in the traditional North-South axis but a universal agenda based on the perception of urgent challenges that constitute systemic threats.

The term “sustainable development” by itself as the headline for the P-2015 agenda creates the danger of inheriting terminology from the past to guide the future.

2) Goal-setting and implementation must be effectively linked.

The international community learned from the previous two sets of goal-setting experiences that linking implementation to goal-setting is critical to goal achievement.  G-20 leader engagement in the post-2015 agenda and linking the success of the G-20 presidencies of Turkey (2015), China (2016), and Germany (2017) would provide global leadership for continuity of global awareness and commitment.

3) Focus on the Sustainable Development Goals must be clear.

Criticism of the 17 Sustainable Development Goals (SDGs) as being too defuse and too detailed is ill-founded and reveals a lack of political imagination. It is a simple task to group the 17 goals into a few clusters that clearly communicate their focus on poverty, access, sustainability, partnership, growth, and institutions and their linkages to the social, economic, and environmental systemic threats that are the real and present dangers.

The Bretton Woods era is over. It was over before China initiated the creation of the Asian Infrastructure Investment Bank (AIIB) and the BRICS New Development Bank (NDB). Never has it been clearer than now that maintaining a single global system of international institutions is essential for geopolitical reasons. For the implementation of the post-2015 agenda, all the major international institutions need to commit to them.

In a joint paper with Zhang Haibing from the Shanghai Institutes of International Studies (SIIS), we make five specific governance proposals for decision-makers: 

The implementation of the post-2015 agenda requires that nations internalize the SDGs by debating, adapting and adopting them in terms of their own domestic cultural, institutional, and political circumstances. It will be important for the U.N. declarations in September to urge all countries to undertake domestic decision-making processes toward this end.

2) Presidential coordination committees should be established.

To adequately address systemic risks and to implement the P-2015 agenda requires comprehensive, integrated, cross-sectoral, whole-of-government approaches.  South Korea’s experience with presidential committees composed of ministers with diverse portfolios, private sector and civil society leaders provides an example of how governments could break the “silos” and meet the holistic nature of systemic threats.

3) There needs to be a single global system of international institutions.

China’s Premier Li Keqiang stated at the World Economic Forum in early 2015 that “the world order established after World War II must be maintained, not overturned.” Together with a speech Li gave at the OECD on July 1st after signing an expanded work program agreement with the OECD and becoming a member of the OECD Development Center, clearly signals of China’s intention to cooperate within the current institutional system. The West needs to reciprocate with clear signals of respect for the increasing roles and influence of China and other emerging market economies in global affairs.

4) We must move toward a single global monitoring system for development targets.

The monitoring and evaluation system that accompanies the post-2015 SDGs will be crucial to guiding the implementation of them. The U.N., the OECD, the World Bank, and the IMF have all participated in joint data gathering efforts under the International Development Goals  (IDGs) in the 1990s and the Millennium Development Goals (MDGs) in the 2000s. Each of these institutions has a crucial role to play now, but they need to be brought together under one umbrella to orchestrate their contributions to a comprehensive global data system.

By engaging in the post-2015 agenda, the G-20 leaders’ summits would be strengthened by involving G-20 leaders in the people-centered post-2015 agenda. Systemically important countries would be seen as leading on systemically important issues. The G-20 finance ministers can play an appropriate role by serving as the coordinating mechanism for the global system of international institutions for the post-2015 agenda. A G-20 Global Sustainable Development Council, composed of the heads of the presidential committees for sustainable development from G20 countries, could become an effective focal point for assessing systemic sustainability.

These governance innovations could re-energize the G-20 and provide the international community with the leadership, the coordination, and the monitoring capabilities that it needs to implement the post-2015 agenda.