Applied Economic Analysis & Policy

Applied Economic Analysis & Policy

We live in rapidly changing societies facing multifaceted problems. These range from the traditional economic issues of conflicts over trade and investment flows to seemingly none-economic ones such as cybersecurity, armed conflict & political instability, environmental degradation (especially the danger of global warming) and pandemics. We aim to providing policy-relevant analyses to address such current issues.

The distinguishing feature of this CFCI research cluster is the adoption of the economics lens and rigorous methods to examine these varied societal problems. The diversity of expertise of our members means that we often have the opportunity to approach research questions from a unique well-rounded perspective.

The cluster’s research is organised around the following five core themes:

The economics of armed conflict & political instability

This theme primarily focusses on economic analyses of armed conflict, instability and natural resource abundance, and their consequences for economic development. A key focus is understanding the mechanisms that fuel internal violent conflict, now accepted as a leading causes of development failure, and the natural resource curse (how the blessing of nature in terms of a rich mineral or fuel endowment can, perversely, retard growth). Our thriving research in this area is both conceptual/theoretical and empirical/econometric.

Public economics and behavioural economics

One focus in this theme is the provision of (threshold or nonlinear) public goods such as the global commons – e.g. mitigation of climate change. The key issue here is ‘what determines agents’ contributions and facilitates provision?’ Another area of focus is cybersecurity – an emerging problem of great significance.  A particular current line of research in this area is improvement of cyber-security in small businesses and charities in the UK.

Trade/FDI and the environment

This theme directly relates to two major policy debates of our time. One is environmental policymaking, which is at all levels riddled by competitiveness concerns (e.g.  in the Paris Agreement on Climate Change). The second is trade liberalisation efforts, which are troubled by concerns over the effect of differential environmental standards across jurisdictions (e.g. the breakdown of the Doha Development Round of the WTO). Research around this theme is expanding to encompass broader trade and foreign direct investment (FDI) topics. Notably, there is some influential theoretical work on trade and market games. FDI and its impact on productivity is another strand in this theme that is picking up momentum.

Tourism economics & management

With rising integration of the world economy, tourism is becoming one of the most important industries in the global economy (currently accounting for over 10% of global GDP). Therefore, tourism-based economic development strategy and the determinants of tourist flows have become prominent issues in both policy circles and academia. One particular area of current research in this theme is on how to reignite tourism in post-conflict areas - with inspiration from the experience of Northern Ireland.

Public healthcare financing

Public health is a major challenge in low- and middle-income countries. As laid out in the Sustainable Development Goals, health is not only an end in itself but also lays the foundation for broader development strategies. A whole host of issues arise under this theme’s focus on public health economics: health financing, health equity, health service and system efficiency, and evaluation of economies of scope in integrated health services.

Cluster Lead 

Dr Abay Mulatu

Abay is an applied economist who has worked on topics in the areas of trade & the environment; trade & development; and firm location behaviour & efficiency. He recently completed a Leverhulme Research Fellowship on a project titled “Environmental Regulation and International Competitiveness”. Some of his research was cited in OECD’s policy documents and was included in EU DG’s Science for Policy news alert reaching over 11,000 policymakers.

This is an eclectic group of (mainly) economists who work on a wide range of economic questions that are at the forefront of current policy debates.

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