Four Reasons to Doubt "Decoupling"

Are the developing economies of Asia becoming "decoupled" from the developed world?  Right now those economies are rebounding rapidly, while the West continues to stumble.  The Far Eastern Economic Review has four reasons to be skeptical about any talk of decoupling.

While structural changes, which most likely will be further accelerated through the current crisis, have been underway in the world economy long before the outbreak of the global economic crisis, it might be too early to declare a decoupling of Asian emerging markets (or those in any other region) from the West, for several reasons.

First of all, one should note that while virtually all Asian economies have been hit by the financial crisis, the damages, at least in their financial sectors, have been much less severe than in Europe or the U.S., which makes recovery of their real economies easier and more rapid. . . .

Second, while the world economy has stabilized over recent months and we are no longer operating in an environment of complete uncertainty, it is far too early to declare an end to the crisis—in Asia or elsewhere. . . . .

Third, most Asian governments were able to quickly implement fiscal-stimulus packages to stabilize their economies. In this regard, China’s state-ownership of the banking system proved to be an asset as it allowed the government to promptly spur investment and economic activity. . . .

Fourth, China, like the other emerging East Asian economies, remains tied to the U.S. economy through the dollar. . . .

The full article is here.

Technorati Tags: economy

Bio Hackers: Coming to a Lab Near You

The Economist points out that most innovators start out as hackers and become creators of new industries. Thomas Edison is a perfect example. Here is the unsettling part of this observation: the next generation of hackers is likely to focus on genetics.

The potential is certainly there. The cost of sequencing DNA has fallen from about $1 per base pair in the mid-1990s to a tenth of a cent today, and the cost of synthesising the molecule has also fallen. . . . When a science blog called io9 ran a competition for biohackers, it received entries for modified microorganisms that, among other things, help rice plants process nitrogen fertiliser more efficiently, measure the alcohol content of a person’s breath and respond to commands from a computer.

Can't wait to see what comes next.

Technorati Tags: innovationi

How are "creative types" faring during the recession?

Pretty well, according to Richard Florida, but it depends upon your line of work:

Creative workers in arts, design, and entertainment occupations consistently face higher unemployment rates and significant spikes during recessions. In contrast to other creative fields, the unemployment rate for arts, design, and entertainment workers sometimes runs higher than the overall unemployment rate. . . .Computer, sciences, and engineering professionals experience lower rates of unemployment than arts, design, and entertainment workers. But the lowest rates of unemployment and the most stable employment are found in meds and eds occupations - health and education - where unemployment stays consistently low, even during downturns.

So artists tend to starve, geeks do a little better and public employees in schools and health care organizations make out the best of all.  No surprises here.  But if you want to read Florida's full analysis, it is here.

Technorati Tags: economy, innovation

The Globe's Changing Carbon Footprint

The Economist notes that a recent report by the World Bank traces a shift in the sources of global CO2 emissions:

In its annual “World Development Report” published on Tuesday September 15th, the World Bank notes that they accounted for 64% of global CO2 emissions from fossil fuels between 1850 and 2005. In 2005 itself, however, this share had fallen to 50%, and middle-income countries such as India and China (now the world's biggest emitter) accounted for almost half of CO2 emissions and more than half of wider greenhouse-gas emissions.

The full story is here.

Technorati Tags: economy

Music for a Friday

Some good old fashioned American music:

India's IT sector bouncing back?

From the Times of India:

Information infrastructure company EMC has just announced that it will invest $1.5 billion in India over the next five years, a level of investment from a single company that the sector has not seen in close to two years.
Manpower supply company TeamLease that saw its open positions drop dramatically from 10,000 a month to 800 post the Wall Street crash, has in the past two months seen those numbers rise to 3,500. Wipro has lifted its freeze on hikes and promotions, at least for some employees.

Partha Iyengar, regional research director in Gartner India, says the number of calls the company gets from customers for directions and consulting has gone up sharply in the last 3-4 months, “indicating that a large number of IT deals will hit the pipeline in the next two quarters”.

During the expansion, India's IT sector was fueled by demand from the US and Europe and it cratered along with those economies. So the current "good news" should be kept in perspective. Prior to the downtown, firms in the subcontinent were forecasting growth rates over 20 percent and are now projecting growth in the 4 to 7 percent range. Better than negative numbers, but a far cry from the heady days of 2007.

Technorati Tags: economy

More Evidence of a Rail Revival?

In the past, we've cited evidence of a coming revival in rail systems. Planetizen has another interesting nugget:

In Portland (where else?) the MAX light rail system opened a new branch this week, whose implications may extend far beyond the immediate increase is service, according to Oregon Live:

First contemplated in the 1970s, when construction of I-205 included land for a bus or rail corridor, the $575.7 million Green Line will send tens of thousands of people a day whooshing to and from downtown Portland. It will bring MAX service to Portland State University and could entice thousands in Clackamas County onto mass transit.

Equally significant, the line opening Saturday adds more rail service on the downtown Portland transit mall, doubling the capacity in the region's core. Future lines can tie into the north-south transit mall or the older east-west Yamhill-Morrison corridor.

Oregon Live reports that with this growth, the MAX system is becoming better integrated with city bus service and could provide the kind of choice and flexibility that could help put transit on a level playing field with the automobile.

Hmm. . .

Technorati Tags: innovation, planning

Benchmarking Global Innovation: Trouble for the US?

Over at Creative Class, Robert Wuebker reports that the Information Technology and Innovation Foundation has just released a report benchmarking 36 countries on their innovativeness. Despite all the self-congratulations on our ability to innovate, the report ranks the US sixth among existing economies and (get this) LAST in terms of our preparation to ride the next wave of innovation. (This is not the first time we've noted a perceived lag in US innovation.) You can get a copy of the report here.

Technorati Tags: innovation

VW keeps its sights on China

While the US auto industry is trying to regain its footing, VW is planning to invest almost $6 billion in China. Volkswagen is seeking to consolidate its position as industry leader in what could potentially be the world's largest market for autos.

"We expect to achieve double-digit growth in China this year and to secure our market leadership going forward," Volkswagen China chief Winfried Vahland said. He added that he expects the company to meet its goal of doubling annual unit sales to two million before its 2018 target date.

The Wolfsburg-based company's share price on the Frankfurt stock exchange rose 4.35 percent in response to the investment news, closing at 127.83 euros ($186.55).

Deutsche Welle has the full story here.

Technorati Tags: economy

Differences between US and Japanese Manufacturers

The Financial Times uses an Onion piece to illustrate a fundamental difference between Japanese and American manufacturers:

Intel makes chips, and Google runs websites, but ask a Japanese technology executive, “What does your company do?”, and there is every chance the reply will be, “We are a manufacturer”. What the company makes is down to circumstance and opportunity.

Some US corporations are becoming more diverse - Microsoft now makes game consoles; and some Japanese companies are trying to focus - Fujitsu wants to concentrate on IT services; but that fundamental difference in approach is still there and explains some of the contrasting behaviour of companies on opposite sides of the Pacific.

Part of this could be related to the two cultures' focus on engineering. In the US, the focus tends to be more on product engineering, the Japanese emphasize process engineering. The latter would lend it self to companies that make many different products. (Of course, none of this may matter if both economies continue to flounder and are overwhelmed by the Chinese and Europe.)

Technorati Tags: innovation

Thinking about Web 2.0: Cool Tool from McKinsey

Over the past 2 years, McKinsey has conducted a survey on how organizations are using Web 2.0. The survey asked them about investments made in the area and which technologies (e.g., RSS, microblogging, podcasts, etc.) have been most useful. They've created an interactive graphic interface that lets you understand the results and monitor how the organizations' usage changes over time.

Check it out here (registration required).

Technorati Tags: innovation

What's wrong with this picture?

Click on the graph to see it full size. You'll notice that the country with the per capita health care expenditures just above double the rest of the developed countries is us.

OECD's take on the matter is here. Read it and weep.

(via Kevin Drum.)