Thought Starters: the outlook for the global and the Chinese economy, India’s middle class, the growing importance of migration and publishing in the digital age

Thought Starters provides me with a chance to look through articles, research and opinion pieces, highlighting interesting trends, developments and changes in the world you and I live in. This edition looks at forecasts for the year ahead, China’s economy and India’s middle class, migration’s growing role in contemporary societies, publishing in the digital age and lots more.

The Economist has published its forecast for the global economy which sees a further shift in momentum from emerging to developed markets, although India, China and Indonesia are seen as top performers:

Emerging markets losing their grips

Malcolm Scott takes a closer look at the slowdown in China’s economy, suggesting that it’s not nearly as significant as some of the more vociferous critics are suggesting:

China's slowdown in context

India as The Economist’s figures above suggest, is one of the powerhouses of the global economy and the country’s growing middle class is seen as providing enormous opportunities for local and international brands. The problem is there are wide variations in estimates of India’s middle class depending on the spending power you apportion to the Indian rupee as the Research Unit for Political Economy shows:

Some estimates of India's middle class

The Wall Street Journal in its profile of demographic trends has taken a closer look at the globe’s growing migrant population. Kim Mackrael and Charles Forelle in their broader analysis of immigration contrast Canada’s more assimilationist and economically driven policies with those of Europe. Whilst I’d argue that Europe is currently in a very different position to Canada due to its proximity to Syria, it does provide some valuable pointers as the continent faces an ageing population:

A growing migrant pool

Angus Hervey provides an important reminder that for many important human development indicators things are on the up (although this is certainly no argument for complacency). Among the indicators he points to are reductions in poverty, malnutrition, polio, infant mortality and AIDS deaths and improvements in universal education, internet access and financial inclusion:

Global poverty has reached a record low

Felix Salmon looks at the maturing of the fintech sector as it  focuses on providing tangible improvements on services offered rather than rhetoric about turning the financial sector upside down:

The problems such fintech companies are trying to solve aren’t the type that can be tackled by a few hyperactive coders in a garage. Rather, they require dozens of different skillsets, not to mention the ability to manage them all. In that sense, the startups are becoming much more like the banks they’re seeking to disrupt. That’s Lunn’s Great Convergence. No one believes the banks are going to solve these problems. The trillion-dollar question is, can the fintech companies do something important and socially useful before they, like the banks, become bogged down in regulation and bureaucracy.

Om Malik reports on how the movement towards a software enabled world has moved a lot of business categories into a winner takes all market (eg Amazon, Uber, Google). It’s also worth adding that innovations in technology and business strategy can see even these advantages quickly fall over time if management aren’t vigilant:

This loop of algorithms, infrastructure, and data is potent. Add what are called network effects to the mix, and you start to see virtual monopolies emerge almost overnight. A network effect occurs when the value of a product or service goes up with the number of people using it. The Ethernet inventor Bob Metcalfe called it Metcalfe’s Law. Telephone services, eBay, and Skype are good examples of the network effects at work. The more people who are on Skype, the more people you can call, and thus the more likely it is that someone will join.

While physical book sales in the US are on the up according to Nielsen BookScan figures, ebooks are heading in the opposite direction with a consolidation around the Kindle and Kobo platforms according to Michael Kozlowski’s report:

In a few short years most digital bookstores will be out of business and Amazon and Kobo will likely be the only players left standing.  The only digital bookstores that will survive will be companies offering both hardware/software solutions to encapsulate people into their walled gardens.  The destruction of the digital book market has already been set in motion and nothing will stop from the industry from collapsing.

In 2013 Amazon created a media storm by announcing they were working on drone delivery with commentators debating whether this was a real story or a public relations stunt. Two years on and the pathway to drone delivery looks clearer. Dan Wang looks at where drone logistics have proven successful and where we’re likely to see it make real inroads in the near future:

Amazon Drones vs Current Delivery Options

As we start a new year we’re seeing various commentators giving their prognosis for the year ahead. Fred Wilson and Bob O’Donnell make good starting points.

Finally, it’s worth watching Extra Credit’s review of China’s Sesame Credit which has seen the Chinese Government collaborate with Tencent and Alibaba on gamifying good behaviour by Chinese citizens. A case of Nudge theory heading in a distinctly dystopian direction:

The featured image is an INTI mural from the Artesano Project in Nagua, Dominican Republic.

Thought Starters: Facebook grows, software as the new oil and the music industry evolves

The following is a look through articles, research and opinion pieces highlighting interesting trends, developments and changes in the world you and I live in, with an emphasis on technology.

Facebook’s release of quarterly financials point to strong growth in mobile users and video although costs grew at as faster rate than revenue. This seen a reshuffling of the S&P 500 in the US with the social networking overtaking a still healthy General Electric and Amazon.

Biggest S&P 500 Companies by Market Cap

Venture capitalist Fred Wilson points to software as taking the place of oil in securing a disproportionate share of the global economy’s economic surplus going forward:

“Companies that control the software infrastructure of the information revolution will sit back and collect the economic surplus of the information revolution and that will be a path to vast wealth and economic power. It has already happened but I think we are just beginning to see the operating leverage of these software based business models.”

We’ve seen a growing number of startups pass the $1bn valuation mark in recent years but a much smaller number have chosen to expose themselves to closer scrutiny and take themselves public. One of the enablers of this has been the availability of venture capital which is looking more and more like traditional debt financing:

“This is hardly an equity instrument at all,” says Altman. “Investors are buying debt but dressing it up close enough to equity to maintain their venture capital fund exemption status. In a world of 0 percent interest rates, people become pretty focused on finding new sources for fixed income.”

Consumers’ media consumption habits are inevitably changing when faced with a growing array of choices. Traditional television channels have up until recently managed to hold its own but Liam Boluk’s analysis points a substantial drop in viewing habits among younger consumers in the US:

Change in Time Spent Watching Television in the US

Content marketing appeared to provide an obvious choice for many brands looking to engage with their audiences providing relevant content in return for consumers’ attention. As Greg Satell points out, it’s not quite that easy as a growing glut of content is making it harder for companies to get their brand noticed unless your content really stands out:

“Yet despite these scattered successes, there is mounting evidence that most marketers’ content efforts are failing.  The Content Marketing Institute reports that although the majority of B2B and B2C marketers have some kind of content marketing program, less than 40% find those efforts effective.  Clearly, things need to improve.”

Songkick’s Ian Hogarth points to the convergence of radio, on-demand music and concert ticketing as reshaping the music industry, with data enabling musicians to foster a closer connections with their audiences:

“The integration of these three, previously distinct industries will produce a richer experience for artists and fans, unlock a ton of additional subscription, ticketing and advertising revenue for artists and create a better experience for fans. It will resolve the central tension between fans, artists and technology companies that so much ink has been spilled about.”

David Pakman argues strongly that as the automotive sector evolves with the introduction of electrification, software and data, traditional manufacturers will be poorly placed to fend off competition from new entrants:

“I am confident many of the existing automotive companies will produce cars with autonomous features. And some of them will be quite good. And eventually they will produce some fully autonomous electric cars too. In the meantime, there are many super-strong, thoughtful entrepreneurs with lots of incredible hardware and software experience working to fundamentally redefine what consumers should expect from cars.”

Chrissie Giles provides a fascinating look at Britain’s changing relationship with alcohol as the industry adapted to changing societal norms and trends which saw UK reach ‘peak booze’ in 2004:

“As the new century began, alcohol was easier to access, cheaper to buy and more enthusiastically marketed than it had been for decades. By 2004, Brits were drinking well over twice as much as they had been half a century earlier. The nation stood atop Peak Booze, and my generation was drinking the most.”

There’s a general expectation that we should see health statistics improve over time with advancements in healthcare seeing many problems either addressed or mitigated.  So it’s rather shocking to see research from Anne Case and Angus Deaton point to growing mortality among non-hispanic middle aged males in the US:

America's middle-aged mortality

The featured image is by Argentinean artist Pastel in Playa del Carmen, México published in StreetArtNews.