The Impact of Iran-Saudi tensions on global oil prices

The recent executions in Saudi Arabia has sparked strong reactions in Iran and has the region in turmoil. Here are my thoughts regarding the impact of the Iran – Saudi Arabia tensions on global oil prices in an interview by CCTV America.

Watch the video here:

 

 

 

Fact or Myth: Foreign law is a threat to the economy

There has been an ongoing debate about the use of foreign law to interpret the American constitution. In 2010 Oklahoma enacted a broad ban on the use of foreign law. A federal court later lifted this ban. There remains however a lot of opposition to the use of international law. Justice Scalia stated, “we must never forget that it is a Constitution for the United States of America that we are expounding. Where there is not first a settled consensus among our own people, the views of other nations, however enlightened the justices of this court may think them to be, cannot be imposed upon Americans through the Constitution.”

Scalia is not alone in his views. The court’s conservatives – including Chief Justice John Roberts Jr., Justices Clarence Thomas and Samuel Alito Jr. – argue that foreign decisions can be relevant in some of the court’s cases that deal specifically with international issues but never in interpreting the Constitution.

On the other hand, Justice Stephen Breyer in his new book, “The Court and the World: American Law and the New Global Realities,” cites the importance of using foreign law in deciding tough cases. Breyer says, “15 to 20 percent of the cases we review require the judges to know something about what happens abroad. Sometimes facts, sometimes laws, sometimes decisions.” Justices Anthony Kennedy and Ruth Ginsburg agree that examining such information from abroad is no different from reviewing the many studies or briefs that seek to influence court deliberations.

While we shouldn’t embrace every attempt to introduce foreign law into the American legal system, neither should we reject it altogether. There will be times when American law should seek reference to foreign law and times when it should not. It is up to the judges then and those who interpret the Constitution.

With 16.5% of the United States GDP attributed to foreign direct investment, the U.S. must look at foreign laws. The constitutional limitations along with restrictions on tax laws, antitrust laws, and immigration laws all affect foreign investment. While the United States should remain true to its roots, if it does not adapt to the new global realities, it may very well be left behind.

According to the Organization for International Investment: Worldwide, cumulative foreign inward investment rose to $25.5 trillion through 2013. The U.S. share dropped to less than one-fifth in 2014 from more than a third in 2000. This is because competition for foreign investment dollars has increased, and multinational companies have expanded their investments in faster growing developing markets. For the fourth consecutive year, more than half of all foreign direct investment in 2013 flowed to developing and transition economies; in fact, developed countries now account for only 39% of global FDI inflows. So foreign allies seem to matter after all.

Sources: Breyer, S. (2015). The court and the world: American law and the new global realities.

World’s Most Powerful Passports

Passports (Baigal)The word passport is from the 1500 French terms passer and port which means authorization to pass through a gate of a city wall. A passport helps to travel across the world and allows holders to cross borders with ease. But some are more influential than others.

Financial firm Arton Capital has put together a ranking of the world’s most powerful passports which allows holders the most global mobility based on how many countries can be visited without a visa or by getting one upon arrival.

It comes to no surprise that developed countries with advanced economies have a distinct advantage. Is it because their holders are most likely to return home? Do countries want to invite holders to visit them and conduct business in their territory? Or are they afraid of the repercussions from prohibiting these visitors?

Tied for first place are U.S. and U.K. passports which give holders access to 147 countries. But the U.S. passport prohibits travel to countries they consider as states that sponsor terrorism such as Iran, North Korea, Sudan and Syria. And despite recent changes, Americans still face a lot of hurdles for travelling to Cuba.

Top-ranked passports are as follows:

Access to number of countries
U.S.; U.K. 147
France, South Korea, Germany 145
Sweden, Italy 144
Denmark, Singapore, Finland, Japan, Luxembourg, Netherlands 143
Switzerland 142

 

On the other hand, passport holders from emerging economies such as China and India are not as lucky with access only to 74 and 59 destinations respectively. But African and Middle Eastern nations have the least powerful passports:

Access to number of countries
Congo, Yemen, Central African Republic, Kosovo 41
Equitorial Guinea, Bhutan, Comoros, Burundi 40
Somalia, Eritrea 39
Afghanistan, Djibouti, Iraq, Ethiopia, Nepal 38
South Sudan, Solomon Islands, Palestinian Territories, Sao Tome and Principe, Myanmar 28

Source: http://money.cnn.com/2015/04/17/news/worlds-most-powerful-passports/


How Coke Uses Culture to be More Effective

By Josephine Tolosa

It’s been a few months since I moved to the United States from the Philippines and as I adjust to differences in culture and language, I cannot help but compare the subtle differences in the positioning of global brands. It intrigues me that while campaign slogans remain the same, the messaging and images they use to convey those taglines are very different.

The Share-a-Coke campaign, which was first rolled out in Australia a few years back and has been picked up in the US for the summer, was also introduced in the Philippines in 2014. This campaign allows you to personalize bottles by printing individual names or other social words such as Dad, Mom, or Bestie instead of the usual Coke label.

US Context

In the US, two ads were shown to introduce the campaign. The first one follows Bobby, the dog, as he searched for a bottle with his own name. I believe that this ad was targeted mostly to millennial and boomers which, if combined, make up an estimated 48% of the American population. The choice of personalizing a pet also has a wide appeal because according to the Humane Society, an estimated 47% of American households have a dog while 62% of households have at least one pet. The second ad was also targeted to a specific public, teenagers or Gen Z, and it shows a growing number of friends sharing a coke with each other.

Philippine Context

In the Philippines, the first ad was very simple and follows the same pattern as the US commercial. It shows a group of teenagers sharing Cokes with one another. Teens in the range of 15-24 comprise of 19% of the population. The second ad however was targeted to a wider audience: the working population and those in the age of 25-54. This makes up about 37% of the Philippine population.

Coke’s ads in both countries try to elicit certain emotions of connectivity and togetherness regardless of race, age, or even species. The target audiences are the same as well and Coke targets the same age range within the population. However, in the Philippine context, Coke adds another layer to its frame and message. It adds everyday situations to bring out emotions of gratitude, appreciation, and happiness. This is especially relevant for the 12th most populated country in the world where menial jobs are often taken for granted. I believe this was important for Coca-Cola so that it can extend its campaign and also tie in with their main slogan of happiness.

Especially now, when US sales have been stagnant, Coca-Cola has to step up efforts in order to maintain its success as a global brand. By effectively changing it’s framing and messaging to fit a country’s culture without changing its overall company’s positioning; I believe they have been successful.coca-cola-statistic_id225388_companys-market-share-in-the-us-2004-2013

For a non-soda drinker, it has been a while since Coke has caught my attention but this Share-a-Coke campaign has made me spend more time in the soda aisle, carefully checking for a bottle that holds names of my family and friends.

View the ads here:

****

Josephine Tolosa is taking her Master’s in Public Relations and Corporate Communications at Georgetown University’s School of Continuing Studies. 

Global Benefits of Trade

The effects of growing global influences on domestic economies have been significant. Policymakers have increasingly come to recognize that it is very difficult to isolate domestic economic activity from international market events. Decisions that were once clearly in the domestic purview have to be revised due to influences from abroad. At the same time, the clash between the fixed geography of nations and the non-territorial nature of many of today’s problems and solutions continues to escalate. Consider, too, that some of today’s products would be nearly impossible to build if manufacturers were unable to source supplies from and sell resulting goods into multiple global markets.

At its root, international trade assumes that trade will improve the quality of life for the consumers, both as individuals and as a nation. The WTO identifies ten core benefits of trade:

  • The system helps promote peace
  • Disputes are handled constructively
  • Rule make life easier for all
  • Freer trade cuts the cost of living
  • It provides more choice of products and qualities
  • Trade raises incomes
  • Trade stimulates economic growth
  • The basic principles make life more efficient
  • Governments are shielded from lobbying
  • The system encourages good government

To some extent however, the complex links that trade fosters between nations have turned the economic world inside out. For example, trade flows once determined currency flows and exchange rates. Recently, currency flows have taken on a life of their own, increasing from a daily average of $18 billion in 1980 to a record $5.3 trillion in 2013. As a result, currency flows have begun to set the value of exchange rates, independent of trade. These exchange rates, in turn, have now begun to determine the level of trade.

To regain some power to influence policies, some governments have sought to restrict the influence of world trade by erecting barriers, charging tariffs, and implementing some import regulations. However, these measures too have been restrained by the existence of international agreements forged through institutions such as the WTO or by bilateral negotiations. World trade has therefore changed many previously held notions about the sovereignty of nation-states and extraterritoriality. The same interdependence that made us all more affluent has also left us more vulnerable.

This is an excerpt from the book by: Michael R Czinkota, Ilkka A Ronkainen, and Michael H. Moffett. Fundamentals of International Business (New York: Wessex, 2015), 50-53.