"When he announced another US$60-billion in financing for Africa last month, Chinese President Xi Jinping promised that the money had “no political strings attached.”
But a series of recent incidents, including cases of media censorship and heavy-handed academic controls, have cast doubt on that promise. China’s financial muscle is rapidly translating into political muscle across the continent.
At a major South African newspaper chain where Chinese investors now hold an equity stake, a columnist lost his job after he questioned China’s treatment of its Muslim minority.
In Zambia, heavily dependent on Chinese loans, a prominent Kenyan scholar was prevented from entering the country to deliver a speech critical of China. In Namibia, a Chinese diplomat publicly advised the country’s President to use pro-China wording in a coming speech. And a scholar at a South African university was told that he would not receive a visa to enter China until his classroom lectures contain more praise for Beijing."
2018/10/08: Upon closer inspection, GVCs and new technologies exhibit features that limit the upside to – and may even undermine – developing countries’ economic performance. One such feature is an overall bias in favor of skills and other capabilities. This bias reduces developing countries’ comparative advantage in traditionally labor-intensive manufacturing (and other) activities, and decreases their gains from trade.
Second, GVCs make it harder for low-income countries to use their labor-cost advantage to offset their technological disadvantage, by reducing their ability to substitute unskilled labor for other production inputs. These two features reinforce and compound each other. The evidence to date, on the employment and trade fronts, is that the disadvantages may have more than offset the advantages.
The usual response to these concerns is to stress the importance of building up complementary skills and capabilities. Developing countries must upgrade their educational systems and technical training, improve their business environment, and enhance their logistics and transport networks in order to make fuller use of new technologies, goes the oft-heard refrain.
But pointing out that developing countries need to advance on all those dimensions is neither news nor helpful development advice. It is akin to saying that development requires development. Trade and technology present an opportunity when they are able to leverage existing capabilities, and thereby provide a more direct and reliable path to development. When they demand complementary and costly investments, they are no longer a shortcut around manufacturing-led development.
Compare the new technologies with the traditional model of industrialization, which has been a powerful engine of economic growth in developing countries. First, manufacturing is tradable, which means domestic output is not constrained by demand (and incomes) at home. Second, manufacturing know-how was relatively easy to transfer across countries and, in particular, from rich to poor economies. Third, manufacturing did not make large demands on skills.
These three characteristics collectively made manufacturing a fantastic escalator to higher incomes for developing countries. New technologies present a very different picture in terms of the ease of transferring know-how and the skill requirements they imply. As a result, their net impact on low-income countries looks considerably more uncertain.
2018-10-04: technologists and U.S. trade hawks have a common but perhaps impossible mission: reverse decades of globalization in computing to try to prevent damaging attacks. Computer Networks Are Now Permanently Hackable. The web of parts makers, assemblers, testers and contractors is almost impossible to untangle.
The supply chain attack could have siphoned corporate secrets and government information while leaving few fingerprints. It’s the most insidious kind of digital spying imaginable, and some of the savviest tech minds in the world haven’t yet found a reliable way to sniff out the hardware-infiltration attacks, according to the Bloomberg Businessweek reporting. And worse, I’m not sure what, if anything, could be done to prevent this kind of snooping.
Perhaps the only surefire prevention is for Google, Apple, the U.S. government and others to build every circuit and computer chip by hand and make sure the parts and equipment never leave the sight of people they trust. This seems impossible. It would cost a fortune, of course, and it may not be practically possible at all. Over the decades, companies in China, Taiwan, the U.S., Vietnam and elsewhere in the world have developed specialization at discrete steps in manufacturing or assembly for computing equipment. It would takes years and support from the U.S. government to replicate that specialization entirely in the U.S. or other countries that American companies and the government trust.
Digital technologies, such as ever-higher-quality communications and remote management with virtual reality or telepresence, will make countries less reliant on simple products for exports: higher quality interactions will become easier over vast distances. They open up scope for growth strategies that involve more complicated goods and especially services: not just call centres, but integrated design, or accountancy services, and even remote health or personal care. In the report, we identify five emerging tech-based pathways for prosperity, including some with more domestically driven growth engines, that go beyond past successful strategies.
Our report on digital technologies articulates a concern that current business models and the nature of government action in most countries will not lead to a route to including these three billion. We will need new business models as well as better government action, including sensible regulation of tax and data. The market alone will not deliver inclusion.
Tech shouldn’t be scared of governance rules; it should definitely not behave as if the only alternative to a libertarian world of totally free markets, including for data, is a model identified with China in which the state controls all, including the on-off switch. India is interesting here. Despite its enormous potential, there has been a backlash on its digital identity system Aadhar.
2018/06/27: We are witnessing a massive transition in Value Creation from the means of production to the means of Market Production and Curation.
Take for example Uber – here the taxi driver is a bare transitionary commodity and interchangeable. The real value creation instrument is Uber which creates, curates the market – this process now extends from Retail – Amazon – to Manufacturing, AliBaba. This reality signals a great transfer of value creation from the relatively distributed means of production to the massively globally centralised & privatised means of market making & marker curation. The implications of this are massive for inequality and scaling of precarious citizenship.
what is being disrupted is not the plumber or craftsmen but the middle classes – the management, administrative and intermediary skills.
Our Governance model is broken, we live in a ‘systemocracy’ – a world of massive inter-dependency yet we are holding on to 19th century versions of governance. This creates the illusion of sovereignty & supremacy – acting as a denial of the complexity we must confront.
2018-09-18: In recent decades, China and India have presented the world with two different models for how such countries can climb the development ladder. In the China model, a nation leverages its large population and low costs to build a base of blue-collar manufacturing. It then steadily works its way up the value chain by producing better and more technology-intensive goods. In the India model, a country combines a large English-speaking population with low costs to become a hub for outsourcing of low-end, white-collar jobs in fields such as business-process outsourcing and software testing. If successful, these relatively low-skilled jobs can be slowly upgraded to more advanced white-collar industries. Both models are based on a country's cost advantages in the performance of repetitive, non-social and largely uncreative work -- whether manual labor in factories or cognitive labor in call centers. Unfortunately for emerging economies, AI thrives at performing precisely this kind of work.
Without a cost incentive to locate in the developing world, corporations will bring many of these functions back to the countries where they're based. That will leave emerging economies, unable to grasp the bottom rungs of the development ladder, in a dangerous position.
the best thing emerging economies can do is to "recognize that the traditional paths to economic development -- the China and India models -- are no longer viable." Countries with "less-educated workers" are advised to build up human-centered service industries.
2018/09/13: The current global expansion will likely continue into next year, given that the US is running large fiscal deficits, China is pursuing loose fiscal and credit policies, and Europe remains on a recovery path.
But by 2020, the conditions will be ripe for a financial crisis, followed by a global recession. There are 10 reasons for this.
Come 2020, the stage will be set for another downturn and, unlike in 2008, governments will lack the policy tools to manage it.
The space for fiscal stimulus is already limited by massive public debt. The possibility for more unconventional monetary policies will be limited by bloated balance sheets and the lack of headroom to cut policy rates. And financial-sector bailouts will be intolerable in countries with resurgent populist movements and near-insolvent governments.
2018/09/10: so far there’s no sign of a wide-spread shift toward restraints on child labor, better pay or safer working conditions. One reason for this is that new international trade pacts, such as GATT and NAFTA, make it difficult to enact sanctions against countries that permit labor abuses. And another reason is the obvious one: these cheap labor pools are enormously profitable for American corporations.
The consequences of the new global trade reach far beyond the wretched conditions inside the factories themselves. Environmental degradation is a hidden externality of the shift in industrial production from developed countries to Latin America and Southeast Asia. The new plants consume enormous amounts of energy in areas where power supplies have been primitive in the past. To meet the increased demand, Indonesia and Mexico have begun constructing huge coal-fired power plants, posing a grave threat to air quality in places like Jakarta and Mexico City. Similarly, China is in the midst of building dozens of new coal-fired plants that will emit thousands of tons of greenhouse gases each year, a dangerous contribution to global warming trends. But China also has more monumental ambitions: the Three Gorges hydroelectric dam.
2017/04/24: Economists are very worried about the decline in labor’s share of U.S. national income. One reason they’re concerned is because when less of an economy’s wealth flows to workers, it exacerbates inequality and increases the risk of social instability. But another reason is that this trend throws a wrench in economists’ models. For decades, macroeconomic models assumed that labor and capital took home roughly constant portions of output -- labor got just a bit less than two-thirds of the pie, capital slightly more than one-third. Nowadays it’s more like 60-40.
There are four main theories, each of which falls apart under scrutiny.
2016/11/20: In a capitalist democracy, the party of the left has one essential reason for existing: to speak for the working class. This delicate balance ended in the 1990s. Many blame Reagan and Thatcher for destroying unions and unfettering corporations. I don’t. In the 1990s, a New Left arose in the English-speaking world: Bill Clinton’s New Democrats and Tony Blair’s New Labour. Instead of a balancing act, Clinton and Blair presided over an equally aggressive “new centrist” dismantling of the laws that protected workers and the poor.
Enough examples should by now be common knowledge. Bill Clinton signed the final death warrant of the Glass-Steagall Act (itself originally signed into law by FDR), removing the final blocks preventing the banking industry from gambling away our prosperity (leading to the 2008 recession). Bill Clinton also sold us on the promise of free trade.
it is crucial that our cultural elite, most of it aligned with the New Democrats, not be allowed to shirk their responsibility for Trump’s success.
Rifkin is persuaded that this paradigm is the key to greening and decarbonating our societies: "The IoT infrastructure offers a realistic hope of quickly replacing fossil fuel energies with renewable energies and slowing climate change."rnThe dead-end of consumerismrnrnWhile Rifkin's predictions seem to follow the course of history, Pitron soberly and methodically tempers them: "Digital technology requires considerable amounts of metals: every year, the electronics industry consumes 320 tonnes of gold and 7,500 tonnes of silver; it accounts for 22% of the world's consumption of mercury (some 514 tonnes) and up to 2.5% of lead. The manufacture of computers and mobile phones alone gobbles up 19% of global output of rare metals like palladium and 23% of cobalt production". Yet, "at current rates of production, the recoverable reserves of 15 or so base and rare metals will run out in less than 50 years; for five other metals (including iron, which is abundant), this will occur before the end of the century."rnrnPitron points out that "the manufacture of a two-gram chip creates two kilograms of waste material, in other words a 1 to 1000 ratio of material produced to waste generated."rnrnLike Rifkin, those who see the digital revolution as the key to ecological transition are victims of a collective blindness that is leading humanity into a dead end: "They don't want to know because a connected world is preferable to a clean planet." Indeed, the book pours scorn on an energy transition that does not call into question our energy needs. "The manufacture of a single solar panel, due in large part to its silicon content, generates more than 70 kilograms of CO2. With PV [photovoltaic] capacity estimated to increase by 23% annually in the coming years, solar power will produce an additional 10 gigawatts of electricity a year. This means 2.7 billion tonnes of carbon released into the atmosphere, equivalent to the annual emissions of 600,000 cars." The examples keep coming. Overall, "sustaining the change in our energy model will require a doubling in rare-metal production roughly every 15 years, and extracting more minerals in the next 30 years than humanity has extracted in the preceding 70 000 years."rnrn legislation will have to change, as will individual and collective behaviour to conserve and recycle the resources currently on our continent.rnrnPitron does not hesitate to raise the question of inequality when it comes to ecological transition. Although the fight against climate change is frequently the subject of public debate, out of ignorance, its potentially redistributive aspects are never discussed. Yet "the energy and digital transition is a transition for the well-off: it cleans up well-to-do city centres to make up for its very real impacts in areas that are poorest and furthest from view." Globally, "hiding away the dubious origin of metals in China has enabled green and digital technologies to enjoy a good reputation. It's undoubtedly the most incredible greenwashing operation in history."rnrnIn short, and this is pretty discouraging, Pitron's work corroborates the results of models created almost 50 years ago. But these were widely ignored when new models were devised which are still used today by economists and governments to justify the productivist and consumerist policies on which our development model is based.
Drives up federal deficit for 30 years, hands the bill to his kids.
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