Coke is so prevalent around the world that non-profits look to its supply chain for help on distributing aid. McDonalds, in 122 different countries, is so widespread that there’s a foreign relations theory that no two countries hosting the burger franchise will go to war, although the strong version of that theory is well dead. And Wal-Mart is the world’s third largest global employer, after the American and Chinese militaries, respectively.
Unfortunately, no, according to Bhaskar Chakravorti, the director of Tufts’ University’s Institute for Business in the Global Context. He says all these examples represent “the myth of American global market power”—they are outliers that disguise the real failing of American multinationals to succeed around the world, and especially in fast-growing emerging markets. Despite what you might hear, he says “we are extremely under globalized.” Here’s an excerpt from a forthcoming paper he’s written with fellow economist Gita Rao (emphasis mine):
In 2010, emerging markets represented 36% of global GDP; these markets already account for the majority of the world’s oil and steel consumption, 46% of world retail sales, 52% of all purchases of motor vehicles and 82% of mobile phone subscriptions. With two-thirds of global growth coming from these markets, in a decade they will account for the majority of the world’s economic value. Yet U.S. companies derived less than 10% of their overall revenues from emerging markets: about as little as 7%, according to HSBC estimates for 2010. The 100 largest companies from the developed world overall made 17% of their revenues from emerging markets, according to a McKinsey report; in other words, the U.S. lags not only emerging market firms in capturing share in emerging markets, but it lags the developed world overall. By considering the difference between the “absolute potential” represented by the 36% number or, to take a much more conservative benchmark, the global peer average of 17% and the U.S. share of 7%, we derive two measures of the gap – and the degree to which U.S. industry has not participated in global growth.
Yes, the yen has weakened and the pound has gotten pounded, but worries about an all-out currency war may be overblown. There's a perception that some countries' economies are being harmed by currency movements that have been undertaken to gain an unfair advantage.
That may be a bit misguided.
In the United States, the threat of a fiscal contraction due to sequestration has prompted the Federal Reserve to take actions that could weaken the dollar.
Signals suggest that the new head of the central bank in Japan will pursue a more expansionary policy in an effort to stimulate that country's long-moribund economy.
These actions are taken for purely domestic reasons, but they could have consequences for currencies.
In anticipation of frictions that could arise, there was an agreement by the G-20 nations at the recent Moscow summit to refrain from so-called competitive devaluations.
Read the full CNN Money piece
February 28, 2013
Dean Chakravorti on the Lessons About Leadership from the Oscars
I don't know about you, but I get my biggest and most concentrated dose of leadership lessons from going to the movies. And this year's movie crop has been nothing short of a bonanza. Oscar gave the nod to so many models of heroic leadership to pick from and adapt for our own use: the iconic American president with the upright gait and unforgettable face reproduced on monuments, mountains and currencies; the shadowy operative who favors anonymity and weaves a fabric of followers stretching from Langley, VA, through Hollywood, CA to Teheran, Iran, and returns to obscurity once the job is done; the boy on a boat with a single follower that can do little else but eat him. They all led. They engineered their followership to pull off seemingly impossible tasks. One led from the front, united a divided nation, fought a bloody war and was not averse to being just a little less upright to work with many stakeholders to get historic legislation passed. Another was an innovative entrepreneur, and harnessed resources that he brought together through intransigence, persistence and creativity. The third, literally, had a tiger by the tail; here was a lesson in leadership in extreme crisis with an extremely hostile constituency.
February 28, 2013
Prof. Aker and Prof. Wilson Examine Mobile Money's Impact on Savings
Mobile money can boost financial inclusion, savings – Research
A new research funded by the SWIFT Institute has revealed that mobile money can help to promote financial inclusion and boost savings rates amongst remote communities.
The research, carried out by US-based Tufts University in rural communities in northern Ghana with little access to financial services, demonstrated that take-up of mobile money can be easily promoted and that use of mobile money services can help to encourage a savings culture.
A month into the research project, 10% of participants had used the service solely for money transfer; two and half months later, usage increased to 26% of households, with 86% of users receiving money transfers and 70% of users saving on their mobile phone.
In a release SWIFT, the financial messaging provider for more than 10,000 financial institutions and corporations in 212 countries and territories, said the results could provide a possible model for policy makers around the world to extend the reach of financial services.
“If mobile money services can help to improve financial inclusion in this way, they could offer a crucial mechanism through which to address a stubborn problem that continues to hinder economic development,” the statement said. ...
...Jenny Aker, Assistant Professor of Economics, the Fletcher School, Tufts University, said: “Whilst these early findings are limited, the research suggests that simple interventions to alleviate the barriers to mobile money adoption can help to encourage its use for receiving remittances and as a saving mechanism. If further research supports these conclusions, mobile money could be an important mechanism for promoting financial inclusion.”
Read the full Ghana Business News piece
February 28, 2013
Britain Quitting the EU Would be a Mistake: Professor Laurent Jacque
Brexit: If Britain Quits The EU, What Then?
Britain has never been too keen on getting closely involved with Europe. When Germany, France, Italy and the Benelux countries established the European Coal and Steel Community in the 1950s, the start of what became the European Union, the British turned down the offer. ...
... If Britain decides to leave, it could grab a few benefits quickly. The nation would save about £8 billion ($13 billion) a year in net budget contributions to the EU, as well as roughly £30 billion a year in EU-related red tape costs.
The British Chambers of Commerce said in its latest Burdens Barometer report available that almost a third of the country's regulatory burden came from European Union directives in 2010.
The study suggests that the cumulative costs (1998 - 2010) to UK businesses from EU-origin regulations implemented since 1998 is £60.8 billion, which accounted for 69 percent of the total net cost of dealing and complying with new laws and regulations during the 12-year period.
“Leaving the EU would be a mistake; it would hurt the UK,” warned Laurent Jacque, a professor of international finance and banking at Tufts University’s Fletcher School. A British exit would dent trade with a market that accounts for half of Britain’s exports.
While there is active debate about whether the net impact of EU membership is positive or negative, any of the benefits the UK might gain from leaving (less regulation, more competition, no contributions to the EU budget) would not start to accrue until it had actually left, which even if it happens, is still many years away.
Perhaps the main immediate economic consequence of that stance is that uncertainty around Britain’s membership could persist for nearly five years. That could potentially hinder investment into the UK if access to the European single market and the UK’s contribution to shaping the EU are seen as important attributes. It seems unlikely that there will be any extra investment flowing into the UK on prospects it may leave the EU, given that the situation is so uncertain.
Read the full International Business Times piece
February 28, 2013
Time for Serious Bank Restructuring: Professor Amar Bhide
Too-Big-to-Fail Rules Hurting Too-Small-to-Compete Banks
Regulators want safety. Investors (JPM) want profits. Employees want bonuses.
Stuck in the middle are management teams at the world’s biggest banks, struggling to assure taxpayers, shareholders and traders that their pleas are being heard, Bloomberg Markets will report in its April issue.
In response to regulators, banks have reduced (BAC) their dependence on borrowed money. To answer investors, they’re cutting costs and exiting businesses that don’t deliver a big enough return on equity. Employees who haven’t lost jobs or fled to hedge funds are getting more of their pay in stock awards that are tied up for as long as five years.
The stakes are high. How executives finesse the competing forces will not only separate winners from losers; it will also determine the safety of the largest financial firms, those deemed too big to fail because their collapse would wreak so much damage that governments would be impelled to rescue them. …
… The industry’s legal bills have ballooned as practices such as shoddy foreclosures, interest-rate manipulation and money laundering came to light. Even CEOs such as JPMorgan Chase & Co.’s Jamie Dimon, whose New York-based bank reported a third consecutive year of record profit (JPM), have had trouble managing their sprawling organizations. Dimon has said he was unaware of complicated trading risks that led to more than $6.2 billion of losses last year.
“Who can tell what JPMorgan’s investment office is doing until after it’s blown up? Not even Jamie Dimon, so what chance does a supervisor have?” says Amar Bhide, a professor of international business at Tufts University’s Fletcher School of Law and Diplomacy in Medford, Massachusetts. “So for that reason, one needs serious restructuring of banks.”
Read the full Bloomberg Businessweek piece
February 25, 2013
The Global Economy in 2025: Op-Ed by Dean Bhaskar Chakravorti
"Tomorrow and Tomorrow and Tomorrow: The Global Economy's Path to 2025"
Editor's note: "Tomorrow and tomorrow and tomorrow" is a three-part series on the future of the global economy in 2025. Read part 2: Competitive edge will sustain US economic advantage in 2025; Read part 3: Resource limits and slow-moving institutions may hamper economic growth
Happy 2013. We are now officially a dozen years into the century. This is as good a time as any to imagine what the next dozen years leading up to the 2025 milestone might have in store.
The reason is simple – if you cannot imagine the future, you will never play a part in shaping it. What is worse, the future that you have been blind to can blindside you. We all know how 2012 played out; this may not help us in 2025. As Macbeth, who helped with the title for this article, also reminds us that “all our yesterdays have lighted fools the way to dusty death.”
Unfortunately, our collective track record for imagination has not been stellar. We have a tendency to get excited about the news that spikes in the near-term and that colors our view of the longer term ahead.
To get a sense of just how bad this cognitive dissonance can be, imagine you were back at the dawn of the century in January 2000, perhaps celebrating the non-event of the past year: the Y2K bug that fizzled. This was already a harbinger of more misconceptions about the most significant developments of a dozen years to come.
Read the full GlobalPost piece
Read part 2
Read part 3
February 11, 2013
America's Future Depends on Global Innovation Capability: Dean Chakravorti
Solving Apple's Innovation Problem
On the face of it Apple has one innovation problem that it needs to overcome – find a new category-busting product like the iPhone. Not so easy, of course. But the intervention of hedge fund manager David Einhorn, mad at the company’s inability to leverage value from its $137 billion cash pile, tells us that its innovation problems are significantly bigger.
It needs to re-instantiate the idea that it could be worth a $1 trillion.
Instead Apple is a company whose current, core customer-centric mission has acted like a dehydrator in the company’s idea closet. Its insistence on a very narrow definition of what it does has made it impotent to use that money. It’s creativity is all but dried up. …
… We face two simultaneous problems in the global economy. The first is the accumulation of capital for non-productive uses – Bain reports that by 2020 the total of financial assets in the world will be $900 trillion, $300 trillion more than today, and its effect is constantly to threaten a surge in non-financial asset prices such as commodities. Apple is a symptom of that problem hoarding cash it is too scared or unimaginative to spend.
The second is the growth of a global middle class that will be extremely resource hungry and that is causing enormous structural problems – or opportunities – because of the pace of development. These are Apple’s future customers.
I got talking recently about this, and the role of the USA, to Bhaskar Chakravorti, senior associate dean of International Business & Finance at The Fletcher School at Tufts University. Bhaskar also runs the Institute for Business in the Global Context.
“America’s future actually depends on a global system capability in innovation,” says Bhaskar, “that is deep, long-term investment in solving problems on a systemic basis.”
There’s some sense in applying this obligation also to corporations. As Bhaskar points out 40% of global GDP comes from emerging markets, yet only 10% of US GDP comes from these areas. America is letting opportunity slip by.
Read the full Forbes piece
February 6, 2013
The Global Farmland Rush: Op-Ed by Michael Kugelman (F05)
Over the last decade, as populations have grown, capital has flowed across borders and crop yields have leveled off, food-importing nations and private investors have been securing land abroad to use for agriculture. Poor governments have embraced these deals, but their people are in danger of losing their patrimony, not to mention their sources of food.
According to Oxfam, land equivalent to eight times the size of Britain was sold or leased worldwide in the last 10 years. In northern Mozambique, a Brazilian-Japanese venture plans to farm more than 54,000 square miles — an area comparable to Pennsylvania and New Jersey combined — for food exports. In 2009, a Libyan firm leased 386 square miles of land from Mali without consulting local communities that had long used it. In the Philippines, the government is so enthusiastic to promote agribusiness that it lets foreigners register partnerships with local investors as domestic corporations.
The commoditization of global agriculture has aggravated the destabilizing effects of these large-scale land grabs. Investors typically promise to create local jobs and say that better farming technologies will produce higher crop yields and improve food security.
However, few of these benefits materialize. For example, as The Economist reported, a Swiss company promised local farmers 2,000 new jobs when it acquired a 50-year lease to grow biofuel crops on 154 square miles in Makeni, Sierra Leone; in the first three years, it produced only 50.
Read the full Op-Ed in The New York Times
January 22, 2013
Six Questions to 2025: Op-Ed by Dean Bhaskar Chakravorti
Tomorrow Is Now: Six Questions About the Road to 2025
Imagine you are back at the dawn of the century in January 2000, perhaps celebrating the non-event of the past year: the Y2K bug that fizzled.
Now consider some of the real game-changers from 1999: the first human chromosome successfully sequenced; a mobile device called the BlackBerry arriving on the scene; the dorm room innovation of the year, Napster, forever changing the music business.
Today, in the warm glow of hindsight, we have a very different view of how any of those events changed our world. Back in January 2000, the words "Al Qaeda," "iPhone," "Barack Obama," "Wikipedia," "Arab Spring," or "Twitter" would have drawn blank stares. All our tomorrows do, indeed, have a way of taking us by surprise. And as for the yesterdays? As Macbeth discovered, they have a nasty habit of having "lighted fools the way to dusty death."
Now we've crossed into 2013. That means we are now officially a dozen years into the century and it has proven to be a tumultuous period from the very first year on. As we head toward the global crossroads of 2025, it's time to imagine some scenarios for the next 12 years. The reasoning is simple -- if leaders do not have the courage to imagine the future, they won't play a part in shaping it. But if the future is so elusive, where do we start?
Read the full piece in the Huffington Post
January 14, 2013
Op-Ed: CEME Senior Fellow Paul Schulte (F88) on US Property Recovery
US Property recovery is key to global stability -- the FED and BIS are arranging this!
The US housing market is the most important marginal asset class globally. In the past 12 weeks, two important developments have occurred which have increased the value and the funding viability of the housing market. In another example of how policy is driving asset prices, the Federal Reserve and the Bank of International Settlements (BIS) have moved the goal posts and have given equity investors (yet again) a ‘get out of jail free’ card. These moves are very important and will have positive benefits for asset prices. This rally is NOT about avoiding the fiscal cliff. It is about policies implemented by regulators to maintain the recovery in US housing prices. They may just pull it off.
Read the full article
January 14, 2013
What is the True Cost of Cash? Dean Bhaskar Chakravorti Weighs In
Innovation Hub 1/12/13: The Future of Cash
Guests:
Bhaskar Chakravorti: senior associate dean at the Tufts Fletcher School
David Wolman: author of The End of Money
James Lyne: director of technology strategy at Sophos
How much money do you have in your wallet right now? For more and more of us, the answer is none.
Cash, as it turns out, has some downsides: it can be easily counterfeited, often carries germs, and even transports traces of cocaine. Plus, there are a lot of purchases you simply can’t make with cash today, from downloading a song to buying a plane ticket — and the transition from paper dollars to plastic and apps isn’t likely to subside.
Tune in to the conversation on Innovation Hub
December 28, 2012
Op-Ed: CEME Senior Fellow Paul Schulte (F88) on Corruption in the Emerging World
Brazil shows great improvement, catapults over India and Russia, in corruption battle
The Corruption Perception Index (CPI) is a global monitor of corruption in more than 200 countries. It monitors the progress of countries in eradicating corruption, is widely followed and is compiled by Transparency International. A full accounting of this process is available onwww.transparency.org/cpi2012/results. The list highlights the cleanest 15 countries in the world as Scandinavia, Australasia, Singapore, Hong Kong, Switzerland, Chile and Canada. The list then highlights the most corrupt countries in the world as Somalia, North Korea, Afghanistan and Myanmar. The bottom line is that countries which are successful at eradicating corruption tend to get very wealthy while those that dilly dally on the corruption issue tend to stay poor. The eradication of corruption takes time – many generations. Older democracies have had much time to clean up messy corruption, while many new democracies are emerging from egregious colonial legacies such as slavery and backward legal systems which hobble progress.
December 21, 2012
Dean Chakravorti Weighs in on the 'Doing Business In Africa' Campaign
Many African countries complained during the recent U.S. Presidential election that President Obama had not paid enough attention to the continent. Among the gripes was that the United States focused too much on charitable efforts when Africa desires and demands investment and business opportunities. Other countries have taken early note of Africa´s up-and-coming economic status and have invested heavily in various African nations. China, Brazil and Japan have a growing presence in Africa, a presence that only appears to be getting bigger and bigger. Now the continent is craving a larger presence from America.
Obama seems to have heard the call. Now the Administration has announced the Doing Business in Africa campaign, "The campaign is to help American businesses identify opportunities for United States commercial and trade relationships in Africa. …
… Bhaskar Chakravorti, senior associate dean of International Business and Finance at the Fletcher School, Tufts University agrees, but adds the campaign is a long time coming. “Less than 3% of U.S. global trade volume is with Africa. So any initiative is welcome. The trade with Africa had peaked in 2008 and since then the Obama administration has not done much by way of a systematic outreach towards Africa until June. In June, they announced a new "strategy" towards Sub-Saharan Africa; the newly launched "Doing Business in Africa" program is a follow-up to that strategy,” explains Chakravorti. “The program will essentially help identify trade and commercial opportunities in Africa and facilitate trade promotion and financing through OPIC, the Ex-Im Bank and USTA. Much of the financing will focus on the clean energy sector. This is all a good start – but I would say that it is too little and a bit late.”
Read the full piece in The Network Journal
December 13, 2012
IBGC Speaker Series hosts Susan Avarde, Citi's Head of Global Branding
Looking Back to Brand Forward: Citi's "200 Years" Campaign
What do the Panama Canal, the first transatlantic cable, and the Marshall Plan have in common? They were all financed in part by Citi, the global financial company that is celebrating its 200th anniversary this year. A legacy of support for these and other historic innovations inspired the company’s latest worldwide branding campaign, explained Susan Avarde, Citi Head of Global Branding, during a visit to The Fletcher School in late November.
Building a strong brand, Avarde said, is difficult in a “transparent world with multiple audiences,” in which consumers “may already carry in their minds a sense of who you are and what you stand for.” To succeed in the marketplace, she said, brands must be new and true, i.e. offer a new interpretation of who you are but remain authentic to your purpose.
Avarde joined Citibank in 1998 and currently oversees the company’s global brand strategy and implementation. An industry veteran, she has created award-winning campaigns for a range of clients including Vogue, BP, Air France, and AT&T. Her talk, titled “Why Brand Matters: The New and the True,” was hosted by the Institute for Business in the Global Context (IBGC). Avarde’s presentation covered current trends in international branding as well as Citi’s efforts to refine its brand over the past decade.
Read the full article in Fletcher Features
December 13, 2012
CEME Senior Fellow Paul Schulte (F88) responds to Foreign Affairs Article "How the BRICS are Crumbling"
The November/December 2012 edition of Foreign Affairs Magazine had an article called “How the BRICS Are Crumbling”. The tone of the article – by a fund manager from Morgan Stanley – seems off the mark. The BRICS are slowing because they are trying to SLOW DOWN credit growth due to their dollar link. They are trying to slow down credit growth while the West desperately uses zero interest rates to SPEED UP credit growth. So, the West and the BRICs are operating at cross purposes. The BRICs countries have dollar-linked currencies, so when interest rates are zero in the West and high in BRICs countries, they will be bombarded with capital seeking a higher return. This causes the currency to appreciate, jeopardizing growth. Or the BRICs countries must intervene domestically to force banks to slow down credit as these banks are filled with cash. Either way, they are encountering forces which cause the currency to rise and credit growth to accelerate. This is a classic cocktail for a real estate bubble and accelerating inflation. Brazil and China are experiencing the same phenomenon now. Both are essentially trying to slow down their respective economies, although China has been more successful.
December 7, 2012
"How to Think Globally": Q&A with Dean Bhaskar Chakravorti
CEOs are naturally students of the big picture. Bhaskar Chakravorti, senior associate dean at the Fletcher School at Tufts University and executive director of Tufts's Institute for Business in the Global Context, wants them to think even bigger. As more businesses become global in scope, leaders must become experts in geopolitics as well as economics and must be conversant in topics as diverse as the domestic agendas of foreign markets and the ways those countries use natural resources and resolve regional disputes. Chakravorti spoke to Inc. about the imperative to follow world events. --as told to Leigh Buchanan
In what sense is the worldview of U.S. business leaders too narrow?
Business leaders traditionally focus on market forces, such as customers, competitors, and suppliers. But potential crises--and potential opportunities--often can be found when imbalances or gaps occur in nonmarket forces. By that I mean the forces that surround the market. So business leaders also should pay attention to developments in countries' political, legal, and regulatory systems. Also to things that might affect those countries' business ecosystems, by which I mean supply chains, basic infrastructure, their capital markets, their natural resources, and the productivity and quality of their human capital.
Read the full Inc. Q&A
December 5, 2012
Is it Africa's Turn? Experts Analyze the Prospects for Investment, Development
Will the continent, long synonymous with hunger, disease, war and corruption, now find its economic and political footing and ways to resolve so many of its problems?
That was the question posed by panelists and participants in a two-day conference held on October 25 and 26 at The Fletcher School of Law and Diplomacy at Tufts University. Organized by Fletcher’s Institute for Business in the Global Context (IBGC), the conference, titled “Africa's Turn? The Promise and Reality of the Global Economy's ‘Final Frontier,’” featured discussions and presentations from business leaders, development experts, entrepreneurs and government representatives who are helping to shape business and investment, policy, development and international relations in Africa.
In the last decade alone, Africa has seen remarkable growth and reform across many parts, according to Mimi Alemayehou (F98), executive vice president of the U.S. Overseas Private Investment Corporation, who moderated the panel discussion “Private Sector as a Catalyst for Development.” The panel included bureau administrators, CEOs, private sector officials and representatives from the World Bank.
Seven of the 10 fastest growing economies in the world are currently in Africa, Alemayehou said. What’s going on now is the realization that it won’t be just private companies alone, or just multinational lending giants, or just government development agencies that will fuel this quickening change.
Read the full article in Fletcher Features
November 29, 2012
IBGC 'Africa's Turn?' Conference at Fletcher Featured in GlobalPost
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| Kelvin Ma/Tufts University |
China vs. US: Who’s better for Africa?
Not long ago, officials and entrepreneurs from Africa seeking access to large quantities of foreign capital had little choice other than to deal with Western financiers.
That’s no longer the case — especially now that China is the world’s second biggest economy.
Beijing, for example, recently pledged to invest $20 billion in Africa’s infrastructure and agriculture over the next three years.
That’s creating some unease among economists and politicians who believe the investments may be more about securing rights to infrastructure and resources than building Africa’s industrial capacity.
Hillary Clinton referenced such doubts in a 2011 visit to Zambia when she told Africans to be wary of the potential for “new colonialism” in the recent slew of foreign investments.
“We saw that during colonial times it is easy to come in, take out natural resources, pay off leaders and leave," she said, adding that “I would argue that there are more lessons to learn from the US and from democracies,” than China on investment matters.
Chinese officials have been quick to refute such claims, citing a list of Chinese-funded agricultural development centers, schools, hospitals, and factories that have brought jobs and education to Africans.
Still, a long history of resource exploitation, when corrupt leaders take lucrative offers from big companies that rarely benefit ordinary Africans, is fresh in their minds.
“If you want to negotiate land investment, at the very least you can set guidelines for [the investor’s] conduct. The first instinct of a foreign investor is to help itself,” said Kingsley Moghalu, deputy governor of the Central Bank of Nigeria, during a conference at the Tufts Fletcher School of Law and Diplomacy last month. “You must construct a win-win deal by saying ‘half of what you produce must be sold here’ or ‘half of what you produce must be processed here.’”
Whether or not China’s recent investments are truly helping Africa, many Africans see China as a critical benefactor whose positive influence is quickly eclipsing America’s.
A 2007 Pew Poll found that Africans in most nations tend to overwhelmingly view China as a more helpful foreign investor than the United States. About 86 percent of people polled in Senegal held a positive of view of China’s economic influence, compared to 56 percent who favored America’s role.
Different investment practices, in addition to the considerable disparities between their levels of financial commitment, play a huge role in determining Africans views.
“The Chinese don’t express their values as part of the business transaction. As far as I’ve seen, Africans love that. Americans come in with a bag of money and a bag of attitudes about governance, human rights and any number of things. This hardly helps with their reception,” said Michael Fairbanks, a philanthropist and advisor to Rwandan President Paul Kagame on private sector development, who also attended the Tufts conference.
The growth of Chinese interest in Africa has also given leaders in the region a choice they didn’t have before, when American and other Western investors were the dominant players.
“African leaders like China — not out of a cultural affinity, but because they provide a choice that gives them leverage with the West, which drives the West crazy,” added Fairbanks.
Some experts agree that, if well managed, this leverage could help African leaders steer their countries towards economic autonomy and prosperity by making sure foreign investments do more than ferry African resources and profits overseas.
But while optimists see Africa’s growing middle class and consumer market as proof of its growing economic potential, others say it is no replacement for a strong production capacity, making Africa’s status as a major economic player a long way off.
Read the full GlobalPost piece
November 28, 2012
What We Get Wrong About China: Op-Ed by Dean Chakravorti
Editor’s note: Bhaskar Chakravorti is senior associate dean of International Business and Finance and founding executive director of the Institute for Business in the Global Context at The Fletcher School at Tufts University.The views expressed are the author's own.
We now know who will be leading the two most important nations for the global economy – for the next four years in the United States’ case, and for a decade in China’s. By the time President Obama is ready to leave office, China will have passed the U.S. in GDP terms, at least according to a report by the OECD. But with GDP no longer Chinese leaders’ top concern, the country has its sights set on catching up with the U.S. in another area – innovation.
On a recent to visit to speak at the World Economic Forum's Summer Davos in Tianjin, I was struck by the sense of urgency among Chinese leaders to close the gap when it comes to innovation. It was clear to me that it is time for the U.S. to pay close attention, because urgency in China is generally followed by execution.
Read the full op-ed in CNN Global Public Square
November 26, 2012
Rethinking Dollars and Cents: Dean Chakravorti on the Cost of Cash
How much money do you have in your wallet right now? For more and more of us, the answer is none.
As people around the world turn to electronic forms of payment, Kara Miller looks at the future of cash on Boston Public Radio.
Cash, as it turns out, has some downsides: it can be easily counterfeited, often carries germs, and even transports traces of cocaine. And then there may be the biggest question of all: Does cash cost you money? Are the funds that we use to print up bills and mint coins excessive? And are we entering a new era of currency?
GUESTS:
- Bhaskar Chakravorti: senior associate dean at the Tufts Fletcher School, which conducted a Cost of Cash study
- David Wolman: author of The End of Money
- James Lyne: director of technology strategy at Sophos
Tune in to the conversation on Boston Public Radio
November 19, 2012
Dean Chakravorti on Fletcher's MALD/MBA Program with Partner Institutions
Breaking down the boundaries of business and law
This month, 22 of Austria’s high-flying judges and public prosecutors temporarily put aside their caps and gowns and went back to [B-school] to uncover the best way to fight white-collar crime....
...The alliances between different institutions, which have been common practice in business education for decades, are now increasingly common between business schools and law schools, says Bhaskar Chakravorti, senior associate dean for international business and finance at the Fletcher School of Law and Diplomacy at Tufts University close to Boston.
“No single professional school feels it has the breadth, the depth and the range of disciplines as well as the range of geographies,” he says. The move towards international relationships and the potential rebalancing of economic power between countries in the northern and southern hemispheres needs to be addressed, he says. “It’s about the challenges of dealing with different societies, with domestic and international legal systems.”
The Fletcher school already teaches its flagship masters in law and diplomacy as a joint MALD/MBA programme with four business schools: Ceibs in China, HEC Paris in France, IE in Spain and Dartmouth College’s Tuck School of Business in the US. He refers to students on these programmes as “360-degree people."
Read the full report in The Financial Times (subscription required)
November 19, 2012
Developing "Contextual Intelligence" Through Executive Education at Fletcher
Business schools have long offered executive education programs for corporations. Along with a welcome stream of revenue, these courses have also brought a sense of real-world dynamism to campuses, as they encourage working professionals to re-enter the classroom.
In the last decade, graduate schools in other arenas — like international relations, public affairs, law and even journalism — have also begun developing executive education courses, particularly in niche areas that are not covered by traditional business schools.
The London School of Economics and Political Science; the Graduate Institute, Geneva; the Kennedy School of Government at Harvard; the Fletcher School at Tufts University; and the Lee Kwan Yew School of Public Policy at the National University of Singapore all have courses for working professionals and managers. …
…Bhaskar Chakravorti, senior associate dean at the Fletcher School, said that its executive classes were interdisciplinary.
“Here at the Institute for Business in the Global Context at Fletcher, we are creating cross-linkages between business and the broader contextual factors that affect business and vice versa,” he said, adding that subjects could include “geography, history, cross-border issues, security questions, diplomacy and cultural issues.”
Read the full International Herald Tribune piece
November 16, 2012
We're Reaching the Limits of Many Non-renewable Factors: Professor Chakravorti
While the global economy remains in a deep funk, Dr. Bhaskar Chakravorti says the world is going through one of the largest periods of economic growth in history. He credits that to India and China each doubling their gross domestic products in the past 15 years, something that took the United Kingdom 150 years to do after the industrial revolution.
But that growth comes at a price, Chakravorti told the more than 50 students, professors and business people in a 90-minute lecture sponsored by Kennesaw State University’s India China America Institute on Thursday.
“We are reaching the limits of many non-renewable factors,” said Chakravorti, who heads the International Business Center at the Fletcher School at Tufts University near Boston. “Whether its natural resources, minerals, land, water — we’re running short of water, particularly India and China. And certainly clean air, and there doesn’t seem to be any way out of where we are. So what is happening is a lot of problems is being shifted away from the corporate centers of the community to the bottom of the pyramid.”
Read the full piece in The Marietta Daily Journal
November 9, 2012
Report by Gaurav Tiwari, F'12, Provided to Students Debating the Importance of Property Rights for Economic Growth at Inaugural George W. Bush Institute Economic Debate Weekend
International Property Rights Index
Over the last twelve months, the world has seen the most dramatic turn of events in the political, economic and social life of the common man in the Middle East. It is a story of enterprise – one that is lost in regulatory red-tapism and overshadowed by government control and corruption. One can trace the beginning of such events to December 17, 2010, when Mohamed Bouazizi, a street vendor in Tunisia, immolated himself. Bouazizi’s attempted suicide (he later died in early 2011) is indicative of the repression that millions of entrepreneurs face in shadow economies across the world. Largely illegal, the shadow economy operates outside the purview of the legal system. Corruption and lack of property rights make it harder for entrepreneurs like Bouazizi to move into the formalized economic framework. To that end, recent events reflect the rebirth of Hernando de Soto’s pioneering work and original ideas that stress the need for legal empowerment of the poor to achieve economic success.
Read the full report on the Gateway House website (published by Americans for Tax Reform Foundation/Property Rights Alliance)
Do B-Schools Need a Physical Presence in Washington? Prof. Bhaskar Chakravorti Weighs In
As many leading US business schools look to engage more actively with public policy issues, how important is it for them to have a physical presence in Washington?
For John Mayo, executive director of the Georgetown Center for Business and Public Policy, there is no doubt. “Physical proximity to policy makers, as we have, is essential for a successful continuity of dialogue,” he says. …
…This conclusion is not, however, held unanimously. Bhaskar Chakravorti, executive director of the Institute for Business in the Global Context at Tufts University’s Fletcher School of Law and Diplomacy, says that a Boston location has inhibited the influence of neither the Fletcher school nor its Harvard neighbour. “Since its establishment, the Fletcher School has had an enormous amount of influence within the corridors of power.”
Read the full Financial Times piece (subscription required)
B-Schools Need Greater Interdisciplinary Engagement: Professor Bhaskar Chakravorti
Schools Widen Their Political Horizons
Looking east from the tower of Healy Hall, the hilltop landmark of Georgetown University, the white dome of the US Capitol building dominates the Washington landscape. Now the home of federal legislature is attracting attention from a different quarter.
Leading US business schools are recognising how the financial crisis has prompted government to play a more active role in the economy and in response are re-evaluating their approach to public policy and its impact upon business. ...
…The reason for this is that business schools are not equipped to engage successfully with matters beyond their field, says Bhaskar Chakravorti, executive director of the Institute for Business in the Global Context at Tufts University’s Fletcher School of Law and Diplomacy. “Business schools have very little intellectual foundation to tackle questions of political context,” he says.
Read the full Financial Times piece (subscription required)
November 1, 2012
'QE3 only works as a prelude to structural change': CEME's Arthur Sculley
The U.S. government must structurally rework its domestic market as the Fed’s third round of quantitative easing (QE3) was a necessary and successful, but only stop-gap, measure to stimulate the economy, according to Arthur Sculley, a senior fellow at the Center for Emerging Market Enterprises at the Fletcher School. The institute, which is affiliated with Tufts University, was established in 2007 as the first professional graduate school of international relations in the U.S.
“[Such measures] ease the pain, but they don’t solve the problem,” Sculley said in a recent interview with the Korea JoongAng Daily. “They’re necessary, but by far the more important issue is structural change, which has been needed in the U.S., and in Europe in particular.”
Sculley was visiting the Korean campus of the State University of New York in Songdo, Incheon, to give a lecture.
Read the full interview in JoongAng Daily
November 1, 2012
Dean Bhaskar Chakravorti on How U.S. Can Lead Business Innovation
How the U.S. Can Lead Business Innovation
As the election winds to a close it feels like there aren't many areas of agreement between Pres. Obama and Gov. Romney, between their respective Democratic and Republican parties.
But we've found one: both want to see innovation and the growth of new businesses.
Today we get behind the platitudes to ask — no matter who wins on Tuesday — how do you foster innovation? How do you ensure the U.S. is a rising power at the forefront of cutting edge technology, not lagging behind?
GUESTS:
- Rosabeth Moss Kantor, professor at Harvard Business School, and author of Supercorp: How Vanguard Companies Create Innovation, Profits, Growth and Social Good.
- Bhaskar Chakravorti, Senior Associate Dean, Tufts Fletcher School.
Listen to the full WGBH discussion
October 26, 2012
Dean Bhaskar Chakravorti Dispels Some Myths on China and Innovation
On a recent to visit to China to speak at the World Economic Forum's Summer Davos in Tianjin, I was struck by a palpable sense of urgency. Catching up with US GDP was no longer the only burning issue; China, it was said, needs to close the gap with the US on innovation. I agree, but some myths about innovation in China need to be dispelled. I have heard five mentioned most frequently.
1. There is no innovation, only piracy and imitation.
2. The Chinese approach to innovation is too top-down and State-led, and real innovation only comes from the bottom-up from entrepreneurs.
3. Protection of intellectual property rights is weak, discouraging innovation.
4. China's Asian education model emphasizes rote learning, with a narrow emphasis on science, technology, engineering and mathematics; innovation can only flourish in environments that encourage exploration, critical thinking and a broad education in the liberal arts tradition.
5. In a globalized economy, sustaining innovation requires investments in international markets; China's brand and soft power abroad is weak and dated.
Each of these beliefs, mostly held by China skeptics, is a statement about China's innovative spirit compared with that of the US, the world's benchmark. Of course, the reality is more nuanced.
Read the full China Daily op-ed
October 25, 2012
Crowded Spaces Do Create Entrepreneurs, says Dean Chakravorti
Born on the Lower East Side
Oh, to live in a teeming tenement!
That’s not a sentiment you hear a lot these days. In fact, it’s doubtful that the great wave of Jews immigrating to New York at the turn of the last century would have uttered it, either. But to the tenements they came, and New York has never been the same. This may be why the city’s current mayor, Michael Bloomberg, wants developers to do it again: Teem away!
In June he announced a contest to plan a building crammed with 80 apartments of 275 to 300 square feet each. Thirty-three developers submitted plans by the deadline in late September and the winning concept will be built in the Kips Bay neighborhood on Manhattan’s East Side. …
… If [the Lower East Side] was both outrageously crowded and, ultimately, outrageously successful as an incubator for great artistic, social and entrepreneurial success, could that mean that extreme cramming actually makes people more productive? If so, wouldn’t that mean slums are great for cities?
It would. And in a way, said Bhaskar Chakravorti, who teaches international business and finance at The Fletcher School at Tufts University, they are. Chakravorti’s specialty is innovation in an international context, and as such he studies slums.
He’s not a romantic about them. He’s an economist; he sees slums burgeoning as people from the countryside flock to the mega-cities of the world. But he sees a big difference between the slums filled with striving newcomers and the older slums, where poverty seems entrenched and intractable. “When we think of a poor neighborhood in L.A. or Chicago, we tend to think of them as inherently decrepit and no signs of hope,” Chakravorti said. But that’s not true of slums that simply provide cheap, convenient housing for the folks flooding in.
Read the full Forward report
October 24, 2012
Are State-backed Business Partners Better? Dean Chakravorti Weighs in
THE PROBLEM
This week, the board of BP agreed to sell its stake in TNK-BP in favour of an alliance with the state-backed Rosneft. When working in uncertain emerging markets, such as Russia, is it better to be partners with the private sector or the state?
The academic: Bhaskar Chakravorti
First, ask four questions: is the state dominant in the economy? Is the industry mainly reliant on natural resources and scale (rather than on a detailed understanding of market needs or on adaptability)? Are capital markets and essential related factors (such as infrastructure, regulation, licence regimes) unreliable? Can you unlock value by bringing efficiencies to inefficient-but-protected industries?
Read the full Financial Times piece
Find here the transcript of a conversation that Prof. Chakravorti had with Dean Peter Uvin on what development organizations can learn from private corporations.
October 11, 2012
Expect Modest Progress from IMF, World Bank Meetings: Dean Bhaskar Chakravorti
Global Financial Leaders Ponder Jobs, Growth and Politics
The International Monetary Fund is warning that global economic growth is slowing at the same time the World Bank says hundreds of millions of new jobs are needed around the world. Top financial and political leaders are gathering in Tokyo to discuss these and other major economic issues.
Many Europeans have been angered by government efforts to slash pensions and salaries, while raising taxes in an effort to balance battered budgets.
Public anger is one of many things limiting what leaders can do to solve economic problems in Europe and elsewhere.
As leaders head for the International Monetary Fund and World Bank meetings, many economists say Europe’s problems are the biggest threat to the global economy. …
… Tufts University [The Fletcher School] Professor Bhaskar Chakravorti expects only modest progress from the IMF and World Bank gatherings in Tokyo. He spoke on Skype.
"I think it moves the ball along a few tiny inches [centimeters] on a field that is probably several miles [kilometers] long," said Chakravorti.
At a time when the globe faces slowing growth, debt problems in Europe, political stalemates in the United States, and other problems, modest progress may be the best that can be achieved.
Read the full Voice of America report
September 26, 2012
Dean Stephen Bosworth on the Repercussions of China-Japan Tensions
Global Business Fears 'Economic Dislocation' if China-Japan Rift Deepens
Global business leaders are voicing increasing concern over heightened political tensions between China and Japan, sparked by a maritime dispute in the East China Sea. They fear an escalation may have a spill-over effect on their regional operations and damage trade ties between the world's second and third-largest economies.
…
"Everyone is taking their cue from last year's earthquake and tsunami in Japan...no one expected what the damage would be," said Stephen Bosworth, dean of The Fletcher School of Law and Diplomacy at Tufts University, and former U.S. Ambassador to South Korea between 1997 and 2001. "All these things have consequences. This is probably the most tightly integrated region in the world in terms of trade and investment."
Read the full CNBC piece or view the CNBC clip