THE ECONOMICS DIGEST
From The Editors
Hello, and welcome to the seventh edition of The Hampton Economics Digest!
This edition of the economics digest features many compelling topics, from the agricultural crisis in Malawi to the bizarre period of time when oil was worth nothing. There are quite a few articles relating to politics, with articles on open borders, macroeconomic populism and the economic effects of Welsh independence. We also feature two articles on the upcoming World Cup, one on the economic impact of the World Cup on Brazil and another focused on Qatar and the future potential effects on the new hosts in 2026.
We hope you enjoy the wide array of articles and, with that, here is The Hampton Economics Digest, Edition 7!
Ryan Crowther and Luca Knowles Co-editors
Writers: Ryan Crowther (Co-Editor), Luca Knowles (Co-Editor), Poyraz Evkuran, Albert Simpson, Gabriel Ho, Agalyan Sathiyamoorthy, Dominic Stenning
The Economic Struggle in Malawi of Agriculture
Malawi faces many struggles, including a high percentage of its population living with HIV/AIDs, a shortage of teachers and the growth in informal housing in urban areas. However, the focus of this article is its overreliance on agriculture. So, what can be done to solve these issues and help Malawi prosper?
Agriculture is significant in Malawi, employing more than 80% of the population and accounting for one-third of GDP and much of its export revenue. This means Malawi has a huge reliance on its agricultural production, not only for food, but for its economy. However, there is a significant problem with this reliance: Malawi has had many climate disasters, and its agriculture sector is faltering, increasing economic struggle and poverty in the nation.
Malawians face food insecurity partly due to climate shocks, with crop estimates in 2024/25 predicting maize production to be at around 2.9 million metric tons, far below the national requirement of 3.3 to 3.5 million tons. This level of maize production remains 24.7% lower than the average from 2019-23, showing how Malawi still has not recovered from the 2022/23 cropping season, with Tropical Cyclone Freddy causing crop damage, with over 204,800 hectares of land being submerged or washed away as well as 194,500 livestock being dead. FEWS NET estimated that total crop losses were in the range of 30-35% in southern
districts, with some localised areas having crop losses as high as 90%. Additionally, due to exchange rate distortions, which makes it difficult for countries to measure the value of their currency relative to the Malawian kwacha, there is little access to foreign currencies for Malawi. This makes it difficult to pay for imported food and agricultural raw materials, meaning that the food shortage in Malawi cannot be compensated for from other countries’ imports. Therefore, one must ensure that Malawi is protected from climate disasters and that the agricultural industry becomes more resistant to climate shocks, helping prevent hunger and poverty in Malawi.
Deforestation has also been a massive problem, with Malawi losing almost a quarter of a million of its 1.5 million hectares of tree cover. This is because Malawi is dependent on wood for energy, with 97% of households depending on wood or charcoal for cooking or heating. The cultivation of trees would protect communities and farmland from flooding, adding to the resistance of the agricultural sector to
extreme weather events while protecting the local Malawians. A proposition to plant more trees, as well as increasing the quantity of solar panel farms in Malawi would mean more communities and agriculture would be protected, so fewer food shortages would occur, in turn making harvests more reliable.
would mean that even with significant weather such as droughts or high rain, the crops are likely to survive, making the harvest more reliable for the population. Improved irrigation systems would help crops that are not climateadapted to survive in droughts; all of these policies help make harvests more reliable in order to attempt to end food shortages in Malawi.
From planting trees to improving irrigation and even climate-adapted crops, the agricultural crisis in Malawi can be alleviated and provide the food and security that Malawi desperately needs
Ryan Crowther
Another policy that could be implemented is one proposed by the World Bank, which was to improve early warning systems for pests and extreme weather. They also suggested increased investment in irrigation systems and climate-adapted crops by reallocating spending from the fertiliser subsidy. In 2021, the Government of Malawi spent over 50% of the agricultural budget on fertilisers ($150 million). Improving early warning systems would give time for farmers to protect their crops and livestock, reducing the damage. Furthermore, the climate-adapted crops
These pictures show the deforestation in Malawi over time
When Oil Was Worthless
On April 20, 2020, while we were all locked down, economic logic was decimated when. The price of oil dropped below zero.
Due to the war in the Middle East, the Strait of Hormuz has been blocked by the Iranian government, preventing 20 million barrels per day from passing through. This accounts for about one fifth of total oil consumption, and without this oil, prices have skyrocketed by over 50%. Therefore, in the current economic climate, it appears even harder to believe that at some point in the recent past, oil was unsellable.
So, what caused one of the world’s most volatile and valuable resources to be regarded as less than worthless by those who held onto it?
Simply put, the world ran out of room for oil.
It is not just a coincidence that the COVID-19 lockdown had started just over a month before April 20th . Flights were grounded in order to prevent the spread of the virus, and an immense fall inpassengerair trafficfollowed. Asimilar event took place with driving, as commuting disappeared and roads were left practically empty; this meant petrol demand crashed almost overnight. Moreover, industry slowed, with a large reduction in global trade, but the underlying factor linking the pandemic and the demand for oil was that it happened everywhere at once, prompting 29 million fewer barrels of oil to be consumed each day. The virus had effectively removed a chunk of the global
market, which created the conditions for the storage crisis.
Furthermore, oil production was not stopped, as wells are extremely complicated, and shutting them down can often be more expensive than producing at a loss, as if a well is closed it may never reopen. Therefore, as supply was not able to be reduced in line with the reduced demand, the excess had to be stored somewhere, but storage facilities were rapidly filling up. Cushing, Oklahoma, was the main location for deliveries for West Texas Intermediate (WTI) futures contracts. These contracts were for the coming months, and whoever held them would face the obligation to take ownership and physical delivery of the barrels when they arrived. This had previously never been a problem, but with the demand falling, capacity became the key issue as all tanks were essentially full. The little space that was left was difficult to access on short notice, due to the complexities of oil storage. Traders holding May 2020 WTI futures contracts realised there was nowhere to store the incoming oil, and they were forced to sell their contracts quickly. Unfortunately, there was no space anywhere, as this was a global problem. This meant that no one wanted to pay for the contracts resulting in panic selling and sellers effectively paying buyers to take it.
In essence, the storage crisis, caused by the COVID-19 virus, transformed excess supply into a logistical and financial liability, triggering one of the most unusual events in market history.
The collapse in oil prices did not end that day. Instead, it forced a dramatic reaction across the global oil industry. Once losses became extreme, producers in the US were forced into cutting supply despite the difficulty; this was followed by similar action by the Organisation of the Petroleum Exporting Countries (OPEC) and allies such as Russia, who agreed to cut production by 9.7 million barrels per day. Despite the collapse, negative prices lasted less than a day, highlighting how the event was not a reflection of oil’s intrinsic value, but a temporary breakdown in the mechanics of the futures market.
While the 2020 incident was driven by an overwhelming lack of demand, through recent years the opposite problem has arisen. Rising tensions and disruptions to shipping routes, such as in the aforementioned Strait of Hormuz and the Russia-Ukraine war, have threatened the global supply of oil; instead of an abundance, there is scarcity. These two extremes emphasise the volatility of the oil market and how sensitive it is to its physical constraints, whether it is storage capacity or wars providing the disruption. These events reveal a simple truth: price is not always a marker for value; it is often just the signal of where the system is breaking.
Luca Knowles
Cost of Hosting the World Cup: A Case Study of Brazil
A dive into the cost of hosting the Brazil 2014 world cup
The World Cup is arguably the greatest event ever hosted, with moments that are engraved in people's memories and tales passed through generations. We now approach the 2026 world cup,which will be hosted in the USA, Canada and Mexico. It will see 48 countries fighting to win the trophy, and millions travelling to Northern America to witness the spectacle. However, hosting such a large-scale event has both benefits and consequences. In the 2014 World Cup in Brazil, we saw both the social and economic impact of hosting such a large-scale tournament.
For Brazil to hold such an event they first had to renovate and build stadiums that can hold on average 54,000 people. This led to seven new stadiums being built and five stadiums being renovated. The cost was expected to be $1.1 billion but ultimately reached $3.6 billion. Nowadays four out of the twelve stadiums have been labelled “white elephants” reflecting how expensive, yet underutilised they are. To create contrast, South Africa spent around $3 billion in total for their turn in hosting the world cup. This overall reflects how poor planning and lack of demand for such large stadiums can create a large financial burden on the government. Moreover, Brazil did not profit from hosting the world cup.
Furthermore, Brazil's rapid investment into infrastructure, costing, in total, $11 billion, led to social tension, as the newly created infrastructure displaced 170,000 people into shelters without water and electricity. This was to accommodate the one million foreign tourists flying out there to potentially witness their country hold the golden trophy. In addition, many people felt that the $11 billion price tag for hosting the world cup was too expensive, especially due to the fact that 7.4% of the population was living in poverty
With that, the economic boom promised by Brazil's president Lula Da Silva never really occurred, and even with the large expenditure by the government, GDP only saw a boost from 0.3% to 0.5%. This in turn meant that the big economic stimulus promised in fact never really occurred in Brazil. However, some local areas experienced growth due to the expenditure generated by the influx of tourists.
Furthermore, the world cup did have a big impact on tourism within the country, as in total 6.4 million international tourists went to Brazil that year, 10.3% higher than the figure in 2013. 770,000 permanent jobs and 220,000 temporary jobs were created to accommodate the mass influx of tourists. This overall led to unemployment falling to its lowest since 1993, at 6.8%, although unemployment
increased straight after the tournament, going back up to 8.5% in 2015.
With all that, the world cup was somewhat of a burden for Brazil as it did not reap a major long term economic boom. Furthermore, we could argue that for Brazilians the world cup ended in further tragedy as they lost 7-1 to Germany and got knocked out. For the rest of the world, however, it was one of the most entertaining and enjoyable world cups in the 21st Century, with great football, which we can only hope the same will be true for the 2026 World Cup.
Poyraz Evkuran
Independence for Wales: Economic Liberation or Fiscal Disaster?
Will Wales, if it becomes independent from the UK, be economically liberated, or will they enter an economic disaster? Key considerations, such as monetary, fiscal and market issues will be discussed in this article.
With the upcoming Senedd elections in Wales on 7 May, important questions have arisen over whether Wales should be independent from the rest of the UK. This question also persists in Scotland, with a close independence referendum in 2014, which narrowly saw Scotland remain as part of the UK. This is contemporarily relevant as Plaid Cymru are polled to record their highest ever seat-share in the Welsh assembly. However, there are questions over the economic viability of independence and the economic success of an act that would in the short-term likely be economically damaging to both Wales and the rest of the UK. Furthermore, for many people, economic arguments remain a side factor in their opinions on independence. Therefore, an economic basis will not act as the sole determinant of whether independence is successful.
independent government.
Simultaneously, Wales suffers from high levels of deprivation in some areas, ranking second out of the twelve regions on poverty rate. However, for median household wealth, Wales ranks fourth with £266,900. These statistics serve to suggest that Wales, despite sufficient wealth, lags slightly behind the rest of the UK in income and would have to absorb the burden of a high budget deficit, when independent. However, this adverse economic position has ultimately been brought about whilst Wales remains as part of the union; therefore, independence may catalyse increased investment and materialisation of the Welsh people’s higher median wealth, as a result stimulating AD and driving up Real GDP.
Firstly, it’s important to consider Wales’s current economic standing. This sits £10,000 below the UK average, with a GDP per capita of £29,316. Additionally, Wales’s key fiscal issue is that its budget deficit represents 20-25% of GDP. This would have implications for an
Furthermore, a deficit implies Wales is underfunded by Westminster, because the Barnett Formula (an initially temporary formula for calculating block grants to devolved governments) provides insufficient funds to finance Wales’s systemic issues of deprivation and poverty. The result from the deindustrialisation spearheaded by a Thatcher government which the majority
of Wales did not elect. Independence may serve to offset these outcomes with an explicit focus on tackling deprivation; however, it will be limited in its scope for reindustrialisation, considering the decline of the UK secondary sector.
However, independence, if managed ineffectively, could have negative effects if confidence collapses, triggering an economically damaged position. In an independent Wales an economically compromised position would occur due to a breakdown with the essentially integrated market of England and Wales. One-third of Welsh goods are exported to England; thus, exchange could be significantly hampered if tariffs were put in place, however this may not occur.
Furthermore, ultimately the lack of major economic infrastructure would likely discourage investment into Wales, unless significant reforms are made, such as the Irish corporation tax to 12.5%. This attracted large amounts of FDI and led to a rapid rise in GDP per capita. Therefore, if an independent Wales sought to attract investment, economic growth could be possible; however, in Ireland this did not massively translate into proportionate increases in living standards and therefore any structural decision would need to innovate uniquely.
Brexit. Recently, the Welsh people’s opinions seem to have changed, with 69% being in favour of rejoining the EU, compared to just 24% opposing it, according to YouGov. This exceeds the 54% of Welsh people who wish to remain a part of the UK, so would be more democratically feasible.
These economic implications could also be offset by maintaining free trade with the rest of the UK, or potentially, more viably, with Wales entering the EU, considering both larger market access along with less potentially sour relations. However, in 2016, 52.5% of the Welsh population voted in favour of
Currency also stands as a key transitional issue of independence; there are three plausible options: maintaining the Pound, adopting the Euro, or creating a new currency. The Pound would retain short-term economic stability for Wales but may limit economic independence for Wales. The Euro would again provide stability and better access to global markets; however, economic flexibility is still limited. A new Welsh currency could also be feasible and could provide more economic flexibility for Wales in the long-term. However, it would initially be highly volatile and if it lacked international recognition, would endanger the Welsh economy. Therefore, a decision would have to be made that could ensure economic stability; whilst also satisfying the longterm needs of an independent government. This is largely satisfied by the Euro, which would establish particularly strong trade links with Ireland. However, to reduce transition costs and instability, the Pound should be maintained initially, with an effective deal with the rest of the UK.
Overall, as the question remains hypothetical, the case for independence is ambiguous. In the short term the separation from the UK may heighten volatility, yet in the long-term outcomes depend on whether Wales can
economically establish itself The pathway to this would either be through EU integration or by maintaining a similar economic relationship with the (less) United Kingdom.
Albert Simpson
Immigration in America During the 19th Century
This article seeks to examine the impact that immigrants had on the future economic growth of America during its period of mass migration in the 19th century.
The 19th century is believed to be the most transformative period in America's history, in which approximately 20 million migrants from across the world entered the USA. This fueled the unprecedented growth that allowed America to be the global superpower that it is today. The years 1850 - 1920 represent the period of US history with the highest levels of immigration, with the majority of these migrants representing different races and cultures from southern, northern and eastern Europe. Immigrants fuelled the industrialisation of America by providing a large supply of labour for the growing manufacturing sector and agricultural farms, but also presented the US with specialised workers in all sectors, allowing America to progress in their knowledge of agriculture, architecture, technology, and education.
Immigration, similar to manufacturing enterprise, was concentrated within the Northeast and Midwest during this time, with roughly three quarters of these cities’ large populations composed of immigrants and their families. 70% of these immigrants were aged between 18 and 40, a significant contribution to the working population at the time. These migrants primarily arrived from Ireland, Germany, and the United Kingdom, and sought any available labour, mostly
physically demanding and low paying jobs such as digging canals, laying railroad tracks, and constructing roads and bridges. German immigrants in particular brought skilled tradespeople and merchants. These migrants not only filled high-skill gaps in a diversifying working sector, but also established many small businesses, such as breweries, printing shops, and manufacturing companies.
In the short term, there were numerous economic and social impacts. Immediate pressures were placed upon wages in low-skilled sectors and the labour supply outpaced demand significantly. In addition, dense urban areas struggled with overcrowding and a shortage of housing. However, the economic gains during the first few decades of mass migration were substantial, with foundational infrastructure having been built by cheap immigrant labour, most importantly the railways. This infastructure accounted for more than half of the increase in urbanisation rates in the US. But these migrant workers were faced with significant racial discrimination and much lower pay than their white colleagues.
The most significant long term growth factor within the American economy during the 19th century was the rise of
US manufacturing. Employment within this sector rose from 14% to 25% of the workforce, with it increasing from 2.5 to 10 million workers. This rapid growth from 1880-1920 relied heavily on immigrant labour. Roughly half of the absolute growth in the number of workers was due to first and second generation migrants. These immigrant families stimulated aggregate demand with the growth of housing, urban development and other amenities . Migrant innovation also provided a significant improvement in many sectors. The introduction of the Bell Telephone company by Alexander Bell, from Scotland, enabled nationwide communication and instant voice communication. Furthermore, the concept of kindergarten was introduced to the US by German immigrant Friederich Frobel. This is shown to have led to higher incomes. The United States patent system saw a notable surge in filings during these years, with many of the inventions and processes fueling American industrial dominance having been developed by first and second generation immigrants.
Migrants were also well-represented within the entrepreneurial sector, creating businesses that created employment, generated tax revenue and diversified employment opportunities. This was primarily enabled by the rapid urbanisation that allowed for such largescale commercial activity.
immigrant labour. Despite rising wages within manufacturing, the working conditions and urban life were not sufficiently attractive to many native born workers, who would have had to move from their secure and familiar rural homes to dense and polluted urban areas. Perhaps a further rise in wages and better working conditions could have attracted domestic labour to work in factories.
To conclude, Immigration during the 19th century was a central feature of the American economy. Migrants filled labour shortages and boosted productive potential beyond the level generated by the local population. In the long term, they founded businesses, drove urbanisation, expanded markets and led to the development of crucial technologies and ideas. Whilst wage competition and social strain between natives were real consequences, overall the long term economic benefit to America did not come at the high cost of social outcomes. The long run benefits of immigration were founded in the creation of economic activity in numerous job sectors, which allowed the US economy to rise and become the global superpower it is today.
Gabriel Ho
However an important question to consider is the extent to which native born workers would have been willing to enter the industrial sector without
Macroeconomic Populism
Populism promises easy solutions to deeply entrenched macroeconomic issues. It is not until populist governments are elected, that the electorate recognises the fatal underestimations in the populist macroeconomic approach.
Populism appeals to the majority, who feel their political sentiments have been disregarded. Populist politicians exploit this tension by suggesting that there are easy fixes to major economic and social issues, which the existing political ‘elite’ are supposedly unwilling to implement. In particular, the gross underestimation of underlying weaknesses in the economy leads to this phenomenon known as ‘macroeconomic populism’.
In 1990, the economists Dornbusch and Edwards were inspired by the histories of various Latin American governments in their research on why the populist economy inevitably fails. They split this worst-case scenario into four phases. The first begins with the implementation of populist economic policies, just as they were promised during the election. Populism thrives on the support of those who feel economically disenfranchised; high government expenditure and wage hikes create the illusion that the incumbent government has resolved long-standing economic issues in the early stages of their administration. This fiscal irresponsibility supposedly maintains voter support and momentum in the short-term.
Next, the second stage begins to expose inherent shortcomings in government overspending. Lower taxes, higher government expenditure, and higher wages mean consumers earn more.
Consequent increases in consumption are not matched by the productive potential of the economy. Such shortages are temporarily concealed using subsidies, which only worsen the budget deficit.
The third stage is characterised by excessive shortages in the economy. Price controls mean that production of high-quality goods and services is economically unviable. Capital flight ensues, because investors lose confidence in an unstable economy and financial assets exit the country. In an attempt to keep the local currency strong, the Central Bank may use existing US dollar reserves to buy local currency back. Depleting foreign exchange reserves hence results in a collapse of the exchange rate, where a black market for foreign currency is the only means of saving one’s wealth. Inflation leads to fears that prices will rise even further, leading to spending sprees that only catalyse the incidence of hyperinflation.
Lastly, a new government has to deal with economic instability. Brutal austerity measures stabilise inflation, and real wages hit their lowest. The workforce bears the brunt of poor economic policy, caused by the populists’ lack of fiscal responsibility.
Perhaps Peru is the most effective example of how this all works in practice. Economic growth was over 9% in 1986, and the popular President Alan García was convinced his revolutionary government was exempt from the usual economic trends. Freezing the Inti-todollar exchange rate could not prevent the actual demand for the dollar surpassing the demand for the Peruvian Inti. Similar to the trend identified by Dornbusch and Edwards, Peru suffered an inflation level of 1700% in the year following the nationalisation of privatelyowned banks. This was partly due to fears that the government could seize other financial assets, leading to capital flight, brain drain and withdrawal of funds from Peruvian banks. Moreover, government-owned banks began to lend based on political loyalty rather than the availability of collateral.
The nationalisation of banks was the last straw. It signalled the end of wellestablished confidence in the Peruvian economy, as well as a loss of faith in the populist macroeconomics of Alan García. Peru depended on last-resort loans given by the International Monetary Fund and the World Bank, which together totalled over $1 billion. Peru could not make the necessary repayments, and private banks refused to lend to them unless they did. Most worryingly, Peru was forced to print more currency to pay for domestic expenses. This only worsened hyperinflation.
inflation levels. And foreign investment began returning to Peru as a result of the renewed confidence in the economy.
The warnings of ‘macroeconomic populism’ do not solely pertain to the left-wing populism of 20th century Latin America. Right-wing populism also has similar detrimental effects on an economy. Trump’s tariffs have redefined the international economy, posing threats to America’s economic dominance. The historically stable US dollar fell by almost 10% by January 2026 from its peak the year prior, and US allies such as Canada are increasingly advancing trade with China. In a characteristically populist bid to demonstrate economic solidarity to his electorate, Trump may have forced economic allies away from American dependence.
Agalyan Sathiyamoorthy
The electoral ousting of García in 1990 left the new Cambio 90 administration with a ruined economy. Brutal austerity measures, including the reduction of subsidies and the complete removal of all exchange controls, stabilised
The Economic Impact of Hosting a World Cup: Qatar to the USA
Canada, Mexico and the United States had successfully fought for the right to host the 2026 football world cup following in the footsteps of Qatar in 2022. But will the billions they have spent boost their economies, or could it prove crippling?
First of all, recent hosts of the football World Cup include Qatar, Russia, Brazil and South Africa and it has had major impacts on their economies. For example, Qatar bid around $1.8 billion in order to host the 2022 world cup. This was an attempt to diversify and develop their non-hydrocarbon economy, so they could become more sustainable, and reduce reliance on their vast oil and gas resources. The bid was a very small proportion of Qatar’s decade-long $200300 billion dollar investment program, which aimed to transform their infrastructure. This investment enhanced output growth in Qatar by providing the right infrastructure for private investment and the creation of jobs for their population. This ultimately led to a 4.2% rise in Qatar’s real GDP in 2022. However, Qatar’s GDP peaked in 2022 at $235 billion and has now returned to $217 billion, which may suggest the world cup’s economic boost was only temporary.
Another positive impact of hosting the world cup for Qatar was the obvious boost to their tourism industry with around 1.4 million people visiting for the world cup. This was an average increase
of monthly tourists by 307%. This increase in tourism would have greatly helped Qatar’s economy as the tourists would be spending money on their travel, this was injected into the local economy and created more jobs. However, the rise in tourist numbers has not stopped as there was an increase of around 1.5 million tourists from 2022 to 2023 and also an increase of around 1 million tourists in 2024. This therefore highlights how Qatar’s investment in their tourism sector for the world cup has greatly boosted their economy.
However, will Canada, Mexico and the United States experience a similar economic boost this year? This year’s tournament is anticipated to make more money than any previous world cup, with the total revenue expected to be exceed $13 billion. It is anticipated that there will be a boost of $17.2 billion to America’s GDP and the event will potentially create 185,000 jobs, due to the large amounts of tourists benefiting sectors such as hospitality, transportation and retail. As well as bringing in tourists for the football, attention could be brought to host cities that previously had not been top tourist
destinations, giving these cities an opportunity to put themselves on the map. This attention could then boost tourism in these host cities beyond the world cup.
Although these impacts could benefit the economies of the host nations, regular tourists may avoid the host cities due to price spikes congestion. This could therefore cause some cases of negative tourism, which may not be economically beneficial. In addition, whilst the aim was that every host city would make around $25-30 million, costs per host city are expected to be around $100-$200 million as a result of necessary improvements on infrastructure. As a result of these massive costs, and the fact that Fifa’s sponsorships are so restrictive, these host cities are currently nowhere near their targets.
Therefore, despite the potential chance of a loss in some of the world cup host cities, the overall benefit could outweigh these costs as tourism and infrastructure projects should positively affect GDP. Ultimately, it is extremely likely that Canada, Mexico and the United States will benefit from hosting this year’s world cup and so are predicted to follow in the footsteps of Qatar’s success.
Dominic Stenning