The Future of the Panama Canal

If you were to ask an individual when he first heard about the Panama Canal, he would probably reminisce upon his grade school days and how it was touched upon in his history book. As children, we learned the basics about the canal and how it served both military and trade functions.

Primarily, we learned how the American-built waterway facilitated the trade route for ships traveling across the Atlantic and Pacific oceans, and how the canal operated as a shortcut for vessels that would typically have to navigate around the tip of South America to get from California to New York.

Certainly these are all valid reasons as to why the canal was significant. But, the canal held much more importance than just cutting the trade route distance for vessels traveling through the Atlantic and Pacific oceans.

Irrefutably the Panama Canal holds immense historical importance for trade in the United States and the world. The canal aided in expanding commerce in our country in particular. It allowed the U.S. to prosper economically while creating meaningful relations with other countries. Currently, it is estimated that 13,000 to 14,000 ships utilize the canal every year.

However, in recent light, the future of the canal was at question as the shipping and trade industry’s shift to megaships gained momentum. It is due to rising fuel costs and the global financial crisis that the industry sought preference in megaships.


But the Panama Canal’s original design is unable to serve megaships because of their great size. Originally the canal was engineered as a 50 mile-long passage that can lift ships 85 feet above sea level. The type of cargo ships that can safely navigate through the canal would be at most 304 meters in length and 33 meters wide. Megaships, on the other hand, boast a length of about 400 meters and a width of 59 meters.

Therefore, to accommodate the larger ships the Panama Canal is undergoing a $5.25 billion expansion project that would widen and deepen the existing passage way. The project is expected to be completed by the end of 2015 and is 93.8 percent complete according to the official website for the Panama Canal expansion. It is believed that the expansion of the canal will change the shipping industry’s current routes and hubs.


Jorge Luis Quijano, the Panama Canal Administrator, said, “The expanded canal will change global shipping, and is already beginning to do so.”

It is predicted that the expansion of the Panama Canal would directly affect the west coast of the United States as many of its ports, such as the Los Angeles and Long Beach ports, will lose market share.

With the industry’s current routes and preferred hubs, the Los Angeles and Long Beach ports handle an estimated 40 percent of the country’s imported Asian goods. But the expansion project in Panama could cost these two west coast hubs nearly 10 to 15 percent of their current cargo business.

Therefore, while Panama’s future looks bright due to its latest renovations, how will this affect the ports in the United States and what actions could they implement?

Many individuals have upheld the fear of losing business to the Panama Canal since the improvements on the waterway began in 2007. The Jobs First Alliance, which is a coalition composed of business, government and labor leaders have devised a campaign called “Beat the Canal!”.

So how do you combat the canal’s expansion project? The Jobs First Alliance would insist that the answer is modernization. The coalition has been fervently pushing that the Los Angeles and the Long Beach ports modernize as quickly as possible to beat the canal.

Four ways diplomacy is helping Finnish exports

Finland is a Northern European country with five million habitants. I’m one the five million. Until recently I have known shamefully little about my home country’s trade.

I knew that Sweden – our neighbor on the western side – is our biggest export destination, and that Europe’s economic giant Germany is a significant market as well.

But I wouldn’t have guessed that this year the U.S. bypassed Russia as the third biggest destination of Finnish exports.

Though it shouldn’t be a surprise.

Finland’s trade with Russia has stalled because of president Putin’s repellent expansion politics and the economic sanctions that EU has passed on Russia.


Finland – a small EU country and member in Eurozone –no longer has means to control its own economy with its’ own monetary policy as it no longer has its’ own currency. Many Finns now consider joining the monetary union was an unfortunate decision.

At the moment there is, however, one slight cause of happiness with weakening Euro, and that is the interest American buyers are showing towards Finnish products.

The overall exports of Finland have decreased at an annualized rate of six percent during last five years. During the first six months of year 2015, Finland’s exports to the U.S grew eight percent from the previous year. The markets of all the main export goods – electronics, machinery, ships and boats, paper and paperboard, refined petroleum products, and telecommunications equipment and parts – expanded, and the total value of Finland’s trade to the U.S is now €1.9 billion.


One man in Los Angeles is particularly happy and proud of the brightened prospects of Finnish products’ sales over the Atlantic. He is the consul general of Finland Juha Markkanen.

Markkanen has been in LA for three years focusing on helping Finnish companies to find buyers, investors and co-operations in the country.

He acts along Finnish governments (and previous governments) strategy. In 2011 the government of Finland created a project called Team Finland. Its’ goal is to bring together Finnish diplomats and government bodies with businesses and organizations to accelerate especially Finnish small and medium size companies’ exports. The whole staff of consulate of Finland in Los Angeles has reshaped its priorities since: they are here less for the foreign policy (that is done in Washington and more and more on EU level) and more for economic networking.

Processing passport and visa applications and issues are, of course, still an essential function of the consulate – but that, too, can be seen as clearing paths for the economic co-operation, says consul general Markkanen.

What else a diplomat does in order to accelerate trade?

Markkanen is a precise man and gives numbered answers.

Four ways how diplomacy is helping Finnish businesses to export.


One. The diplomat shares information. Markkanen and his consulate know all the details of legislation and agreements concerning the trade between Finland, EU, Eurozone and the U.S. The consulate helps business people with their concerns with trade tariffs and possible barriers. Equally important is to advice people how to approach the market. For that, Markkanen has created “ten commandments”: 1. Networking is key. 2. Visit the US early, often, and before you have a final product. 3. Ask questions, lots of them, and then ask more. 4. Local presence is crucial. 5. Work with local players. 6. Pick the best partner, never the first. 7. Be swift (24-hour-rule). 8. Be patient and think long-term (follow up). 9. Do the sales/marketing in the US way. 10. Give the market what it wants, not what you think it wants!


Two.  The diplomat offers connections. Consul general Juha Markkanen shows the folder where he has collected all the business cards he has got during his years in LA. There are hundreds of them. Consulates mission is to find networks and to connect Finnish professionals with Californian counterparts.


Three. The diplomat makes visits and organizes them for others. Markkanen points out lines of Finnish business that he thinks have nowadays particular potential in California: 1. Clean tech. 2. Health and wellness. 3. ICT. 4. Creative industries.

He wants entrepreneurs from those branches to know the hubs in California -LA / Silicon Beach, San Francisco / Silicon Valley and San Diego – and otherway round.

He visits these hubs and lobbies for Finnish innovations. When the consul general asks for an appointment with, companies and organizations usually find time for an appointment.

The Finnish consulate recently organized stage time for pitching for five Finnish clean tech companies in a big clean tech conference in LA.


Four. The diplomat uses his residence. The residence of consul general is a beautiful, big house. The foreign ministry of Finland does not buy or rent these kinds of beautiful big houses for its’ diplomats just because diplomats should have a nice home abroad. Juha Markkanen hosts numerous events in his residence where he brings together Finns and Americans. He may allow Finnish business delegations to organize meetings or conferences in his residence. He invites and receives Finnish groups over in LA.


Before I met consul general Juha Markkanen, I had a very vague image of what a consul general does. Now I know that he is an ambassador of Finnish exports.

Though that shouldn’t be a surprise.

If I was to expand my (imaginary) business from Finland to California, who would I contact to have advice? The consulate, surely.

The Influence of a Logo

When you hear the word “McDonald”, what is the first thing that comes to your mind? 99% of the time it will be the iconic golden arches. The logo is often the first thing customers think of or associate with a brand when the brand name is mentioned. Nonetheless, many brands often ignore or underscore the importance of their logo and economic implications it can have.

In October, 2010, Gap, a multinational clothing retailer, decided to change its signature logo from a blue square with white “Gap” in the middle, to a unfamiliar logo where the word Gap is written in black with a small blue square overlapping with the “p”.

The customers were not happy about the change. Shortly after the debut of the new logo, GAP received large amounts of negative feedback and backlash on its social media platforms, with many comments asking to bring back the original logo and stating the refusal to shop with GAP. One of the comments on Facebook wrote, “This is the worst idea Gap has ever had. I will be sad to see this change take place, if this new logo is brought into the store I will no longer be shopping with the Gap.”

The company argues that it changed its logo in order to build a stronger connection with its target audience, the millennial generation. However, considering the lack of support from its online community and unfavorable comments from its target audience GAP made the decision to return to its original logo within a week.

A brand’s logo serves as a means for the company to communicate its value and emphasize its uniqueness to its customers. “A good logo can be a synthesizer of a brand that is readily used by customers for identification, differentiation and positive associations.” According to an article from MIT Sloan Management Review, an effective corporate logo relates positively to customer’s commitment to the brand.

In September 2015, Google changed its old logo, serif typeface, to a new logo, a san serif typeface. The original logo was created in 1999 and even though Google has made minor changes to the original logo, changing the typeface is the first major move the company has made in the last 16 years. Besides the change from serif to san serif, Google transformed its logo from words to an animated symbol, with red, blue, orange, and green dots.

Why did Google decide to change its logo at this moment? Some speculate that Google is trying to change its brand image from a dull search engine to an interactive and friendly portal that is capable of leading you to anything and anywhere. According to the article ”Google’s New Logo Is Trying Really Hard to Look Friendly”, Google wants its users to see its brand as a benevolent guide to this new world, one that considers humans, not machines, argues Rhodes.

Positive and negative reviews came along with the change of Google’s logo. For some, the new logo brings positive energy and refreshes Google’s brand image. “…they’ve modernized the logo in a way that feels very true to who they are and what they stand for.”, said Debbie Millman. For others, the change is unnecessary and superficial. “It’s almost this fake, artificial intelligence, the machine trying to act like your friend. And when Google as a corporation tries to do that, they sound like an automated friend-bot.”, said Ellis.

Although it is difficult to mathematically calculate the success of a logo change and its underlying affects, one thing that we know for certain is that logos certainly play an important role in brand and its implications will, positive or negative, will trickle down.

The Growing Exports of Air

When cargo ships arrive to the Port of Los Angeles they are typically full, but what do the containers ship when they leave? When an Economist named Michael Keanan on a Port of Los Angeles boat tour was asked this question, there was no hesitation with his answer of “air”. Most often when cargo ships leave the Port of LA, there are many empty boxes, because China imports more than the U.S. exports back. With the recent setback of China’s economy, the rise of empty containers is at an all-time high for U.S. exports and has become a concern.

Michael Keanan elaborated on how cargo is brought in from Asia to provide for an entire nation, while the U.S. exports typically come from the mid-west and are in lower quantities. The economist continued explaining why cargo ships arrive full but half of them leave empty.  “When containers leave, half the containers are empty,” Michael said, “the other half are filled with low value items such as scrap metal, waist paper and agricultural products like soy beans, hay, and grains”. The items received from Asia are higher in number and more profitable then the goods leaving the U.S, which is one of the reasons why only half of cargo boxes are full.


A recent article by the Wall Street Journal called At U.S. Ports, Exports Are Coming Up Empty made a statement about how one of the fastest growing U.S. exports is air. The article continued to discuss the current weak demand of troubled global markets and the tough sales American exports face abroad.

China’s cooled economy has effected outgoing exports and U.S. exporters find it tougher to make foreign sales. The Wall Street Journal article claims that the stronger dollar that makes American goods more expensive has a part in the slowing. When shipments leave the Port’s to return to Asia, they carry the waist and agricultural products that were mentioned earlier. However, these items have declined in loads.

The Port of Long Beach is one of the busiest ports in the country and September was the strait 8th month that empty containers leaving the port outnumbered those loaded with exports. Long Beach and the Port of Oakland both reported its exports of empty containers doubled and this year empties are up 20% from last year. The Port of Los Angeles empty outbound containers is up 21% compared to this time last year as well. These ports are suffering the most because they are heavily tied to trade with China.

An economist, named Paul Bingham, told The Wall Street Journal the decrease in exports that reflects economic weakness goes beyond China, it shows slowing demand in Europe as well. He also mentioned the Commerce Department stated that U.S. exports fell 2% in the month to their lowest level since October 2012.

While empties outnumbering loaded containers is beginning to be a concern, it will become a bigger issue if numbers don’t decrease within time and the U.S. continues to struggle with sales on its exports.

The Significance of Three Percent


The field trip to the Port of Los Angeles solidified a number of the concepts we’d discussed in class with respect to international trade, but one particular aspect left me with more questions than answers: security.

Even with the massive number of containers being unloaded off multiple cargo ships, the port included only one relatively small area in which the contents of containers were checked. Otherwise, they were stacked, and loaded as efficiently as possible to get them onto trucks to have their contents distributed as quickly as possible.

According to Rep. Janice Hahn (D-Calif.), who introduced legislation that would reserve federal funds to improve port security, only three percent of incoming cargo is scanned.

With the passage of the Trans-Pacific Partnership, which will further open up US trade with other nations along the Pacific, west coast ports are likely to see a surge in traffic. Does that mean three percent turns into two or one?

Hahn’s Scan Containers Absolutely Now Act, commonly (and fortunately) known simply as the SCAN Act, was introduced in the House a little more than a year ago and, from a brief news search, was never heard from again. Despite the ridiculous name, the bill points to a very real—and thus far, unaddressed—issue.

We spent two hours touring and having multiple people tell us how critical the port is to the US economy and, by extension, the world. A trade agreement that will increase the amount of traffic to the west coast’s busiest ports has been passed just ahead of what is already the ports’ busiest time of year.

Did I mention that more than 95 percent of containers passing through ports go completely unchecked?

Given the US’s often frosty relationship with growing economic power China, that country’s increasingly friendly relations with its neighbors (see: Regional Cooperation Economic Partnership) and rising global tensions that include what basically amounts to a proxy war with China’s neighbor Russia, is it really that far-fetched to think that negligence on port security might be an actual problem?

Of course, authorities assuredly have security measures in place that are invisible to the public, but given the fact that local legislators felt the need address it in Washington, it seems that an issue may remain.

It just seems from the outside that the level of oversight doesn’t match the relative importance of the ports to global trade. Given the short-sightedness of most legislators, that seems unlikely to change.

The TPP and the Port of Los Angeles

2015-10-13 10.49.17On October 5th, 2015, the United States and eleven countries in the Pacific Rim finalized a trade agreement after five years of negotiations. Since the release of information surrounding the agreement, many people now know it contains a range of international trade issues including comprehensive market access. According to the Office of the U.S. Trade Representative, the Trans-Pacific Partnership will eliminate or reduce tariffs and other trade barriers in order to create new trade and investment opportunities for businesses and consumers.

Seaports, which constitute a major part of the U.S. economy when it comes to exports, have the potential for the most growth from the reduction in tariffs. The American Association of Port Authorities says for every additional $1 billion in exports shipped through U.S. seaports, U.S. jobs increase by 15,000. The Port of Los Angeles, for example, has a special position as one of the major ports connected with Asia and the Pacific Rim. Michael Keenan, the director of planning and strategy at the port, believes services industries at Long Beach and in Los Angeles as a whole have a positive future ahead as trade rises.

“There are about 15,000 longshore workers that support the Port of Los Angeles and Long Beach,” said Keenan. “On top of that, there’s a huge number of railroad, warehouse and logistics workers. Trade through the port supports about 190,000 jobs in the region and under an engrossed growth scenario with the TPP, we see that number going up.”

Before the Great Recession, exports coming into Long Beach were growing at 10 to 12 percent. The financial crisis brought cargo activity down to about 3.5 to 4 percent. Keenan looks at the TPP as a way to not only boost cargo activity, but the amount of jobs in the city of Los Angeles.

Another interesting part of the Trans-Pacific Partnership was the exclusion of China from the negotiations. Although China is a major trading partner with the U.S., Keenan does not think the TPP will have an effect on trade with the Asian country. However, there could be greater opportunities for smaller countries in the region.

“I think a lot of China’s neighbors are interested in being part of an agreement that offers them a set of advantages against China.” said Keenan. “If you’re trying to be competitive against the big dog on the street, the best way to do it is to find a set of friends who have that same interest. It offers our other friends in Asia a closer relationship with the U.S., which helps us.”

Despite the positive results of the multi-part agreement, there are some downsides to the TPP in relation to the ports. The U.S. economy continues to grow stronger, but its trading partners’ economies have grown weaker and it makes goods from the United States less competitive in the global marketplace.

“I think that’s the bigger challenge. Something like TPP that offers offsetting advantage could certainly help us, but the biggest driver for exports is going to be shared growth where other countries develop stronger economies and they can buy more of what this country produces. I have high hopes we’ll be able to see that within the next five to ten years.”

Uber takes a bite out of the Big Apple

By Alexa Ritacco


My mother calls Uber “the magic app.” She loves that with just a touch of button you can call a ride that could arrive in just minutes. Not to mentions the completely digital, cashless transaction that makes for a smooth ride, with no awkward moments or hesitations when it comes to tipping.
As a college student in LA, Uber has become an essential way to get around, especially when it comes to nightlife. Coming out of a bar in Downtown LA, the streets are normally lined with dozens of Ubers and Lyfts waiting to pick up their passengers. This is a completely different picture than what existed just a few years ago. It even has its own verb now.
“Oh yeah, let’s just uber.”
“Going to uber over now!”
“No, I ubered.”
Founded in 2009, Uber now exists in sixty countries, and over three hundred cities. In just 6 years Uber has become a globally used and extremely well-known app. But global success does not certainly mean global acceptance. Resistance to the ride sharing service has come about from all angles. Some consumers think the service is sketchy.

“I don’t know, I just get a bad feeling about it. You’re getting into a complete stranger’s personal car. What if they’re a creep? What if someone tries to take advantage?” said Alexis Colner, a senior at USC. Colner’s not alone in her sentiments. There have been countless reports of harassment, extortion, and sometimes even robbery, and Uber’s response to such reports have been pretty mixed. But others view Uber as the lesser of two evils.
“I would much rather hop in an Uber than a taxi cab,” said NYU student, Elizabeth Gurdus, “Taxi drivers are so incredibly rude, and never take me the route I want to go. Uber drivers have a rating incentive to make my experience at least somewhat pleasant, and generally that’s been the case in my experience.”
While consumer perception has been an issue, the most resistance to Uber has come from Taxi cab drivers, as well as local city legislation. New York City, a place known for its thriving taxi sector with the infamous yellow cabs, has seen quite a bit of controversy surrounding Uber and other ride sharing services.
Uber launched in New York in May of 2011. Since then, the service has exploded, having given millions of rides to New Yorkers, and employing over 30,000 drivers. And it has been driving the NYC taxi drivers absolutely insane. Many drivers claim to be taking a hit financially, and feel that it is completely unfair that Uber just waltzed in one day and began stealing customers. They feel betrayed by New York City for letting this go on.
For so long, they were the only ones on the market for private transportation around the city. If a New Yorker wasn’t taking the subway, bus or personally driving themselves, chances are they were taking a taxi. And really, that was their only other option. Now suddenly, the consumer has quite a few options when they’re strapped for a ride. Rather than stepping out onto the sidewalk and hailing a cab, they very well may be whipping out their phone and calling for an Uber or a Lyft. The transportation market has changed completely, and now Taxis are dealing with some very hungry competitors.


Taxi medallion owners have put a lot of pressure on Mayor Bill de Blasio’s administration to help them and act in their favor. Satwinder Singh, ad NYC Taxi Medallion owner gave this analogy in a New Yorker article, “The city is the father and mother. They created the yellow cab as the baby. Now they’re refusing to take care of it!”
Another owner Lal Singh continued the analogy citing the fifty cent tax that is charged on cab fares that goes directly to the MTA. “We’re giving them eighty-five million dollars a year! And yet everybody accepts Uber is the stepfather and all the politicians are the stepsons!” he said.
After much badgering, de Blasio pushed to start regulation and capping on Uber in NYC in the late Spring of 2015. The legislation would basically limit the amount of Uber drivers that could be in New York City at all times, and prohibit any further growth of the company in the city.
This launched Uber into full on defense mode. They put out countless adds dissing taxi cabs, attacking their well-known racist stereotyping practices, as well as pushing all of the different types of services they offer, ranging from Pool to Lux. They rallied support from consumers in the form of petitions and protests, and even got a view celebrity endorsements via Twitter, including Kate Upton, Neil Patrick Harris and Ashton Kutcher.

Screen Shot 2015-10-17 at 12.36.52 PM

It came as no surprise to many when de Blasio decided to halt his efforts to place a cap on Uber while further studies were conducted to see really just how hard Uber is hitting the transportation market. Obviously this infuriated NYC cab drivers and launched them into a series of protests. Some of the leaders of these protests have gone as far as to suggest emulating what cab drivers in Paris did in response to Uber, which included blocking major intersections and entrances to airports. But until something drastic happens, for now, it looks like Uber will not be leaving New York anytime soon.
Since Uber is still a private company, it is pretty difficult to tell just how much of an impact they are having on the transportation market. But by looking at employment numbers, leaked reports and the cab side of things, it is pretty easy to tell that Uber has made a giant mark on the Big Apple.
It has been noted that the number of abandoned taxi cabs in Brooklyn outside of dispatcher offices has been on the rise. Many drivers have reported that they jumped ship for Uber. By doing this, they lose the worry of paying the lease on their cab, and the countless other fees that cab drivers that don’t own their own medallions have to pay.
In November of 2014, it was leaked that Uber was set to generate $350 million in revenue for that year. It could have only grown since then, as Uber has expanded over 14% in NY over the past year.
A New York Post article reported that as of October 2015, 30,000 Uber drivers are employed in New York, and that they could be making an average of $40 per hour.
Based on all of these factors, there is no doubt that Uber has taken a large bite into the transportation market in New York City. So will this mean the end of taxi cabs in NY? Of course not. But this situation has forced taxicab companies to start thinking more forwardly. It has been reported that they have been developing apps similar to Uber for cab drivers to being using. Features would include GPS based fares as well as a possible rating system.


Uber has totally woken up what was a sleepy transportation market in New York. Only time can tell what will come of the industry, and if these two competitors will ever be able to peacefully coexist.


Why The Hollywood of the South Keeps Getting Bigger


Since the arrival of Iron Man, Marvel Studios has built a major platform for distributing profitable movies. In the summer of 2015, they introduced a new superhero called Ant-Man. In its opening weekend, the movie earned $177 million at the domestic box office. Forbes Magazine reported the movie actually made more initial money than previous films like Captain America: The First Avenger.

However, the most impressive feat the film pulled off was becoming the cheapest film to date in comparison to previous Marvel Studios productions. One of the biggest blockbusters of the year cost $130 million to make and a majority of the budget was spent in one city: Atlanta, Georgia.

Tax incentives and more job opportunities continue to shift the established economic model of strictly Hollywood filmmaking. The increasing number of runaway productions, or movies filmed in other states for economic reasons, has given other states some advantages and disadvantages in the lucrative film business.

Inexpensive filming locations, like Atlanta, are fast becoming a favored spots to make a movie, but the city also has the potential to become the new entertainment capital of the United States.

Why did Georgia want a piece of the film industry pie?

Before the earliest introduction of tax incentive programs, films were made in locations outside of Hollywood for creative reasons. Some films and television programs today still follow this procedure, such as the HBO series Game of Thrones, which films in Ireland and Spain to reflect the locations in the original novels.

In 1997, everything changed when Canada introduced the Production Services Tax Credit program. According to the Department of Canadian Heritage, the program was designed to promote Canada as a less expensive place for film productions to take up shop. The Canadian government created a 16 percent tax credit to alleviate the expenses productions usually incur in Hollywood. Tax credits are tax incentives created by states and countries to remove a small amount of the income tax productions companies owe the state or country. As a result, Canada started looking like a cheaper place to invest in both television and film.

Screen Shot 2015-10-28 at 9.12.58 AMIn the last several years, Canada has built a large repertoire of foreign film productions, with many coming from the United States. Between 2010 and 2011, about 33 percent of film and television production in Canada was through foreign production
companies. Once the Canadian government started their program, runaway productions began to affect the United States.

A 1998 study conducted by the management-consulting firm Monitor Deloitte revealed 285 of the 1,075 films recorded for the study were economic runaways. Due to almost a third of productions moving out of state, the U.S. lost $10.3 billion, which combines the loss in direct production spending and the loss in spending and tax revenues.

Today, 37 states including Georgia have similar tax incentive programs because of the growing fear of runaway productions in places like Canada. More states now compete to counter the massive success of their neighbor to the north. In a sense, Georgia began its own program about fifteen years ago because every other state had the same mentality: If Canada can have the same economic benefits of Hollywood in California, why can’t I?

Screen Shot 2015-10-28 at 1.32.06 AM

(Courtesy: California Legislative Analyst’s Office)

A Brief History of the Georgia Film Tax Credit

Since the 1970s, Georgia has been the location for several movies, television shows and music videos. Famous films like Deliverance, Fried Green Tomatoes, Forrest Gump, and Remember The Titans all found their home in and around the state capital Atlanta. Although Georgia had a steady amount of film production for a number of years, it was not until 2001 when the state government became more interested in capitalizing on the filmmakers interested in heading south for cheaper production opportunities.

The Georgia General Assembly passed legislation in 2001 exempting the television and film companies from sales and use taxes on production expenses. This meant productions did not have to pay taxes on the film equipment they needed and bought in the state. In 2005, the creation of the Entertainment Industry Investment Act allowed out-of-state production companies to apply for a 9 percent base tax credit for productions over $500,000. The state income tax in 2005 was set at 35 percent, but with the 9 percent tax credit it meant larger productions only had to pay 26 percent. In addition, the law gave another 3 percent tax credit to filmmakers who spent money in poor and rural counties or on income paid to Georgia residents.

As film production declined in 2006 and more states like Louisiana and North Carolina began constructing their own incentives, then Georgia governor Sonny Perdue was quick to revise the law in 2008. He expanded the tax credit from 9 percent to 20 percent. Additional incentives included another 10 percent for placing a Georgia logo in the finished film. The potential to receive a 30 percent tax credit for working in Atlanta instead of Los Angeles started to become more lucrative for production companies.

Screen Shot 2015-10-16 at 1.32.27 AM

Three Reasons Georgia has (arguably) the Best Tax Credits in the U.S.

1. Transferable Tax Credit – Georgia is one of 14 states who offer transferable tax credits, which allows production companies with tax credits exceeding their tax liability to sell the credits to other taxpayers. Since most productions companies coming from out of state do not have tax liability, tax credits in Georgia have a greater value.

2. Multi-Year Tax Credit – Georgia has a carry-forward period of up to five years for tax credits. This means production companies have up to five years to claim the tax credit against tax liability.

3. No Production Caps – Production companies can request unlimited tax off-set liability. This means Georgia has a better chance of attracting big-budget movies capable of bringing in large amounts of revenue.

Criticisms of the Georgia Film Tax Credit

This past summer, Georgia governor Nathan Deal announced film and television productions made $6 billion for the state during the fiscal year 2015. Some critics argue this number is inaccurate because the direct spending in Georgia this past year was $1.7 billion. The Atlanta-Journal Constitution reported in August the state economic development department uses a specific multiplier, 3.57, to estimate the economic impact of film production. Officials from the department said they were unsure of the credibility of the multiplier, even if it did supposedly quantify the revenue generated by production companies.

Another big issue in the film tax credit world is whether tax credits are a form of corporate welfare. Corporate welfare refers to a disproportionate amount of tax breaks given to corporations rather than groups in need of the money. The Tax Foundation, a non-partisan research group from Washington D.C., released a report in April 2015 saying state tax incentives actually cost states revenue and can increase taxes in other areas of their budgets.

Runaway production has also had huge impact on the people working in the film industry. As more production companies are making places like Georgia their home, more workers based in Los Angeles get hurt by the constant maneuvering of out-of-state production. However, the workers are trying to fight back. Last year, Variety reported Los Angeles-based visual effects artists launched a campaign to get the U.S. government to place a tax on countries taking away business by subsidizing labor costs. These actions indicate the constant traveling of film production workers has taken a toll. In the race to have the best tax incentives of any state, Georgia is also alienating some members of the industry with their lucrative tax credits.

Goodbye Hollywood, Hello Y’allywood

The film industry in Georgia continues to flourish today as more production companies decide to not only shoot movies, but also take up shop in Atlanta. Pinewood Studios Group, a multinational film facility company based out of the United Kingdom, opened Pinewood Atlanta Studios in 2014. It was the primary filming location for Ant-Man and, according to its website, will now serve as the filming location for the upcoming Captain America sequel.14819408718_068fbb88f8_b

The sharp rise in the tax incentives has also had an equally dramatic effect on the number of productions. The chart above shows, between approximately 2003 and 2005, there were less than 5 film productions in the state. In a statement released by the commissioner of the Georgia Department of Economic Development in July 2015, the state had 42 productions filming at the same time. He argued more than 100 new businesses flocked to Georgia since the expansion of the tax credit in order to support the industry. Although the economic impact of film and television production appears to be heading in the right direction with greater job opportunities for multiple businesses, there are still major issues Georgia faces as it builds its identity as an entertainment powerhouse.

Issues Facing The Georgia Film Industry Part 1: Suitable Workforce

In June 2015, the Motion Picture Association of America reported the state film industry provides over 24,000 jobs and pays local workers over $1.68 billion in wages. In addition, the MPAA said the average salary for a worker in the industry is $84,000.

Well-paying jobs are bringing in a greater number of local people seeking employment, but the industry lacks the proper workforce to keep film production at a high standard. In the earlier days of the Georgia film incentive, the major challenge for the state was how to keep people within the industry to build their careers in Atlanta. Production companies would import people in from Los Angeles to do the work needed because Georgia did not have enough local citizens who had the skills needed to be successful in the industry. Today, Georgia continues to struggle with this problem. An NBC News article published in September revealed industry executives in Atlanta wanted to hire people from within the state, but instead were forced to look everywhere else to get the necessary workers.

However, recent events indicate Georgia may have found a solution: The Georgia Film Academy. The academy reflects a growing need for film industry training and education. According to the Atlanta Business Chronicle, Kennesaw State University professor Jeffrey Stepakoff was chosen to head the program, which will work in conjunction with university and technical college systems in the state. The academy will offer certification for entry level positions in the film industry in order to give people an opportunity to land a job with specialized skills. In addition, production and studio companies are taking notice of the new initiative. Pinewood Studios is the first major partner of the academy, which will give students the chance to get hands-on experience on real film sets as part of their classes.

How can Georgia measure job success in the film industry?georgia-table__140521200918

Georgia is a right-to-work state, which means any workers can work for a living with or without joining a union. However, in the last several years, the number of people joining film worker unions in Atlanta has grown dramatically. (U.S. Department of Labor) These numbers suggest a shifting trend in the industry from imported workers from the west coast to local workers with more expertise in film production.

Issues Facing The Georgia Film Industry Part 2: Competition

Another obstacle for the Georgia film industry remains the stiff competition with different states and Hollywood itself. A year ago, California governor Jerry Brown signed an expansion of the film and television tax credits. The main goal of the legislation was to triple the size of the tax credits to $330 million and reduce the amount of production that was leaving the state. In an interview with the Atlanta NPR station, the communications director for Los Angeles mayor Eric Garcetti explained how the employment gains in states like Georgia puts middle class jobs in California in danger.

1297368677-film_incentive_mapOther states, such as New York, New Mexico, and Louisiana, have similar ambitions to Georgia. They want a piece of the $57 billion dollar film production pie in the United States. In the state of New York, the tax incentives were raised to 30 percent in 2008. In New York City, the potential tax credit is now 35 percent, which is much higher than Georgia. In New Mexico, the tax credits sit at 25 percent, but the state established a Film Crew Advancement Program, which reimburses 50 percent of wages of local workers for hands-on training. Georgia will begin its own program, the Georgia Film Academy, in January 2016. Louisiana began offering refundable, permanent and transferable tax credits in 2002. Similar to Georgia, increased film production enabled the state to expand its infrastructure and labor force.  Overall, Georgia faces stiff competition for film production from around the country. However, their goal of trying to become one of the top five film destinations in the country and the distinct perks of the tax credits compared to other states like California does give Georgia an edge over the competition.

The Future of the Georgia Film Industry

Despite various roadblocks, the film industry in Georgia continues to expand to attract more people. There are several reasons why the film industry will remain vibrant in Georgia.

The construction of more film studios brings in more foot traffic to the area. According to the Atlanta Journal Constitution, close to 80 film industry companies relocated or expanded to Atlanta in the last six years. Several production companies and real estate developers have chosen Atlanta as their base of operations, including Jim Jacoby. He plans to build a 5 million square foot production facility catering to film, television, and video game development. The massive Atlanta Media and Campus and Studios would include sound stages, offices, and classrooms.


Financial stability of the state film industry will play a huge role in attracting more people to turn Atlanta into the new Hollywood. Some states, like California, expanded their tax credits, while others are now looking to eliminate incentives all together. In addition, the film industry could succeed because of the mass migration of several other businesses to the area. Service industries, such as tourism or catering, could see a large boost in profitability as the interest in films produced in Atlanta expands further.

State identity could be another reason why the film industry succeeds. Georgia has a variety of shooting locations needed for different films, whether its an urban or rural environment that would be needed. In addition, Atlanta is home to Hartsfield-Jackson International Airport, which holds the title of busiest airport in the world. The airport has direct flights between Los Angeles and Atlanta several times a day, making travel accommodations for the cast and crew of a film fairly easy.

Georgia is in the midst of a major shift in its emphasis on the entertainment industry, but the future looks bright for the state as it embraces more alternative methods to make it the Hollywood of the South.

Iran to Fuel its Growth: Remergence in Oil Markets

Post Iranian Revolution, the Islamic Republic of Iran has continued to be in a state of unrest. The country’s political and economic instability has resulted in several accusations made against it. From entities accused of supporting terrorism (2001), to nuclear proliferation (2005), to officials in the government responsible for serious human rights abuse (2010), Iran has been at the forefront of violation of international laws. Consequently, in 1995, the US implemented sanctions against Iran that extended to companies dealing with the Iranian Government. Additionally, in 2006, the UN levied economic sanctions against Iran as a result of the country’s refusal to suspend its uranium enrichment program. The nail in the coffin was when the Congress issued the Accountability and Human Rights Act, 2012, targeting companies conducting business with Iran’s national oil company. “These sanctions have significantly hurt the exports of oil, which contribute to 80% of the country’s revenue,” said Mr. Wayne Sandolhtz, Professor of International Relations at University of Southern California. Sanctions on Bank of Iran and Iranian financial institutions have curbed the flow of capital into the country. Reduced foreign investments have further contributed to the declining growth. Consequently, the sanctions have disrupted supply chains, contributing to higher operating costs. High costs and reduced investments have forced companies to lay off workers. As a result, the economy has been severely damaged. Inflation is at 40%, with prices of basic food and fuel expected to further soar. Unemployment lurks at 10.3%, with unofficial figures rising to 35%. Recent sanctions (2012) have taken a toll on Iran’s growth, with the GDP figures estimating a drop by 20% from 2012. However, with Iran agreeing to restrict its nuclear program, an opportunity for future economic success has presented itself.

The recent conference in Tehran concluded on a nuclear deal agreed between Iran and the six economic giants: Britain, US, France, Germany, Russia and China. Iran agreed to limit its uranium enrichment program in return for the sanctions being lifted. New contracts were launched at the conference, with Iran expected to initiate 50 new projects in the coming year. “The deal will increase production by 500,000 barrels per day,” said Syed Mehdi Hosseini, head of the country’s oil contracts. This deal has major implications for Iran as it opens a door for reentry into the global oil market. The country can now attract foreign investors who will supply capital to the economy. This will bolster growth, primarily through rise in production and exports of oil.

Project 1 (2)

According to the BP Statistical Review of World Energy, Iran leads the world in natural gas reserves and is fourth in oil. Influx of Western and European investment and technology could revive an industry that in a decade of sanctions has lost much ground to its rivals. “Since the sanctions in 2012, Iran’s oil production has dropped more than 20%. Meanwhile, Iraq has increased its production by 70%, where as Saudi Arabia has been pumping at near record levels,” said Mr. Gaurav Mukherjee, Professor of Applied Statistics at University of Southern California. “The country is currently producing 2.9 million barrels a day, and has a capacity to produce 4 million barrels a day. To fulfill this potential, Iran will require more investment than what the National Iranian Oil Company can muster. This opens the door to increased foreign investment.” The deal provides the perfect platform for influx of investment to aid Iran to step back into the oil markets, and challenge its competitors to gain back the lost share. The new contracts will increase daily production by 500,000 – 800,000 barrels per day, which will significantly boost the countries exports.

Screen Shot 2015-10-09 at 3.18.47 pm

Iran will now become the largest country to rejoin the global marketplace since the breakup of the Soviet Union. Energy sector companies and business from other sectors have already travelled to Iran to seek market opportunities since the agreement to lift sanctions. “Iran holds potentially interesting promises and perspectives. We have to see how the market will develop,” said Shell Chief Executive Ben Van Beurden. Iran is already in contact with former oil buyers in the European Union – traders such as Vitol Group and big oil producers such as Royal Dutch Shell PLC, Total SA – as well as existing importers in Asia. Although Iran will welcome foreign capital, it will be careful on the manner of negotiations. “Iranians are likely to seek deals in which they pay a fee per barrel for the output increases achieved by Western companies’ technology and investment,” Professor Sandolhtz. However, with the assured backing of foreign investors, Iran is likely to make a strong statement in the global oil market. In addition to increasing supply to 3.5 millions barrels per day, Iran will experience an influx of foreign technology and ideas. This combined effect is predicted to raise Iran’s economy by 2 percentage points, to more than 5 percent GDP growth within a year. After an additional 18 months, GDP growth could reach 8 percent. With new channels to trade, easy access to raw materials and technology will improve efficiency and reduce cost of operations. This will help combat rising prices. Additionally, investment and consequent growth will also provide more jobs in the economy, hence chipping off on the high levels of unemployment.

In the global oil markets, Iran will benefit from increasing leverage. The sanctions restricted Iran’s exports of oil to limited countries. Iran heavily relies on China as a consumer for its oil supply. More than 15% of Iran’s oil is shipped to China. Additionally, due to limited access to global markets, Iran imports 35% of its gasoline from China. Hence Iran is significantly dependent on China for the functioning of its economy. Consequently, this reduces it power to dictate terms. However, with increased consumers, Iran is likely to enjoy an improvement in its economic position allowing it to have leverage in negotiations.

Scaling back sanctions will help Iran keep its best and brightest at home. From 2009 to 2013, more than 300,000 Iranians left the country in search for better job opportunities. Today, 25% of Iranians with postgraduate live in developed OECD countries outside Iran. This is a significantly high rate of “brain drain”. According to the World Bank, Iranian economy loses out on $50 billion annually as local talent look elsewhere for work. Iran’s GDP last year was US $368.9 billion. Hence, retaining its talented workforce will have a substantial impact on Iran’s growth. With access to high levels of investment and technology, the Iranians will regain confidence in their economy, willing to take their chances at home.

Although the economy will be brimming with optimism, it is important to acknowledge that lifting sanctions does not mean all players will invest in the economy. American oil companies, in particular, are subject to tighter restrictions than their European counterparts. They are likely to be far more cautious in their activities. Furthermore, oil experts predict that it may be some time before major oil and gas projects get underway. “The level of interest in Iran will be high, but actual investment will be slow,” Professor Mukherjee. Additionally, Iran cannot immediately increase its production to its predicted capacity of 3.5 million barrels per day. This will create an oversupply of oil in the market, dropping the price of oil, and hurting several economies in the Middle East. Hence, Iran must slowly work towards its target, which means realizing slow and steady growth.

The nuclear deal has raised interest elsewhere in the Middle East, with Iraq and Saudi Arabia keeping a watchful eye. The reentry of Iranian oil to the global market could lower 2016 forecasts for world crude oil prices by $5-$15 per barrel. With the current price already as low as $49 per barrel, Iran’s activities will trouble members of the OPEC. “Iran, through its contracts and potential investment, will take away a major share of oil exports from Iraq,” Professor Sandolhtz. Nearby, Saudi Arabia will also be dealt a significant blow. The leader of the OPEC has already increased supply of oil, dropping the prices to where they are today. The country is heavily reliant on oil for its revenues, and will stand to lose market share to Iran. The tensed Saudis will have to look to diversify away from deep dependence on the US for markets for Saudi oil exports. And what about the political and economic implications for Israel?Project 1 (3)


Conquering the world with wine

Finnish-French Marketta Fourmeaux accomplished her dream of having her own winery in California. What else than a dream is needed to make a winery successful?


Näyttökuva 2015-10-09 kello 15.55.04


An oddball. When Marketta Fourmeaux moved to Napa Valley, California, in 1988, she heard she is an oddball. That was probably a nice way to put it. A blond in her mid-thirties, a mother of two, coming from France, born in Finland, said she wanted to buy a vineyard to make her own wine in California.

”Some people would have rather talked to my male dog than me!” Fourmeaux says and laughs. ”There were not many foreign winemakers nor female winemakers in California back then.”

Now, 30 years later, Marketta Fourmeaux is the only Finnish female wine-maker of Napa but no longer an oddball. California is a growing wine area attracting international investors. The U.S. is both consuming and exporting more and more wine – situation totally opposite to that of old wine empire France.

Fourmeaux has created two wine brands in California: Château Potelle and Marketta Winery, and now people pay close attention to what she says. She is a board member of The Wine Institute, the largest advocacy and public policy association for California wine, and the ex-president of the Mount Veeder Appellation Council.

She came to the U.S. well prepared.


Fourmeaux has a master’s degree in economics from Finland and a diploma in enology – the science of wine and viticulture– from France.

In 1976, one single happening in Paris changed Fourmeaux’s life and that same happening shook the world of wine. The Judgement of Paris, a prestigious blind tasting wine competition, rated California Chardonneys and Cabernet Sauvignons over French comparisons.

This was devastating news in France. Fourmeaux was then married to a Frenchman and evaluated wines for the honorable ”Institut des Appellations d’Origine”, the core of the qualifications of French wines.

A group of French wine producers asked her to travel to California to find out what is happening in its’ vineyards. Years earlier she had been an exchange student in California and her English was fluent. Fourmeaux agreed to travel to Napa. Later she sent a telegram home. It said: ”Looks good. We’ll stay.”


Wine is not an easy business. Making a vine grow is a basic form of agriculture, but farming vine to produce wine is much more complicated than farming vine to sell grapes or raisins. The quality of soil, the amount of rain and sun as well as the temperature all play a role in setting the taste and the quality of the final product. It is impossible to control nature. Fourmeaux says that the draught in California has not yet affected Napa Valley’s wine production but she is afraid of what the future brings. If northern California gets dryer, both the volume and the quality of its’ wine may decrease.

Now California produces 90 percent of the wine made in the U.S. The production, consumption and exports of Californian wines have all steadily grown during the time Fourmeaux has been here.

When she came much of the wine making was in the hands of big companies producing industrial bulk wine.

The prohibition law of the 1920s and 1930s had a long lasting effect on the wine culture of the U.S. It swept away many old vineyards, and later quality vines were replaced by lower-quality vines that grew thicker-skinned grapes, which could be more easily transported.

Much of the knowledge of artisanal winemaking was lost.

When Fourmeau bought the 273-acre estate Mount Vedeer in Napa Valley she planted new vines  – Cabernet Sauvignon, Zinfandel, Syrah, Chardonnay and Sauvignon Blanc.

Americans ”new nothing about wine”, says Fourmeaux. The food culture and viticulture ”were not sophisticated in the 80s”, she says, but there was a reason for her to stay in California.

”I could have never became a winemaker in France. Here the oldest vineyards are run by maybe fifth generation of the same family. In France, it is the 15th generation. Foreigners are not accepted or taken seriously as winemakers in France.”


People doubted her in California too, but Fourmeaux says that the U.S. legislation made it easy to start a business and then proof that she can make good wine.

”Having a vineyard and winery in France means endless fighting with bureaucracy. Here I was able to concentrate immediately on developing the vineyard and the business.”

Fourmeaux wishes she could say that quality of wine means everything in sales but that is not true. The brand means nearly everything. Newcomer has to market aggressively.

”The most expensive wines of the world are not necessarily the best wines,” Formeaux says. The most wanted wines are the ones that have a name and fame.

Fourmeaux’s Mount Vedeer produced and sold around 300 000 bottles a year. It was a small, independent winery that had clients – restaurants, wine dealers and direct buyers – who had learnt to know the winemaker and appreciated her talent and brand. They were not looking for big volumes or a cheap price.

This kind of production is very vulnerable in economic turmoils.

The volume of the wine production of the U.S. has grown in past ten years from 35 million gallons to 117 million gallons. At the same time, the revenues to wineries grew from from $196 million to $1,494 million. There was a drop of one million dollars between the years 2009 and 2010, after the financial crisis of 2008.

”Premium wine is a luxury product. Many of my clients have big wine cellars. After the market crash they stopped buying new wines and started drinking the ones they already had in their cellars,” says Fourmeaux.

”I know many small winery owners who have been forced to quit because they haven’t had capital to overcome bad years.”


”I could have never became a winemaker in France. Here the oldest vineyards are run by maybe fifth generation of the same family. In France, it is the 15th generation. Foreigners are not accepted or taken seriously as winemakers in France.”

Fourmaux was forced to give up the Mount Vedeer estete and Château Potelle brand when she divorced. She now buys grapes from vineyards she has helped during her years in California and gets to choose the ones she wants. She gets a small amount from her own backyard plot of 100 acres. She matures and blends her current wine called Marketta in downtown Napa.

Marketta Winery produces only about 100 boxes of wine per year and sells them to two restaurants and loyal old customers. Earlier her wines were exported to Europe. Today Fourmeaux prefers to keep her business small although she knows that there are potential markets.

The European Union’s 28 member countries are the largest export market for California wine. Last year they accounted for $518 million and 35 percent of the exports. Canada is the second largest export market with value of $487 million. Following eight export areas are Japan ($88 million), China ($71 million), Hong Kong ($69 million), Mexico($24 million), South Korea  ($22.2 million), Nigeria ($21.9 million), Vietnam ($20 million) and Singapore ($16 million).


Näyttökuva 2015-10-08 kello 16.04.19


”Cheap dollar helped the exports for many years”, says Fourmeaux.

With weakening Euro, exports to Europe are down slightly. The Wine Institute of California is not expecting the situation to get any better in the near future.

The UK however, is seen as a more promising market. The sales of wines at low prices are decreasing in the UK but the sales of wines costing $15 or more increased last year by 30 percent.

In Japan, the situation is similar to the UK. The volume of the exports to Japan is decreasing because less and less bulk wine is shipped to Japan but at the same time Japanese show more interest in premium California wine.

Since 2011, the value of wine exports to Asia has doubled, and the future looks bright.

Even though the economy of China is currently slowing down and California wine exports to China and Hong Kong decreased last year. “Asia’s emerging wine markets remained buoyant in 2014 despite the negative impact of China’s ongoing austerity campaign”, reports The Wine Institute. ”However the long-term outlook for these key markets remains very promising.”

Wine industry lobbied strongly for the Trans-Pacific Trade Agreement and is pleased with the result so far. Wine trade will remain under special regulation but many trade barriers are to be eliminated.


If Marketta Fourmeaux was now to advice a young, enthusiastic winemaker on where to start her own winery, she would not recommend California.

”The land is so expensive. One acre of vine costs 250,000 dollars or even more.”

California attires affluent investors, and in Marketta Fourmeaux’s opinion some of them come here out of vanity. ”They want to make themselves nobles by buying a vineyard.”

California still has many advantages. The climate is ideal, and it is easy to get cheap work force from Mexico.

The country’s wine consumption is growing. The U.S. is now number two in wine consumption in the world and will likely bypass France soon. In per capita consumption, the U.S. is only the 23rd in the world when France holds the second place – after tiny Luxemburg. There should be plenty of room to sell more and more wine to the Americans.

However, Marketta Fourmeaux would advise a new winemaker to start in South America – or maybe in India which is an emerging wine area.

Chinese drink more and more Western style wine, and the climate is good for growing grapes in many parts of the huge country. China is already a huge producer of raisins. But China does not welcome foreign entrepreneurs in its’ agriculture.

France and Italy have long been the largest wine producers of the world. These old world countries are slowly losing their positions. The traditional, hierarchical, male-dominated wine industry is not appealing to young consumers nor innovative entrepreneurs.

Fourmeaux thinks this could actually open paths for new winemakers in lesser-known wine areas of France.

Marketta Fourmeaux is sure that one does not need to be an economist to become a successful wine producer. One needs to know wine and be ready to work hard.