Cooperation in a fragmented world—why the signs are not encouraging
Cooperation in a fragmented world—why the signs are not encouraging
Cooperation in a fragmented world was the theme of this year’s World Economic Forum (WEF) in Davos, Switzerland. While cooperation was high on everyone’s agenda, there was a realisation that ongoing fragmentation was a genuine concern for the global economy. As many conversations focused on sustainability, inclusion and digitalisation, efforts are complicated by increasing geopolitical and economic uncertainty.
After many panels, roundtables and discussions at Davos, here are my three key takeaways from this year’s WEF:
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The Hinrich Foundation Sustainable Trade Index 2018
Yet the enthusiasm in Asia for trade does not appear to have waned. This broad societal consensus behind international trade has enabled Asian countries to continue broadening and deepening existing trading relationships, for example, by quickly hammering out a deal for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2018 following the US’s withdrawal from its predecessor in 2017.
Asia, then, finds itself in the unique position of helping lead and sustain the global economy’s commitment to free and fair trade. It is in this context that the need for sustainability in trade is ever more crucial.
The Hinrich Foundation Sustainable Trade Index was created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, business executives, and civil society leaders must take into account when managing and advancing international trade.
The index was commissioned by the Hinrich Foundation, a non-profit organisation focused on promoting sustainable trade. This, the second edition of the study, seeks to measure the capacity of 20 economies—19 in Asia along with the US—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and strengthened social capital. The index’s key findings include:
Countries in Asia, especially the richer ones, have broadly regressed in terms of trade sustainability. Hong Kong is developed Asia’s bright spot, recording a slight increase in its score and topping the 2018 index. Several middle-income countries perform admirably, led by Sri Lanka. For the economic pillar, countries generally performed well in terms of growing their labour forces as well as their per-head GDPs. For the social pillar, sharp drops for some countries in certain social pillar indicators contribute to an overall decline. For the environmental pillar, with deteriorating environmental sustainability in many rich countries, China, Laos and Pakistan are the only countries to record increases in scores. Sustainability is an ever more important determinant of FDI and vendor selection in choosing supply-chain partners. Companies are improving the sustainability of their supply chains by restructuring and broadening relationships with competitors and vendors.
The Global Illicit Trade Environment Index 2018
To measure how nations are addressing the issue of illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) has commissioned The Economist Intelligence Unit to produce the Global Illicit Trade Environment Index, which evaluates 84 economies around the world on their structural capability to protect against illicit trade. The global index expands upon an Asia-specific version originally created by The Economist Intelligence Unit in 2016 to score 17 economies in Asia.
View the Interactive Index >> Download workbook
Breaking Barriers: Agricultural trade between GCC and Latin America
The GCC-LAC agricultural trading relationship has thus far been dominated by the GCC’s reliance on food imports, specifically meat, sugar, and cereals. Over the past two years, however, there has been a notable decline in the share of sugar imported from LAC, and 2017 saw the biggest importers in the GCC—Saudi Arabia and the UAE—impose a ban on Brazilian meat.
Market players on both sides of the aisle are keen to grow the relationship further, but there are hurdles to overcome. In this report, we explore in greater depth the challenges that agricultural exporters and importers in LAC and the GCC face. We consider both tariff and non-tariff barriers and assess key facets of the trading relationship including transport links, customs and certification, market information, and trade finance.
Key findings of the report:
GCC will need to continue to build partnerships to ensure a secure supply of food. Concerns over food security have meant that the GCC countries are exploring ways to produce more food locally. However, given the region’s climate and geology, food imports will remain an important component of the food supply. Strengthening partnerships with key partners such as those in LAC, from which it sourced 9% of its total agricultural imports in 2016, will be vital to food security in the region.
There is a wider range of products that the LAC countries can offer the GCC beyond meat, sugar and cereals. Providing more direct air links and driving efficiencies in shipping can reduce the time and cost of transporting food products. This will, in turn, create opportunities for LAC exporters to supply agricultural goods with a shorter shelf life or those that are currently too expensive to transport. Exporters cite examples such as berries and avocados.
The GCC can engage small and medium-sized producers that dominate the LAC agricultural sector by offering better trade financing options and connectivity. More direct air and sea links can reduce the cost of transporting food products, making it viable for smaller players to participate in agricultural trade. The existing trade financing options make it prohibitive for small and medium-sized players too. Exporters in LAC suggest that local governments and private companies in the GCC can offer distribution services with immediate payments to smaller suppliers at a discount.
Blockchain technology is poised to address key challenges market players face in agricultural trade. Through a combination of smart contracts and data captured through devices, blockchain technology can help to reduce paperwork, processing times and human error in import and export processes. It can improve transparency, as stakeholders can receive information on the state of goods and status of shipments in real time. Finally, it can help with food safety and quality management—monitoring humidity and temperature, for instance, along the supply chain can help to pinpoint batches that may be contaminated, minimising the need for a blanket ban on a product.
The impact of China’s reopening on global supply chains
The impact of China’s reopening on global supply chains
China remains the dominant manufacturing hub globally in 2023 and has been for the past ten years. So, any reshaping of supply chains due to their reversal of the zero-covid policy will not happen overnight due to the complexity that has been built up over the last decade, with China at the epicentre.
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The Hinrich Foundation Sustainable Trade Index 2018
Yet the enthusiasm in Asia for trade does not appear to have waned. This broad societal consensus behind international trade has enabled Asian countries to continue broadening and deepening existing trading relationships, for example, by quickly hammering out a deal for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2018 following the US’s withdrawal from its predecessor in 2017.
Asia, then, finds itself in the unique position of helping lead and sustain the global economy’s commitment to free and fair trade. It is in this context that the need for sustainability in trade is ever more crucial.
The Hinrich Foundation Sustainable Trade Index was created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, business executives, and civil society leaders must take into account when managing and advancing international trade.
The index was commissioned by the Hinrich Foundation, a non-profit organisation focused on promoting sustainable trade. This, the second edition of the study, seeks to measure the capacity of 20 economies—19 in Asia along with the US—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and strengthened social capital. The index’s key findings include:
Countries in Asia, especially the richer ones, have broadly regressed in terms of trade sustainability. Hong Kong is developed Asia’s bright spot, recording a slight increase in its score and topping the 2018 index. Several middle-income countries perform admirably, led by Sri Lanka. For the economic pillar, countries generally performed well in terms of growing their labour forces as well as their per-head GDPs. For the social pillar, sharp drops for some countries in certain social pillar indicators contribute to an overall decline. For the environmental pillar, with deteriorating environmental sustainability in many rich countries, China, Laos and Pakistan are the only countries to record increases in scores. Sustainability is an ever more important determinant of FDI and vendor selection in choosing supply-chain partners. Companies are improving the sustainability of their supply chains by restructuring and broadening relationships with competitors and vendors. The Global Illicit Trade Environment Index 2018
To measure how nations are addressing the issue of illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) has commissioned The Economist Intelligence Unit to produce the Global Illicit Trade Environment Index, which evaluates 84 economies around the world on their structural capability to protect against illicit trade. The global index expands upon an Asia-specific version originally created by The Economist Intelligence Unit in 2016 to score 17 economies in Asia.
View the Interactive Index >> Download workbook
Breaking Barriers: Agricultural trade between GCC and Latin America
The GCC-LAC agricultural trading relationship has thus far been dominated by the GCC’s reliance on food imports, specifically meat, sugar, and cereals. Over the past two years, however, there has been a notable decline in the share of sugar imported from LAC, and 2017 saw the biggest importers in the GCC—Saudi Arabia and the UAE—impose a ban on Brazilian meat.
Market players on both sides of the aisle are keen to grow the relationship further, but there are hurdles to overcome. In this report, we explore in greater depth the challenges that agricultural exporters and importers in LAC and the GCC face. We consider both tariff and non-tariff barriers and assess key facets of the trading relationship including transport links, customs and certification, market information, and trade finance.
Key findings of the report:
GCC will need to continue to build partnerships to ensure a secure supply of food. Concerns over food security have meant that the GCC countries are exploring ways to produce more food locally. However, given the region’s climate and geology, food imports will remain an important component of the food supply. Strengthening partnerships with key partners such as those in LAC, from which it sourced 9% of its total agricultural imports in 2016, will be vital to food security in the region.
There is a wider range of products that the LAC countries can offer the GCC beyond meat, sugar and cereals. Providing more direct air links and driving efficiencies in shipping can reduce the time and cost of transporting food products. This will, in turn, create opportunities for LAC exporters to supply agricultural goods with a shorter shelf life or those that are currently too expensive to transport. Exporters cite examples such as berries and avocados.
The GCC can engage small and medium-sized producers that dominate the LAC agricultural sector by offering better trade financing options and connectivity. More direct air and sea links can reduce the cost of transporting food products, making it viable for smaller players to participate in agricultural trade. The existing trade financing options make it prohibitive for small and medium-sized players too. Exporters in LAC suggest that local governments and private companies in the GCC can offer distribution services with immediate payments to smaller suppliers at a discount.
Blockchain technology is poised to address key challenges market players face in agricultural trade. Through a combination of smart contracts and data captured through devices, blockchain technology can help to reduce paperwork, processing times and human error in import and export processes. It can improve transparency, as stakeholders can receive information on the state of goods and status of shipments in real time. Finally, it can help with food safety and quality management—monitoring humidity and temperature, for instance, along the supply chain can help to pinpoint batches that may be contaminated, minimising the need for a blanket ban on a product.
The outlook series: what to watch in FDI in 2023
The outlook series: what to watch in FDI in 2023
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The Hinrich Foundation Sustainable Trade Index 2018
Yet the enthusiasm in Asia for trade does not appear to have waned. This broad societal consensus behind international trade has enabled Asian countries to continue broadening and deepening existing trading relationships, for example, by quickly hammering out a deal for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2018 following the US’s withdrawal from its predecessor in 2017.
Asia, then, finds itself in the unique position of helping lead and sustain the global economy’s commitment to free and fair trade. It is in this context that the need for sustainability in trade is ever more crucial.
The Hinrich Foundation Sustainable Trade Index was created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, business executives, and civil society leaders must take into account when managing and advancing international trade.
The index was commissioned by the Hinrich Foundation, a non-profit organisation focused on promoting sustainable trade. This, the second edition of the study, seeks to measure the capacity of 20 economies—19 in Asia along with the US—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and strengthened social capital. The index’s key findings include:
Countries in Asia, especially the richer ones, have broadly regressed in terms of trade sustainability. Hong Kong is developed Asia’s bright spot, recording a slight increase in its score and topping the 2018 index. Several middle-income countries perform admirably, led by Sri Lanka. For the economic pillar, countries generally performed well in terms of growing their labour forces as well as their per-head GDPs. For the social pillar, sharp drops for some countries in certain social pillar indicators contribute to an overall decline. For the environmental pillar, with deteriorating environmental sustainability in many rich countries, China, Laos and Pakistan are the only countries to record increases in scores. Sustainability is an ever more important determinant of FDI and vendor selection in choosing supply-chain partners. Companies are improving the sustainability of their supply chains by restructuring and broadening relationships with competitors and vendors. The Global Illicit Trade Environment Index 2018
To measure how nations are addressing the issue of illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) has commissioned The Economist Intelligence Unit to produce the Global Illicit Trade Environment Index, which evaluates 84 economies around the world on their structural capability to protect against illicit trade. The global index expands upon an Asia-specific version originally created by The Economist Intelligence Unit in 2016 to score 17 economies in Asia.
View the Interactive Index >> Download workbook
Breaking Barriers: Agricultural trade between GCC and Latin America
The GCC-LAC agricultural trading relationship has thus far been dominated by the GCC’s reliance on food imports, specifically meat, sugar, and cereals. Over the past two years, however, there has been a notable decline in the share of sugar imported from LAC, and 2017 saw the biggest importers in the GCC—Saudi Arabia and the UAE—impose a ban on Brazilian meat.
Market players on both sides of the aisle are keen to grow the relationship further, but there are hurdles to overcome. In this report, we explore in greater depth the challenges that agricultural exporters and importers in LAC and the GCC face. We consider both tariff and non-tariff barriers and assess key facets of the trading relationship including transport links, customs and certification, market information, and trade finance.
Key findings of the report:
GCC will need to continue to build partnerships to ensure a secure supply of food. Concerns over food security have meant that the GCC countries are exploring ways to produce more food locally. However, given the region’s climate and geology, food imports will remain an important component of the food supply. Strengthening partnerships with key partners such as those in LAC, from which it sourced 9% of its total agricultural imports in 2016, will be vital to food security in the region.
There is a wider range of products that the LAC countries can offer the GCC beyond meat, sugar and cereals. Providing more direct air links and driving efficiencies in shipping can reduce the time and cost of transporting food products. This will, in turn, create opportunities for LAC exporters to supply agricultural goods with a shorter shelf life or those that are currently too expensive to transport. Exporters cite examples such as berries and avocados.
The GCC can engage small and medium-sized producers that dominate the LAC agricultural sector by offering better trade financing options and connectivity. More direct air and sea links can reduce the cost of transporting food products, making it viable for smaller players to participate in agricultural trade. The existing trade financing options make it prohibitive for small and medium-sized players too. Exporters in LAC suggest that local governments and private companies in the GCC can offer distribution services with immediate payments to smaller suppliers at a discount.
Blockchain technology is poised to address key challenges market players face in agricultural trade. Through a combination of smart contracts and data captured through devices, blockchain technology can help to reduce paperwork, processing times and human error in import and export processes. It can improve transparency, as stakeholders can receive information on the state of goods and status of shipments in real time. Finally, it can help with food safety and quality management—monitoring humidity and temperature, for instance, along the supply chain can help to pinpoint batches that may be contaminated, minimising the need for a blanket ban on a product.
The outlook series: key trends in trade—2023
The outlook series: key trends in trade—2023
Although trade is still expected to grow in 2023, the outlook is worse than 2022. The global economy is still facing multiple headwinds, including the war in Ukraine and the perpetual US-China tensions.
The WTO initially estimated that global merchandise trade would grow by 3.4% in 2023. This has been revised down by 2.4 percentage points accounting for both demand and supply side shocks [1].
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The Hinrich Foundation Sustainable Trade Index 2018
Yet the enthusiasm in Asia for trade does not appear to have waned. This broad societal consensus behind international trade has enabled Asian countries to continue broadening and deepening existing trading relationships, for example, by quickly hammering out a deal for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2018 following the US’s withdrawal from its predecessor in 2017.
Asia, then, finds itself in the unique position of helping lead and sustain the global economy’s commitment to free and fair trade. It is in this context that the need for sustainability in trade is ever more crucial.
The Hinrich Foundation Sustainable Trade Index was created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, business executives, and civil society leaders must take into account when managing and advancing international trade.
The index was commissioned by the Hinrich Foundation, a non-profit organisation focused on promoting sustainable trade. This, the second edition of the study, seeks to measure the capacity of 20 economies—19 in Asia along with the US—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and strengthened social capital. The index’s key findings include:
Countries in Asia, especially the richer ones, have broadly regressed in terms of trade sustainability. Hong Kong is developed Asia’s bright spot, recording a slight increase in its score and topping the 2018 index. Several middle-income countries perform admirably, led by Sri Lanka. For the economic pillar, countries generally performed well in terms of growing their labour forces as well as their per-head GDPs. For the social pillar, sharp drops for some countries in certain social pillar indicators contribute to an overall decline. For the environmental pillar, with deteriorating environmental sustainability in many rich countries, China, Laos and Pakistan are the only countries to record increases in scores. Sustainability is an ever more important determinant of FDI and vendor selection in choosing supply-chain partners. Companies are improving the sustainability of their supply chains by restructuring and broadening relationships with competitors and vendors. The Global Illicit Trade Environment Index 2018
To measure how nations are addressing the issue of illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) has commissioned The Economist Intelligence Unit to produce the Global Illicit Trade Environment Index, which evaluates 84 economies around the world on their structural capability to protect against illicit trade. The global index expands upon an Asia-specific version originally created by The Economist Intelligence Unit in 2016 to score 17 economies in Asia.
View the Interactive Index >> Download workbook
Breaking Barriers: Agricultural trade between GCC and Latin America
The GCC-LAC agricultural trading relationship has thus far been dominated by the GCC’s reliance on food imports, specifically meat, sugar, and cereals. Over the past two years, however, there has been a notable decline in the share of sugar imported from LAC, and 2017 saw the biggest importers in the GCC—Saudi Arabia and the UAE—impose a ban on Brazilian meat.
Market players on both sides of the aisle are keen to grow the relationship further, but there are hurdles to overcome. In this report, we explore in greater depth the challenges that agricultural exporters and importers in LAC and the GCC face. We consider both tariff and non-tariff barriers and assess key facets of the trading relationship including transport links, customs and certification, market information, and trade finance.
Key findings of the report:
GCC will need to continue to build partnerships to ensure a secure supply of food. Concerns over food security have meant that the GCC countries are exploring ways to produce more food locally. However, given the region’s climate and geology, food imports will remain an important component of the food supply. Strengthening partnerships with key partners such as those in LAC, from which it sourced 9% of its total agricultural imports in 2016, will be vital to food security in the region.
There is a wider range of products that the LAC countries can offer the GCC beyond meat, sugar and cereals. Providing more direct air links and driving efficiencies in shipping can reduce the time and cost of transporting food products. This will, in turn, create opportunities for LAC exporters to supply agricultural goods with a shorter shelf life or those that are currently too expensive to transport. Exporters cite examples such as berries and avocados.
The GCC can engage small and medium-sized producers that dominate the LAC agricultural sector by offering better trade financing options and connectivity. More direct air and sea links can reduce the cost of transporting food products, making it viable for smaller players to participate in agricultural trade. The existing trade financing options make it prohibitive for small and medium-sized players too. Exporters in LAC suggest that local governments and private companies in the GCC can offer distribution services with immediate payments to smaller suppliers at a discount.
Blockchain technology is poised to address key challenges market players face in agricultural trade. Through a combination of smart contracts and data captured through devices, blockchain technology can help to reduce paperwork, processing times and human error in import and export processes. It can improve transparency, as stakeholders can receive information on the state of goods and status of shipments in real time. Finally, it can help with food safety and quality management—monitoring humidity and temperature, for instance, along the supply chain can help to pinpoint batches that may be contaminated, minimising the need for a blanket ban on a product.
The outlook series: inclusive finance—a roadmap for the next decade
The outlook series: inclusive finance—a roadmap for the next decade
It will be another challenging year for the global economy in 2023. The long-lasting effects of covid, macroeconomic shocks and geopolitical risks will likely lead to a global recession. Like most crises, the poor will be disproportionately affected. The World Bank estimates that by the end of 2022, as many as 685 million people will be living in extreme poverty [1].
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The Hinrich Foundation Sustainable Trade Index 2018
Yet the enthusiasm in Asia for trade does not appear to have waned. This broad societal consensus behind international trade has enabled Asian countries to continue broadening and deepening existing trading relationships, for example, by quickly hammering out a deal for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2018 following the US’s withdrawal from its predecessor in 2017.
Asia, then, finds itself in the unique position of helping lead and sustain the global economy’s commitment to free and fair trade. It is in this context that the need for sustainability in trade is ever more crucial.
The Hinrich Foundation Sustainable Trade Index was created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, business executives, and civil society leaders must take into account when managing and advancing international trade.
The index was commissioned by the Hinrich Foundation, a non-profit organisation focused on promoting sustainable trade. This, the second edition of the study, seeks to measure the capacity of 20 economies—19 in Asia along with the US—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and strengthened social capital. The index’s key findings include:
Countries in Asia, especially the richer ones, have broadly regressed in terms of trade sustainability. Hong Kong is developed Asia’s bright spot, recording a slight increase in its score and topping the 2018 index. Several middle-income countries perform admirably, led by Sri Lanka. For the economic pillar, countries generally performed well in terms of growing their labour forces as well as their per-head GDPs. For the social pillar, sharp drops for some countries in certain social pillar indicators contribute to an overall decline. For the environmental pillar, with deteriorating environmental sustainability in many rich countries, China, Laos and Pakistan are the only countries to record increases in scores. Sustainability is an ever more important determinant of FDI and vendor selection in choosing supply-chain partners. Companies are improving the sustainability of their supply chains by restructuring and broadening relationships with competitors and vendors. The Global Illicit Trade Environment Index 2018
To measure how nations are addressing the issue of illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) has commissioned The Economist Intelligence Unit to produce the Global Illicit Trade Environment Index, which evaluates 84 economies around the world on their structural capability to protect against illicit trade. The global index expands upon an Asia-specific version originally created by The Economist Intelligence Unit in 2016 to score 17 economies in Asia.
View the Interactive Index >> Download workbook
Breaking Barriers: Agricultural trade between GCC and Latin America
The GCC-LAC agricultural trading relationship has thus far been dominated by the GCC’s reliance on food imports, specifically meat, sugar, and cereals. Over the past two years, however, there has been a notable decline in the share of sugar imported from LAC, and 2017 saw the biggest importers in the GCC—Saudi Arabia and the UAE—impose a ban on Brazilian meat.
Market players on both sides of the aisle are keen to grow the relationship further, but there are hurdles to overcome. In this report, we explore in greater depth the challenges that agricultural exporters and importers in LAC and the GCC face. We consider both tariff and non-tariff barriers and assess key facets of the trading relationship including transport links, customs and certification, market information, and trade finance.
Key findings of the report:
GCC will need to continue to build partnerships to ensure a secure supply of food. Concerns over food security have meant that the GCC countries are exploring ways to produce more food locally. However, given the region’s climate and geology, food imports will remain an important component of the food supply. Strengthening partnerships with key partners such as those in LAC, from which it sourced 9% of its total agricultural imports in 2016, will be vital to food security in the region.
There is a wider range of products that the LAC countries can offer the GCC beyond meat, sugar and cereals. Providing more direct air links and driving efficiencies in shipping can reduce the time and cost of transporting food products. This will, in turn, create opportunities for LAC exporters to supply agricultural goods with a shorter shelf life or those that are currently too expensive to transport. Exporters cite examples such as berries and avocados.
The GCC can engage small and medium-sized producers that dominate the LAC agricultural sector by offering better trade financing options and connectivity. More direct air and sea links can reduce the cost of transporting food products, making it viable for smaller players to participate in agricultural trade. The existing trade financing options make it prohibitive for small and medium-sized players too. Exporters in LAC suggest that local governments and private companies in the GCC can offer distribution services with immediate payments to smaller suppliers at a discount.
Blockchain technology is poised to address key challenges market players face in agricultural trade. Through a combination of smart contracts and data captured through devices, blockchain technology can help to reduce paperwork, processing times and human error in import and export processes. It can improve transparency, as stakeholders can receive information on the state of goods and status of shipments in real time. Finally, it can help with food safety and quality management—monitoring humidity and temperature, for instance, along the supply chain can help to pinpoint batches that may be contaminated, minimising the need for a blanket ban on a product.
Growth amid uncertainty: how trade policy and geopolitics can shape global opportunities
Growth amid uncertainty: how trade policy and geopolitics can shape global opportunities
KEY FINDINGS
Related content
The Hinrich Foundation Sustainable Trade Index 2018
Yet the enthusiasm in Asia for trade does not appear to have waned. This broad societal consensus behind international trade has enabled Asian countries to continue broadening and deepening existing trading relationships, for example, by quickly hammering out a deal for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2018 following the US’s withdrawal from its predecessor in 2017.
Asia, then, finds itself in the unique position of helping lead and sustain the global economy’s commitment to free and fair trade. It is in this context that the need for sustainability in trade is ever more crucial.
The Hinrich Foundation Sustainable Trade Index was created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, business executives, and civil society leaders must take into account when managing and advancing international trade.
The index was commissioned by the Hinrich Foundation, a non-profit organisation focused on promoting sustainable trade. This, the second edition of the study, seeks to measure the capacity of 20 economies—19 in Asia along with the US—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and strengthened social capital. The index’s key findings include:
Countries in Asia, especially the richer ones, have broadly regressed in terms of trade sustainability. Hong Kong is developed Asia’s bright spot, recording a slight increase in its score and topping the 2018 index. Several middle-income countries perform admirably, led by Sri Lanka. For the economic pillar, countries generally performed well in terms of growing their labour forces as well as their per-head GDPs. For the social pillar, sharp drops for some countries in certain social pillar indicators contribute to an overall decline. For the environmental pillar, with deteriorating environmental sustainability in many rich countries, China, Laos and Pakistan are the only countries to record increases in scores. Sustainability is an ever more important determinant of FDI and vendor selection in choosing supply-chain partners. Companies are improving the sustainability of their supply chains by restructuring and broadening relationships with competitors and vendors. The Global Illicit Trade Environment Index 2018
To measure how nations are addressing the issue of illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) has commissioned The Economist Intelligence Unit to produce the Global Illicit Trade Environment Index, which evaluates 84 economies around the world on their structural capability to protect against illicit trade. The global index expands upon an Asia-specific version originally created by The Economist Intelligence Unit in 2016 to score 17 economies in Asia.
View the Interactive Index >> Download workbook
Breaking Barriers: Agricultural trade between GCC and Latin America
The GCC-LAC agricultural trading relationship has thus far been dominated by the GCC’s reliance on food imports, specifically meat, sugar, and cereals. Over the past two years, however, there has been a notable decline in the share of sugar imported from LAC, and 2017 saw the biggest importers in the GCC—Saudi Arabia and the UAE—impose a ban on Brazilian meat.
Market players on both sides of the aisle are keen to grow the relationship further, but there are hurdles to overcome. In this report, we explore in greater depth the challenges that agricultural exporters and importers in LAC and the GCC face. We consider both tariff and non-tariff barriers and assess key facets of the trading relationship including transport links, customs and certification, market information, and trade finance.
Key findings of the report:
GCC will need to continue to build partnerships to ensure a secure supply of food. Concerns over food security have meant that the GCC countries are exploring ways to produce more food locally. However, given the region’s climate and geology, food imports will remain an important component of the food supply. Strengthening partnerships with key partners such as those in LAC, from which it sourced 9% of its total agricultural imports in 2016, will be vital to food security in the region.
There is a wider range of products that the LAC countries can offer the GCC beyond meat, sugar and cereals. Providing more direct air links and driving efficiencies in shipping can reduce the time and cost of transporting food products. This will, in turn, create opportunities for LAC exporters to supply agricultural goods with a shorter shelf life or those that are currently too expensive to transport. Exporters cite examples such as berries and avocados.
The GCC can engage small and medium-sized producers that dominate the LAC agricultural sector by offering better trade financing options and connectivity. More direct air and sea links can reduce the cost of transporting food products, making it viable for smaller players to participate in agricultural trade. The existing trade financing options make it prohibitive for small and medium-sized players too. Exporters in LAC suggest that local governments and private companies in the GCC can offer distribution services with immediate payments to smaller suppliers at a discount.
Blockchain technology is poised to address key challenges market players face in agricultural trade. Through a combination of smart contracts and data captured through devices, blockchain technology can help to reduce paperwork, processing times and human error in import and export processes. It can improve transparency, as stakeholders can receive information on the state of goods and status of shipments in real time. Finally, it can help with food safety and quality management—monitoring humidity and temperature, for instance, along the supply chain can help to pinpoint batches that may be contaminated, minimising the need for a blanket ban on a product.
Talent scarcity, technology and jobs: insights from Davos on the future of work
Related content
The Hinrich Foundation Sustainable Trade Index 2018
Yet the enthusiasm in Asia for trade does not appear to have waned. This broad societal consensus behind international trade has enabled Asian countries to continue broadening and deepening existing trading relationships, for example, by quickly hammering out a deal for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2018 following the US’s withdrawal from its predecessor in 2017.
Asia, then, finds itself in the unique position of helping lead and sustain the global economy’s commitment to free and fair trade. It is in this context that the need for sustainability in trade is ever more crucial.
The Hinrich Foundation Sustainable Trade Index was created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, business executives, and civil society leaders must take into account when managing and advancing international trade.
The index was commissioned by the Hinrich Foundation, a non-profit organisation focused on promoting sustainable trade. This, the second edition of the study, seeks to measure the capacity of 20 economies—19 in Asia along with the US—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and strengthened social capital. The index’s key findings include:
Countries in Asia, especially the richer ones, have broadly regressed in terms of trade sustainability. Hong Kong is developed Asia’s bright spot, recording a slight increase in its score and topping the 2018 index. Several middle-income countries perform admirably, led by Sri Lanka. For the economic pillar, countries generally performed well in terms of growing their labour forces as well as their per-head GDPs. For the social pillar, sharp drops for some countries in certain social pillar indicators contribute to an overall decline. For the environmental pillar, with deteriorating environmental sustainability in many rich countries, China, Laos and Pakistan are the only countries to record increases in scores. Sustainability is an ever more important determinant of FDI and vendor selection in choosing supply-chain partners. Companies are improving the sustainability of their supply chains by restructuring and broadening relationships with competitors and vendors. The Global Illicit Trade Environment Index 2018
To measure how nations are addressing the issue of illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) has commissioned The Economist Intelligence Unit to produce the Global Illicit Trade Environment Index, which evaluates 84 economies around the world on their structural capability to protect against illicit trade. The global index expands upon an Asia-specific version originally created by The Economist Intelligence Unit in 2016 to score 17 economies in Asia.
View the Interactive Index >> Download workbook
Breaking Barriers: Agricultural trade between GCC and Latin America
The GCC-LAC agricultural trading relationship has thus far been dominated by the GCC’s reliance on food imports, specifically meat, sugar, and cereals. Over the past two years, however, there has been a notable decline in the share of sugar imported from LAC, and 2017 saw the biggest importers in the GCC—Saudi Arabia and the UAE—impose a ban on Brazilian meat.
Market players on both sides of the aisle are keen to grow the relationship further, but there are hurdles to overcome. In this report, we explore in greater depth the challenges that agricultural exporters and importers in LAC and the GCC face. We consider both tariff and non-tariff barriers and assess key facets of the trading relationship including transport links, customs and certification, market information, and trade finance.
Key findings of the report:
GCC will need to continue to build partnerships to ensure a secure supply of food. Concerns over food security have meant that the GCC countries are exploring ways to produce more food locally. However, given the region’s climate and geology, food imports will remain an important component of the food supply. Strengthening partnerships with key partners such as those in LAC, from which it sourced 9% of its total agricultural imports in 2016, will be vital to food security in the region.
There is a wider range of products that the LAC countries can offer the GCC beyond meat, sugar and cereals. Providing more direct air links and driving efficiencies in shipping can reduce the time and cost of transporting food products. This will, in turn, create opportunities for LAC exporters to supply agricultural goods with a shorter shelf life or those that are currently too expensive to transport. Exporters cite examples such as berries and avocados.
The GCC can engage small and medium-sized producers that dominate the LAC agricultural sector by offering better trade financing options and connectivity. More direct air and sea links can reduce the cost of transporting food products, making it viable for smaller players to participate in agricultural trade. The existing trade financing options make it prohibitive for small and medium-sized players too. Exporters in LAC suggest that local governments and private companies in the GCC can offer distribution services with immediate payments to smaller suppliers at a discount.
Blockchain technology is poised to address key challenges market players face in agricultural trade. Through a combination of smart contracts and data captured through devices, blockchain technology can help to reduce paperwork, processing times and human error in import and export processes. It can improve transparency, as stakeholders can receive information on the state of goods and status of shipments in real time. Finally, it can help with food safety and quality management—monitoring humidity and temperature, for instance, along the supply chain can help to pinpoint batches that may be contaminated, minimising the need for a blanket ban on a product.
Cultivating Ties: Deepening trade and investment between Latin America and the GCC
Cultivating Ties: Deepening trade and investment between Latin America and the GCC
As Latin American countries navigate the post-pandemic economic recovery, they are discovering that there are fresh opportunities to seize and new relationships to forge. Companies in the region are riding the surge in commodity prices, which benefits their agricultural and metal exports, and are positioning themselves as the partner of choice for companies that are diversifying their supplier base for products ranging from medical devices to cosmetics.
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Untapped opportunity: Deepening trade and investment between sub-Saharan Af...
Executive summary
Sentiment on the economic promise of Africa seems to ebb and flow. African economic growth has been anaemic over the past decade, and the continent continues to grapple with fundamental challenges around improving transport infrastructure and electrification. Since the start of the covid-19 pandemic, some of these development priorities have been pushed further down the agenda.
The continent’s governments must recognise that addressing these challenges will be pivotal in realising Africa’s potential. But to achieve these goals with limited resources, African governments must cultivate relationships with other regions, not just as potential investors in African businesses and infrastructure but also as markets for their products and services.
This report, following on from a series of reports prepared by The Economist Intelligence Unit over the past seven years, examines the potential for Africa to deepen ties with the Gulf Co-operation Council (GCC) countries, in the context of sectors currently poised for growth as well as those that are greatly in need of external support.
The key findings of this report are:
Africa must get the basics—including regulation and infrastructure—in place to spur growth in key sectors. ‘Burdensome regulation and bureaucracy’ was the top impediment to business growth in our survey, cited by 59% of respondents. In addition, addressing the continent’s transport, electricity and digital- infrastructure deficits will be critical in delivering growth in key sectors. Executives in financial services and fintech (90%), healthcare (89%), agriculture and food (87%) and retail and e-commerce (74%) are expecting revenue to expand in 2022.
The digital economy will be an essential component of African growth. In 2022, 35% of respondents to our survey are expecting online channels to generate the bulk of their revenue, compared with 22% in 2019. All the sectors poised for expansion in 2022 have strong digital delivery links— from fintech to telehealth, and from digital platforms for farmers to e-commerce for broader retail. There are some lessons that Africa could learn from regions such as the GCC, which have led strong digital transformation programmes domestically.
The GCC region can support Africa in addressing critical infrastructure deficits. GCC-based companies such as DP World and ACWA Power are making progress on transport and energy infrastructure in Africa. Etisalat is operating on the continent, expanding their telecommunications infrastructure, which is vital in enabling e-commerce, fintech and education, among other sectors, to thrive.
African businesses can help the GCC’s strategic initiatives too. Healthcare companies such as Mediclinic have been operating in the UAE since 2007, helping to expand services in this vital sector. Meanwhile, efforts to efficiently deliver agricultural products from Africa to the GCC can help with the latter region’s food security.
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Uncharted Territory: Deepening trade and investment between ASEAN and the G...
The GCC’s pivot to Asia has yielded some strategic partnerships with the region’s giants, including China and India, but the relationship with the ASEAN countries remains underdeveloped. Imports from the ASEAN countries made up just 6% of the GCC’s total imports between 2016 and 2020. Although exports from the GCC to ASEAN have been on the rise, they mainly consist of crude oil and plastic polymers.
This research report highlights areas for deeper collaboration, particularly among ASEAN’s growth sectors of food and agriculture, e-commerce and fintech.
Key findings of the report:
The digital economy is going to drive growth in ASEAN’s key sectors. In our survey, executives in the following sectors were most optimistic about revenue expansion in 2022: transport and logistics (90%), agriculture and food (90%), retail and e-commerce (87%) and financial services and fintech (83%). The increasing use of digital platforms, from ridehailing and e-commerce apps to blockchain and robo-advisers in financial services, is expected to enhance efficiency and help companies deliver innovative services to businesses and consumers. A higher share of respondents expects a majority of their revenue to be secured through online channels in 2022 (67%) compared with 2019 (26%). The GCC and ASEAN regions already have a foundation for future collaboration. In ASEAN, GCC companies have invested in establishing oil refineries and petrochemical facilities but have also ventured into food, e-commerce and financial services. ASEAN companies are active in the GCC’s hospitality and food sectors but also have a small presence in financial services. Lessons learned from these endeavours could enable further expansion. There is scope for increasing trade in agricultural products. The GCC relies on the ASEAN region for just 7% of its total food and beverage imports. Given that ASEAN is known for its production of rice, soybeans and tropical fruits, among others, the GCC could explore a wider variety of agricultural products to import. Strengthening transport and logistics links as well as harmonising rules for halal products may enable greater trade in agriculture, food and beverages between the two regions. Knowledge sharing in key sectors can provide a framework for deeper collaboration. Regulators aiming to develop the fintech sector in the GCC could learn from progressive regulators in the ASEAN region such as Singapore, for example. Collaborating on the training of halal auditors could facilitate trade in a host of halal products from food to pharmaceuticals. Download Arabic Report The Hinrich Foundation Sustainable Trade Index 2018
Yet the enthusiasm in Asia for trade does not appear to have waned. This broad societal consensus behind international trade has enabled Asian countries to continue broadening and deepening existing trading relationships, for example, by quickly hammering out a deal for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2018 following the US’s withdrawal from its predecessor in 2017.
Asia, then, finds itself in the unique position of helping lead and sustain the global economy’s commitment to free and fair trade. It is in this context that the need for sustainability in trade is ever more crucial.
The Hinrich Foundation Sustainable Trade Index was created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, business executives, and civil society leaders must take into account when managing and advancing international trade.
The index was commissioned by the Hinrich Foundation, a non-profit organisation focused on promoting sustainable trade. This, the second edition of the study, seeks to measure the capacity of 20 economies—19 in Asia along with the US—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and strengthened social capital. The index’s key findings include:
Countries in Asia, especially the richer ones, have broadly regressed in terms of trade sustainability. Hong Kong is developed Asia’s bright spot, recording a slight increase in its score and topping the 2018 index. Several middle-income countries perform admirably, led by Sri Lanka. For the economic pillar, countries generally performed well in terms of growing their labour forces as well as their per-head GDPs. For the social pillar, sharp drops for some countries in certain social pillar indicators contribute to an overall decline. For the environmental pillar, with deteriorating environmental sustainability in many rich countries, China, Laos and Pakistan are the only countries to record increases in scores. Sustainability is an ever more important determinant of FDI and vendor selection in choosing supply-chain partners. Companies are improving the sustainability of their supply chains by restructuring and broadening relationships with competitors and vendors.Creative Industries: Trade challenges and opportunities post pandemic
Creative Industries: Trade challenges and opportunities post pandemic
The pandemic has brought sections of the creative industry to a halt, but also accelerated structural changes within the industry, such as the transition towards digital platforms and a greater role for individual ‘content creators’.
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Agriculture, Food and Beverages: Trade challenges and opportunities post pa...
The global supply chains for food, agricultural products and technology experienced an unprecedented shock due to the pandemic. Despite the disruption trade in foodstuff remained remarkably resilient, highlighting the essential role of food supply in times of crisis. Nevertheless, global food systems are undergoing a structural transformation that is necessary, not only to feed the world’s growing population, but also to prevent damaging impacts of climate change and environmental degradation.
The globalisation of supply and markets has seen agri-food sectors become more integrated with other sectors of the economy, both within countries and across those value chains. International trade in food and agriculture has more than doubled in real terms between 1995 and 2018 to reach US$1.5trn.1 The total global food and beverages market was worth almost US$6trn in 2019, following annual growth of 5.7% since 2015. Prior to the pandemic, the market was forecast to reach a value of US$8.6trn by 2025, before climbing to nearly US$12trn by the end of the decade.2
The global food system has also become more “global”, as exports from developing countries and emerging economies made up more than one-third of global agri-food exports by 2018, with around a third of global agricultural and food exports traded within global value chains (GVCs).3 Agri-food value chains have been driven by foreign direct investment (FDI) and trade, allowing companies to operate across multiple regions and making it easier for developing countries to integrate into global markets.
Globalised food: Agri-food exports and imports, average annual growth ratesHowever, the pace of this internationalisation has slowed down in recent years, and the global pandemic fuelled concerned about the resilience and sustainability of the global food system. While supply chains proved largely resilient, parts of the developing world experienced food security crises as a result of the pandemic. The Covid-19 pandemic further execrated the trends that saw the number of undernourished people increase by as many as 161 million from 2019 to 2020.4 The UN FAO warned that even though agri-food systems had proved resilient, the economic effects of the pandemic would cause acute and chronic food insecurity to increase, with the most vulnerable groups in society hit by lower incomes and employment.5 With the world’s population forecast to hit the 10bn mark by 2050, global food demand is expected to continue to grow significantly, putting further pressure on the global food system.
Meeting this demand will require development and adoption of innovative technologies and practices throughout the global value chain. In developing countries, for instance, agricultural technology (agri-tech) helps to empower the huge population of smallholder farms in areas including Africa and South Asia by giving them platforms for trading, connecting, learning and creating greater efficiency. More advanced technology, such as Artificial intelligence (AI), now plays a large role in agri-tech and is expected to become increasingly focused on precision agriculture with the optimisation of decisions on cropping, livestock husbandry and land management to improve farm efficiency and productivity. The new emerging precision ‘smart’ agriculture market is estimated to grow rapidly from US$13.8bn in 2020 to US$22bn by 2025.6
Many of the solutions developed by agri-tech providers target the urgent challenge of sustainability in supply chains and food production. With the food supply chain accounting for a quarter of all global emissions – 82% of which are attributed to food production – cutting emissions, ecological harm and waste are at the core of national sustainable development strategies.7 Food systems also have a negative impact on biodiversity, contributing to the mass extinction of species, ecocide, soil loss, land degradation, air pollution and emissions. A shift towards alternative sources of protein, nature-positive food practices, such as conservation agriculture, sustainable aquaculture (fish farming) and vertical farming, as well as sustainability standards and targets will all be required to make the global food systems ready to face the current and future challenges.8
Heavy emitters: Global agricultural greenhouse gas emissions 1FAO. ‘The state of agricultural commodity markets - agricultural markets and sustainable development: global value chains, smallholder farmers and digital innovations’. 2020. http://www.fao.org/3/cb0665en/CB0665EN.pdf 2Research and Markets. ‘Insights on the Food and Beverages Global Market to 2030 - Identify Growth Segments for Investment’ (internet). PR Newswire. 2021. https://www.prnewswire.com/news-releases/insights-on-the-food-and-beverages-global-market-to-2030---identify-growth-segments-for-investment-301202729.html 3FAO. ‘The state of agricultural markets 2020’. 2020. http://www.fao.org/home/digital-reports/state-of-agricultural-commodity-markets/en 4FAO. The Sate of Food Security, 2021. http://www.fao.org/state-of-food-security-nutrition 5FAO. ‘Covid-19, agricultural markets and trade and FAO’s response’. 2021. http://www.fao.org/3/nf041en/nf041en.pdf 6Markets and Markets, ‘Smart Agriculture Market worth $22.0 billion by 2025’. 2020. https://www.marketsandmarkets.com/PressReleases/smart-agriculture.asp 7Ritchie, H. ‘Food production is responsible for one quarter of the world’s greenhouse gas emissions’ 2019. https://ourworldindata.org/food-ghg-emissions 8UNCTAD. ‘Trade and development report 2020. From global pandemic to prosperity for all – avoiding another lost decade’. 2020. https://unctad.org/system/files/official-document/tdr2020_en.pdf; The Economist Intelligence Unit. ‘Changing trends in food: discovering and utilising alternative crops’. https://foodsustainability.eiu.com/blogs/changing-trends-in-food-discovering-and-utilising-alternative-crops/
Education: Trade challenges and opportunities post pandemic
The Covid-19 pandemic has posed unprecedented disruptions to education systems; however it has also accelerated many of the structural changes undergoing in the sector and opened up new opportunities. The emergence online and hybrid learning models, the take-up of Massive Online Open Courses (MOOCs) and augmented and virtual reality (AR/VR) have the potential to reshape the sector and pose serious threats to current incumbents, if investment in supporting connectivity infrastructure and training is not embraced.
The global education sector has reached an impressive scale, having grown rapidly over the previous decade, and forecasted to double in market size within the next decade. Total enrollment across all levels of education reached 829 million students in late 2019, a 14% increase from 2010. In 2019, more than 5.5 million students studied in degree programmes outside their home countries, more than double the number doing so in 2000. The global education market is projected to continue expanding rapidly and more than double in size, reaching US$2.4trn by 2027, up from US$1.1trn in 2019.1
Growing student population: Global student enrollment, 2010-2019 (million students) growth ratesThe pandemic has accelerated the digital imperative, a likely irreversible change, that is forcing education providers to rethink their strategies. Although most students have returned to classrooms since the height of the pandemic, educational institutions can now be certain that blended or digital-only modes of learning are part of their future. Established high education providers can no longer afford to put off investment in the digital future, as growing competition from new entrants in the market intensifies. The strongest challenges are posed by online-only providers of MOOCs (Massive Online Open Courses). This segment has seen rapid growth in 2020, increasing its international base of registered learners by 50%, and reaching 180 million users (excluding China).2 US-based MOOC Coursera has led the charge, adding 30 million new users in 2020 and attracting substantial new funding to increase its expansion. There is growing expectations that MOOCs, as they refine their models, will have a larger impact on the sector in the years to come.
Global spending on education technology is also showing signs of expansion. Total spending worldwide in 2020 was US$227bn, accounting for 3.6% of total expenditure on education and training. Spending is expected to grow rapidly in the coming years, reaching US$404bn in 2025.3 Advanced technologies that enable immersive and multi-sensory learning methods, such as augmented and virtual reality (AR/VR), are expected to grow fastest to around US$13bn globally, while AI and robotics spend is expected to reach US$9bn.4 Investors follow the suit, as the EdTech segments attracted over US$16bn venture capital (VC) investment in 2020, up from just US$1.8bn in 2014.
EdTech boom: Global Venture Capital (VC) investment in EdTech, 2015-2020 (US$bn)There are however significant structural challenges that remain in place that may hinder the growth EdTech. The lack of high-quality broadband infrastructure needed to support more advanced forms of learning, coupled with teachers’ lack of readiness to embrace digital forms of learning are some of the biggest limits to the growth in the sector. Governments and telecom companies have a major role to play in upgrading the current broadband infrastructure, guaranteeing faster levels of connectivity and increasing digital skills training. There are further concerns towards data security and the need to ensure adequate data privacy practices by EdTech firms.
1 Fortune Business Insights, 2020: https://www.fortunebusinessinsights.com/higher-education-market-104503 2 The Report by Class Central, 2020: https://www.classcentral.com/report/the-second-year-of-the-mooc/ 3 HolonIQ, January 2021: https://www.holoniq.com/edtech/10-charts-that-explain-the-global-education-technology-market/ 4 Ibid
Digital Technology: Trade challenges and opportunities post pandemic
As a driver of economic growth and competitiveness, however, the science and production of digital technologies are also becoming an area of fierce competition between countries. Global spending on ICT (information and communication technology) has increased steadily at 4% annually for several years, reaching a total of US$4.9trn in 2019.1 Despite the pandemic-related slowdown in momentum for traditional type of hardware and enterprise software, spending on newer technologies such as IoT (Internet of Things), robotics, 3D printing, AI and VR is expected to grow at a faster pace. Global ICT spending is forecasted to increase from US$5.2trn in 2021 to US$5.8trn in 2023, with an annual growth of 6%. Newer technologies will account for 23% of total spend in 2023, up from 14% in 2018.2
The digital economy is also a considerable driver of international trade, with cross border exports of ICT good and services estimated at US$2.74trn in 20203. While trade in goods accounts for the highest share, trade in ICT services is growing annually by 7.7% (CAGR) between 2010 and 2017.4
Rapid recovery: Worldwide ICT spending, 2018-2023 (US$ bn)Several high-profile sub-sectors epitomize the rapid growth of and challenges faced by the digital technology sector. The worldwide revenue from the sale of artificial intelligence (AI) -based software and services stood at US$62bn in 2020 and is set to reach US$998 by 20285. One study estimated the potential value generated by application of AI techniques across various industries places the market between US$3.5trn and US$5.8trn.6 However, there are two main obstacles that hinder a widescale AI adoption: the shortage of good quality data and data scientists, particularly as the talent that drives improvements in AI is largely concentrated in large economies such as the US, UK, Germany and China.
Cybersecurity is also an area that has attracted growing investment from corporates and VCs. With the advent of the digital economy, cyber threats put organizations and societies at risk. Global revenues for cybersecurity services are projected to grow from US$67bn in 2019 to US$111bn in 2025.7 Funding for companies providing cybersecurity services has increased nine-fold to US$7.8bn in 20208. The pandemic has further highlighted security vulnerabilities faced by organizations, as the mass shift to remote working coupled with the increased use of cloud infrastructure and services have exposed many to cybersecurity threats.
The pandemic has also impacted semiconductors, a key commodity for the digital economy representing a market expected to grow to US$469bn in 2021.9 A rise in demand for digital services and computer equipment caused severe supply chain disruptions across the global semiconductor production. The shortages have thrown light on the inadequate resilience of technology sector supply chains. They have also underscored the extreme concentration of semiconductor production. Although US firms account for 47% of global sales, most exports originate from East Asia—namely Taiwan, South Korea and China. Moreover, the most advanced generation of semiconductors is currently produced at scale only by Taiwan’s TSMC and South Korea’s Samsung.10
Something’s phishy: Share of cyber security breaches reported by UK companies over previous 12 months, by type of breachAs digital dominates more parts of the global economy, governments are taking proactive action to include the digital economy within national industrial policy. The need to gain strategic autonomy, in light of growing geopolitical rivalries, is prompting governments to adopt policies aimed at protecting their national technology sector. Since 2008, 101 countries representing more than 90% of global GDP have adopted formal industrial development strategies.11 These have focused mainly on supporting technology innovation and the digital economy. The resulting risk of fragmentation of global technology supply chains is likely to stay high on the agenda for global technology companies and governments around the world.
1IDC, Global ICT Spending: Forecast 2020-2023: https://www.idc.com/promo/global-ict-spending/forecast 2 Ibid 3 Estimated using World Development Indicators and IDC data. 4 Ibid 5 Grand View Research, Artificial Intelligence Market Size, Share & Trends Analysis Report, 2021-2028: https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-market 6 McKinsey Global Institute, Notes from the AI Frontier, 2018:https://www.mckinsey.com/featured-insights/artificial-intelligence/notes-from-the-ai-frontier-applications-and-value-of-deep-learning 7 The Business Research Company, “Cybersecurity Industry Overview Shows US To Account For The Largest Share Among Countries, In The Global Cyber Securities Market 2020”, November 2020: https://www.globenewswire.com/news-release/2020/11/05/2121251/0/en/Cybersecurity-Industry-Overview- Shows-US-To-Account-For-The-Largest-Share-Among-Countries-In-The-Global-Cyber-Securities-Market-2020.html 8 Crunchbase, The Rise Of Global Cybersecurity Venture Funding, 2021: https://about.crunchbase.com/cybersecurity-research-report-2021/ 9 Semiconductor Industry Association, 2021 Factbook: https://www.semiconductors.org/wp-content/uploads/2021/05/2021-SIA-Factbook-May-19-FINAL.pdf 10 Ibid 11 UNCTAD, World Investment Forum 2018: https://unctad.org/system/files/official-document/wir2018_en.pdf
Video | Age of Asia - Digital innovation: A new world of commerce
Age of Asia: Rise of a multipolar world is an Economist Impact report, sponsored by PineBridge Investments, that examines Asia’s long-term and evolving place in the global economy. The trends discussed here form a picture of possibility, opportunity and risk that’s set to play a transformative role in the years ahead.
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The shifting landscape of global wealth: Future-proofing prosperity in a ti...
In some instances the impact of this shift will be shaped by local factors, such as demographic changes. In other instances this shift will reflect shared characteristics, as demonstrated by the greater popularity of overseas investing among younger high-net-worth individuals (HNWIs) brought up in an era of globalisation. Whatever the drivers, the landscape of wealth is changing—from local to global, and from one focused on returns to one founded on personal values.
Despite rising economic concerns and a tradition of investor home bias in large parts of the world, the new landscape of wealth appears less interested in borders. According to a survey commissioned by RBC Wealth Management and conducted by The Economist Intelligence Unit (EIU), younger HNWIs are substantially more enthusiastic about foreign investing. The U.S. is a particularly high-profile example of a country where a long-standing preference for investments in local markets appears set to be transformed.
Click the thumbnail below to download the global executive summary.
Read additional articles from The EIU with detail on the shifting landscape of global wealth in Asia, Canada, the U.S. and UK on RBC's website.
Fintech in ASEAN
To better understand the opportunities and challenges in developing a fintech business in seven ASEAN markets, The Economist Intelligence Unit conducted wide-ranging desk research supplemented by seven in-depth interviews with executives in Australia and ASEAN.
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Risks and opportunities in a changing world
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