The Myth of Decoupling

There was a triple decoupling .

Enhancing energy conservation and efficiency are key for decoupling economic growth from increased energy use, and thus for driving sustainable development worldwide.

On the contrary, private consumption fell to a record low 45 of developing Asia s GDP in 2010 down ten percentage points from 2002. In these circumstances, immunity from external shocks or decoupling, as it is often called seems fanciful.

Even in the case where the direct effect is small the decoupling assumption the US slowdown still can have a substantial net impact on European exports because of its indirect effect on Asian imports from Europe.

Ireland apos s recent structural development has apparently involved some important gains in energy efficiency and indicated a possible decoupling of CO2 emission trends and economic growth.

The third decoupling referred to commitments made with respect to the Millennium Development Goals and the fact that the majority of extremely poor people lived in vulnerable regions.

Decoupling did not occur in 2008, when exports accounted for about 45 of pan Asian GDP (excluding Japan) and every emerging country in the region experienced a sharp contraction in growth as world trade plummeted. Nor is decoupling likely today, because exports still account for about the same share of the region s GDP, and about 50 of these exports are still headed to developed countries.

One unintended effect of the Arab revolutions is that the link between security and integration that forms Europe s foundation is decoupling. The advantages of pooling sovereignty and resources ring increasingly hollow to ordinary Europeans.

NEW DELHI At the nadir of the financial crisis four years ago, many Asian governments came to believe that robust growth had led to a near decoupling of their economies from the West and its ongoing problems. But now, as the eurozone teeters and America s recovery weakens, Asia, too, is showing signs of faltering.

Moreover, not only is the tradable sector of Japan s economy highly vulnerable to a slowdown in China, but the recent conflict over the Senkaku Diaoyu Islands raises the prospect of economic decoupling. Apart from that, Japanese economic performance is set to remain weak, because the non tradable side is not a strong growth engine.

As was true three years ago, many hope for an Asian decoupling that this high flying region will be immune to global shocks. But, with GDP growth now slowing across Asia, that hope appears to be wishful thinking.

Such decoupling can occur only if we do away with the illusion that pollution is cost free. We can no longer get away with subsidizing economic growth and standards of living at the expense of the global environment.

The very existence of decoupling arguments is a warning that they should be concerned about the continuing robustness of Europe s economy. Special interests would not be peddling such dubious pabulum if they felt confident about the economy s future.

The fact that America s economy is slowing is bad news for Europeans, regardless of claims that Europe s economy has successfully decoupled itself from the United States. Decoupling is an idea that is based on bad economics and on some Europeans reluctance to accept the fact that Europe s short but sweet economic expansion is also coming to an end.

Italy s new leaders must address this situation by decoupling labor s contribution to productivity growth from that of capital and total factor productivity. According to the OECD, lower regulatory costs and more efficient public administration (building upon measures introduced by the previous government, led by Mario Monti) could add 0.3 0.4 to average annual GDP growth by 2020.

Today, 20 months into the US recession a recession that became global in the summer of 2008 with a massive re coupling the V shaped decoupling view is out the window. This is the worst US and global recession in 60 years.

This experimental approach by central banks has involved the conscious decoupling of financial asset prices from their fundamentals. The hope has been that more buoyant market valuations would boost consumption (via the wealth effect, whereby asset owning households feel wealthier and thus more inclined to spend) and investment (via animal spirits, which bolster entrepreneurs willingness to invest in new plant, equipment, and hiring).

PALO ALTO, CALIF. The fact that America s economy is slowing is bad news for Europeans, regardless of claims that Europe s economy has successfully decoupled itself from the United States. Decoupling is an idea that is based on bad economics and on some Europeans reluctance to accept the fact that Europe s short but sweet economic expansion is also coming to an end.

Zhou Xiaochuan, the governor of the People s Bank of China, China s central bank, has repeatedly called for a shift toward an international monetary system that allows for the use of multiple currencies for payments and investment. Such an approach would reduce the risk and impact of liquidity crises, while decoupling the international monetary system from the economic conditions and sovereign interests of any single country.

The absence of such a plan in the US (and in Europe) has contributed to the decoupling of financial markets from inclusive economic progress, because it suggests that current trends are politically sustainable. But, while this disconnect could continue for some time if no alternative program emerges, the huge gap between financial markets performance and most people s well being is unlikely to persist in the longer term.

I had long argued that the notion of decoupling was a myth the evidence now corroborates that view. This is especially so because America has exported not just its recession, but its failed deregulatory philosophy and toxic mortgages, so financial institutions in Europe and elsewhere are also confronting many of the same problems.ampnbsp

Many believe that religious revival and political radicalism among Muslims who reside in the West reflects the traditions and conflicts of the Middle East or the wider Muslim world. But Islamic Salafism (fundamentalist religious radicalism) is above all a consequence of the globalization and Westernization of Islam, and of the decoupling of culture and religion more generally.

Until then, decoupling arguments, whether applied to relations between Europe and America or Europe s financial sector and the rest of the economy, should be seen as having a single purpose to deny the very real threats to the continued expansion of the European economy. Some of this, no doubt, is wishful thinking on the part of economically unsophisticated people.

Yet Schmidt was always a strong advocate of a close transatlantic partnership, which he saw as indispensable for Germany s security and foreign policy. In fact, his initiative to counter the Soviet deployment of SS 20 intermediate range nuclear missiles, a plan he set out in a major speech in 1977, was motivated above all by concerns about a potential decoupling of Europe and its US ally.

The economic slowdown in the US, the eurozone, and China already implies a massive drag on growth in other emerging markets, owing to their trade and financial links with the US and the European Union (that is, no decoupling has occurred). At the same time, the lack of structural reforms in emerging markets, together with their move towards greater state capitalism, is hampering growth and will reduce their resiliency.

Secondly, as an example of the decoupling between traditional knowledge and modernization, he cited the example of the ancient system of irrigation that had sustainably channelled water underground to the places where they were needed, as opposed to the use of more recent drilling technology that had raised the salinity of the water supply and led to the degradation of biodiversity, water quality and land use in the deserts, and a wasted water supply.

Beef from Charollais, pork from Périgord lamb from Brittany, veal from Normandy.

Asparagus from Argenteuil, oranges from Valencia melons from Cavaillon, cabbage from Aubervilliers.

Salmon from the Loire, sole from the Channel lobsters from Corsica oysters from Dieppe, sardines from Lorient.

Well, we collect data from satellites, from airplanes, from ground vehicles, from people.

From here? From here.

Facts from history, from geography, from newspapers... from scientific books, millions and millions of them.

Market vitality comes from people, especially from entrepreneurs, from entrepreneurship.

(i) Two from those elected from African States, two from those elected from Eastern European States and two from those elected from Western European and other States

It's from Paris. From Paris?

From people, from money troubles.

Yours, from Vicky. From Vicky?

From Leipzig. Krüger from Leipzig.

From me, from Lloyd, from Eve, Bill, Max and so on.

I take images from our global imagination, from cliché, from things we are thinking about, from history.

21.6 is from natural gas, 1.6 is from petroleum, 19.4 is from nuclear, 5.8 is from hydro.

And there followed him great multitudes of people from Galilee, and from Decapolis, and from Jerusalem, and from Judaea, and from beyond Jordan.

And there followed him great multitudes of people from Galilee, and from Decapolis, and from Jerusalem, and from Judaea, and from beyond Jordan.

Musawwira from Ghana, Hadya from Pakistan, Jaleel from Iran who uses fire.