There is quite a list that Canadian rightly feel proud about such as having better beer than the Americans; adding colour to color and bestowing honour to honor with the extra “u”; and saying the last letter in the alphabet the way the Queen wants us too.
Now we can add one more thing we Canadians will brag about endlessly… having notoriously boring (but solvent) banks.
We are in a new era indeed when bankers become a source of national pride!
What Toronto can teach New York and London
Good and Boring
Showing posts with label economic future. Show all posts
Showing posts with label economic future. Show all posts
Monday, February 01, 2010
Saturday, November 28, 2009
Damn the Aid
I was recently directed to what is probably the most damning opinion on foreign aid I’ve come across in a while (hat tip Jodi and Tracy.)
Here’s the bottom line:
Over the past 60 years at least $1 trillion of development-related aid has been transferred from rich countries to Africa. Yet real per-capita income today is lower than it was in the 1970s, and more than 50% of the population -- over 350 million people -- live on less than a dollar a day, a figure that has nearly doubled in two decades.
The point the author makes is that Africa (and I would add other developing nations) needs investment and not aid. When you accept investment, be it equity or debt, there is significant responsibility attached to provide a return. In other words, you need to make the money work so you can pay back your investors.
Hopefully the money you make with the investment is more than what you need to pay back. If so, you have economic growth and that is good.
It’s not a perfect system, but it seems to work in places like India, SE Asia and more recently in Latin America (the Economist gushed on Brazil in its cover story a few weeks back.)
I’ve touched on this point before, but my view is that the world is awash with capital trying to find its way into places like Africa. Yes, I know there is a credit crunch going on but I think the view still holds.
African countries could start by issuing bonds to raise cash. To be sure, the traditional capital markets of the U.S. and Europe remain challenging. However, African countries could explore opportunities to raise capital in more non-traditional markets such as the Middle East and China (whose foreign exchange reserves are more than $4 trillion). Moreover, the current market malaise provides an opening for African countries to focus on acquiring credit ratings (a prerequisite to accessing the bond markets), and preparing themselves for the time when the capital markets return to some semblance of normalcy.
I would also add multilateral institutions and development banks as potential partners. Yes they have been part of the problem in the past, endlessly financing non-returning projects. But there are factions within these organizations that are now demanding a return and reform for their development financing dollars, and that is a good thing.
Corporations are eager to invest in developing country as well. The problem is there aren’t any good projects to invest in. There is a lot of money sitting on the sidelines waiting for the right time to enter Africa (I’m talking about investment in things other than resource extraction).
So what is everyone waiting for? Institutional reform for one (or even institutional creation in some instances)
Governments need to attract more foreign direct investment by creating attractive tax structures and reducing the red tape and complex regulations for businesses. African nations should also focus on increasing trade; China is one promising partner. And Western countries can help by cutting off the cycle of giving something for nothing. It's time for a change.
I would disagree with the point on China. Yes, China is pouring money into Africa but it is doing so to buy up resources and it is hard to see China making the demands for reform an outside investor has to make on Africa. Recent news from Dubai may make the Middle East a less active investor as well.
Why Foreign Aid Is Hurting Africa - WSJ.com
Here’s the bottom line:
Over the past 60 years at least $1 trillion of development-related aid has been transferred from rich countries to Africa. Yet real per-capita income today is lower than it was in the 1970s, and more than 50% of the population -- over 350 million people -- live on less than a dollar a day, a figure that has nearly doubled in two decades.
The point the author makes is that Africa (and I would add other developing nations) needs investment and not aid. When you accept investment, be it equity or debt, there is significant responsibility attached to provide a return. In other words, you need to make the money work so you can pay back your investors.
Hopefully the money you make with the investment is more than what you need to pay back. If so, you have economic growth and that is good.
It’s not a perfect system, but it seems to work in places like India, SE Asia and more recently in Latin America (the Economist gushed on Brazil in its cover story a few weeks back.)
I’ve touched on this point before, but my view is that the world is awash with capital trying to find its way into places like Africa. Yes, I know there is a credit crunch going on but I think the view still holds.
African countries could start by issuing bonds to raise cash. To be sure, the traditional capital markets of the U.S. and Europe remain challenging. However, African countries could explore opportunities to raise capital in more non-traditional markets such as the Middle East and China (whose foreign exchange reserves are more than $4 trillion). Moreover, the current market malaise provides an opening for African countries to focus on acquiring credit ratings (a prerequisite to accessing the bond markets), and preparing themselves for the time when the capital markets return to some semblance of normalcy.
I would also add multilateral institutions and development banks as potential partners. Yes they have been part of the problem in the past, endlessly financing non-returning projects. But there are factions within these organizations that are now demanding a return and reform for their development financing dollars, and that is a good thing.
Corporations are eager to invest in developing country as well. The problem is there aren’t any good projects to invest in. There is a lot of money sitting on the sidelines waiting for the right time to enter Africa (I’m talking about investment in things other than resource extraction).
So what is everyone waiting for? Institutional reform for one (or even institutional creation in some instances)
Governments need to attract more foreign direct investment by creating attractive tax structures and reducing the red tape and complex regulations for businesses. African nations should also focus on increasing trade; China is one promising partner. And Western countries can help by cutting off the cycle of giving something for nothing. It's time for a change.
I would disagree with the point on China. Yes, China is pouring money into Africa but it is doing so to buy up resources and it is hard to see China making the demands for reform an outside investor has to make on Africa. Recent news from Dubai may make the Middle East a less active investor as well.
Why Foreign Aid Is Hurting Africa - WSJ.com
Wednesday, November 18, 2009
Climbing out of the Aid Trap
Although I would probably disagree with Glenn Hubbard about a lot of things, I am very eager to read his new book questioning the efficacy of past international aid initiatives.
The simple truth is that billions have been spent on aid, and billions are still left in poverty. Something clearly isn’t working. I understand that Hubbard looks at the post WWII Marshall Plan for inspiration on what could be done in the 21st century to address global poverty. Interesting idea.
Here’s a great quote talking about why microfinance isn’t enough. I’ll pre-empt the quote to say that I agree. Microfinance is great in certain instances, the rural poor for example, to help people on the path to economic development. But microfinance doesn’t really help SMBs and there is a real gap in the market there. Often SMBs are too big for microfinance, but too small for a regular bank loan, so they’re stuck. Happily, this gap seems to be filling in in many countries
Microfinance can be a catalyst for entrepreneurship up to a certain stage of business development, but the businesses launched through microfinance need to develop into full-fledged small businesses if they are to promote greater economic growth. Small and medium-sized businesses are the source of growth in all countries. Eighty percent of China’s employment, for example, is in small business — not in microfinance.
The barriers to growing past micro-entrepreneurship are formidable. Starting a formally-recognized business can require months of waiting, and paying enormous fees — including bribes — as the Doing Business rankings show. An example we use in the book is Mozambique, where starting a business requires forms 12 government agencies; you also have to pay bribes to each of the 12 government employees who stamp your documents. When you have 12 stamps, you can — at last — run your business without fear of being shut down. Similar hurdles in other countries mean that micro-entrepreneurs have a very difficult time becoming a political or economic force strong enough to challenge the status quo.
The bright spot is that micro-lenders are increasingly expanding their loan programs to serve not only individuals, but also established small and medium-sized businesses. Our proposal includes provisions for supporting existing small and medium-sized businesses through microfinance institutions.
Climbing out of the Aid Trap
The simple truth is that billions have been spent on aid, and billions are still left in poverty. Something clearly isn’t working. I understand that Hubbard looks at the post WWII Marshall Plan for inspiration on what could be done in the 21st century to address global poverty. Interesting idea.
Here’s a great quote talking about why microfinance isn’t enough. I’ll pre-empt the quote to say that I agree. Microfinance is great in certain instances, the rural poor for example, to help people on the path to economic development. But microfinance doesn’t really help SMBs and there is a real gap in the market there. Often SMBs are too big for microfinance, but too small for a regular bank loan, so they’re stuck. Happily, this gap seems to be filling in in many countries
Microfinance can be a catalyst for entrepreneurship up to a certain stage of business development, but the businesses launched through microfinance need to develop into full-fledged small businesses if they are to promote greater economic growth. Small and medium-sized businesses are the source of growth in all countries. Eighty percent of China’s employment, for example, is in small business — not in microfinance.
The barriers to growing past micro-entrepreneurship are formidable. Starting a formally-recognized business can require months of waiting, and paying enormous fees — including bribes — as the Doing Business rankings show. An example we use in the book is Mozambique, where starting a business requires forms 12 government agencies; you also have to pay bribes to each of the 12 government employees who stamp your documents. When you have 12 stamps, you can — at last — run your business without fear of being shut down. Similar hurdles in other countries mean that micro-entrepreneurs have a very difficult time becoming a political or economic force strong enough to challenge the status quo.
The bright spot is that micro-lenders are increasingly expanding their loan programs to serve not only individuals, but also established small and medium-sized businesses. Our proposal includes provisions for supporting existing small and medium-sized businesses through microfinance institutions.
Climbing out of the Aid Trap
Friday, November 06, 2009
Woman passes 950th driving test
Valuable lesson in persistence. She narrowly beats my record for most driving tests attempted.
BBC NEWS | Asia-Pacific | Woman passes 950th driving test
BBC NEWS | Asia-Pacific | Woman passes 950th driving test
Friday, August 28, 2009
What the credit crisis should tell us about climate change
Given how well excessive financial engineering seems to have buggered the economy, I’m amazed that there are some who advocate “climate engineering” to address the issue of global warming.
I’m all for trying out new technologies, in addition to reducing carbon emissions, as a way to try to mitigate some of the potential damage that climate change could have on the very fabric of humanity.
But thinking that there are some quick and easy gadget-driven fixes such as, and I quote: “one proposal would have boats spray seawater droplets into clouds above the sea to make them reflect more sunlight back into space” seems a little...ahem...pie-in-the-sky.
To further quote:
Some economic models find that target impossible to reach without drastic action, like cutting the world population by a third. Other models show that achieving the target by a high CO2 tax would reduce world GDP a staggering 12.9% in 2100—the equivalent of $40 trillion a year.
Some may claim that global warming will be so terrible that a 12.9% reduction in GDP is a small price to pay. But consider that the majority of economic models show that unconstrained global warming would cost rich nations around 2% of GDP and poor countries around 5% by 2100.
Right, because, as we’ve noticed with a credit crisis, economic models have served us so well.
Again, I’m not trying to be anti-intellectual here. I greatly respect the models economists do as a guide to help us think about the possible consequences of our actions. But that is all they are, models and guides, which do, and should, change as new data becomes available. I greatly respect technology as a fundamental tool for human advancement. But that is all technology is, a tool used by intelligent people, not a deus ex machina, bailing us out at the critical moment of tragedy.
In a time when we worry about how government action will have “unintended consequences” on the global economy, I’m amazed at how readily people accept the notion of climate engineering. The Earth’s climate is an infinitely more complex system than the global economy. The climate is the poster child for Chaos theory and how small perturbations can lead to enormous and unexpected results.
I defer here to Black Swan Nicholas Nassim Taleb who has had some of the most fascinating comments on our current economic crisis. Of climate change he said:
I am hyper-conservative ecologically (meaning super-Green). My position on the climate is to avoid releasing pollutants in the atmosphere, on the basis of ignorance, regardless of current expert opinion (climate experts, like banking risk managers, have failed us in the past in foreseeing long term damages and I cannot accept certainty in a certain class of nonlinear models). This is an extension of my general idea that one does not need rationalization with the use of complicated models (by fallible experts) to the edict: "do not disturb a complex system" since we do not know the consequences of our actions owing to complicated causal webs. (Incidentally, this ideas also makes me anti-war). I explicitly explained the need to “leave the planet the way we got it” .
Bjorn Lomborg: Technology Can Fight Global Warming - WSJ.com
Inversion of Statements Made During My Meeting With David Cameron
I’m all for trying out new technologies, in addition to reducing carbon emissions, as a way to try to mitigate some of the potential damage that climate change could have on the very fabric of humanity.
But thinking that there are some quick and easy gadget-driven fixes such as, and I quote: “one proposal would have boats spray seawater droplets into clouds above the sea to make them reflect more sunlight back into space” seems a little...ahem...pie-in-the-sky.
To further quote:
Some economic models find that target impossible to reach without drastic action, like cutting the world population by a third. Other models show that achieving the target by a high CO2 tax would reduce world GDP a staggering 12.9% in 2100—the equivalent of $40 trillion a year.
Some may claim that global warming will be so terrible that a 12.9% reduction in GDP is a small price to pay. But consider that the majority of economic models show that unconstrained global warming would cost rich nations around 2% of GDP and poor countries around 5% by 2100.
Right, because, as we’ve noticed with a credit crisis, economic models have served us so well.
Again, I’m not trying to be anti-intellectual here. I greatly respect the models economists do as a guide to help us think about the possible consequences of our actions. But that is all they are, models and guides, which do, and should, change as new data becomes available. I greatly respect technology as a fundamental tool for human advancement. But that is all technology is, a tool used by intelligent people, not a deus ex machina, bailing us out at the critical moment of tragedy.
In a time when we worry about how government action will have “unintended consequences” on the global economy, I’m amazed at how readily people accept the notion of climate engineering. The Earth’s climate is an infinitely more complex system than the global economy. The climate is the poster child for Chaos theory and how small perturbations can lead to enormous and unexpected results.
I defer here to Black Swan Nicholas Nassim Taleb who has had some of the most fascinating comments on our current economic crisis. Of climate change he said:
I am hyper-conservative ecologically (meaning super-Green). My position on the climate is to avoid releasing pollutants in the atmosphere, on the basis of ignorance, regardless of current expert opinion (climate experts, like banking risk managers, have failed us in the past in foreseeing long term damages and I cannot accept certainty in a certain class of nonlinear models). This is an extension of my general idea that one does not need rationalization with the use of complicated models (by fallible experts) to the edict: "do not disturb a complex system" since we do not know the consequences of our actions owing to complicated causal webs. (Incidentally, this ideas also makes me anti-war). I explicitly explained the need to “leave the planet the way we got it” .
Bjorn Lomborg: Technology Can Fight Global Warming - WSJ.com
Inversion of Statements Made During My Meeting With David Cameron
Sunday, July 05, 2009
Working on my new investment strategy
So over the past couple of months/years, my personal finances have become a bit of a mess. I had too many accounts with too many brokers and it was too hard to tell what was going on. So some accounts got super-whacked by the recession and some got brutally-whacked. I wasn’t sure which got whacked the hardest and why so over the past little while I’ve been consolidating all the accounts into one place, so I can get a nice overview of what is going on.
I got phase 1 completed a few weeks back and now have a single view on our various retirement and retail accounts (well, sorta, no sense in going into the gory details.)
Now, what to do with what little cash remains?
The accounts are currently filled with a variety of funds but I get the sense there is a lot of overlap here. Different funds, probably covering the same parts of the market, exist in different accounts; I’m going to have to spend some time untangling and figuring out which are the funds to keep and which I should jettison. Diversity is still your friend, and I think I have a lot of redundancy.
I’ve already done a couple of moves. In one account (Roth IRA) I loaded up on a TIPS fund. Yes, I am very worried about inflation and since that account didn’t have any bonds in it, I took the TIPS mutual fund route. My wife and I have a Roth each so I don’t mind sacrificing growth on one, if I think it is a little less risky. Right now, a TIPS mutual fund sounds like the right kind of risk mitigation.
In the retail account, I went back to an old friend, EWZ (Brazil ETF.) I made pretty good money off if this ETF over the past 5-6 years. Last year I fell asleep at the wheel and got totally spanked in Oct when this ETF fell like a ton of bricks (BRICs?)
Anyway it seems to be coming back and while I’ve missed some of the early upside, there may be more to come (I hope!) I’ve always liked Brazil. It has a solid financial sector, good exposure to commodities but still pretty diversified with a strong manufacturing base as well.
In the retail account I also bought into a California Municipal Bond fund. Yes, I know the state’s finances suck but I’m counting on it not defaulting. The yield may go up on the state’s munis so that may be nice plus I’m looking for a little tax protection.
I’ll let you know as to my other moves. Basically in my other accounts (IRA, Roth IRA) I’ve got a bunch of large-cap funds, which I need to diversify away from, and a REIT, which I may keep, I’m not sure yet.
I got phase 1 completed a few weeks back and now have a single view on our various retirement and retail accounts (well, sorta, no sense in going into the gory details.)
Now, what to do with what little cash remains?
The accounts are currently filled with a variety of funds but I get the sense there is a lot of overlap here. Different funds, probably covering the same parts of the market, exist in different accounts; I’m going to have to spend some time untangling and figuring out which are the funds to keep and which I should jettison. Diversity is still your friend, and I think I have a lot of redundancy.
I’ve already done a couple of moves. In one account (Roth IRA) I loaded up on a TIPS fund. Yes, I am very worried about inflation and since that account didn’t have any bonds in it, I took the TIPS mutual fund route. My wife and I have a Roth each so I don’t mind sacrificing growth on one, if I think it is a little less risky. Right now, a TIPS mutual fund sounds like the right kind of risk mitigation.
In the retail account, I went back to an old friend, EWZ (Brazil ETF.) I made pretty good money off if this ETF over the past 5-6 years. Last year I fell asleep at the wheel and got totally spanked in Oct when this ETF fell like a ton of bricks (BRICs?)
Anyway it seems to be coming back and while I’ve missed some of the early upside, there may be more to come (I hope!) I’ve always liked Brazil. It has a solid financial sector, good exposure to commodities but still pretty diversified with a strong manufacturing base as well.
In the retail account I also bought into a California Municipal Bond fund. Yes, I know the state’s finances suck but I’m counting on it not defaulting. The yield may go up on the state’s munis so that may be nice plus I’m looking for a little tax protection.
I’ll let you know as to my other moves. Basically in my other accounts (IRA, Roth IRA) I’ve got a bunch of large-cap funds, which I need to diversify away from, and a REIT, which I may keep, I’m not sure yet.
Monday, June 29, 2009
China's Super-Sovereign Reserve Currency Idea: Could the SDR Be a Reserve Currency?
China's Super-Sovereign Reserve Currency Idea: Could the SDR Be a Reserve Currency?
This I think is one of the more interesting thoughts on China's push to SDR's as reserve currency:
"Foley: In the short term the costs to the US of losing its role as the reserve currency would be significant as it would lose seignorage benefits and ability to borrow in its own currency. In the longer term, the U.S. would benefit as it would regain some control over its currency. A central currency would make it harder for one country to get into so much debt to another. If the currency was increased along with global GDP it could provide a steady store of value."
Although bitter medicine, the US dollar losing its place as the global reserve currency could actually benefit the US economy in the long-term because it would force the US to lessen its reliance on debt and increase its savings.
Yes, that would cut consumption and lower growth rates, but the growth that does occur will be more stable and sustainable.
This I think is one of the more interesting thoughts on China's push to SDR's as reserve currency:
"Foley: In the short term the costs to the US of losing its role as the reserve currency would be significant as it would lose seignorage benefits and ability to borrow in its own currency. In the longer term, the U.S. would benefit as it would regain some control over its currency. A central currency would make it harder for one country to get into so much debt to another. If the currency was increased along with global GDP it could provide a steady store of value."
Although bitter medicine, the US dollar losing its place as the global reserve currency could actually benefit the US economy in the long-term because it would force the US to lessen its reliance on debt and increase its savings.
Yes, that would cut consumption and lower growth rates, but the growth that does occur will be more stable and sustainable.
Tuesday, June 16, 2009
Reaching out to emerging markets
Fantastic piece inthe Globe on Canada’s need to expand its economic and commercial horizons beyond the US. This has been a refrain for some time now but the writer nicely summarizes the key points. As I deal in emerging markets investments for a large US firm this topic is of particular interest to me. At conferences and in conversations, Canada is noticeable absent from the emerging markets dialog.
Canada does not have a holistic strategy on how to engage emerging markets. I use the word “holistic” because it needs to include Canada’s foreign policy and international trade interests. It seems to me that there is a separation of church and state in Canada around foreign policy and trade. In our economically interconnected world, this separation is not a sophisticated strategy. With a relatively strong banking sector, Canada has the unique opportunity to use its national balance sheet to create economic and policy linkages in the emerging markets.
Don’t forget, the emerging markets are going through a recession because the West, a main customer, is going through a recession. But there isn’t a fundamental crisis of finance in the emerging markets as there is in the West (an ironic twist of fate, one could say.) So the emerging markets remain open to do business with whoever still has capital.
Despite current challenges, Canada still has capital, but it is not seizing the opportunity to use it and expand its economic and political influence.
Some thoughts on what the writer said:
By 2050, China and India are set to be the No. 1 and No. 3 economies in the world by GDP, and together will be larger than the G7 combined.
Yes, but the US is still #2, so let’s not get too ahead of ourselves. And if we look at GDP per capita, the US will remain number 1 for a very long time.
Moreover, the emerging patterns of global trade, travel and investment are increasingly multidirectional - from China to Africa, Brazil to India and no longer guaranteed to flow through the once dominant hubs of Europe and the United States.
Great point. All Western countries, not just Canada, need to better understand this trend.
Our competitors are cued up with active strategies and we risk losing out if we do not act quickly and with focus.
The US and Europe have diverse strategies that engage the emerging markets with a combination of aid, expertise, commercial contacts, loans, equity investments, technology sharing, JVs, the list goes on and on. It involves national governments and companies together creating linkages in the emerging markets and using a portfolio of investments, loans and grants to win influence and business. Canada doesn’t seem to get this.
The structural advantage is we have a good story for the times. Canada's relative financial stability amidst crisis, our advanced resource markets, quiet excellence in many of the emerging 21st-century technology areas, from clean tech to agriculture, in addition to the advantage that comes from our diversity, make for a compelling story that, if marketed well, will find ready global audiences.
Agreed
Being a destination and source of trade with India is essential - but better still, we need to be part of India's strategy for Brazil. Innovative trade and corporate strategies should be focused on building these trade triangles.
Genius.. This man for PM.
An effective diversification strategy requires focusing even greater corporate and public diplomatic resources on three key markets: Latin America, China and India.
What can I add?
To send the right signal to corporate India, Canadian business needs to take the lead and support the call for a "comprehensive economic partnership agreement" - a pathway to free trade. We should start simply by focusing on free trade in services and leave the other more contentious issue like agriculture off the table.
I agree in theory, but wonder if this will work in practice. Can Canadian businesses take the lead in building these sorts of economic partnerships? Perhaps, unfortunately, business waits too long and government must lead. That seems like a more Canadian way.
We are late to the party in these emerging markets. To jump ahead in the queue, Canada needs to get ahead of its peers with a co-ordinated public diplomacy strategy enabling us to tell a compelling 21st-century Canadian story, streamlining the cacophony of messages from our various levels of governments.
…and business communities.
Canada does not have a holistic strategy on how to engage emerging markets. I use the word “holistic” because it needs to include Canada’s foreign policy and international trade interests. It seems to me that there is a separation of church and state in Canada around foreign policy and trade. In our economically interconnected world, this separation is not a sophisticated strategy. With a relatively strong banking sector, Canada has the unique opportunity to use its national balance sheet to create economic and policy linkages in the emerging markets.
Don’t forget, the emerging markets are going through a recession because the West, a main customer, is going through a recession. But there isn’t a fundamental crisis of finance in the emerging markets as there is in the West (an ironic twist of fate, one could say.) So the emerging markets remain open to do business with whoever still has capital.
Despite current challenges, Canada still has capital, but it is not seizing the opportunity to use it and expand its economic and political influence.
Some thoughts on what the writer said:
By 2050, China and India are set to be the No. 1 and No. 3 economies in the world by GDP, and together will be larger than the G7 combined.
Yes, but the US is still #2, so let’s not get too ahead of ourselves. And if we look at GDP per capita, the US will remain number 1 for a very long time.
Moreover, the emerging patterns of global trade, travel and investment are increasingly multidirectional - from China to Africa, Brazil to India and no longer guaranteed to flow through the once dominant hubs of Europe and the United States.
Great point. All Western countries, not just Canada, need to better understand this trend.
Our competitors are cued up with active strategies and we risk losing out if we do not act quickly and with focus.
The US and Europe have diverse strategies that engage the emerging markets with a combination of aid, expertise, commercial contacts, loans, equity investments, technology sharing, JVs, the list goes on and on. It involves national governments and companies together creating linkages in the emerging markets and using a portfolio of investments, loans and grants to win influence and business. Canada doesn’t seem to get this.
The structural advantage is we have a good story for the times. Canada's relative financial stability amidst crisis, our advanced resource markets, quiet excellence in many of the emerging 21st-century technology areas, from clean tech to agriculture, in addition to the advantage that comes from our diversity, make for a compelling story that, if marketed well, will find ready global audiences.
Agreed
Being a destination and source of trade with India is essential - but better still, we need to be part of India's strategy for Brazil. Innovative trade and corporate strategies should be focused on building these trade triangles.
Genius.. This man for PM.
An effective diversification strategy requires focusing even greater corporate and public diplomatic resources on three key markets: Latin America, China and India.
What can I add?
To send the right signal to corporate India, Canadian business needs to take the lead and support the call for a "comprehensive economic partnership agreement" - a pathway to free trade. We should start simply by focusing on free trade in services and leave the other more contentious issue like agriculture off the table.
I agree in theory, but wonder if this will work in practice. Can Canadian businesses take the lead in building these sorts of economic partnerships? Perhaps, unfortunately, business waits too long and government must lead. That seems like a more Canadian way.
We are late to the party in these emerging markets. To jump ahead in the queue, Canada needs to get ahead of its peers with a co-ordinated public diplomacy strategy enabling us to tell a compelling 21st-century Canadian story, streamlining the cacophony of messages from our various levels of governments.
…and business communities.
Wednesday, April 15, 2009
Evolution of the newspaper
Currently it is very trendy to talk about the "death of the media" but I think a more sophisticated discussion should rather focus on its evolution. Yes, it is painful for those involved and yes the result may be a media product that is quite different than what we've been used to in the past.
But then again, find me one industry that has essentially remained unchanged over the past 100 or so years (the auto industry immediately springs to mind.... great model they turned out to be.)
Hyper-local sites like the one starting in Seattle may very well be the next step in the evolution of the local paper. There are already some excellent models out there, most notably in San Diego.
Admittedly, these are non-profits at the moment but hopefully these will evolve into sustainable for-profit models. Whatever business models these non-profits may eventually come up with will probably be better than some of the questionable management decisions that are currently plaguing parts of the media industry.
But then again, find me one industry that has essentially remained unchanged over the past 100 or so years (the auto industry immediately springs to mind.... great model they turned out to be.)
Hyper-local sites like the one starting in Seattle may very well be the next step in the evolution of the local paper. There are already some excellent models out there, most notably in San Diego.
Admittedly, these are non-profits at the moment but hopefully these will evolve into sustainable for-profit models. Whatever business models these non-profits may eventually come up with will probably be better than some of the questionable management decisions that are currently plaguing parts of the media industry.
Friday, April 10, 2009
The new normal - The McKinsey Quarterly - The new normal - Strategy - Strategic Thinking
Quick look at the “new normal” by McKinsey. Not a lot of detail here but in the spirit of the article, here are a couple of my “new normal” predictions;
1) The economy will be more slow burn. With (somewhat) higher savings rates and (somewhat) lower consumption, the economy will be on a slower, but hopefully more sustainable and less bubbly) path
2) I don’t want to overstate the higher savings/lower consumption in the US. Yes, there will be some changes in consumption patterns but it won’t be extreme. The US is not going to turn into Asia-type supersavers and consumer credit will trickle back to fuel consumption.
3) Western/Ango-Saxon/whatever you want to call it capitalism won’t die. It won’t even be on life support. Yes, it may evolve somewhat. Yes, there may be more regulations. But the core principles will remain
4) I hope I can say the same for globalization. I don’t think there is great long-term threat to globalization but there may be bumps
The new normal - The McKinsey Quarterly - The new normal - Strategy - Strategic Thinking
1) The economy will be more slow burn. With (somewhat) higher savings rates and (somewhat) lower consumption, the economy will be on a slower, but hopefully more sustainable and less bubbly) path
2) I don’t want to overstate the higher savings/lower consumption in the US. Yes, there will be some changes in consumption patterns but it won’t be extreme. The US is not going to turn into Asia-type supersavers and consumer credit will trickle back to fuel consumption.
3) Western/Ango-Saxon/whatever you want to call it capitalism won’t die. It won’t even be on life support. Yes, it may evolve somewhat. Yes, there may be more regulations. But the core principles will remain
4) I hope I can say the same for globalization. I don’t think there is great long-term threat to globalization but there may be bumps
The new normal - The McKinsey Quarterly - The new normal - Strategy - Strategic Thinking
Thursday, April 09, 2009
Homegrown Aid
Short but compelling case for bottom-up development, meaning letting poor countries decide for themselves how to allocate development resources.
Make development results-based rather than consultant-based. I'll leave it to Jeffrey Sachs to explain far better than I could:
Rather than have Washington (Penguin: or anyone else) decide the kind of aid each country will receive, the recipient countries should be invited to prepare plans and budgets that would be reviewed by independent experts. These plans would describe the inputs needed by the farmers, the expected increase in production, how the strategy would be put into place and how much money would be required. Such plans, if described with care, could then be closely monitored by the United States and other donors to gauge results and avoid corruption.
Two international programs during the last decade, championed jointly by the United States, other governments and the Gates Foundation, have demonstrated the benefits of such a scientific, results-based aid approach: the Global Alliance for Vaccines and Immunization, and the Global Fund to Fight AIDS, Tuberculosis and Malaria. These programs have saved millions of lives and protected hundreds of millions more from disease and infection. Here’s how they work: Low-income countries submit national action plans to the two programs, which then scrutinize the plans on their scientific, financial and management merits. If the plans are properly put into effect, recipients get more financing.
I would even take it one step farther and in certain cases, only where is makes sense, have outside investors come in to provide either loans or risk capital. When done properly (ie, this is NOT a peanut butter solution that can be spread over every problem) but when done properly, local for-profit entities working on local social problems could benefit from insights and knowledge of outside investors.
Make development results-based rather than consultant-based. I'll leave it to Jeffrey Sachs to explain far better than I could:
Rather than have Washington (Penguin: or anyone else) decide the kind of aid each country will receive, the recipient countries should be invited to prepare plans and budgets that would be reviewed by independent experts. These plans would describe the inputs needed by the farmers, the expected increase in production, how the strategy would be put into place and how much money would be required. Such plans, if described with care, could then be closely monitored by the United States and other donors to gauge results and avoid corruption.
Two international programs during the last decade, championed jointly by the United States, other governments and the Gates Foundation, have demonstrated the benefits of such a scientific, results-based aid approach: the Global Alliance for Vaccines and Immunization, and the Global Fund to Fight AIDS, Tuberculosis and Malaria. These programs have saved millions of lives and protected hundreds of millions more from disease and infection. Here’s how they work: Low-income countries submit national action plans to the two programs, which then scrutinize the plans on their scientific, financial and management merits. If the plans are properly put into effect, recipients get more financing.
I would even take it one step farther and in certain cases, only where is makes sense, have outside investors come in to provide either loans or risk capital. When done properly (ie, this is NOT a peanut butter solution that can be spread over every problem) but when done properly, local for-profit entities working on local social problems could benefit from insights and knowledge of outside investors.
Friday, April 03, 2009
Missed the last rally...?
...Don't worry, it probably won't last.
The market has been a lousy predictor. People used to say that the stock market predicted 12 out of the last nine recessions. This time, it predicted six out of the last zero economic recoveries. Every time there was a rally, and then the macro[economic] news, the earning news, the financial news was worse, and the market touched a new low.
reportonbusiness.com: A big bear: Markets 'way too optimistic'
The market has been a lousy predictor. People used to say that the stock market predicted 12 out of the last nine recessions. This time, it predicted six out of the last zero economic recoveries. Every time there was a rally, and then the macro[economic] news, the earning news, the financial news was worse, and the market touched a new low.
reportonbusiness.com: A big bear: Markets 'way too optimistic'
Don't worry be happy... or maybe not
I love John Authers... he sorta reminds me of a British, slightly too earnest David Gergen.
Anyways, I'm always looking for some good news in the economy and John provides a bit for us here. Or maybe not... wait to the end when he at the last second puts things into some sort of historical context and suggests we may be more screwed than ever.
Short View: Happy Days
Anyways, I'm always looking for some good news in the economy and John provides a bit for us here. Or maybe not... wait to the end when he at the last second puts things into some sort of historical context and suggests we may be more screwed than ever.
Short View: Happy Days
Monday, August 04, 2008
Entrepreneurship | Spreading the gospel | Economist.com
Another example of using entrepreneurship and market forces as tools for global development.
I highlight this example and examples such as Digicel not to discredit more traditional forms of development (although those models could use a re-working), but to illustrate that developments needs a portfolio approach.
There is no one model (for-profit or non-profit) that can help raise people out of poverty. Rather it takes the efforts of many different organizations, with different goals and motivations to really raise the lot of the global poor. For too long perhaps we have focused on the non-profit model and it is now clear that some of the most exciting thinking is coming out of the for-profit world.
I highlight this example and examples such as Digicel not to discredit more traditional forms of development (although those models could use a re-working), but to illustrate that developments needs a portfolio approach.
There is no one model (for-profit or non-profit) that can help raise people out of poverty. Rather it takes the efforts of many different organizations, with different goals and motivations to really raise the lot of the global poor. For too long perhaps we have focused on the non-profit model and it is now clear that some of the most exciting thinking is coming out of the for-profit world.
Monday, July 07, 2008
Why the US auto industry is sinking....
... in a word "innovation" or lack thereof.
Great article in today's NYTimes "Asleep at the spigot" on how US automakers and unions blustered and lobbied politicians and did anything but the right thing, innovate and make cars for the future. Now they are paying the price and are a great cautionary tale for other industries that may become complacent and lazy.
That’s the great thing about economics and markets, eventually it'll trump any sort of backward ideology. For some reason, US carmakers and their supporters thought it was a right to make and sell backward-thinking behemoths, regardless of what was happening in global oil markets. They didn't pay attention to where the auto and fuel markets were going and are now far behind more intelligent competitors that understood the market for how it really is, not for how they can manipulate politicians to say it should be.
Great article in today's NYTimes "Asleep at the spigot" on how US automakers and unions blustered and lobbied politicians and did anything but the right thing, innovate and make cars for the future. Now they are paying the price and are a great cautionary tale for other industries that may become complacent and lazy.
That’s the great thing about economics and markets, eventually it'll trump any sort of backward ideology. For some reason, US carmakers and their supporters thought it was a right to make and sell backward-thinking behemoths, regardless of what was happening in global oil markets. They didn't pay attention to where the auto and fuel markets were going and are now far behind more intelligent competitors that understood the market for how it really is, not for how they can manipulate politicians to say it should be.
Wednesday, July 02, 2008
Wednesday, June 18, 2008
The economic future of my daughter: pt i
With the birth of my daughter, as well as with all the crazy news in the market as of late (oil prices, subprime blah blah, inflation and so on) I’ve been thinking about what sort of economy my daughter will grow up with. I’m 36, which is pretty much the same age my dad was when he had me. So here are some thoughts on what economic forces will be bearing down on my daughter when she is 36.
Her diet will be different: Meat and animal products will continue to get more expensive as feed prices continue to rise. The price of feed/meat won’t be a direct straight-line to the upper right, but the inexorable trend will be in that direction. The result is that meat and animal products will continue to become more of a luxury. There may be meat substitutions, which will be entirely synthetic meat that is manufactured in a lab somewhere.
Transportation will be reduced: People simply won’t travel as much. Oil prices will rise at a rate faster than our ability to replace oil as the basis for our fuel. This will result in changes in our behavior and the increased use of substitution technologies.
Increased urbanization: One behavioral change will be an increased migration back to the city. The economic of travel will force us to live closer to work and amenities. She won’t be driving to the store as much as she’ll be walking to it, perhaps on her way back from work. That downside is she may not travel as much for pleasure, but there may be some solutions for that.
Substitutions technologies: Things like holograms and advanced video conferencing will step out of the pages of scifi novels and become a practical reality for my daughter. She’ll be telecommuting to work probably more often than actually commuting. Such technologies will also begin to shape her social life as well as she may have some friends who she may never actually meet in person, and she may visit some locations without ever leaving her livingroom.
I’ve got a lot more on this subject… more to come.
Her diet will be different: Meat and animal products will continue to get more expensive as feed prices continue to rise. The price of feed/meat won’t be a direct straight-line to the upper right, but the inexorable trend will be in that direction. The result is that meat and animal products will continue to become more of a luxury. There may be meat substitutions, which will be entirely synthetic meat that is manufactured in a lab somewhere.
Transportation will be reduced: People simply won’t travel as much. Oil prices will rise at a rate faster than our ability to replace oil as the basis for our fuel. This will result in changes in our behavior and the increased use of substitution technologies.
Increased urbanization: One behavioral change will be an increased migration back to the city. The economic of travel will force us to live closer to work and amenities. She won’t be driving to the store as much as she’ll be walking to it, perhaps on her way back from work. That downside is she may not travel as much for pleasure, but there may be some solutions for that.
Substitutions technologies: Things like holograms and advanced video conferencing will step out of the pages of scifi novels and become a practical reality for my daughter. She’ll be telecommuting to work probably more often than actually commuting. Such technologies will also begin to shape her social life as well as she may have some friends who she may never actually meet in person, and she may visit some locations without ever leaving her livingroom.
I’ve got a lot more on this subject… more to come.
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