NEWS & INSIGHT
RENEWABLE ENERGY FUELS EQUALITY COUNTRY: UK SCHOOL: University of Sussex Business School
COVID-19: DEADLY PANDEMIC OR INVESTMENT OPPORTUNITY? COUNTRY: Denmark SCHOOL: Copenhagen Business School Covid-19 has hit some communities harder than others. Simple factors, such as being able to work from home and having access to quiet spaces or a garden, have impacted people’s experience of the pandemic. However, research from Copenhagen Business School suggests that the actions of shadow banks – deregulated private investment funds such as private equity funds and hedge funds – may have exacerbated these differences of experience. For one, from March to December 2020, US billionaires were found to have been able to increase their fortunes by more than a third, while many low-income workers in the US slipped into poverty. ‘The most economically vulnerable have borne most of the hardships of the pandemic, while those with economic capital have profited from both hard-pressed and booming sectors. The shadow banks have contributed to economic and social inequality,’ said lead author, Megan Tobias Neely, Assistant Professor at Copenhagen Business School’s Department of Organization, on the findings from the report published in the American Behavioral Scientist . During the pandemic, shadow banks are said to have been ‘shorting’, or borrowing stock and selling it on the free market, before buying it back at a lower cost if the price drops. They are also thought to have been targeting both flourishing sectors, such as healthcare technology, and sectors which have been struggling, such as airlines. Private investment funds will look to resell companies quickly, which equates to little or no appetite for investments in new technology, skills or protective equipment. Such a strategy during the pandemic heightens the extent to which frontline workers are overstretched and unprotected. Furthermore, the study finds women are disproportionally impacted, as they are more likely to make up frontline staff. The aim of the research is to expose practices in the financial sector which lead to inequality, with recommendations for tax and regulatory reform and for the democratisation of institutions. / EB
Countries which invest in renewable energy have greater income growth and lower levels of income inequality, according to new research conducted by academics at the University of Sussex Business School and the University of Portsmouth. ‘The positive relationship between economic growth and renewable energy is endogenous,’ said Panagiotis Tzouvanas, Lecturer in Finance at the University of Sussex Business School. ‘The more you invest in renewable energy, the higher the economic growth. In turn, the higher the economic growth, the more renewable energy consumption. The challenge is to reach a sufficient level of economic development to initiate this win-win cycle.’ The study, based on an analysis of data from 200 countries between 2000-2019, found a 0.2% decrease in income inequality for every 1% increase in renewable consumption in countries where renewable energy already represented 47% of total energy consumption. The research also found that, in terms of economic growth, a country had to reach a threshold of $17,000 USD income per capita before it saw a rise in renewable energy consumption. Each $1,000 USD increase in income per capita beyond that threshold then led to a 1% increase in renewable energy consumption. This win-win situation is not found in the early stages of a country’s economic growth. In fact, when this was the case, the study found that renewable energy consumption and production declined when an economy grew and that income inequality also grew when renewable energy consumption first started to increase. This is due to the initial cost of the renewable energy systems being put onto the consumer. Even so, the authors of the report believe this to be evidence that policymakers need to promote the use of renewable energy, because it will ultimately propel more equal growth. The recommendation is for policymakers to use incentives, such as renewable energy certificates, to increase renewable energy consumption in their countries . / Ellen Buchan (EB)
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