H-1B Visa 2017 Status: Fraud, costs, and what’s next?

How applicants and employers may be impacted by the Trump administration’s possible changes to the H1-B visa process.”

By Jeremy Ron Teboul

Winter has certainly come to an end in Washington D.C. but has left employers and job seekers around the United States and the world quite chilly. On April 3rd, through its Citizenship and Immigration Service agency (USCIS), the White House announced new changes to the H1-B visa program, which allows companies to employ skilled foreign workers in the United States. The Department of Homeland Security, issued a memo, announcing that “more scrutiny” will be put in place to eradicate immigration frauds involving the sponsorship of H1-B visas. This is particularly relevant, as most H-1B visas’ operations are put in place by companies during the beginning of April and usually come into effect 6 months after this date. H1-B visas can account for 85,000 of jobs in the United States for foreigners, 82% of them coming from India and China, according to data from the United States Department of State. In this article, we analyze what the new scrutiny put in place by the Trump Administration means for all actors involved in this process. What is the economic cost of H1-B visa? Why is the Trump Administration scrutinizing H-1B sourcing? And how do these changes affect companies and applicants?


H1-B visas cost money for applicants, companies and the federal government:

 

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Immigrant and nonimmigrant visas from 2011 to 2015

(retrieved from the U.S. Department of State)

Immigration is essential to companies in the United States. As far as experienced hires are concerned, companies are looking for specific skills which can sometimes apply to foreigners. Every year, more than 10 million visas are awarded by the United States’ Department of State to foreigners. There are about 185 different types of visas awarded every year for different purposes, most of them, allowing its holders to work in the United States, legally. However, we distinguish two types of visas: Immigrant visas, which allow permanent immigration to the United States and nonimmigrant visas, including H1-B visas, which are of interests here. The table above shows a 45% increase in the number of visas awarded to foreigners from 2011 to 2015, a percentage which illustrates the Obama administration’s stance on immigration. For current U.S. President Donald Trump–who has promised to be cautious on matters such as immigration, jobs, and China–government scrutiny in the H1-B visa process was obviously to be expected.

Now we wonder what H-1B visas actually cost to companies, applicants and to the United States’ federal government:

-In theory, H1-B visas involve different costs that are spread out between the applicant and the company who nominates the qualified applicant for this visa. The cost of creating such visa is split between these two agents and usually ends up being fully covered by the company–except if legal services apply for the applicant. The Los Angeles Times reports that “there were 17 H-1B visa requests for every 1,000 jobs in Silicon Valley.”  

 

-In practice, the cost for the U.S. federal government, which simply involves processing fees and operational fees, sums up to much less than what the company has to pay. However, the Trump administration insisted on the economic opportunity cost of hiring foreign workers, as opposed to American. This explains why the Trump Administration, wants to adopt more scrutiny into the process. The USCIS has not yet disclosed information regarding the number of visas it will award for future financial years and if restrictions would apply for specific countries’ applicants. Despite not being very harmful to applicants just yet, the H-1B visa scrutiny certainly foreshadows more drastic measures are to come, possibly defining strict quotas as far as Indian and Chinese immigrants are concerned.  


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What does it mean to be ‘tough’ on H-1B frauds?


In this section, we come to ask what ‘H-1B frauds’ are and why the federal government is becoming ‘tough’ on them. Our first analysis aims to explain ‘who actually frauds who?’


Previous comments from the Trump administration with regards to immigration tend to hint that H-1B visa applicants could be to blame in this process. However, what we find is a wholly different story: When the Trump administration refers to H-1B visa frauds, they are not referring to either fraudulent applicants or applicants which do not abide by American laws but rather to fraudulent American companies–particularly those in the technology sector–who apply for more H-1B visas than they actually need, in order to have a higher chance of hiring as many foreign workers as possible. This is considered fraud as H-1B visas only apply for specifically skilled applicants and not for cheaper labor. Tech companies are trying to outsource work as much as possible and a way to do that is to import highly skilled and ‘cheaper’ workers using the H-1B process. President Donald Trump has insisted that this corporate behavior is fraudulent as it favors foreign workers as opposed to American workers for reasons other than aptitudes.

The Future of H1-B visas

On the one hand, while it first seems that foreigners are the only ones targeted by H-1B visa changes, it appears that the Trump administration actually intended to threaten outsourcing companies, who tend to abuse of this system. On the other hand, there is a clear movement for protection of U.S. workers by the government: a CNN Tech article reports that “the Department of Justice recommended that people call a hotline if they see discrimination of U.S. workers on the basis of their nationality.” It further states that “the USCIS asked that tips about visa abuse be sent to a newly established email address.” Not only is the Trump administration scrutinizing the process of administering such visas but it also announces on-going scrutiny for all companies hiring H-1B workers in the form of site visits. CNN adds that a Department of Homeland Security spokesperson declared that “site visits are not meant to target non-immigrant employees for any kind of criminal or administrative action but rather to identify employers who are abusing the system.”

Looking at the timing of such statements, we were not surprised to hear about President Trump’s ‘buy American, hire American’ executive order on April 18th, which targets H1B visas. This executive order, as its name suggests, emphasizes the scrutiny evoked above, coming from the new administration in the H1B visa process. Apart from reiterating the role of the executive branch in making sure tech companies prioritize U.S. workers in their hiring process, the order does not – yet – affect foreign H1B workers directly. On the other hand, silicon valley giants like Apple or Google, who chose not to comment on the order, clearly got the message.   

Since Trump has promised “million of jobs” back for U.S. citizens, we conclude that it is not the end of the H-1B war between corporate leaders and U.S. President Donald Trump.

 

Sources:

Photo from Pixabay.

O’Brien, S.A. (April 3rd 2017) Trump administration moves to combat H-1B visa fraud with increased site visits. CNN. Retrieved from http://money.cnn.com/2017/04/03/technology/h1b-visa-fraud/

USCIS. H and L Filing Fees for Form I-129, Petition for a Nonimmigrant Worker. (n.d.). Retrieved from https://www.uscis.gov/forms/h-and-l-filing-fees-form-i-129-petition-nonimmigrant-worker

Travel State. Statistics and annual reports of the visa office. Retrieved from https://travel.state.gov/content/visas/en/law-and-policy/statistics/annual-reports/report-of-the-visa-office-2015.html

Lien, T. Changes to H-1B visa policy could have a chilling effect on the tech industry. (n.d.). Retrieved from http://www.latimes.com/business/technology/la-fi-tn-silicon-valley-h1b-changes-20170404-story.html

https://www.usatoday.com/story/tech/news/2017/04/04/new-h-1b-visa-measures-employment/99992732/

Business Standard

http://www.business-standard.com/article/companies/stricter-scrutiny-on-h-1b-visas-may-reduce-applications-from-indian-it-117040400401_1.html

Breitbart
http://www.breitbart.com/texas/2017/04/05/trump-admin-creates-reporting-tool-h-1b-abuse/

Financial Express
http://www.financialexpress.com/india-news/us-president-donald-trump-cracks-down-on-h1b-visa-programme-5-things-indian-techies-must-know/614274/

Recode
https://www.recode.net/2017/4/13/15281170/china-india-tech-h1b-visas

Maritime Imperialism: A Battle For Economic Resources

Maritime areas presents vast economic resources for countries who are willing to fight for it.”

By Jeremy Ron Teboul

Territorial disputes between nations over resources have been going on for centuries, and key maritime territories, could potentially solve the onshore energy crises for the elite nations who control them. Most of 21st century conflicts arise from disputes over shared resources. Conflicts over maritime areas are commonly underestimated because they do not directly involve civilians. In this article, we show that they are in fact significant because of the economic and political stakes for governments. Imperialism–the act by which countries expand their power through the acquisition of land–is still a major conflict today. While there are many reasons for territorial disputes, imperialism in the 21st century is mostly economically driven. Today, more than ever, imperialism takes place on what used to be the main obstacle to discoveries centuries ago, according to famous adventurers like Columbus–water.


Constituting more than 70% of the Earth, water is the result of great territorial disputes around the world. These maritime areas, bodies of water around a sovereign country, are defined by the United Nations, in its convention on the Law of the Sea. Maritime areas, in political terms, are referred to as Economic Exclusive Zones (EEZ), where  ‘exclusive’, refers to the exclusivity individual governments have to exploit such zones. This EEZ starts from a country’s shore up to 200 nautical miles away from their land. Problems arise when the UN evokes the question of sharing such maritime area: when two countries’ EEZ adjoin, the countries ‘should’ share the maritime area equally.

While most countries do abide by these international laws, the economic stakes of being able to exploit the resources present in oceans and seas are too high for some ambitious nations, especially in regions of cluster, where EEZs are relatively small and sharing becomes an international brain teaser (i.e. South East Asia). Today, maritime areas constitute a source of political and economic conflict, which involves resources worth billions of dollars for whomever acquires it first. What is the economic significance of maritime areas and what are the political and economic consequences for countries that transgress the international laws currently in place?


Conflicts in Economic Exclusive Zones: A problem of resources

Screen Shot 2017-04-03 at 7.44.36 PM.png

courtesy of the BBC, UNCLOS and CIA


What is a good economic problem that does not involve an allocation of scarce resources? Natural resources, energies, or even fisheries, are all resources present under water and it is imperative for countries who seek economic prosperity to have a direct access to these resources. For instance, the South China Sea, is “estimated to hold 11 billion barrels of oil, 109 trillion cubic feet of natural gas, and 10 percent of the world’s fisheries” (Vox). The People’s Republic of China, political and economic leader in the region, claims most of the South China Sea because of a Nine-dash line which originated from Taiwan when it still controlled Mainland China. This virtual imprecise line is conflicting with the UN’s EEZ law and is the main conflict today in South East Asia. For the past two decades, China has been building artificial islands outside of its EEZ to form military bases in the region. While localized, this problem still involves a lot of actors, especially the United States, which regularly patrols in the area and has been fighting a cold war with China on the matter. Current White House Chief Strategist Steve Bannon declared that “ [the U.S.] is going to war in the South China Sea in 5 to 10 years. There is no doubt about that” (reports The Guardian). Resources are a source of international conflict as far as maritime areas are concerned. Although the U.S. is playing an objective policeman role in the region, one can assume it is economically motivated to allow its South East Asian allies to embrace such resources as opposed to its Chinese economic rival.

 

Maritime areas, an essential component of trade:

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France’s Exclusive Economic Zones, compiled by The Economist.


Such maritime zones also hold economic importance because they allow for direct international cooperation. Trade deals, regardless of their effectiveness, are strong incentives for the possession of a vast and strategically selected maritime area. There are several aspects to look at:

 

On the one hand, countries like France, the United States and Russia manage vast maritime areas but do not necessarily qualify for ‘strategic’ ownership of the key maritime zones that facilitate trade deals. For instance, France possesses the largest EEZ in the world. With territories spread out across all continents, its EEZ sums up to more than 11 million square kilometers, making it very efficient to trade with many nations.


On the other hands, some maritime areas are more precious than others: The United Kingdom claims 3 nautical miles around the Strait of Gibraltar, key passage between the Iberian Peninsula and North Africa. One can note that trade is also a major source of conflict because of straits and the importance of an accessible route for shipping efficiently. South East Asia is again at the center of the problem as far as straits are concerned. The World Economic Forum reports that  “according to the United Nations Conference on Trade and Development (Review of Maritime Transport 2011), almost half of the world’s total annual seaborne trade tonnage passed through the Strait of Malacca and the nearby Straits of Sunda and Lombok in 2010”. This creates a new source of “friction” in the region, this time between Malaysia, Singapore and surrounding nations, adding up to the Nine-dash line issue.

 

Trade is thus dependent on maritime areas and these two strategies – either a vast EEZ or a strategically determined EEZ – are different ways to successfully compete in the world’s maritime imperialist quest.

 

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South China Sea Major Crude Oil Trade Flows compiled by the Energy Information Administration

 

There are other economic reasons for wanting to acquire marimite areas. China seeks to build military bases in the South China Sea to facilitate and reduce the cost of its defence. EEZs can significantly affect economic affairs especially when it involved the military power of world economic champions like China or the United States, who both recently promised to increase their military spending. The economic factor of current territorial disputes on water is significant as nations are reconsidering their trade deals in 2017. Acquiring resources, precisely fossil energies such as natural gas and oil, soon to disappear, has never been more present on governments’ agendas. The economic stakes involved with straits and maritime trade routes also contribute to the economic race set by the United States and China. As the new American administration settles in, President Xi Jinping has remained intransigent on the question of the Nine-dash line. It remains a challenge for the United Nations to successfully sort such economic matters, especially as members of its P5 veto power states are are at the front of the negotiation table.


Maritime zones constitute a critical new form of imperialism, happening away from the coasts. The decline in classical land-based imperialism coincides with the decrease in resources available on mainland. Governments understand that most resources in our planet are now to be found under water. Ambitious governments wish to solve the energy crisis by exploiting EEZs. Furthermore, military power and political power is also a reason for classifying maritime zones as precious organs of a country’s exclusive territory. The United States, greatest maritime patroller in the world, has endorsed the role of moderator in regions such as the South China Sea, where China captured most of the power. As it is practically impossible for a country to acquire or even manage all maritime areas, two strategies repeatedly occur: Acquiring a vast maritime area, thus favoring political influence or strategically selecting part of an EEZ, which has the most resources to exploit. Despite different strategies for exploiting EEZ, all countries value the importance of maritime areas, making them battlefields for trade wars, as populist regimes flourish both in the East and the West.
Sources:

Image Source: pixabay

The United Nations, Preamble to the United Nations Convention on the Law of the Sea (n.d.). Retrieved March 03, 2017, from http://www.un.org/depts/los/convention_agreements/texts/unclos/part5.htm

Ellis, S. (2017, February 17). Why China is building islands in the South China Sea. Retrieved March 03, 2017, from http://www.vox.com/videos/2017/2/17/14642818/china-south-china-sea-us-islands

Haas, B. (2017, February 01). Steve Bannon: ‘We’re going to war in the South China Sea … no doubt’ Retrieved March 03, 2017, from https://www.theguardian.com/us-news/2017/feb/02/steve-bannon-donald-trump-war-south-china-sea-no-doubt

 

Hirst, Tomas. (2014, May 21). The World’s most important trade routes. Retrieved March 03, 2017, from
https://www.weforum.org/agenda/2014/05/world-most-important-trade-route/

 

The Economist, (2016, January 13). Drops in the ocean: France’s marine territories. Retrieved March 03, 2017, from http://www.economist.com/blogs/graphicdetail/2016/01/daily-chart-10

 

Smith, J. M., Eisenman, J., Hart, G., Mendis, P., Wang, J., & Rines, S. (n.d.). China and America Clash on the High Seas: The EEZ Challenge. Retrieved March 03, 2017, from http://nationalinterest.org/feature/china-america-clash-the-high-seas-the-eez-challenge-10513



Has Thomas Piketty Solved the Problem of Inequality?

“Wealth inequality is considered one of the most troubling economic problems of the 21st century. “

By Jeremy Ron Teboul

Wealth inequality is considered one of the most troubling economic problems of the 21st century.  While recovering from wars, economic crises and recession, our economy has split households into two categories: the ones that are well-off and the ones that are not. In the past five years, many economists with conflicting views and solutions have tried to solve the issue of inequality in both income and wealth. The most intriguing one remains Professor Thomas Piketty in his chef d’oeuvre “Capital in the 21st century.”  
Capital, which first appeared in France in 2013 and became later on a best-seller in the United States and many other countries, has left optimistic economists quite unsettled. Thomas Piketty is a Professor at the Paris School of Economics and EHESS, a French Grande École. He worked on his book for more than a decade, gathering data from the past 250 years in order to advance an argument on the issue of inequality. His vision, supported by strong statistical evidence from 20+ countries, is clear: Output generated by the economy grows slower than wealth – the rate of return of wealth r is greater than the economic growth rate g – thus, he suggests that governments cooperate and intervene in the economy by creating “a global tax on capital” to strictly inverse the rate of inequalities, which has been growing for centuries.

On an economic standpoint, Piketty makes valuable observations on what actually causes inequality today. He derives appropriate conclusions on the structure of inequalities, as far as income and capital are concerned. However, almost four years after the publication of his book, many economists have successfully challenged his empirical statements about the world economy, claiming that his framework towards equality lacks theoretical support and is not feasible.

 

 

What makes Thomas Piketty’s thesis reasonable?

 

There are many ways to look at inequality. The first question we ask is ‘inequality of what?’ For Piketty, the problem is everywhere: There exists considerable inequality of wealth and income. A common misconception is to think that wealth and income are similar while they actually have little in common:
Wealth, and especially inherited wealth, is rare and precious to middle-class households in the United States . NYU Economist Edward Wolff explains that a fifth of the population of the United States holds close to 90% of the whole wealth of the country (Pew Research Center).  
Income, the other source of revenue for households in our economy is not only formed of labor income, but can also be represented quantitatively by interest rates, profits, capital gains and rents. Labor income relates to the exchange economy model, where households provide labor in exchange for wages.
Income and wealth form a basis for Piketty’s argument on how to solve inequalities in the 21st century.
Without loss of generality, Piketty uses many statistical tools to describe these inequalities, such as 20:20 ratios, gini indexes and of course public data. These statistical indicators are commonly used by economists to show inequality within different geographic regions or within different economic backgrounds. Piketty looks at the richest 10%, 1% and 0,01% of society, considers various geographic regions and looks at a large timeframe, from 1900 to 2010.  

In the above graph from Capital, we can see that the gap between levels of inequality in the United States versus Europe has been increasing dramatically since the 1970’s, reaching a global maximum in 2010.  Piketty’s main observation in Capital is on the annual returns to capital r compared to the annual growth rate g of the economy: He stands firm on the relationship: r is greater than g . Piketty explains that when the rate of return on capital significantly exceeds the growth rate of the economy, then it logically follows that inherited wealth grows faster than output and income.

 

r  > g

 

However, he makes an interesting exception to his claims: For Piketty, Twentieth Century’s data  has to be excluded from the model since the Great Depression and the Great Wars destroyed high amounts of wealth. Apart from the twentieth  century exception, r remains greater than g and inequality increases.
Piketty’s observation of such facts may be explained by what he refers to as the “hyper meritocratic society” of “winners take all markets”. He explains that it is relatively easier for someone born with considerable wealth (say in the top (0%;10%] richest part of society)  to stay wealthy or become even wealthier. This advantage, while present in most capitalist regimes, is present critically in the United States.

 

Screen Shot 2017-04-03 at 7.38.38 PM                               

 

Piketty encourages two pure strategies which are best responses to the problem of inequality:

 

  • The first one is about raising the minimum wage. It is fundamental to not only complement low incomes but also to ensure low income households generate wealth. Entrepreneurship, participation in the workforce, affording health care, education and leisure: these all depend on the accumulation and management of wealth – non-inherited as far as low income households are concerned. This is key to Piketty’s argument: In the United States, a low income person has very few chances of accumulating wealth. The graph above shows the minimum wages per hour in U.S. dollar and Euro in the United States and France. European Welfare States not only have higher minimum wages than the United States but the governments also subsidize  education, healthcare and other social services
  • The second best response to the problem of inequality is taxation. Taxing wealth, labor income and income from wealth dramatically lowers inequalities and ensures a more equitable and equal society. All socialist and welfare state countries use progressive tax systems based on total income and wealth. Piketty thus suggests a progressive global tax on capital to fight inequality around the world.

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From the courtesy of Economics online:
The effect of a negative externality on a macroeconomic market

 

However, is it fair, feasible, and will it end inequality?

 

Vilfredo Pareto, Italian economist, which gave his name to the field of Pareto Economics, helps understand the First Fundamental Theorem of Welfare Economics: ‘Under specific restrictions of Equilibrium Theory in Economics, a competitive free market tends towards Pareto Efficiency.’ An allocation of resources, such as wealth in our case between some individuals, is Pareto efficient if and only if such allocation makes at least one individual better off without making anyone else worse off. Market Performance theory suggests that any allocation of resources which is not Pareto efficient leads to market failure. Piketty’s argument, while reasonable, is not necessarily a pareto efficient situation: Shifting that much wealth from the top richest 0,01% to the bottom 50% of society would surely make the bottom 50% of society better off, but will end up making the top 0,01% worse off. Since resources are shifted away from this small percentage of the upper class towards a large portion of the lower class, the principle of non-satiation, commonly referred to as ‘the more the better’, proves this allocation is not pareto efficient. Therefore, we wonder if Piketty’s global tax on capital could lead to market failure.

 

Another important point of tax-sceptics and critics of Professor Piketty’s book uses the idea of externalities. Externalities of a transaction in economics refer to effects that can increase or, in our case, decrease the welfare of third-parties, not necessarily involved in the transaction. Elinor Ostrom, Nobel Prize winner too, “reflects on the [tragedy of the] Commons” in the first chapter of her best-seller “Governing the Commons.” She uses game theory and quotes many famous intellectuals such as Aristotle’s Politics to prove that a resource allocation that works in practice can also work in theory.  She uses the example of environmental externalities to show that we do not care enough about our ecosystem, which she considers as our greatest resource.
We can then question whether Piketty’s argument works in practice to justify the theory. On the one hand, there exists enough resources in the world which, if shared equally, would make everyone live a very normal and decent life. Shifting resources from people in the top 5% of society would complement any lack of such present in the bottom 50% part of society. However, the absolute amount of wealth we have in the world does not directly imply how wealth should be divided: It is very unlikely that governments, which not only have different political ideologies but also differ in their economic positions, will ever agree on a certain tax structure and tax base to equalize wealth. Therefore, it is unlikely that Piketty’s strategies to fight inequality hold in practice.

Since Professor Piketty’s empirical argument lacks feasibility to properly function in practice, the theory might also not stand correctly.

 

Piketty’s argument, though contested, still stands today.

 

Thomas Piketty is and will be remembered for his incredible observations on inequality. Where most economists saw inequality as a result of secondary factors like education or social background only, he successfully proved there exists a clear correlation between capital and inequalities today. This Marxist method – primarily focusing on capital – for ending inequalities is also properly synthesized which explains why Piketty’s ‘Capital in the 21st century’ was such a success.  However, economists have managed to transform Piketty’s roadmap for governments into a manifesto for socialism. It is very likely that we will hear more about Piketty in the next few years, especially with the rise of Bernie Sander’s democratic socialist movement in the United States.

While countries have borders, inequalities have no limit.

 

Jeremy Ron Teboul

The Economics Review


 

 



Sources:

Image source: Pexels photo library

Piketty, T., & Goldhammer, A. (2014). Capital in the twenty-first century. Cambridge, MA: Belknap Press of Harvard University Press.

Ostrom, T. L. (2015). Governing the commons. Place of publication not identified: Cambridge Univ Press.

Thomas Piketty’s. (2014, May 04). Retrieved February 23, 2017, from http://www.economist.com/blogs/economist-explains/2014/05/economist-explains

 

Economics Online. (n.d.). Retrieved February 27, 2017, from http://www.economicsonline.co.uk/Market_failures/Externalities.html

 

 

 

 

Sustainable Development: A Model for Reducing Carbon Emissions

“Why firms, cities and governments aim to reduce their carbon emission to seek growth.”

By Jeremy Ron Teboul

     Sustainable development, the balance between economic, social and environmental development, has been at the center of growth-related talks for nations and firms in 2017. While it is a common misconception that governments are the ones to fiscally pressure companies to limit their carbon footprint, certain occurrences might prove the opposite: Companies might as well return the favor by acting effortlessly for the sake of the environment, complementing any lack of actions from their administrators. In any case, private firms have realized that ecological development, more precisely the dissolution of externalities, is the decisive move to progress from a two-sided equitable state to a three-sided sustainable equilibrium.

screen-shot-2017-02-17-at-9-19-04-am

 

Firms are leading the path to ecological development, and it makes sense!

     As world leaders are freshly back from promising engagements taken at the COP22 conference on climate change last November in Marrakesh, big corporations are shaping their current procedures to become more environmental-friendly, leading the way to sustainable development. Forbes reports that “executives at 80% of Global 100 firms receive higher bonuses if the company meets sustainability targets.”

     This is the case at Siemens, one of the world’s most accomplished companies in terms of contribution to the environment, which defines sustainable development as “the means to achieve profitable and long-term growth.” As one of the largest environmental technology providers and global powerhouses for over 160 years, Siemens has been actively consistent in its contribution to protecting the environment, reducing its carbon footprint and investing into R&D for sustainable development research. In 2016, the company generated more than 36 billion Euros from its “environmental portfolio.” This portfolio represents almost half of Siemens’s revenue, and is exclusively dedicated to environmental development. Headquartered in Germany, Siemens’s green revenue model not only satisfies its shareholders, but also contributes to Germany’s environmental-friendly international reputation and gives confidence to many of its citizens.

     Similarly, in Sweden, IKEA has been implementing green policies, reducing adversities to the environment. With innovative ways to improve its carbon footprint, the Swedish company knows how to keep up with its image as a Scandinavian green leader; in January 2017 it began constructing the largest solar rooftop array in Washington state. As one of the world’s most environmentally sustainable country according to the Sustainable Development Goal Index, Sweden facilitates the road for many of its companies, such as IKEA, to implement internal environmental regulations and find innovative ways to make profit while benefitting – or simply not harming – the planet.
Whether pressured or not by local governments, Siemens and IKEA both reflect the success of companies making high profit off sustainable development and positive environmental action.


Eco-friendly cities that invest in the environment are also stimulating markets!


     On a larger scale, cities investing in the environment are bringing considerable hope to investors all around the world. In China, the Tianjin eco-city project, which targets 350,000 new homes, shows an honest effort from the world’s largest emitter of carbon dioxide to equalize socio-economic development with environmental growth. This joint venture project between China and Singapore shows that South and East Asian powers are keeping up with the microeconomic trend of investing considerable amounts in sustainable development. The ownership of this 50 billion Chinese Yuan project is equally divided between Chinese agents which include the China Development Bank and TEDA investment holdings, versus Singapore’s Keppel group.

     Western Asia is also showing a strong commitment to sustainable projects by building new environmentally friendly cities, most commonly known as eco-cities, and even improving existing infrastructure to make it greener. In December 2016, the World Bank’s board of directors approved a $132 million loan to Turkey for a sustainable city project; this loan represented over 80% of the cost needed to complete the project.

     GreenBiz, an online media outlet specialized in technology, business and environmental sustainability, asserts that 2017 is the year to invest in green bonds, as “the market is expecting to reach $100 billion,” and that cities are major leaders in this industry. It also predicts that investors will gain more access to environmental data, following 2016 incidents such as the Volkswagen scandal.

 

However, the greatest effort remains for governments.

     Despite many efforts to “build green,” firms and cities have limits to their operational power and must comply with their government’s target goals.
On the one hand, in China, the top-down strategy approach makes the enforcement of environmental policy smooth on all domestic scales. According to Forbes, the Chinese Communist Party is becoming tougher in terms of environmental policy. In December, it announced it was “increasing its standards for gasoline and diesel in order to cut emissions,” in 2017. With more than 170 million vehicles, China has positioned itself to clearly limit its emission over the next five years. This comes after a rough “year of the monkey,” spent under the spotlight of the global conferences of Paris and Marrakesh.

     On the other hand, the Trump Administration, still not at full capacity, has not repositioned itself from its campaign promise to shift towards a ‘laissez-faire’ position on environmental policy. Several foreign leaders and key actors in global environmental institutions have announced their lack of confidence for Scott Pruitt, President Trump’s pick to operate the Environmental Protection Agency (EPA). The coming months will be critical to analyze the United States federal government’s eventual compliance on the actions it agreed on in Paris.

     In 2017, cities represent the battlefield for firms to enhance environmental experiments favoring sustainable development. Despite strong budget and operational constraints, as opposed to governments, cities and firms are working together to achieve ‘the sustainable equilibrium’ by enforcing stronger environmental policies to balance their current economic and social status. ‘Eco-city projects’ display the conclusive and cooperative entanglement between massive corporations and cities of all sizes to achieve environmental sustainability. While governments seem to monopolize policy enforcement to respect equitable share between economic, social and environmental development, it seems that their scope of action will be limited by internal disagreements.


Sources :

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