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Subscribe to this list via RSS Blog posts tagged in Economics

It happened again. A domestic helper in our neighborhood here in Singapore, an Indonesian woman, asked the helper next door for food and clothes. Your occasional correspondent is trying to imagine her desperation. This woman lives and works in a house that’s worth well over a million US dollars, but she is neither fed nor clothed. I will not dwell on the personal characteristics of people who treat other human beings this way, but I will dwell on the phenomenon of migrant labor, and the winners and losers of this global trend. Because she is a case in point – migrant labor is on the up, and an increasing proportion of them are women.

Anyone who takes up some kind of paid employment outside their home country is considered a migrant worker, including well-off ‘expats.’ However, the topic here is migrant workers from developing countries, those who cross a national border in search of a better life, for themselves and for their families back home.

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In recent years the possibilities of the Arctic have hit the news now and again. Mostly it goes unnoticed. For many people the Arctic is still just a big chunk of very cold, inaccessible and uninhabitable land. The Arctic region covers more than 30 million square kilometers or 18 million square miles. However, since 1979 the extent of Arctic sea ice has decreased rapidly and according to a UN climate report Arctic summer ice is set to be gone in less than 40 years, much faster than anticipated. While this present huge opportunities for developing the Arctic region, scientists also worry that the melting of the Arctic permafrost could be a “economic time bomb” as it releases unusually large amounts of methane (potent greenhouse gasses) that could potentially cause significant climate changes.

The Arctic actually isn’t just a piece of uninhabitable land. It is to home to about 4 million people from 40 ethnic groups and an economy of US$230 billion. While it is a region ripe with opportunities, it is also one of the last true wildernesses on earth and an extremely challenging environment. According to the United States Geological Survey about 13% of undiscovered oil and 30% of undiscovered gas reserves are in the Arctic. In a world facing rising oil prices, countries as well as international oil corporations have shown much interest in recovering these vast reserves. However, it is widely believed that the potential oil and gas fields are out at sea, far from land as well as infrastructure and in extreme climatic conditions, making production far too expensive. Exploring other and cheaper options such as shale gas in North America and conventional gas production in in the Middle East could be better and more viable options! The Arctic as the new energy source should not go completely unquestioned.

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Do you ever think about the size and impact of the corporation you, your friends, family members or neighbors work for? If you do, the size might amaze you. Thinking this way offers a whole new perspective on global markets as the revenues of some of the world’s largest corporations are far bigger than the GDPs of many countries.

We are pleased to have just released our annual research on the world’s largest economic entities, Corporate Clout 2013, which reveals that, in 2012, 40 of the world’s 100 largest economic entities (countries and corporations combined) are public corporations. This is the same percentage as in 2011 but down 2% since 2010 (42%).  If you look at the top 150 economic entities in 2012, the proportion of corporations is 58%, slightly down from 2011 (58.7%) but at the same level as in 2010 (58%).

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Many thanks to former UN colleagues Todd Smith and Odkhoi Bold for your up-to-date perspectives from Mongolia! 

I will never forget what economist Jeffrey Sachs said in 2002 about Mongolia’s prospects for development: “Half of the people live in yurts. Their connectivity is low. They have no viable industry right now […]. The real economic answer for Mongolians is to leave. But that's not the answer for Mongolia” (my italics). Looking up my Mongolian friends on Facebook, most of them are still there, and one Canadian friend, Todd Smith, has even stayed on in Ulaan Baatar and started a family.

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We are delighted to welcome Judith Wedel as our occasional correspondent from Brussels. She is a sociologist and journalist and she will keep us updated on the latest trends from Belgium, the Netherlands and Germany. Her focus is on political developments with regards to business, social and environmental issues. In her first blog she shares her insights about how monitoring EU institutions has become a growth industry for Europe

After some years abroad we’re back to Brussels – the European melting pot. The unofficial European Capital doesn’t offer an easy welcome initially. The sky above the city seems to be stuck in shades of grey, public administration often appears somewhat Kafkaesque and signposting is not a Belgian strength. It takes a lot of patience, effort and tenacity to find your way around.  Skills you also need when working in the surroundings of the European Institutions.

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The Yale Center for the Study of Globalization through its YaleGlobal online service has just launched an ebook A World Connected: Globalization in the 21st Century which is well worth the read for anyone interested in how globalization has – and will in future – impact our world, lives and work.  It’s a seminal collection of essays collated from over ten years of work by scholars, practitioners, politicians, and experts in the study of globalization. 

One of its most compelling points is its broad scope, covering the complex array of ways in which globalization is changing our world – often discussions of globalization narrow in to areas of economics and trade, or to the global capital markets which have had such an impact in recent years, or to the geopolitics of a new world order. With the notions of interconnectedness and interdependence as its lenses, the book not only explores these topics, but also the many ways in which globalization touches all of our lives and interweaves communities, countries and continents – including how cultures and societies develop, how we seek security, how ideas moving around the world are impacting creativity, how rising inequalities are changing societies, how China’s rise is impacting the world, and how we as people interact around the world.

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The winds of reform are blowing in Asia at the moment. Or so it seems when one reads the headlines. Are the loosening of the authoritarian regime in Burma (sometimes called Myanmar) and the recent protests by Chinese journalists really manifestations of openness in these countries? 

To first check out the longer term trends, your occasional correspondent turned to the internationally recognized indices relevant for political governance. It turned out to be depressing reading. In terms of press freedom, both Burma and China score in the bottom five percent of the Reporters Without Borders’ Press Freedom Index over the past decade. The Freedom House Index, measuring political rights and civil liberties, shows similar results. In terms of corruption, represented by Transparency International’s corruption perception index, China’s result is near the middle among the world’s countries, whereas Burma is consistently cited as one of the three most corrupt countries in the index since 2004.

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Your occasional correspondent is tuktuking south on Chamkardoung boulevard on a steamy hot October day. Red dust and nauseating diesel fumes fill my lungs and eyes as we approach the infamous Khmer Rouge killing field outside Phnom Penh. The nausea is exacerbated by seeing the physical remnants and listening to vivid accounts of a horrendous time in Cambodia’s history in what is nowadays an open air museum.  Historical images of forced labor and starvation in the rice paddies, torture and execution in the killing fields fill my head. Later, returning northwards, zigzagging through the sprawling urban landscape, history fades and today’s reality grabs my attention and fills me with a glimmer of hope. The small independent businesses along the road are seemingly thriving: bakeries, furniture-, hardware- and appliance-stores, delivery companies, the larger beer breweries and garment industries. Only a few decades after Pol Pot and his regime were forced out of power in 1979, Phnom Penh has gone from ghost-town to this dynamic hustle and bustle. 

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Note to self: Stay here! Singapore is buzzing. There is no other way to describe the activity and creativity visible in every corner of this miniscule adopted home country of mine. And it is buzzing in a sort of planned and structured way that makes you feel as if everything is moving onwards and upwards. Therefore, the fact that Singapore scores among the top third in this year’s Global Innovation Index and at the top of the Global Innovation Policy Index comes as no surprise.

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Here's another quick preview from The Global Trends Report 2013, due out in just 2 days on November 14th. Look out for it soon.

Social needs, mobility, communities, societal impact and connectedness are at the heart of the business environment of the future. In this world the consumer can no longer be regarded solely as an individual, self-determining entity. They are connected, for better or worse, and that means the impact of the business-consumer relationship extends beyond the “target” of the relationship, i.e. the consumer, out to the extended networks and communities of which that individual is a part. This is a world where word of mouth and, increasingly, word of mouse dominate. There is nothing new about using our friends as source of best advice. What is relatively new is the way more and more people do it. We are moving away from “wisdom of crowds” to the “wisdom of friends.” Trust is the currency of the connected world.

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The last two weeks have seen unprecedented social unrest around the world – the democratization of everything is spreading but frankly it’s not a pretty sight.  Just think back on the headlines:

  • China and Japan facing off over disputed ownership of islands in the East China Sea – with demonstrations and violence against Japanese businesses in China as nationalist sentiment rises, compounded by the anniversary of a politically sensitive incident.
  • Demonstrations, violence and deaths across the world from North Africa and the Middle East to Indonesia and Pakistan as Muslims protest over a cheap and nasty film ridiculing Islam, clearly produced by less than a handful of bigots to incite religious turmoil.
  • Ongoing strikes and renewed violence as South African miners demand higher wages and clash with security forces, even as some returned to work.
  • Massive demonstrations in Portugal and Spain against austerity measures as standards of living fall and unemployment soars – plus renewed demonstrations by Catalan separatists.
  • In India, tens of thousands protest against government plans to open the retail trade to foreign investors, as well as rising fuel prices.
  • Russia’s President Vladimir Putin, re-elected this year, targeted by up to 50,000 demonstrators in Moscow, calling for an end to his rule.
  • In Argentina, President Cristina Kirchner’s government facing the largest pot-banging protest ("cacerolazos") since taking office as people protested over corruption scandals, crime and management of the economy.
  • Occupy Wall Street protesters back to mark the anniversary of the movement, although with fewer feet on the street and continued tensions with police.
  • Continuing protests over natural resources in Peru, particularly directed at the mining sector, leaving one more person dead this week.
  • Ongoing protests over the July election of President-elect Enrique Peña Nieto in Mexico, amid accusations of vote-rigging and media collusion, including a cyber-attack this week on government, political and media websites.
  • The threat of renewed protests in the Chinese village of Wukan, as elections have not brought the desired changes in government control nor the return of land sold illegally.  

The list could go on – frustration and anger is boiling in societies around the world over: their own government’s management of economy and society; perceived threats to livelihoods; inequality; religious insults and intolerance; crime and corruption; and natural resource ownership.  It’s a potent cocktail of grievances. The cost to societies in terms of driving divisions and damaging livelihoods and economies is massive. What’s causing the unrest? And what can we do about it?

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Ashley Halligan, of Software Advice, recently published an article outlining how organizations are undertaking zero-waste initiatives – specifically, diverting all of their waste from landfills through a series of efforts ultimately tackling their waste stream.

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Natasha Deonarain, MD, MBA is a board-certified family practice and urgent care physician with 20 years of experience in both Canada and the United States. In her upcoming book, The 7 Principles of Health: Your Call to Health Consciousness, she talks about a new paradigm for optimal health that’s based on a different paradigm than that used in Western medicine. Natasha kindly shares her thoughts on how the US healthcare system needs to – and can become – more patient-centric.

To see where America’s healthcare future lies, we should take a few lessons from the book and music industries.

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Is the potential of distributed energy on your radar yet?  If it isn’t, it probably should be.  Energy transforms economies and lives, so it should demand the attention of politicians, thought leaders, industry and, hopefully, the consumer.  And it does, but not necessarily with an eye to the future.  The potential of distributed energy hasn’t really been recognized yet.  The question is why?

Distributed energy (also known as distributed generation) is electricity generated from small-scale power generation technologies, which when combined with load management and energy storage improve the amount, quality and reliability of electricity supplies.  Typically, such technologies focus on renewable sources. Most importantly, however, because distributed generation projects are small in scale and more numerous, they move supply closer to the consumer thereby lowering environmental impacts and improving security of supply.  It also avoids the enormous cost of energy wastage which – if we could figure out how – could cut your bills in half!  For example, in 2009 about 58% of energy generated was wasted. (Source: Good Infographics)

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It did not escape the notice of my partner as we walked down Nathan Road in Hong Kong that the local couple ahead of us were carrying a plethora of bags from Gucci, Chanel and a host other top designers, while our bag bore the Chinese logo of one of the local emporiums. Having sought out in vain the great local goods and technology deals we used to find here just a few years ago, we had reluctantly came to the conclusion that we were standing in the next great bastion of high end consumerism.  Gone are many local shops and outlets, replaced by designer names on every corner and giant shopping malls that offer soft music, stores-in-stores and richly designed aesthetics.  Just like you would find in New York, Paris, London or Tokyo – only more expensive in many cases! With 10 Gucci stores/stores-in-stores in Hong Kong (home to 7 million people), the density of stores per capita is already higher than in London or Tokyo.  

gucci queue hk

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In my last blog post, I talked about the phenomenal rise and opportunities in Vietnam, but there are also challenges ahead.  Some thoughts from discussions while there…

While the streets of Hanoi and Saigon (as locals still call Ho Chi Minh City) are vibrant, they also testify to the growing pains of this rapidly emerging nation, which only started international reintegration in 1986 after prolonged military engagement.  In 1975, when the country reunified under a communist government, it was isolated and devastated from military action. Even today, younger generations of Vietnamese entrepreneurs talk from personal experience about how they and their families suffered during this period and the disastrous post-war collectivization of farms and factories which led to massive inflation and economic collapse. The shift in leadership and policies in 1985 heralded a new start for the nation, with free market reforms – known as Đổi Mới (Renovation) – starting the transition from a planned economy towards a socialist-oriented market economy.  Private ownership, economic deregulation, foreign investment and newly resumed trade links with the world restarted the engine of growth.

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Happy New Year!  Just back from a fascinating trip to Vietnam and Hong Kong, so a few reflections to share…

vietnam motos

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The headlines have been full of numbers recently, particularly as we have just passed a milestone where the 7 billionth person has now joined the world’s population (give or take a few million and a few months either way).  So let’s start there in terms of looking at some important numbers that will impact the world in the next decades.

1.  7 billion: The world’s (estimated) population at the end of 2011

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Flying has always been a passionate interest with members of my family and I must admit I have enjoyed airshows myself, even if not the main instigator of visits.  However, I do wish I had had the chance to attend the Paris Air Show last week for just one reason: the Solar Impulse.  The completely solar-powered aircraft is a revolution – and an inspiration: Look Mum, no fuel and no pollution.  While its slow speed, weight sensitivity, and delicate handling means it will not be threatening commercial carriers any time soon, it is undoubtedly a significant breakthrough for the aviation industry and one which will help to shape the future of flying.

According to Solar Impulse founder and Chairman Bertrand Piccard (the first man to have circumnavigated the globe in a balloon) speaking to Reuters:  Now we are starting a new cycle again, it's a new cycle with zero fuel, and this really is important. So of course, the aeroplanes will make some evolution, it will not always stay so big, so light, so sensitive to the weather, but this is a first step, now we are showing that an aeroplane with zero fuel, just on solar power, can fly day and night with a pilot on board.

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NASA reported today that the final voyage of Space Shuttle Endeavour, originally planned for Friday, would be delayed by several more days due to technical problems.  The Space Shuttle was originally to be retired in late 2010, but has been extended until 2011, with the final launch of Atlantis scheduled to herald the end of a 30 year era in June 2011. This leaves the US Space Agency with a void in terms of next generation space passenger vehicles after last year’s cancellation of Project Constellation which was developing a new spacecraft to serve the International Space Station (ISS) as well as voyages beyond Earth’s orbit to the Moon and even Mars. The interim solution for the ISS will be for US astronauts to hitch a ride on Russia’s state-run Soyuz spacecraft.  As for homegrown options, the future looks commercial.  The privatization of space is starting – at least in the US, even as rapidly developing countries including China and India ramp up their space efforts under state banners.  As space becomes more commercial what will this mean for nations and businesses?

Under Obama’s new space policy, the transportation of crew and cargo to the International Space Station will be turned over to the commercial sector. The change came into effect with the signing by President Barack Obama of the NASA Authorization Act 2010 last October.  Obama has proposed to devote US$6 billion over the next five years towards commercial spaceflight.  In the last two weeks the first of this money has started to come through, with NASA offering US$270 million of funds to four firms to help them push forward designs for new orbiting vehicles. 

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