News and Analysis: 14-25 Feb 11 | EmergingFrontierMarkets.com

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Posted on Fri, 25 Feb 11:

Mohamed El-Erian: The global economic impact of recent events in North Africa and Mideast--With an oil exporter such as Libya now in the grips of a popular uprising, markets will push oil prices higher to reflect much greater supply uncertainties for this key commodity. And with sectarian issues now on display in Bahrain, geopolitical risks are higher for the region - esp. as other nations seek to influence events in the Kingdom. These events could prove a tipping point when it comes to the implications for the global economy; and there is little that the West can do to offset short-term stagflationary winds, says Pimco CEO and co-CIO/ Egyptian author of award-winning "When Markets Collide"(2008), FT (courtesy Pimco), 22 Feb 11

Is WikiLeaks a good thing?: In this issue, we describe the 50 most innovative companies in the world. Not among them is WikiLeaks, the Internet organization that publishes the secrets of gov'ts and businesses, because it is neither a co. dedicated to generating profits nor, perhaps, a fit subject for celebration. But WikiLeaks is, for all that, the most interesting Web startup around. What has been written about it tends to reveal the authors' feelings about authority more than it illuminates the org's innovations. Yet those innovations are real and disruptive and can be imitated by others, Technology Review, Mar-Apr '11 (Carroll and Mui: 4 principles for crafting your innovation strategy, 2 Feb)

C-Suite/Boardroom: 15 steps to an Innovation Economy: A recent report, which focuses on thematic trends in how several economies have successfully fostered innovation, is meant to be a set of practical recommendations to be used by Russian Pres Medvedev as his staff develops an innovation policy. "The Roadmap 10-15-20" describes the innovation policies, successes and challenges of 5 economies (Israel, Finland, India, US and Taiwan). Based on analyses of how those regions developed innovation economies, and on a study of the Russian economy, it offers 15 recommendations and highlights 20 pitfalls to avoid, NY Academy of Sciences (courtesy Google), Sep ’10

Posted on Wed, 23 Feb 11:

Oil industry fears the spread of Libya unrest: The 1st major protests to hit an OPEC nation put the oil industry on edge, sending crude prices jumping and raising speculation about the use of emergency oil reserves that have only been touched twice in 2 decades. In addition to Libya, the industry is closely watching protests in Algeria, Bahrain and Iran, the 2nd largest crude exporter in the OPEC behind Saudi Arabia. Libya is more important to the oil industry than Egypt or Tunisia, as it has the largest proven oil reserves in Africa,   AP, 23 Feb 11 (Infographics: Foreigners in Libya | Libya's oil output) [courtesy China Post/ Taiwan | Globe and Mail/ Can.]

Mouse and Wo/man: Apps to change the world - and maybe save billions--An unexpected hint of the power of technology to change lives in poor societies is found in the entries a World Bank competition for new cell phone apps that address development challenges. I’m not talking about the winning app - that hasn’t been determined yet. I’m talking about the 107 entries and where they come from. A third are from Africa, a continent with only about one-eighth of the world’s population, and one widely acknowledged to be lagging in both tech and education, by D Cayo,   Weblog at Vancouver Sun/ Can., 8 Feb 11

Lessons from the crisis--'The state must bolster the innovative strength of companies', Q&A with Edmund Phelps, Nobel Laureate '06: The recent crisis has brought about a change of heart in him. Once considered a radical free-marketeer, the economist now believes that some parts of the market are not sufficiently regulated. Looking ahead, he sees a role for the state in monitoring prices on the capital market and providing funding to banks dedicated to lending to companies for innovative investment projects,   Focus Mag, July '10 [2.8MB] (Wanted - A First National Bank of Innovation, Harvard Business Rev, Jan-Feb '10) [PDF, courtesy Columbia U]

Posted on Mon, 21 Feb 11:

Fuzzy compromise threatens relevance of G20: G20 finance ministers and central bankers meeting in Paris agreed on a list of technical indicators to track trade and currency imbalances - caused by some nations consuming more while others tend to hold on to their money - but left the more tricky questions of when those imbalances actually become dangerous and what to do to mitigate them for later. The valuation of national currencies - long a sticking point in China-US relations - did not survive as a separate indicator, but will be considered as part of the broader analysis of capital flows,   AP (courtesy Star/ Malaysia), 20 Feb 11

R Desai, A Olofsgard and T Yousef: Is the Arab authoritarian bargain collapsing?--Dictators cannot stay in power by repression alone. In the Mideast and North Africa, gov'ts have relied on an implicit contract between ruling elites and citizens whereby citizens relinquished political influence in exchange for economic benefits. But this contract has been under stress for over 2 decades and is now collapsing, say Inst senior fellows and Georgetown U prof,   Brookings, 9 Feb 11 (Grand: Starting in Egypt - The 4th wave of democratization?)

A look at the emerging markets frontier: While frontier emerging markets may be poised for growth, the outlook for the emerging markets mainstream remains better overall. On the frontier, investors should focus on the 'next' rising manufacturers. Within the frontier we favor Asia and Africa today. Over the longer term, we downplay the commodity side and stay with manufacturing economies in Asia and Eastern Europe. As a result, our picks for longer-term growth and devt. would be: (i) the newly industrializing export manufacturing centers in Asia, and (ii) the expanding European frontier,   UBS, Jan '11

Posted on Fri, 18 Feb 11:

Food prices likely to force their way onto G20 agenda: Ministers from the G20 industrial and emerging economies will gather in Paris today against a backdrop of soaring food prices threatening economies in the Middle East and elsewhere. Developing nations tackling inflationary pressures, such as Saudi Arabia and Indonesia, are likely to be keenest to discuss food prices. Prices of items such as wheat and oil have surged in recent months. The combination of a global econ rebound and, in the case of food, bad harvests have fed supply pressures. The World Bank has already urged the G20 to make the food crisis a top priority,   National/ UAEmirates, 18 Feb 11 (Globe and Mail/ Can.--Infographic: Food misery index)

Doha trade talks start to move - US:   Negotiators have been meeting over the past few weeks since trade ministers called last month in Davos for an outline deal by the middle of July, and said they would tell negotiators to do what it takes to reach necessary compromises. The meetings this week of the 11 economies known as G11 (Argentina, Australia, Brazil, Canada, China, EU, India, Japan, Mauritius, SAfrica and US) are part of those intensified efforts,   Reuters (courtesy TVNZ), 17 Feb 11 (Brazil proposes greater market opening for key farm products, Intl. Ctr Trade Sust. Devt. | Baldwin: Doha is doable this year, VoxEU, Jan '11 | High level trade experts group report on Doha talks) [PDF, courtesy UK's No.10]

Global financial crisis accelerates shift in economic power to emerging economies: The global financial crisis has accelerated the shift in econ power to emerging markets, says a new report 'The accelerating shift of global economic power', the latest in the series of 'The World in 2050' reports.  In Mar '06, we produced a report setting out projections for potential growth in GDP in 17 leading economies over the period to 2050. We updated these projections in Mar '08 and have now revisited them again in the aftermath of the financial crisis, extended now to cover all of the G20. The analysis shows that the E7 emerging markets (China, India, Brazil, Russia, Mexico, Indonesia and Turkey) are likely to overtake the G7 (US, Japan, Germany, UK, France, Italy and Canada) before 2020,   PwC, 7 Jan 11

Posted on Wed, 16 Feb 11:

Coffers: Deutsche Boerse, NYSE see deal giving them leg up in Asia--Deutsche Boerse and NYSE Euronext say they hope their planned merger, which was agreed on Tue, will create a more attractive partner for exchange operators around the world, esp. in Asia. The interest in Asia is a sign of the growing financial might of emerging markets. Exchanges from Hong Kong to Sao Paulo are looking to capitalize as more money and investment shift away from traditional financial hubs. Pressure is also mounting on exchanges in Asia to show that they can effectively compete vs new and bigger competitors, Reuters (courtesy Sify/ India), 16 Feb 11 (Global stock exchanges enter a new round of consolidation, Stock Market Digital/ US)

Charting the economic fault lines: In Aug '05, Raghuram Rajan, U Chicago prof/ fmr IMF chief economist, gave a speech that made his reputation as someone with a special understanding of the global economy. It was a dispassionately delivered warning to the world's central bankers at their annual retreat in Jackson Hole, Wyo. Most of the speakers lavished praise on attendee Greenspan, who was completing a much-lauded final year as Fed chair. Rajan used his turn at the lectern to warn vs complacency, noting "the absence of volatility does not imply the absence of risk". He says that at the time, he "felt like an early Christian who had wandered into a convention of half-starved lions", by P Coy, Businessweek, 10 Feb 11 (Rajan: Why did economists not spot the crisis?, 5 Feb)

Sustainable investment holds key to growth in low-income nations: Low-income nations are poised for a takeoff in growth over the next decade, and strategic investment in infrastructure can be the driver if nations finance it in a sustainable way, said panelists at an IMF confab. It brought together leading academics, researchers, private sector representatives, and policy makers to share their views on the challenges of infrastructure financing and debt management. The confab attracted a large audience, indicating the broad interest in this topical issue, IMF Survey Mag, Dec '10 (Poor nations must strike fine balance in scaling up investment, Nov '10 | Conference: Sustainable investment scaling up in low-income nations)

Posted on Mon, 14 Feb 11:

For Colombia growers, Valentine's coming up roses: Valentine's is a frantic export period, with Colombia expecting to send 450 mln flowers to the US, which gets 65% of its roses from Colombia. White plastic tarps cover the elevated plains outside Bogota and Colombia's 2nd city Medellin for as far as the eye can see. Inside the greenhouses, thousands of mostly female workers scramble to harvest, cut and box millions of roses bound for foreign markets. Colombia sells some 15% of its annual rose production in the runup to Valentine's,   AFP (courtesy Jakarta Globe), 14 Feb 11 (Wrong flowers can mean death for global business, Deseret News)

Nancy Birdsall: Mubarak is out - What lessons for China, Africa and Western donors?--What’s the lesson that China and the 102 of 160 developing nations around the world that are 'partly free' or 'unfree' (acc to Freedom House) are taking from Egypt and Tunisia? And is there a lesson for Western donors? When aid, whether for roads or schooling or health, is motivated primarily by a foreign policy concern with security and stability, no matter how legitimate (and not by a moral conviction), it may at some point actually become counterproductive even for stability, says Ctr pres,   Weblog at Ctr Global Dev't, 11 Feb 11 (Rodrik: The poverty of dictatorship, Proj Syndicate)

Capital flows to emerging markets surge by 50% in '10: Private capital flows to emerging economies have surged since early '09, encouraged by their positive growth and risk perceptions, as well as easy money in the G3, acc to a global association of financial institutions. Net private inflows to emerging economies are now estimated to have been $908 bln in '10, up from $602 bln in '09. Private inflows picked up in all regions in '10 and flows to China reached an all-time high of $227 bln. With favorable conditions in most emerging markets likely to persist, private capital flows are projected to increase to just over $1 trillion this year,   Inst Int'l Finance, 24 Jan 11

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