Parag Khanna, author of The Second World: Empires and Influence in the New World Order, offers some tips for a new US president in the October issue of Wired, in an article by Daniel Pink.
- The United States can avoid decline by “tightening trade and energy ties to the rest of the hemisphere, pursuing economic innovation at home, and establishing a ‘diplomatic-industrial complex.’”
- The US should create “an energy partnership with Mexico, Canada, Venezuela, and Brazil,” reducing dependence on oil from the Middle East.
- The US should treat Mexico as the EU does Turkey, “integrating, elevating, and partnering with it.”
- Egypt is “ripe for revolt. We should make friends quickly with other power centers in the country, including the Muslim Brotherhood.”
- The US should offer Iranians a deal: oust President Ahmadinejad, and they will get “everything they want in terms of of Western investment in energy, freer trade, diplomatic recognition, and increased cultural and student exchanges.”
- Uzbekistan merits attention, as the most populous and industrialized country in Central Asia, and the only state that shares borders with all the other “stans.”
- “India will never rival China . . . It’s not a superpower.”
- China’s rise will not be hindered by “demands for such niceties as transparency or free expression,” as “the Chinese people have a preference for stability over another revolution.”
- Russia has more problems than potential: it is “in demographic free fall” and “Chinese immigration is blurring the border.”
Endangered: the Amazon forest
Danger level: medium
Time frame: 50-100 years
Causes: climate change, deforestation
A new study of the effects of climate change suggests that without significant action to reduce the phenomenon, rising temperatures and falling rainfall could destroy the ecosystem completely, transforming the rain forest into savanna and wiping out vast amounts of biodiversity.
Moises Naim suggests two ways to redirect US policy in Latin America and reengage with the region:
- end the trade embargo with Cuba
- engage with Brazil, beginning with a trade agreement
Of Cuba, Naim writes:
The first step toward draining the appeal of Chávezism and restoring the U.S.’s image in Latin America would be to unilaterally lift the embargo on Cuba. The U.S. embargo has never worked as a tool to weaken Castro. Instead it has provided him with a wonderful excuse to hide his failures and justify the island’s dire poverty and harsh political repression. The embargo is even less effective now that Cuba is so deeply intertwined economically and politically with Venezuela and other countries in the region. …. The U.S. embargo on Cuba has enormous political costs for the U.S. and no benefit other than pleasing a portion, but not all, of Cuban-American voters.
Engaging with Brazil would mean paying attention to the single most important country in the region. Engagement
would involve offering an attractive trade agreement that would grant freer access to the U.S. market for Brazilian steel, shoes, orange juice, ethanol and other products that currently face import barriers. The costs for the U.S. economy would be relatively minimal. For Brazil, such a deal would stimulate exports, drive investment and lift the economy. Even more important, such an approach would reward and support a country (and a government) that is providing a powerful counterexample to the populist policies that are gaining favor in the region.
The Boston Consulting Group has released a report on 100 emerging-market companies with global competetive potential, according to the Daily Telegraph.
Firms from China (44 companies), India (21), Brazil, and Russia constitute most of the group, with Mexico also making a good showing.
Companies like these will be the shock troops for the redistribution of global economic power. In the process, they will transform their home countries’ global roles and interests.
An emerging market expert points out that the developed world may balk at the process:
“The whole pace of globalisation may have to slow or it could set off a wave of protectionism. So far the West has mostly been losing jobs at the low end, and the process has been mutually beneficial. There is now a big risk of losing jobs at the high end too now that China and India are moving move swiftly up the ladder, as we have already seen in software. This means that incomes in the West may have to adjust downwards, and the workforce is not going to tolerate this.”
[Via Social Technologies; image: Social Technologies]
Two recent stories suggest that the rising powers of the world will find themselves with new roles and interests:
- Brazil and Bolivia, traditionally friendly and both led by leftists, got in a spat over Bolivian energy nationalism, which threatens Brazilian investments.
- Militants in Nigeria’s Niger Delta warned that they would target Chinese working to extract oil in their region.
Brazil and China thus find themselves cast in unfamiliar roles: status quo powers with an stake in the established system working smoothly, and accused bullies.
As their interests continue to diversify and globalize, Brazil, China, and other rising powers will find their traditional outlooks challenged. Simple verities like South-South solidarity and noninterference will no longer suffice, and new perspectives on many issues — trade rules and intellectual property are only the beginning — will be required.
The Economist Intelligence Unit released its 2006 e-readiness rankings yesterday. The index is a measure of a country’s readiness for e-business, judged by Internet access, broadband penetration, innovation, information security, and other factors. More telling than the ranking is the country’s distance from a score of 10.
The ratings are a good indicator of general abilities in IT, and thus an important component of present and future competitiveness.
The top countries
Rank. Country — score out of 10 (2005 rank)
1. Denmark — 9.00 (1)
2. US — 8.88 (2)
3. Switzerland — 8.81 (4)
4. Sweden — 8.74 (3)
5. UK — 8.64 (5)
6. Netherlands — 8.60 (8)
7. Finland — 8.55 (6)
8. Australia — 8.50 (10)
9. Canada — 8.37 (12)
10. Hong Kong — 8.36 (6)
11. Norway — 8.35 (9)
12. Germany — 8.34 (12)
13. Singapore — 8.24 (11)
14. New Zealand — 8.19 (16)
14. Austria — 8.19 (14)
16. Ireland — 8.09 (15)
17. Belgium — 7.99 (17)
18. South Korea — 7.90 (18)
19. France — 7.86 (19)
Other countries of interest
Rank. Country — score out of 10 (2005 rank)
21. Japan — 7.77 (21)
22. Israel — 7.59 (20)
23. Taiwan — 7.51 (22)
25. Italy — 7.14 (24)
30. United Arab Emirates — 6.32 (X)
31. Chile — 6.19 (31)
35. South Africa — 5.74 (32)
37. Malaysia — 5.60 (35)
39. Mexico — 5.30 (36)
41. Brazil — 5.29 (38)
42. Argentina — 5.27 (39)
45. Turkey — 4.77 (43)
46. Saudi Arabia — 4.67 (46)
48. Venezuela — 4.47 (45)
49. Romania — 4.44 (47)
51. Colombia — 4.41 (48)
52. Russia — 4.30 (52)
53. India — 4.25 (49)
55. Egypt — 4.14 (53)
56. Philippines — 4.04 (51)
57. China — 4.02 (54)
60. Nigeria — 3.69 (58)
61. Ukraine — 3.62 (57)
62. Indonesia — 3.39 (60)
64. Kazakhstan — 3.22 (62)
65. Iran — 3.15 (59)
67. Pakistan — 3.03 (64)
Regional standouts in the developing world are Chile, South Africa, and the United Arab Emirates. The low scores of some countries, notably India, China, and Russia, disguise significant specialized capabilities in infotech.
The World Economic Forum has released its new report on Latin American competitiveness.
Twenty-one countries are evaluated on the basis of macroeconomy, institutions, infrastructure, health, education, market efficiency, tech readiness, “business sophistication, and innovation. The rankings say a lot about the prospects of these countries — and 20 of the 21 rank poorly.
Country (global rank out of 117 countries)
1. Chile (27)
2. Argentina (54)
3. Costa Rica (56)
4. Brazil (57)
5. Colombia (58)
6. Mexico (59)
7. El Salvador (60)
8. Jamaica (63)
9. Panama (65)
10. Trinidad and Tobago (66)
11. Uruguay (70)
12. Peru (77)
13. Venezuela (84)
14. Ecuador (87)
15. Dominican Rep. (91)
16. Guatemala (95)
17. Nicaragua (96)
18. Honduras (97)
19. Bolivia (101)
20. Paraguay (102)
21. Guyana (108)
Chile is highly competitive, surpassing 13 of the EU’s 25 members.
The rest of the region lags. Despite some improvements
Latin America still suffers from one of the most inequitable income distributions worldwide, social tensions and an increasing sense of reform fatigue. Moreover, the region seems to be losing ground as foreign direct investment and trade shares shift to other developing regions, notably Asia and Eastern Europe.
Still, Latin America had its highest growth since 1980 in 2005, and many structural factors are in better shape than in previous decades.
PriceWaterhouseCoopers has released a study of potential growth in the world’s 17 largest economies out to the year 2050.
The study forecasts the eclipse of the current developed economies. The E7, largest emerging market economies (China, India, Russia, Brazil, Indonesia, Mexico, Turkey), were only 20% of the size of the G7 economies at market exchange rates in 2005, but would be 25% larger than the G7 by 2050. By purchasing power, the E7 economies were only 75% as large as the G7 in 2005, but would be 75% larger by 2050.
In purchasing power terms, the shifts in relative GDP would be stark:
COUNTRY — relative econ size 2005 / 2050
US — 100 / 100
Japan — 32 / 23
Germany — 20 / 15
China — 76 / 143
UK — 16 / 15
France — 15 / 13
Italy — 14 / 10
Spain — 9 / 8
Canada — 9 / 9
India — 30 / 100
South Korea — 9 / 8
Mexico — 9 / 17
Australia — 5 / 6
Brazil — 13 / 25
Russia — 12 / 14
Turkey — 5 / 10
Indonesia — 7 / 19
Note that the values are relative within their respective years, but not across them; all economies are projected to be larger in 2050 than at present.
Purchasing power suggests, among other things, the military power the economy can afford to buy, suggesting that the realignment of power toward Asia will have substantially occurred. It will no longer be possible for the US to massively outspend all potential rivals.
The study also offers some startling numbers for per capita income. The figures suggest that the developed countries could have universal prosperity, and the emerging markets could achieve levels of wealth like those of developed countries today, eliminating dire poverty.
COUNTRY — 2005 / 2050 purchasing power GDP per capita (constant 2004 dollars)
US — $40,339 / $88,443
Japan — $30,081 / $70,646
Germany — $28,770 / $68,261
China — $6,949 / $35,851
UK — $31,489 / $75,855
France — $29,674 / $74,685
Italy — $28,576 / $66,165
Spain — $25,283 / $66,552
Canada — $31,874 / $75,425
India — $3,224 / $21,872
South Korea — $21,434 / $66,489
Mexico — $9,939 / $42,879
Australia — $31,109 / $74,000
Brazil — $8,311 / $34,448
Russia — $10,358 / $43,586
Turkey — $7,920 / $35,861
Indonesia — $3,702 / $23,686
These numbers suggest massive value shifts: countries reaching these wealth levels have shifted toward democracy, social freedom, and humane governance.
There is an underlying problem in these hopeful figures: sustainability will be strained with far more of the planet living at developed levels of wealth.