Nigeria’s GDP Just Doubled on Paper: What It Means in Practice

Harvard Business Review

Earlier this week, Nigeria ascended to the position of Africa’s largest economy following a recalculation of its GDP by the country’s National Bureau of Statistics. The long overdue exercise (the last one was in 1990) nearly doubled the country’s economy pushing GDP up to $510bn from $270bn. Nigeria’s Finance Minister Ngozi Okonjo-Iweala mentioned the “psychological impact” of the announcement on foreign investors.

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3 Emerging Market Risks Companies Should Watch for in 2018

Harvard Business Review

This means that many emerging market risks get cut from the senior leadership agenda. They did not spend as much time thinking about local events that have implications for their emerging market operations. We identified three emerging market risks that are top multinational leaders should be paying more attention to this year: the election of populists in Brazil and Mexico increasing the cost of doing business. Emerging Markets Require a Risk-Reward Balancing Act.

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Debt and the Future of the U.S.

Harvard Business Review

During the financial crisis, the world came to the apparently shocking realization that debt financing entails risks. trillion, roughly 10% of gross domestic product (GDP). Gross public debt is $14 trillion, or over 95% of GDP. On another front, the government is also on the hook for insuring bank deposits (including money market funds at the peak of the crisis), pension liabilities, and a wide range of other loans and liabilities. Cutting costs Economy Government GD

Would You Invest in This Kid?

Harvard Business Review

Investing in innovators simply can't happen in markets with weak property rights. The GDP of China — the world's largest — in most centuries never exceeded $100 billion. was recording its GDP in hundreds of millions of dollars — not billions. patent on July 31, 1790, there was a market for ideas and investing. A new America was born and, as this plot shows , the country GDP began to grow in multiples.

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Fighting Inflation, Ruining Economies

Harvard Business Review

debt was 98% of GDP, its deficit 10% of GDP; Spanish debt was 69% of GDP, its deficit 8.5% of GDP. Finance Minister Domingo Cavallo (himself a Harvard economics Ph.D.) Salinas instituted market reforms lauded by Washington, including the North American Free Trade Agreement. To cover this deficit, Mexico had to borrow 7% of GDP a year. Euphoric foreign financiers, chasing high returns in "emerging markets" and enamored of Salinas, gladly complied.

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Three Reasons the Euro Zone Deal Won't Work

Harvard Business Review

And market participants were initially thrilled. Yields are now beginning to climb for Irish, Spanish, and Italian debt as the markets realize three important details of what was agreed. The unwillingness of the ECB to fulfill these roles telegraphs that Spain and Italy can indeed be forced out of the market once the perception returns that the sovereign cannot effectively guarantee its banking system regardless of any short term recapitalization.

Reinhart, Rogoff, and How the Macroeconomic Sausage Is Made

Harvard Business Review

I couldn''t help but think back to that as controversy erupted this week over Harvard economists Carmen Reinhart and Kenneth Rogoff''s oft-cited three-year-old finding that economic growth plummets when a country''s debt-to-GDP ratio exceeds 90%. growth in countries with debt/GDP of more than 90%, they came up with 2.2% The initial Reinhart-Rogoff research seemed to indicate a sharp dropoff in average growth after debt passed 90% of GDP. Economy Finance Research

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The (Postponed) End of the Dollar Era

Harvard Business Review

current account deficit, which measures the gap between what the country takes in from export income, investment income, and cash transfers and what it pays out, peaked at nearly 6% of GDP in 2006 and was down to 3.1% of GDP in 2011. is a big shortfall — one that takes hundreds of billions of dollars of new foreign capital every year to finance — and the gap shows no signs of shrinking further. Economy Finance Global businessRemember "global imbalances"?

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Financial Fears, Flows, and Globalization

Harvard Business Review

As readers of this blog already know, markets are far less integrated internationally than popular views of globalization presume. Our current problems stem, in part, from the special characteristics of finance, which as Keynes noted , is highly dependent on sentiment and, as Hyman Minsky emphasized , therefore particularly susceptible to crises. Economy Finance Global business

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Interview with Sramana Mitra on 1M/1M Program

Rajesh Setty

One Million by One Million is a global initiative that aims to nurture a million entrepreneurs reach a million dollars each in annual revenue and beyond by 2020, thereby creating a trillion dollars in global GDP and ten million jobs. Our community has successfully established a culture of bootstrapping as a counterforce to the compulsive rush to financing that entrepreneurs mistakenly often engage in, only to be rejected over and again by investors. 1M/1M Program has a bold mission.

Fixing the Euro Zone and Reducing Inequality, Without Fleecing the Rich

Harvard Business Review

So one solution suggested by a growing number of economists in Europe is for central banks to “helicopter drop” money , and directly finance private sector spending. A payment of cash to Eurozone households of 3-5% of GDP would probably suffice to generate a recovery.

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Spain Is Now Making Ireland's Mistakes

Harvard Business Review

Just like Ireland, Spain had a credit boom financed mostly with external debt, which meant that the balance sheets of their banks are now stuffed with bad debts as asset values collapse. The Spanish Prime Minister has become preoccupied with creating market confidence, as was the Irish Prime Minister in the run up to the EU/IMF bailout. And yet in the run up to the collapse in 2007, the combined asset footprint of the three main Irish banks was around 400 percent of GDP.

What Alan Greenspan Has Learned Since 2008

Harvard Business Review

Not long after Alan Greenspan stepped down as Federal Reserve chairman in 2006, global financial markets began to unravel. But he nonetheless has some interesting things to say, most of them revolving around the idea that financial-market behavior isn’t fully rational, which makes the job of a central banker more complicated than envisioned back in the glorious 1990s. Greenspan was never a hardline believer in the rationality of financial markets. It’s true of GDP.

The Last Days of the Dollar Era

Harvard Business Review

Our current deficits are mostly the product of the economic downturn, we can easily finance them, and, when the economic recovery gains stronger footing (as it might have by now if it weren't for the impasse in Washington), they will shrink. This isn't just a spending problem; the tax cuts of the early 2000s also brought revenue down (as a percentage of GDP) to what appears to be an unsustainably low level. Economy Finance Global business

A Six-Step Extreme Makeover for the Economy

Harvard Business Review

That's pretty much the state our economy's in: industrial age metrics like GDP are giant slabs lipstick, massive swathes of eyeliner, and gigantic dollops of foundation on the proverbial pig — they perpetually let us overstate real prosperity, as it matters in authentic human terms. A more eudaimonic approach is to limit debt subsidies, and, where markets fail, subsidize equity instead. Economy Finance Recession

The End of Economists' Imperialism

Harvard Business Review

"By almost any market test, economics is the premier social science," Stanford University economist Edward Lazear wrote just over a decade ago. Meaning that you can never get truly scientific answers out of GDP or unemployment numbers. Decision making Economy FinanceThe field attracts the most students, enjoys the attention of policy-makers and journalists, and gains notice, both positive and negative, from other scientists.".

What’s Driving Superstar Companies, Industries, and Cities

Harvard Business Review

We focus on economic profit rather than revenue size, market share, or productivity growth because these other metrics risk including firms that are simply large and may not create economic value. Using our metric of GDP and personal income per capita, we identify 50 top superstar cities.

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Does Standard & Poor's Deserve a Downgrade?

Harvard Business Review

still remains the largest economy within a single national border (the EU is about the same size but includes 27 States) with a GDP that is 200% larger than that of China. Saturday's New York Times led with a story saying "many analysts say it's not so clear that it will deliver any immediate shock to financial markets or to consumers." This proved to be overly optimistic - the markets reacted negatively as they opened across the world on Monday. Economy Finance

Africa’s Unique Opportunity to Promote Inclusive Growth

Harvard Business Review

For the last decade, Africa’s GDP has been growing quickly. ” Adesina competed for the AfDB presidency against several accomplished bankers and finance ministers. Economic development Emerging markets Africa Article

What to Know About Doing Business in Iran

Harvard Business Review

But peruse some of the recent headlines about Iran , and you might wonder whether the market’s potential was overstated. sanctions are delaying these projects being financed. Overcoming a lack of market data. Emerging markets Global strategy Middle East Digital Article

Doing Business in a Post-Fidel Cuba

Harvard Business Review

President Obama’s historic visit to Cuba in March 2016 drove excitement for businesses considering the market that the island could become. With a limited financial system, Cuba lacks the domestic savings to raise fixed capital investment above the current level of 10% of GDP (half the average of Latin America). At the last Congress, in 2011, Raul Castro had announced plans to introduce new market reforms and attract foreign investment.

Why the U.S. Is Still Richer Than Every Other Large Country

Harvard Business Review

In 2015 real GDP per capita was $56,000 in the United States. The real GDP per capita in that same year was only $47,000 in Germany, $41,000 in France and the United Kingdom, and just $36,000 in Italy, adjusting for purchasing power. has a more developed system of equity finance than the countries of Europe, including angel investors willing to finance startups and a very active venture capital market that helps finance the growth of those firms.

The Economic Impact of the Japanese Disasters

Harvard Business Review

Analysts have already reduced forecasted GDP growth rates for Japan by 0.5% at the market's close on Monday (3/14), erasing more than $300 billion of equity value, and lost another 10.6% Flooding money markets on Sunday (3/13) with ¥15 trillion (about $183 billion) was a sensible first step by the Bank of Japan, but the real challenge lies ahead. Bold recovery plans would seem to be in order, but how that response is financed holds great import for Japan's economic future.

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Tackling Big Global Challenges with Low-Cost Innovation

Harvard Business Review

GDP by 2020. Meanwhile, even middle-class Americans are being priced out of the housing market in states like California, where average low-tier property prices went up by 10% in 2015. Finance. According to one recent estimate, Europe is home to 50 million low-income people who altogether represent a €220 billion ($245 billion) untapped market, especially for financial services. Innovation Emerging markets Entrepreneurship Articledave wheeler FOR HBR.

Fixing the World's Infrastructure Problems

Harvard Business Review

of GDP (PDF) is necessary to raise infrastructure in the region to the standard of developed East Asian countries. Just to keep pace with anticipated global GDP growth, the world needs to spend $57 trillion , or on average $3.2

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When America Was Most Innovative, and Why

Harvard Business Review

The chart below illustrates a strong relationship between patenting activity and GDP per capita at the state level. It predicts that an innovative state like Massachusetts, which from 1900 to 2000 had four times as many patents as a less innovative state, like Wyoming, would become 30% richer in terms of GDP per capita by 2000. The competitiveness of the U.S.

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The Real (and Imagined) Problems with the U.S. Corporate Tax Code

Harvard Business Review

companies don’t pay taxes on debt-financed investments, which amounts to a subsidy. After-tax profits are at historically high levels; they were more than 50% higher as a share of GDP in the years 2010-2015 than they were over the prior 20 years. based corporations make up a disproportionately high share of the Forbes Global 2000 list of the world’s most important corporations (in terms of profits, assets, market capitalization, or sales).

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Promoting Entrepreneurship in Vulnerable Economies

Harvard Business Review

Foreign aid, which can account for to up to 97 percent of a nation's GDP, is neither a long-term nor a sustainable solution to help the citizens of these fragile countries. Small- and medium-sized companies currently account for nearly 30% of formal GDP in low-income countries [ PDF ], but they often struggle to compete against larger firms for contracts and clients. Chief among these are access to capital, access to markets, and access to networks and skills development.

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How Bad Leadership Spurs Entrepreneurship

Harvard Business Review

their companies account for over $3 trillion of GDP (for the sake of comparison, that's 40% of China's entire GDP). What do 70% of successful entrepreneurs have in common? They all incubated their business ideas while employed by someone else.

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Greece Needs to Be Honest About the Numbers

Harvard Business Review

Given his former position, you would imagine that Georgiou’s crime would involve falsifying national economic data in order to cover up tax shenanigans or to fool the markets into thinking that the Greek economy was healthier than it was. Georgiou’s crime was that back in 2009, he strictly applied globally accepted international rules in reporting the Greek government’s budget deficit, which had the effect of increasing it by just under 3% to a whopping 15% of GDP.

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The 4 Types of Cities and How to Prepare Them for the Future

Harvard Business Review

Implications for city leaders: Leaders should loosen restrictions so that private finance can invest in improvements to physical infrastructure, to better use what already exists. From The New York Public Library. The prospect of urban innovation excites the imagination.

Why Germany Dominates the U.S. in Innovation

Harvard Business Review

has the world’s most sophisticated system of financing radical ideas, and the results have been impressive, from Google to Facebook to Twitter. by 66%, manufacturing in Germany employed 22% of the workforce and contributed 21% of GDP in 2010. How Samsung Gets Innovations to Market.

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Globalization Is Becoming More About Data and Less About Stuff

Harvard Business Review

Today growth in global trade has flattened, and it looks unlikely to regain its previous peak relative to world GDP anytime soon. We find that over the last decade, global flows of goods, services, finance, people, and data have contributed at least 10% of world GDP, adding $7.8

If the U.S. Gets into a Trade War with the EU, It Will Lose an Ally in Pressuring China

Harvard Business Review

SOEs receive preferential access to land, finance, telecom, hydrocarbons, and electricity. When China was admitted to the World Trade Organization in 2001, the Western hope was China would move toward a market-driven economy. The SOEs produce 33% of China’s GDP and account for 20% of its jobs; the central government controls one-third of the SOEs. Such market shares will create a platform for global juggernauts. Monty Rakusen/Getty Images.

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The Global Rise of Female Entrepreneurs

Harvard Business Review

Women-owned entities in the formal sector represent approximately 37% of enterprises globally — a market worthy of attention by businesses and policy makers alike. But, as participants in these programs regularly articulate, they are insufficient without access to capital and markets.

Finally, Proof That Managing for the Long Term Pays Off

Harvard Business Review

Among the firms we identified as focused on the long term, average revenue and earnings growth were 47% and 36% higher, respectively, by 2014, and market capitalization grew faster as well. GDP over the past decade might well have grown by an additional $1 trillion if the whole economy had performed at the level our long-term stalwarts delivered — and generated more than five million additional jobs over this period. public market capitalization over this period.

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Will Greece Survive the Crisis?

Harvard Business Review

GDP shrunk this year by 5.5% Our horrendous public debt is compounding and the public debt to GDP ratio will soon hit almost 200%, a level that can force our country to default on a most of what it owes. The new government has met with the cautious approval of the EU, the IMF, the markets and the international press. Greece is unquestionably in a catastrophic spiraling economic, social and political crisis.

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Small and Young Businesses Are Especially Vulnerable to Extreme Weather

Harvard Business Review

they account for 50% of employment and 45% of GDP. Firms applied for credit to finance recovery. Despite the need for credit to finance recovery, disasters can also constrain the capacity of lenders to supply it because so many households and businesses are affected at once. Challenge risk financing conventions. Businesses likely need new forms of risk financing.

How Multinationals Can Adapt to a Political Mood That Doesn’t Care for Them at All

Harvard Business Review

Shareholders have benefited greatly from bigger product markets, lower production costs, and the judicious use of head office domiciles to reduce tax bills. Since 1990, the market capitalization of multinational corporations has grown at more than three times the average rate of listed companies around the world, our research shows. Lean cost models that make use of globally centralized control functions (finance, compliance, legal, risk) will no longer be deemed sufficient.

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How To Choose The Next Head of the Fed

Harvard Business Review

and the transfer of business risk from "too big to fail" institutions to taxpayers, leading to a "heads I win, tails you lose" relationship between the finance and the rest of the economy. The financial industry accounts for about 8% of GDP, but about 32% of corporate profits.

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The Cardinal Sins of Innovation Policy

Harvard Business Review

It happens every time there’s a big announcement about a national or regional innovation policy that will lead us into the future: We are presented with schemes to strengthen intellectual property rights, enlarge the pool of risk financing, and upgrade the universities while pushing them to collaborate more with industry. The aim of innovation policies, by contrast, is to foster the development of technologies that don’t yet exist and whose business models and markets are unknowable.

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Global Demand for Food Is Rising. Can We Meet It?

Harvard Business Review

This will shape agricultural markets in ways we have not seen before. And because banking sectors in developing countries give fewer loans to farmers (compared to the share of agriculture in GDP), investments by both farmers and large corporations are still limited.

How GE and IBM are Playing Global Development to Win

Harvard Business Review

CEOs are proactively engaging with emerging market government to spur economic development and create opportunities for their companies. In the fast growth markets of Asia, Africa and Latin America, national governments are responding to a more empowered citizenship, and looking for corporate partners to achieve their development goals. Four years ago, GE initiated a strategy to compete more effectively in Africa, one of the fastest growing regions in the world in terms of GDP.