Category Archives: Economic development

Updates from Chicago Booth

Four ways to ensure innovation continues after the crisis
Tools for innovating better and faster, even after the recovery
By Lindsey Lyman – The COVID-19 crisis has prompted inspiring acts of innovation. Companies, governments, entrepreneurs, and citizens have proved how capable humans are of innovating during times of crisis. Responding to the acute public-health pandemic has forced rapid changes in health-care-delivery models. The social-distancing mandates have prompted complete workforces to adopt a virtual work model as well as K–12 school districts and university systems nationwide to figure out how to educate students through distance learning. The slowdown of commerce has pushed small-business owners to transform their business models overnight in an attempt to stay afloat amid economic collapse.

Necessity forces companies to innovate. However, waiting for a crisis is not a sustainable innovation strategy, and certainly no one wants a crisis for the sake of innovation. The COVID-19 pandemic provides a natural experiment that allows us to examine conditions that have prompted innovation and to observe and learn how organizations have responded. The circumstances are dire and the effectiveness of many of these innovations remains unknown. Despite this, it is worth observing what is happening and learning from it. Companies should take note of these lessons and apply them to remain innovative, whether in the midst of a crisis or in a position of strength.

Extreme examples of innovation have surfaced from the COVID-19 crisis. In one well-documented example, Wuhan’s Huoshenshan Hospital, a specialty field hospital, was built in just over a week to treat the outbreak. Although this is a great testament to human ability, it does not provide a blueprint for sustainable innovation. The financial burden and other costs—among them, structural and safety concerns and suspect labor practices—do not justify building a hospital at this speed under normal circumstances.

However, other tools used to fight the COVID-19 outbreak can and should become a replicable part of corporate innovation practices. Here are four of them. more>

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We must break the cycle of panic and neglect

Health, global security and international stability are inextricably linked. And our globalised, urbanised and at the same time politically fragmented world has never been as prone to pandemics as it is today. Wolfgang Ischinger and Stefan Oschmann present five points that are critical in order to be better prepared for situations like these in the future.
By Stefan Oschmann and Wolfgang Ischinger – The number of coronavirus cases as reported on the website of Johns Hopkins University continues to skyrocket. The International Monetary Fund is preparing the world for a massive recession.

Governments around the world have mobilized incredible sums of money in order to strengthen healthcare systems in the short term and to cushion the economic consequences of the crisis in the long term. Without a doubt, health crises can pose a serious threat to all of humanity, one no less serious than the dangers of atomic weapons, terrorism or the impact of climate change.

The fact that health, security and stability are inextricably linked is not a new realization. The devastating consequences of pandemics – from the plague to the Spanish flu – are a firm part of human history.

Yet they are still being massively underestimated – despite the fact that our globalized, urbanized and at the same time politically fragmented world has never been as prone to pandemics as it is today.

At the moment, the focus is on acute crisis management. How can a lockdown be managed? When and how can a return to normalcy be responsibly permitted? And what exactly will the new normal look like?

These topics are currently being widely discussed, and rightly so. With this article, however, we want to point out that it is also necessary to plan beyond this period. We should urgently think about the following five points:

First: Overall, the global community has not succeeded in breaking the cycle of panic and neglect that characterizes the way in which it responds to pandemics. No doubt, after SARS 2002/03, significant progress was made in the areas of pandemic preparedness, in research and development as well as in vaccine development.

Countries such as China have considerably strengthened their healthcare systems. Yet unfortunately, this was not enough. At the Munich Security Conference (MSC) in 2017, Bill Gates spoke about the sad irony that the global costs of a pandemic massively eclipse the expenditure needed to successfully prevent a global pandemic.

According to Gates, the cost of ensuring adequate pandemic preparedness worldwide is estimated at US$ 3.4 billion a year, while the projected annual loss from a pandemic could run as high as US$ 570 billion.

The amounts being called up right now for global crisis management show that at the time, these estimates were a rather conservative estimate of the potential follow-on costs. One thing is clear: Pandemic preparedness is an absolute must and pays off, not only in financial terms. There is no price as high as the one we are paying right now as a global community. more>

Updates from McKinsey

How payments can adjust to the coronavirus pandemic—and help the world adapt
The challenges are immediate, with long-term implications for global, regional, and local economies—and for the payments industry itself. Here’s what to expect.
By Philip Bruno, Reet Chaudhuri, Olivier Denecker, Tobias Lundberg, and Marc Niederkorn – As the catastrophic human costs of the coronavirus come into clearer focus, so too do the consequences for people’s well-being beyond the immediate imperative to safeguard lives. Taking care of our families and friends, our neighbors and communities, our employees and coworkers comes first. For that reason, companies across industries and geographies have scrambled to establish remote-working conditions—and continue to improve them as the health crisis continues. Those that can, including most banks and financial-services companies, have taken swift action to protect both their customers and their employees.

The next focus of all the professionals involved with the transactions infrastructure must be the stability of systems, for both payments and securities. At this writing, despite the scale of the emergency measures underway, no major outages of core infrastructure have been reported. Payments systems have proved resilient and reliable, as they have in earlier crises. Payments systems and providers, which enable companies and their customers to transfer funds in return for goods and services, continue to enjoy a high level of trust from the general public.

At the same time, we all realize that the economic disruption will be profound and the short-term drop in activity for economies under lockdown will be severe. Quarterly GDP in the second quarter of 2020 could decline by as much as 35 to 40 percent—and the payments industry’s financial outlook reflects that uncertainty in the short term. But the industry’s stability will play an invaluable role in rebooting the global economy, and the potential for innovation can support functioning economies as a “new normal” emerges. Below, we observe how the payments industry can adapt now—and suggest ten fundamental changes to the payments ecosystem that will help all of us find a new normal.

How will the coronavirus crisis affect payments economics?
There is no definitive answer. Much depends on the complex interplay between economic activity, the interest-rate landscape and associated liquidity patterns, and the evolution of individual and collective behavior. Taking these factors into account, we expect revenue growth in global payments to turn negative.

Instead of growing by 6 percent, as projected by our 2019 global payments report, activity could drop by as much as 8 to 10 percent of total revenues, or a reduction of $165 billion to $210 billion—comparable to the 10 to 11 percent revenue reduction in the wake of the global financial crisis in 2008–09. more>

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Updates from ITU

UNESCO rallies international organizations, civil society and private sector partners in a broad Coalition to ensure #LearningNeverStops
By Clare O’Hagan – At a time of when 87% of the world’s student population is affected by COVID-19 school closures, UNESCO is launching a global education coalition to support countries in scaling up their best distance learning practices and reaching children and youth who are most at risk.

Over 1.5 billion learners in 165 countries are affected by COVID-19 school closures.

“Never before have we witnessed educational disruption on such a scale,” said UNESCO Director-General Audrey Azoulay. “Partnership is the only way forward. This Coalition is a call for coordinated and innovative action to unlock solutions that will not only support learners and teachers now, but through the recovery process, with a principle focus on inclusion and equity.”

Since closing schools to contain the COVID-19 pandemic, governments have been deploying distance learning solutions and grappling with the complexity of provisioning education remotely, from delivering content and supporting teachers to providing guidance to families and addressing connectivity challenges. Equity is the paramount concern because closures disproportionately hurt vulnerable and disadvantaged students who rely on schools for a range of social services, including health and nutrition.

“We must speed up the ways we share experience, and help the most vulnerable, whether or not they have internet access”, said Angelina Jolie, UN High Commission for Refugees Special Envoy, who partnered with UNESCO in the establishment of the Coalition. more>

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Updates from Siemens

Redefine the Line: How automotive trends are changing the ways we move from point A to B
By Tarun Tejpal – The automotive industry has been one of the most dynamic and exciting incubators of technological and product innovation in the modern world. A unique mix of investment, consumer interest, and industry competition has driven this dynamism with a constant search for the next feature, style, or capability to capture the public imagination. At the 1964 New York World’s Fair, General Motors (GM) hoped to capture such interest with the Firebird IV concept car. GM explained, then, that the Firebird IV “anticipates the day when the family will drive to the super-highway, turn over the car’s controls to an automatic, programmed guidance system and travel in comfort and absolute safety at more than twice the speed possible on today’s expressways.” (Gao, Hensley, & Zielke, 2014).

GM’s vision of the future was striking and exciting, but the technology did not yet exist to make it a reality. Ford took a different approach to generating buzz in the market, focusing on the present. Instead of forecasting a future of self-driving cars and super highways, Ford launched a car for “young America out to have a good time”: the Mustang (Gao et al., 2014). It engaged the new generation by providing both transportation and personal expression in a stylish, highly configurable, and inexpensive package. Ford estimated it would sell 100,000 Mustangs, but one year after the launch it had sold over 400,000 (Gao et al., 2014).

Vehicles are now a central feature of everyday life. Since 1964, global vehicle sales have grown by nearly 3 percent on average each year, nearly double the rate of population growth, resulting in one billion vehicles on the road today (Gao et al., 2014).

However, large-scale trends, such as a surging Chinese automotive market, electrification, and urbanization, are beginning to affect the form and function of vehicles and personal mobility systems. more>

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Updates from Chicago Booth

Don’t fall for the false trade-offs of COVID-19 policy
By Neale Mahoney – The American economy—like those of many countries—is reeling. As COVID-19 forces businesses to shut their doors and consumers to retreat within their homes, the stock market has plummeted and unemployment-insurance claims have skyrocketed. Many people are predicting that we will soon experience a severe recession, in the United States and around the world.

So it may come as no surprise that in this gloomy environment, there are growing concerns that the economic costs of mitigating the spread of COVID-19—through social distancing and/or isolation, the approaches favored by many health experts—are worse than the health costs we would incur by relaxing such measures. As US president Donald Trump put it on Twitter, “We cannot let the cure be worse than the problem itself.”

Trade-offs are central to economics. Many of our canonical models are designed to illustrate them, and economists are quick to point out trade-offs, or “unintended consequences,” when they are ignored by policy makers.

Because of these trade-offs, reasonable people with a shared goal can disagree, simply because they have differing views of, for instance, the elasticity of labor supply (how workers respond to changes in after-tax wages), the degree of moral hazard (how people respond to the out-of-pocket price of health care), and so on.

However, when it comes to COVID-19, the conventional economic trade-offs are greatly overstated. Indeed, I’m worried that the language of trade-offs is being co-opted to push for shareholder bailouts and corporate cronyism. Some of the “trade-offs” being weighed in discussions of policy are not trade-offs at all. We economists should get ahead of this and call it what it is: nonsense. more>

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China, America, and the International Order after the Pandemic

By Mira Rapp-Hooper – As people around the world fall ill, global markets convulse, and supply chains collapse, COVID-19 may also reorder international politics as we know it. No analyst can know when this crisis will end, much less divine the world we will meet at its conclusion. But as scholars have begun to note, it is plausible that China will emerge from the wreckage as more of a global leader than it began.

Following World War II, the United States was a chief architect of the so-called liberal international order and became its uncontested leader with the Cold War’s end. China, with its breathtaking economic growth and vast increases in military spending, has been on the ascent for decades, but long remained focused on domestic stability and the security of the Chinese Communist Party. It clambered to center stage after 2008, when the global financial crisis appeared to signal a weakening of American primacy.

China and others took the American financial stumble as a blunder of democratic capitalism, and a moment of opportunity to advance their own agendas. Under Xi Jinping, Beijing has seen the last decade as a period of “strategic opportunity” — one it did not necessarily expect to last, as it faces its own expected economic and demographic slowdowns. It built military bases in the South China Sea in contravention of international law, launched the vast and opaque Belt and Road Initiative to spread economic and political influence, doubled down on the state’s role in the economy and prejudicial policies, and coopted international human rights bodies. Along the way, it began to develop its own global governance aspirations and visions.

With the election of Donald Trump, the United States widened Beijing’s window of opportunity with its self-inflicted political convulsion. To China’s great fortune, American foreign policy was now expressly hostile to multilateral institutions, bellicose on trade, and defined national security in terms of narrow, homeland defense. To experts in the United States and abroad this looked like a willing abdication of the system the United States had constructed and led. But alongside these fears, and in another significant shift, foreign policy thinkers from both major parties increasingly agreed that the United States and China had entered a period of a great-power competition, in part, over the future of the international order and which power would set its terms.

Alone, the United States could not hope to match China’s economic and military heft in Asia. With allies by its side, America could remain peerless and manage peaceful change. Narrow unilateralism stoked renewed perceptions of further American decline and attenuated an otherwise favorable balance of power.

Enter the novel coronavirus.

It should be stunning that a virus that originated in China and spread in part due to Chinese government mismanagement may reorder the world to Beijing’s advantage, as Kurt Campbell and Rush Doshi have argued. more>

Updates from McKinsey

We’re not going back to the ‘normal’ we had before coronavirus
Our global managing partner Kevin Sneader joined Andrew Ross Sorkin on CNBC’s “Squawk Box” Wednesday, March 25, to talk live about the business implications of the coronavirus pandemic. The full interview is available now at CNBC.com. You can read all of our material on the crisis at our coronavirus insights page.
By Kevin Sneader – One thing is clear from all the conversations I’ve had: nothing is going to be the same. This is a new normal, a different way of operating.

I think for our clients, they’re worried about their employees, their customers, and cash—in that order. And they are worried about cash. Even in the health care sector, there are providers who are not getting paid right now, and they’re worried about cash flow just as players in several other sectors are.

Another reality they’re all dealing with is that people keep sending them scenarios as to how this could play out. The message we’re hearing is that the scenarios are helpful, but leaders are wondering what’s going to be true across all these scenarios. Because if it’s not going back to the way it was before, what’s the next normal? What’s the way in which we’re going to have to operate?

The reality is that consumer behavior is changing fundamentally, and so much else is changing, and the question is, “will it go back?” I think the answer in many cases is “no.”

If you think about a lot of what’s happened in the last few years, some of it’s going to be reinforced. The shift [to working] online has now been given a boost, and it’s hard to see that being taken back to where it was before.

At the same time, I think one of the biggest shifts will be the way that products reach us. For many years, we and others have been focused on efficiency: how efficiently can I run my supply chain? I think now there’s going to be a lot of conversation about, how resilient is my supply chain? more>

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Updates from ITU

How can we ensure safety and public trust​ in AI for automated and assisted driving?
ITU News – Cars are becoming increasingly automated. Drivers already benefit from a wide range of advanced driver-assistance systems (ADAS), such as lane keeping, adaptive cruise control, collision warning, and blind spot warning, which are gradually becoming standard features on most vehicles.

Today’s automated systems are taking over an increasing amount of responsibility for the driving task. It is expected that soon, sensors will take the place of human impulse, and artificial intelligence (AI) will substitute for human intelligence.

This process is defined through various level steps, from low levels of automation where the driver retains overall control of the vehicle in level 1, to a fully-autonomous system in level 5.

10 years ago, manufacturers predicted many cars on today’s roads would be fully automated, but it still remains a distant future for the automotive industry. At the recent Future Networked Car Symposium 2020 at ITU Headquarters in Geneva, Switzerland, top experts joined a panel entitled ‘AI for autonomous and assisted driving – how to ensure safety and public trust’ to discuss the progress and the prospects for vehicles that drive themselves – and how we might achieve this future. more>

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Updates from Ciena

Single-wave 400G across 4,000km? Yes – with Ciena’s new Waveserver 5.
Ciena’s popular family of Waveserver products just got a new member – Waveserver 5. With tunable capacity up to 800G and support for 400GbE services at any distance, learn how Waveserver 5 is already setting new industry benchmarks – in live networks.

By Kent Jordan – Two mega-trends have been driving rapid innovation in optical networks. Advanced coherent technology brings the promise of greater network capacity, now reaching up to 800G across short links and 400G at distance. At the same time, new compact modular platforms promise greater density, reduced footprint and lower energy consumption.

What if you could combine this incredible performance and awesome density into one device? Sounds too good to be true, right?

Well not anymore. Ciena’s most advanced coherent technology, WaveLogicTM 5 Extreme, has arrived in the newest member of our Waveserver family of interconnect platforms: Waveserver 5. And, it’s bringing the performance you need, packaged in a compact and efficient footprint.

Combining the world’s most innovative coherent chipset with the simple, server-like operational model the Waveserver family is known for, Waveserver 5 provides network operators with industry-leading transport economics for high-capacity, high-growth applications.

Internet2 will be one of Ciena’s first customers to deploy Waveserver 5. They are building out their next-generation research and education (R&E) network across the U.S. and they have selected Ciena’s best, most flexible, open and highest-performance technologies to do the job. more>

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