Search the archive.

Because the threat of regulatory nukes is so great, it is easy to gloss over that very often when faced with a regulatory nuke, in the majority of circumstances, the end result is compliance. Furthermore, often compliance is won the easy way: without the agency having to make a threat to the individual target.

Consider a regulatory nuke that is more familiar to the average American than most—the prospect of prison time for tax evasion. In 2009, the IRS received nearly 140 million tax returns and only recommended that the Justice Department prosecute 1269 for criminal enforcement due to tax or tax related reasons (Internal Revenue Service, 2010). This represents less than one for every 100,000 returns submitted. Additionally, it seems unlikely that the IRS would pursue each of the recommended cases. Interestingly, the IRS only examined about one percent of the returns filed in detail (Internal Revenue Service, 2010). The vast majority of returns do not get audited. Most Americans do not need to be threatened directly in order to be convinced that paying federal taxes is necessary. The IRS gets compliance because Americans probably for a variety of reasons including, among others, commitment to honesty, a feeling of obligation, and fear of the consequences of not paying taxes. While the story of the citizen who is unwilling to pay taxes and who has cheated the system may get the attention of the media and public, the much more common story is less exciting: it is the story of compliance. In this case, and many like it, we overlook the story that defines the vast majority of potential regulatory targets and focus—if at all—on the story of the exception. With mushroom clouds on the horizon, it is easy to focus on it and neglect the rest of the world of possibilities.

So, how do we know if we are dealing with a regulatory nuke and not just an impressive, yet conventional regulatory weapon? There is more to a regulatory nuke than the power of the regulatory option. The size of the stick is a factor, but it is not determinative. As Schelling put it, there is such thing as massive retaliation “on a diminutive scale, with local effects not unlike those of Hiroshima” (Schelling, 2008/1966, 15). Rather, staying true to Schelling’s logic, a regulatory nuke is a regulatory power that is considered generally “out of bounds” and is symbolically different from typical regulatory efforts. It is the stick that goes unused or the punishment that is presumptively off the table. Whether due to precedents of agency dealings, perceptions of inequity, unacceptable impacts on larger society, congressional design, or political pressure—a regulatory nuke carries symbolic importance. And like actual nuclear weapons, agencies use the regulatory nuke by brandishing the weapon rather than firing it.

The fact that regulatory nukes are used differently than other regulatory weapons often leads commentators to mistakenly believe that regulatory nukes are rarely or never used simply because they are rarely or never launched. However, equating launches of regulatory nukes to use of the regulatory tool overlooks a major dimension of symbolically important stopping points: threats, bluffs, and escalations. The uses of regulatory nukes fall on a spectrum. Launching the weapon is at one extreme. There are more subtle uses that deserve our attention as well: leveraging the weapon at the bargaining table, relying on the weapon as a backdrop of pursuing compliance, and even scaring potential targets from straying from compliance lest they show up on the agency’s radar screen at all.

But new research suggests that audit threats are actually effective because, simply put, they scare people. At least in Uruguay.

In an NBER working paper, Marcelo Bérgolo, Rodrigo Ceni and Matias Giaccobasso of IECON-UDELAR, Guillermo Cruces of CEDLAS-UNLP and UCLA Anderson’s Ricardo Perez-Truglia show what happens when that theoretical model of tax evasion is tested in the real world. Their results indicate that, once faced with the possibility of an audit, no matter the probability or penalty, firms tend to pay more in taxes going forward.

3. Regulatory tax laws are a suitable measure for regulation of the credit institutions. While making decisions on certain behaviour model in the credit institutions, the economic arguments usually prevail, and the activity of the credit institutions is relatively insignificantly affected by morals – values. The regulatory impact of the tax laws on the credit institutions is justified by regulation of economic conditions of decision making rather than classifying a certain behaviour as legal or illegal, therefore, the tax laws allow a legislator to regulate the decision making process itself. Certain behaviour model is forbidden by imperative administrative orders by making it illegal with the help of the laws, however, the causes (economic motives) of the illegal behaviour model are not always eliminated, and this weakens the regulatory impact of the administrative orders and reduces their effectiveness. Regulation of the credit institutions by the tax laws, unlike traditional method of legal permissions or prohibitions, allows ensuring the significantly lower extent of forced nature of legal regulation and decreasing the risk of possible legal conflicts.

4. The tax laws might be used both as individual measure for regulation of the credit institutions and as additional measure for regulation of the credit institutions together with the current legal regulation of the credit institutions. Regulation of the credit institutions by the tax laws might significantly improve the possibilities of a legislator to regulate the risky activity of the credit institutions and to ensure the stability of financial sector. The regulatory impact of the tax laws can be better directed towards all activity elements of the credit institutions than the administrative orders, prevailing in regulation of the credit institutions. More accurate regulation allows ensuring constant and easier effect on the financial condition of the credit institutions, and enables to improve the solvency, liquidity and panic resistance indicators. In case of regulating the activity of the credit institutions, the tax laws allows achieving the same regulatory effect as the administrative orders, however, by keeping the variety of the credit institutions and more freedom than in case of regulating the activity of the credit institutions by legal prohibitions and permissions, therefore, the tax laws should be considered as proportional measure of regulation of the credit institutions. What is more, the price of possible error, made by a legislator, will be significantly lower because of the features of the regulatory impact of the tax laws than in case of regulating the same relationships by prohibitions and permissions.

The Shop Safe Act, introduced on Sept. 28 by Sens. Chris Coons (D-Del.) and Thom Tillis (R-N.C.), stands for the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce Act. It was previously introduced last session as a means to crack down on counterfeit product sales alongside the Inform Act. That bill passed with support from both brands and marketplaces, and requires marketplaces to verify identification, contact information and bank account information to confirm the identity of third-party sellers. The Shop Safe Act goes a step further than Inform by requiring those platforms to do more vetting of counterfeit goods, or else be legally liable for those goods pose health or safety threats. It has widespread support form retail lobbies like the American Apparel and Footwear Association, Toy Association and the National Association of Manufacturers. The proposal, introduced as Senate Bill 2934, has made some headway with a hearing from the Senate Judiciary Subcommittee on intellectual property last week. But without the same widespread support that the Inform Act had, it’s unclear if the proposal will make it to a vote. Matt Schruers, president of the Computers & Communications Industry Association, which counts e-commerce players like Amazon and eBay as members, said at the Senate subcommittee hearing last week that the proposal is “highly flawed.” The group supported the Inform Act, and Schruers urged lawmakers to give that bill time to work before adding more laws. “CCIA has significant concerns with Shop Safe including broad, ambiguous definitions, prescriptive and inflexible requirements to escape automatic liability, and lack of meaningful responsibilities on the brand side, which mean the bill will not successfully accomplish what it seeks to address,” he said. But groups that support the Shop Safe Act, like the American Apparel & Footwear Association, say that they’re looking for the same guardrails for online stores that exist for physical retail, where selling counterfeits is illegal. Jennifer Hanks, director of brand protection with AAFA, told Modern Retail that a key issue with counterfeits is because they’re made of lesser-quality materials that could be harmful. But even if the product is safe, there’s concern about how the purchaser will then view the brand if it’s of shoddy quality. “It goes far beyond that in terms of IP misuse, infringement, brand protection issues,” Hanks said. “And it’s not just our members. It’s across industries. With the Shop Safe Act again up for debate, here’s what brands need to know about the proposal and where it stands How widespread is counterfeiting? Given its subversive nature, the exact scope of counterfeiting is hard to quantify. But the National Association of Manufacturers found in 2019 that counterfeits cost $131 billion from the U.S. economy. Another indicator of counterfeit activity is the annual Notorious Markets review from the U.S. Trade Representative, which describes specific operations that sell counterfeit goods or facilitate piracy. The most recent edition said that rights holders — or the brands and companies that hold the intellectual property of legitimate goods — are noticing more counterfeits moving on social media channels. “This rising concern has coincided with the continued growth of e-commerce and the increased movement of many physical sellers to predominantly online platforms,” the report said. Platforms have attempted to tackle the issue of counterfeits on their own — Amazon reported that it took 6 million goods off last year — but they still face a challenge given the huge volume of products that are being sold. For brands, counterfeits run the risk of damaging their reputation or stealing away sales — and while not necessarily rising to the level of an intellectual property violation, some brands are facing competition from dupes that are cheaper and taking over on TikTok as users look to win out on a good deal. What would the Shop Safe Act require? The Shop Safe Act creates a law for trademark infringement liability that would apply to e-commerce platforms that sell a counterfeit good that poses a threat to health and safety, unless that platform is providing “best practices.” Platforms that are vetting sellers, removing counterfeit listings and kicking off counterfeit sellers would have a safe harbor from liability, according to the current proposal. Brands that have trademarks for their products would be responsible for providing those to the platforms in order to help them be proactive in removing counterfeit products. Why do brands support it? Jen Gibbons, the vp of government affairs for the Toy Association, said the overarching concern with counterfeits is that those who are making them are likely to be using lesser-quality materials, or skirting the same safety testing that legal manufacturers would go through to bring the product to market. Under the current system, it’s “disproportionately on brands or consumers to notify the platforms of dangerous or counterfeit or noncompliant products,” she said. The Shop Safe Act could remedy this by making platforms take proactive measures to ensure that products are legitimate. “Right now it’s extremely challenging and the burden of enforcement and notifying and getting counterfeits [off of marketplaces] falls disproportionately on the brands,” she said. “There’s no common approach, necessarily, across the marketplaces.” Hanks said that the Shop Safe Act’s requirements would provide parity between online and in-store retail, where it is illegal to sell counterfeits. “It’s the verification and proactive measures in terms of keeping counterfeits off that platform that is needed,” she said.

Washington – Today, Congressman Darrell Issa (CA-48), Chairman of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, introduced the SHOP SAFE Act which will protect consumers from counterfeit goods on the online marketplace. The SHOP SAFE Act incentivizes online marketplaces to improve their ability to detect and stop counterfeit goods by protecting online marketplaces from civil liability if they comply with anti-counterfeiting measures, including requirements to better vet third-party sellers and provide more information to consumers about where the products they buy are originated. “For far too long and for no acceptable reason, millions of American consumers have been ripped off by purchasing fake, illegal, and unsafe counterfeit products sold on online marketplaces. How we stop it starts right here,” said Chairman Issa. “The nationwide problem of third-party sellers peddling bogus products on platforms is made worse because these sham sellers are rarely – if ever – held accountable for the damage they inflict not only to individuals but to the entire structure of consumer confidence as well. Our bipartisan legislation promotes key incentives for online platforms to engage in best practices that will screen and vet both sellers and products to ensure that consumers have the information they need when they shop online.” Issa was joined by House Judiciary Ranking Member Jerrold Nadler (NY-12), House Judiciary Member Ben Cline (VA-06), and Subcommittee Ranking Member Hank Johnson (GA-04) in introducing the legislation. “As American consumers increasingly turn to the internet to shop, counterfeiters have kept pace. To stop this rising trend in online sales of unsafe counterfeit products, the law must keep pace too,” said House Judiciary Ranking Member Jerrold Nadler. “I am proud to reintroduce the bipartisan SHOP SAFE Act, which will protect consumers by making platforms appropriately responsible for harmful counterfeits sold through their websites by others and encouraging them to go on the offensive in the fight against fakes.” "As online retailers continue to grow and increasingly work with unverified third-party vendors, Congress must take steps to protect American consumers from both physical and financial harm, as well as protect the integrity and authenticity of the products," said Rep. Cline. "The SHOP SAFE Act will help ensure consumers get the product they paid for by curbing the flow of counterfeit goods, many of which come from China. It would also aid in dismantling revenue sources for terror organizations who rely in-part on the sale of fake goods to fund their operations." “Combatting counterfeits online is of critical importance,” said Subcommittee Ranking Member Hank Johnson. “We are no longer in the era of fake watches and handbags being sold out of car trunks. As consumers have moved online, counterfeiters have embraced the Internet, too. But shopping on an online marketplace should come with the same customer trust and confidence as a brick-and-mortar store – today it does not. The SHOP SAFE Act is a good first step to countering this troubling trend and protecting American consumers.” The bill has received endorsements from the following organizations: ABA Industry Inc adidas America, Inc. Alliance for Automotive Innovation (AAI) Alliance for Safe Online Pharmacies (ASOP Global) American Apparel & Footwear Association Association of Home Appliance Manufacturers (AHAM) Authentix, Inc. Automotive Anti-Counterfeiting Council (A2C2) Communications Cable & Connectivity Association (CCCA) Consumer Healthcare Products Association (CHPA) Council 4 Innovation Promotion (C4IP) Council for Responsible Nutrition Footwear Distributors & Retailers of America (FDRA) Halloween & Costume Association (HCA) International Anti-Counterfeiting Coalition (IACC) MEMA, The Vehicle Suppliers Association National Association of Manufacturers National Systems Contractors Association (NSCA) Personal Care Products Council (PCPC) Sentinel Connector Systems Sports & Fitness Industry Association (SFIA) The Partnership for Safe Medicines The Toy Association TIC Council Transnational Alliance to Combat Illicit Trade (TRACIT) Vinyl Institute “All toys sold in the U.S. must comply with strict standards and undergo extensive testing to ensure they are safe. Though some efforts have been made, counterfeits continue to pop up on many online marketplaces at an alarming rate. These unsafe items are putting millions of families at risk and undermine all of the hard work that legitimate companies put in to make their products safe,” said Greg Ahearn, President & CEO of The Toy Association. “The Shop Safe legislation can help ensure that all American consumers are protected while shopping online.”

In 2022, bilateral trade in goods between the U.S. and Brazil, as measured by MDIC, reached a new record of US$ 88.7 billion, exceeding the previous record from 2021 by 26%. 55% of Brazilian exports to the United States are in value-added goods and services, an important driver of job creation for Brazilians and Americans. Among the principal Brazilian exported products to the United States include aircraft and parts, semi-finished steel products, and partially manufactured wood products. According to the most recent report by the Central Bank of Brazil, the United States was the largest source of foreign direct investment stocks by final beneficiary with nearly R$ 1 trillion (nearly US$ 192 billion) in 2021, almost four times the amount of the next largest country source of investments. U.S. investments in greenfield initiatives are disproportionately higher than investments in this area from other foreign countries, which can help develop longer-term sustainable investment. All of Brazil’s unicorns, or startups valued at more than R$ 5 billion, have received investments from the United States. 80% of the top products (imports and exports) in major bilateral trade sectors saw an increase last year, a sign of mature growth and impressive potential in our commercial relationship.   Brazilian companies continue to expand their presence in the U.S. market, either through purchasing U.S. companies or establishing their own businesses across a range of sectors including agriculture, food processing, and finance. American energy companies are deploying cutting edge technology alongside Brazilian partners to promote Brazil’s continued growth as one of the largest oil producers and exporters in the world.

Oil production in Brazil reached a new high of 1.1 billion barrels in 2022. This compared to a natural gas production of 50.34 billion cubic meters, which also constituted a new peak in annual extraction volumes. Natural gas is often produced alongside crude oil. Brazil’s oil and gas reserves are primarily found in so-called pre- and post-salt layers. They are geological formations located around underground salt deposits. Petrobras is the largest company within Brazil’s oil and gas industry. The company’s hegemony is the result of more than four decades of exclusive rights to oil exploration in the country. Although legally the company has not held a monopoly since 1997, it remains largely unrivaled, accounting for more than 90 percent of the national crude oil production. Disregarding domestic consumption, the majority of oil from Brazil is exported to China. Nearly every second barrel sold from Brazil ends up in Asia’s largest economy. The export price of Brazil’s oil usually fluctuates along developments in the wider global oil market, and as such recorded notable lows throughout 2020 and reached a high in the summer of 2022.

The United States has historically been the world's leading soybean exporter, but its export share has steadily declined since the early 1980s. Contrary to the United States, Brazil was not a key player in the world soybean market as recently as the 1980s, the country's export share has been steadily increasing and even surpassed the US export share from 2016 to 2019. Brazil's soybean export share expanded by more than 41 percentage points, while the US share fell by 44 percentage points relative to the 1980s (FAO-STAT, ). Together these two countries have accounted for at least 75% of soybean exports over the past 40 years. On the import side, China is the largest soybean importer, accounting for 63% of global soybean imports in 2016, a threefold increase over its share of world imports in 2001 (Carlin, 2019). Focus Economics reports that despite exhibiting better-than-anticipated economic performance in 2022, Brazil’s short-term prospects remain bleak. The country’s high interest rates, coupled with slow but high inflation are hampering private consumption, while external demand for Brazilian exports is weakening due to the global slowdown. Additionally, newly elected president Lula da Silva’s challenge of achieving fiscal consolidation adds to the uncertainty, as evidenced by social unrest and massive riots provoked by his supporters in January. Brazil is the largest and most populous economy in Latin America, with GDP worth around a third of the regional total. Brazil is also the third-largest emerging market after China and India. Brazil has a diverse economic structure encompassing agriculture, mining, manufacturing, and services. Brazil is a global leader in agriculture, renowned for being one of the world’s largest producers of coffee, soybeans, beef, sugar cane and ethanol. The sector benefits from advanced agricultural technology and vast arable land. Brazil is also an important producer of iron ore and oil and holds large reserves of minerals that will be integral in the green transition, such as graphite, nickel, manganese, and rare earth elements. In 2023, population reached 218.6 million (CIA World Factbook Est.), an increase of 43.6 million since 2000. By population Brazil is the seventh largest country in the world. The median age was 34.7 years in 2023, 11.8 years greater than in 2000. Fertility has been falling rapidly but it is still 1.8 births per female. The downward trend will decelerate in the future, reaching about 1.6 births per female by 2030. Sterilization, abortion, and programs for family planning are driving the decline. The number of those over 65 years more than doubled in 2000-2022, reaching 22.9 million by the end of that period. However, this group still accounts for just 10.2% of total population – a relatively small share compared with most countries. Demographers expect the ageing process to accelerate in the future, with the share of those over 65 years reaching 13.6% of total population by 2030. Brazil is a member of the Common Market of the South (Mercosur), a trade bloc that includes Argentina, Bolivia, Paraguay, and Uruguay. Venezuela’s membership in the organization was suspended in August 2017. After the Asian and Russian financial crises, Mercosur adopted a protectionist stance to guard against exposure to volatile foreign markets and it currently is negotiating Free Trade Agreements with the European Union and Canada. Their trade policy is protectionist: Average tariff rates are more than double the Latin American average. USDA’s Office of Agricultural Affairs (OAA) in Sao Paulo, hereinafter referred to as FAS Post Sao Paulo, reported that in 2022, imports of consumer-oriented products by Brazil reached US$5.2 billion, an 8% increase compared to the previous year. The U.S. States maintained its position as the fourth major supplier, with a 5.4% market share. On the other hand, European countries, direct competitors to the U.S. gained two percentage points of market share, accounting for 30% of the market. Both are positioned at a higher price level and offer products with similar quality and standards; therefore, it is plausible that U.S. companies have considerable room to grow in the Brazilian market. Brazil is the third largest market in South America for the export of U.S. processed foods. In 2022 Brazil imported US$314.9 million in processed foods, and an increase of 24%. In 2023, U.S. exports to Brazil decreased 8% to US$288.1 million. That equates to about US$26.8 million which adds to the U.S. trade deficit in food and agricultural products. Although Brazil is going through a difficult time economically, the food sector is a key one for the country and has been less affected than other sectors of the economy. Brazilians spent around 17% of their disposable income on food and this remains unchanged. Brazil continues to be an attractive consumer market. Half of the country’s population is considered middle class and around 16 million are at the top of the social pyramid, the very rich consumers.

Brazil, the fifth largest country in area and population and the largest in terms of arable land, is among the few countries with potential to increase agricultural productivity. Over the past two decades, Brazil has been consolidating its position as a major producer of agricultural commodities and related food products as well as a supplier to international markets. It is now a top-5 producer of 34 commodities and is the largest net exporter in the world. Continuing trade expansion and diversification of markets and products remains at the core of Brazil’s agricultural growth strategy. However, increases in fuel and fertilizer costs, credit and storage limitations, an overburdened port and transport system, and pressure to preserve the environment are challenging the long-term growth of Brazilian agriculture. Measured in U.S. dollars, the value of Brazil’s agriculture, including cultivation of crops and livestock production, grew an average of 8 percent annually over the past two decades (2000–20), with agricultural output doubling and livestock production increasing threefold. Since the mid-2000s, Brazil has accelerated its transformation from an exporter of mainly tropical agricultural products such as coffee, sugar, citrus, and cacao to a major global supplier of commodities, including soybeans, grains, cotton, ethanol, and meats. Soybeans stand out as a crucial crop in the expansion of Brazil’s farm sector and the country’s ascent as a top global supplier of agricultural products. In 2000, Brazil’s soybean exports were 40 percent of United States’ exports; they now surpass U.S. exports by 20 percent. Brazil supplies more than 50 percent of the world’s soybean trade from crops produced on 17 percent of the country’s arable land. The value of Brazil’s agricultural exports, including processed products, has grown an average of 9.4 percent a year from 2000 to 2021 and accounts for 37 percent of Brazil’s total exports. Brazil now exports major agricultural commodities and food products to 222 countries and territories and is the world’s third largest exporter of agricultural products, behind the European Union (EU) and the United States. Factors driving Brazil’s transformation include agricultural research that has increased yields, expansion of the arable land base, large investments in production technologies to develop crop and forage varieties, and increased global demand for food and animal feed, particularly over the last decade. Most important, Brazil’s ability to harvest two to three crops a year in the same plot of land makes it unique compared with other grain and soybean-producing countries. Other factors include export-oriented macroeconomic policies, extended periods of depreciation for Brazil’s currency (the real), crop-specific agricultural policy incentives, improved sanitary controls, acquisition of foreign competitors, and a growing multinational presence and foreign investment in the country. In 2021, crop and livestock production accounted for 8 percent of Brazil’s Gross Domestic Product (GDP). The University of São Paulo’s Center for Advanced Studies on Applied Economics estimated that when activities such as processing and distribution are included, Brazil’s agriculture and food sector accounts for 29 percent of the country’s GDP, valued at $1.8 trillion in 2021. Agriculture employs 15.1 million people in rural establishments, equivalent to 15 percent of the labor force, according to Brazil’s latest agricultural census. In Brazil, resource costs for farming are low relative to that of competitors largely because of lower land and capital costs, making it easier to expand acreage and increase productivity. Growth in production has exceeded growth in domestic consumer demand, leaving surplus production for more exports. The value of Brazil’s agricultural exports in 2021 reached $125 billion, led by soybeans and soybean meal, sugar, beef, poultry, corn, cotton, pork, coffee, and citrus. Soaring demand from China has been at the root of much of Brazil’s export growth. In 2021, China accounted for 39 percent of Brazil’s total agricultural exports and 70 percent of the total volume of Brazil’s soybean exports. Exports of unprocessed primary bulk (oilseeds, grains, cotton, tobacco) and semi-processed commodities (grain flours, vegetable oils, animal products) have contributed the most to Brazil’s total agricultural exports. According to statistics from Trade Data Monitor, primary bulk agro-food products grew 11.5 percent annually during 2002–21, compared with 5.8 percent annually for semi-processed products. Processed products (fresh, chilled, and prepared meats, dairy products, processed fruit and vegetables) grew 6.3 percent annually during 2002–21. In recent years, the growth in exports of processed products has accelerated to nearly 10 percent annual growth and the sector now accounts for 32 percent of agro-food exports, compared with 44 percent for primary bulk commodities. Horticultural products, which include fruits, vegetables, flowers, nuts, and spices, have grown at a rate of 4 percent per year since 2002. Exports of unprocessed primary bulk (oilseeds, grains, cotton, tobacco) and semi-processed commodities (grain flours, vegetable oils, animal products) have contributed the most to Brazil’s total agricultural exports. According to statistics from Trade Data Monitor, primary bulk agro-food products grew 11.5 percent annually during 2002–21, compared with 5.8 percent annually for semi-processed products. Processed products (fresh, chilled, and prepared meats, dairy products, processed fruit and vegetables) grew 6.3 percent annually during 2002–21. In recent years, the growth in exports of processed products has accelerated to nearly 10 percent annual growth and the sector now accounts for 32 percent of agro-food exports, compared with 44 percent for primary bulk commodities. Horticultural products, which include fruits, vegetables, flowers, nuts, and spices, have grown at a rate of 4 percent per year since 2002. In Brazil, resource costs for farming are low relative to that of competitors largely because of lower land and capital costs, making it easier to expand acreage and increase productivity. Growth in production has exceeded growth in domestic consumer demand, leaving surplus production for more exports. The value of Brazil’s agricultural exports in 2021 reached $125 billion, led by soybeans and soybean meal, sugar, beef, poultry, corn, cotton, pork, coffee, and citrus. Soaring demand from China has been at the root of much of Brazil’s export growth. In 2021, China accounted for 39 percent of Brazil’s total agricultural exports and 70 percent of the total volume of Brazil’s soybean exports. The economic impact of devaluation on the domestic agricultural and related food industries depends on the price structure within the economy and the response of relative commodity prices to the devaluation. For example, a weaker value of Brazil’s currency, the real, during its deep 2015–16 recession contributed to record growth in Brazil’s agricultural exports. During the 2015–16 period, the devaluation of the real encouraged Brazil’s farmers to put more land into production and increase double cropping. Consequently, local currency-denominated prices yielded increased net returns for Brazilian farmers despite weak dollar-denominated prices in global markets. In the case of soybeans, land use increased 28 percent. The increase in area planted and higher production translated into an 84-percent increase in soybean exports by volume. Because Brazil is a large contributor to the international soybean market, this export expansion led to changes in world prices, as well as a 6-percent decline in world soybean prices by 2021.

The World Health Organization has reported that counterfeit medicines potentially make up more than 50% of the global drug market, with a significant proportion of these fake products being encountered in developing countries. This occurrence is attributed to a lack of effective regulation and a weak enforcement capacity existing in these countries, with an increase in this trade resulting from the growing size and sophistication of drug counterfeiters. In addition, due to both cost and lack of availability of medicines, consumers in developing countries are more likely to seek out these inexpensive options. The World Health Organization is mindful of the impact of counterfeit drugs on consumer confidence in health care systems, health professionals, the supply chain, and genuine suppliers of medicines and medical devices. Antibiotics, antituberculosis drugs, and antimalarial and antiretroviral drugs are frequently targeted, with reports of 60% of the anti-infective drugs in Asia and Africa containing active pharmaceutical ingredients outside their pharmacopoeial limits. This has obvious public health implications of increasing drug resistance and negating all the efforts that have already gone into the provision of medicines to treat these life threatening conditions in the developing world. This review, while focusing on counterfeit medicines and medical devices in developing countries, will present information on their impact and how these issues can be addressed by regulation and control of the supply chain using technology appropriate to the developing world. The complexity of the problem will also be highlighted in terms of the definition of counterfeit and substandard medicines, including gray pharmaceuticals. Although this issue presents as a global public health problem, outcomes in developing countries where counterfeit drugs to treat malaria, tuberculosis, and human immunodeficiency virus/acquired immunodeficiency syndrome not only result in drug resistance, but a number of deaths from the untreated disease, is in stark contrast with the developed world, where lifestyle drugs such as sildenafil (Viagra®) are most commonly counterfeited.

WHO estimated as far back as 1991 that half of the world’s population at that stage did not have regular access to essential drugs, with this number reducing to 33% in sub-Saharan Africa.14 Although counterfeit drugs are an important issue in Africa, there are also a number of other constraints to the regular supply of essential drugs, including geographic location, logistics, ensuring the integrity of the supply chain, and financing the supply of essential drugs. It must also be noted that some of these constraints also play a role in compounding or impacting the issue of counterfeit drugs in Africa.14 There are a number of factors which make medicines a viable and attractive option for counterfeiters, particularly in the developing world. These factors and their importance in developing countries as well as the risk rated as mild, moderate, or high, are listed in Table 1. Drug products lacking in quality, safety, and efficacy, and that are not under regulatory control, may result in prolonged therapy, promote resistance, and cause adverse effects, which are then not reported on or monitored. This has potential to significantly impact on global public health.

Luxury is a term associated with the products that are prestigious to those who use them. Although luxury can be subjective to one’s well-being, social status, and excellence of power one holds — in association with brands, it is often linked with the products designed and developed by world-leading renowned brands. Luxury items are often — as per a research conducted by the Association of Consumer Research by the title of “Why do consumers buy counterfeit luxury brands?” — associated with social-adjustive attitudes and value-expressive attributes of a consumer.

Social-adjustive attitude defines the need of consumers in favour of the form and image of a product, which is directly linked to the social appeal function. In contrast, the value-expressive is associated with intrinsic aspects like quality and reliability.

Consumers use products to differentiate themselves from others and to make inferences about the identities and social roles of others (Berger & Heath, 2008; Englis & Solomon, 1995; Tajfel, 2010). Consumers' shared understanding of the symbolic meanings of products, whether through a brand's logo, name, patterns or other visibly identifying feature, and the constellation of products that reflect a certain lifestyle (Englis & Solomon, 1995; Lowry, Englis, Shavitt, & Solomon, 2001), is an important driver in consumers' communicating to others the groups to which they aspire to belong or people to whom they wish to be similar or dissimilar (Escalas & Bettman, 2003; Berger & Heath, 2007). To the extent that an individual uses products typical of a social category, such as social class, and does not use products associated with other roles, that individual is more likely to be viewed as a member of that category (Solomon & Assael, 1988; Berger & Heath, 2008; Escalas & Bettman, 2003; White & Dahl, 2006, 2007). Luxury brands, in particular, communicate social class standing and become emblematic of an aspirational lifestyle (Englis & Solomon, 1995). Counterfeit versions, which provide easier access to luxury, can trigger these aspirational lifestyles and fulfill symbolic needs, even vicariously, when viewing other like-minded people using them. When female consumers seek to belong to a particular aspirational group that uses expensive luxury handbags, they may perceive use of a counterfeit by similar others as a symbol of the importance of the brand to their current group membership and, in turn, may increase their favorable perceptions of the genuine luxury brand. Dissociative “out-group” reference groups can also impact consumer brand preferences (Berger & Heath, 2008; Escalas & Bettman, 2003; Solomon & Assael, 1988; White & Dahl, 2006, 2007). Dissimilar others using a counterfeit may lead consumers to weaken their ties to the genuine brand (White & Dahl, 2006), and these dissociations may impact choices (McFerran et al., 2010). Consumers may abandon brands when out-groups adopt them and/or when the brands lose their exclusivity (Berger & Heath, 2007, 2008; White & Dahl, 2006). In general, therefore, people are drawn toward products used by in-groups and repelled by products used by out-groups (e.g. Stephens, Markus, & Townsend, 2007).

However, social class is used not only to communicate social identity; consumers also use it to communicate social hierarchy or rank. Social hierarchy is the unequal distribution of status across individuals (Fragile, Overbeck, & Neale, 2011; Magee & Galinsky, 2008), and social class is an important type of ranking within a social hierarchy (Kraus, Piff, & Keltner, 2009). Attempts to attain social standing are so commonplace that desire for status is considered a fundamental human motive (Fragile et al., 2011; Frank, 1985; Zitek & Tiedens, 2012). Theories of social hierarchy note that there is a general attraction toward tastes of in-groups and an aversion toward tastes of out-groups, but that asymmetries may also occur. In the current context, three conceptual ideas in the social hierarchy literature lead to predictions about how consumers will respond to viewing persons of the same or different social class using counterfeit products.

A brief survey of the many of the comments on the video paints a striking picture of the battle that brands now face as the quality and accuracy of counterfeit goods continues to rise. “You know what that means, kids … go buy the fakes and nobody will know,” wrote one follower. “If that’s the case, where do I buy the fake for a cheaper price?” asked another. Finally, “This begs the question, why would anyone waste their time and effort to buy retail Yeezys … when China offers you the exact same shoe for cheaper and it’s always in stock.”

In 2009, the Greek economy crashed, sending the country into a severe recession. The financial failure also churned up political unrest: the government was forced to call for an early election and lost power. The economic crisis that rattled Greece was not isolated—it affected several countries in the European Union. Norway, for example, also experienced a dip in its gross domestic product. Yet there was little political turmoil in the country. Why the difference? “There was a lot of news about people being angry with the Greek government and feeling lied to by their politicians,” says Nancy Qian, professor of managerial economics and decision sciences at the Kellogg School. “It was striking that in other European countries going through a recession, we weren’t hearing about political unrest or riots.” Throughout history, economic crises have sparked differing political responses. But it can be difficult to pinpoint the underlying reason for any differences because countries like, for instance, Greece and Norway differ in many ways, including their overall levels of prosperity. So Qian and coauthors decided to focus on one specific metric: how much the people of a country typically trust other people. “It’s about how likely I am to attribute the economic problems to circumstance or luck versus to the political leadership.” They found that in countries where general trust levels are high, an economic crisis is less likely to trigger political unrest. But in countries where people feel less trusting of others, signs of a flailing economy are more likely to lead to the ruling party being voted out of power. “If I’m a less trusting person, I might say something like, ‘I don’t understand the details of what our leader is doing, but most politicians are bad and they’re lazy, so it is probably his fault,’” Qian explains. Alternately, a trusting person might blame factors beyond politicians’ control. “It’s about how likely I am to attribute the economic problems to circumstance or luck versus to the political leadership.”

The unemployment rate is open to interpretation depending on how it's measured. Underemployment can be extremely detrimental to the economy of society as well. Underemployment numbers include those who are working low-paying or low-skill jobs that don't provide enough full-time hours for benefits or to earn a living wage.

Global and national emergencies can trigger both unemployment and underemployment. Civilian employment plunged by 21 million from the fourth quarter of 2019 through the second quarter of 2022 due to the COVID-19 pandemic.1

A trade war happens when countries take protectionist actions against each other as a result of barriers to trade.

Advocates say trade wars protect national interests and provide advantages to domestic businesses.

In the past three decades or so, the proliferation of counterfeit products has become increasingly prevalent, with far-reaching effects across developing nations in the Global South (Akinyandenu, 2013; Organization for Economic Co-operation and Development (OECD) & European Union Intellectual Property Office (EUIPO), 2019; Yi et al., 2022). This problem has been further amplified by technological advances and the evolution of the internet and digital platforms, which provide ample opportunities for online piracy to flourish, affecting digital works encompassing films, books, music, television shows, and software (OECD & EUIPO, 2019; The Office of the U.S. Trade Representative (USTR), 2023). Across a range of industries, including intellectual property (IP)-intensive sectors such as pharmaceuticals and biotechnology, entertainment, media, education, and creative industries, the social and economic forces driving counterfeiting remain widespread (Berman, 2008; Gao and Wu, 2023; OECD & EUIPO, 2019; USTR, 2023; Ziavrou et al., 2022). According to the OECD (2019), trade in counterfeit and pirated goods that infringe on trademarks and copyrights accounts for around 3.3% of global trade and continues to rise year on year. For instance, in the European Union (EU), such goods account for approximately 6.8% of imports from non-EU nations (OECD, 2019). While counterfeiting has historically been associated with prestigious and luxury goods, this phenomenon has transformed to impact both the healthcare sector and healthcare products, such as pharmaceutical and electronic items, which directly affect the security and safety of citizens (see Akinyandenu, 2013; Yi et al., 2022).

The involvement of local governments in the support of the trade in counterfeit goods makes effective enforcement at the local level difficult, if not impossible. Local governments in China control all of the levers of power in law enforcement. For example, judges, police officers, and administrative enforcement officials are all appointed by and beholden to local government leaders, such as mayors and local Communist Party leaders.' 7 These law enforcement officials can be discharged, transferred to less desirable jobs, demoted, or suffer pay cuts and other setbacks to their careers if they act contrary to the wishes of local government and Party leaders.18 As a result, local enforcement officials generally follow the directions of local government leaders who are reluctant to enforce laws against counterfeiting because such enforcement will harm the local economy.' 9 In fact, counterfeiting often supports entire local economies because a host of legitimate businesses, such as hotels, restaurants, nightclubs, transportation companies, and warehouse and storage companies all depend on the trade in counterfeit goods."Counterfeiting also provides jobs; an urgent need at this time in China, where many jobs in the export industries have been lost to the global economic crisis. In addition, contrary to popular belief, many sellers and distributors of counterfeit goods pay substantial local taxes allowing local governments to provide for essential public services. The revenues and taxes generated by counterfeiting allow local governments to meet economic growth targets set by national authorities. The local governments are rewarded with government subsidies if those targets are met.2 2 Counterfeiting is a very lucrative, albeit illegal, economic activity. The importance of counterfeiting to local economies means that shutting down the trade in counterfeit goods would have serious negative repercussions for the local economy. Any serious crackdown would also affect the legitimate businesses that support counterfeiting, which could result in the shutdown of the entire local economy creating unemployment, social turmoil, chaos, and unrest-something that PRC authorities fear more than anything else.2 ' The importance of counterfeiting to local economies suggests that counterfeiting will be heavily defended at local levels.