Author: Awareness News

Estoril Conference – 24th of October 

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Reading time: 7 minutes

Introduction 

With this collection of articles, we aim be for the Estoril Conferences (EC) what Blitz is for Vodafone Paredes de Coura, by translating approximately ten hours of talks per day into  four pieces, so that those that missed out on the event can also engage in the reflections that were brought to the fore in these couple of days.  

This edition of the EC is “Time to Rethink”: Piece, Policies, AI, Climate, Longevity. So, specialists were invited to address issues for each area of action. In one of the more important years when it comes to elections, these talks invite us to rethink our beliefs so that we can more confidently engage in the societal debate that will translate into policy action.  

Morning sessions 

The first day of the Estoril Conferences at Nova SBE, Carcavelos, began with some words from the hosts and organization, as well as a Solemn Moment provided by Portugal’s President Marcelo Rebelo de Sousa, setting the scene for a day dedicated to the debate and discussion about the future of innovation, talent and global politics. 

As people found their seats, the first theme of the conferences was introduced, Peace, with guest speaker José Ramos-Horta and CNN Portugal News Anchor João Marinho, sharing a brief yet significant moment where the President of Timor-Leste and 1996 Nobel Peace Prize Laureate shared his insight on peacebuilding and the fundamental lessons learned from the fight for Timor-Leste’s independence, which now marks its 25th anniversary.  

Peace Talks 

The morning progressed, with guest speakers Olena Zelenska, Ukraine’s First Lady, and Oleksandra Matviichuk, 2022 Nobel Peace Prize Laureate, exploring Ukraine’s current situation and how war times compels people to rethink what truly matters. 

The nature of security in Ukraine has been redefined, no longer reflecting physical safety but about protecting dignity – a key word across the morning’s sessions. 

Olena Zelenska further established that everyday actions, such as calling a taxi or boarding a plane, have, since the conflict’s triggering, become monumental decisions that highlight the gravity of living in a war zone. In response to the war, new strategies for civil defense were developed, including widespread training in tactical medicine to equip civilians with life-saving skills, as part of a broader resilience-building effort.  Moreover, the systematic deportation of 19.000 Ukrainians to Russia is a painful and ongoing issue. As many children were displaced and deprived of normalcy, on account of Ukraine’s political turmoil, protecting their future was established as a critical priority, with about one third of Ukrainian students now receiving education online to provide education and a temporary sense of stability. 

Both talks highlighted the global threat of violence: war is not just about Ukraine. 

But what can peace be built around? 

The next “fireside chat”, moderated by CNN Portugal News Anchor, Rita Rodrigues, brought Yulia Svyrydenko, First Deputy Prime Minister of Ukraine, and Senida Mesi, Former Deputy Prime Minister of Albania, to the Estoril Conferences. This engaging conversation delves into the crucial role played by women in conflict resolution, peacebuilding and, most importantly, post-conflict recovery of society. Sustainability is an instrumental attribute for policies and conflict solutions to be long-lasting and inclusive. 

In the next programmed session, Zaynab Abdi, leader and advocate for social justice, discusses how global conflict and political turmoil have hindered society’s empathy and understanding regarding the large scale of events, such as the refugee crisis. Despite being widely tackled, with over 120 million refugees worldwide, the audience showed, by raise of hand, that only about 25% have ever spoken to a refugee or engaged with their stories. This indicates a profound lack of understanding and awareness about the scale of the crisis, even among highly educated individuals. By sharing her experience, Zaynab Abdi called for proactivity and unity, since, without it, we are merely creating another history lesson.  

After a heartfelt message from UN Secretary-General António Guterres about the importance of peace, unity, and proactivity among citizens and countries around the world, Martaz Lorenzo, Director of the UNRWA Representative Office for Europe, reflects the current situation in the Middle East, more specifically Gaza and Lebanon, where overcrowding, deprivation, and conflict have created dire humanitarian crises. Lorenzo paints a stark picture by asking the audience to imagine 2 million people living in one-third of the space of Lisbon. The silence in the audience enhanced the gravity of the real scenario prompted.  

As sheer density and lack of resources make life unbearable for many, Lorenzo further stresses the need to protect the multilateral system that governs international relations. Without these, coupled with international laws, humanity loses its moral compass, and conflicts spiral out of control. 

Policies 

After such insightful and inspirational messages from the “Peace” sessions, the next segment “Policies” was introduced, with first speaker Monica Ferro, Director of the London Office of the United Nations Population Fund, prompting the question: How long until women’s rights are fully respected? 

“Women’s right are still a mirage for a majority of us” 

Ferro reflects on how far society has come since the 1990’s, women’s rights were already fully outlined economically and socially 30 years ago but are still not reached today when regarding positions of power and career development.  

“Women need a seat at the table and if there are not enough chairs, they will bring their own chairs.” 

In this session, Monica Ferro addresses crucial role of data, highlighting that what doesn’t get counted doesn’t get thought about, and, according to the World economic Forum, women are being left behind and are absent from decision making, as power structures do not allow for fair shares of seats at the table. Moreover, in a world of innovation and progress, full gender parity is expected to take 144 years, meaning five generations of women will still live with inequality. Other important issues, such as women’s health and the stigma around it, were also debated, since, despite clear efforts are being made to improve, genital mutilation, gendered violence, and child marriage are still prevalent in some areas of world, fostering a culture of imparity.  

This session’s message lies within the importance of human capital investment and early education around gender parity to accelerate the progress toward true equality. 

Upon the many talks addressing international instability, the mood at the precinct is lightened by the performance of Portuguese singer Luísa Sobral, who inspired the audience by singing about the need for world peace and womanhood. 

After Sobral’s performance, UNRIC’s (UN Information Centers) Director Sherri Aldis takes the stage and debates how the UN is shaping the future of multilateralism. 

Today, 2.6 billion people are not connected to the internet (1/3 of the global population). Furthermore, there is also significant evidence of increased online violence and misinformation. Some examples outlined include young individuals being driven to despair or suicide due to online bullying, female leaders receiving threats of rape and death, and climate activists being attacked. With misinformation’s escalation and science’s erosion by “fake news”, the UN has conducted recent efforts to reform the multilateral system and striving towards a world where everyone has access to a secure digital world. The UN’s “Pact for the Future” sets out a new roadmap for global cooperation over the coming decades, including breakthrough commitments in areas such as Security Council reform, outer space governance, international financing, and securing the rights of youth and future generations. 

As the morning sessions come to an end, Tomás Magalhães, Founder of Despolariza & The Kolkata Relief Project, prompts the question: How to disagree constructively? 

Surface solutions include listening to understand, talking in questions rather than statements, and assuming good intentions from the messenger. Magalhães then dives into more rooted solutions, calling for people to put everything into perspective before reacting and establishing the political spectrum as multidimensional. 

Closing Remarks 

Attending the Estoril Conferences provided audiences, and more specifically Nova Awareness members, with new perspectives and insights about UN’s initiatives, the life-long work of some of the most distinguished figures in today’s society, and organizations which strive to inspire action.  

Overall, the reflections from influential figures emphasize the importance of resilience, the critical role of women in peacebuilding and societal development, and the urgent need to protect human rights amid global conflicts. The call to action across these voices is clear: without proactive and inclusive approaches that prioritize human dignity, equality, and collective action, lasting peace and justice will remain elusive.

Madalena Martinho do Rosário

Marta Nascimento

Mara Blanz

Understanding Mental Health: A Comprehensive Guide 

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Mental health is an essential aspect of our overall well-being, encompassing our emotional, psychological, and social functioning. It influences how we think, feel, and behave, and affects our ability to handle stress, relate to others, and make decisions. In this article, we’ll explore key concepts related to mental health, its significance, and ways to promote it. 

The Importance of Mental Health 

Mental health is not merely the absence of mental illness. It involves a state of well-being where individuals can realize their potential, cope with the stresses of life, work productively, and contribute to their communities. According to the World Health Organization (WHO), good mental health enhances the quality of life, improves productivity, and promotes better physical health. 

Common Mental Health Conditions 

  1. Anxiety Disorders: These include generalized anxiety disorder, panic disorder, and social anxiety disorder. Symptoms may include excessive worry, restlessness, and physical symptoms like increased heart rate. 
  1. Depression: Characterized by persistent sadness, loss of interest in activities, and feelings of hopelessness. It can impact one’s ability to function daily. 
  1. Bipolar Disorder: This condition involves extreme mood swings, including emotional highs (mania) and lows (depression). 
  1. Schizophrenia: A severe mental disorder that affects how a person thinks, feels, and behaves. It can lead to hallucinations, delusions, and disorganized thinking. 
  1. Post-Traumatic Stress Disorder (PTSD): This condition may develop after experiencing or witnessing a traumatic event, leading to flashbacks, severe anxiety, and uncontrollable thoughts about the event. 

The Stigma Surrounding Mental Health 

Despite the prevalence of mental health issues, stigma remains a significant barrier to seeking help. Many individuals fear judgment or discrimination, which can prevent them from accessing support. It’s essential to foster an environment where mental health can be openly discussed and treated with the same seriousness as physical health.  

Men’s Mental Health 

The stigma surrounding men’s mental health is not just a cultural issue; it’s a silent killer. From childhood, boys are often taught to “man up,” to bury their feelings deep inside where no one can see them. Emotions are viewed as a threat to their masculinity, and crying or admitting vulnerability is seen as a failure. This toxic mindset grows with them into adulthood, creating a cycle where men feel that expressing pain or seeking help is somehow a betrayal of their identity. But what we don’t talk about enough is the heavy cost of this silence. Behind every forced smile, there are men living with unbearable pain, convinced they have to carry it alone. 

The consequences are brutal. Suicide rates among men are shockingly high, yet society remains disturbingly quiet about the invisible pressures that drive them to such desperate ends. These men aren’t weak—many of them are silently battling demons while appearing “strong” on the outside. They continue to function, perform, and meet expectations while their mental health deteriorates, believing that breaking the silence would bring shame or judgment. We’ve created a world where men feel more comfortable contemplating their own death than speaking openly about their emotional suffering. 

By not addressing this, we aren’t just ignoring a problem—we’re allowing it to thrive. The societal notion that “real men don’t cry” or seek help is killing them, driving them into deeper isolation. We need to shatter this narrative and send a shockwave through our collective consciousness: men, just like everyone else, need space to express pain, fear, and doubt without fear of ridicule or rejection. If we don’t act now, the silence around men’s mental health will continue to take lives, and those lives could be our fathers, brothers, sons, and friends. 

Mental Health Dichotomy in Organizations 

The mental health dichotomy in organizations is a stark and often overlooked reality. On the surface, many workplaces champion wellness initiatives, host mental health awareness days, and post motivational slogans about the importance of “self-care.” Yet, beneath this facade, a far more troubling truth lingers. Many organizations still operate in ways that directly contradict these efforts, perpetuating environments where high pressure, unmanageable workloads, and a culture of relentless productivity leave employees too burned out to take advantage of the very mental health support being offered. This dichotomy isn’t just hypocritical—it’s dangerous. 

In many corporate settings, the unspoken rule remains clear: your value is measured by your output, not your well-being. Employees are expected to push through exhaustion, stress, and even mental health crises in the name of deadlines and performance. If someone dares to show vulnerability or admit they’re struggling, the response is often a quiet judgment, a subtle shift in how they’re perceived by peers and leadership. In some cases, it might even be career suicide. The organization’s message of “mental health matters” becomes hollow when, in reality, employees are often punished for needing time to recover or for setting boundaries to protect their well-being. 

The starkest irony is that these toxic work environments, driven by profit and performance metrics, are the very breeding grounds for the mental health issues they claim to combat. Stress disorders, anxiety, and burnout are skyrocketing, and yet organizations continue to wear their wellness programs like badges of honor without addressing the root cause: the toxic culture itself. Until companies stop viewing mental health as a checkbox on an HR form and start addressing the fundamental ways they dehumanize their workforce, this divide will only grow wider. The real shock comes when we realize that this isn’t just a failing of corporate responsibility—it’s a systemic betrayal of the people who keep these organizations running. If mental health truly mattered in these environments, we wouldn’t just be talking about it, we would be radically changing the way we work. 

Promoting Mental Health 

Promoting mental health is a collective responsibility. Here are several strategies that individuals and communities can adopt: 

1. Education and Awareness 

Understanding mental health is the first step toward destigmatization. Schools, workplaces, and communities can offer workshops and training sessions to raise awareness about mental health issues. 

2. Encourage Open Dialogue 

Creating safe spaces for open conversations about mental health can help individuals feel less isolated. Encourage discussions among friends, family, and colleagues. 

3. Promote Self-Care Practices 

Self-care is crucial for maintaining mental health. Here are some effective practices: 

  • Physical Activity: Regular exercise can significantly improve mood and reduce anxiety. 
  • Mindfulness and Meditation: These practices can help in managing stress and enhancing emotional regulation. 
  • Healthy Eating: Nutrition plays a key role in mental well-being. A balanced diet can positively affect mood and energy levels. 
  • Adequate Sleep: Quality sleep is vital for cognitive functioning and emotional health. 

4. Seek Professional Help 

Encouraging individuals to seek help from mental health professionals when needed is essential. Therapy, counseling, and medication can provide support for those struggling with mental health issues. 

Resources in Portugal 

In Portugal, several resources are available for mental health support: 

  • Mental Health Helpline (Samu): Offers confidential support and guidance for individuals in crisis. 
  • APAV (Associação Portuguesa de Apoio à Vítima): Provides assistance for victims of crime, including those dealing with trauma and mental health issues. 
  • Public Health Services: The Portuguese health system provides various mental health services through the National Health Service (SNS). 

Conclusion 

Mental health is a critical component of overall well-being. By fostering an understanding of mental health issues, promoting open discussions, and encouraging self-care practices, we can create a supportive environment for those struggling with mental health challenges. Remember, seeking help is a sign of strength, and everyone deserves access to the resources they need to thrive. 

Sources: World Health Organization: WHO, APAV PT., Women’s Health., Well.

Afonso Nunes Freitas

Mara Blanz

Is Colonialism the Cause of Inequalities in the World or are there any other deep-rooted causes? 

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It is well known countries diverge in levels of development which lead us to a world full of inequalities, but did you ever wonder how we ended up in this situation? 

Oded Galor argues that, even though there are factors that perpetuate inequalities, the deep-rooted factors that triggered (or not) development were related to population diversity and the geographical profile of each region. Let’s dive into his theory. 

Geographical traits 

Evidence of geographical differences in the world dates as far back as to when civilizations chose places like the Fertile Crescent, Mesoamerica, and the Yangtze River Valley to settle. These offered rich soils and favorable climates for the domestication of plants and animals, leading to stable food supplies and population growth. The unequal availability of domesticable species across regions meant some societies could develop agriculture more rapidly than others, creating early disparities in wealth and social organization. 

Eurasia’s east-west orientation was another key factor, as it facilitated the spread of crops, technologies, and ideas across similar latitudes and climates, resulting in a more rapid and widespread agricultural advancements compared to the north-south axis of Africa and the Americas, where climate varied significantly. Furthermore, areas prone to diseases like malaria (especially in sub-Saharan Africa) which increased infant mortality rates and the sleeping disease which killed or weakened livestock and population, negatively impacted their economic trajectories compared to healthier regions. Later on, large civilizations would also choose not to settle in these regions due to the high mortality rates. 

It was due to a lot of geographical traits that the European Miracle happened around the 18-19th century. Europe had proximity to the sea and navigable rivers which was advantageous for trade and many states with different languages which promoted competition and fostered economic growth while China was unified and had a uniform writing system, single language and central control. According to the hydraulic hypothesis by Karl Wittfogel, the fact that Europe depended largely on rainfall compared to China having a network of dams and canals with political centralization also fostered innovation and competition inside Europe. Other advantages of Europe were the Pyrenees, alps and Carpathian Mountains – hurdles that were natural buffers to invasion and the fractal shoreline which made it easy to defend from invaders and encouraged maritime trade. Comparably, China had mountain ranges that offered little protection from centralized imperial rule and no peninsulas apart from Korea which was independent.  

Geographical roots of cultural traits 

There are some cultural traits with geographical roots responsible for differences in development. For example, regions with higher return on crop cultivation would tend to be more long-term oriented and therefore invest in innovative agriculture or alternative methods even if that meant sacrificing present consumption. Also, in regions where the plough (which required massive upper body strength) was the main tool of agriculture, there was a division of labor (men would work on the fields and women would take care of the house) and a less egalitarian view on women would be passed along generations. Last but not least, areas with uniform climates would generally be more loss-averse and prepare their crops for possible harsh weather while areas with volatile climates between different regions and throughout the year would be more loss-neutral and risk a bit more while cultivating as they could just escape harsh weather by moving to a different region (they did not need to prepare their crops for hypothetical losses). 

Population Diversity 

Population size and composition were considered wheels of change. Larger populations were more likely to generate greater demand for new goods, tools and practices, as well as exceptional individuals capable of inventing them, and benefited from more extensive specialization, expertise and exchange of ideas through trade. Moreover, as stated in Darwin’s natural selection, any intergenerationally transmitted trait which makes an organism better adapted to their environment, generating more resources, would survive longer, setting human capital formation as a pertinent element of growth. 

Social diversity can also explain some of today’s divergences. According to the Serial Founder Effect, the further a region is from Africa the less diverse it is. This happens because populations started settling in Africa 300k years ago and, as they migrated farther away, the less they would mingle with diverse species reducing variety in civilizations. Since social diversity has a contradictory effect, as it spurs cultural cross-pollination of ideas and enhances creativity, fostering tech progress but also provokes conflict and erodes the kind of social coherence necessary for investment in public goods, an intermediate level of diversity is the sweet spot conducive for economic development. That is why Latin America with lower level of diversity and Africa with higher levels of diversity are less developed than Europe which has intermediate levels of diversity. 

Institutions  

Institutions and cultural traits were not what triggered development, but rather what determined the speed of it. North and South Korea are a perfect example. They were both dictatorships, but while NK had massive nationalization of private property and centralized decision-making, SK had private property protections and decentralized political and economic power, making inclusive institutions promotive of development and extractive institutions a hindrance to it. 

Other example is former British colonies which had common law systems compared to Portuguese and Spanish colonies with civil law systems. Or even South Italy with a feudal order and mafia, characterized by lower prosperity, strong family ties and less trust outside family environments which issued reduced cooperation, opposite to North Italy which was a democracy with higher social mobility. 

How are the inequalities Deepened? 

We have stated the possible deep-rooted foundations for the inequalities we face nowadays, but what about the causes that emphasise those already existing disparities in qualities of life? 

We can adopt a different outlook on this topic, by saying that inequality deepens because of a rapidly changing world. By interacting with a range of factors, including economic systems, political factors, cultural influences, rapid technological change, but also the climate crisis, urbanization and migration, as well as gender, age, origin, ethnicity, disability, sexual orientation, class and religion. Addressing these facts requires a comprehensive understanding of both historical and contemporary factors.  

By delving a little bit deeper on some of these topics, we gain a better understanding of how they are undeniably associated with an inevitable distinction between people and their lifestyles. 

Technological progress came about as a revolution that became shocking because of its quickness to spread and develop. The unequal access to it can lead to disparities in access to information, skills and economic opportunities. Because of the previously stated deep-rooted causes, some nations are wealthier, disproportionally benefiting new technologies, while poorer communities may lack the resources to adopt them. This may lead to a whole new range of problems, as automatic and digital technologies can displace low-skilled workers, exacerbating unemployment and wage inequality, affecting those vulnerable populations who may, once again, not have the means to transition to these new jobs. Thus, a much larger bridge to connect these nations is imperative. 

When we focus on Globalization, we can easily conclude that it has facilitated the flow of goods, services, and capital across borders, undisputably benefiting some economies. That does not exempt the fact that it ultimately marginalized developing countries who may struggle to compete on equal footing with those established markets, leading to uneven economic growth. Also, global supply chain often exploits labour in developing countries, where workers may face low wages accompanied with poor working conditions, which is the case of India, Bangladesh or Kenya, where there is an increasing population of “working poor”. Both poverty and a global workforce at risk of exploitation are socially created circumstances that drive the demand for inexpensive labour, which in turn sustains the profitability of labour-intensive industries. This will perpetuate cycles of poverty and inequality within those regions, as well as wealth concentration in the hands of multinational corporations and affluent individuals, often at the expense of local economies and communities.  

Many developing countries rely heavily on the export of a few commodities, leaving them volatile and dependent of commodity price cycles. Price fluctuations can lead to economic instability. When the prices are risen, the benefits often accrue to a small elite or foreign investors rather than being distributed to the broader population. This can exacerbate existing inequalities and impose limits on economic mobility for local communities. Also, some countries that are considered resource-rich experience a so called “resource curse”, that believes that these countries rely exuberantly on those resources, neglecting the other sectors, hindering sustainable and equitable growth. 

Figure 1- “resource curse” 

Conclusion 

In alignment with all that it was tackled, understanding global inequalities requires a comprehensive view that considers both historical contexts and current dynamics, revealing how deep-rooted factors continue to influence disparities in quality of life across the world, and what other factors carry on deepening it. 

Sources: “ECCHR: Forced Labor in Global Supply Chains.”; “Causes of Inequality – Equality Trust.”; “Psychological Characteristics and Colonialism: Where the Deep Roots of International Inequalities Were Shaped – the Sustainable Development Watch.”; “The Resource Curse: The Political and Economic Challenges of Natural Resource Wealth”.

Laura Casanova

Teresa Catita

THE DIARY OF A FRANCHISEE: THE ROLLERCOASTER OF OWNING A FRANCHISE

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Owning your own business is often portrayed as the ultimate dream—the idea of being your own boss, setting your hours, and building something from the ground up. But ask any entrepreneur, and they will tell you the truth: starting a business is a nerve-wracking, all-consuming roller coaster. There’s excitement, sure, but also sleepless nights, long hours, and the constant pressure of wondering, “Will this succeed?”. 

Now imagine doing all of that with a blueprint already handed to you—a business model that is proven, with marketing plans, a recognized brand, and a support system in place. It sounds easier, right? This is the appeal of opening a franchise. 

THE STRUCTURE OF A FRANCHISE: A FRAMEWORK FOR SUCCESS 

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Franchising has a long history, and its model has revolutionized the way businesses grow and expand. One of the earliest examples of franchising can be traced back to the mid-19th century with the Singer Sewing Machine Company. Isaac Singer, needing a way to distribute his sewing machines across a vast and varied geography, developed a model that allowed local agents to sell and service machines under the Singer name. This early form of franchising set the stage for what we see today—an agreement where a franchisor (the company) licenses its brand, systems, and processes to a franchisee (the local business owner) in exchange for fees, usually including an initial investment and ongoing royalties. 

Today’s franchise model is a powerful engine for business expansion. According to the International Franchise Association (IFA), there are over 792,000 franchise establishments in the U.S. alone as of 2023, contributing nearly $825 billion to the U.S. economy. The franchise industry employs approximately 8.5 million people in the U.S., demonstrating its vast economic impact. For someone looking to get into business ownership, it offers a way to mitigate some of the risks involved in starting a business from scratch. 

THE COSTS AND COMMITMENT 

Just like any business venture the first step (and perhaps the scariest one) is the investment, these vary with the brand. For example, opening a fast-food franchise like McDonald’s can require an initial investment ranging from $1 million to $2.2 million, including franchise fees, real estate costs, and equipment. On the other hand, a lower-cost franchise like Subway may require a starting investment of $100,000 to $300,000. 

However, the financial commitment does not stop at the initial investment. Franchisees must also factor in ongoing expenses, such as royalty fees, which typically range from 4% to 12% of gross revenue, depending on the franchise. For example, Subway charges an 8% royalty fee on sales, while McDonald’s charges a 4% fee. These fees, while providing brand support, can feel like an ongoing burden, especially during the early months when cash flow is tight. 

The responsibilities of the franchisee do not end here. In fact, the real work begins, that is: recruiting employees. Even when franchisors provide training materials and operational guidelines, it is more challenging than expected. The U.S. Bureau of Labor Statistics estimates that the average employee turnover rate in the restaurant franchise industry can be as high as 150%, meaning that, on average, a franchisee will replace their entire staff more than once per year. 

REALITY CHECK FOR FRANCHISEES 

One of the hardest parts of being a franchisee is balancing the autonomy of owning your own business with the restrictions imposed by the franchisor. You are not fully in control. If a corporate decision impacts your business negatively, whether it is a new product that does not resonate with your local market or a pricing structure that customers do not favor — you have little recourse. A 2021 Franchise Business Review survey found that 33% of franchisees felt their franchisor did not give them enough flexibility to adapt to their local market conditions. 

THE REALITY OF PROFIT MARGINS 

To better understand the economic realities of franchising, it is important to look at profit margins. In many franchise models, especially within the food industry, profit margins are typically low, sometimes ranging between 5% and 10% after all expenses are paid. That means if your franchise generates $500,000 in annual revenue, your net profit could be as low as $25,000 to $50,000 after deducting expenses like royalties, rent, labor, and supplies. 

Many franchisees often assume that the support and brand recognition will automatically lead to strong profit margins, but the reality is more nuanced. Franchise Business Review reports that while 51% of franchisees earn more than $100,000 annually, nearly 25% of franchisees report that they earn less than $50,000 per year. This gap highlights that not all franchises are equally profitable, and success depends heavily on a variety of factors such as location, industry, and management. 

One of the key reasons franchises can be attractive is the lower failure rate compared to independent businesses. According to FranData, franchises tend to have a 90% success rate after five years, compared to a 50% success rate for independent businesses. However, while franchisees benefit from the franchisor’s support, they still need to navigate significant financial and operational challenges. 

WHY SOME FRANCHISES FAIL 

Despite the established brand, business model, and support from franchisors, some franchises still fail. While a franchise system provides a proven blueprint, there are various reasons why a franchise might not succeed, both from an economic standpoint and operational missteps. 

Having interviewed former franchisees of the fast-food industry, I was able to get first-hand information on their experience, where the struggles of owning a franchise came with full force. Some of the factors that helped fast-track the steady decline of the fast-food restaurant can be summarized into 4 factors: location, COVID-19, inflation and perhaps the naivety in inexperience of working with franchisors. 

Location is one of the most critical factors in the success of a franchise. According to Franchise Direct, 30% of franchise failures can be attributed to poor location choice. Even if the brand is strong, if the franchisee opens in an area with low foot traffic or poor demographics, it can struggle to generate enough revenue to cover fixed costs. Most of the time, franchisors assign the franchisee with a set location that was chosen by realtors and the franchisors to better ensure success. However, the guides are not exempt from making mistakes, thus the franchisees must pay that price. In addition, rent, labor, and supply costs can quickly eat into profits, and some franchisees find it difficult to stay afloat, particularly in competitive markets. The COVID-19 pandemic illustrated this starkly, with many franchisees facing unprecedented drops in revenue while still needing to pay royalties and maintain costly leases. Many franchisees struggled with expensive ingredients and the franchisor’s mandatory promotions, which didn’t always lead to increased profits. Moreover, economic downturns, like the 2008 financial crisis, can severely impact franchises. Even if the overall brand is strong, reduced demand makes profitability harder to achieve. 

It is crucial for Franchisee-franchisor’s relationship be at least cordial. Disagreements over decisions like marketing, product introductions, or pricing can cause tension, especially when franchisees feel the franchisor’s strategic outlook does not fit their local market. A 2021 survey found that 33% of franchisees felt they lacked the flexibility needed to adapt locally, leading to frustration and legal disputes. 

Finally, some of these franchisees end up suffering from success. Franchisors may push for more units without providing adequate support, leading to underperforming stores. Quiznos is an example, expanding to 5,000 locations, but collapsing due to poorly performing stores, leaving only about 200 locations by 2023 as franchisees battle with high costs. 

MANAGING EXPECTATIONS AND FINDING SUCCESS 

Despite the struggles, there is a reason so many people still choose the franchise route. According to FranData, franchises tend to have a success rate of 90% after five years, compared to a 50% success rate for independent businesses. The support system, while sometimes restrictive, can provide stability, especially if the franchisor is strong and responsive to franchisee feedback. 

CONCLUSION: THE FRANCHISE LIFE 

Franchising is not a version of stress-free entrepreneurship, it is the real deal and must not be underestimated. In the end, the life of a franchisee is about balance, as these should have to balance the support of the franchisor with the challenges of day-to-day operations. Most importantly aspiring franchisees must balance their vision for the business with the limitations of the franchise model. 

Sources: International Franchise Association (IFA), McDonald’s Franchise Information, Subway Franchise Information, Franchise Business Review, FranData, Franchise Times, Franchise Direct, Franchise Business Review 

Alegra Maza

Survivorship bias: the omnipresent skewer of decisions 

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Survivorship bias is a cognitive shortcut that takes place when the successful or surviving part of a group is mistaken for the whole group, due to the invisibility of the group’s failures. A common example of survivorship bias is the assumption that older buildings and architecture were much more durable and stable as suggested by the common saying “they don´t make them like they used to”. This assumption fails to acknowledge that only the sturdier buildings have survived into the present while the rest, the majority, have been destroyed or replaced. A contributing factor to this erroneous belief is the fact that we haven’t experienced the durability or, in this case, the survivability of modern buildings: presently, we are surrounded by both good and bad quality construction; the former will be preserved in time while the latter might not, just like with the older ones.  

When we “miss what we’re missing” is how author David McRaney describes the survivorship bias. Indeed, if failures are invisible, successes are in the spotlight, and we not only fail to acknowledge that the failures might have held useful information, but we fail to acknowledge their existence altogether. 

This bias is harmful due to how common it is and how easily it affects decision making. Furthermore, it affects a myriad of sectors ranging from business and finance to science, and even medicine. During the Covid 19 pandemic for instance, healthcare systems struggled to keep up with testing which might have skewed survival and death rates. Medical studies are also more often performed on stronger and younger patients who survive initial diagnoses, as weaker patients are less likely to survive long enough to participate in them, leading to overestimations of successful outcomes.  

When thinking about research, it is obvious how error-inducing this bias is. Indeed, to be effective, research must be thorough and take into account as many variables as possible. More specifically, statistics rely on surveys and analysis of populations and, to be accurate, they have to put together groups that fully represent them. The survivorship bias skews researchers into only looking at a subset of those populations, leading to incomplete research. Similarly, when making decisions without analyzing all the available data, individuals will automatically not be making the best choices for themselves. 

Background 

A study that took place during WW2 has become the prototype of survivorship bias.  

For context, Abraham Wald was born in 1902 in what was then the city of Klausenburg in the Austro-Hungarian Empire, today’s Cluj-Napoca in Romania. He developed an interest and talent for mathematics and went on to study the subject at the University of Vienna. He later moved to the United States to work at the Austrian Institute for Economic Research. Then, during World War II, Wald joined a classified program that assembled statisticians to focus on military research and strategy to help in the war, the Statistical Research Group (SRG). 

At the time, the military came to the SRG with data on the placement of enemy bullet holes on planes that had come back from battle, represented by the red dots in the image below. The first conclusion reached was to install more armor in the areas where the planes were getting hit the most. However, Wald pushed the group to do the opposite: since the planes being analyzed were the ones that had come back from battle, the areas in more need of protection were the ones without apparent bullet holes, the ones where the planes that did crash must have been shot. Thus, the missing bullet holes were on the missing planes. This is where the notion of survivorship bias was first coined. In fact, the decision to reinforce the areas of the planes ridden with bullets failed to consider that the planes being looked at were the ones that made it back safely, the ones that survived. While the others’ perceptions had been distorted by the survivorship bias, Wald overlooked it and was instrumental in the reinforcement of the aircraft.  

Had it not been for him, the group would have made a major mistake despite the stakes being so high, which illustrates how much bias affects decision making. 

Diagram used to represent the bullet holes on the aircrafts that came back from battle 
Abraham Wald

Survivorship bias in the business world 

Survivorship bias has also crept into the business and finance environment and is apparent in various situations.  

The first instance is the glorification of successful businesses and people. Every now and then, we hear an inspiring story about how some college dropouts became millionaires. Concrete examples are Steve Jobs, Mark Zuckerberg, Bill Gates, all of whom quit university and went on to become part of the richest people on the planet. Their fame has made them into inspirations and examples to follow. However, chances of becoming a millionaire after dropping out of college are rare. In fact, according to Ramsey Solutions’ National Study of (American) millionaires in 2024, 88% of millionaires graduated from college. Furthermore, the success of the examples above tends to be attributed solely to hard work, when in reality, for every successful college dropout, there are thousands who are not as lucky despite equivalent ambition. Moreover, variables such as luck, timing, networks and socioeconomic background also play a significant part in the path to success. 

A similar example involves what are called “unicorn start-ups”. This term, coined by venture capitalist Aileen Lee in 2013, refers to a private startup company valued at over one billion dollars. Examples of unicorn start-ups are Uber Technologies Inc, Airbnb and Space X. People venturing into the business world often strive to one day find or create start-ups as the latter, in particular unicorns like the ones above, are viewed as the archetypes of success and entrepreneurship. At the same time, according to Forbes, 8 in 10 startups will fail within the first year of operation and unicorn start-ups got their name from their statistical rarity. 

Looking up to and trying to emulate success stories is an example of survivorship bias and its consequences. Firstly, it drastically limits the knowledge and awareness needed to have a chance of actually succeeding by leaving out important voices, the voices of failures which are vital in understanding successes. To quote author David McRaney again, “The advice business is a monopoly run by survivors”, only their advice and stories are deemed relevant. Secondly, it leads to overly high degrees of optimism which can influence risk-prone decisions. Finally, it suggests causation from correlation by creating the illusion of certain patterns: dropping out of college does not necessarily put you on the path to becoming a millionaire even though a few millionaires did so. 

Studies on mutual funds are perhaps the most famous example of survivorship bias in the business world.  A mutual fund is an investment fund that pools money from investors to purchase stocks, bonds, and other assets and securities. When looking at mutual funds, studies tend to only include ones that currently exist and fail to show data on funds that no longer do. Funds cease to exist in the case of mergers and acquisitions but also during restructuring and poor performance. This failure to count lost funds leads to misleading positively biased results that do not actually depict the returns realized by all mutual funds, since funds that close cause a negative return that is not considered. 

Finally, marketing campaigns can also transmit biased information. Indeed, many rely on attractive figures in terms of client satisfaction and durability of the product: “90% of people loved the product!”. These figures are not necessarily biased or false, but it is important to look at their sources and the factors they consider: these include the sample size and composition and for how long the product was used. For instance, the study might have been set up for success by only using the testimonies of regular and loyal customers.  

How to avoid the bias 

Knowing about its existence and understanding how it can influence and impact our judgement is already a huge step in trying to avoid bias. Being selective of data sources, always striving to see the bigger picture and practicing critical thinking are other ways of fighting against it. Since it is present in so many different situations, awareness of the bias can already lead to better and more informed decisions, from financial investments and ventures to medical and scientific conclusions, but also common opinions and values.  

Conclusion 

Survivorship bias is omnipresent in our everyday life, impacting our decisions and opinions. 

However, it is not the only bias and many others like the anchoring, availability and confirmation biases also guide our conduct every day. Although it is impossible to be immune to them altogether as they are unavoidable cognitive occurrences, being aware of them and their significance is enough for a more informed point of view in a variety of subjects and, in particular, decisions as an economic agent. 

Marta Nascimento

Sources: 

“Survivorship Bias – the Decision Lab.” n.d. The Decision Lab. https://thedecisionlab.com/biases/survivorship-bias. 

Team, Cfi. 2024. “Survivorship Bias.” Corporate Finance Institute. May 24, 2024. https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/survivorship-bias/. 

Penguin Press. 2018. “Abraham Wald and the Missing Bullet Holes – Penguin Press – Medium.” Medium, June 17, 2018. https://medium.com/@penguinpress/an-excerpt-from-how-not-to-be-wrong-by-jordan-ellenberg-664e708cfc3d. 

Solutions, Ramsey. 2024. “The National Study of Millionaires.” Ramsey Solutions. October 3, 2024.  https://www.ramseysolutions.com/retirement/the-national-study-of-millionaires-research#:~:text=Eighty%2Deight%20percent%20of%20millionaires,38%25%20of%20the%20general%20population.&text=And%20over%20half%20(52%25),13%25%20of%20the%20general%20population. 

TEDx Talks. 2015. “Missing What’s Missing: How Survivorship Bias Skews Our Perception | David McRaney | TEDxJackson.” https://www.youtube.com/watch?v=NtUCxKsK4xg. 

Gratton, Peter. 2024. “Survivor Bias Risk: What It Is, How It Works.” Investopedia. September 18, 2024. https://www.investopedia.com/terms/s/survivorship-bias-risk.asp. 

Peachman, Rachel Rabkin. 2024. “America’s Best Startup Employers 2024 Methodology.” Forbes, March 8, 2024. https://www.forbes.com/sites/rachelpeachman/2024/02/21/americas-best-startup-employers-2024-methodology/#:~:text=Anyone%20who%20has%20worked%20at,fail%20in%20the%20long%20run. 

 “Whatever it takes” to bring Europe back from the dead?  

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A look into the integration and competition concerns of the Draghi Report 

“Europe faces a choice between exit, paralysis, or integration” – Mario Draghi 

Unlike many of us perceive, European integration is far from figured out.  

In practical terms, integration is all-around. From the euro to the European Court of Justice, touching on more simplistic aspects such as the citizen’s identification as Europeans. On the other hand, macro shocks like the Sovereign Debt Crisis might be able unveil more sensitive aspects of this fragile social, economic and political commitment, for example, by leading us to question whether European countries should pay for each other’s debt.  

So, how much integration is too much integration? Mario Draghi, former Italian prime minister and president of the European Central Bank (ECB) brings this issue back to the fore with the release of his 400-page report on European competitiveness. There, Draghi identifies a rather plain and apparently sensible solution for its stagnation: cooperation and coordination. The former president of the ECB calls for an additional annual €800bn in investment, paired with a profound policy redesign to foster the European’s assertiveness in global competition. For many, a courageous punch full of truth, while for others, a political disaster.  

This article will further delve into the specific intricacies of the mediatic Draghi’s Report, while dissecting the competition dilemma that Europe faces and intertwining them with the pervasive message of integration throughout report. Thus, alluding to the question of whether it exists a trade-off between resilience in global position and the core of current European values. 

Nicolas Tucat, AFP 

Background 

The idea that the European Union is falling behind the United States, China and other advanced economies, when it comes to competitive edge, has been abiding for a while now.  

The report dedicates a fair number of pages exploring the evolution of these dynamics. For instance, the gap in GDP level at constant prices is said to be widening, from 15% in 2002 to 30% in 2023. When measured in Purchasing Power Parity (PPP), it amounts to 12%. The gap growth is more sluggish when translated into per capita terms, but the authors claim is still significant, rising from 31% in 2002 to 34% today. The catalyzers for these disparities are precisely differentials in productivity: About 70% of the gap in per capita GDP with US at PPP is explained by lower productivity levels in the EU. 

2024, The future of European competitiveness – Part A 

On the other hand, the European Union is the proud face of some of the lowest levels of inequality, reportedly disclosing rates of income inequality around 10 percentage points below the ones evidenced in the United States (US) and China. It also surpasses these countries when it comes to life expectancy at birth, low levels of infant mortality, and education. In fact, its education systems allow a third of adults to have completed higher education. The EU is also the world leader in sustainability, environmental standards and progress towards the circular economy. (2024, The future of European competitiveness – Part A).  

Plans had already been forged to deal with this issue of modest competition efforts across the European landscape. In November 2023, Ursula von der Leyen delivered her annual State of the Union speech, where she presented the main lines of action for the European Commission for the next year. Von der Leyen dedicated around a third of her speech to reshaping the EU’s economy, but the headline announcement was, precisely, Draghi’s Report. (2023 Foy) 

Proposals 

The report identified three main areas of action: The first is closing the innovation gap with America. According to the report, emerging technologies are still underdeveloped in the EU, not by lack of ideas or competence, but because of structural blocks, in the form of said inconsistent and restrictive regulations. Europe must focus on easier access for researchers when it comes to the commercialization of ideas, joint public investment in breakthrough technology or even investment in infrastructure to lower the cost of developing AI. Furthermore, training and adult learning should be at the core of the agenda.  

The second area for action is combining decarbonization with competitiveness, by reforming Europe’s energy market, so that end-users can benefit from a competitive clean energy price, supporting industries that allow for decarbonization (e.g. clean tech and electric vehicles), while jointly promoting green industries.  

The third area is increasing security and reducing dependencies. This vector of action is a result of the political turmoil instituted by the geopolitical instability. The EU is called to build a true “foreign economic policy”, by establishing coordination mechanisms in trade agreements and direct investment, ensuring stock of specific critical goods and devising industrial partnerships to establish robust supply chains.  

To add on to this, the article takes a more thorough look at some more specific recommendations that have been particularly featured within the mediatic space, as the ones where it may be more difficult to achieve political consensus towards.   

Competition Policy  

“There is a question about whether vigorous competition policy conflicts with European companies’ need for sufficient scale to compete with Chinese and American superstar companies” – Draghi’s Report 

A controversial point of discussion encompasses the question of competition policy enforcement, particularly mergers. EU antitrust policy has long been praised for protecting against abuses of dominant position. However, the report claims that this might be compromising the forging of European world-beaters, instead of only preserving competition within the EU (2024, Financial Times). In practical terms, this can be translated into the concern that European firms won’t be able to compete with significant global firms.  

To achieve this, the report suggests an increased weight of the innovation factor in the assessment of mergers, by allowing higher market share concentration if this were to produce the development of new technologies by the merging firms. Of course, this might raise concerns regarding the misuse of this type of defense on a merger deal, allowing for a situation in which firms might commit to innovation only for the possibility of acquiring increased market power. So, Draghi suggests making companies showcase measurable levels of investment that can be tracked in the years following merger approval. The commission might, for instance, require companies to provide data on pricing or investment.  

What is more, it is proposed a less stiff approach towards collaboration between rival corporate executives, with the argument that coordination might be necessary to maximize investment in research, or technological standardization (2024, Foy & Espinoza). 

The report also recommends defining telecoms markets at the EU level – as opposed to the Member State level. To exemplify, a merged telecoms group could function in an almost monopolistic setting in individual countries, if their market share across the entire single market was less than 40 percent, which serves as a threshold for merger policy (2024, Foy and Espinoza). 

These last measures have been subject to much mediatic scrutiny. On a paper published in Vox EU, the professors Tomaso Duso, Massimo Motta, Martin Peitz and Tommaso Valletti expressed their concerns regarding the telecom policy recommendations provided by the report. They claim that “They propose a broader, EU-wide market definition, which would artificially de-concentrate the relevant market, thereby making intra-national mergers appear no longer problematic on paper”, which ultimately creates the possibility to accept mergers that would be detrimental to European businesses and consumers. 

Integration 

Draghi claimed that the new “industrial strategy for Europe” would cost approximately €750- €800bn, which corresponds to 4.4-4.7 percent of EU GDP. Large amounts of money should be placed on joint funding key projects, such as innovation, as well as other European “public goods” —such as defense procurement, cross-border grids or common energy infrastructure. 

Another concern expressed in the report points to the levels of financial fragmentation of the capital markets of the EU. Its integration is seen as an essential procedure towards the introduction of economic momentum that would allow for the development of the investments needs.  

With the case of banking fragmentation, the report reminds us of the incomplete implementation of the Banking Union. While the unified supervision aspect is solidified, Europe has failed to implement a common debt insurance scheme, and the single resolution authority lacks a financial backstop. One of the proposed actions to facilitate this process is the creation of a common safe asset, particularly, the report appeals to “issue common debt instruments to finance joint investment projects that will increase the EU’s competitiveness and security.” However, it also established that a necessary condition for this to happen would be that “the political and institutional conditions are in place”, which can signify an impediment.   

Moreover, the report asks for the extension of qualified majority voting (QMV) in the Council of The European Union, such that voting subject to QMV would be elongated to more areas, or even generalized, implying the end, or at least, reduction of the veto power under unanimity voting.   

The difficulty here lies exactly in gaining political momentum to implement such reforms. In fact, the German finance minister Christian Lindner has already spoken on the matter, dismissing the Draghi’s suggestion to raise additional common debt to fund breakthrough innovation: “Each individual EU member state must continue to bear responsibility for its own public finances”. (2024 Hall). Eelco Heinen, finance minister of the Netherlands, said that “Europe has to grow, and I totally agree with that. An economy will grow if you reform (…) more money is not always the solution.”.   

Conclusion 

To conclude, the Draghi Report could represent either a turning point for Europe or just another document to be archived and forgotten about in the years to come. And although it may not be translated into policy action, at least for the time being, it has the power to ignite the public discussion back to “After all, what is the Europe that we want?” 

References: Dragui, Mario. 2024. “Mario Draghi outlines his plan to make Europe more competitive”. The Economist.  https://www.economist.com/by-invitation/2024/09/09/mario-draghi-outlines-his-plan-to-make-europe-more-competitive

Draghi, Mario. 2024. The future of European competitiveness: Part B | In-depth analysis and recommendations. European Comission. https://commission.europa.eu/document/download/ec1409c1-d4b4-4882-8bdd-3519f86bbb92_en?filename=The%20future%20of%20European%20competitiveness_%20In-depth%20analysis%20and%20recommendations_0.pdf

Draghi, Mario. 2024. The future of European competitiveness: Part A | A competitiveness strategy for Europe. European Comission. https://commission.europa.eu/document/download/97e481fd-2dc3-412d-be4c-f152a8232961_enfilename=The%20future%20of%20European%20competitiveness%20_%20A%20competitiveness%20strategy%20for%20Europe.pdf

Foy, Henry. 2024. “Why Draghi went for broke in calling for €800bn of new EU spending”. Financial Times.  https://www.ft.com/content/76e8458d-3eb7-46d3-8d9c-42d524d60800

The Editorial Board. 2024. Whatever it takes to boost European competitiveness”. Financial Times.  https://www.ft.com/content/a87af4c4-5e5f-44a8-88a5-9a4037a16d19

Foy, Henry and Ian Johnston. 2023. “The EU’s plan to regain its competitive edge”. Financial Times. https://www.ft.com/content/124b4cdb-deb9-49a0-b28d-d97838606661  

Foy, Henry, Javier Espinoza, and Paola Tamma. 2024. “Mario Draghi confronts the EU’s merger police”. Financial Times.  https://www.ft.com/content/515d5a42-a760-42f1-9afa-89d4dcdc2a99

Duso, Tomaso,  Massimo Motta, Martin Peitz , and Tommaso Valletti. 2024. “Draghi is right on many issues, but he is wrong on telecoms”. Vox EU. https://cepr.org/voxeu/columns/draghi-right-many-issues-he-wrong-telecoms

Hall, Ben. 2024. “Will Mario Draghi’s masterplan get the momentum it needs?”. Financial Times. https://www.ft.com/content/a5e1264c-4004-440e-b3d9-2e130a68853

Maria Francisca Pereira

Financial literacy: The overlooked one 

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Financial literacy springs as a cornerstone of responsible and efficient financial management and entails one’s capacity to comprehend financial concepts to make informed decisions regarding money, budgeting and investment.  

Typical household activities like going to the supermarket for monthly shopping. This simple action encompasses numerous integral financial concepts, such as budgeting, basic asset pricing, and price variation, that is, inflation. In accordance with the ubiquity of such concepts in one’s everyday life, statistics conducted amid the Plano Nacional de Formação Financeira for “Todos Contam”, show that around 81% of Portuguese respondents evidence concern about household budgeting and personal finances. However, despite its relevance, many individuals still struggle with basic concepts, such as inflation, as more than one in three people in the EU do not understand how inflation erodes their purchasing power. 

⁠Why is it important? 

As introduced, financial concepts are ever-present in daily lives as these serve as a safeguard against excessive borrowing, unforeseen expenses, and foster conscious financial planning and stability. Financial literacy is a fundamental competency for families to sustainably improve well-being and quality of life, even more so when assessing the current inflation rate variations and, consequently, increased interest rates and decreased household purchasing power.  

A solid understanding of concepts such as the link between interest rates and bond prices, asset diversification, and time value of money, is associated with improved management of household savings and investments. Conducted studies show that households which hold more financial knowledge have greater tendencies to, for instance, allocate resources more efficiently, plan retirement savings, and contain debt (Demertzis at al. 2024). This relationship raises the question of whether wealth derives from general financial literacy or the opposite. Well, by using GDP per capita as a proxy for income, a positive relation between income and financial literacy is displayed among the richest 50% countries and around 48% of the variation in financial literacy rates can be explained by differences in income across countries (Kapper et al. 2024). However, the same is not evidenced in the poorer half of countries, where a correlation is not shown.  

Source: S&P Global FinLit Survey and World Bank–World Development Indicators (http://data.worldbank.org) 

Furthermore, as the world experiences a rapid technological development, digital literacy also plays a role in financial decisions being made, as overwhelming amount of information is progressively more accessible for the public. This heightens the risks of navigating the digital financial landscape and further increases the vulnerability of less informed groups, including the youth and elderly. As Eurostat’s data reveals that, in 2022, the average age at which young people left their parents’ home was 26.4 years. Coupled with this, in recent years, there has been a striking surge in the promotion of young individuals accounting for their own financial decisions, with the 3rd conducted inquiry on Portuguese Literacy, for Plano Nacional de Formação Financeira in 2020, indicating a significant increase, from 20% in 2015 to around 45% in 2020 of people ranging from 18 to 24 years old. This emerging trend suggesting that younger generations are assuming financial decisions progressively earlier, further emphasizes the importance of financial literacy, and the fundamental impact its lack of could have in these generations’ life. 

Financial Knowledge in Portugal   

Financial literacy not only encompasses knowledge, but also practices in accordance. In Portugal, financial literacy stages a rather complex picture since, while efforts are being developed to improve literacy, challenges impose themselves which foment the need for more comprehensive educational initiatives. These, for example, include Portugal’s position in financial literacy as 26th in 2023’s Eurobarometer, surpassing only Romania. Despite this lagging position in performance, Portugal is 13th in OCDE/INFE’s inquiring (out of 39 countries), 7th regarding financial attitudes and habits and 21st in terms of financial knowledge. The latter explains an existing deficit financial literacy when it comes to financial numeracy, computation of compound interest and the importance of asset diversification. Additionally, as formerly tackled, the digital age has brought its own set of challenges, namely regarding information overload and unfiltered misinformation, from which Portugal is no exception. 

Addressing these challenges requires a multifaced approach whereby financial concepts should not only be taught but applied effectively as well. Despite Portugal’s lack of literacy, there is still optimism in initiatives such as “Digital Financial Literacy Strategy for Portugal”, designed with support from the OECD and the European Commission, bringing about meaningful change, by providing low-income families, middle-aged individuals and young adults crucial skills and fundamentals to enhance their quality of life and financial health. 

Financial Knowledge in the European Union 

More than a decade ago, indicators of financial literacy established low financial knowledge among a large world share, even in countries with well-developed financial markets, such as European Union (EU) countries (Lusardi and Mitchell 2011 cited in Demertzis et al. 2024). However, the will of refining financial literacy has rose globally.  

In 2021, the European Commission (EC) carried out a survey that aimed to access the level of financial knowledge of the EU population. Demertzis et al. 2024 show that, on average, just over 50 percent of the respondents answered correctly to at least three of the five knowledge questions, suggesting that financial knowledge continues to be low despite the increased interest in it. Particularly, only one in five respondents correctly answered questions regarding the relationship between interest rates and bond prices, on average. In this context, it is also relevant to state the presence of a gender gap in financial knowledge, such that more men than woman answer at least three out of five questions correctly, with 18 percentage points of difference, on average in the European Union. This study also assesses that more financial knowledge is linked to higher financial inclusion, as EU countries with higher levels of financial knowledge have greater percentages of adults saving with and borrowing from financial institutions.  

A graph with a pink circle and a pink circle Description automatically generatedBruegel based on European Commission (2023a) 

Over-Indebtedness: Private, Public, Global  

Most commonly, over-indebtedness refers to the situation in which the monthly earnings of a family are not enough to contemplate both essential expenses and the credit instalments, implying a lack of space for savings. In such a situation, it is said that families face a high debt burden. Besides the obvious hazards of excessive debt, that are translated into reduced living standards, it can be detrimental to the mental health of individuals, thus affecting personal relationships and stimulating isolation. According to experts, here, the role of financial literacy becomes particularly evident, not only as a prevention mechanism, but also as a key first step into debt-freedom.  

According to the OECD database, household debt (all liabilities of households that require payments of interest or principal by households to creditors, as a percentage of net household disposable income) has been registering a negative trend in Portugal since 2011, despite a slight increase in 2020 at the hand of the global pandemics. Total credit to households as a percentage of GDP as also been diminishing since the period around the Sovereign Debt Crisis, with Portugal foll  owing the EU area movement. On the other hand, emerging economies have been registering a great increase in the credit to households.  

Household debt, OECD 

Excessive amount of private debt is not only a concern for individuals, but also for the whole economy. There is evidence that private “credit booms” many times culminate in either financial crisis or economic underperformance (Dell’Ariccia et al. 2012). Until the Great Recession in 2008, policy paid limited attention to the situation. The economic intuition for the question of underperformance is that when private debt is high, agents divert a large portion of their income to the payment of interest and principal on that debt, ending up spending and investing less. High debt can make borrowers more reluctant to spend or take on more debt. Additionally, there is research that establishes a link between private and public debt, such that the excess of the first systematically turns into more of the second, regardless of whether the credit boom resulted in a crisis or a more orderly deleveraging process (Mbaye et al. 2018).  

“Finanças Para Todos” 

With the conviction that university poses a fundamental role in providing services to the civil society, “Finanças Para Todos” comes as free training program on the subject of financial literacy, with a particular focus on low income and lower education individuals. Throughout five enlightening sessions, diversified speakers cover subjects that go from family budget to investment and retirement. Created with the contribute of Nova SBE Finance Knowledge Center, “Finanças Para Todos” has now registered around eleven thousand applications, with its second edition counting with more than two thousand online participants and almost than five hundred on a presential regime (on the Nova SBE campus).  

Additionally, there are many online resources available, from articles to videos or even interviews, always keeping in mind the ever-present goal of raising awareness to the subject of financial literacy while demystifying finance theory and enhancing the importance of conscious and informed decision-making.  

The Nova Awareness Club was very pleased to have joined two sessions, so as to get a better grasp on the intricacies of each session, the dynamics of the program and the strong class interaction, as well as extend our financial education, that many times lacks a more practical component.  

To conclude, as economic landscapes evolve, promoting a financially literate population becomes increasingly imperative as it paves the way for prosperity and financial security among families. 

From the supermarket aisles to the corridors of academic institutions, the impact of financial literacy acutely resonates not only with households’ lifestyles, but with the broader economic landscape. As the world navigates the complexities of private and public debt, digital footprint and global economic trends, the need for further investment on financial literacy across countries grows progressively evident to ensure a financially sustainable future. 

Maria Francisca Pereira

Madalena Rosário

Microfinance Interventions and Their Impact on Women´s Empowerment and in Developing Countries 

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What is Microfinance? 

Microfinance is a financial service that provides small loans, savings accounts, insurance, and other financial products to individuals who typically lack access to traditional banking services. It targets low-income individuals, particularly in rural and underserved areas, who may not have collateral or a credit history to qualify for loans from commercial banks. It has gained attention as a tool for inclusive finance and sustainable development, with initiatives implemented worldwide to expand access to financial services for marginalized and vulnerable populations. The service has the potential to empower individuals, particularly women, by giving them the means to create livelihoods, build assets, and improve their standard of living. Thereby, it aims to alleviate poverty by providing financial resources to support income-generating activities, such as starting or expanding small businesses, purchasing livestock or equipment, or investing in education and healthcare.  

How can it be bearer of importance to women? 

Its relevant and important for women’s empowerment, especially in rural areas, due to several reasons, such as financial inclusion, economic empowerment, poverty alleviation, social impact, and risk mitigation.  An undeniable proof of that is the fact that by 2006 microfinance services had reached over 79 million of the poorest women (Daley-Harris 2007 cited in ILO 2008). 

Financial inclusion  

Women, particularly in developing countries, often face barriers to accessing formal financial services such as bank accounts, loans, and savings. Microfinance provides them with access to financial resources that they may not otherwise have, empowering them to participate in economic activities and make financial decisions. 

Economic empowerment 

Microfinance enables women to start or expand small businesses, generate income, and become economically self-sufficient. By providing them with loans, savings accounts, and other financial services, microfinance helps women to invest in income-generating activities, improve their livelihoods and support their families. 

Poverty alleviation  

Women constitute a significant proportion of the world´s poor population. Microfinance programs specifically targeting women can contribute to poverty alleviation by providing them with the means to lift themselves out of poverty. By investing in women’s economic activities, microfinance helps to create opportunities for income generation and asset accumulation, ultimately improving their living standards. 

Women´s Empowerment 

Access to financial resources through microfinance can enhance women’s autonomy and decision-making power within their households and communities. As women become financially independent, they gain greater control over household finances, education, healthcare, and other important aspects of their lives. This empowerment can lead to positive social outcomes, such as improved gender equality and women´s rights. 

Social impact  

Investing in women’s economic empowerment through microfinance can have broader social benefits. Studies have shown that when women have control over household income, they tend to prioritize spending on the well-being of their families. Consequently, microfinance programs targeting women can have ripple effects on community development and poverty reduction. 

Risk Mitigation 

Women often face greater financial vulnerability due to factors such as lower incomes, limited access to formal employment, and social and cultural constraints. Microfinance can help mitigate these risks by providing women with financial tools to cope with emergencies, smooth consumption and build resilience against economic shocks. 

Microfinance in developing countries 

Microcredit programs have been implemented in developing countries such as Bangladesh, India, or Cambodia since 1976 and its relevant to understand if and how it’s a beneficial initiative. To answer this concerns, it was conducted a study focused on the development of microfinance programs in Ethiopia and how it changed the lives of who was targeted. Ethiopia is known for being one of the poorest and underdeveloped countries (68.7% of the population, 82,679 thousand people in 2021, is multidimensionally poor while an additional 18.4% is classified as vulnerable to multidimensional poverty, 22,076 thousand people in 2021). 

For the past two decades, microfinance institutions have held significant sway as a pivotal development initiative in Ethiopia. The genesis of this movement and its subsequent expansion in the country can be traced back to the enactment of legislation postulated after the 1996 proclamation. This legislative milestone stands as a cornerstone in the inception and evolution of microfinance across this country. Notably, there has been a steady escalation in female engagement within the microfinance sphere. All microfinance enterprises share a unified aspiration towards ameliorating poverty and fostering the economic empowerment of women.  

The main aim of the inquiry is to analyse the impact on microfinance programs on women´s economic empowerment. A sample of 346 women that were clients of those initiatives were questioned and examined for a deeper understanding of the debate in question. With the help of tools such as multiple regression and sampled t-test data analysis, was revealed that age, marital status, education level, credit amount, and number of trainings have a significant impact on women’s economic development. 

The results of the paired sample t-test unveiled noteworthy disparities in mean values pre- and post-engagement with microfinance services, particularly concerning income, asset accumulation, and savings. Microfinance interventions evince a discernible positive impact on women’s economic empowerment, manifesting through augmented independent income streams, heightened asset portfolios, and increased monthly savings. Furthermore, the investigation underscored the constructive role of microfinance in nurturing women’s entrepreneurial acumen and fostering their exposure to business opportunities. 

Despite this article being more focused on the effects of microfinance in developing countries, because of how the impact is noticeable, it’s also important to emphasise the fact that also it has also reached and in a growing scale, developed countries, like Spain, that you can read more about in one of the links in the references focused on the Barcelona case. 

Conclusion 

Overall, by addressing the unique financial needs and challenges faced by women, microfinance plays a crucial role in promoting women´s economic empowerment, reducing poverty, and advancing gender equality with the help of its programs that promote an inclusive and sustainable development. Also, it has been proven to be beneficial to countries in development, being a fundamental tool for growth, prosperity, and equality of opportunity. 

References: 

ILO. 2008. “Small change, Big changes: Women and Microfinance”. Geneva, ILO.  wcms_091581.pdf (ilo.org) 

Leight Lebos, Jessica. 2022. “How microfinance supports livelihoods in developing countries”. Kiva. Consulted in 01/05/2024. https://www.kiva.org/blog/how-microfinance-supports-livelihoods-in-developing-countries 

Lorenzo Vidal, Raquel, and Julia Soler Agustí. 2017. “Microcredit in the developed countries: the case of Barcelona”. https://migrant-integration.ec.europa.eu/sites/default/files/2019-10/EWI05-Microcreditinthedevelopedcountries_thecaseofBarcelona.pdf 

Mengstie, Belay. 2022. “Impact of microfinance on women’s economic empowerment”. J Innov Entrep 11 (55). https://doi.org/10.1186/s13731-022-00250-3 

Raid, Dr. Moodhi, Nisar Ahmad, Dr. Hisham Alhawal, and Dr. Jumah Ahmad Alzyadat. 2023. “Impact of Microfinance on Poverty Alleviation in Developing Countries: The Case of Pakistan”. http://dx.doi.org/10.2139/ssrn.4402017 

Laura Casanova

Understanding Ponzi Schemes: A Tale of Investment Fraud

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Reading time: 6 minutes

Ponzi schemes have a notorious history of preying on investors’ desires for quick and substantial returns. From the infamous exploits of Charles Ponzi in the 1920s to modern-day scandals like that of Bernard Madoff, these fraudulent schemes have left a trail of financial devastation in their wake. In this article, we delve into the intricate workings of the first Ponzi scheme, exposing its goals, deceptive mechanisms and exploring their profound implications.

What is a Ponzi Scheme and How they Work?

At its core, a Ponzi scheme is an investment scam that relies, not on genuine business activities or profits, but on the funds provided by new investors. Named after Charles Ponzi, who famously executed such a fraud in the 1920s, these schemes are dangerously seductive as they promise high returns with little to no risk, appealing to the financial desires of almost any investor. However, underneath the attractive facade lies a fundamental deception: no real investment is taking place.

The mechanism of a Ponzi scheme is relatively straightforward. Initially, the organizer will collect money from new investors by promising them a lucrative return on their investment. Instead of engaging in any legitimate business activities or investments, the organizer uses the money from incoming investors to pay returns to earlier participants. This cycle continues with new investors funding payouts to earlier ones.

This system depends entirely on a steady flow of new investments. Without it, the scheme cannot continue because there are no actual profits being made. The moment it becomes challenging to attract new investors, or when too many participants attempt to withdraw their funds, the scheme collapses.

The Origin of Ponzi Scheme

The origin of the term “Ponzi scheme” traces back to Charles Ponzi, whose early 20th-century scam involved exploiting the pricing of International Reply Coupons (IRCs). Ponzi discovered that IRCs could be bought at a lower price in Europe and redeemed in the U.S. for a higher value of postage stamps, theoretically allowing him to profit from the arbitrage.

Figure 1: International Reply Coupons

Encouraged by this discovery, Ponzi started soliciting funds from investors in 1919, promising them a 50% profit within 45 days, and established the Securities Exchange Company to manage these investments. Initially, Ponzi paid early investors using the funds from new investors, creating the illusion of a successful business venture. As word of these high returns spread, more and more people were drawn to invest, and Ponzi’s operation seemed to thrive, rapidly escalating as investments grew from $5,000 to millions of dollars within months.

This exponential growth was marked by Ponzi’s ability to pay initial investors promptly, which further fuelled the trust and influx of new funds.

The Unravelling of Ponzi’s Scheme

Charles Ponzi’s scheme, initially perceived as a rapid path to wealth, quickly revealed its inherent flaws due to logistical challenges and the sheer impossibility of leveraging International Reply Coupons for promised returns. To sustain the investments made with the Securities Exchange Company, a staggering 160 million postal Reply Coupons would need to be in circulation; however, only about 27,000 were actually available. It was becoming increasingly clear that Ponzi could not deliver on his promises.

Figure 2: Charles Ponzi

The intense scrutiny by The Boston Post, led by Richard Grozier and aided by financial journalist Clarence Barron, played a critical role in exposing the scheme. Barron’s investigation revealed a stark discrepancy between the number of coupons needed to fulfill Ponzi’s promises and the actual number available, illustrating not only the operational impossibility, but also raising significant ethical questions about the legitimacy of exploiting governmental mechanisms for profit. This damning revelation began to unravel the truth behind Ponzi’s spectacular claims.

Postal inspectors, unable to reconcile Ponzi’s promised returns with the actual volume of International Reply Coupons in circulation, grew increasingly suspicious. Despite lacking concrete evidence of fraud, their investigations cast a shadow over Ponzi’s enterprise. Meanwhile, a series of exposés by The Boston Post shed light on the dubious nature of Ponzi’s operations, triggering panic among investors.

Facing mounting pressure, Ponzi attempted to reassure investors by offering to halt new investments during an audit. However, this gesture backfired, sparking a wave of withdrawals, and ultimately exposing Ponzi’s insolvency. With regulators closing in and banks freezing his accounts, Ponzi’s empire crumbled. Ponzi’s investors were practically wiped out, receiving less than 30 cents to the dollar. They lost about $20 million in 1920 dollars (approximately $230 million in 2023 dollars).

Despite being acquitted in two state trials, Ponzi was convicted in a February 1925 trial, receiving an additional seven to nine years behind bars. While out on bail, Ponzi returned to his fraudulent activities in Florida, earning himself a jail term for violating securities laws before vanishing during an appeal process. After being located months later, he was extradited back to Boston to finish his sentence before being deported to Italy on October 7, 1934.

Ponzi Scheme Legacy

Ponzi pioneered a business model that inspired numerous imitators, each promising lucrative returns through seemingly ingenious investment strategies. The allure of quick and substantial profits led many to overlook the inherent risks and ethical dilemmas inherent in such schemes.

In Portugal, the most well-known Ponzi scheme is that of Dona Branca. Maria Branca dos Santos promised monthly returns of 10% to those who entrusted her with their savings. These interest rates far exceeded those offered by the banking system, earning her the nickname “Banqueira do Povo” (Banker of the People). By the end of the 1980s, after she began failing to meet payments, she was sentenced to 10 years in prison for aggravated fraud.

Bernard Madoff orchestrated the largest Ponzi scheme in history, originating from Wall Street. It involved at least $17.3 billion in investments with guaranteed returns unrelated to market performance, which, despite triggering numerous complaints to U.S. regulators, only collapsed in 2008. Madoff is serving a 150-year prison sentence after pleading guilty in 2009. The proceedings estimate losses of $65 billion for the victims.

Ponzi’s Scheme Takeaways

In the intricate tapestry of financial markets, Ponzi schemes stand out as cautionary tales of unchecked greed and deceptive promises. The unravelling of Ponzi schemes serves as a sobering reminder of the importance of robust regulatory frameworks and diligent oversight. It underscores the need for investor education to empower individuals with the knowledge to discern between legitimate investments and fraudulent scheme.

By fostering transparency, accountability, and resilience within our financial systems, we can mitigate the risks posed by Ponzi-style operations. Through collective efforts to fortify regulatory measures and enhance investor awareness, we can strive towards a future where the promise of prosperity is built on a foundation of integrity and trust.

Sources: National Post Museum, EisnerAmpers, Jornal de Negócios

Beatriz Gomes

Regional economic and security cooperation 

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Reading time: 7 minutes

Economic Interdependence and Geopolitical Tensions in Northeast Asia 

Introduction 

China’s economy exceeded expectations, growing 5.3 per cent in the first quarter compared to the preceding year. Chinese businesses keep growing, after a boom in the mainland, bubble tea chains are eyeing stock market listings as they aim to expand overseas. The pace of China’s post-pandemic development should be a wake-up call for western manufacturers, writes Thomas Hale in the Financial Times. As this economic momentum accelerates, different perspectives on the way to deal with them arise, prompting questions about the role of economic cooperation in fostering interstate peace, particularly in the case of China. 

Does economic cooperation lead to interstate peace in the case of China? In the differing International Relations theories, there are different approaches to this question; while liberal thinkers argue that the growth of economic interdependence between states can create pressures and incentives for states to pursue peace, realist thinkers have a more cynical approach. 

An intensive trade culture and strong investment relations often lead to the interdependence of the regions involved and a more peaceful and stable environment. This is the case of Northeast Asia. However, this interdependence may also bring negative effects, such as the trade disputes between China and Australia, which arose from security and geopolitical issues. There are two major developments that depict the dynamic of economic integration and geopolitics of this region: The rise of China and the proliferation of regional trade agreements (RTAs). 

Differing Perspectives and Expectations 

As stated before, different theories take different approaches when it comes to interdependence between states and, namely, different expectations and perspectives in the case of the rise of China. 

Former president of the US, Bill Clinton, a liberal voice, thought that China had to be brought inside the WTO (World Trade Organization) and that it was in the US’ interest to promote building prosperity and partnership with Asia. In order to get the China relationship right, it was necessary to increase the interdependence between the two countries: a more interdependent China would be a more cooperative China.  

“The world will be a better place over the next 50 years if we are partners, if we are working together.” – Former President of the US, Bill Clinton 

The realist counterargument against this policy is that the changing power position of China and the US will matter more than economic interdependence and democratic government. According to this approach, China will seek to use its power to expand its influence and control over its region, and perhaps the wider world. The rise of China – and its likely desire to dominate East Asia – will pose a fundamental threat to the United States in the near future. 

“The best way to survive in this system is to be the biggest and baddest dude on the block. . . Nobody fools around with Godzilla.” – Political scientist John Mearsheimer, (Quoted in Nathan Swire, ‘Mearsheimer explores threat of China’, The Dartmouth, November 14, 2008) 

Unravelling of China’s rise 

China’s prosperity acted as an effective boost for regional growth due to the country’s rapid economic and technological growth. Nonetheless, this event also changed the power balance of the region, as China gained competitive power over other countries, ultimately resulting in increasing tensions.  

The trade between China and the Association of Southeast Asian Nations has been increasing steadily. Since all these countries manage their relationship with China cautiously, this growth stresses the idea that an increased interdependence is highly linked with a sense of peace. Hence, as trade with China is crucial to the economy of these countries, they would avoid engaging in conflicts and anti-China policies.  

However, and as stated before, this interdependency may lead to increasing tensions between the parties involved. Still following this example, although no government in the Asian-Pacific region has adopted a clear anti-China policy, there have occurred some sporadic anti-China riots in Indonesia, Malaysia, and the Philippines. 

Proliferation of regional trade agreements 

The rise of trade agreements, which create rules for trade and investment relations, reduces these risks by providing platforms to solve disputes, ultimately separating economic issues from security ones. In this context, the ASEAN free trade agreement was the pioneer, followed by bilateral and regional agreements. However, since relations between major players, like China, Japan, and Korea did not exist, their economic relations were prone to tensions. 

Political conflicts and the trade systems 

Countries often fail to separate their political conflicts from their already established trade systems. For instance, South Korea and Japan are still imposing trade barriers due to the Japanese invasion that occurred many years ago. In other words, limiting trade due to geopolitical issues.  

A good example of this is the US vs China chip war. In a nutshell, this conflict arises from the US concern that the Chinese army could surpass the US’ (one) in terms of overall power if they have easy access to their chip production process. The chip production process was spread across the US and its allies. Although China has increasingly been settling production centers of its own, a key part of the chip had always to be imported from these countries. This resulted in a series of protectionist measures, in particular, Chinese businesses and individuals being unable to buy advanced chips without a specific license from the US government. 

On the article “An agenda for regional economic and security cooperation” Yose Rizal Damuri comments that these countries “must do more”. He argues that the key is to address these problems under a regional framework, rather than bilaterally, with region-wide agreements such as the Regional Comprehensive Economic Partnership (RCEP). Meanwhile it is also crucial to address common regional and global challenges together, for example, energy transition. However, these should be complemented by covering emerging issues such as intellectual property and cross-border digital investment. As mentioned in the article, specific common projects increase trust, facilitating conversation on difficult issues and ASEAN may be a key driver of these initiatives. 

ASEAN 

ASEAN, which is the Association of Southeast Asian Nations, is an intergovernmental organization that aims to promote economic and security cooperation among its ten members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The group has played a central role in Asian economic integration, joining negotiations to form the world’s largest free trade agreement, and signing six free trade deals with other economies in the region.  

Nevertheless, the group’s impact remains limited due to a lack of strategic vision, diverging priorities among member states, and weak leadership. Their biggest challenge is said to be the development of a unified approach to China, since ASEAN countries are strongly dependent on China, and benefit a lot from this relationship. However, this relationship also limits their growth, thus, a balance between the advantages of trading with China and the risks from overdependency should be achieved. The aim of this would be not only to maintain peace but also to pave out a more resilient and sustainable economic future for ASEAN countries. 

Looking ahead 

So, what can these countries do? Some argue that the answer is to enhance diversification efforts – They can start by diversifying their trading partners which would mitigate the risks of their excessive reliance on China and would also create a viable alternative for businesses relocating from China. Strengthen trade agreements – An additional way of doing this would be to prioritize the intra- ASEAN trade and integrating supply chains. This would lead to diminishing dependence on imports for components and materials, for example in the sectors of electronics and cars.  

Besides this, strategic trade relationships with other countries should be considered. This measure would not only grant ASEAN countries a greater access to significant markets such as Canada (for which there are ongoing negotiations to sign an agreement) but also, once again, promote trade diversification. Aligning China’s Foreign Direct Investment with sustainability – Interdependence with China cannot be abruptly broken, and it is important in maintaining peace. Following this rationale, as China’s FDI is important, ASEAN countries should ensure that these investments align with their sustainable growth goals, for example, transparency and accountability. 

Conclusion 

In summary, as China tries to steer a manufacturing-led revival of the world’s second-largest economy, the data from Beijing heightens Western concerns about Chinese competition. The opinions on how to approach this rising economy diverge, and the effects of interdependence are bittersweet. While on one side it may lead to peace and stability, since conflict is costly, on the other hand, it also provides room for disputes to emerge.  

The ultimate consequence of this is the incapability to separate political issues from economic trade. There are many suggestions to address these matters under regional frameworks rather than country-to-country. To effectively do so, these agreements should be comprehensive including emerging potential causes of conflict, like the ASEAN. 

Sources: Damuri, Y. R. (2022). An agenda for regional economic and security cooperation – East Asia Forum. East Asia Forum Quarterly: Volume 14, Number 4, 2022, 14(4), 5–7, Hawkins, A. (2023, July 5). Chip wars: how semiconductors became a flashpoint in the US-China relationship. The Guardian. Maizland, L., Albert, E., Hong, L., & Galina, C. (2023, September 18). What Is ASEAN? Council on Foreign Relations, Wester, S. (2023, November). Balancing Act: Assessing China’s Growing Economic Influence in ASEAN. Asia Society, XIA, M. (2018). “China Threat” or a “Peaceful Rise of China”? – New York Times. Nytimes.com, Hale, T. (2024, April 4). Manufacturers need to face up to new wave of Chinese competition. – Financial Times, Joseph Grieco, G. John Ikenberry, Michael Mastanduno (2024). Introduction to International Relations- Enduring Questions and Contemporary Perspectives 

Catarina Franco