Governments across the rich world have spent anywhere between 4 and 21 per cent of their countries' gross domestic product to stimulate their coronavirus-ravaged economies. A substantial portion of these stimulus packages has been aimed at boosting the purchasing power of individuals and small businesses. But there is evidence to suggest that they are not having the desired effect on consumer spending, thereby pushing governments to consider announcing more such packages in the near future.
Researchers in the US and Europe point out that people have tended to use the money they received from stimulus funds to pay for necessities, including food and rent, more than they have on luxuries, such as electronics, furniture and cars. The outcome – as concluded by researchers from the Kellogg School of Management at the US-based Northwestern University – is that the "stimulus checks didn't stimulate the hard-hit areas of the economy like manufacturing or retail".
This means that governments need to rethink their stimulus packages before they run out of money. But what can they do?
James Duesenberry, a former Harvard University economist, once wrote: "Economics is all about how people make choices, but sociology is all about how they don't have any choices to make." I would add to this notion by saying that the way people spend their money today is largely determined by their access to enabling technology.
Read More from Sami Mahroum
For example, it was only after the invention of the Diners Club Card in 1949 that consumers could access financial resources that were previously not immediately available to them. Just consider how limited a person’s choice would be at a restaurant or a shop that only accepts cash as a form of payment.
Electronic payments generally require access to a bank account and to electronic banking. But there are countries in the emerging markets where a majority of people do not have access to an account, let alone net banking. Only 3 per cent of India’s population have access to a credit card, according to data sourced from Reserve Bank of India, compared to around 68 per cent in Japan and the US.
Governments have come to take for granted the availability of many established technologies, such as the internet and the various modes of transportation. Yet these ubiquitous technologies are not as available to everybody as one might assume. The rate of car ownership, for instance, is as high as 838/1,000 adults in the US, according to the Federal Highway Administration, a the US government agency. But it is only 22/1,000 in India and under 10/1,000 in many African countries. The same can be said about air and train travel in emerging markets.
In today’s world, goods and services are increasingly bundled with technology. The app store is bundled with the smart phone, just as the mall is bundled with the car. And yet technology does not seem to feature a great deal in governments' study of consumer choice, as is evidenced in the lack of effectiveness of some of the stimulus packages.
Governments would be wise to consider the effect of technology scarcity on the effectiveness of these packages.
Access to broadband, transportation, smart wearables and intelligent home and office technologies could hold the key to an effective stimulus. In this respect, governments could earmark some of their funds to enable small firms and households to adopt or upgrade the necessary technology to participate in the economy, both as consumers and producers. They could subsidise the cost of high-speed internet connection, software, smart home appliances and personal wearables.
It is evident that working from home and remote learning have only been made possible in countries and communities where broadband access is available and reasonably priced, as well as in places where ownership of video-enabled phones, laptops and tablets is high.
It is therefore important for governments to recognise that technology is a “necessity resource” that helps to unlock other resources. Furthermore, they should identify technology scarcity as a separate subject of economic policy.
Lionel Robbins, a former professor at the London School of Economics, once defined the subject matter of economics as "the study of the allocation of resources, under conditions of scarcity". However, allocation itself is often influenced by technology. In fact, technology has become a condition for participation in various aspects of economic life, whether they relate to production or consumption. This is especially observable in regions and communities where access to technology is beyond reach.
Without adequate and affordable access to technology, human agency will continue to fall short. On a macroeconomic level, it will almost certainly render obsolete any government's economic recovery policies despite its best intentions.
Sami Mahroum is a professor at the Free University of Brussels
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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UAE currency: the story behind the money in your pockets
Springtime in a Broken Mirror,
Mario Benedetti, Penguin Modern Classics
UAE currency: the story behind the money in your pockets
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
england euro squad
Goalkeepers: Dean Henderson (Man Utd), Sam Johnstone (West Brom), Jordan Pickford (Everton)
Defenders: John Stones (Man City), Luke Shaw (Man Utd), Harry Maguire (Man Utd), Trent Alexander-Arnold (Liverpool), Kyle Walker (Man City), Tyrone Mings (Aston Villa), Reece James (Chelsea), Conor Coady (Wolves), Ben Chilwell (Chelsea), Kieran Trippier (Atletico Madrid)
Midfielders: Mason Mount (Chelsea), Declan Rice (West Ham), Jordan Henderson (Liverpool), Jude Bellingham (Borussia Dortmund), Kalvin Phillips (Leeds)
Forwards: Harry Kane (Tottenham), Marcus Rashford (Man Utd), Raheem Sterling (Man City), Dominic Calvert-Lewin (Everton), Phil Foden (Man City), Jack Grealish (Aston Villa), Jadon Sancho (Borussia Dortmund), Bukayo Saka (Arsenal)
The specs
Engine: 4.0-litre V8
Power: 503hp at 6,000rpm
Torque: 685Nm at 2,000rpm
Transmission: 8-speed auto
Price: from Dh850,000
On sale: now
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The Baghdad Clock
Shahad Al Rawi, Oneworld
The years Ramadan fell in May
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
Company%20Profile
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COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%203S%20Money%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202018%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20London%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Ivan%20Zhiznevsky%2C%20Eugene%20Dugaev%20and%20Andrei%20Dikouchine%3Cbr%3E%3Cstrong%3ESector%3A%3C%2Fstrong%3E%20FinTech%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%3C%2Fstrong%3E%20%245.6%20million%20raised%20in%20total%3C%2Fp%3E%0A
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
UAE currency: the story behind the money in your pockets
LIVERPOOL SQUAD
Alisson Becker, Virgil van Dijk, Georginio Wijnaldum, James Milner, Naby Keita, Roberto Firmino, Sadio Mane, Mohamed Salah, Joe Gomez, Adrian, Jordan Henderson, Alex Oxlade-Chamberlain, Adam Lallana, Andy Lonergan, Xherdan Shaqiri, Andy Robertson, Divock Origi, Curtis Jones, Trent Alexander-Arnold, Neco Williams
On Instagram: @WithHopeUAE
Although social media can be harmful to our mental health, paradoxically, one of the antidotes comes with the many social-media accounts devoted to normalising mental-health struggles. With Hope UAE is one of them.
The group, which has about 3,600 followers, was started three years ago by five Emirati women to address the stigma surrounding the subject. Via Instagram, the group recently began featuring personal accounts by Emiratis. The posts are written under the hashtag #mymindmatters, along with a black-and-white photo of the subject holding the group’s signature red balloon.
“Depression is ugly,” says one of the users, Amani. “It paints everything around me and everything in me.”
Saaed, meanwhile, faces the daunting task of caring for four family members with psychological disorders. “I’ve had no support and no resources here to help me,” he says. “It has been, and still is, a one-man battle against the demons of fractured minds.”
In addition to With Hope UAE’s frank social-media presence, the group holds talks and workshops in Dubai. “Change takes time,” Reem Al Ali, vice chairman and a founding member of With Hope UAE, told The National earlier this year. “It won’t happen overnight, and it will take persistent and passionate people to bring about this change.”
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
ONCE UPON A TIME IN GAZA
Starring: Nader Abd Alhay, Majd Eid, Ramzi Maqdisi
Directors: Tarzan and Arab Nasser
Rating: 4.5/5
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
More from Janine di Giovanni
Results:
5pm: Baynunah Conditions (UAE bred) Dh80,000 1,400m.
Winner: Al Tiryaq, Dane O’Neill (jockey), Abdullah Al Hammadi (trainer).
5.30pm: Al Zahra Handicap (rated 0-45) Dh 80,000 1,400m:
Winner: Fahadd, Richard Mullen, Ahmed Al Mehairbi.
6pm: Al Ras Al Akhdar Maiden Dh80,000 1,600m.
Winner: Jaahiz, Jesus Rosales, Eric Lemartinel.
6.30pm: Al Reem Island Handicap Dh90,000 1,600m.
Winner: AF Al Jahed, Antonio Fresu, Ernst Oertel.
7pm: Al Khubairah Handicap (TB) 100,000 2,200m.
Winner: Empoli, Pat Dobbs, Doug Watson.
7.30pm: Wathba Stallions Cup Handicap Dh80,000 2,200m.
Winner: Shivan OA, Patrick Cosgrave, Helal Al Alawi.
