Category: Emerging Markets

De-Politicizing Climate Activism

Editors

Or how Greta Thunberg can create more converts.

“Nature is not a temple. It is a workshop, and a human being is the worker in it.”                               _                                                                                                         Ivan Turgenev

Item 1: The outbreak of coronavirus that threatens to create a global pandemic and the tragic sudden death of basketball star Kobe Bryant both remind us that the unexpected can happen quickly and that we humans live in an environment that can at times be ruthlessly hostile.

Nature, fate, providence, or whatever one chooses to call it, works in inscrutable ways. The virus will spread and endanger millions, if humans do not stop it. It has no will or conscience and would inexorably destroy those who are dearest to us, in a matter of days. And, before downing Bryant’s helicopter and killing him, his young daughter and seven others, fate or gravity did not pause for a millisecond to ponder the sadness that it would inflict on hundreds of millions all over the world through such a senseless death.

Modern society is generally free of deadly viruses and helicopters are generally safe to fly. But it took centuries of human progress to get there in both instances. And it will take more human progress and ingenuity to seal the cracks in our vigilance that allowed the coronavirus to emerge and spread, and the helicopter to crash .

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CDC photo by Dr. Fred Murphy.

Item 2: Last week in Davos, US Treasury Secretary Steven Mnuchin volunteered that climate activist Greta Thunberg ought to get an economics degree before preaching her message to grown-up policy makers. That is more confidence in university economics departments than most of Miss Thunberg’s critics would be willing to concede. It is true that Miss Thunberg’s message is incomplete, but that is not for lack of economic pedigree. The building blocks that are glaringly missing from her campaign are 1) a better understanding of Turgenev’s aphorism on nature and man, and 2) a trip or two to China, India or other fast developing countries.

Read more →

Future Hubs of Africa and Asia

Editors

On UN projections between 2015 and 2050, the world population will grow by nearly 2.38 billion people, from 7.35 billion to 9.73 billion. Although this 32% growth is a big increase, it marks a slowdown from the 66% growth rate recorded in the preceding 35 years (1980-2015). Total Fertility Rates (TFRs) have come down all over the world and are expected to continue falling.
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About half of the 2.38 billion increase will take place in sub-Saharan Africa and nearly 40% in Asia. India is the biggest contributor with a net addition of 394 million, followed by Nigeria (216m), Pakistan (120m), DR Congo (118m) and Ethiopia (89m). By 2050, all of these countries will feature in the top 10 populations by size, a list that will include the United States (expected to rank fourth) but not one European country. Outside of Africa and Asia ex-China, regional populations will be growing slowly (the Americas), stagnating (China, Europe), or receding (Japan, Eastern Europe). Read more →

Africa: 800 Million Jobs Needed

Editors

African economies are in a race to get ahead of the demographic boom.

“Let us share without fear the journey of migrants and refugees.” Pope Francis (@Pontifex) tweet on 27 September 2017.

While some people in the United States are sweating the presence, against the backdrop of a demographically stagnant white population, of the 11 million undocumented immigrants or of the 30+ million other foreign-born residents, there are far bigger numbers brewing in other parts of the world, numbers that are so large that they could affect, decades from now, the life of an American citizen far more than would the rare determined Mexican or Guatemalan who manages henceforth to scale President Trump’s purportedly impenetrable border wall.

In the next decades as was so often the case in history, the future shape of the world could once again be decided in Europe and by Europe’s and the West’s handling of Africa’s incipient demographic boom.

In fact, if you are a generous-minded European who shares the Pope’s noble sentiment and who views the ongoing wave of migrants coming into your country as a benign and positive development; or, if you believe that borders are outdated constructs and that all refugees and other immigrants should be welcomed into the rich world; indeed, if it is your view that anyone who stands in the way of this openness is misguided by racist and nefarious motives, then it behooves you to test the strength of your belief by examining the larger demographic data coming out of Africa and Asia. Read more →

A Different Kind of Border Wall

Editors

To slow mass migration, stop the illicit capital flight from poor to rich countries.

An asset manager called ____ Capital recently sent out this email seeking referrals:

The US Investor visa program allows one to invest $500,000 U.S. in a government licensed fund for a period of about five years and in around 18 months, a conditional green card is attained for the investor and their immediate family. The investor and their family can live, work and study anywhere in the United States and there are no educational, age or English language requirements.

Most experts report that on September 30th the investment amount will increase from $500k to $1.3m, a significant jump that will price out many potential investors.

There is still time to file before September 30th if you start your process with ____ Capital now.

Others can comment on the practice of selling green cards (and ultimately US citizenships) to wealthy foreigners while millions of other applicants, some of whom would be greater contributors to the United States, continue to wait in line for years. Our concern is one step removed and has to do with the legality of this money. Read more →

Capitalism Did Not Win the Cold War

SAMI J. KARAM

This article first appeared at Foreign Affairs.

Why cronyism was the real victor.

When the Soviet Union collapsed 26 years ago, it was generally agreed that the West had won the Cold War. This was affirmed by the prosperity and possibilities awaiting citizens of Western countries, as opposed to the political and economic stagnation experienced by those in Communist states. A natural conclusion, much repeated at the time, was that capitalism had finally defeated communism.

This sweeping statement was only partially true. If one took capitalism and communism as the only two protagonists in the post–World War II struggle, it was easy to see that the latter had suffered a mortal blow. But there was a third, stealthier protagonist situated between them. This was a system best identified today as cronyism. For if capitalism did win over the other two contenders in 1991, its victory was short-lived. And in the years that have followed, it is cronyism that has captured an ever-increasing share of economic activity. A survey of the distribution of power and money around the world makes it clear: cronyism, not capitalism, has ultimately prevailed. Continue reading at Foreign Affairs >>> or read the pdf below.

Capitalism-Did-Not-WinDownload

New Infrastructure in Sub-Saharan Africa

Editors

This post will be continuously updated as we learn about new projects. Go to the bottom of the page for new entries.

On the three main vectors of wealth creation, African countries have lagged other developing nations for several decades. Sub-Saharan Africa is the poorest region of the world and suffers from poor infrastructure, uneven literacy, endemic corruption, political instability and war. While this is problematic for the present, improving conditions are pointing to a more promising future.

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Al Gesh Road, Sahara. (Photo by KaiAbuSir via Wikimedia Commons)

In particular, sub-Saharan Africa could have a unique opportunity to realize a demographic dividend if its elevated fertility rate and dependency ratio decline in the same way as have those of other countries in the past.

The experience of China shows that a significant dividend can be reaped if other conducive factors are also present. Most important among them are a growing workforce that is more literate and productive, and an institutional framework that is supportive of economic development. Read more →

The Futility of Annual Top 10 Predictions

Editors

In every recent year, a black swan event has made top 10 lists appear quaintly naive and unimaginative. Our list is probably no better.

This time of year, top 10 predictions are all the rage. These lists can be interesting and entertaining but how useful are they really?

This question goes to the heart of forecasting. How futile or how useful is an attempt to forecast the economy, or technology, or world events for the next twelve months? There are three answers. Read more →

India’s Disruptive Gamble

Editors

by Ravi Srinivasan

(Ravi discussed this post at the BreakingBank$ podcast. His segment starts at 20:10.)

Modi’s demonetization was the other November 8th global earthquake.

A thorough historical record will show that not one but two man-made events shook the world on 8 November 2016. One was of course the election of Donald Trump to the US Presidency against the predictions of nearly all polls and pundits. The other was the Indian government’s shock and awe decision to withdraw from circulation all ₹500 ($7.3) and ₹1,000 ($14.6) rupee bank notes, equivalent to 85% of the country’s paper money. Although the first event dominated the headlines, the second will have a greater impact on over a billion people in India and elsewhere.

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500 rupee banknote, an endangered species since 8 November 2016.

This process known as demonetization is the latest in a series of initiatives by the Modi government to modernize Indian society and to increase financial inclusion and digitalization. Along the same lines in the past two years, other government efforts have included the ambitious and unprecedented Aadhaar national identification system started in 2012, the Aadhaar-based remittance system offered by the National Payments Corporation of India in 2013, and the Jan Dhan Yojana drive to bring financial services to lower-income segments of society. Some private players such as Paytm, Citrus Pay, Mobikwik and Freecharge have also moved in lockstep with public initiatives. Read more →

The Bridge from Laissez-Faire to Socialism

SAMI J. KARAM

Cronyism remains unchecked in the world’s largest economy.

We might object to the phrase crony capitalism for two reasons:

First, because cronyism is in some ways the antithesis of capitalism. The freedom to compete and the freedom to fail that are central tenets of capitalism are severely compromised by cronyism when in the former case powerful politicians intervene to shield their friends in business and finance from competition, and in the latter intervene again to save them from bankruptcy or occasionally from criminal prosecution. Of course, these friends in turn are no disloyal slouches and they later show themselves to be supremely appreciative by underwriting, financially and otherwise, those same politicians who had all but guaranteed their continued dominance in normal times and their survival against bad odds in times of distress. Read more →

How Demographics Explain the Economy

Editors

Aaron M. Renn, a senior fellow at the Manhattan Institute and a contributing editor at City Journal, invited founder Sami J. Karam to discuss populyst and the populyst index. Topics include the economies of America and China, Europe’s demographic stagnation and Africa’s population explosion.

TO HEAR THE PODCAST, CLICK HERE OR ON THE TIMELINE BELOW: