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  • Women in the Workplace and Global Growth

    Want to see global GDP grow more rapidly? Stop focusing on specific economies and industries. Instead, focus on women, says The Atlantic 's Derek Thompson . Thompson argues that a concerted effort to grant more women access to jobs around the world, especially in emerging market economies, will have a direct impact on global growth. And that means first giving women "access to better education." Women drive economic growth -- more than China, more than the Internet, and more than banks. In the U.S., the growth of female employment added 2 percentage points per year to GDP growth. In Europe, working women accounted for 25% of the continent's new wealth in the last 20 years, as I've reported. But internationally, there are still 1.5 billion women of prime-age who are not in the "formal global economy," according to the Women's Economic Opportunity Index. In the poorest African countries, women's participation rate is high, but many work in the informal economy (selling cheap wares to tourists on the street, for example) with scarce pay. In lower-middle income countries -- those undergoing the early stages of industrialization -- women are half as likely to be working as men, and in many Middle Eastern countries fewer than one in five women are working at all. If there is an opportunity to intervene on the part of international worker, it is hard to find more opportunity than in improving the lot of women in these developing countries. Read The Most Important Pro-Worker Policy in the World: Education for Women here .
  • Millenials Start Spending and Flexing Their Economic Might

    Barron's Jacqueline Doherty reveals a certain lack of cultural literacy when she calls the late Kurt Cobain a patron saint for Millenials. Gen Y took no time stealing all the attention from Gen X, but they can't steal their icons. Still, Doherty's cover story on the consumer power of Millenials is worth a read. The new power generation is larger than the Boomers, and now are rapidly becoming the driving force across a lot of marketplaces. The Millennials already account for an annual $1.3 trillion of consumer spending, or 21% of the total, says Christine Barton, a partner at the Boston Consulting Group, which defines this cohort as ages 18 to 34. As the economy pulls out of an extended period of sluggish growth, helped in part by this rising generation, annual growth in consumer spending is likely to revert to its long-term average of 3.5% to 4% from about 2% now. Likewise, consumer spending on durable goods could rise sharply. The Millennial generation has already made a big mark on one industry: education. The number of students enrolled in college in the U.S. climbed by 30% from 2000 to 2011, helping to fuel a building boom on campuses across the country. But that's something many schools could regret in coming years, given the past decade's sharply declining birth rate. Owing in part to the Millennials' surge, apartment demand is strong around the country. Housing could be the next major industry to benefit from their size and maturation, but Wall Street could reap the biggest rewards. The MY ratio, which compares the size of the middle-aged population of 35-to-49-year-olds with that of the young-adult population, ages 20 to 34, explains why. Middle-aged folks have higher incomes than younger people, and a greater urgency to save for retirement. They invest their savings, which drives up stock prices. When the MY ratio is rising, meaning the older cohort outnumbers the younger, the stock market typically does well. The ratio has been falling since 2000, which has exerted a drag on stock prices. Read On the Rise here .
  • Swiss Pay Remains the Best Pay

    If salary matters most to you, you will want to try to get a job in Switzerland. In Mercer 's latest International Geographic Salary Differentials , Switzerland dominates the rankings (of course, this report doesn't cover how expensive it is to live in Switzerland ). Some other interesting findings from the report include Venezuela as the place with the highest gains in salary over the last year. The full report is available for purchase, here . But here are some of the key findings (full size graphic available here ):
  • IMF's World Economic Outlook: Three Speed Global Recovery

    What was once a "two speed recovery" is now looking like a "three speed recovery" to IMF researchers. It had been the case that advanced economies were recovering at a slower rate than emerging and developing economies. Now, there is a split among advanced economies. Overall, the IMF is projecting 3.25% growth in global gdp for 2013 and 4% growth in 2014. That is up from 2.75% growth over the second half of last year. Here are some regional specific projections from the World Economic Outlook : In advanced economies, the recovery will continue to proceed at different speeds. The main revision relates to the U.S. budget sequester, which lowers the U.S. growth forecast for 2013. Following a disappointing end to 2012, easier financial conditions, accommodative monetary policies, recovering confidence, and special factors will support a reacceleration of activity, notwithstanding still-tight fiscal policy in the United States and the euro area. The reacceleration, which assumes that policymakers avoid new setbacks and deliver on their commitments, will become apparent in the second half of 2013, when real GDP growth is forecast to again surpass 2 percent. • Thanks to increasingly robust private demand, real GDP growth in the United States is forecast to reach about 2 percent in 2013, despite a major fiscal tightening, and accelerate to 3 percent in 2014. Weak growth in the United States in the fourth quarter of 2012 reflected the unwinding of a spurt of inventory investment and defense spending during the third quarter (Figure 1.8, panel 1). Preliminary indicators suggest that private demand remained resilient this year, but across-the-board public spending cuts are expected to take a toll on the recovery going forward. • Activity in the euro area will pick up very gradually, helped by appreciably less fiscal drag and some easing of lending conditions. However, output will remain subdued––contracting by about ¼ percent in 2013––because of continued fiscal adjustment, financial fragmentation, and ongoing balance sheet adjustments in the periphery economies (Figure 1.8, panel 2). The projection assumes that policy uncertainty does not escalate and further progress is made toward advancing national adjustment and building a strong economic and monetary union. • Activity in Japan is expected to accelerate sharply during the first quarter of 2013, as the economy receives a lift from the recent fiscal stimulus, a weaker yen, and stronger external demand. Growth will reach 1½ percent in 2013, according to WEO projections, and will soften only slightly in 2014 as private demand continues to garner speed, helped by aggressive new monetary easing offset by the winding down of the stimulus and the consumption tax increase. In emerging market and developing economies, the expansion of output is expected to become broad based and to accelerate steadily, from 5 percent in the first half of 2012 to close to 6 percent by 2014. The drivers are easy macroeconomic conditions and recovering demand from the advanced economies. Download the full report here .
  • McKinsey Quarterly: Finding the Framework for Making Great Decisions

    Advances in the field of behavioral economics ought to make us at least aware of what goes into making good decisions, if not make us better decision-makers. The McKinsey Quarterly is featuring an interview with two people who are putting some important lessons about decision-making out into the world: McKinsey's own Olivier Sibony , and Chip Heath --co-author, with his brother Dan, of Made to Stick and Switch . The interview centers on the Heaths' latest book, Decisive , and Sibony's research on effective decision making among global business leaders. Here is an excerpt: The Quarterly: Is the right approach to suggest a couple of simple things senior executives can do or to recommend that they take a step back and look at a whole checklist or framework to create a healthier process? Chip Heath: I’m a fan of frameworks, but you don’t have to be 100 percent there to improve dramatically. One legitimate criticism of the decision-making field is that we have this overwhelming zoo of biases. In our most recent book, Decisive, we therefore came up with 4 intervention points in the decision process. Others propose 40 intervention points. Nobody will be successful intervening at 40 decision points. Olivier Sibony: We too have looked at this zoo of biases and tried to sort out what really matters to executives. When people ask me what will make a difference as they build decision processes, I emphasize three things. First, recognize that very few decisions are one of a kind. You are not the first person to decide on an acquisition. Lots of M&A happened before, and you can learn many things from that experience. Second, recognize uncertainty—have alternatives, prepare to be wrong, and have a range of outcomes where the worst case is real and not “best case minus 5 percent,” which is very common. Creating a setting where it’s OK to admit uncertainty is very difficult. But if you achieve that, you can make headway. Third, create a debate where people speak up. It’s the most obvious but also the most difficult. If you’re the decision maker, when you get to the debate you’ve already got an idea of where you want it to lead. And if you’re an experienced executive, you’ve already influenced your people, consciously or unconsciously. A good intervention point, for instance, is to ask subordinates if anyone disagreed with them about a recommendation they bring to you. If everybody agreed, that’s a sign that there may have been “groupthink.”3 Chip Heath: All of the things you’ve highlighted are things we grappled with in designing the WRAP process we propose in our book (see sidebar, “Four principles for making better decisions”). A Wider set of options means you’re going to have more debate. By Reality-testing assumptions, you look at the reference class of events. If you make a decision about restaurants, you read reviews because that’s your reference class. Yet if you’re making a merger decision, you won’t look at the reference class of companies in similar situations. Why do this research for a $200 dinner but not a $200 million acquisition? Then there is the process of actually making a decision. It’s now slightly more complicated because instead of one option you’ve got two, and you’ve done some due diligence on both. When you find yourself agonizing about a choice, it’s important to step back and Attain some distance. Finally, you should be Preparing to be wrong at the end of the process—that’s about hard-to-acknowledge uncertainty. Read the full interview here .
  • Making the Economic Case for an Independent Scotland

    Scotland's First Minister, Alex Salmond , is leading the charge for Scottish independence. Were this a political science or government blog, we'd have a lot to unpack on the underlying cultural and historical push for independence. But here, we are more interested in the economic justification for such a bold move. Speaking at the Carnegie Council , Salmond put prosperity front and center, and pointed to the success of small nations as one selling point for an independent Scotland. And he raises an interesting question: in today's global economies, is is better to be smaller? Here is an excerpt from his talk: You can heard the full talk here .
  • EU Leaders Looking East for Trade Pacts

    Patrick Messerlin , professor of economics at the Institut d' Etudes Politiques de Paris, thinks European leaders are right to look to Asia to build new trade agreements. Trade liberalization, Messerlin says, are the right prescription for Europe's stunted economic growth. But new trade agreements must be with the right partners. And you might be surprised as to which Asian economies Messerlin argues make the right partners for the EU. From Vox : The first question focuses on the ‘growth’ dimension of trade policy. Preferential trade agreements will only be able to boost domestic growth if the economies of the EU’s preferential trade agreements partners fulfil three main conditions. They should be big enough to generate economies of scale and scope capable of having a substantial impact on the EU’s relative prices – changes in relative prices are the source of welfare gains. They should also be well regulated because modern economies are intensive in norms and dominated by services, the efficiency of which depend largely on the quality of the regulatory schemes in place. Finally, they should have a wide network of good-quality preferential trade agreements, capable of offering EU firms opportunities to access the economies already covered by those preferential trade agreements (the ‘hub’ quality) without waiting for longish negotiations with the EU. As Table 1 shows, Japan and Taiwan – apart from the US – are the only economies in the world that meet these three conditions since the EU already has a free trade agreement with South Korea. China (possibly India in the long run, but not Brazil or Russia) may offer better growth opportunities when it comes to size. But, it still scores poorly on regulatory quality, while Japan and Taiwan score better than many EU member states. When it comes to the ‘hub’ criterion, Japan has a wide network of preferential trade agreements in east Asia (a region that EU negotiators are very slow to negotiate with) while Taiwan has massive operations in China which have been recently strengthened by a key preferential trade agreement, making Taiwan a privileged hub with respect to China. The capacity of Japan and Taiwan to meet all three conditions indicates the need for a resolute EU pivot to east Asia – an outcome echoed by general equilibrium calculations (Kawasaki 2011). Read The much-needed EU pivot to east Asia here .
  • The Era of Datification

    As Data Editor for The Economist , Kenneth Cukier has been watching the impact of big data on global business from a front row seat. At the moment, that has meant watching the growth of social media companies and trying to understand how they "datafy" our lives and relationships. But Cukier says we are really at the beginning of the era of big data, and there will be so many new ways to use data. In this Big Think interview, Cukier discusses datafication today and in the near future:
  • Sandberg Points to High Tech as Sector Where Women Can Thrive

    Sheryl Sandberg thinks the tech sector could hold the key, or perhaps hammer, needed to break the glass ceiling. With the startup mentality and lack of slavishness to old rules, Sandberg says the tech sector provides the "freedom" for women to climb the ranks. Sandberg has been making the rounds to discuss her book, Lean In , and last week she visited with a lot of old friends and classmates in Boston. She spoke with WBUR 's Curt Nickisch and made the case for the tech sector: I think technology is a great career for a woman. Talk about a career where you can make your own hours, where people expect you to be very much on your own terms. I think it’s fantastic. Take a listen to Nickisch's report:
  • Stiglitz on Abe-nomics and Hope in Japan

    Things are looking up in Japan, as businesses in the world's third largest economy gain confidence in the economic policies of the Abe government . At The Guardian , Joseph Stiglitz gives Abe credit for tackling big structural challenges that have been holding back growth. And, Stiglitz writes that Japan could become a "ray of light" for advanced economies: Abe is doing what many economists (including me) have been calling for in the US and Europe: a comprehensive programme entailing monetary, fiscal, and structural policies. Abe likens this approach to holding three arrows – taken alone, each can be bent; taken together, none can. The new governor of the Bank of Japan, Haruhiko Kuroda, comes with a wealth of experience gained in the finance ministry, and then as president of the Asian Development Bank. During the East Asia crisis of the late 1990s, he saw firsthand the failure of the conventional wisdom pushed by the US treasury and the International Monetary Fund. Not wedded to central bankers' obsolete doctrines, he has made a commitment to reverse Japan's chronic deflation, setting an inflation target of 2%. Deflation increases the real (inflation-adjusted) debt burden, as well as the real interest rate. Though there is little evidence of the importance of small changes in real interest rates, the effect of even mild deflation on real debt, year after year, can be significant. Kuroda's stance has already weakened the yen's exchange rate, making Japanese goods more competitive. This simply reflects the reality of monetary policy interdependence: if the US Federal Reserve's policy of so-called quantitative easing weakens the dollar, others have to respond to prevent undue appreciation of their currencies. Some day, we might achieve closer global monetary-policy co-ordination; for now, however, it made sense for Japan to respond, albeit belatedly, to developments elsewhere. Monetary policy would have been more effective in the US had more attention been devoted to credit blockages – for example, many homeowners' refinancing problems, even at lower interest rates, or small and medium-size enterprises' lack of access to financing. Japan's monetary policy, one hopes, will focus on such critical issues. But Abe has two more arrows in his policy quiver. Critics who argue that fiscal stimulus in Japan failed in the past – leading only to squandered investment in useless infrastructure – make two mistakes. First, there is the counterfactual case: how would Japan's economy have performed in the absence of fiscal stimulus? Given the magnitude of the contraction in credit supply following the financial crisis of the late 1990s, it is no surprise that government spending failed to restore growth. Matters would have been much worse without the spending; as it was, unemployment never surpassed 5.8%, and, in throes of the global financial crisis, it peaked at 5.5%. Second, anyone visiting Japan recognises the benefits of its infrastructure investments (America could learn a valuable lesson here). The real challenge will be in designing the third arrow, what Abe refers to as "growth". This includes policies aimed at restructuring the economy, improving productivity, and increasing labour-force participation, especially by women. Read Japan banks on success of Abenomics here .
  • Understanding Increased Efficiency Through One Potato Chip Factory

    Don't confuse the below video as being about a potato chip factory. It is better to view it as a short history of manufacturing in America. The video is from Planet Money , and it provides an interesting lesson in how technology has changed business. We hear so much about manufacturing getting so much more efficient over the last half-century, it is helpful to have a clear example of how exactly that takes place for one company: Secrets From The Potato Chip Factory from Planet Money on Vimeo .
  • Travel and Tourism Competitiveness Index: Switzerland Leads Europe-Heavy Top Ten

    Even with all of the economic struggles of the EU, Europe remains the region best equipped to support a strong tourism industry. In the World Economic Forum 's Travel and Tourism Competitiveness Index for 2013, the top five countries are all in Europe: Switzerland, Germany, Austria, Spain, and the UK. France and Sweden are also top ten countries, along with outsiders the U.S., Canada, and Singapore . Overall, World Economic Forum researchers found some positive trends globally in the travel and tourism sector. Two years after the last edition of The Travel & Tourism Competitiveness Report, the world economy remains somewhat fragile. Growth in emerging markets is returning tentatively, but rising inequalities, macroeconomic concerns, and high unemployment— particularly among the young—continues to afflict many advanced economies. Despite the mixed global economic picture, prospects for the Travel & Tourism (T&T) industry are not entirely gloomy. According to the World Tourism Organization (UNWTO), international tourist arrivals grew by 4 percent between January and August 2012 compared with the same period in 2011, and total expenditure on tourism has also increased. Although most of the increase in spending was from travelers from developing countries such as Brazil, China, and Indonesia, advanced-economy travelers—even those from economies where the economic outlook appears more pessimistic—increased their spending. Even amid shrinking household and business budgets, spending on travel is continuing, although the structure is changing. While the frequency, distance, and length of international trips tend to be shorter, the number of international travelers has increased—perhaps indicating that travel is increasingly seen as necessity rather than a luxury. Travel & Tourism remains a critical sector for development and economic growth for advanced and developing economies alike. Developing a strong T&T sector supports job creation, raises national income, and also benefits the general competitiveness of economies through improvements in hard and soft infrastructure. Access the full report here .
  • Richard Florida Calls Rising Creative Class the "Growth force of our time"

    It has been more than a decade since Richard Florida got our attention with his book, The Rise of the Creative Class . Even with the tumult of the last several years, Florida has not changed his position. He continues to believe that workplaces that tap into, and encourage, the creativity in workers will reap benefits in today's global economy. In this Big Think interview, Florida discusses the continuing rise of the creative class:
  • MarketingProfs: Tapping Into Potential of Big Data

    We are living in the age of BIG DATA , though it may still be the dawning of that age. AT MarketingProfs , Verónica Maria Jarski suggests that many global businesses have a communication problem. When different departments are not working hand in hand, the potential benefits of having all this new data are not realized. Jarski presents an infographic to make her point (note: this is focused on marketing and sales departments, but we think there is a larger lesson for organizations here): See the full size graphic here .
  • Elon Musk: In 18 years, "solar will be at least a plurality of power"

    Elon Musk has his eyes on the stars. But we aren't talking about his commercial space ventures. He believes that we will soon turn the corner on solar energy and most of America's power will come from the sun. In this interview with Ted curator Chris Anderson , Musk discusses his various business ventures (Tesla Motors, SpaceX, Solar City). The lessons here are not in Musk's waving the flag for his own ventures, but rather in how his core belief in what the future holds drives his investments.
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