Archive for November, 2010
China’s innovation progress, including its new supercomputer, the world’s fastest, is a benefit—not a threat—to the U.S. Pro or con?
Pro: A We-Are-the-World Breakthrough
by Henry Chesbrough, Haas School of Business, UC Berkeley
The advent of China’s lightning-fast supercomputer demonstrates that Chinese scientists and engineers are taking their place on the world stage, and that the country will be an increasingly important source of new ideas and technology for many years to come.
This is good news. China’s success does not come at our expense. The creation of knowledge is not a zero-sum game. New discoveries in one place lead to other discoveries in other places, and we all benefit as a result. More investment in science and technology in China could lead to new breakthroughs in the U.S. in creating new materials, treating diseases, and developing more energy-efficient products and cleaner energy technologies.
But the biggest opportunity for the U.S. comes from how we respond to the growing technological capability of China. In a word, our response needs to be “open.” Many of my students are from China, and they are as hard-working and entrepreneurial as my students from Silicon Valley. They are eager to work for leading companies around the globe. And they will move from one company to another if they see a better opportunity. So it behooves U.S. companies to create those opportunities. It is also wise for U.S. firms to increase their activities in China, which is already the world’s second-largest economy and will likely be the largest fairly soon. Read More
Con: Spotlight on U.S. Vulnerability
by John Kao, Institute for Large Scale Innovation
I surprise myself by occupying the con side of this debate since in general I believe a world richer in innovation capacity is a better and potentially more peaceful world.
I also believe that China’s time has come in humanity’s race to the innovation high ground. The benefits of peace for a country that has seen precious little of it, and the visible gains that have resulted in terms of social and economic development, are rewards richly deserved and merit applause.
At the same time, I worry about America’s loss of leadership in strategic industries—alternative energy, materials science, and now supercomputing. In particular, I am concerned from a national security perspective about the destabilizing effect of massive new waves of innovation that we don’t control or in some cases don’t even understand.
If history holds any lessons for us, it is that great powers rise and fall. And the subtext of these transitions often translates into object lessons in the dangers of incumbency and the disruptive power of innovation. Genghis Khan and the Mongols prevailed militarily because of the stirrup. Britain applied lessons learned from the Industrial Revolution to the organization of war. And we are fresh from an American century inextricably woven together with the Atomic Age and the kind of cyberwarfare enabled by digital technology. Each wave of innovation rode its own wave of economic surplus and societal momentum.
Now it may be China’s turn. Read More
Source: Henry Chesbrough and John Kao, Bloomberg BusinessWeek, The Debate Room,
Entrepreneurs running sophisticated companies with the potential to create millions of jobs in the developing world are often overlooked by outsiders, say Deirdre Coyle Jr. and Anne Habiby
Phanindra Sama will tell you the reason he became an entrepreneur is that he missed a bus. In 2005, he was trying to get from Bangalore to his hometown of Nizamabad for Diwali, the annual Hindu festival of lights. But tickets, available only at the bus station, had sold out before he could buy one.
That inspired Sama, then an engineer designing digital chips for Texas Instruments (TXN), to create redBus, a website and a network of kiosks, newsstands, and small retailers where customers can see schedules and buy tickets for thousands of bus routes across India. RedBus, which sold 1.8 million tickets in 2009, now has more than 200 employees and is heading toward sales of $30 million this year from commissions and fees paid by bus lines. “The operators had never used any technology of any kind,” says Sama, 30. “We demonstrated how [we] could help them grow their business.”
Young, dynamic entrepreneurs like Sama are showing up all over the emerging world, building companies that could create new industries—and millions of jobs. But fast-growing developing-world companies like Sama’s often stall out because few outsiders know they exist. And their markets offer little in the way of entrepreneurial infrastructure such as venture capital firms eager to invest, small business banking services, and targeted government programs such as loan guarantees. Hoping to identify the most dynamic businesses in the developing world and raise their profile, we teamed up with Harvard management professor Michael E. Porter to found AllWorld Network. We have surveyed 300 fast-growth companies from Africa, the Middle East, and South Asia.
Source: Deirdre Coyle Jr. and Anne Habiby, Bloomberg BusinessWeek, Special Report, November 17, 2010
A mine in Mountain Pass, Calif., was once the world’s leading producer of so-called rare earth minerals, which are used in everything from missile systems to electric cars. But the mining was stopped in 2002 after a leak of radioactive fluid. China’s lower-cost operations, technical superiority and lax environmental rules propelled it to become the dominant producer, and today it accounts for 95 percent of the world’s supply.
But China’s recent embargo on shipments on the crucial minerals to the United States, Europe and Japan raised new concerns about Beijing’s monopoly, and added urgency to efforts by other countries to develop their own source of the minerals, for which demand is growing.
Molycorp Minerals, the operator of the Mountain Pass site, wants to reopen the mine with higher safety and environmental standards. In Australia, a mining company, Lynas Corporation, hopes to begin small-scale production at a rich deposit in the middle of the country, though technical issues remain.
But even if the U.S. and other countries can find and unearth the elements, do they have the technical expertise to compete with China in their processing? Is the domestic production of rare earth elements essential to American economic and national security interests?
Source: The Opinion Pages, New York Times, November 9, 2010
Like so many young entrepreneurs, Stanford University grads Amit Aharoni and Nicolas Meunier had an idea for a business: a website to help Americans find deals for cruise-ship vacations. Unlike many other entrepreneurs, though, they didn’t launch their company in Silicon Valley, opting instead to go nearly 6,000 miles south, to Santiago, Chile.
Aharoni, a 30-year-old MBA who spent nine years in the Israeli Defense Forces, and Meunier, 25, a programmer from France with a masters in electrical engineering, are the first participants in Start-Up Chile, a government program to woo foreign entrepreneurs. The goal is to put Chile on the map as an innovation hub. “We wouldn’t have come to Chile if it hadn’t been for the program,” says Aharoni. “It’s not something that you might consider naturally.”
Start-Up Chile is trying to tackle what President Sebastián Piñera calls an obstacle to growth: a dearth of entrepreneurs. Shortly after taking office in March, the billionaire, who made his fortune introducing credit cards to the country, pledged to add 100,000 businesses and 800,000 jobs by 2014. In a July speech, Piñera said Chile needs to look outside its borders and “work hard to regain its entrepreneurial and innovative culture.”
Nicolas Shea, a Chilean who had been running an e-learning company in Silicon Valley, moved back to Santiago to help run Start-Up Chile. The program will have a budget of $1 million this year and $5 million in 2011. More than 150 people, with ideas ranging from software to solar panels to gadgets that use radio-frequency identification technology, have applied to the program. Those who make the cut will receive a $40,000 grant, a one-year residency visa, and hand-holding from the program’s seven-person team to ensure participants settle in quickly and make connections with potential hires and investors. Read More
Source: N. Leiber, Bloomberg BusinessWeek, October 21, 2010
Although India has a long tradition of philanthropy, giving on a large scale has only recently become common among wealthy Indians and Indian corporations, the Washington Post reports.
Wealthy families in India have long supported the construction of wells and schools in their native villages. Today, however, with the encouragement of American mega-philanthropists like Bill Gates and Warren Buffett, affluent Indians are finding ways to do more for the poor, especially as donor governments such as the United States reduce their foreign aid to developing countries.
According to global consulting firm Bain, Indian billionaires give more to charity than China’s wealthiest businessmen but less than those in developed countries. Moreover, between 2009 and 2010, the number of Indian billionaires nearly doubled, to fifty-two, while half the twenty-five wealthiest Asian billionaires listed in a recent Forbes magazine survey were Indian.
A new report published today by the European Commission shows that more than 330 trade restrictive measures have been taken by the European Union’s major trade partners since the outbreak of the financial and economic crisis in 2008. Despite the economic recovery and contrary to the G20 commitment, a mere ten percent of those measures have been removed in the meantime. Ahead of the G20 summit in Seoul, the European Commission calls on its trading partners to remove the remaining restrictions in order not to undermine the recovery.
EU Trade Commissioner Karel De Gucht said: “With the economic recovery still fragile, the world’s major economies must remove the trade restrictive measures that put a break on growth. For the world economy to move forward, we have to roll back these barriers. The G20 summit in Seoul needs to demonstrate leadership in this respect.”
The latest report is the seventh in a series of reports which the European Commission has been issuing on trade restrictive measures adopted by major trade partners since the beginning of the economic crisis in 2008. The monitoring mechanism has been an important tool to ensure vigilance during the crisis and prevent an escalation of trade protectionism.
The report covers thirty of the EU’s trading partners over the two-year period from October 2008 to September 2010. The measures found range from classical trade barriers such as import bans or tariff increases to “buy national” and other behind-the-border policies. The report finds that many of the new barriers are rapidly becoming permanent features of the world trading system and risk undermining the economic recovery.Read More
Source: Europa, Press Releases, October 25, 2010
E.U. achievements refute critics’ claims of failure – Ambassador Vale de Almeida: EU Is Alive and Well
Writing in the Washington Post this month, Ambassador João Vale de Almeida, Head of the European Union Delegation to the United States, notes that recent economic and foreign policy developments demonstrate that rumors of the European Union’s death are greatly exaggerated. “The union is alive and well, taking strong, decisive action that is having an impact on Europe and the world,” he writes.
I have been the European Union’s ambassador and head of the E.U. Delegation to the United States for not quite two months — not long enough to be completely settled in, but long enough to hear the refrains about European failure on several occasions.
Against the backdrop of some E.U. member states’ fiscal difficulties, commentators have been quick to lump together a series of ailments — rising nationalism, deficits, high unemployment, a declining euro — and declare that the European Union is dying, if not already dead.
There is no glossing over the financial crisis and the severe impact it has had on many European countries, as well as the United States. But to suggest that we are on the brink of collapse is profoundly inaccurate and seriously underestimates the resilience of the 50-year-old European project. In fact, a good-news story is emerging that deserves much more attention than the doomsday headlines of the past six months.
This summer, European leaders agreed on measures to preserve financial stability in Europe, which included a rescue package for Greece, comprehensive financial stabilization mechanisms and the launching of revamped economic governance mechanisms. Critics said we acted too slowly. That is debatable, but the fact remains that our actions had the intended effects.
Greece has undertaken significant reforms to put its finances back on a sustainable path; in return, it has received loans from its European partners and the International Monetary Fund. Other E.U. countries have introduced measures designed to lower their own deficits. The European bank stress tests successfully performed in July have also helped to restore confidence in the financial sector. And last month, we reached an agreement to establish a new framework for financial supervision to help prevent future crises. And the euro proved its worth. Without it, we would most certainly have seen damaging instability in individual countries’ currencies.
Source: By João Vale de Almeida, The Washington Post, Saturday, October 9, 2010