New Report: We’re Not As Connected As We Think


 

HBR Blog Network

We recently released the DHL Global Connectedness Index 2012, which tracks the depth and breadth of trade, capital, information, and people flows across 140 countries that account for 99% of the world’s GDP and 95% of its population. Based on data covering the period from 2005 to 2011, it charts how globalization has evolved since the onset of the financial crisis at the global, regional, and national levels. The full report is available as a free download and, to whet your appetite, here are some of its most striking findings:

 

Global connectedness declined sharply at the onset of the financial crisis from 2007-2009, and despite modest gains has yet to recapture its 2007 peak. Capital markets are fragmenting and while merchandise trade recovered strongly since 2009, the intensity of services trade has remained stagnant. We compare trends across 10 distinct types of flows within its 4 pillars: trade (merchandise and services), capital (FDI and portfolio equity), information (internet bandwidth, telephone calls, trade in printed publications), and people (tourism, international education, migration).

The world’s most globally connected country (the Netherlands) is hundreds of times more connected than the least connected country (Burundi). Our report provides full country rankings and explains how the depth and breadth of countries’ connectedness varies with factors such as countries’ levels of economic development, population sizes, and geographic locations. It also summarizes patterns of connectedness at the regional level. Europe is the world´s most globally connected region and sub-Saharan Africa the least, but it is encouraging to note that sub-Saharan African countries averaged the largest increases in global connectedness from 2010 to 2011. Leer más “New Report: We’re Not As Connected As We Think”

Good news! The next 50 years are going to be amazing


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The near-term economic outlook in the United States and Europe is bleak, between the latter’s monetary crisis and the fact that the United States won’t reach full employment for 11 years and four months if we keep gaining jobs at the rate we did last month.

But if you look a bit further in the future, the outlook becomes much rosier. The OECD has a new report out projecting what countries’ economic output, both total and per capita, will be in 2060. Unsurprisingly, the Chinese and Indian economies will have eclipsed the U.S. one, which will remain in third place

But the per capita numbers are more striking, and encouraging. The report projects that between 2011 and 2060, real GDP per capita will increase sevenfold in India and China. In China, that means a jump from $8,387 in 2011 to almost $60,000 in 2060, in constant 2011 dollars. By contrast, U.S. GDP per capita in 2011 was $48,328. Leer más “Good news! The next 50 years are going to be amazing”

A Double Dip Recession? Who Cares?

What should be most striking about these concerns, however, is how little they matter. A double dip is a period of economic contraction that follows a brief recovery after a recession. It’s a useful prop for framing economic and political debates but doesn’t describe what’s actually happening across the country. The reality is that if you are doing well in this economy, either as a company or an individual, you will continue to do well regardless of a statistical double dip. If you are doing badly, you will continue to struggle whether or not the economic data are improving. (See 10 big recession surprises.)

GDP has been expanding since the third quarter of last year, graced by government spending and a steady though diminished level of domestic consumption. But as we all know, that growth — 5.6% in the fourth quarter of last year and 2.7% in the first quarter of this year — has been accompanied by high unemployment and little job creation. In short, this has been an economic recovery that has felt like a continued recession.

That’s because for a significant portion of the population, it is a continued recession. Not only is the real unemployment rate (combining workers who have dropped out of the workforce and the headline numbers, together with workers classified as marginally attached to the workforce) in the midteens, but the amount of hours worked has declined, as have many incomes. If you combine that with the scarcity of consumer credit and the uncertainty about the social safety net, tens of millions of Americans are facing a grave economic future. Particularly for men who lack a college education and were or are in an industry that depends on manual labor (construction and manufacturing above all), this is a perilous time.


Though global equities have rallied modestly after a sharp plunge in May and June and companies have announced strong earnings, sentiment about the future remains gloomy. In response to intense concerns about a looming double-dip recession, business leaders have complained to White House officials that government policy is inhibiting job creation and that uncertainty about new regulations is discouraging them from investing their $1.8 trillion in accumulated corporate cash. On the flip side, Democrats in Congress effectively cornered the Republicans to extend unemployment benefits yet again, a direct response to the undeniable fact that the unemployed are facing a severe challenge to find work. Leer más “A Double Dip Recession? Who Cares?”

Is China a debt junkie?

Posted by Michael Schuman

There is a debate raging among China watchers over the potential consequences of last year’s epic credit boom. Banks in China granted almost twice the number of loans in 2009 as they did the year before, an amount equivalent to nearly 30% of GDP. Any such expansion of credit has a powerful impact on growth. So what would happen to the Chinese economy if the credit spigot got turned off?

We’ve all by now learned about the dangers of too much debt. The U.S. is paying the price for an explosion of consumer debt. Europe is struggling with too much sovereign debt. Now one of the big questions facing China is whether or not Beijing’s policymakers are about to get their own lesson in the perils of debt-driven growth.

That’s exactly what’s happening. Chinese policymakers have raised the amount of money banks have to keep in reserve and introduced other steps to rein in lending, and the policies are working. In June, the amount of new yuan loans was less than 40% the total of June 2009. That’s a significant drop. And as a result, the economy is slowing down. How slow will China go? Well, that depends on your view of how important debt has been to China’s recent growth.


Posted by Michael Schuman

There is a debate raging among China watchers over the potential consequences of last year’s epic credit boom. Banks in China granted almost twice the number of loans in 2009 as they did the year before, an amount equivalent to nearly 30% of GDP. Any such expansion of credit has a powerful impact on growth. So what would happen to the Chinese economy if the credit spigot got turned off?

We’ve all by now learned about the dangers of too much debt. The U.S. is paying the price for an explosion of consumer debt. Europe is struggling with too much sovereign debt. Now one of the big questions facing China is whether or not Beijing’s policymakers are about to get their own lesson in the perils of debt-driven growth.

That’s exactly what’s happening. Chinese policymakers have raised the amount of money banks have to keep in reserve and introduced other steps to rein in lending, and the policies are working. In June, the amount of new yuan loans was less than 40% the total of June 2009. That’s a significant drop. And as a result, the economy is slowing down. How slow will China go? Well, that depends on your view of how important debt has been to China’s recent growth. Leer más “Is China a debt junkie?”

Why China Won’t Surpass America As #1 Superpower Any Time This Century

Vincent Fernando, CFA | May. 5, 2010, 6:25 AM

china vs usaA month ago we looked at how population trends would allow the U.S. economy to keep expanding at a relatively rapid rate for the next few centuries… just as China’s population trends would be hurting China’s economic growth.

Population dynamics alone argue that it will be a challenge for Chinese GDP to overtake America’s, though this challenge is likely to be met.

Yet even once Chinese GDP is larger than America’s, raw aggregate GDP is not enough to become a world super power, and Harvard Professor Joseph Nye gives an explanation why in an interesting opinion piece in Caixin.


Vincent Fernando, CFA | May. 5, 2010, 6:25 AM

china vs usaA month ago we looked at how population trends would allow the U.S. economy to keep expanding at a relatively rapid rate for the next few centuries… just as China‘s population trends would be hurting China’s economic growth.

Population dynamics alone argue that it will be a challenge for Chinese GDP to overtake America’s, though this challenge is likely to be met.

Yet even once Chinese GDP is larger than America’s, raw aggregate GDP is not enough to become a world super power, and Harvard Professor Joseph Nye gives an explanation why in an interesting opinion piece in Caixin. Leer más “Why China Won’t Surpass America As #1 Superpower Any Time This Century”

3 Valuable Infographics For Marketers In China


National emblem of the People's Republic of China
Image via Wikipedia

As of 2008, there are about 1.4 billion people in China; that’s about one in five persons living on the face of the Earth. In Shanghai alone, there are more than 17 million people – that’s more than those that live in the U.S. cities of New York, Los Angeles and Chicago combined. On top of being the most populous country in the world, they also boast the third largest economy in the world after the United States and Japan with a normal GDP of US$4.91 trillion in 2009.

From the looks of it, their global dominance is inevitable if not for a few problems that are still unresolved. For example, their environment is seriously polluted which in turn threatens their food production. On top of that, social unrest is the toughest problem that’s still unresolved; 400% income gap between urban Chinese and those residing in the countryside anyone?

Here are 3 infographics showing the different aspects of China for potential marketers that wish to expand or start their business there.

The Numbers Behind China

the numbers of china Leer más “3 Valuable Infographics For Marketers In China”