Research Agenda

- No empirical relationship in developed world between population size, growth and p/c GDP.

- It will be interesting to see how the structured market of China compares against the democratic market of India or the politicized economy of Russia.


- How different people’s wellbeing comes together to determine the overall value of the world


- Comparison of engineering costs of raw freshwater, reclaimed water and seawater:
Hong Kong is one of the very few coastal cities in the world that use 'dual water supply systems'. Dual water supply involves two distribution systems: a freshwater system for potable use and a seawater system for toilet flushing. This study looks into the feasibility, from an engineering cost point of view, of extending seawater supply into districts where potable water is still being used for toilet flushing, including South District of Hong Kong Island, Sai Kung, Northern New Territories and Northwest New Territories. Besides seawater, raw (untreated) freshwater and reclaimed water (treated effluent from local sewage treatment works) are also considered to be used for toilet flushing for these districts. Six cases are developed for comparison by using the lowest net present value of cost criterion. The result shows that using seawater for toilet flushing in these districts has the best engineering economy.


- By Aeon McNulty in: Technology
It's not exploding batteries that worry most of us: it's dead ones. My desk and table are littered with different charging cables, and there's a constant need to top up camera, mobile, laptop. iPod, and the rest of it. Now Marin Soljacic and colleagues at MIT have presented the idea of sending wireless energy to recharge batteries. They unveiled it last week at an American Institute of Physics forum, reports Kate Greene.
To create a mid-range wireless-energy solution, the researchers propose an entirely new scheme. In it, a power base station would be plugged into an electrical outlet and emit low-frequency electromagnetic radiation in the range of 4 to 10 megahertz, explains Soljacic. A receiver within a gadget--such as a power-harvesting circuit--can be designed to resonate at the same frequency emitted by the power station. When it comes within a couple of meters of the station, it absorbs the energy. But to a nonresonant device, the radiation is undetectable.
Because it's low frequency, it doesn't radiate great distances. In fact the near-field radiation just sits there within a couple of metres until it's extracted by a resonant receiver. So you just put all your gadgets on the desk, and they charge up automatically. No wires, no fuss, no having to remember to check. Soljacic reckons the device might be about 50 percent as efficient as plugging into the mains, but that only means a charge-up would take longer – a small price to pay.

It is a theoretical study at present, but the physics has been declared sound by peer group physicists, and the MIT team hope to have a working prototype within a year. After that, the only thing in the way will be the anti-progress lobby who will undoubtedly claim that the radiated energy causes cancer or cellulite or whatever. After that the main fear will be of being killed in the stampede as we all rush to buy one.




- By Dr Madsen Pirie in: Economics
We have increased money supply, but without the expected corresponding increase in the prices of goods and services and wages. Chinese, and to a lesser extent Indian, products and services have exerted downward pressure on prices. They have supplied us with enough cheap goods to keep the headline price rises down. They have kept wage rates down, too, by outsourcing or the possibility of it. Chinese and Indian workers have effectively entered Western economies.

All right then, where has the money gone, if not in the expected general rise in prices and wages? Part of it has gone into asset prices instead, into things like housing and equity values, some of it chasing one asset bubble after another. And a large chunk has gone to China, where the People's Bank last week declared international currency reserves of $1 trillion, 70 percent of which is in US dollar notes and bonds.

So Milton Friedman was right. Inflation is a monetary phenomenon, but does not have to translate into rising prices in the shops; the rise of the Asian economies has sent it elsewhere.

- By Dr Alister McFarquhar in: Economics
China now holds more official foreign currency than any other country - equivalent to $1 trillion. But if you include private holdings, Japan holds three times that amount, most of it by large companies. It facilitates investment abroad in countries that consume its products, such as cars. China's surplus derives from its competitive exports, from what many say is an undervalued currency, and from a domestic lack of interest in imported goods, constrained by the difficulty of consumers getting foreign currency.

China is reluctant to recycle foreign exchange to the retail banking sector, fearful of their habit of giving unsecured loans for local party-approved social and political projects - making many local banks technically bankrupt. Domestic inflation and liquidity is also a worry, and China is currently raising interest rates and compulsory Bank deposits to 9 percent. The best way to stimulate domestic growth would be currency appreciation to reduce oil prices, but progress is at a snail's pace.

In the days of Bretton Woods, stabilizing exchange rates was a must, for which the IMF was created. Exchange rates after floating remained a major preoccupation of economic policy in the US, Japan and China. The textbooks still claim the public deficit must be constrained in relation to GNP, and the EU pretends to enforce that. The record trade deficit in the US presages a fall in the US dollar - maybe around 20 even 40 percent to correct the balance, but nobody knows.

Globalization has changed everything. Saving in the East (Japan, Korea and China) finances consumer spending in the West, and makes the economic world go round. The rampant stock markets seem to think this is sustainable. As Cheney says, the value of the US dollar is a China problem. If it falls, then foreign savings in Japan and China fall pro rata and the powerful in those countries don't want that.

Most likely China will gradually outsource production to consuming countries, buying land and plant, holding more foreign assets and less currency. Sony and Samsung point the way, along with other famous names. The balance of relative return and risk make the US most attractive for investment. Should we worry? Or maybe toss away the economics textbooks!

In that foreign exchange holders hedge against the US dollar in Euros, the EU should certainly worry. This will make the EU less competitive than it already seems to be. Batten down the hatches; things could get rough.
By Dr Alister McFarquhar in: Economics

There has been a lot of talk recently about the exponential rises in management fees for hedge–funds and other investment managers, especially in the US. This has not correlated well with portfolio performance, where some managers take home bonuses of around $5 million per annum while portfolio performance doesn’t even reach double figures. Congress has become increasingly eager to regulate the finance industry and we’ve witnessed various congressional hearings and testimonies that have involved hedge–funds. If the SEC introduces regulations, the FSA may well follow suit due to the similarity between the markets over which the two regulatory bodies preside. The largest concentration of hedge–funds outside of the US is, after all, in the UK.


- By Krish Batra in: Regulation
Hedge–funds are a relatively new phenomenon and the readiness of people to invest their hard earned money in them could be explained by two considerations — decent economic growth and a boom in the hedge–fund sector. Investors have become (perhaps overly) optimistic of getting good investment results when they put their money into these new financial entities. Sometimes they are rewarded well, but often they are not. Due to the boom, management talent is becoming scarce and therefore managers are able to get away with grossly enriching themselves, regardless of performance results. According to the basic laws of economics, this boom will not last forever. There has to be a levelling off at some point when management costs, due to competition, will reach a more or less stable equilibrium. Predicting how far away this equilibrium point is, is not an easy task, but it’s still important to keep its inevitable occurrence in mind when there is talk of introducing regulation.