This is the twenty-second edition of weekly recommendations. Watch this space for facts, news, trivia and research around the world. Topics range from economics, public policy and psychology to finance, society and current affairs. Access all weekly recommendations here.

Erdogan Going Against Textbook Lessons

Raising policy rates to combat inflation is the basic lesson that economics textbook teaches us. You don’t need a PhD to understand this. Erdogan, Turkey’s prime minister, however, is against the idea of raising interest rates for controlling inflation. He believes that low-interest rates can ease inflation and therefore, has dismissed central bank governors in the past if they had raised interest rates.

The inflation rate in Turkey is more than 73%.

Regulators want people to use more lira and not keep much balance in any other foreign currency. On my latest trip to Turkey, I witnessed a lot of currency exchange counters around all the main streets. Most shops accepted foreign currency (largely dollars and euros) but at the same time, I have seen shopkeepers carrying a bunch of dollars and euros to get them converted into lira. This shows desperate attempts by the government to keep floating the demand for lira.

According to a rule, Turkish exporters have to convert 40% of their foreign revenues. Recently there has been another such attempt. It said that Turkish companies would no longer be eligible for loans in lira if their foreign-currency holdings exceeded 15m lira (roughly $900,000)and if the amount exceeded a tenth of their assets or yearly sales. This move will force companies to sell foreign currency and buy lira.

These unconventional methods have taken a toll on the country’s economic outlook. Since 2019 the central bank has burned through at least $165bn in foreign reserves by intervening in currency markets.

Read more on The Economist.

Cities Became More Livable

The Economist Intelligence Unit comes up with Liveability Surveys each year. It calculates Liveability Index based on a few parameters mentioned below for all the main cities around the world. The liveability index has improved in 2022. The score now stands at 73.6 (out of 100), up from 69.1 a year ago; this is still lower than the average of 75.9 reported before the pandemic.

Parameters used to calculate the index –

General Methodology and Important Points –

• Data for 173 cities
• Excluded Kyiv due to Russia’s invasion.
• 33 new cities have been added and of them, one-third are from China.

2022 report observations –

• Healthcare, Education and Culture & Environment categories saw improvement as Covid-19 curbs have eased.
• Vienna (Austria) tops the list in 2022. Previously it topped in 2018 and 2019 too.
• Rankings of Eastern Europe cities have fallen due to geopolitical risks. The report acknowledges that although the pandemic has receded, a new threat to liveability emerged when Russia invaded Ukraine.
• Western European and Canadian cities have improved a lot due to vaccination and ease of Covid restrictions.
• Copenhagen (Denmark) moved up 13 places and is now ranked at second position.
• Russian cities have reported a fall in ranking by 13-15 places.
• Sanctions in Russia have worsened the food security in many countries. The impact of war is likely to be seen throughout 2022. It states that the ongoing food shortages and inflation might create uncertainties and conflicts in most parts of the world. The cost of living is likely to increase more due to high inflation, high-interest rates, geopolitical uncertainty and resulting public outcry.
• Cities in Algeria, Libya, Nigeria and Syria are at the bottom of the list, which has remained unchanged compared with the previous year.

Business Opportunities in Space

Many companies believe that the environment of space could help them discover new products. McKinsey conducted a survey in four industries viz. pharmaceuticals, beauty and personal care, food and nutrients, and semiconductors. Pharma might benefit from it more than any other sector. It could achieve revenue of US$ 2.8-4.2 billion every year if it collaborates with a space company, followed by beauty & personal care, semiconductors and food & nutrients.

Potential use cases in these industries are –

1. Pharma –
   1. Cell cultures for predicting disease models.
   2. Organoids.
   3. Drug research.
   4. Manufacture of retinas in space.
2. Beauty and Personal Care –
   1. Space-based R&D may unlock new insights about skincare because of the harsh space environment.
   2. Space-based R&D might help companies to develop or manufacture active ingredients (vitamins, retinas, etc.) in skin care products.
3. Food and Nutrients –
   1. Discover and develop new probiotics.
   2. Production of probiotics (Microbes may grow rapidly in suspension in space).
4. Semiconductors –
   1. Reduce the number of gravity-induced defects and increase output.
   2. A natural vacuum in space could potentially facilitate innovative thin-layering techniques by reducing or eliminating gases during production.

This is exciting, isn’t it? Read more here on how exactly the above products can be made or how space-based collaboration can aid such industries or what are the caveats of doing business in space.

– Swapnil Karkare