Growth
Introduction
Will 3D printing kill the supply chain?
The additive manufacturing revolution is underway, and product supply chains lie directly in its path of creative destruction. Which ones, if any, will survive?
In additive manufacturing – also known as 3D printing – a computer-controlled laser melts materials such as plastic or a mixture of alloys according to a blueprint that is programmed into the machine. An object is made by building up ultra-thin layers of the material one by one.
The technology reduces waste to a minimum because material is added (hence the term “additive”) in the precise quantities needed to make an item. In addition...
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August 2, 2013
Finding the right economic reform strategy for Europe
Together with fiscal consolidation, structural reform is the new European mantra. International organizations and European Union bodies regard such reform as a prerequisite of economic recovery, growth, and alleviation of the unemployment plague.
Indeed, the agreement reached between the Greek government and the “troika” (the International Monetary Fund, the European Central Bank, and the European Commission) includes a 48-page list of detailed reforms. Not all countries are given such a long to-do list, but, since new EU legislation was adopted in 2010, specific recommendations are addressed...
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August 1, 2013
Can Silicon Valley be replicated?
Everyone wants to know how to build the next Silicon Valley: an innovation hub that draws talent and capital, and that creates jobs, companies, and whole new industries. Developed-country governments scramble to subsidize technology that could be the Next Big Thing. Emerging-market policymakers hope that incentives like tax breaks and free land will induce innovators to settle and prosper there. But most of these well-meaning schemes are missing an essential ingredient: demand.
Demand for innovation in specific areas of technology has been the common force behind all high-tech hot spots, as...
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July 31, 2013
Misreading China’s economic rebalancing
The punditocracy has once again succumbed to the “China Crash” syndrome – a malady that seems to afflict economic and political commentators every few years. Never mind the recurring false alarms over the past couple of decades. This time is different, argues the chorus of China skeptics.
Yes, China’s economy has slowed. While the crisis-battered West could only dream of matching the 7.5% annual GDP growth rate that China’s National Bureau of Statistics reported for the second quarter of 2013, it certainly does represent an appreciable slowdown from the 10% growth trend recorded from 1980 to...
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July 30, 2013
Should markets be pessimistic about China’s economic future?
China’s growth has slowed considerably since 2010, and it may slow even more – a prospect that is rattling investors and markets well beyond China’s borders. With many of the global economy’s traditional growth engines – like the United States – stuck in low gear, China’s performance has become increasingly important.
But now growth rates for Chinese exports and related indices in manufacturing have fallen, largely owing to weak external demand, especially in Europe. And the Chinese authorities are now scaling back the other major driver of their country’s growth, public-sector investment, as...
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July 24, 2013
What is ailing the BRICS and other emerging markets?
During the last few years, a lot of hype has been heaped on the BRICS (Brazil, Russia, India, China, and South Africa). With their large populations and rapid growth, these countries, so the argument goes, will soon become some of the largest economies in the world – and, in the case of China, the largest of all by as early as 2020. But the BRICS, as well as many other emerging-market economies – have recently experienced a sharp economic slowdown. So, is the honeymoon over?
Brazil’s GDP grew by only 1% last year, and may not grow by more than 2% this year, with its potential growth barely...
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July 23, 2013
How can China get the right kind of growth?
For more than three decades, China’s GDP has grown by an average of more than 10% annually. But former Premier Wen Jiabao rightly described this impressive growth performance as “unstable, unbalanced, uncoordinated, and unsustainable,” highlighting the many economic, social, and environmental costs and challenges that have accompanied it. Now China must choose between the export-based, investment-driven growth model of the past and a new, more viable economic order.
Cheap credit and perverse incentives – such as promotions for officials who contribute most to GDP growth – have led to massive...
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July 16, 2013
Can demographic growth drive society forward?
Demography is a powerful thing. Only two years ago, the UN projected a “medium variant” global population in 2050 of 9.3 billion; just recently the UN upped this projection by 300 million people to 9.6 billion. What’s striking about this upward drift in the UN’s projections is that the growth comes from a surprisingly small set of countries, mainly in sub-Saharan Africa. These include Nigeria and the Democratic Republic of Congo, as well as Niger, which currently has the world’s highest fertility rates.
Elsewhere the world has recorded general declines in fertility. Family size is falling and...
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July 11, 2013
Inclusive development in Myanmar
Myanmar is in a process of unprecedented transformation and its destiny is being determined at breakneck speed on a daily basis. Development is now a reality but the question today is what kind of development is this going to be?
Most of us would agree; we want “growth” to improve our collective quality of life. But will this be growth at any cost? Will this be quality growth? Above all, after decades of military rule, and with ethnic-based violence still ongoing, how inclusive is it going to be?
There are plenty of reasons to be pessimistic. According to World Bank Development Indicators,...
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July 9, 2013
Can increasing urban migration benefit China?
The latest population census conducted in China in November 2010 portrayed a rapidly urbanising country, with the urban population reaching 49.7%, up 13.5 percentage points compared to 2000.
After decades of highly regulated urbanisation – which led to significantly undersized cities (Au and Henderson 2006) – the unprecedented pace and scale of urbanisation fed by massive rural-labour exodus brings in new challenges and opportunities.
With one billion people expected to live in Chinese cities by 2030, the country now faces extremely challenging policy choices in the management of the...
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July 9, 2013
FDI surges: Not all capital waves are alike
Capital flows often come in waves. An extensive literature has documented ‘surges’ and ‘bonanzas’ in capital flows (e.g. Forbes and Warnock 2012, Reinhart and Reinhart 2009, Ghosh et al. 2012). While capital flows can bring many benefits the literature has also documented the risks associated with this cyclical nature. Indeed, they can contribute to amplifying economic cycles, fuel credit booms, appreciate the real exchange rate, and can be subject to sudden reversals (Calvo et al. 2008).
The perceived wisdom is that there is a pecking order among capital flows, with...
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July 8, 2013
Getting young Europeans back to work
European leaders are rightly concerned about the record level of youth unemployment in the EU. According to the latest Eurostat figures, the rate of unemployment among those under the age of 25 reached over 23 per cent in the EU and over 24 per cent in the eurozone in April 2013. Four countries (Greece, Italy, Portugal and Spain) now have youth unemployment rates above 40 per cent, of which two (Greece and Spain) have rates above 50 per cent. The alarming situation has prompted European Council President Van Rompuy to place the issue at the top of the agenda at today’s EU summit. The main...
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July 4, 2013
The old economies strike back
The impact of Abenomics on Japan’s economy is gradually beginning to be felt. Annual GDP growth in the first quarter has been revised upward, to 4.1%, exceeding market expectations and providing a strong indication that the Japanese economy is finally recovering, after two decades of stagnation. Consumer spending is particularly robust, as wages show signs of upward movement.
Moreover, the currency depreciation in the wake of the Bank of Japan’s efforts to increase the annual inflation rate to 2% is expected to benefit exporters, though a substantial effect on the trade balance is yet to be...
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July 3, 2013
Does boom and bust really matter?
Boom and busts in asset prices and credit and, more generally, ‘financial imbalances’ have been the subject of a lot of public attention in the wake of the global financial crisis and the Eurozone crisis. All major jurisdictions have been establishing macroprudential authorities and there is a lively discussion on whether financial stability should be an objective for central banks alongside price stability. However, nobody seems to have asked the person in the street whether they care about financial imbalances at all.
The ideal way to conduct this analysis would be to design an appropriate...
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June 28, 2013
Europe’s strength lies in its diversity for entrepreneurs
For a couple of decades now, the conventional view has been that a single European market, with a size comparable to the US market, would encourage entrepreneurship and innovation, resulting in high growth. While there is much merit in this view, it has not played out as planned.
Diversity, however, can help to create the right conditions for economic growth. It is time Europe starts to see the diversity of each country and culture as a source of strength. Every country, city, region or cluster can be seen as an integral part of a broader system that supports innovation, with each component...
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June 24, 2013
Global Value Chains and challenges to trade
In the wake of the financial crisis, the topic of Global Value Chains (GVCs) – the way in which different business processes are spread out around the world, from designing a product to making it and selling it – has captured growing attention in policy circles. Indeed, the World Economic Forum itself has published a significant study on the subject.
The newfound focus on GVCs reflects in many ways a fundamental change in how companies seek to innovate, manufacture, sell and service their products. Thirty years ago, the bulk of trade occurred under a “build it here, sell it there” model....
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June 20, 2013
What to tell a 23-year-old who wants to join a start-up?
At a workshop on innovation I attended a while ago, one of the most revealing moments came when participants were asked to answer the following question: “If you were to advise a 23-year-old to work in a start-up, which one would you recommend?”
To my surprise (and, it has to be said, horror) it transpired that among the 40 or so people who replied, less than a handful referred to genuine start-ups, with the majority citing companies such as Google, SAP or Facebook. This said two things to me: firstly, there is a distinct lack of knowledge and awareness of the start-up environment (especially...
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June 19, 2013
Abenomics must overcome one crucial flaw
Abenomics is all the rage.
Japan grew at 3.5% in the first quarter;
The stock market is up; and
Sentiments, consumption, and exports are all picking up – even if recent stock-market performance has created some uncertainties.
But negative inflation is still present.
March 2013 CPI inflation was -0.9% (year on year), down from -0.6% in February.
Survey-based inflation expectations are flat.
Although the market inflation expectation (break-even inflation rate) had increased from 1.3% in April to 1.9% in mid-May, it recently declined to 1.4% (as of June 6) (Figure 1).
Figure 1. Headline...
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June 19, 2013
What can the G8 do to restore growth?
The annual meeting of the G8 traditionally aims to address some of the world’s most pressing challenges. In the past, the small gathering of world leaders has centred on issues such as poverty reduction, international aid, peace and security, and climate change. The agenda of this year’s meeting in Lough Erne, Northern Ireland, includes strengthening international tax standards; reducing investment barriers and advancing free trade agreements; facilitating greater transparency in land deals and extractive industries; and working to promote more open and readily available data. However, the...
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June 17, 2013
Why turkey is thriving
A recent visit to Turkey reminded me of its enormous economic successes during the last decade. The economy has grown rapidly, inequality is declining, and innovation is on the rise.
Turkey’s achievements are all the more remarkable when one considers its neighborhood. Its neighbors to the west, Cyprus and Greece, are at the epicenter of the eurozone crisis. To the southeast is war-torn Syria, which has already disgorged almost 400,000 refugees into Turkey. To the east lie Iraq and Iran. And to the northeast lie Armenia and Georgia. If there is a more complicated neighborhood in the world, it...
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May 28, 2013
Top 10 quotes from Jordan – day 3
Palestinian and Israeli business leaders call for peace; Arab women transform the workplace; educators bring innovation into the classroom. Catch up on the most thought-provoking quotes and impassioned pleas at the World Economic Forum in Jordan.
“We are issuing an urgent call to action to all leaders to break the impasse and put as their top priority the pursuit of the peace process.”
Munib R. Masri
Chairman, Palestine Development & Investment – Padico Holding, Palestinian Territories, in the session: Breaking the Impasse.
“Most of my life has been...
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May 27, 2013
China’s interest-rate challenge
NEW YORK – China’s successful transformation from a middle-income country to a modern, high-income country will depend largely on the reforms that the government undertakes over the next decade. Financial reforms should top the agenda, beginning with interest-rate liberalization. But liberalizing interest rates carries both risks and rewards, and will create both winners and losers, so policymakers must be prudent in their approach.
In 2012, the People’s Bank of China allowed commercial banks to float interest rates on deposits upward by 10% from the benchmark, and on bank loans downward by...
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May 22, 2013
Africa can’t grow without proper fuel
Historically, people associate the sound of Africa with the roar of the lion; but in reality, it’s the roar of the diesel generator. Herds of these archaic beasts are on the prowl. Their habitat includes cities, towns, factories, mines, businesses and big farms – anywhere where power is required and isn’t available or reliable.
When I started in the development arena, and specifically in the renewable energy space, nearly 15 years ago, energy issues simply didn’t feature. Conservationists and environmentalists alerted us to the dangers of deforestation and climate change, and to the...
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May 21, 2013
From austerity to a balanced growth agenda
In a recent set of studies, Carmen Reinhart and Kenneth Rogoff used a vast array of historical data to show that the accumulation of high levels of public (and private) debt relative to GDP has an extended negative effect on growth. The size of the effect incited debate about errors in their calculations. Few, however, doubt the validity of the pattern.
This should not be surprising. Accumulating excessive debt usually entails moving some part of domestic aggregate demand forward in time, so the exit from that debt must include more savings and diminished demand. The negative shock adversely...
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May 21, 2013
Can Free Trade Agreements support ‘Factory Asia’?
Free trade agreements (FTAs) have been proliferating in Asia for more than a decade. Production networks and the product-fragmentation trade that they generate have been growing for a much longer period. In fact, since ‘Factory Asia’ emerged, well before FTAs (Baldwin 2008). They are clearly not necessary for the formation of production networks, but can they support production networks’ further growth and/or spread?
Empirical studies cannot provide a clear answer because they produce mixed results, possibly reflecting dual causality – growth in fragmentation trade may be inducing FTAs, or...
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May 15, 2013
Africa must add value to its vast natural resources
Although a number of African countries have experienced rapid economic growth over the past decade, substantial developmental challenges remain.
According to the World Bank’s latest World Development Indicators, Africa has recorded almost 20 years of continuous decline in extreme poverty, from 60% in 1993 to 48% in 2010, yet the region is still home to a third of the world’s extreme poor, defined as people who live on US$ 1.25 per day or less.
That being said, the economic outlook for the continent remains positive, underpinned by improving political stability and governance, the growing...
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May 10, 2013
Paving a new silk road through Africa
Unreliable as they might come in Africa, statistics all indicate that the continent is ready to take off economically. Six out of the 10 fastest growing economies over the past decade were African – a fact that has too easily been overlooked in the shadow of much more publicized growth numbers in China and India. Foreign direct investment into Africa has grown more than three-fold over the past 10 years to US$ 46 billion in 2012. And trade with China, where I am writing this, has exploded from US$ 11 billion to US$ 166 billion over the same time.
With China now by far the biggest single...
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May 10, 2013
Can technology trigger sustainable growth?
It is fantastic to see capitalism helping to address some of the world’s most pressing social problems – talent from corporations is moving to not-for-profit companies to spearhead impressive social causes, and the evolving models of social entrepreneurship and corporate social responsibility are promising. There is a trend for for-profit businesses to focus their resources on social problems, especially since the disillusionment with financial capitalism across the globe has triggered a search for new models of sustainable economic growth.
However, to what extent have we been able to solve...
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April 13, 2013
Can reducing taxes on travel boost Growth?
Tom King, Head of Government and Industry Affairs at British Airways, makes a case for reducing taxes on travel and tourism
As economies across the globe continue to search for sustained growth, the promise of increased export income from inbound tourism has become ever more attractive. In the United Kingdom, the government has set out its ambition to treble the number of Chinese tourists it attracts to Britain – to 500,000 a year by 2015. Growth in tourism forms an important part of the economic strategies of many leading economies and is an important engine for job creation.
Yet many of the...
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February 14, 2013
Meeting America’s growth challenge
Laura Tyson, a former chair of the US President’s Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley.
BERKELEY – The United States continues to recover from its deepest economic slump since the Great Depression, but the pace of recovery remains frustratingly slow. There are several reasons to anticipate modest improvement in 2013, although, as usual, there are downside risks.
Prolonged recession or a financial crisis in Europe and slower growth in emerging markets are the main external sources of potential danger. At...
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January 31, 2013
Target growth to avoid a lost decade
We cannot afford to let the global economy drift, warns Gordon Brown, former UK Prime Minister and Annual Meeting participant.
As world business leaders gather in Davos, a long-overdue paradigm shift in monetary policy – subordinating the targeting of inflation to the targeting of growth – is slowly taking shape.
In what some call a “reverse Volcker moment,” US Federal Reserve Chairman Ben Bernanke has specified a target of 6.5% unemployment alongside his inflation target; Japan’s new government has proposed a minimum inflation target; and Mark Carney, the next governor of the Bank of England...
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January 25, 2013
How can supply chains drive growth?
From Doha to Singapore – how can supply chain focus on trade help drive economic growth?
As part of the World Economic Forum’s Enabling Trade programme, a report published today reveals that reducing supply chain barriers could increase global GDP up to six times more than removing all import tariffs. The report, Enabling Trade: Valuing Growth Opportunities, culminates a year of research led by a team from the Forum, the World Bank and Bain & Company.
For the past three years, Singapore has ranked first on the Forum’s Enabling Trade Index, which measures the ease of cross-border...
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January 23, 2013
Growth and austerity: a complex policy mix
World Economic Forum’s meeting in Istanbul attracted over 800 business leaders, politicians and bankers to consider the prospects to the region’s success and transformation. Among the participants was Ukrainian President Viktor Yanukovych.The Middle East North African and Eurasia, which Ukraine borders, is one of the fastest growing regions in the world. However, the uncertainty over the performance of its near neighbour, the EU, currently throws a potentially dark shadow over the region’s economic outlook. The economic uncertainty at present lies around the future of the euro and the impact...
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June 7, 2012
Balancing the world through inclusive growth
Growth has undeniably been the economic goal for the last few decades. It is believed that growth does not only benefit the rich, but can also pull up those at the base of the pyramid and out poverty. But is this always the case?As many, if not all, government policies and performance indicators are focused on high GDP while ignoring issues that should be their real mandate – food security, the environment and access to healthcare, especially for the poor – I am not really convinced about the “magic of growth” in conventional terms.At the Mae Fah Luang Foundation, we believe that the...
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May 30, 2012
Finding growth opportunities in trade
Governments worldwide, but particularly in Europe, are looking for growth. Can trade provide it? And to enable it, can we apply austerity to trade barriers and stimulus to trade facilitation?There is a growing view that traditional trade objectives focused on market access are becoming outdated in a world in which value is added incrementally in numerous locations. Physical, administrative and informational obstructions to trade are a greater deterrent than tariff barriers.Business wants policy-makers to address key constraints that obstruct the movement of goods or increase supply chain...
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May 23, 2012
A Shared Agenda to Grow Africa
What do three heads of state, 10 ministers, 116 companies and a group of farmer leaders have in common?They all want to see growth in Africa’s agriculture sector.So do we – which is why we found ourselves at the Grow Africa Investment Forum in Addis Ababa, Ethiopia, last Wednesday, in a room packed with nearly 300 people at the closing session. The atmosphere in the room was slightly electric, suspenseful.One by one, speakers rose to say they felt we were nearing a tipping point. “What an epic moment,” said Josette Sheeran, the new Vice-Chair of the World Economic Forum, whose previous...
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May 15, 2012
The road to Africa 2022
Africa in 10 years time. This was the thread of discussion on the final day of the World Economic Forum for Africa. World leaders and leaders of thought and innovation considered the question. Where can Africa be in 10 years time? How should it look?Opinions centred, inevitably, around education, economic prosperity and employment for the youth of the continent.But I have my own question. How will Africa look in 2022 if we do not enable the whole population to deploy its abundance of home-grown innovation? What will happen if women and men are not able to engage in the development of the...
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May 15, 2012
Africa’s Transformation is already well under way
As this meeting draws to a close, I have been privileged to hear, feel and interact with the grand ideas that are gestating around Africa’s Transformation. I have heard about the immense opportunities that lie before us in the agriculture sector, a sector bursting with the potential to “feed the world”, putting Africa back in her rightful and historic place as a breadbasket for the world, capable of feeding rather than being fed.I have experienced the extent to which the continent’s people are embracing, deploying and crafting technology, something I have more than a passing interest in as I...
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May 11, 2012
African potential – it’s time to “Grow Africa”
A quarter of a century ago, Africa was seen as a land of famine. And while much has improved, hunger crises continue to haunt the continent, emerging most recently in the Sahel region and East Africa. As global food prices have spiked repeatedly over the past five years, the resulting rise in hunger, poverty and political instability have reminded us how many African families live close to the edge of food insecurity.With agriculture providing 70% of employment and 30% of GDP in Africa, on average, Africa’s well-being is closely tied to its agriculture sector – for better or worse.Now,...
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May 8, 2012
Africa is a continent of opportunities
In January, I was at the World Economic Forum in Davos as a Global Shaper representing Ethiopia and the Addis Hub. This meant a very rare and unique opportunity to meet and share experiences with amazing young people from all corners of the world, with impeccable achievements ranging from leading corporations to leading revolutions. It also meant unlimited access to more than 2500 corporate, political and civil society leaders that were gathered in Davos.While in Davos, out of the hundreds of sessions, I attended four sessions on Africa. Surprisingly, the usual grim and gloomy...
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May 7, 2012
BRICS: The “S” for South Africa represents the rising “A” for Africa
After successfully hosting the 2010 FIFA Soccer World Cup, it was a case of double celebration when the country was invited to join Brazil, Russia, India and China to be a member of the BRICS. Of course, compared to these economic giants, South Africa’s economy, population and growth prospects are quite small.However, since the advent of democracy in 1994, South Africa has often punched above its weight in global terms. Furthermore, the inclusion of South Africa has certainly cemented the rising optimism about the prospects for African growth and a changing narrative for the continent. It is...
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March 28, 2012
Bringing growth to Brazilian shores
In a series of posts leading up to the World Economic Forum’s Energy for Economic Growth report launched on Wednesday 7th March 2012, José Sergio Gabrielli de Azevedo, President and Chief Executive Officer, Petrobras, Brazil, expresses his hopes for Brazilian economic growth through the development of pre-salt oil reserves.Since we discovered the pre-salt oil fields offshore Brazil in 2007, much has been said about the potential for the area to become one of the world’s major oil and gas provinces. Indeed, the IEA points out that the pre-salt fields could be a gamechanger for our company...
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March 5, 2012
Africa 3.0
When history is being made, the participants sometimes do not recognize it. When history is being made, it at times happens unknowingly and can be easily passed off as an ordinary affair initially. All in all, it is incumbent on the partakers of history to recognize the crystal moment that fate has brought upon them, to harness that moment and provide the opportunity for it to have a lifetime effect. These unique moments can change the course of our lives and shift the order of the world, as we know it. Some are lucky to recognize when the volcanic coals appear on their laps. Unfortunately,...
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February 20, 2012
From development to growth: finding value in time
What first comes to your mind when you hear or read the word “development”? I personally visualize women’s empowerment projects, vaccination campaigns, school feeding programmes, microfinance initiatives, and not to mention humanitarian assistance, disaster risk reduction, responsibility to protect, cluster approach … I could go on. What I mean is that when I think about development, my brain automatically associates it with aid.What’s the new context for development? This year at Davos, the answer – at least the one I made for myself digesting all those insights I collected – was clear: if...
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January 29, 2012
How can we value potential to create growth?
India is eagerly awaiting her demographic dividend – the 1.1 billion working age adults that will populate our nation by 2022. 700 million Indians are under the age of 35, a stark contrast to aging Western economies. In ten years time, India will be supplying a full quarter of the world’s workforce. The question of the hour: will these workers be educated, equipped with technical training and soft skills, or will they just get by, limping along in an informal economy or unable to scale their career ladders?Our current capacity can only train 25% of new workers needed, so the Indian government...
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January 26, 2012
World Economic Forum Annual Meeting 2011
Browse the ReportSession VideosHighlights from Saturday 29 JanuaryHighlights from Friday 28 JanuaryHighlights from Thursday 27 JanuaryHighlights from Wednesday 26 JanuaryQuotes from Meeting ParticipantsThe Annual Meeting of the World Economic Forum in Davos-Klosters is perhaps best known to the world at large simply as "Davos". It is much more than a simple get-together of global leaders from many fields in a Swiss ski resort, however.The Annual Meeting provides a rethinking of our systems and exploration of strategies and solutions that have positive transformational implications. For...
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January 26, 2011
Stimulating economic growth
There is widespread agreement that the international community needs to undertake a complementary set of adjustments in national policies supported by improvements in international cooperation to rebalance the world economy and make it more inclusive and sustainable. There are numerous key points to bear in mind.Viewed over a half-century, the global economy is in better shape than the crisis might indicate. Mankind is better off than it has ever been and technology promises to make things even better. Whatever choices are made to improve global governance, care must be taken not to...
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November 3, 2010
