Monday, 16 April 2018

Macro Levels Trends – Brazil – Latin America: WEF 2018 : Leadership



The second discussion panel discussed the idea of' 'A New Era of Leadership', recognising that - beyond stalwart the domestic devotees of high profile “powerful men” such as Putin (Russia), Erdogan (Turkey) and to a lesser extend the 'soft-power' of Modi (India) and Xi Jinping (China) - much of the global public had become either somewhat or wholly disenchanted with the state of progressive democracies.

The USA's politics today viewed by Americans and other nationalities as a derisory pantomime throughout the Presidential elections, with what was then only the bombastic theatre of Washington today increasingly writ-large over world politics, from trade protectionism to the (seen as necessary) restrengthening of the 'Atlantic Relationship' per Russian border activities and Syrian affairs, and so seemingly the role NATO beyond the auspices of the UN.

The central issue that emerges and appears ever less opaque, is that historically a nation's citizenry would be largely united behind what it considered at best good leadership that had come from the masses, (eg Roosevelt, Eisenhower) to whom they could connect, to at worst adept leadership supported by good advisors (Nixon, Ford, Bush Jnr) through which America could indeed operate as the 'Free World's' policeman.

Yet today, the fact that national unity in many western nations has cleanly divided into the 'progressive left' and 'retrogressive right' because of the influence of the overt left-leaning mass-media and so enormous middle-nation reaction (with little centre-ground), it means that any notional 'people's mandate' is effectively lost.

So although the machinery of democracy still operates, the 'theatrical politics' itself (having grown over the last two decades arguably since the 'spin' of Blair's Britain) with today's use of TV personalities ((Trump and potentially Oprah) appears ever more divorced from serving the people, even if that be the faรงade. Instead increasing numbers of people appear to think, politics only serves the totems of corporate advantage and the egos of the political classes.

Hence the people have begun to become disinterested because of the lack of true representation and hence mistrust of career politicians and the media-machine.
It is this increasingly obvious state of affairs that prompted the Latin American WEF 2018 discussion about 'Leadership'.

Once again, the observations by investment-auto-motives are provided within [the square parenthesis].

A New Era of Leadership -

Chaired by Andres Velasco, (Ex Finance Minister for Chile) the panellists consisted of :

Candido Bracher - Deputy Chairman of Banco Itau
Paul Bulcke - Chairman of Nestle
Maria Christina Frias - Journalist
Alejandro Ramerez - Entertainment Sector Businessman
Luiza Trajano - Chairwoman of Magazine Luiza (Retail)
Ngaire Woods - Lavatnik School of Gov't Oxford

The Chair 'got the ball rolling' with mention of a Chilean survey which asked who do people admire the most?

The answer returned was the 42% most admired soap opera actors.

[NB with the inference that admiration translates to potential for credible leadership, it obviously appears utterly surreal (indeed wholly 'societally-dismorphic') to any persons of basic appreciation about the qualities for political leadership. Yet given the modern age of the screen-derived political persona (eg Reagan to Schwarzenegger to Oprah) unfortunately wholly 'proven' and so believable that a well screen-crafted public persona moves into the political arena.

But this should come with a public health warning, it is indeed a very real possibility that the public rise of 'female empowerment' tied with 'LGBTQ empowerment' through marches, en mass 'pink-sash' charity events and flash-mobs, could indeed create such overwhelming voter popularity for an apparent 'humanistic saviour' (such as Oprah) that the door to national tyranny could be easily opened and not so easily closed, once the 'god-head's' edicts started to grow. Thus more potential for a dystopian 'Big Sister' than the archetypical Orwellian 'Big Brother' seen with Stalin, Mao etc].

Thereafter, the order of Chile's most admired was: football-players, journalists...then in the middle ground the general sense of accomplishment and expertise were economists and academics...and at the very bottom union leaders, business people, church leaders and politicians.

[When a nation has become so 'socially-inversed' that pretend characters and drama plot lines become a closer fit with the public's mindset than their real-world leaders, it highlights a very severe problem, but of course a great populist solution regards 'ready-made' next era leaders].


The Chair states :

We live at a time in Latin America were trust in politicians, institutions and democracy is 'way down'”...” where new dimensions are appearing (ie more females)”...”but let us not kid ourselves, since we are still far from leadership that truly represents the broad diversity of our societies”.

Other challenges includes the news cycle and (leaders) being watched 24 hours a day”...”Populism waning in some countries but rising in others (ie USA)”....”a time to regain sustained economic growth”...”and so these are the enormous challenges for leaders”.

So as posed to the panellists the answers were:

A. Rameirez -
Unfortunately the beginning of his answer was inaudible, but went on to likewise cite from another survey in a major Mexican newspaper which highlighted the low levels of general trust...

all institutions have eroded their credibility...but in general order, the best retained are universities, the church, the army....then in the centre: human rights commission, printed media, business organisations....and the lowest: the banks, TV, the Supreme Court, Senate, House of Representatives, the police, union leaders and political parties....things have gotten appreciably worse”.

To provide a worldwide perspective he cited another survey by the Pure Research Centre which spanned 50 countries, and indicated that when compared to conditions fifty years previously. 88% of Vietnamese, Indians and S.Koreans stated that they were noticeably better-off . But at the bottom of the list was Latin America, when only 38% Brazilians believed they were better-off.; whilst in Peru and Colombia only about 28% believed so...Mexico showed 13%, and Venezuela came last with 10%.

The question Rameriz poses is that why should this be so when in many regards the quality of life and standards of life is so much better for many per per capita income, life expectancy, illiteracy, infant mortality, even extreme poverty.

I believe this has to do with a cognitive dissonence between reality and perception, this stemming from the rule of law...with only 8% of the world's population we have 40% of the homicides...and of the 50 most violent cities, 42 are in Latin America. This has to do with a failed drug policy over last fifty years...its not working. Mexico has seen many Reforms (that should assist the economy) but the continued perceptions of corruption and violence given a low Presidential approval rating.”

In this context people are willing to vote for the unknown, and that's what we face right now...candidates that promise much with little substantive economic, political and public policy understanding and tools, indeed even retrogressive in places. The threat that advancements will be undone to return to economic nationalism”.

To counter this: “The business community can work on 2 fronts: support the rule of law, and inclusive growth. For many years attention was focused upon the macro-economic (inflation etc), but did not do enough for those left behind”.

[The Mexican example highlights that even with the substantive economic growth of the last two decades in mid-level value activities – progressing from earlier 1960s'70s Bracero Programme and seen with the 1990s/2000s Maquiladora Programme and much else – and so very visible improvement for the middle-aged and elderly to see, the feeling appears to be that whilst more are living the appearance of the American (consumeristic) Dream, because of added economic pressures, and the result of increased necessary and voluntary social separation life feels more 'exposed'. This even more so during downturns when unemployment grows, crime increases and the individual feels at greater risk].


The Chair highlighted the role of the Free Press, which has massive historical importance in LatAm, but also now suffers from issues such as 'fake news' and increasing commercial pressures regards audience sizes, constant rolling-news etc. 
“Where do we go from now, especially to reconcile the need for maturity and long-termism vs the short-term demands?”.

Frias : “this has always existed, way before the internet, and illustrates a maturing of broadcast news, so a learning curve. But the duopoly that is Google and Facebook controls the flow of information and society should not 'delegate' to those not supportive of democracy, who don't have the expertise to see well investigated news, method, criteria and credibility. This is the importance of professional journalist”.

Chair - “As per the rule of law, Brazil has seen some companies flout this, what can be done?”

Luiza Trajano -
We do need a Free Press, but one that actually properly reports on the issues at hand, not focus upon the trivia such as what shoes are being worn – as has been my experience”.

Business founders often need to be completely absorbed with the start-up of their enterprise, ad so social issues are not considered, but as a firm ages so its social responsibilities expand. This not easy to achieve but glad its on the agenda. With a more equitable society we will see better results. I came from a family background where the commercial knowledge specifics were not overtly important (pointing to professionalism criticisms by her company auditors). Business cannot take the place of the government but 60% of our (Brazilian) population earn less than 2000 Reals, with some migrant Chinese women bussed around for 4 hours per day. So companies must become aware. And young consumers are now ethically aware and that impacts your bottom line. I belive in the Free Press and my shoes!”.

[This did not answer the set question but instead purported what has become 'Director's Diatribe' regards ethical business, the role of the press etc. A very stilted answer not helped by the need for cross-panel translation.

From an external perspective, it seems that Trajano is not of the same calibre as the rest of the mixed gender panel. Instead, she seemingly elevated to that of business head in the same way as Oprah was: a woman of the people who, as well as evident self-drive, was also 'made successful' to befit the modern ideal of the entrepreneurial woman. Gaining from the Brazilian rise of the consumer through the 1990s and 2000s; and with public exposure in part for self interest and in part so as to encourage others to both consume and to enter the business world.

To focus upon such aspects that were out of context to the question and topic of debate - such as her auditor's criticisms and her shoes (even if humorously) - illustrates what may be LatAm's biggest problem: the educational divide between the 'Old Guard' Establishment and the obvious push of 'democratized entrepreneurialism' which ironically backs a few high profile public faces. The capability-gap especially obvious when compared to the innate 'rounded' capabilities of a well educated and hard-won career rise of the archetype 'corporate (wo)man' or indeed even the under-appreciated devout 'corporate manderine'.

The good entrepreneur needs to learn at least thrice as fast as the corporate person, so it does raise questions when such a no doubt nice but seemingly relatively inept person gains (or is given by others) such a social position and public voice].


The Chair asks the Brazilian banker about what can be done to assist the national recovery, and how the banking sector can regain its credibility...

[Before answering, Bracher commiserates about the death of the rights activist Marielle Franco.

She has criticised the actions of the military police in fevella's, and specifically the death of a young man, who was somehow caught-up in the ongoing hard-hitting war by the authorities on drugs and fevella originated crime.

Obviously, the major problem for the authorities is the paradox of dealing with ethnicity 'diversity' issues and protection of rights, whilst also recognising that crime inevitably stems from people in such neighbourhoods, who themselves may be hiding behind their 'ethnic diversity' and indeed using formally organised protest groups to do so in order to claim apparent righteousness and apparent innocence – the deleiberately created and very paradoxical 'guilty-victim' syndrome or 'cry-bully' that inhabits so much of the far left in many nations today].

Bracher continues -
we are starting the biggest crisis seen in decades, in 2 years we lost 8% of GDP, something never seen before. But we grew 1% last year and this year we are pushing 3% growth. The health of the banking sector is pivotal in the growth of an economy. To do so sustainably means both 'bottom-line' growth which itself is only made possible by appreciating the bigger stakeholder picture and the long-term. This means understanding the 'journey' of clients, from the opening of a current account to vehicle and property loans etc; trying to solve their problems. Good business leaders should be able to listen to their 'constituents'. The 'technology gap' has created an income divide between those who are IT literate and those who are not, yet that IT has also allowed us to better communicate and listen to people. Leaders today must commit themselves to resolving society's needs.

As per banks, there are two approaches: the short term and the longer term structural reforms needed. The parallel is the managing of a country like a company. Banks can be 'loved' but requires much consideration to ensure that all banking 'contact points' ensure positive interaction and the inevitable negative experiences are as small as possible. So, remain humble for continuous improvement.

[The 3rd Industrial Revolution mated to the IT-centric 4th].

Also recognise that financing large companies provides for ever more widespread job creation.

[It should be recognised by those outside of LatAm that an estimated 55% of the region's employment is within the general spheres of the 'Black Economy', so the subject of formal economic inclusion is obviously of major interest to LatAm economists and policy-makers]


The Chair addresses Ngaire Woods about the manner in which experts have been derised by the public, seen as either inept or no longer independent [this perspective prompted by the agenda-pushed UEA climate change debacle]. “What may be done to reverse this, and how to instil in under-graduate technocrats the sense of a professional mission?”

Woods -
We [at Oxford's Blavetnik Centre} believe its far bigger than about technocrats but about politicians, as seen by elections wherein people voted against the Establishment, whether France, Italy, Chile, the UK Brexit vote, etc. This is a huge warning signal to every democracy about what's going wrong. We want to know why such popularism has grown, and its not because people are stupid.

The 3 lessons :
1) People suffering socio-economically listen to those politicians who understand. This (basic expectation has been lost by politicians who use PR, focus groups, online surveys, etc to 'lead' and 'respond' and that is not listening. France's Macron won because he had people ask the public what they cared about (ie not traditional canvassing).

2) Communication – the simple meaningful messages “Make America Great”, “Take Back Control” etc do not have to be simplistic. Taking the time to make complex issues simplified and intuitive.

3) What is the 'transformative vision' that centre-point politics need?
I find it astounding that when 60% of Brazilians are hardly making ends meet, that politicians are still focused on balancing the budget and inflation. It's sensible, but that's not a vision that mobilises people; and that's the task of business leaders and public-policy setters to demand of politicians.

Woods again invokes the UK's post-WW2, the “Attlee Vision” that kick-started its economy and achieved better social well-being.

So what's the vision today? Leaders have a big task in front of them to create a vision, mobilise the populace and achieve that vision.

[The great concern, given the raft of problems being faced by the supposed 'elite' regards the problematic confluence of still sluggish economies, the angry masses, the technology gap and its critics, and vitally the chasm between 'good news stories and statistics' and the reality on the ground, is that each leadership community looks to each-other to solve the innately big problems whilst still serving itself, so creating a game of 'pass the (problem) parcel' with accordent criticism of the other sides: Governments vs MNCs vs Populist Leaders...and so an ever-circular argument].

The Chair highlights the point that too much time is spent pronouncing about the instruments of public policy, not the goals. And to alter the direction of debate he asks Paul Bulcke (an MNC leader) about the somewhat damaged reputation of MNCs and yet also important their roles toward creating a better society; with acknowledging the local (typically BRICs+) criticism of 'importing foreign values'.

How can MNCs be purveyors of better practices, especially regards the labour market?

Bulcke -
First let me refer to the 'admired' rankings previously and the high scores of actors etc. This is not in direct contrast to any criticism of MNC's but politics.
As per 'leadership', let me quote an old Chinese philosopher “we are not only responsible for what we do, but also responsible for what we do not do”. Given that the title of this forum is 'Turning Point', if we (all leaders) don't take the right turn (especially for LatAm) (ie become “responsible for not doing” the right things) that would be bad.

Leadership is not about time/tenure, but what you pass on the next leader and the long-term. This especially so in LatAm where 6 elections offer the chance for the right turn. Strong institutions, structural reforms...everyone knows what has to be done, yet it is not done because of short-termism. (The recent trend toward) Populism is formulating simply what the others did not do. The idea of inclusiveness is an anathema when you did not care for the biggest part of the population. In an age of new global growth LatAm is very well placed [per the full industrial and commercial value chain], with the 'democratic dividend' of a young population that can be deployed over the next 20-25 years...so a unique opportunity regionally.

Leadership is required, not simply politics, along with integration of the continent, so looking beyond the Asia-Pacific west and Euro-African east. As for companies, they will be judged on what they do not, as well as do. Beyond shareholder and to stakeholders since economic activity is inevitably linked to society. In Nestle “shared values” to intersect in a positive way.

We at Nestle have been here for 100 years, and we are in countries that offer little in the short term and only make sense in the long term. We look to all involved: consumers, suppliers, farmers...thst is leadership. But we will be criticised; as a high tree we ctach more wind; but don't hide-away, engage and explain as we try to do.


The Chair raises the topic of Populism again, highlighting the problem that many Brazilians live on BRL2000 ($600 per month), so we need some solutions. And asks of the panel “what will you (personally) do to overcome the 'societal disconnect'?

[The fact that there was such a reticence to answer, highlights the size of the problem and the way in which no 'leader' wishes to be held accountable for their promises].
The answers that eventually came was the normative ideology of CSR and 'corporate citizenship', shaping a bold vision, being critical when public policy is failing and being more constructive. Also the observation that big election campaign promises are, after election, are watered-down or forgotten...the country needs to be 'vaccinated' against such lies and false pledges. Leaders need to both listen and be inspirational, give hope but carefully (ie managed with capability) since (in Brazil) the policies about homes for the poor and foreign-study student grants were shown to be worthless.

The Chair highlights similar past experiences of unkept promises in Argentina and Peru - “a pretty common habit” - and then opens up questions from the audience.

Audience Questions -

A person from Caracas, Venezuela, for Ngaire Woods “How to get leaders to connect with the people, their 'soul”.

NG - “we need a new model, we thought it would be purely from economic growth, but worker-share of that growth is less than ever, and outsourcing and robot threats add more concern. The economic data supports the mass feelings of anxiousness. I like mention of the soul, because this is about dignity, not just economics. The populism appeals to people's self-worth, identity...so the new 'compact' has to be not just 'redistribution' (of wealth) (eg Universal Income proposition) but 'dignity' hence the 1945 UK model.

Another audience member from the new start-up arena regards food safety [after the Brazilian Beef scandal] asks “how large companies deal with a new generation of young leaders from start-ups?”

Bracher answers “at Banco Itau we deal with over 200 start-ups, our posture is that of curiosity and learning, we finance many to initially understand how they work in structure and intra-cooperation, and so we seek to mimic that. The old management theories of organigrams are being altered, things being more organic less organigram. So a changed mindset in HR, from individual performance to collective performance. Innovations comes from cooperation.

Bulcher says “society will be transformed in this way. It does not go against established companies, so we embrace youth and its new philosophies. LatAm is a 'young' continent so we muct embrace.

An audience member from Chile says “Given the interconnect between society and companies, what would you choose, social influence from a 'leader' (as per the political slant) or a manager (as per the corporate)?”

Ngaire Woods
Leaders have to be able to forge the vision and mobilise the people; people mobilise when they feel they are creating it”.

Luiza Trajano
I would like to add that leaders take people further than they thought....its about hearts, minds and pockets...in their hearts when they feel the strategy is true, from their minds they participate regardless of their level, and their pockets is about sharing profit with employees. The pocket the most important dimension.

[What ever Trajano's actual business acumen, this does at least demonstrate she has an understanding that for those whose lives are massively constricted, all the rhetoric is meaningless, what matters is society's and corporations' demonstrated fairness regards the spread of wealth].

Thus, it is easily recognised by both inference and directly stated facts, that the term 'Leadership' from whatever quarter (corporate, political, social) only becomes meaningful and applicable to the masses when they actually see improvement in their own lives.

Many, though no all, of the 'elite' seem to believe that the term 'leadership' is a broadly applicable term relevant to their job description, and often see it as a badge of honour for past achievements of climbing the slippery pole of the organisational hierarchy.

And that includes the very necessary focus of such a typically demanding position of ensuring ROI and EPS, top-line growth and either running an expansionary yet simulateneously lean corporate machine, or endeavouring to generate a company turnaround toward a better future.

All admirable goals and far harder than the majority of staff and middle and lower management will ever understand.

The best leaders (as stated by some) seek to create a true societal difference, when one is so desperately required – as the Cadbury's, Hershey's, Leverhulmes and Henry Ford sought to do.

Each recognised their calling to make a better world, from model villages to improve the housing conditions and aspirations of factory workers, to the introduction of the then enormous $5-a-day pay increase to not only help create an additional captive market for Ford cars, but to ensure the basics of food and housing could be bought so that individuals and families could be relived of the very detrimental effects of poverty and actually grow themselves to become moralistic Americans.

Lastly, perhaps an excerpt from the legendary film 'Lawrence of Arabia' tells all.

During the  anti-Ottoman Arab  Revolt the idealistic Major T.E. Lawrence effectively asks the nomadic, tent-dwelling leader why his people love him so much?

 "I am a river to my people” (in terms of providing for their needs and instilling their dreams).

(Thankfully the Arabs and Turks have long since been able to see beyond yesteryear conflicts and - beyond the unfortunate Syrian hotspot - and seek a brighter 'progressive-conservative' Middle-Eastern future.).

Yet the sentiment remains as true today as then, and it should be a motto upon which all leadership is built.

All Latin America leaders alike must realise today, that to avert yet more anger-led mass unease, or indeed the possibility of new people's revolutions, they must become as unified, stolid, inter-connected as the sources, tributaries and main channel of the Amazon River.

They must become the convincing model for betterment and display how the 'sources' of self-discipline, health, education and morality leads to a river mouth of individualistic and national strength.





Friday, 30 March 2018

Macro Level Trends - Brazil - The LatAm WEF 2018



Having listed the broad spectrum of discussion topics the following

Attendees to the LatAm WEF summit obviously included many seen as the 'good and the great' of the region, spanning all spheres across: government, industry, services, high finance, academia and journalism.

Just a very few of the institutions represented included: Banco Itau, Nestle, PepsiCo, Mastercard, Cinopolis, El Pais, Oxford University and a myriad more.

To start the basic analysis looked at the core WEF issue of modern and future globalisation, with general inferred recognition of the past failings (of its prime control levers of financial markets and regulation) that have left so many riling against globalisation and retaking to the idea of populist protectionism.

Examples being the heavily affected EMs such as 1990s Mexico, Brazil, Thailand, Indonesia and S.Korea, and of course in AM regions the tsunami-effect of the Great Financial Crisis a decade ago which first massively undermined AM economies (exacerbated by the European Sovereign Debt Crisis) and thereafter affecting the previous rapid growth trajectory of the BRICs, CIVETS etc, creating for a period worldwide contraction and stagnation; new growth now taking effect.

So the first topic related to the need to re-shape the character and attractiveness of globalisation to rekindle peoples' beliefs and energies.

[NB Observations from investment-auto-motives are contained within closed square-parenthesis}.


'A New Deal on Globalisation' -

Ngaire Woods – Chair – Oxford University's Blavatnik School of Government

Brian Gallagher – CEO - 'United Way' NGO-Charity consortium
Roberto Azevedo – WTO Head – (Brazilian Public Administrator)
Micheal Gregoire – CEO – CA Technologies
Georges Faure – Foreign Minister for Argentina

The session started with three questions directed to the audience:
- “How many believe more trade barriers will affect exports from your country's economy?” (Majority agreed)
- “How many believe there is a general popularism in your country against the idea of globalisation?” (About half agreed)
- “How many believe that a 'New Deal' is needed on globalisation?” (Some did some didn't)

[Given the remit of the WEF to drive enthusiasm for world-wide trade and human activity, it is very, very pertinent that this issue be properly examined, beyond the well-worn and now disbelived 'globalist diatribe' – putting finance first - against which so many people are railing. What follows, whilst no where near a panacea seeks to offer new hope via the already very present digital age and digital future, with the necessity for all to become involved if they are to enjoy economic uplift].

Galleghar -
We are the result of industrialisation, organised as such when people moved from rural to urban areas for work/income. Now we are undergoing a new one. The last took 60s years to unfold and 20 years for social systemic adaption that ultimately aided the masses via policy-led redistribution of wealth from the 'Robber Barons' to the people. This economic revolution takes place over 20 years and will have a socially disruptive effect for the next half-century.
[NB The sentiment here is true, but in reality 'the people' lived through 100 years of industrialisation and bad living standards before government via post-WW2 policies fundamentally altred the lives of the masses. Critically, it had been a matter of family and community survival and betterment – the moralistic and unified improving and the amoral criminal disintergrating. With critically the relatively few paternal/maternal industrialists - who with a humanistic ferver - altered the lives of their workforces for the better from the 1880s onwards].
Today there is talk of the people 'left behind', let me provide 2 contrasting examples:
USA.... those left behind previously honed skills relevant to diminishing industrial sectors, and don't have the modern skill-set [and or geographically distant] from the modern IT and Services led economy.
[NB Herein, as globalisation grew and jobs were 'off-shored' many successive AM governments (and arguably companies) failed in their societal responsibilities to the broad populace. The younger and middle-aged British car-workers and coalminers of the 1970s and 1980s were not retrained for anything substantive because there was no education-based “industrial replacement policy”, instead the fortunate gaining production line assembly jobs on Italian and S.Korean washing machines etc, or reliant upon similar inbound FDI for new Japanese car factories.
Vitally, it took another culture -Japan - of mutuality, shared responsibility, professionalism, efficiency and indeed 'honour' (see latter mention of 'dignity') to modernise the British workforce – the introduction of a whole new belief system by Directors and Senior managers who vitally were not class-conscious and vitally knew what they were doing in running the national division of a global car company. The same story in the USA and Europe, with those lessons learned partly but not overtly successfully adopted by the incumbent (all-Anglo) auto-sector players.
Its why Nissan, Toyota, Honda went on to remain successful as even the best nameplates underwent torturous times, all too often blaming lack of finance when so much inefficiency (at every level) and so absorbed costsd were prevelant. Basically, Western companies – let alone governments – did not plan and deliver the industrial transformation required in specific sectors beyond reliance on FDI. As seen by the poor management, heavy legacy costs and so previous collapse of GM and rescue of Chrysler. The irony being that investors, managers and staff recognising that such firms were being run for the profiteering or the Banks and Senior Management – hence the massive decades-long dischord
The City and Wall Street obviously recognised the profit drivers of globalisation, MNCs, lower-cost off-shore production, cheap 'low-value' imports and the massive promise of EM B2B and B2C growth from the 1990s onwards, but vitally failed to take little industrial interests beyond the revolutionising IT sector.
Hence with large profits to be had elsewhere (countries and sectors) the vital theme of industrial innovation that would have saved large sections domestic workforce – ranging from coal carbon capture to new 'lightweight' steels to new material applications such as mass-market high-composite 'lightweight' vehicle bodies (ie Land Rover's experimental visonary 1990s 'plastic Defender' prototype and Ford's 2003 Model U concept). But such projects were not provided the policy-banking-corporate support to succeed, such research and developement efforts coming into fruition on a very ad-hoc basis only within recent years because of directed funding into the latest funded chapter of eco-trends. Such solutions were being investigated decades ago and could have provided new avenues for old industries which in turn would have sustained employment in what should have been very vibrant growing economic eco-systems.
Instead, even with the rise of Retail and Call-Centres for the fortunate, many old-industry communities continued their 1970s 'them and us' labour vs management class-based mindset, which together with greater social seperation and aspiration/greed/individualism across age and gender fragmented families and divided communities
Beyond the enormous damage of the 2007/8 Financial Crisis hitting SME business and the online transformation of Retail and else into 'E-Everything, it has also been the backlash of 35 years of broad industrial sector neglect and its impact that has created the populist anti-globalist wave seen today typically amongst those most affected.
Little wonder that the new entrepreneurial elite (today's Tech Sector 'Robber Barons' given their enormous wealth), under their casual 'campus guise' are seen by the young as the new socio-economic saviours of society, whilst older generations view the obvious potential threat of electronic-based social intrusion and control via untrammelled corporate-government tyranny].

Turning to the other extreme of those 'Left Behind' on the opposite side of the planet Gallagher looks at..
China :
Those people left-behind in the rural regions consisting of the elderly, disabled and children. 61 million children are looked after by grandparents and extended family members; whilst half a million have been left all alone); importantly with no or little assistive infrastructure / social welfare. The Government is now dealing with the issue for fear of social unrest and the social outcomes of such older 'outcasts'. hence the 'Left Behind Initiative' by Gallagher's NGO.

The Chair's question about “global or national solutions?” appeared unanswered by the Panel, so instead the question about recent American steel tarrtifs.

Azevedo -
The WTO was designed to try to avoid the sort of situation we could be headed into, so it is now time again for what is a WTO-led system to prove itself.
A major issue being the transformation of the labour market. One example being the belief (in some quarters) that two-thirds of elementary school children will eventually work in jobs that as of today do not yet exist.
In the meantime what to do about those who've not got either transferable skills or lack modern skills altogether? He believes [without convincing arguement, so requires such] that about 80% of job losses experienced are down to new technologies; so not the imports of goods and services, nor because of immigrants. Simply that in all of commercial evolution new technologies and solutions introduce greater efficiencies and so we see the next innovation driven phase providing higher productivity – in essence (largely IT led task learning and so personnel rationalisation) is an irreversable trend, as has been the case for centuries.
But how to handle that?
The need for more 'horizontal' approaches across education, retraining, social security etc.
He states that a protected job (via protectionism etc) costs a nation about 10x the actual cost of the job (to the employer) being protected through lost competitiveness. So much cheaper for a national economy to adapt, than to become insular so as to protect jobs.
The Chair asked “if its a generational issue? (ie IT literate young vs incapable/unwilling older).
No the younger generations will suffer even more, because their jobs will be shifting even quicker because of technological change (eg Artificial Intelligence, Machine Learning etc).

Gregoire -
It's not just about the trends for shifting jobs but critically the recognised steady declining share of all generated general income, with the bottom 50% earning less and less, and increasing inequality across most developed parts of the world.
He recounts the Victorian/Edwardian 'Red Flag Law' (where a warning 'saftey man' had to warn pedestrians and horse operators of approaching motor car). This designed to slow down the production of cars and innovation, (but the tidal wave still arrived).
[NB Whilst some truth to this, to protect the commercial interests of the wagon-carriage trades (constructiors and operators), actually not wholly so. The Red Flag Act was also a matter of how parliament dealt with the social attitudes toward innovation, since it recognised the advantages of motorised vehicles on many levels, from cleaner more orderly modes of transportation, to the expansion of the oil, chemicals and metals sectors. The Red Flag as such was a regulatory 'transition tool' for the period].
The earnings difference between an IT job and blue-collar job is the crux of capitalism. If you have a skill that is unique and required, the market will reward you, more so than compared to a 'commidity skill'. Any 'New Deal' ought to ensure that Tech companies are made responsible for human welfare without slowing down innovation.
He proposes a 'gift and get'...specifically regards data capture and use.With the need for standardised cross-border regulation to provide a basis of stable research and use. In return society gains from the IT sector by providing society with the required skill-sets necessary in an IT-led climate into the future.
AI, no-code systems, serverless computers, etc... we've moved from 'data analystics' to true 'machine learning' to true AI and cognitive systems. Why not have a private-public partnership on a global basis where (the Techocrats) have to bring IT training to the forefront for those who wish to participate. This should be a start-point regards curriculums and skill-sets.
EMs don't need to play catch-up but could in fact leap-frog the AMs, since the educational curriculums of the G8 nations is 30/40/50 years old. Ultimately it needs a new approach to public education.
LatAm is an IT matured region, young and old smart-phone literate and the region is the 3rd largest cyber-economy. so have a "bolder" curriculum.
[NB This suggests that Alphabet-Google et al wish to directly design the school curriculums of 5-18 year olds, with the expected promise (as with its urban planning efforts) of financial spend and increasing responsibility, so reducing the financial obligations of municiplaities around the world, in both budget-deficit/constrained localities in AM countries and under-developed localities in EM countries.
Making such a transition – for the obvious gain of 'Big Tech' – would require substantive cost-benefits and SWOT/TOWS planning by central governments. This is not to believe that such initiatives are inherently bad, simply that the foundations of proper Enlightenment based eduction is retained].

Chair - 
“That deals with next generation skills, but what about 'Capitalism' (per se)? (Newer) thinking by some seek to fundamentally change the economic basis. JP Morgan Chase's CEO says we need new approaches, over tax-credits or taxing robotic production etc. Blackrock, McKinsey and TATA say "capitalism is at a dis-equilibrium", so need to think about longterm capitalism and one that all can buy into.

Gregoire -
We all got Larry's (Fink of BlackRock) e-mail, but we've been doing that for the last 15 years, taking care of employees and community is good business. If you don't you won't survive.
We raise $5bn per year and 95% of that is from the private sector., so I'm a Capitalist... ['capitalist-NGOer need not be a paradox]... long before CSR / triple-line etc. The best leaders recognised their best customers come from their communities... [a perspective created by the forefathers of industrial philanthropism eg Hershey's, Cadburys, Sunlite, Ford, etc].
Forming socio-economics, business leads, society comes second and government way behind. The inertia that exists in developed countries in welfare, training programmes, etc are so entrenched. [NB often because of (as in the UK) the commercial interests of select private training companies and their entrenched interests (that have in the past provided exactly the same extremely basic notional 'training' for a massively diverse spectrum of the unemployed, whether a PhD graduate or remedial school drop-out. By and large teaching people things that they already know, but are still forced to attend to retain very scant unemplyment benefit. So adding to the profits of those companies but wasting the time of many of already capable but insufficiently financially supported to make their own lives better. Indeed the travelling costs to such centres fundamentally impacts on their poverty level standard of living. Such schemes should be directed for the truly poorly educated and the training monies better directed if given to the individual based upon their capabilities and qualifications so they can help themselves...if indeed there is job market at the time which often there is not in the midst of even a mild recession let alone elongated as experienced since 2008.].
(We've) got to 'bust loose' [ie deconstruct]some the educational institutions we have right now because they will not be preparing the workforce of the future.


Chair – provides an audience question :
Who thinks retraining will boost the fortunes of those who face declining wages (in 23 of the 25 OECD countries about 50% of workers have experienced declining or stagnating income?
Majority think it could, but large minority think not.
[NB The reality is that people in such positions - let alone longterm unemployed and now incapable - no longer believe in the entirety of 'the system' as is, or indeed promises that it will miraculously get better for them. Such is the broad and massive dissatisfaction at the manner in which many OECD countries failed their populations because of short-termist, inept and unempathetic leadership from their policy-setters, politicians and professionally emplyed remaining middle and upper classes.
In essence though obviously unstated (because of civility and political correctness) there appears an "FU" mentality seen by those 'long lost', that bitterness spanning from the youth to seniors. The endemic problem is far bigger than generally appreciated).

Chair -
(Per Argentine) “Having been through the populist wave, and so 'ahead' of other countries facing such matters, is a 'New Deal in Globalisation' needed?

Faure -
"Globalisation as an expression is already in the past, and there is no 'New Deal' (idiology). Simply that we have to deal with the technological reality as is. But as is, all governments are far behind given that their structures originated out of the previous reality (the 19th/20th industrial and associated services economic base). So not just unresponsive people [populations] but also unresponsive national structures.
New tech offers fundamental re-organisation of standard practices. Especially in industry where trends like 3D printing will create ['micro-factories] for say shirt-making
[NB this something experiemented with by new (typically Californian) start-ups in the Micro-Factory Retailing space of the auto-sector over the last 20 years [eg the early origins of (non-Chines) BYD 'Build Your Own' and 'Local Motors', now the technology selectively used by major automakers to illustrate the idea of much from complete new models of the future through to specifically commissioned non-structural outer skin panels].


Faure (continues) -
or seen in bricklaying by robots [for speed and accuracy, though still evolving on a site by site specific basis].
Education is moulded by the tools and environment around a person. The old models [as provided to] the 30s to 60 year olds, are already falling apart, so they are likewise disorientate by today'#s speed of change.
[NB this is perhaps an overtly simplified and innacurate description, depending upon the socio-economic status, livelihood and social relations of a person].
We have to stop this. The remit of society's leadership is how to adapt to this reality.

Chair -
Not everyone under 50 is a 'digital native'.
In (the wealthy) town of Oxford "20% of children do not have access to the internet more than once every 2 weeks..
[NB this a questionable survey result, possibly because the survey itself was designed deliberately promote the idea of IT exclusion. Nevertheless, it is a concern. It highlights the reality of very disruptive lives in poor areas (infact not so different the Brazilian favella – but without the community cohesion, so possibly even worse).
Indeed it also highlights the issue of financial literacy and responsibility of such parents whose themselves even with decent benefits do not manage themselves properly to ensure children's stability whether because of own rationality or facing everyday language problems for immigrants].

Chair – with another audience question -
The need for a New Deal is to deal with the social disruption, the restructuring of labour markets, new skills and training, and new international agreements that permit digital commerce, all under the Tech Revolution...How to help groups for this?
[NB This has been discussed in AM countries for 3 decades now, with little real-world progress, as seen by the Oxford Town example].
Anything missing, what else in any New Deal in Globalisation?
An Audience member from the ICC - International Chamber of Commerce – stands...
We at ICC have started the 'ITTI' (International Tech and Trade Initiative), to see how Augmented Intelligence could better plot international trade. Since present conditions are akin to 'flying an aeroplane without instruments'. New tech could be the instruments.
[NB it seems that much can be learned from other disciplines, such as the technical transfer of Meteoroloical Modelling, which must compile credible forecasts from a myriad of climate data inputs from the macro perspective of for the entire globe through to local conditions].

Another audience member...
Important issues are: the “Global Deal on Climate Change for Climate Security....Migration / Human Mobility, and a new G20 'set of rules of the game'. Also on fiscal policies such as OECD BEPS initiative. The need to understand that globalisation was previously about trans-national forms or production, but now need to recognise its about trans-national forms of 'de-materialisation' [ie digital-environments] which requires new levels of insight. The digital world brings totally new paradigm..

Another states...
[We need to] "start to discuss 'de-carbonisation' - landscape management and gong 'carbon negative', The plan to reforest 350m hectares, regenerating jobs in rural areas alongside tech solutions, and the potential to redfine resource flow from linear to circular (ie improved recycling), bio-economies and have millions of people in gardening landscapes.
[NB this highlights the tangible realities of an expanding eco-economy, from new realms of market gardening to trash seperation, collection and recycling, assisted by the likes of 21st century bottle-deposit initiatives – so echoing the period from the 1880s to 1960s when all re-usable packaging was recognised as valuable – and helped fundamentaslly boost the profits of drinks retailers (eg Coca Cola to R. Whites Lemonade) negating the costs of all-new new bottle production].

Another audience member from WIPRO (the Indian IT co)...
"Re-skilling and training...what scale is required?
We have plenty of opportunities but (face the challenge as to) how to properly fulfil the human resource aspect? Growth is about who's got the right people and talent for the kind of demand we face already, not a decade ahead but nowadays.
[NB it is assumed this is a RoW problem for WIPRO, since India itself appears to have the human resources required domestically. Thus an issue related to WIPRO's global expansion, not doubt specifically in LatAm].

Chair -
CEOs said "we do need to start paying tax". Over last decade in the OECD we saw personal tax rates rise by 6% but corporate tax rates decline by 10%. Many governments feel they are in a race to the bottom to attract business with good tax rates. Does this require global coordination?
[NB this interesting given the apparently syncronised world we now live in for those in the old (AM) and new (EM) middle classes, who's lives are increasingly compatible, from the purchase of global products spanning white and brown goods to cars, and the expansion of brands pertinent to leisure-time consumption, from Disney entertainment to Westfield mall shopping to Nandos restaurants. Hence there looks to be an arguement for PPP based international taxation for those employed (at different earnings rates) and a similar approach for businesses depending upon sector and maturity].

Chair -
"Give us one element in the New Deal for Globalisation".

Azevedo -
"Get ready for digital revolution. There is a parallel with yesteryear's need for language skills and without adequate formal schooling, the importance of alternative home tutoring. Today some countries (eg China) have a mandatory discipline of computer coding, this replacing the past need for (European and Japanese) languages.

Chair -
Are we not too complacent about the political revolt on our doorsteps?
[NB Precisely...except it is no longer political since the disenchanted masses have no belief in the apparently orchestrated 'media-politics' of today. The poor yet conservative right brought up on old patriotic and family values effectively dispises the worthless soundbite chatter and the media industry that demand and creates it. Whlst the older and younger liberal left are caught in a concern about the rise of the right and the awakening 'sleeping giant' that is pissed-off people. (This especially so in the USA given gun ownership levels). Moreover, the left appears to be experiencing more ingroup infighting between the many different (sex, race, SIG) factions which once united under the same cause seem to be diverging (eg 2nd wave feminists such as the iconic Germain Greer per the rise transgender (wo)men). The friction and factions then is/are not simply political but deeply sociological, especially worrying when modern politics is viewed with such distain and so as an increasingly meaningless societal construct].
[NB Hence this remark by the chair (Ngaire Woods) perhaps the most prescient of the whole discussion].
She continues...
Many people across many countries sayong we don't like the status quo, and we need a political and public solution that answers that? Even though digital education is fine, what would calm the masses?

Gallagher -
The biggest problem in my view – besides military conflict - is the concentration (ie disparity) of wealth around the world. China has figured it out given their economic uplift, and Alex de Tocqville once wrote 'it is not the people living in abject poverty you should worry about, but the ones who get out of abject poverty and see what they don't have”. If the concentration of wealth doesn't start to diminish and general personal oncome in developed countries doesn't start to rise, these digital technologies allows these demonstrations to turn violent when they are ready.
[NB without sounding overly alarmist, investment-auto-motives has long suspected that the real intention behind the evolution of the so called flash-mob, predicated upon spur of the moment entertainment activities and created by influencers within the media and performance arts industries, has indeed been done with the intention of creating on the spot demonstration and riots that the authorities have little reaction time and manpower to quell. Not so small scale examples seen already across many US cities after the election of Trump.
Smart-phones are already the socialised communications device in what has become a passive-aggressive social war campaign, the mobilising 'walkie-talkies' of today for many tribes across the social spectrum from the street gangs of inner city areas to even some criminalised white-collar groups who pretend to be 'pillars of society' whilst harrassing others for their assets].
This is a properly insightful observation by a Brian Gallagher, who perhaps who unlike some others recognises the world's reality where supposed developed societies have taken on the aggressive social dynamics of 3rd world countries.
Bravo Mr Gallagher!







Sunday, 18 March 2018

Macro Levels Trends – (Return to) Brazil – The View From On High: WEF 2018 - Latin America : The Compendium of Thought.



The Latin American World Economic Forum took place recently with Soa Paulo as the host city, and as such, hardly surprising that the broad LatAm / Mercosaur region continues to inevitably look to the economic pulling power of Brazil as the region's panacea.

Discussions were held around the following numerous topics:

- A New Deal on Globalisation
- A New Era of Leadership
- An Insight, An Idea with Pele
- Boosting Latin America's Infrastructure
- Breaking the Cycle of Corruption
- E-Commerce: Expanding Trade Horizons
- Equipping the Smart City of Tomorrow
- Global Economic Outlook
- Start-Ups
- Latin America: Update
- Latin America in a Deals-Based Global Order
- Leading Business with Purpose
- Migration in LatAm: Between Economic Mobility and Humanatarianism
- Mixed Reality Behind the Scenes: 'Awavena'
- New Scenarios for Brazil
- Brazil's New Strategy on Industry 4.0
- Building Trust and Transparency through Technology
- Driving Gender Parity in LatAm
- Improving Competitiveness in Brazil
- Regional Integration: Full Steam Ahead?
- Re-invigorating Brazil's Investment Climate
-Scaling-up Innovation in Agriculture
- Shaping the Fourth Industrial Revolution
- The Next Latin Unicorn
- The Politics of Misinformation
- The Post-Manufacturing Economy
- The Tide is Turning: International Trade in 2018


To follow will be general summaries and observations about these discussed topics, affecting a myriad of issues: from the continued need for deep-water oil drilling in the Gulf of Mexico to help kickstart economies and ironically support green-energy's further traction, through to those potential new trade opportunities in the far distances of Kazakhstan and Central Asia.

Watch this space.






Sunday, 4 March 2018

Macro Level Trends – (Return to) Brazil – Firm Domestic Foundations vs International Econometrics.




The recent S.Korean Winter Olympics, buoyed by the ground-breaking move toward apparent entente cordiale across the South-North Korean border, dims the positive memory of the previous Brazilian Olympics and Paralympics from 19 months ago.

The old adage is that any host nation pays twice over: once regards the enormous infrastructural costs, then by way of negative economic aftermath soon following the event. But likewise the theory is that such heavy spending creates new economic possibilities in terms of transport, housing and improved 'sports economy'.

[NB as regards advancement toward a more unified Korea, the progress made by the previous metamorphosis of parts of the DMZ (de-militarised zone) toward the current existence of the specific 'commercialisation-zone' would bode very well for major aspects of S.Korean industry. As any initial 'free-port' ideology would in time seemingly extend toward major public works and replay the beginnings of Chinese-style shift from Communism to increasingly mixed-economy Socialism].

During the 2016 event Brazil itself was already suffering in the midst of global economic problems, those tsunami waves not of its own doing but obviously having impact. (Though far lesser than compared to the West, for all the contraction data sets; given its central place in the burgeoning 21st century global growth story.

Nonetheless, to overcome a 'top-heavy' socio-economic model, remedial action was and continues to be necessary. President Temer's attempts to re-shape Brazilian industry, commerce and society with a rational and fair new model template seeking to re-orientate Brazil's increasingly recognised reduced competitive global position.

[NB full details illustrated in the previous web-log].

Those Reforms creating the new super-structure to the macro-economic foundations that have and are being laid.

So to expand the Brazilian perspective, and highlight the efforts already made, it is worth looking at 3 other pertinent aspects of the economy that may (beyond the centrality of Brazilian economists and western/worldwide investment bankers) may have over-looked given the North American and Asianic focus of recent times.


The Base Rate and Inflation Rate -

The Central Bank of Brazil has seemingly worked wonders in the stabilisation and decline of the key metric that is the (Overnight Interbank lending) 'Selic' Rate. At the turn of the century with distrust abound it stood in 1998 for a short time at an eye-watering 42%.

[This illustrated the damage wrought by both poor policy, seemingly unlimited money-printing (with various previous fiscal and monetary experiments and resurgence of rabid investment expansion even after the earlier Latin American Debt Crisis, itself fuelled by the same aspects of crony-capitalism that previously led to the ASEAN Tiger Crash a year earlier].

Since that unfortunate monumental high the Banco Central do Brasil has gained much rightful international respect by using the economic rewards of the previous Brazilian growth story very well, steering that transformation via its institutional dynamic levers, so as to 'about-turn' the previous short-term skepticism of domestic and international lenders and investors toward increasing long-term trust.

Major reforms in 1999 saw the SELIC Rate drop precipitously from 45% to 20% over that year, then to see trend-line decline – though in a much wavering oscillatory pattern – until the previous low in Q4 2012 and Q1 2013 of 8%. An upturn to 15% caused by Olympics spending in 2015/16 (and arguably some 'hot money' from China and elsewhere) has since been quashed; primarily via the sharp felt retraction of constructional spending and exports contraction, to the now historical SELIC low of 6.75% (set most recently on 07.02.2018).

That feat was the latest of eleven straight rate reductions by the COPUM Steering Group, taking the SELIC to a level even below the previously set target inflation rate. Given the emergent rebound of consumer spending and retail price inflation of near 3% in December 2017, mostly driven by non-disposable fixed-expenses through housing and transport rises; so upping what had been a more sluggish general Consumer Price Inflation over the previous 4 months, but more than broadly amenable to all given the previous 6.29% a year earlier.

Ordinarily, when climbing out of a recessionary period such costs would have an effect on more discretionary expenditure, typically brought about for a period because of the spending gap between static personal incomes and increased personal costs of basics; so potentially affecting sectors such as FMCG and Leisure.

However, mirroring the Chinese effort, there has been effort by Brasilia's economists to create B2B and B2C demand-pull, doing so via the much improved health of national credit markets and so availability to business and consumers.

This seen in two specific areas: the massive upward growth in new car sales (as exemplified by Volkswagen's 45% YoY rise), presumably to SME's and wealthier individuals, and the success of the relatively newly established e-retail realm that reaches nearly all levels of digitally connected consumer.

Hence overall there has been positive inflationary traction across two of the three types of inflation: Cost-Push and Demand-Pull, with expected absence of Wage-Push until possibly the long term, that economic gain stemming from the planned Labour Reforms that would overcome the stubbornly 'inelastic' labour capacity that had become a defective aspect of the system.

Presently the CBoB states that it will maintain an 'accommodatory' monetary policy, with interest rates below the 'structural norm'. This policy eased as the broad economy grows as forecast at approximately 2.75% per annum (the 'averaged consensus' of polled economists), so as to reach a broad relationship equation between overall inflation and interest rates. Whilst those economists also expect the SELIC to remain flat at 6.75% throughout the remainder of 2018; presuming the CBoB will maintain a reduced structural differential vs creeping inflation.


The Unemployment Rate -

The Unemployment Rate fell 0.2% between Q3 and Q4 2017, to 11.8%. Some observers expected greater decline, however undoubtedly this appears to indicate the cautiousness of still tentative business community regards new recruitment; awaiting instigation of what would be very beneficial Reform change regards recruitment bureaucracy, obligations and labour availability.

At 11.8% this is the lowest rate in 17 months and illustrates that the previous peak of 13.5% is well behind, but given the present attitudinal stance of business, it may be assumed that the present “aroundabout 12%” unemployment rate may be the 'static floor' until those critical Reforms are enacted.


The Political Slant -

Finance Minister Henrique Meirelles remarked on 27.02.18 that overall 2018 growth would be higher that the 2.75-2.80% estimated by economists, also believing that the 2017 measure of 1.0% may have to be revised (upward 10%) to 1.1%.

Exactly how Meirelles reached this conclusion is vague, but it appears obvious that the Temer administration is trying to enthuse both business people, the national populace and foreign investors and governments, by maximising the good news story.

This enthusiasm balanced by conjecture of “above 2.5%” for 2019.

Obviously seeking to manage expectations over the short and medium terms, with knowledge that the economic metamorphosis sought should allow for provision of a well-managed steep growth climb from 2020 onward. Hence his desire to buoy the here and now and beat the forecast beyond the next few years.


Debt to Gross Domestic Product -

Key for Brazil is the vital need to manage its national liabilities, the most prolific of which is its ageing workforce and the enormous burden of overly generous (early) pension availability and costs, with other issues pertaining to level of remaining state control of industry and commerce which itself because of Socialist past is equally mired in financial burden and inevitable operational inefficiency and under-investment.

Some commentators will relate the 'liability issue' to Brazil's notionally high Debt:GDP ratio at 74%, markedly above its previous lowest of 51%.

Compared to many 'top-heavy' Triad nations this appears mild. Presently we see Japan: 250%, Greece: 179%, Italy: 131%, Portugal: 126%, USA: 105%, France: 96%, Canada 92%, UK: 89%, EU Area: 89%....Germany: 68% the well managed exception (thanks to its education system, its level of high 'added-value' and its worldwide export-base as the enabler of other nations).

Hence Brazil seemingly sits comfortably here, but this is to compare “apples with pears” given the differing stages of economic progress between the advanced EM and arguably post-peak AM examples..

Compared to the measures of its truer counterparts in the BRIC, MINTS / CIVETS and a very different picture can be seen. Russia: 12%, India: 69%, China: 46%.

Hence seemingly metrically upon par with India, and with similar younger population-pyrimid. But critically India has enormous room for expansion thanks to population size of 1.34bn vs Brazil's 211m; thus Brazil sits in a comparatively negative position (simplistically by a factor of six). And whilst there is periodic western talk of China's own demographic crisis resulting from an ageing population and the effects of the previous one-child policy, its own pyramid is relatively balanced across the generations, it has 1.38bn people and it enjoys a substantially lower Debt:GDP ratio. Russia sits numerically in the apparent best position, but only because of the disparity between its enormous Oil and Gas income, under-investment in education and economic diversification and lacklustre public-spending programmes.

As per the MINTS and CIVETS: Mexico: 48% with 130m people, Indonesia: 28% with 263m, Nigeria: 18% with 192m, Turkey: 28% and 80m, with Colombia: 47% and 49m, Vietnam: 62% and 95m, Egypt: 92% and 95m, South Africa: 51% and 64m
Thus we see that presently Brazil sits in a precarious competitive position if its Reforms are not implemented. Specifically regards India and China over the near and medium term, and in the longer term Indonesia (given ASEAN: Japanese, Chinese and Australian interests), and possibly Nigeria (given Chinese, British and European interests), with a new era American soft-power influencing much of the remaining nations previously viewed as Pioneer regions.


In Summary -

The apparently improving relationship between S. Korea and N.Korea seen at the Winter Olympics (literally watched by the American Vice-President) well illustrates the seeming intentional renewal and expansion of a long distant Asia-pact ideology in its own form; something not seen for centuries. The China sponsored 'New Belt and Road' scheme encompassing a new growth stratagem centred upon the Far East, Indian Sub-Continent, Central Asia and the Near East.

With tie-in to the present ASEAN trade-bloc the stage is being set for a re-balancing of the global economic order. Even if progress appears slow to date, the promise of greater autonomy and socio-economic strength for many presently insignificant countries that once were vital to the over-land trading of yesteryear's 'Silk Road' (which ran Beijing to Venice) is undeniable. So much so that the modernisation plans and implementation seen in small-scale urban planning precedes expectations of economic planning and the previous post-ponement of the 'Economic Miracle' dream seen elsewhere; Brazil a shining example in the 1950s/60s and 1990s/2000s.

With an increasingly defensive and possibly insular USA (its metals manufacture protectionism hurting Brazilian exports) and a slowly growing but realistically North-South fractured Europe (echoing much of the 20th century experience), Brazil must more than ever look beyond its ethnographic roots and historical trading template associated with nominally titled AM nations, and better connect to its BRIC counterparts, the MINT nations, those of the CIVETS and indeed even further afield in Africa and vitally act with renewed vigour in Latin American leadership.

Brazil then must not only re-organise itself across its Foreign Relations front – this much improved over the last 20 years – but ensure its internal re-organisation via the raft of socio-economic Reforms are implemented as envisioned.

Any short-fall in making Brazil more globally aware, fit-for-business, better educated, entrepreneurial and so internationally competitive, would be to fall short of its massive potential as an EM leader across a myriad of fields which impact upon prosperity and ecology, from green-power generation to smart-cities and satellite-towns, to new nation-wide planning formulas to lightweight standard and autonomous vehicles to end-of-life recycling and ethical disposability.

Just as China has become the industrial powerhouse of the world, India the IT consulting hub and Russia still the eponymous lowest-cost fossil-based Energy centre, so Brazil must intelligently deploy its enviable spread of human, industrial/commercial and natural resources; doing so in a unified way that truly convinces, both at home and internationally across 2nd, 3rd and 4th Tier countries.

Brazil's central bank has long undertaken what was initially an onerous task to much improve domestic and international confidence in both the its currency, base rates and interest rates, the former previously massively affected by the extremely damaging historical syncronicity of the latter two, that unhealthy co-dependent relationship now essentially defunct with what might be deemed and broad 'structural normality' at amenable levels now in place.

The foundations of the economy then have been put in place over a long period. Precisely because the high costs, disfunctionality and so volatility as output of yesteryear's Socialistic Statist mantra has – and continues to be – recognised as inevitably inefficient and so dismantled.

Yet as illustrated by worldwide metrics, even though a beneficiary of late 20th and early 21st century global capitalism, the costs of this ongoing transformation have been costly as the expenditure public infrastructure projects of whatever colour and ideology still weigh heavy on the national balance sheet; even the gain of realised assets vs accumulated projects' debts.

Without addressing this paper-based imbalance, by exporting more products and services and importing more FDI and expertise and labour to better 'sweat' those physical assets, Brazil looks to be caught in the classic 'middle-income trap' – effectively the reluctance to improve its mid-level cost-base, which in fact appears overtly high to other up-coming nations who themselves seek the assistance of lead EMs for their own growth toward prosperity.

To this end, beyond Temer's vitally important raft of competitively transformational Reforms, the business community – historically led by the Sao Paulo Chamber of Commerce – must continue to deepen and expand its offering to both the nation and the world at large. New expansions of incumbent companies such as: Troller (specialist vehicles), Marcopolo (Coach and Bus), Avibras (military products), Klabin (recycled paper goods) and the rise of all-new entities from within industry and academia and indeed from the supported energies of the young, to befit a myriad of today's and tomorrow's needs, wants and desires...[and so brightly shine above the previous dark clouds associated with Petrobras, Odebrecht and JBS].

The Latin American adjunct to Davos 2018 takes place very shortly in Sao Paulo (13th to 15th March at the Grand Hyatt), with special note of the intersect between Brazil's upcoming elections, the need for Reform, the trade pipeline and springboard that is the increasingly important Mercosur-Pacific Alliance, and the continued unfolding of the digitally enabled '4th Industrial Revolution'.

Perhaps as never before have the eyes and minds of Latin American leaders been so avidly focused in 'Shaping the New Narrative' across a plethora of socio-eco-techno-commercial arenas.

If Brazilian business both old and young can acquit itself upon the worldwide stage as well as the former Olympic showcase, there is good reason for an increasingly synchronised EM-AM world led by fair capitalism and centrist moralities to be optimistic.