Tag Archives: globalization

Which Countries Are Ready to Deal with Change?

change-readiness-index

Every day on the news we hear about challenges that countries face, ranging from domestic crises to natural disasters. At the same time, we learn about opportunities for advancement created by new technologies and global markets. How ready are countries to absorb negative shocks and capitalize on positive changes? This is the question that KPMG, in cooperation with Oxford Economics, seeks to address through the 2013 Change Readiness Index (CRI).

The index, this year in its second and expanded edition, assesses the ability of 90 countries around the world – from Australia to Afghanistan – to manage change and cultivate opportunity. Based on the analysis of secondary data and primary surveys of over 500 country experts, the index looks at three key elements: enterprise capability, government capability, and people & civil society capability. This data is also accompanied by several case studies that put CRI to the test, looking for instance at the varied capacity of countries to respond to major earthquakes (Haiti, Chile, and Japan).

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Sand in strange places

There are places in the Atacama Desert where no rain has fallen since such records have existed. Stretching from Peru, across southwestern Bolivia and into Chile, the Atacama Desert is an atmospheric phenomenon, as air circulates down from the upper atmosphere after dumping its moisture over the Amazon Rainforest, on the other side of the Andes. The air is cold, for a desert, typically staying between zero and 25 degrees celsius. It’s also dry; and as it blows down across the Andes Mountains into the Pacific Ocean it siphons up any moisture from the ground. Yes, even air gets thirsty.

In its trail, the evaporated moisture deposits some of the world’s largest salt flats, helping provide economic support to the surprising population found scattered across the fringes of the desert – more than a million people. They have learned how to survive under such harsh conditions, and recently one of their own, Evo Morales, was elected to Bolivia’s presidency. A proudly leftist ally of Venezuelan President Hugo Chavez, Morales is poised to make many of the same mistakes.

Morales has already nationalized Bolivia’s natural gas industry, to the shock of its neighbor and largest customer, Brazil. But the world is quickly fixating on another natural resource, one found beneath the salt flats of Morales’ ancestral home:

In the rush to build the next generation of hybrid or electric cars, a sobering fact confronts both automakers and governments seeking to lower their reliance on foreign oil: almost half of the world’s lithium, the mineral needed to power the vehicles, is found here in Bolivia — a country that may not be willing to surrender it so easily.

“We know that Bolivia can become the Saudi Arabia of lithium,” said Francisco Quisbert, 64, the leader of Frutcas, a group of salt gatherers and quinoa farmers on the edge of Salar de Uyuni, the world’s largest salt flat. “We are poor, but we are not stupid peasants. The lithium may be Bolivia’s, but it is also our property.” Read more from The New York Times….

Quisbert is quite right about property; he and the rest of Frutcas’ members live on land passed down since before rain records were kept, and can likely count on one hand how many times it’s rained since they themselves were born. Most of Bolivia’s estimated 5.4 million tons of lithium

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“When the Sky is the Limit: Aviation Development in the Middle East and North Africa”

The task of building a strong competitive advantage in the global market rests on the fundamentals of productivity growth. As Michael Porter has long argued, a country’s competitive advantage includes not only inherited factors of production (e.g., geography, demography, natural resources) but also created ones, such as infrastructure, knowledge resources, and communication networks.

In this Feature Service article, Jawad Rachami is a senior manager at an aerospace firm in the United States, argues that in the Middle East and North Africa (MENA), one sector that could uniquely spur the region’s global competitiveness is air transportation. Participation in 21st century global trade requires modern aviation infrastructure and the integration of local capacity into complex cross-border supply chains. Having such advanced infrastructure can transform an economy by energizing the private sector, creating broader access to trade and investment, and turning airports themselves into major economic engines.

Rachami says, “Global air transportation has achieved remarkable progress over the years in terms of new technology, market presence, and economic relevance. In MENA, however, aviation development remains a mixed bag ranging from impressive expansion and modernization in the Gulf to a series of stumbling blocks spanning from Casablanca to Damascus. A key question, then, would be: How can MENA move forward on achieving even growth for its aviation industry and moving towards a more sustainable economic model?”

Article at a Glance

  • Middle East and North Africa (MENA) countries must diversify their economies in order to lay a stronger foundation for lasting growth.
  • Modern aviation infrastructure is important for global competitiveness and for connecting local MENA economies to the rest of the world.
  • The success of MENA countries in developing sound aviation infrastructure has not been uniform, nor has been their ability to create competitive positions in global markets.

Our way is the highway

The King Cobra is not the fastest snake, and it is not the biggest snake, but it just might be the most revered. The city of Nagercoil, at the southern tip of India, contains a temple to the King Cobra, worshipped as a deity. India’s new mascot might be the King Cobra. It is not the fastest growing economy, nor is it the biggest, and who doesn’t like Ghandi?

India’s newest metaphorical cobra is a 3,633 mile long highway connecting its four major population centers, Delhi; Kolkata; Mumbai; and Chennai. Dubbed the “Golden Quadrilateral (GQ)” by the Indian Government, officials expect it to stimulate further economic development in rural India, where 70 percent of India still live, by facilitating the movement of goods into and out of the country.

Combined with past-established Special Economic Zones (SEZs) providing tax holidays to foreign direct investors, the GQ already appears to be a major success in its own right:

Every factory on the GQ, including Hyundai, creates its own “ecosystem,” opening dozens of specialized niches that are quickly filled by energetic Indian entrepreneurs. Hyundai, for example, is surrounded by 83 smaller companies, which supply it with windshields, fasteners, headlights, rearview mirrors, and other specialty parts. Each of these companies in turn has suppliers of its own to provide truck transport, warehousing, clerical services, and logistical support….Today there are more than 200 SEZs in India, which generate more than $15 billion in annual exports and provide jobs for more than half a million Indian workers. The vitality of these ecosystems is partly responsible for India’s soaring economic growth rate of 9 percent a year, second only to China among comparable market economies. Read the rest of this story in October’s National Geographic Magazine…

Next to China, the GQ and its many adjacent SEZs may soon become even more attractive to multinational companies, as China’s seemingly endless supply of surplus labor dries up.

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Politics of Economics

Gideon Rachman has an interesting column in today’s FT on the “political threats to globalisation.” (registration required to read the whole column).  His argument is quite simple, quite powerful, and quite troubling.

Globalization is not an economic phenomenon – as we’ve come to think of it – it is primarily political.  As Rachman points out, it was the politics that drove the process forward – including China’s embrace of a more open economy, collapse of the Berlin wall, deregulation in the US and the UK in the 1980s, and move away from protectionism in India in the 1990s. 

Yet, today, it is also politics that is driving globalisation back – and not only in developing countries, but in developed countries as well.  Whether its the desire to protect domestic markets in Europe or poverty pressures in India – politicians around the world seem to be more empowered to run on the protectionist, populist, or anti-globalization agenda. 

Rachman hits the nail on the head with his argument, but, perhaps, things are not as bad as they may seem.  Globalization is still more about choices than rhetoric.  And although its popular to run on the anti-globalization agenda I wonder if political leaders across the board can really go far in limiting competition, controlling access to resources, protecting domestic industries, restricting investment, and nationalizaing companies.  If even Chavez is facing serious questions in light of his moves to isolate the economy, what can be said of others?

Although solving the politics of economics is still rarely recognized as a key development issue – it may be gaining prominence in different circles.