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Efficient City-Building: Quick Solutions to Drive Economic Expansion

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Global Logistics, Global Trade Daily

Efficient City-Building: Quick Solutions to Drive Economic Expansion

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In an era where urbanization is rapidly increasing, efficient city-building has become crucial for driving economic expansion. The challenges faced by cities today are multifaceted, requiring innovative and quick solutions that address the needs of growing populations while fostering sustainable economic growth. By focusing on key areas such as infrastructure, technology, and smart urban planning, cities can transform into thriving economic hubs. This article explores several strategies that can be implemented to ensure efficient city-building and economic expansion.

Read also: Navigating Global Economic Challenges: UN Report Highlights Concerns and Calls for Multilateral Action

1. Prioritize Infrastructure Development

  • Modern Transportation Networks

    Investing in efficient transportation systems is a cornerstone of economic growth. Well-developed public transit reduces congestion, lowers transportation costs, and increases productivity by reducing commute times. Cities should prioritize the construction and expansion of railways, subways, and bus networks that connect residential areas with commercial and industrial hubs.

  • Utility Infrastructure

    Adequate access to utilities such as water, electricity, and sanitation services is vital for any city’s growth. Modernizing aging infrastructure and ensuring the availability of these services can attract businesses and investors, providing the necessary backbone for economic activities.

  • Digital Infrastructure

    In today’s digital age, a robust digital infrastructure is as important as physical infrastructure. Cities should invest in high-speed internet, 5G networks, and smart city technologies to foster innovation, support businesses, and create new economic opportunities.

2. Embrace Smart Urban Planning

  • Zoning for Mixed-Use Developments

    Efficient city-building requires smart zoning practices that allow for mixed-use developments. This approach encourages the development of areas where people can live, work, and play, reducing the need for long commutes and fostering a sense of community. Mixed-use developments also contribute to economic growth by creating vibrant local economies.

  • Green Spaces and Sustainable Practices

    Integrating green spaces within urban settings not only improves the quality of life but also boosts property values and attracts tourists. Cities should adopt sustainable practices such as green building codes, energy-efficient designs, and the use of renewable energy sources. These practices make cities more attractive to businesses that are increasingly prioritizing sustainability.

  • Efficient Land Use

    Cities should focus on optimizing land use to accommodate growing populations without compromising on quality of life. By utilizing vertical construction, cities can maximize available space, reduce urban sprawl, and create more opportunities for businesses and housing.

3. Foster Economic Development Initiatives

  • Business Incentives

    Cities can stimulate economic growth by offering incentives such as tax breaks, grants, and low-interest loans to attract businesses. Special economic zones (SEZs) and industrial parks can be established to provide a conducive environment for businesses to thrive, leading to job creation and increased economic activity.

  • Support for Startups and SMEs

    Small and medium-sized enterprises (SMEs) and startups are vital engines of economic growth. Cities should create incubators, co-working spaces, and innovation hubs to support these businesses. Additionally, offering access to capital, mentorship, and networking opportunities can help these businesses grow and contribute to the local economy.

  • Tourism Development

    Tourism is a major economic driver for many cities. By investing in the development of tourist attractions, improving accessibility, and promoting the city as a destination, cities can increase tourism revenue. This, in turn, supports local businesses and creates jobs.

4. Invest in Education and Workforce Development

  • Skilled Workforce

    A city’s economic growth is closely linked to the skills of its workforce. Investing in education and vocational training programs can ensure that the local workforce is equipped with the skills needed for emerging industries. Partnering with educational institutions and businesses can create tailored training programs that meet the demands of the market.

  • Research and Innovation

    Cities should encourage research and development (R&D) by supporting local universities, research institutions, and private companies. Creating innovation clusters where academia and industry collaborate can lead to the development of new technologies and industries, driving economic expansion.

  • Attracting Talent

    Cities that offer a high quality of life, access to amenities, and cultural vibrancy are more likely to attract and retain talent. By investing in housing, healthcare, education, and recreational facilities, cities can become magnets for skilled workers who contribute to economic growth.

5. Enhance Governance and Streamline Processes

  • Efficient Bureaucracy

    One of the barriers to economic growth in cities is inefficient bureaucracy. Streamlining administrative processes, reducing red tape, and improving transparency can make it easier for businesses to set up and operate in the city. This, in turn, attracts more investments and fosters economic expansion.

  • Public-Private Partnerships (PPPs)

    Collaborating with the private sector through public-private partnerships can accelerate infrastructure development and service delivery. PPPs allow cities to leverage private sector expertise and resources while sharing risks, resulting in more efficient and cost-effective projects.

  • Data-Driven Decision-Making

    Cities should embrace data-driven decision-making to improve governance. By collecting and analyzing data on various aspects of urban life, city officials can make informed decisions that lead to better outcomes in areas such as transportation, public safety, and resource management.

6. Implement Quick Solutions with Long-Term Impact

  • Temporary Infrastructure

    In rapidly growing cities, temporary infrastructure solutions can provide immediate relief while long-term projects are being planned and executed. For example, temporary roads, bridges, and shelters can accommodate sudden population influxes or support economic activities during peak seasons.

  • Pilot Projects

    Before committing to large-scale projects, cities can implement pilot projects to test new ideas and technologies. Pilot projects allow for experimentation and adjustment before scaling up, reducing the risk of failure and ensuring that resources are used efficiently.

  • Load Calculation for Construction

    To ensure the stability and safety of buildings, especially in densely populated urban areas, accurate load calculation is essential. This involves determining the forces that a structure will need to withstand, ensuring that the design and materials used are adequate to support the building and its occupants.

Conclusion

Efficient city-building is key to driving economic expansion in today’s fast-paced world. By prioritizing infrastructure development, embracing smart urban planning, fostering economic development initiatives, investing in education, enhancing governance, and implementing quick solutions, cities can position themselves as economic powerhouses. The strategies outlined in this article offer a roadmap for city planners, policymakers, and stakeholders to create thriving urban environments that support long-term economic growth and prosperity.

 

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WTO Highlights Impact of Illicit Trade on Economic Growth and Public Health

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The World Trade Organization (WTO) has emphasized that illicit trade significantly harms societies, stifling economic growth and development. This illegal activity undermines legitimate businesses, fosters corruption, and deprives governments of crucial tax revenue needed for societal investments.

Read also: WTO Forecasts Global Trade Rebound Amidst Challenges and Uncertainties

Under the leadership of Director-General Ngozi Okonjo-Iweala, the WTO Secretariat has been investigating how WTO rules can assist member countries in addressing these challenges. In a recent publication focused on combating illicit trade in medical products, Okonjo-Iweala stressed the necessity of enhancing international cooperation and providing technical assistance to bolster members’ capacities to fight illicit trade.

The WTO has also introduced a new publication on illicit trade in food and food fraud, aiming to clarify the role the organization can play in addressing these issues. This publication leverages insights from various organizations, including the Food and Agriculture Organization of the United Nations, the International Seed Federation, the Transnational Alliance to Combat Illicit Trade, and the United Nations Interregional Crime and Justice Research Institute. It examines the issue from multiple perspectives and suggests strategies for tackling illicit trade in food and food fraud.

“Illicit trade and fraud in the agri-food sector have detrimental effects on stakeholders, including consumers, farmers, agribusinesses, regulators, and other operators within the food industry,” said Okonjo-Iweala. “While the global cost of fraud to the food industry is hard to quantify due to the secretive nature of these activities, estimates range from $30–50 billion annually, excluding losses from illicit trade in alcoholic drinks.”

Illicit trade impacts various segments of society and the economy. It causes economic losses to legitimate businesses through decreased sales and reduced consumer confidence. Governments lose valuable tax revenue and incur costs fighting counterfeit crime and smuggling. Additionally, fraudulent and counterfeit food and beverages pose serious public health risks, as adulterated or contaminated products can have deadly consequences. Even counterfeit products that are harmless but do not contain advertised ingredients defraud customers and erode trust in the food supply chain.

Okonjo-Iweala highlighted that the WTO rulebook provides legal tools to combat illicit trade and food fraud. During the launch event of the publication, new ideas for the WTO’s future steps were discussed. These include collaborating with the World Health Organization (WHO), reviewing government actions through the Trade Policy Review process, and utilizing Aid for Trade discussions to address illicit trade. Other suggestions involved enhancing cross-border customs cooperation, examining the impact of e-commerce on food fraud, and continuing discussions in the Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) committees.

She emphasized that implementing these future actions would require the agreement of WTO members.

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Challenges and Strategies for Economic Recovery in Emerging Europe and Central Asia

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The World Bank’s latest Economic Update for the Europe and Central Asia region paints a sobering picture of economic activity, forecasting a slowdown in growth due to various factors. Despite a substantial strengthening in 2023, regional growth is projected to slow to 2.8% this year, with headwinds from a weaker global economy, tight monetary policies, and geopolitical tensions.

Antonella Bassani, World Bank Vice President for the region, emphasizes the need for countries to address multiple crises and revive productivity growth to protect their people and accelerate economic recovery. The lingering effects of recent shocks, including Russia’s invasion of Ukraine and the pandemic, continue to hinder progress.

While inflation has fallen faster than expected, households still grapple with the aftermath of the 2022 cost-of-living crisis. In Ukraine, recovery is expected to slow due to factors like labor shortages and a smaller harvest, with reconstruction costs surpassing the country’s pre-war economy size.

Türkiye is also facing economic challenges, with growth expected to dip to its lowest level since 2009, primarily due to macroeconomic consolidation efforts. Meanwhile, subdued global oil prices will impact prospects in Central Asia, with growth projections being revised downwards.

A special focus chapter in the report highlights the importance of unleashing the power of the private sector for economic development. While significant progress has been made in transitioning to market economies, barriers to business dynamism persist, including challenges in the competition environment, state involvement in the economy, and skills gaps in the workforce.

Addressing these challenges requires efforts to reduce barriers to entry for firms, improve the quality of education, and enhance access to long-term finance for private enterprises. By fostering a conducive environment for private sector growth and innovation, countries in the region can bolster their economic resilience and drive long-term prosperity.

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Reimagining Africa’s Economic Growth: Insights from Okonjo-Iweala

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Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, emphasized the imperative for Africa to bolster trade and investment in value-added goods and services to stimulate economic expansion. Speaking at BusinessDay’s Africa Trade and Investment Summit, themed ‘Reimagining Economic Growth in Africa,’ she underscored the need for an enabling external environment and a predictable internal economy to drive this transformation.

Okonjo-Iweala highlighted that African businesses face significant trade costs, equivalent to a 354 percent tariff among the world’s cheapest, hindering their competitiveness. Additionally, intra-African trade faces trade costs equivalent to a 435 percent tariff, underlining the challenges within the continent. To overcome these barriers and accelerate growth, she stressed the importance of increasing trade and investment in value-added goods and services.

Despite Africa’s underperformance, accounting for only three percent of global trade, Okonjo-Iweala sees potential for growth by shifting focus from raw materials and commodities to value-added products. She emphasized the necessity of reimagining global trade and investment, capitalizing on Africa’s growing young population and regional integration through initiatives like the African Continental Free Trade Area.

Highlighting the opportunities presented by the rapid growth in services, particularly in tech-savvy sectors like fintech, Okonjo-Iweala emphasized the need for more supply and value chains in Africa to integrate into global production networks. Successful re-globalization, she argued, would enhance growth, job creation, and supply resilience.

Okonjo-Iweala stressed the importance of a supportive external environment and an open and predictable internal economy for African countries to achieve these goals. She called for agreements that would facilitate this process and encouraged investors to diversify their portfolios to include African markets.

In his welcome address, Frank Aigbogun, Publisher of BusinessDay Media, echoed the sentiment of Nigeria and Africa being at a crossroads, emphasizing the need to focus on actionable steps to realize their potential. He underscored the importance of giving hope to the people by fostering economic growth and development across the continent.

Overall, Okonjo-Iweala’s insights shed light on the challenges and opportunities for Africa’s economic growth, emphasizing the need for strategic initiatives and partnerships to unlock its full potential on the global stage.

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Cities With the Most Economic Growth in 2021

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The U.S. economy has made a remarkable comeback from the deep dive caused by the pandemic. Consumer spending (fueled by savings and government stimulus money) is strong, the economy recently added the most jobs in nearly a year, and the housing market is booming. According to the Bureau of Labor Statistics, nonfarm employment has grown by 1.5% from January to May, and the unemployment rate is now 5.9%, well below the high of 14.8% seen in April 2020.

In the spring of last year, real gross domestic product (GDP)—a measure of economic activity used to track the health of the country—fell by a record annualized rate of 31.4%, the sharpest contraction in modern U.S. history. In comparison, real GDP fell by less than 9% annualized in 2008 during the Great Recession and took several years to recover. Following the initial COVID-19 shutdowns, GDP has been recovering quickly as economic activity resumes, and is projected to return to its pre-pandemic level later this year.

Alongside the broader economic contraction were massive job losses: nonfarm employment initially dropped by 20.5 million in the early stages of the pandemic. Following this unprecedented decline, employment increased sharply in May of last year, but since then, the recovery has slowed with current employment far below pre-pandemic levels. Some cities and states have been affected more than others depending on local economic factors. As such, current unemployment rates vary widely across the country, ranging from less than 3% to more than 10%.

To find the locations with the most economic growth in 2021, researchers at Stessa analyzed data from the Bureau of Labor Statistics, the U.S. Census Bureau, and Redfin, creating a composite score based on the following factors:

-Percentage change in total employment from January to May 2021

-Unemployment rate from May 2021

-Average monthly building permits per capita (averaged over January to May 2021)

-Average monthly home sales per capita (averaged over January to May 2021)

Based on these metrics, Utah and Florida are the two states with the most economic growth this year. Both states saw employment grow by 1.5% from January to May and have lower than average unemployment rates (at 2.7% and 5.0%, respectively). At a time when housing is in short supply across much of the country, new residential construction is booming in these states, with 107 and 79 average monthly building permits per 100,000 residents, respectively, far above the national rate of 43.

At the opposite end of the spectrum, Louisiana and Alaska reported the least economic growth so far this year. Louisiana employment actually decreased slightly from January to May while employment in Alaska increased only marginally. Both states have higher than average unemployment rates and lower than average residential construction and home sales per capita.

To find the metropolitan areas with the most economic growth, Stessa ranked metros using the same composite score. To improve relevance, only metropolitan areas with at least 100,000 people were included in the analysis. Additionally, metro areas were grouped based on population size.

Here are the large U.S. metros experiencing the most economic growth in 2021.

Metro Rank   Composite score   Percentage change in total employment   Unemployment rate  Average monthly building permits per 100,000 residents  Average monthly home sales per 100,000

 
Nashville-Davidson–Murfreesboro–Franklin, TN    1     78.9     1.1% 3.9% 132 174
Raleigh-Cary, NC    2     78.6     1.0% 3.8% 136 168
Austin-Round Rock-Georgetown, TX    3     77.9     1.3% 4.2% 207 138
Jacksonville, FL    4     75.0     0.8% 4.2% 127 191
Orlando-Kissimmee-Sanford, FL    5     74.7     2.8% 5.4% 84 173
Oklahoma City, OK    6     73.0     1.3% 3.6% 55 139
Minneapolis-St. Paul-Bloomington, MN-WI    7     71.4     1.7% 3.8% 57 122
Tampa-St. Petersburg-Clearwater, FL    8     70.4     1.0% 4.6% 75 193
Salt Lake City, UT    9     69.9     1.1% 2.8% 78 107
Atlanta-Sandy Springs-Alpharetta, GA    10     68.9     1.1% 3.9% 55 153
Denver-Aurora-Lakewood, CO    11     65.3     1.6% 5.9% 77 156
Las Vegas-Henderson-Paradise, NV    12     64.7     3.1% 8.9% 63 181
Portland-Vancouver-Hillsboro, OR-WA    13     64.6     2.6% 5.3% 51 133
Phoenix-Mesa-Chandler, AZ    14     64.4     1.3% 6.2% 88 173
Charlotte-Concord-Gastonia, NC-SC    15     63.6     0.4% 4.3% 83 152
United States    –     N/A     1.5% 5.8% 43 165

 

For more information, a detailed methodology, and complete results, you can find the original report on Stessa’s website: https://www.stessa.com/blog/cities-with-most-economic-growth/

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Customer Preferences Are Constantly Changing — You Can Either Listen or Get Left Behind

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Today’s consumers demand more from brands on every level. Millennials and Generation Zers have entered the driver’s seat with a combined $3 trillion in purchasing power, according to YPulse, and they have made their expectations clear.

Offering products at competitive prices is no longer enough — you must also provide a top-tier customer experience. That means creating open lines of communication with consumers, listening to their feedback, and offering products that anticipate their needs.

Customer experience becomes especially crucial during times of crisis, such as the ongoing coronavirus pandemic. This experience is reflected in the values that consumers want companies to hold, such as a move toward more natural, sustainable materials and processes. Companies that empathize with consumers and show compassion by reflecting these values in their manufacturing and logistics can stand out from the pack.

General Motors Co., for example, created and filled a new C-suite position for sustainability earlier this year to show its values to manufacturing partners and customers. When the coronavirus began to spread throughout the country, the company started creating ventilators to help people suffering from the worst cases of COVID-19. This appeals to consumers, as 53% believe brands should get involved in social issues that don’t impact their businesses.

There are countless ways to interact with your audience and gather insights into their preferences, ranging from social media posts to online reviews and email surveys. However, a shockingly low number of companies engage in these beneficial activities. According to a 2019 HubSpot study, 42% of companies say they do not collect feedback from their customers.

Creating products and services without listening to customers is a risky move. A great example of a company making this mistake came in 1985, when Coca-Cola changed its formula for the first time in 99 years. The company had gradually lost market share to Pepsi, so its leaders tried to make a splash with New Coke, which tasted more like Pepsi. Coke’s loyal consumers were blindsided by the change, however. They loved the taste of classic Coca-Cola and refused to embrace the new offering. Sales plummeted, and Coca-Cola reverted to its tried-and-true formula a few months later.

Microsoft made a similar blunder in 2012 with the release of Windows 8. Fresh from the failure of Windows Vista, the company decided to change the look and feel of its operating system completely to resemble Apple’s user interface. The decision backfired. Windows 8 released to poor reviews, and fewer consumers adopted it than Windows Vista. Since then, Microsoft has returned to its traditional look. 

Companies like Coca-Cola and Microsoft can afford to make big mistakes. But for most small and midsize organizations, these missteps can have detrimental consequences.

Follow these tips to ensure your operation remains on par with customer preferences:

1. Leverage CRM technology.

Manually tracking customer feedback is a fool’s errand. There are simply too many simultaneous conversations occurring across a multitude of venues. Instead, companies should use customer relationship management (CRM) software to track their interactions with current and potential consumers and to aggregate customer insights into a centralized location.

I took this exact approach while at my previous company, Schmidt’s Naturals. I was able to read customer reviews and communicate with users more efficiently. This helped us discover that customers wanted a new form of our product, which we delivered.

Most CRM platforms offer mobile access, which has been shown to improve productivity and make it easier to maintain open communication with customers. In light of the ongoing pandemic, some CRM vendors have stepped up to help struggling businesses. For example, Salesforce has gone above and beyond by offering free solutions to help companies communicate with customers during these uncertain times.

2. Reply early and often.

According to HubSpot research, a majority of consumers expect companies to reply to their messages in 10 minutes or less. To meet this expectation, devote team members to monitor your CRM system and social media accounts for questions and comments — and respond to them quickly.

You’ll also want to pay attention to comments on your social media ads, which are easy to overlook. Even if a question seems like a no-brainer, answer it. Chances are, several other customers are wondering the same thing.

Artificial intelligence and chatbots can be useful in this area. Many companies use these technologies on their websites and social media pages to help them interact with consumers, answer simple questions, provide product recommendations, and even facilitate transactions.

Yelp has done this well during the pandemic by offering updated services that allow restaurants and businesses to communicate more easily with their customers. For example, Yelp has added banner alerts to each restaurant’s page to display relevant information in a prominent spot.

3. Make authentic connections.

According to Quick Sprout, consumers are less likely to shop around and more likely to recommend you to friends if they feel an authentic connection to your brand. Chatbots might be able to handle the bulk of your customer interactions, but that doesn’t mean you should become overly reliant on the technology. Research from Sitel Group suggests that 70% of consumers would rather interact with a real person than a chatbot, so you’ll want to balance your use of AI with an authentic human touch.

Zappos is a shining example of a company that interacts authentically with consumers online. The shoe retailer’s social media team routinely — and cheerfully — replies to the majority of comments it receives, with team members signing each message with their initials. Even as Zappos transitions employees to work from home, it’s still focused on “WOWing” customers, vendors, and employees. During trying times, brands must adhere to the core values that have always driven them.

Customer preferences are always changing, and they fully expect the companies they support to keep up with them. This has never been truer than during a global crisis like the coronavirus pandemic. To innovate and stay relevant, you must continually check in with customers, monitor their online conversations, and offer a tailored experience that shows you’re listening.

Modern consumers don’t just buy products — they invest in brands. They care about purpose, transparency, and authenticity. If your company does not deliver those three essential elements, it will not survive.

________________________________________________________________

Michael Cammarata is the president and CEO of Neptune Wellness Solutions, an innovative wellness company based in Quebec offering high-quality, environmentally friendly, natural alternative products. He also co-founded Schmidt’s Naturals, a fast-growing wellness brand that was acquired by Unilever in 2017.

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TOURISM IS THE QUIET HERO OF TRADE

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International travelers drop big bucks in the United States

International travelers check in to their accommodations, they ride local transportation, they sightsee, they eat, and they shop. All that wonderful cross-border spending counts as an export in international trade.

Although the United States doesn’t hold the top spot in global tourism (France was most visited in 2018), its popularity still drives some 80 million visitors each year who spend more here than in any other country. In 2018, tourism brought in $256.1 billion in international travel receipts, driving 2.8 percent of U.S. GDP and supporting 7.8 million jobs in the United States.

The top five spenders on visits to the United States were China ($34.6 billion in U.S. travel spending), Canada ($27.2 billion), Mexico ($20.9 billion), followed by Japan and the United Kingdom.

Travel delivers 10% US exports

1.4 billion people are on the move

For the United States, tourism is a really important component of our trade portfolio, accounting for 31 percent of total services exports and 10 percent of all U.S. exports.

We are not alone. Globally, tourism is growing faster than global economic growth overall and is the third-largest sector in international trade. Some 1.4 billion people are on the move in the world as travel continues to grow year on year.

Is the U.S. losing global tourism market share?

Global travel exports were worth $1.7 trillion in 2018. The United States captured 15.7 percent of the total. But even as global travel is expanding, U.S. tourism growth is showing signs of slowing. France, the United Kingdom and Italy are traditional rivals, but the United Arab Emirates, Turkey, Egypt, Thailand and China are also garnering significant market share.

Aside from spending, another measure of competitiveness is the number of international visits annually. Total visits to the United States remained strong due to travel within North America, but the United States’ share of long-haul visits dropped from 13.7 percent in 2015 to 11.7 percent in 2018. Notably, visitors from Japan, South Korea, and China all fell in 2018.

While visits to the United States between 2015 and 2017 rose just 0.5 percent, the United Arab Emirates saw 20.1 percent growth, Canada experienced 19 percent growth, Australia 21.5 percent, India 24 percent, Thailand 14.1 percent and China 13.6 percent.

Travel is #2 export

Tourism and travel is so important to the economies of many countries that the OECD is working to develop a set of indicators to measure the competitiveness of destinations – how they optimize accessibility and attractiveness, deliver quality services, and gain market share while promoting efficient and sustainable use of tourism resources.

Road warriors are helping to grow trade

The tourism and travel sector isn’t strictly about the visitors who come to stroll through Istanbul’s bustling Grand Bazaar, New York’s Central Park or Beijing’s Forbidden City.

The World Travel & Tourism Council (WTTC) says business travel has a notable impact on wider trade flows. The road warriors who hop the long-haul flights to land a sale, keep existing customers, develop business partnerships, and enter into research and development deals generate travel revenue but also generate incremental trade over subsequent years through their business dealings, which in turn spur more business travel.

WTTC cites analysis by Oxford Economics estimating that business travel supported around a quarter of the growth in international trade within the Asia-Pacific region in the heady decade between 2003 and 2013.

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Trade in global goodwill

Brand USA will not grow out of style anytime soon. The United States will remain a top destination for tourists and business travelers alike. The National Trade and Tourism Office projects annual international visits to the United States for personal and business reasons will grow to 95.5 million by 2023.

For the United States and the global economy, tourism and travel are the unsung heroes of the international trade story and not only for the billions in goods and services travelers buy directly and support indirectly. When we think about all the many forms of voluntary exchange, tourism and travel are at the top of the list for those that promote trade in international understanding and global goodwill.

 

 

Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

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How Has the Trade War Affected China?

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In the last two weeks the stakes in the ongoing trade conflict between the United States and China have increased significantly. After negotiations stalled in July, President Trump expanded his tariff targets to cover nearly all imports from China. But the weapons in this conflict have become increasingly more sophisticated. Beijing retaliated by suspending purchases of U.S. agricultural products and by lowering the value of its currency to make Chinese goods less expensive abroad. In response, the U.S. Treasury named China a currency manipulator and vowed to take actions to eliminate the alleged unfair competitive advantage. In addition, President Trump announced that the United States is not going to do any business with China’s tech giant Huawei. 

While these escalations have recently uneased investors and rattled the markets, they have yet to make an obvious impact on the U.S. economy, albeit U.S. farmers have begun to experience the negative effects of lost sales to China. But how have these actions resonated in China? There are some indicators that the trade war has had an impact on the Chinese economy, as well as public perception in that country. 

At the moment, the U.S. can claim a short term victory, although China appears to be playing the long game. Official reports indicate that Chinese economic growth has decelerated to its slowest pace since 1992, as businesses have held back on investment in light of the ongoing trade tensions with the United States. Also, Chinese exports to the U.S. declined by $5.6 billion in June, versus a $1.8 billion decrease in U.S. exports to China. 

The Trump administration has claimed that its trade policy seeks to remedy problems which have been neglected for too long, and to defend America’s economic interests against perceived abuses by its trade partners. The administration has introduced tariffs as a means to address alleged intellectual property violations by China and a growing trade deficit. Its trade policy takes into account that some pain will need to be absorbed by the United States. However, it is not evident that the U.S. consumer has suffered yet. U.S. importers have to pay the tariffs, and so far many have sough ways to absorb them in whole or in part to minimize any price increases for the consumer. They have also begun to shift sourcing to third countries, including bringing some production to the United States. 

Concurrently, Beijing has implemented a robust domestic stimulus by encouraging banks to relax controls on borrowing and by cutting 2 trillion yuan ($291 billion) in taxes. Furthermore, investment in infrastructure has increased in the first half of the year and Chinese factory output rose 6.3% in June from a year earlier, compared with 5.3% in May. Also, by letting the value of the yuan fall and making Chinese goods cheaper, China has in effect offset some of the impact of the U.S. tariffs – essentially giving the U.S. consumer a tax cut.

The efforts by the Chinese government to lower domestic taxes and support an easier fiscal policy appear to have been, at least temporarily, beneficial to economic growth. If these actions are to be expanded, they may continue to serve as a further stimulus in the second half of this year in areas such as consumption and investment. Although Chinese shipments to the United States have declined, they comprise only about a fifth of its overall exports. By allowing the yuan to fall, China can boost its sales to other countries to offset declines to the United States. 

The trade conflict also does not appear to have had a negative impact on the mindset of the Chinese population at large. Skilled workers and professionals have expressed an open mind to the ongoing trade negotiations, some even welcoming them with a sentiment that “Trump is good for Chinese people” because he has opened up the dialogue between the two countries on trade which in turn has fostered certain welcome reforms in China, as well as tax cuts. Indeed, if Beijing had already planned to institute such measures, then U.S. policy may have provided ample cover for them.

The trade war has also led China to reevaluate existing global alliances, such as those with Japan and Russia. Mending fences with Russia, for instance, is key to the continuation of China’s ambitious “Belt and Road Initiative” of investment and infrastructure projects to connect Asia with Africa and Europe via land and maritime networks. 

With further entrenchment by both sides, and a trade deal increasingly unlikely before next year’s U.S. presidential elections, China appears to be bracing itself for a protracted conflict and may have reason to believe it can “win” if President Trump faces increased political pressures entering the election. As the President recently announced, China may be counting on a Democrat to win the White House to strike a new trade deal. On the other hand, a continuing conflict between two of the world’s greatest economies which has evolved from measures to address intellectual property protection and trade imbalances to currency manipulation, may in the long run lead to recession and hurt growth globally. 

Mark Ludwikowski is the leader of the International Trade practice of Clark Hill, PLC and is resident in the firm’s Washington D.C. office. He can be reached at 202-640-6680 and mludwikowski@ClarkHill.com

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What to Expect from Sub-Saharan Africa Economy in 2019

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The IMF economic outlook presents a picture of what to expect from each economy or region annually. For Sub-Saharan Africa (SSA) in 2019, a GDP growth rate of 3.4 percent is projected at the aggregate level; a slight improvement over the 2.9 percent actual growth rate of 2018. Poor performance in the three big economies (Angola, Nigeria and South Africa) continues to weigh down the overall economic position of the region. Thus, when excluded, the growth projection for the rest of SSA rises above 5 percent since eighteen out of forty-five countries are anticipated to grow at five percent or higher in 2019. Over the last few years, countries like Cote d’Ivoire, Ethiopia, Rwanda, Ghana, and Tanzania have consistently exceeded the region’s average GDP growth rate.
Sub-Saharan Africa has continued to recover from the commodities market crash that brought its GDP growth rate down to 1.4 percent in 2016; its lowest level in decades. This growth pattern is influenced by a combination of factors which include improved global economy, increased public investment, strong agricultural production, relatively stable political environment across the continent and more. Improvements in policy frameworks and economic reforms also played an important role in the progress recorded. World Bank Doing Business 2019 reported that one out of three of all business regulatory improvements captured between June 2017 and May 2018 were in SSA. Sub-Saharan Africa has been the region with the highest number of reforms every year in the last seven years.
Although the Doing Business annual report is not the only measure of a country’s competitiveness since it is limited in scope and does not take into account other key market determinants such as market size, macroeconomic conditions, foreign investment, security and political stability. However, it provides valuable information to market players about government’s willingness and efforts to create a conducive marketplace for business.
The private sector, especially the service industry, is the largest beneficiary of the improved business environment contributing more than half of the region’s economic output. The service sector has played a more prominent role with an average growth rate of more than six percent over the last ten years. The region’s growth trend is expected to continue at least in the short and medium term. It is estimated that Africa will have over 160 million people in the middle class by 2030. Transition to middle class will be powered by a huge base of young and working age population which is growing at the rate of 1.7 million per month according to the IFC. Africa offers enormous business and investment opportunities in many sectors including transportation, information and communication technology (ICT), housing and education.
While the region has returned to a path of economic growth, certain conditions can threaten the realization of those projections on the long term – slow growth rate, high debt levels and upcoming elections. The current aggregate GDP growth rate is not strong enough to absorb any sudden economic shock or deliver rapid economic transformation across the continent. Escalating debt levels is very concerning as they pose serious risks to the region. Also, critical elections to watch include Nigeria, Senegal, Mozambique, South Africa, Botswana, Malawi and Namibia. Political situation in SSA has been relatively stable but fragile. Power shifts sometimes come with policy reversals; this can erode investors’ confidence in the market and adversely affect economic growth. Nevertheless, Africa remains a key destination for growth and market expansion.

Top African Economic Performers of 2018-2019

Table: Brookings Institute

Kemi Arosanyin is an International Trade Development Specialist and Director, Africa Trade Expansion Program at the World Trade Center Miami. She writes, speaks, and advises on trade and investment in sub-Saharan Africa.

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Why Businesses Must Grasp Millennial Thinking Or Face Economic Calamity

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When it comes to shopping and buying, the Millennial generation appears to play by its own rules.

And businesses that fail to understand the Millennial mindset are destined to fall behind their competition – and perhaps plummet into irrelevancy, says Gui Costin (www.guicostin.com), an entrepreneur, consultant and author of Millennials Are Not Aliens.

“Millennials are changing how we buy, how we sell, how we vacation, how we invest, and just about everything else,” Costin says. “If you’re running a business, you have to pay attention to how they think and act.”

Millennials are the generation born roughly from 1981 to 1995, meaning that the older millennials aren’t that far from 40. There are about 80 million Millennials, or nearly one-third of the adult population in the U.S. – and that’s a lot of buying power.

Millennials grew up under very different circumstances than Baby Boomers and Generation X, though, and the way in which they came of age greatly influenced them.

One example is their relationship with technology.

“All of us, regardless of which generation we belong to, have been impacted by technology,” Costin says. “But the generation most affected by the digital, connected world are the Millennials. You could think of it this way: If technology were a geyser, Baby Boomers and Generation Xers have been sprayed by its impact, but Millennials got drenched.”

And their natural use of technology transformed the way they act as consumers, Costin says.

“Bargaining is a part of their process,” he says. “Because they are facile with technology, they rely heavily on their cell phones to price shop and hunt the best deals.”

Costin says there’s plenty that businesses need to understand about Millennials, but here are just a few other facts about their consumer habits worth paying attention to:

They let everyone know about their buying experiences. It is not uncommon for Millennials to candidly share details about their buying experiences, good or bad, on their public social media platforms. “This can translate to bad news for businesses that underperform or, conversely, great news for those that exceed expectations,” Costin says.

Big purchases can happen virtually. For many older people, it’s difficult to even conceive the idea of buying a car, for example, without ever physically seeing or touching it first. “Millennials do it all the time,” Costin says. “In fact, they are the very first of all the generations to make a large purchase without first performing an on-site inspection.”

Brand loyalty means something. No matter how fickle many people believe Millennials to be, they are extremely brand loyal, Costin says. In fact, 60 percent of Millennials say they almost always stick to brands they currently purchase.

Information is essential. Millennials scour the internet to learn about a brand or product before making a purchase. They check websites, blogs, or peer reviews that they trust.

Instant gratification is paramount. Because they have grown up in a digital age, Millennials are used to speed and immediate gratification. “They value prompt feedback and communication and do not like wasting time,” Costin says. “Think emails, text messages, and online messaging.”

“The environment you grow up in determines what you become accustomed to,” Costin says. “Gen Xers and Baby Boomers need to realize that how they grew up is affecting the way they are selling and marketing their organizations. But you cannot sell and market to Millennials the same way you were sold and marketed to.

“The good news is, many companies are listening. They are actively replacing dated, manual processes with more efficient, cutting-edge tools to promote the convenience and speed Millennials crave.”

About Gui Costin

Gui Costin (www.guicostin.com), author of Millennials Are Not Aliens, is an entrepreneur, and founder of Dakota, a company that sells and markets institutional investment strategies. Dakota is also the creator of two software products: Draft, a database that contains a highly curated group of qualified institutional investors; and Stage, a content platform built for institutional due diligence analysts where they can learn an in-depth amount about a variety of investment strategies without having to initially talk to someone. Dakota’s mission is to level the playing field for boutique investment managers so they can compete with bigger, more well-resourced investment firms.