RECESSION!

An issue I expect to remain in the headlines — and one that is monitored continually — is the possibility of an economic recession in the United States, thus generating shockwaves in the world markets.

Recent dips in stock markets — in the US as well as internationally (will Asia be hit hard?) — have increased fears about the instability of the American markets, thanks, in part, to the subprime loan debacle (which I will blog more on soon).

I am not an expert in economic matters, but I think it is easy even for a layperson to say that the near future is not bright for the US economy and world markets. After years of prosperity, negative economic trends may be among us. As the World Economic Forum is held this week in Davos, Switzerland there is certainly a contrast between last year's hope — especially in regards to the rise of Asia — and this year's fear. The bigwigs in Davos are worried, as are market analysts everywhere from New York to Hong Kong.

America dethroned from top tech rank

When it comes to information technology, America is king... right? Everyone from Cisco to Apple to Google to IBM to Microsoft to GE is based in the United States and got their start in the country with the famed Silicon Valley. Hardware, software, ideas — many designed by some of the world's most innovative people — all gravitate towards the world's superpower. For all its political and societal faults, the US is an innovative haven, the dream land for technological entrepreneurs. Yes, at the end of the 20th century Japan was making advances in the robots and other technological industries. But the United States has largely still held the real gold: the products and ideas that have transformed our lives. On the back of an iPod, in fine print: "Designed by Apple in California. Assembled in China." Western European and East Asian nations still lag behind America's technological and innovative supremacy.

Actually, not anymore. According to the World Economic Forum's Global Information Technology Report (summary), the US has dropped from first place in the Networked Readiness Index (ranks) in 2005-2006, to seventh place in the most recent 2006-2007 report. In 2004-2005, the US was at fifth place. The UK's average rank is 10 or so, nine this year; Germany's at 16; China is down nine places to a poor 59. India is also down to 44th place, that's four positions worse than in the previous index. Korea, home to LG and the most integrated broadband Internet infrastructure and usage, ranked 19th. Denmark took first place, and its fellow Nordic countries also did well: Sweden, Finland, Norway, placed second, fourth, and 10th, respectively. All four of the Nordics were up from last year.

BBC News:

The US has lost its position as the world's primary engine of technology innovation, according to a report by the World Economic Forum.

The US is now ranked seventh in the body's league table measuring the impact of technology on the development of nations.

A deterioration of the political and regulatory environment in the US prompted the fall, the report said.
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Countries were judged on technological advancements in general business, the infrastructure available and the extent to which government policy creates a framework necessary for economic development and increased competitiveness.

The Networked Readiness Index, the sixth of its kind published by the World Economic Forum with Insead, the Paris-based business school, scrutinised progress in 122 economies worldwide.

Despite losing its top position, the US still maintained a strong focus on innovation, driven by one of the world's best tertiary education systems and its high degree of co-operation with industry, the report said.

The country's efficient market environment, conducive to the availability of venture capital, and the sophistication of financial markets, was also given recognition.

So, the US still has good colleges and a very stable tech business foundation. The question is: how will that change with EU countries showing signs of diversifying industry and Asian nations moving forward, despite their poor rankings in this report. In addition, what about the seemingly inevitable (at this point) effects of globalization on tech services?

With 3G technology and, a while back, even things as simple as SIM cards, Europe and East Asia were beating the US in mobile phone technology. America is still trying to catch up. The latest computing craze or game console may first hit in the US, but many other technologies are more evolved in other developed countries.

technorati tags: technology, information+technology, news, world+economic+forum, economics, tech, politics, networked+readiness+index, technological+innovation

Inside the WEF's Davos 2007

Some of the worlds most powerful and recognizable figures have been meeting in Davos, Switzerland over this past week discussing everything from climate change to currencies. Davos 2007 is a meeting of the World Economic Forum. At first glance it may just sound like a meeting of economists, albeit at one of the nicest ski resort areas on earth. When one takes a closer look one sees a conference with influence that can measure on a massive scale. The likes of British Prime Minister Tony Blair, rock star/activist Bono, United States' Sen. John McCain, the globally influential Google's Chairman and CEO Eric Schmidt, Microsoft head Bill Gates, US Sen. John Kerry, and German leader Angela Merkel are all in attendance at the WEF meeting, and are joined by non-Western dignitaries such as the Chinese economic minister in addition to Brazil’s re-elected President ‘Lula’ de Silva. I find it amazing how many blogs are talking about Davos, and how many of them are newsblogs not run by individuals, but by news organizations like the BBC, CNN Money, The Economist, The Guardian, Comment is Free, Newsweek, Huffington Post, Financial Times, and the International Herald Tribune, and the New York Times. Le Monde (translated) and the Wall Street Journal have also joined the party. Davos ’07, like the World Economic Forum itself, is obviously elite — which is why there has been opposition to it, just like there is opposition to the G8, WTO, and other governmental and economic conferences.

The World Economic Forum's meeting may now be over, but its reverberations still feel the news atmosphere and international zeitgeist. I said earlier in this post, climate change seems to be a topic on everyone’s mind at Davos. Global warming will have not only a disastrous human and environmental impact, but obviously an economic impact too — as the Stern Review confirmed. If precautions are to be taken against things like greenhouse gasses, it would be better for those precautions to be taken now than later, when they would be even more costly. If I was a political leader in country X, it would be more economically and otherwise effective to work to prevent the effects of human-caused climate change sooner rather than later; the cost — in money and lives — would be all the more higher the longer I wait. That being said I’d look for dampers on global warming sooner rather than later. Let’s say country Y waited 40 years until they took any action their climate change battle. By then the environmental consequences have a massive malevolent potential and the cost of working to save what has been lost by global warming and work against the problem at its core would be more expensive than if that country had done it 40 years prior.

One major story relating to Davos on the climate change front. BBC News:

UK Prime Minister Tony Blair has told the World Economic Forum a major breakthrough on long-term climate change goals could be close.

Germany is taking center stage in the push for moderate globalization and has been a major player in European and world politics lately. Angela Merkel, the center-right German chancellor, has done well at balancing all the different forces of globalization — from human conflict and terrorism to climate change — in her recent agenda. Another international relations topic revealed more at Davos is that the United States is not nearly as ‘all powerful’ as it used to be, at least in regards to global economics. There’s a great IHT opinion piece on the matter.

This year's theme at the World Economic Forum annual meeting here — "the shifting power equation" — confirms the view of many participants that power is draining away from the United States to multiple centers as countries from Brazil to China move beyond "emerging" market status to establish themselves as major players on the world scene.
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Far from some kind of conspiracy of the global elite plotting the future as they whisk down the Alpine slopes, Davos is in fact a back-end barometer of their evolving worldview. It does not break new ground but consolidates opinion. It does not generate new trends but codifies them into conventional wisdom. That is its power and its importance.

There is also hope for (BBC News) what is called the Doha round (The Guardian) of trade talks between the developed and developing nations. The Doha round ended without agreement earlier in 2006 and was seen as a failure of both sides of the developed/developing fringe. Skepticism should still be used for these trade talks, but if Doha does gain progress from the recent push at Davos, one may hope a positive outcome is reached. Some have gone far enough to say 2007 is going to be a ‘good’ year (BBC News) for economies in general. (As you can tell from the abundance of linking to the BBC News site, there is a lot of good Davos news there as well as at the afore-linked blogs and news websites.)


Updated with more links to sites covering Davos '07.

technorati tags: trade, economics, blair, merkel, germany, uinited+states, davos, doha, world, economic, forum, economics, world, news, in+the+news, current, politics, world+trade, globalization, climate+change, global+warming, wef, davos+2007