Posts Tagged ‘India’

What will happen to global growth?

Sunday, February 8th, 2015

There’s a lot of nervousness about the outlook for global economic growth. Will the pace and location of growth in the world change? What impact will our aging population have? Jaana Remes and Richard Dobbs, partners of McKinsey Global Institute, discuss what will happen in this short video:

In 1964 the world economy was approximately the size of China’s economy today in terms of purchasing power. Since then we have had a remarkable era of growth on a global scale. In the last 50 years the global economy has become 6 times larger. The reason is two-fold; the labour pool expanded and productivity for all those workers increased.

Demographic tailwind

The global economy has on average grown 3,6 percent per year the last half century. We have in other words had a phenomenal demographic tailwind.

But now that will come to an end because of our aging population. We are approaching flat demographics. Consequently global growth will slow down significantly unless we can increase productivity substantially. Wolfgang Fengler of Brookings Institution took an interesting look at demographics in our world in “How your birthday reveals global demographic shifts” 

Will India, as some predict, continue to grow well beyond 2050?

Will India, as some predict, reach its peak long after China?

Peak in 2050

The number of workers in the world will reach its highest level in 2050. In quite a few developed economies that has already happened. For instance in Germany, Italy and Japan. But between 2020 and 2025 it is estimated that even China and South Korea will peak. Needless to say this will have an enormous impact because they have both been growth engines during the last 50 years. India and Nigeria, however look likely to have their peaks later on.

If economic growth stays the same as the last 50 years global GDP will decline by 40 percent. In other words the global economy will only grow by 2 percent a year as opposed to 3,6 percent.

Did you know how our aging population is likely to impact global growth? Are Jaana Remes’ and Richard Dobbs’ predictions likely to take place? Do you believe we can increase productivity enough to compensate for the fall in the number of workers? What are your suggestions? In what areas of the world are you predicting we will have the highest growth? How can we in the West increase productivity? 

Video: McKinsey & Co. Photo: World Economic Forum

Shifting wealth of nations – what is overlooked

Sunday, April 27th, 2014

Middle class spending is crucial for economic growth. So now, with Western middle classes in debt and distress, many economists look to the new emerging-market middle class as the foundation for a new era of global  prosperity. However, companies need new approaches to penetrate the developing world’s increasingly prosperous consumer markets.

saudi arabia, business development

Saudi Arabia has more money than any other country in the world. And they literally shop until they drop

The last couple of years 70 million people in developing countries joined the middle class, with incomes between $6,000 and$30,000. It is estimated that within 20 years they will surpass their Western pears when it comes to global spending power. The focus is mainly on Asia and it is estimated that in about a decade they will pick up the slack left by overspent America. Emergency market spending is in fact already bolstering the balance sheets of many Western firms.

World focusing on China and India

Needless to say the world is focusing on China and India due to its huge populations as well as rapidly rising economies and middle classes. Correct if you look at the amount of people. But by looking at the issue that way we overlook a very potent and prosperous group of people. Saudi Arabia’s retail sector is booming as more international brands look to move into the kingdom. Saudi Arabia has already overtaken better known retail destinations like Hong Kong, Russia and Japan when it comes to attracting brands. Only London and Dubai are attracting more retailers and shoppers.

Don’t forget Saudi Arabia and the Gulf states

When it comes to per capita spending I’m certain that the middle classes in Saudi Arabia and the other Gulf countries not only earn more but also spend far more than their Asian counterparts. It’s not for nothing many middle class Indians chose to work in the Gulf, despite the fact that they are paid less than the locals. Salaries are higher and you pay no income tax in the Gulf.

Shopping for entertainment

Shopping is a top leisure activity and when the weekend starts the malls are filled with people who literally shop until they drop. A woman who works in a Chanel shop in the area told me an average customer spends an absolute fortune every time they come to the shop. And the same goes for more expensive items like cars, jewellery and electronics. Considering the importance the Chinese put on saving money, I would be very surprised if middle class people in China, with the exception of some mega rich, spend that much.

Emerging middle classes have different tastes

Emerging-market leaders know that the Western system created the worldwide boom of the last quarter century that ended when Lehman Brothers collapsed. Now the boom has moved to emerging markets, and their leaders will increasingly choose to alter Western models to suit their countries. Consequently the fact that all eyes are on Asia and the Gulf is forgotten could turn out to be a fatal mistake. The new emerging middle classes are supporters of globalization but highly nationalistic. And there is a vast difference between nationalism in China and, say, Kuwait.

Kingdom to invest $100b in transport and logistics
And not only is KSA and the Gulf a key market for consumer brands. All other products and services will find that what they have to offer is in high demand. Saudi Arabia is, for instance, targeting $100 billion of investment in ports, airports, railroads, roads and logistics centre projects over the next decade in a push to make the kingdom one of the world’s leading transport and logistics hubs by 2020.

Back to emerging middle classes in general, we can conclude that the Chinese bought more cars than Americans the last couple of years, and that India has as many Internet users as the U.S. Also it is estimated that by 2030, more than nine out of every 10 mobile phones will be owned by people in the developing world. Coca-Cola actually forecasts a doubling of worldwide revenues to $200 billion over the next decade, thanks to another 1 billion people expected to join the middle class by 2020. So Western companies who haven’t yet focused on developing countries’ middle classes should jump on the band waggon swiftly and not overlook the Gulf.

(photo: flickr – Lars Plougmann)

Ever heard of emerging generosity?

Sunday, June 30th, 2013

Yes, that’s right, wealthy donors from developing countries, notably China and India. They are increasingly giving, donating, caring and sympathizing. Not, as some of you may think, just sell and take. And it’s not only a new phenomena. Saudi Arabia and the Gulf states have actually been quiet donors for decades.

Maarc Zuckerberg with Chinese actor, philanthropist and founder of the Jet Li One Foundation. Should not he get the same kind of recognition as Western philanthropists?

Marc Zuckerberg with Jet Li, Chinese actor, philanthropist and founder of the Jet Li One Foundation. Shouldn’t he get the same kind of recognition Western philanthropists get?

Global philanthropy

And they are not just generous at home but on a global scale. Profound cultural change and consumers at home starting to demand what their counterparts in the West are demanding are some of the reasons behind. A Chinese company who funds worthy causes all over the world are more popular with Chinese customers.

Not only Westerners are generous

Seems to me philanthropy is frequently associated with only the West. Especially by Westerners. What’s forgotten is that there are giving and caring people of all nationalities. Did you for instance know that 86% of global consumers want businesses to focus as much on the interests of society as their company’s interests?

Emerging markets customers expect businesses to support worthy causes

The majority of Indian, Chinese and Brazilian customers prefer to buy brands that support good causes, but measured on a global scale the figure is actually lower. Edelman, a global public relations company, claims that 8 out of 10 customer in India, China, Mexico and Brazil expect companies to donate part of their profits to worthy causes.

 At least 1,800 foundations in China

The China Foundation Center aims to make Chinese philanthropy more transparent. Their members are a mix of pubic and private foundations, including the Jet Li One Foundation

 As is plain to see from above web sites, China is not just a place where fortunes are being made but also where the rich are turning into the philanthropists of today and tomorrow. It should be noted that many of them are voluntarily giving money away.

 According to the Philanthropy Bluebook 2011, issued by the Chinese Academy of Social Sciences, donations in 2010 exceeded 11 billion US dollars.

Philanthropy moving East?

Philanthropy has been done for decades by wealthy Saudi Arabians as well as their neighbours in Qatar, Kuwait, the UAE and Bahrain. The Al Sauds, Al Sabahs, Al Rajhis, Al Zamils and Al Amoudis to name just a few. But they have given donations without announcing it to the world.

 Saudi Arabia was for instance one of the first donors to victims of the tsunami early 2005 but Western media frequently did not even mention their generosity because of the ongoing Saudi bashing.

Considering that developing countries’ economies are vastly out performing the West it’s just a question of how long it takes before emerging market philanthropists start setting up foundations in the West to help our poor. Can’t help wondering how sections of Americans and Europeans will feel about that? Am sure there will be an outcry, especially from prejudiced people objecting to “charity” courtesy of say, Saudi Arabia or China.

Isn’t it time for the world to face up to the fact that we live in global market and recognize that there are generous people of all nationalities. Why is philanthropy mainly being associate with the West? Isn’t it time to give the same kind of recognition and praise to philanthropists from emerging markets? Especially since top donors Bill & Melinda Gates and Warren Buffett are doing so. Or are Westerners, or at least parts of Western media, frightened by the prospect of being given charity from the East? What’s your opinion? Are Westerners happy about the world shifting from West to East even when it comes to donations? Or do some people like to cling on to the illusion that all good things come from the West?

Photo: Robert Scoble – Flickr

Are you joining the “Made for China” trend?

Thursday, June 20th, 2013

An increasing number of Western brands are launching new products, or even brands, catering to consumers in emerging markets.

Are you developing products catering to the needs and likes of well to do Chinese customers?

That’s where the money is right now, and Western brands are still favored over local ones.The combination of perceived quality with a bit of local tailoring, love or exclusivity is hence an intelligent way of finding new customers.

Products tailored to their needs and wants

Like all consumers, Chinese, Indian, Brazilian, Russian and Middle Eastern consumers are keen on products tailored to their needs, wants and desires, either for practical reasons or simply because of cultural pride.

Affluent Chinese prefer foreign brands

This phenomenon is spawned by the fact that economic and consumption power is shifting towards emerging markets. And considering that, according to McKinsey, affluent Chinese consumers prefer foreign brands to Chinese ones it’s clear that it’s worth while for Western companies to focus on Chinese customers. Add to that the fact that China’s retail sales may outstrip those of the United States already in 2016 and it makes even more sense to cater to the new Chinese middle class.

Shift to emerging markets

China’s wealthy shrugged off the recession. Actually only 8% of them changed their luxury shopping behavior in 2009 (46% of Americans and 51% of Europeans, however did) . Forty four percent of China’s wealthy instead increased their spending during the global downturn.

Global growth moving to BRIC

About 80% of global growth is likely to take place in emerging markets. The figure could go even higher if India were to facilitate imports of luxury goods. Not to mention if commodity prices go even higher which will increase wealth in Russia. So there is a need for Western companies to create both uniqueness and make consumers in emerging markets feel they belong. For companies who manage to do so, the new rich in BRICs offer a world of opportunity.

Some Made for China products

Trendwatching, one of the world’s leading trend firms have singled out some products created by Western companies for Chinese customers. Levi’s dENIZEN, a new jeans brand for Asian/Chinese customers with slimmer fits. For wealthy customers in Shanghai Dior offer very expensive Shanghai Blue Phones. Shang Xia is Hermés’ Chinese brand of ready-to-wear and decorative arts inspired by Chinese culture. When Cloé celebrated five years in China they created a limited edition of Marchi handbags to mark the occasion. The limited edition of BMW’s orange metallic M3 Tiger was very popular in China. Not least since it was released to coincide with the Chinese year of the Tiger.

Apple “Designed in California, Made for China”

In Apple’s Shanghai store staff started wearing red t-shirts with that slogan in Mandarin. A play on the words on the back of all iPhones “Designed by Apple in California, assembled in China”. And the Chinese loved it.

Introducing cheaper brands in China

Honda (Li Nian), Nissan (Venucia) and GM (Baojun) are creating and introducing less expensive cars for China since many customers in emerging markets still have less to spend than their counterparts in the West.

So have you jumped on the Made for China bandwagon yet? Or are you aiming for the Indian, Russian, Brazilian or Middle Eastern markets instead – or – as well? If so, what markets have been most successful for you? What new products have proved to be hits in the different countries? If not, can you really afford to ignore the new emerging middle classes?

(Photo: PhotoXpress – chinatiger)

Branding for success in our global world!

Wednesday, June 5th, 2013

Everything and everyone is a product. A country, city, company, product, service and a person. And how the market perceives the product determines its value. It’s sounds cynic, I know. But if you want to be valued and sought for on the market you have to on a continuous basis make sure your brand is in demand and sells.

Does Chanel have a higher turnover in the developing world than in the West? Most likely. But since it's a priave company the information is not available.

Does Chanel have a higher turnover in the developing world than in the West? Most likely. But since it’s a private company the information is not available.

Innovating and updating your brand

When a product is a success all of a sudden the brand matures, growth slows and it comes under pressure from competitors. Europe and the US at the moment are good examples. That’s the time to start innovating and spending again if you want to defend your market position. If not, don’t complain if you lose out to your competitors.

Nothing ever stays the same – not even Cornflakes

You may object that some brands, like Cornflakes, or Chanel for that matter, have been around for a long time. But what we buy today is very different from the same product 50 years ago, not least when it comes to packaging and design. If your brand is out of date you will have to make an investment and innovate yourself.  How you want to be perceived depends on what market you are aiming for.

The West needs to get their attraction back

When it comes to countries and continents, Europe and the US have matured and competitors are moving in. But the West seem to take their current status for granted and are not doing enough to defend their market position. What happened to innovation and making their markets more attractive to investors, not to mention more business friendly?

The West is losing out

The market is irrevocably global. That does not mean the concept represent the best of worlds. But the West will continue to lose relative power as a result. It’s ironic isn’t it that thanks to its generosity in exporting the secrets of success, China and other emerging giants are catching up.

Developing nations are not going to cede power to the US and Europe out of gratefulness. So the West needs to face up to reality –  their brand is losing out. It’s time to innovate and make it profitable for businesses again to stop them moving to other parts of the world. If not, the West will gradually trade places with the developing world. 

Photo credit: Panoramas / / CC BY-ND

Africa growing faster than Asia?

Sunday, December 2nd, 2012

Sixteen of the fastest growing countries in the world are in Africa. No you didn’t get it wrong. Seven are in South East Asia followed by three in Central Asia. So has Africa’s time finally come and the continent will now forge ahead?

Ethiopia is predicted to grow at least 8% per annum for the next few years. If so, it will be as normal for Eleni Gabre-Madhin, CEO of the Ethiopia Commodity Exchange, to take center stage globally as for her Western and Asian counterparts.

According to the IMF we will see more African countries with massive growth during the next few years. They also forecast that many African economies will outpace Asian countries, even China and India.

The shoe is on the other foot

Angola is now lending money to it’s former colonial master Portugal struggling in the Euro crisis. Not so long ago nobody would have thought such a development possible.

Many of us have worked extensively to further the interests of Africa and hence hope real progress has now started. But somehow can’t help wondering what will go wrong this time because something usually does. Really hope it is correct that Africa as a whole will grow 7% on a yearly basis over the next two decades?

Surging demand for raw materials and foreign investment driving progres

The continents changing fortunes seems to be, at least partly, based on China’s demand for raw materials, higher commodities prices and increased inflow of foreign investment. Africa’s rising middle class have also fuelled growth in domestic demand. There is global interdependence in respect of production and demand. Africa offers producers around the world a vast and growing market that will keep on expanding.

African governments improving

Government is improving in Africa and corruption is less than it used to be. Seems the NEPAD peer review mechanism have made a difference when it comes to implementing true democracy, good corporate governance, transparency and eradicate corruption. Nowhere else in the world has such a process ever taken place and its uniqueness was well illustrated by former President Bush’s remark, “We don’t do that in America”. More and more governments are being responsible and putting money aside to cushion their economies. Know-how is also improving. As a result of statisticians improving their data in Ghana their GDP was revised up by as much as 75%.

Trade not aid

Africa, the poorest continent, according to many analysts, bares the brunt of the continued rigging of trade rules in the WTO. And in order to prosper the continent needs to trade out of poverty, as opposed to relying on aid. According to the UN, just one percent of increase in exports from Africa is worth a staggering five times the amount it receives in aid and debt relief.

Africans recognises their responsibility to wipe out the gap between the continent and the rest of the world. Africa wants to improve its role in the world economy. Its contribution to world trade is hopelessly small. They want to get its house in order, but the rest of the world needs to play its part as well. For example, Africa is told it may not subsidise its agriculture, so the Western world shouldn’t be doing so either, but as we know both the EU and US does. Jean Chretien put it very well when he stated “we must realize that little progress will be made with investments and trade if Africans continue to be refused access to our markets”.

African media has a role to play

Can’t help thinking about what President Chissano told me in 2004. According to him a major obstacle to improving the image of Africa is that the African press, like it’s Western counterparts, focus on scandals to grab headlines. Naturally a free press is essential, but the down side of that is that far too many negative stories come out of Africa, deter foreign investors and hence have a detrimental affect on the progress of the continent. Maybe it would be a good idea for African media to also show case African success stories? That Angola is growing faster than China would be a start.

The world’s new manufacturing centre?

Unfortunately commodity driven growth doesn’t generate enough jobs. However, now with salaries increasing in Asia  Africa could become the new manufacturing centre. Kenya and Uganda have already increased their export sector. To make this reality the WTO need to facilitate market access for products made in Africa on the world market. If not, Africa may continue to be a scar on the the conscience of the West.

There are many obstacles to Africa continuing to progress. Political instability, weak rule of law, corruption, bad infrastructure as well as poor health and education. So without the political will to reform, the current growth rate will be difficult to sustain. However, for outside companies looking for new markets a whole continent almost sounds too good to be true. But that’s what a developing Africa, with a gradually burgeoning middle class and numbers of skilled workers constantly increasing would constitute. A vast and growing market for the world’s manufactured products, intermediate goods and services. Add to that UN figures showing that investments in Africa provide higher rates of return than anywhere else in the world. It has been said for more than a decade that Africa’s time has come. But maybe now with the changed world order due to the recent global crisis, will Africa finally be able to progress? What do you believe? Will Africa now be able to forge ahead or will the gap between Africa and the rest of the world remain as wide as it is?

(Photo copyright World Economic Forum ( by Zahur Ramji / Mediapix)

Do you agree with Zbigniew Brzezinski’s ideas about future global leadership?

Sunday, March 11th, 2012

America’s global supremacy is over, according to Brzesinski but he adds that the US still has an extremely important twin role to play. Watch him tell Chrystia Freeland why Vladimir Putin’s election will reverse political evolution in Russia and how the US should handle Syria:

Few individuals have had as much influence as Brzezinski when it comes to shaping US global policy and hence the world today. Since Jimmy Carter was president the ideas outlined in his book “The Grand Chessboard” have been like a bible for US administrations.

One nation can no longer dominate the world 

The days when one nation, or even one region could dominate the world the way Rome did 2,000 years ago, the Ottoman empire 500 years ago or the British empire a century ago, are, according to long-time national security expert Zbigniew Brzezinski, over. It’s simply no longer possible.  

Americans have to get used to sharing power

“The world is now much more diversified”, he says. “There is a new east in Asia and a global population that is awakened politically”. “America have to get used to the new world, in which their relative influence may decline”

He firmly believes a strong West is needed as a counterbalance to rising developing nations. The US should, in his opinion act as “promoter and guarantor of a greater and broader West”.

Enlarge the sphere of capitalist democratic nations

America should, according to Brezezinski, take a lead in enlarging the sphere of capitalist, democratic nations in North America and Europe by integrating Turkey and Russia. 

Avoid conflicts with China and Iran

Brezezinski believes it is crucial that America understands that it needs to avoid conflicts with China. “We have to accept their economic and political rise and that there is nothing the US can do to stop it”.

US role in Asia is, in his opinion, as a “balancer and conciliator between major powers in Asia”. America should learn from Britain in the 19th century when it stood aloof from conflicts in Europe and just tried to mediate. Instead of entering into a formal alliance against any major power in Asia i.e. China, Japan, India and South Korea, the US aim should be to mitigate conflict and promote cooperation and conciliation.

Western military action against Iran would in his opinion be seen as external intrusion and a cause for war in the Middle East and should hence be avoided.

Do you agree with Brzezinski that America will no longer be the one and only super power? Should the US take a lead in developing a greater and broader West by integrating Russia and Turkey? Should America mediate between Asian powers and avoid military action against Iran? Should the US listen to Turkey and Saudi Arabia when it comes to handling Syria? Or maybe you are of the opinion that he is wrong and America will remain the one and only super power? 

Video: ReutersTV – You Tube

Do you trust in God but not governments and businesses?

Sunday, February 12th, 2012

If so, you personify the findings of Edelman's 2012 Trust Barometer. Watch Chrystia Freeland talk to Richard Edelman about the current erosion of confidence in the workplace and governments:

Respondents in 25 countries indicate trust in government have declined with nine percent and that Brazil is the country where confidence in elected officials have fallen most.

Not surprisingly the debt ceiling debacle in the US, bailouts in the European Union, corruption in Brazil and India as well as the nuclear disaster in Japan are the main reasons behind the mistrust. And it's interesting to note that Westerners have lower faith in their governments than citizens of the developing world. 

Half the public distrust companies

Businesses need to be regulated according to half the participants in the survery. And they are of the opinion that governments are not doing enough to rein in immoral companies. A high number of people would also like their authorities to increase consumer protection and ensure ethical corporate behaviour. It comes as no surprise that banks and financial institutions are least trusted. 

Trust in social media on the rise

Traditional media and online search engines are still the most trusted sources of news and information but social media including blogs, networking sites and content sharing sites showed the biggest increase in trust this year. Surprising, considering the amount of incorrect information circulating on such forums. 

Do you agree with the findings of the 2012 Trust Barometer and what Richard Edelman had to say? Have we lost confidence in authority figures? How can they build trust again and manage their reputations?There is now an opportunity for governments and businesses to lead in ways that earn trust. How would you like to see that done? Can they convince the citizens of the world that they are not about self interest but taking their responsibilities in society? Do you agree with Richard Eberman that confidence in governments and businesses will start rising again this year?

Video: ReutersTV

Cyber war more likely than nuclear conflict?

Sunday, February 5th, 2012

The prospect of war with Iran is headline news. But how prepared are we for cyber threats? Or worse, the prospect of cyber space turning into a nuke? Devote four minutes to listen to what a high level delegation from Europol, Israel, NATO, the EU and US has to say on cyber security:

According to a new report on cybersecurity by Security & Defence Agenda, a think tank in Brussels, Sweden, Finland and Israel are best prepared for cyber attacks. Better even than the United States, Germany and Britain, which is alarming since the latter three are more likely to be targeted than Sweden and Finland. India, Brazil and Mexico on the other hand, rank near the bottom. 

More than half the respondents believe a cyber arms race is already going on and 36% are of the opinion that cybersecurity is more important than missile defence. Nearly half said that it's as important as border securiry.

Global agreement to share information recommended

Governments and private sector companies need to cooperate better on sharing information about possible threats. The public also needs to be educated and more attention being given to secure smart phones and cloud computing.

China lagging behind

Considering how active China is reputed to be in cyber warfare, it's surprising that the report finds that they are no better equipped to defend themselves than countries like Poland and Austria. Makes you wonder if the talk about China's super elite Cyber army is exaggerated? If not, why don't they make sure they are better protected against attacks? Provided, of course that the report has the right information. 

Apparently the West is so far scrambling to bolster its capabilities as I wrote about in Cyber Warfare – hackers to the rescue? six months ago. Hackers are both a concern and possible assett when it comes to defense in cyber space. A few days ago Anonymous released a recording between the FBI and UK police discussing efforts against hackers. Once again, can't avoid thinking that it would be much better if the members of Anonymous and other such groups could give governments a helping hand. Let's face it they exist and could use their skills in beneficial ways.

US warns against Iran, China and Russia

On January 31st James Clapper, US intelligence officer told the senate that Iran is accelerating its activity in cyber space and warned that China and Russia have aggressive capabilities. Iran, Russia and China on the other hand accuse the United States of being the main agressor in cyber space. 

What's your opinion? Do you agree that an arms race is already going on in cyber space? Are Iran, China and Russia as active as we are led to believe by US intelligence and the news? Did you know that 1,000 attacks a minute take place world-wide? Is a full scale online war more likely than a nuclear conflict? Is enough being done to protect us against attacks in cyber space? What more could be done? Will it actually go as far as an online war? If so, will it paralyze the world and who will be the winner?

Video: InfoSecDefAgenda

Is the West taxing itself out of business?

Sunday, June 13th, 2010

It’s not a coincidence that most successful Western corporations were founded last century. Then it was still possible to build up a highly profitable company in the West. Nowadays however, that’s easier said than done. Western tax authorities, led by Sweden followed by America, are tightening any loopholes there are.

Multinational corporations have already made arrangements to pay as little as possible to the taxman in the West. So they will not be much, if at all, affected by this. However the vast majority of companies are small and medium sized. And for them it isn't always possible to do what the big players do.

In the developing world however, companies can still do what used to be done here which gives them the upper hand. Cannot understand how tax authorities have been allowed, actually instructed, by politicians to hand out all the aces to competitors overseas? You have to play with the cards you have and with the odds stacked against them, Western companies have their hands tied.

Private sector companies generate the main part of taxes and fees that pay for government and the public sector. Hence cannot understand how Western governments can implement taxation laws that slowly but surely make Western corporations unable to compete on the global market? Where is the money going to come from to fund Western authorities? Obviously the problem is that politicians main priority is to be re-elected. They hence take opportunistic decisions to gain short term benefits. But how about keeping the West competitive in the long run? A lot of famous Western brands, such as Volvo, Rolls Royce and Range Rover, have already been sold to the developing world.

Where is the money going to come from to keep the West wealthy when companies are being taxed out of business? Tax authorities in the West are getting more and more militant and EU and US politicians are cooperating to make sure they squeeze as much taxes as possible out of companies. The justice system in Sweden is hence so twisted you are actually better of murdering someone than committing severe economic crimes since your jail sentence will be shorter.

The jobless recovery illustrates the tax problem very well. Many jobs lost will not be replaced, more likely outsourced or moved overseas. Most manufacturing has already moved to the developing world, not because companies wanted to move, but had to in order to be competitive. Fair enough since most Americans and Europeans are not keen on such jobs anyway. Catch is that all countries have a population of everything from brilliant to stupid people. What are Westerners with a low IQ going to do in the future? Non-skilled jobs are in the developing world but how many labourers in the West are prepared to start working in, say, a factory in China? Or Africa for that matter, because some experts believe manufacturing will start moving there since they provide cheaper labour than Asia.

Multinational corporations have already made arrangements to pay as little as possible to the taxman in the West. So they will not be much, if at all, affected by this. However the vast majority of companies are small and medium sized. And for them it isn’t always possible to do what the big players do. So weather they like it or not, they have to start thinking about moving their company head quarters to other parts of the world. Or, like IKEA, transfer ownership to a trust abroad.

Unfortunately politicians are not the do-gooders they ideally should be. Politics is a profession. And like the corporate world they are looking for short term gains. That companies do is one thing, but surely US and European politicians should have the long term welfare of their own countries at heart? Throughout history empires come and go. And the US and European empires are no exceptions. We all know that China, India and Saudi Arabia/the Gulf will take over. But what I cannot understand is why Western politicians are actually speeding up the end of their empires? Wouldn’t it be better to try to remain the leading powers for as long as possible by keeping the good cards? Apparently not since the West seems to be undermining its strenght from within without taking into account what this will do to future generations.

(photo: 427 – flickr)