World Bank – Global Financial Development Report 2017 / 2018: Bankers without Borders

MAIN MESSAGES OF THE REPORT

Following a decade of increased globalization, international banking suffered a setback after the global financial crisis.

Remaining open despite rising protectionism is important for countries to continue to benefit from global flows of funds, knowledge, and opportunity.

However, international banking is no panacea for guaranteeing financial development and stability. There is an important role for policy in maximizing benefits and minimizing costs of international banking. Recent research suggests that for designing effective policies, it is important to keep in mind differences in bank characteristics and home and host country conditions.

Encouraging the right type of foreign bank presence or forms of capital flows without causing distortions is challenging.

Regulation and supervision of international banking is complex and should involve extensive cross-border coordination.

The rise of South-South banking and greater regionalization of banking comes with benefits but also possible risks.

After the crisis, there was also a disintermediation trend where cross-border bank credit was substituted with capital markets.

Fintech developments may have important implications for the global banking landscape.

Pascal Lamy: «Maurice a régressé en termes de sécurité intérieure…»

Dans un entretien exclusif à L’express Maurice, Pascal Lamy, membre du board de la fondation Mo Ibrahim, confie que même si Maurice est une référence en matière de bonne gouvernance, une dégradation de certains critères liés à celle-ci a été notée, dont l’État de droit.

Il explique que le recours aux réseaux sociaux pour rendre publics les résultats de son 11e indice de la fondation Mo Ibrahim est lié au fait que la problématique de la bonne gouvernance en Afrique est d’un intérêt capital pour sa population, dont 50 % sont constitués de jeunes de 26 ans. Ainsi, la fondation a voulu intéresser les jeunes à ces sujets, il n’y a pas de meilleures plateformes que les réseaux sociaux auxquels s’adonnent massivement les jeunes d’aujourd’hui.

Il a aussi fait état de la particularité de cet indice par rapport à ceux produits par d’autres  institutions comme Transparency International ou Ease of Doing of Business de la Banque mondiale dans la mesure où Mo Ibrahim est un indice composite comptant une centaine d’indicateurs issus de 36 institutions recueillant des données indépendantes d’Afrique et du monde entier. L’indice couvre des indicateurs liés à l’organisation des élections, à l’accès à la justice et à l’emploi ainsi qu’au système de l’éducation en général.

À bien des égards, l’indice Mo Ibrahim demeure un outil d’analyse très riche, publié à partir de sources d’informations publiques vérifiées.  Cette édition de 2017 démontre l’évolution de la gouvernance globale sur le long terme en Afrique, soit la période couvrant 2007 à 2016, ainsi, la trajectoire de bonne gouvernance a connu un net ralentissement au cours de la seconde partie de la décennie.

Il fait remarquer que Maurice,  tout en restant une référence en Afrique en matière de bonne gouvernance, avec sa démocratie vivante et son système politique. Ce qui explique sa position de lauréat dans le continent, sur d’autres critères, il y a eu une dégradation, notamment la sécurité intérieure, l’État de droit ou encore l’égalité économique. Pour remédier à cette  régression constatée dans certains critères, il invite le pays à se mettre au travail pour améliorer sa performance.

Pour Monsieur Lamy, l’économie mondiale va bien. La crise de 2008 a purgé le système en introduisant davantage de régulation du secteur financier. Des risques moins forts qu’avant subsistent dans le secteur financier. Il est préoccupé par la politique et particulièrement de  l’Amérique de Donald Trump  qui a favorise des tensions géopolitiques à l’échelle mondiale.

Pascal Lamy  un Européen engagé

Énarque, Pascal Lamy a servi en tant que directeur de l’Organisation mondiale du commerce (OMC) pendant 8 ans. Par la suite, en 2013, il a entamé une carrière de consultant auprès de nombreuses institutions internationales. Il est connu à Maurice comme étant celui qui a fait tomber Jayen Cuttaree qui était aussi candidat au poste de . directeur de l’OMC, en 2005. Âgé de 70 ans, l’ex-commissaire européen a été conseiller de l’ancien ministre de l’Économie et des finances, Jacques Delors, après l’avènement de la gauche en 1981.

Indice: au 1er rang en gouvernance globale

La fondation Mo Ibrahim, basée à Dakar, a publié, lundi, l’indice 2017 Mo Ibrahim de la gouvernance en Afrique. Celui-ci indique que Maurice, avec un score de 81,4 sur 100, se classe au 1er rang en Afrique en gouvernance globale. Le pays devance ainsi 54 pays. Son meilleur score est dans le développement humain (86,1) et son score le plus faible est en participation et droits humains (77,5). Selon le rapport, Maurice a atteint un score supérieur à la moyenne africaine (50,8) et à la moyenne régionale pour l’Afrique australe (58,6). Cependant, Maurice reste mauvais élève dans d’autres catégories, dont la corruption dans les services gouvernementaux et la création d’emplois.

World Economic Forum – How should economists describe what they do? – Written by Christopher Snyder, Joel Z. and Susan Hyatt Professor in the Department of Economics, Dartmouth College,published in collaboration with VoxEU.

When you meet someone at a cocktail party who learns you are an economist, the inevitable question follows, “What’s the stock market going to do?” That’s an excellent question. If, on the day I was born, my parents had invested $100 for me in Altria, the top-performing stock since then, I would be a millionaire.

Of course, most of us economists do not spend our time thinking about the stock market.

The press has its own view of what we do, not always positive, whether criticizing our inability to predict the future (Harford 2014), our lack of engagement with the real world (The Guardian 2017), or our preference for mathematics over people (Smith 2015). How do we, as economists, combat these negative stereotypes? Perhaps by explaining better the broader set of issues economists think about and how we think about them. I recently attempted this in a chapter (Snyder 2017) published in What Are the Arts and Sciences? A Guide for the Curious.

In a nutshell

One short answer is that economics is the social science focusing on people’s material well-being, the ‘business side’ of life. How do people earn a living? What do they buy with the money they earn? What spurs the overall economy to grow?

While a starting point, the domain of economics has continued to expand, blurring any distinctions between it and other social sciences. For example, crime was once exclusively a matter for sociologists and corruption for political scientists. But economists realised that these social problems might respond to economic incentives, and left untreated could destroy a productive economy. In this way, the issues have become part of mainstream economics.

Art auctions

One might think nothing could be further from the ‘business side’ of life than art, but even this has become the subject of economists’ study. In 2015, Picasso’s Women of Algiers, the painting shown in Figure 1, broke the record for the highest price paid at an art auction. While economists may have few insights about the quality of the brushstrokes, they have deeper insights about the outcome of the auction, held at the international auction house, Christie’s.

Figure 1 Women of Algiers, by Pablo Picasso

Image: Private Collection / Bridgeman Images

Bidding was intense. The opening price was $100 million. Bidders drove the price up to $180 million, its sale price, in ten minutes. Though they were allowed to bid in $1 million increments, at several points in the auction bidders jumped over the previous offer by $10 million.

To many people, this jump-bidding strategy is puzzling. It wastes the chance of winning the painting for less if the other bidders would have dropped out before the price rose the full $10 million. Some economists suggest that jump bidding may be a strategic attempt to scare off other bidders. They reason that rivals may consider it foolhardy to stay in an auction with someone who values the item so highly that he or she would be willing to waste money to prove it (Avery 1998).

Jump bidding is not the only interesting feature of this auction. Why did Christie’s pick $100 million for the opening price instead of $80 million or $120 million? Why not have each bidder submit a single, secret bid instead of ascending series of open outcries?

Theoretical principles

Although economists study topics ranging from jobs to corruption to art, some core concepts underlie their thinking. Perhaps the most important is scarcity. Devoting resources to one project—say, preventing diabetes—means some other worthy project—curing cancer—goes unserved. So, in determining whether a choice should be undertaken, one of the functions of economics is to argue that its benefits should not be considered in isolation but weighed against its costs. Costs put a dollar value on what has to be given up when one choice is made over another.

How is value determined? Scholars puzzled over this for a long time. Why are diamonds, mere decorations, so prized, while water, essential for human life, flows freely from public fountains? In the Middle Ages, philosophers advanced the just-price theory. This argues that value is an inherent property of an object. On this view, diamonds are expensive because of their inherent quality, and water is not. But this theory is unsatisfactory. It does not explain where this inherent value comes from, nor is it consistent with price variation across cultures and time. Karl Marx contributed the labour theory of value, arguing that the value of an object is the effort workers put into its production. The labour theory has its own drawbacks, leading to the awkward conclusion that an hour-long tooth extraction would be sixty times more valuable than one that had taken a minute.

Today, economists generally believe that value is neither inherent, nor determined by a single factor, but is the result of the interaction of several impersonal market forces. We can explain the water-diamond paradox simply by drawing curves of supply and demand, as depicted in Figure 2. Seller behaviour is represented by the red supply curve. Its upward slope indicates that at higher prices, more is supplied as existing suppliers expand their operations and new suppliers are drawn into the market. Buyer behaviour is represented by the blue demand curve. Its downward slope indicates buyers are willing to purchase more at lower prices.

Figure 2 Market supply and demand

Image: VoxEU

An equilibrium is reached where supply and demand intersect. At other points, either supply exceeds demand, leading price to fall as sellers accepted lower prices to offload their excess inventory, or demand exceeds supply, leading price to rise as buyers would still line up to buy at higher prices rather than do without the good. Equilibrium price P* determines the object’s value.

Using this model, one can easily resolve the water-diamond paradox. Water is in abundant supply, intersecting demand at a price near zero. At this price water is used not just to prevent people from dying of thirst, but also to water lawns. Diamonds, by contrast, are mined in only a few places in the world. The restricted supply intersects demand at such a high price that diamonds are reserved for extraordinarily high-value uses, such as marriage commitments.

Causality in empirical economics

From its earliest days, economics has been theoretical. It originated as a branch of philosophy. More recently, economic research has shifted in an empirical direction, spurred by the availability of rich data and powerful computers.

One of the great advances of modern empirical economic research is causal identification—uncovering true causal relationships rather than overinterpreting apparent correlations as causation. Uncovering causal relationships is difficult in economics. Opportunities to run experiments are limited by the expense and ethics involved in controlled interventions in markets (although these opportunities are growing, owing to an explosion of interest in laboratory and field experiments).

Economists have to devise clever ways to establish causation in nonexperimental data. Pick one of your favourites. A microeconomist might choose Dale and Krueger’s (2002) study of whether a more prestigious college causes higher earnings after graduation, explaining the problem that positive correlation may be wholly due to the higher ability of students admitted to better colleges. A macroeconomist might pick Romer’s (1992) study of whether fiscal or monetary policy deserved more credit for the US recovery from the Great Depression. The problem: a bad economy can feed back to make beneficial policies look damaging.

Back to the stock market

Having patiently listened to your description of what you do, your audience may still expect an answer to the million-dollar question, “What’s the stock market going to do?” Recall the stock that could have made me a millionaire by now, Altria, the top-performer over the last several decades according to Siegel (2005). Are you curious what Altria makes? A good guess might be something high-tech, perhaps computers or pharmaceuticals.

Altria makes cigarettes. Until a recent spinoff, Altria was the parent company of Phillip Morris, manufacturer of Marlboro and other cigarette brands. With smoking on the decline in rich countries due to high taxes and restrictions, it is hard to believe cigarette manufacturing would be a good investment.

The surprising performance of cigarettes provides a useful economic insight into stock prices. It is tempting for average investors to think they can beat the market, but study after study shows this is generally not true. They are better off diversifying across many stocks and holding these stocks over the long term.

 

REUTER – Brexit and the City: Taking London’s Financial Pulse Reporting by Andrew MacAskill; editing by Alexander Smith

 

LONDON — Will Britain’s decision to leave the European Union in 2019 damage one of its most successful industries?

The financial services sector, which accounts for about 12 percent of Britain’s economic output and pays more tax than any other industry, potentially has a lot to lose from the end of unfettered access to the EU’s post-Brexit market of 440 million people.

Known for centuries as « the City », London’s financial center has expanded beyond its original heartland in the City of London to the skyscrapers of Canary Wharf in the east and plush townhouses in Mayfair to the west. The British capital dominates global foreign exchange, and features international bond and fund management operations and more banks than any other hub.

But it is particularly vulnerable to a Brexit shock, because about a third of the transactions which take place on its exchanges and in its trading rooms involve clients in the EU.

This has led some politicians and economists to predict London will lose its pre-eminence as a financial center after Brexit, although supporters of leaving the EU say Britain will benefit over the long term by being able to set its own rules.

Reuters has created a tracker to monitor six indicators to help assess the fortunes of the City, taking a regular check on its pulse through public transport usage, bar and restaurant openings, commercial property prices and jobs.

« At the beginning it is difficult to assess the true impact of what is happening because it is quite a confused picture, » said Tom Kirchmaier, a professor who focuses on banking at the London School of Economics. « These proxies will help you piece together what is going on. »

Almost 17 months after Britons voted to leave the European Union, our indicators suggest signs of a slowdown, but no transformative decline.

Commercial property

Reuters obtained property data from Savills and Knight Frank, two of the biggest real estate firms in Britain. Savills says it calculates the value of property based on all-known property deals within the City of London area. Knight Frank’s data comes from landlords, developers and agents.

According to Savills, commercial property prices in the City of London have dropped more since the Brexit vote in June 2016 than at any point since 2009, the last year of the global financial crisis.

The price of renting real estate in the City of London district has fallen by about 5 percent since last year, dropping to 73.4 pounds per square foot at the end of September, from 77.6 pounds, Savills says.

However, leasing activity in the City of London was 17 percent above the long term average in the first three quarters of 2017, Mat Oakley, Savills’ head of European commercial research, said.

In Canary Wharf, prices are unchanged compared with last year, Knight Frank says.

Oakley at Savills says that for the first time since the global financial crisis the finance and banking sector is « out there looking for new office space » in the former docklands.

Going Underground

Every weekday more than 200,000 journeys are recorded at the two main underground stations – Bank and Monument – that serve the City, making the stations among London’s busiest.

To find the number of people using these two stations and the underground station at Canary Wharf, Reuters filed Freedom of Information Act requests to Transport for London, which runs public transport.

The number of people using Bank and Monument stations is on course for its first fall since the final year of the global financial crisis, Transport for London data shows.

Travelers going in and out of Bank and Monument fell by 2.7 percent in the first eight months of 2017 compared with 2016. This follows an annual increase each year since 2009.

In Canary Wharf, the number of people using the station continues to rise. But the pace has slowed and in the first seven months of this year grew at its second slowest since 2009, Transport for London data

A spokesman for Transport for London said a multi-year project to expand the capacity at Bank station began at the end of 2015, resulting in the occasional closure of some escalators, but this has not resulted in any reduction in the number of trains running.

Bar and restaurant openings    

Reuters also filed a Freedom of Information Act request to the City of London Corporation to find the number of new premises who have applied for licenses to sell alcohol and license renewals this year.

So far, Brexit seems to be having no impact here. The number of venues, such as bars and restaurants, applying for new licenses to sell alcohol in the City of London in the first eight months of 2017 is at a record high, data from the municipal local authority that runs the district shows.

Officials at the City of London Corporation say this is partly because the area’s night life has diversified in recent years, and no longer just caters to finance workers.

« We have a safe City with an expanding night life, » the Corporation said in a statement.

London City Airport

The number of people using London City Airport, favored by executives for flights to European cities and beyond, faces its slowest increase in five years, according to its publicly available passenger figures.

(For a graphic on Arrivals at London City Airport click http://reut.rs/2A2OJcM)

The airport, close to Canary Wharf’s financial district, had an increase of 0.9 percent in passengers in the first six months of this year. That compares with an average annual 10 percent increase in the previous four years.

London City Airport said that it has enjoyed record growth since 2012, but its capacity is being constrained at peak times and it is looking to expand.

Hiring numbers

The number of available jobs in London’s financial services industry this year has fallen the most in five years, recruitment agency Morgan McKinley says.

Morgan McKinley focuses on hiring staff in the finance industry. It says it bases its number on the overall volume of mandates it receives to find jobs; it then applies a multiplier based on its market share of London’s finance industry.

The recruiter found 51,922 new financial services jobs were created in the first seven months of this year, a 10 percent drop compared with the same period last year. This was the lowest number of jobs available since 2012.

« Businesses are naturally hesitant to plan and execute growth hires due to the uncertainty around Brexit, » said Hakan Enver, a director at Morgan McKinley.

Jobs leaving London?

Around 10,000 finance jobs will be shifted out of Britain or created overseas in the next few years if the UK is denied access to Europe’s single market, according to a Reuters survey published in September of firms employing the bulk of workers in international finance.

(For a graphic of Finance jobs moving from London click http://reut.rs/2zJn7ca)

Sam Woods, a deputy governor of the Bank of England who has reviewed the contingency plans of more than 400 banks and financial firms, said he agreed with the findings of the survey.

The findings suggest that the first wave of job losses from Brexit may be at the lower end of estimates by industry lobby groups and firms, which could mean London will keep its place as the continent’s top finance center, at least in the short term.

« Your survey seemed to be about right, » Woods said.

 

AFP News Agency – The global wealth pyramid

Global wealth up 27% since the 2007 financial crisis, but spread is far from even: Credit Suisse study.
Today, less than 10% of the global population owns 86% of the global wealth.
Since year 2000, the number of millionaires globally has increased 170%.

 

World Economic Forum – President Xi and Secretary Tillerson: what two speeches tell us about the future of China and the US – Written by Samir Saran, Vice-President, Observer Research Foundation (ORF)

The past week has been a significant one for speeches. The first was President Xi Jinping’s marathon three-and-a-half-hour-long “report”, inaugurating the Communist Party of China’s (CPC) 19th National Congress. The 68-year-old Xi, widely regarded as the most influential Chinese leader since Chairman Mao, laid his ambition for the Asian giant bare, with his plan for “socialism with Chinese characteristics” in a “new era”.

As head of the party, military and state, Xi has accomplished what other world leaders can only dream of: an unprecedented centralization of power. He has the authority to make the world’s largest armed forces and the huge transnational Chinese corporations an instrument of his state policy, and this gives him the muscle to rewrite the rules of international politics.

His repeated swipes at President Trump’s “America first” policy, and emphasis on China’s positive role in global governance, sent a clear message: this new era would be Chinese-led, with China able and willing to commit political, military and economic capital to ensure that it happens. Needless to say, the “Chinese dream” – which includes becoming a global tech leader by 2035, reconnecting Eurasia with the Belt and Road Initiative (BRI), and achieving a strong, prosperous society by 2049 – brings with it implications for the rest of the world.

Before China can become a global leader, however, it must consolidate its position in Asia – arguably the most important region in the 21st century. What truly defines China’s ambitions in Asia is the BRI – Xi’s signature development strategy, which he called on the country to pursue as a priority. There was an underlying message to those who oppose or question it.

China’s proposition

Ostensibly, the BRI is a regional connectivity project, stretching from oil and gas projects in Myanmar to ports in Malaysia and Pakistan, to a military base in Djibouti. This also creates the physical infrastructure for China’s “march west” to capture high-value markets in Europe – an essential part of its rise.

At its core, however, the BRI creates strategic co-dependencies between China and host states, setting the stage for what may be a Sino-centric world order. Already, China is in a position to create norms and rules across the wider region. Its leadership, through institutions like the Asian Infrastructure Investment Bank and initiatives such as the Regional Comprehensive Trade Partnership, significantly aid China in this effort.

While Xi was careful to point out that China’s rise would not be hegemonic, his speech also celebrated China’s militarization of the South China Sea (SCS), regarded by some as detrimental to the smaller littorals in that region.

Additionally, several of China’s regional projects have saddled smaller nations with debts they are struggling to repay, as was Sri Lanka’s experience with the Hambantota port. New Delhi, which boycotted the BRI summit in May over these very concerns (alongside the principal concern around sovereignty), was rewarded with a 73-day military standoff in the Himalayas.

Xi is confident that other developing countries would benefit from China’s rise. He was clear, however, that China would always protect its national interests – an attitude that will by definition be disadvantageous to many of its neighbours.

A democratic counterweight

Against this backdrop, the second important speech was delivered by the US Secretary of State, Rex Tillerson, a week before he is expected to visit New Delhi. Emphasizing on the importance of “shared democratic values”, Tillerson set out to define America’s “relationship with India for the next century”. Delivered on the same day as Xi’s landmark address, the speech extolled India’s peaceful rise, while chastising China’s disdain for international law and sovereignty.

Notably, Tillerson’s critique of the BRI was the strongest the Trump administration has made so far. Earlier in July, an Indo-US joint statement made only an oblique reference to “regional connectivity”, echoing some of India’s concerns. Tillerson, however, was more direct.

Tillerson hailed the US and India as the “eastern and western beacons of the Indo-Pacific”. Having struggled to balance China’s rise in the SCS, the US is keen to prevent the same kind of maritime militarization elsewhere – an objective India undoubtedly shares. Tillerson sees cooperation among the “Indo-Pacific democracies” – namely, India, Japan, the US and Australia – as key to stability in Asia.

With an eye on China, Tillerson’s speech is a call to like-minded states to ensure a rule-based multipolar governance architecture. Already, there is clear convergence of norms between the democratic powers – the US and Japan have reiterated India’s position that regional integration must be financed responsibly and must respect sovereignty. Similarly, Japan and India have echoed the US stance on freedom of navigation and peaceful resolution of maritime disputes. India led by example when it peacefully settled its dispute with Bangladesh recently.

Leading from behind?

What Tillerson’s speech tells us is that the Trump administration is correct in its reading of the geopolitical currents in Asia. It also tells us, unfortunately, that the US has no coherent response. Tillerson’s vague call for “some means of countering [the BRI] with alternative financing measures” underlines the fact that this and previous American pronouncements have not been matched by actual political actions and propositions. There is little to demonstrate that there has been any serious attempt to put together an alternative to the Chinese-led BRI in Washington, DC.

Unlike China, which is forging ahead on its own with its own roadmap, America is attempting to stitch together an alliance that is heavily limited by the larger political compulsions, both its own and those of its partners. Australia, for example, is still debating the nature of its relationship with China, and refusing to take a clear stance on either the BRI or on a maritime order, while Japan is still unsure about transitioning from its pacifist constitution. The US’s own willingness to engage with Pakistan limits its ability to integrate with India. India will confirm that, while it was staring down the dragon in the Himalayas recently, it was indeed lonely.

Xi has transformed China into a military heavyweight. Taking into account Beijing’s relaxed purse strings, no developing country can ignore China’s allure. American reluctance to address China’s rise head-on has already seen it lose influence in Asia, including with strategic partner the Philippines. While Tillerson’s words may constitute fresh rhetoric from DC, they will have limited impact on China’s influence, unless backed by real political and economic investments in the region.

Hardening fault-lines

The speeches by Xi and Tillerson are a study in contrast, and are reflective of the complex times in which they are given. At a time when US primacy is waning, Asia is rapidly emerging as the centre of global economic growth. The geopolitical implications are significant, and the institutional arrangements in Washington to manage this development are missing or feeble.

Both politicians sought to address this paradigm and were distinct in their tenor. Xi was imperious and forthright; with no signs of hesitation, he appeared certain that China was a power whose time had come and that he was destined to deliver “the great rejuvenation of the Chinese nation”.

Tillerson, on the other hand, voiced anxiety around managing a rapidly changing environment. It was a plea for collective action; to serve ambiguous goals; on behalf of a country whose policy of “leading from behind” is fast turning into, as US diplomat Richard Haass puts it, “leaving from behind”. The fate of the international order depends on which narrative ultimately prevails. Writing the script for this era will require a strong hand. As things stand currently, we know from whom the ink flows.

 

World Economic Forum – Germany has way more industrial robots than the US, but they haven’t caused job losses – Written by Jill Petzinger, and published in collaboration with Quartz.

The rise of the robots, coming first for our jobs, then may be our lives, is a growing concern in today’s increasingly automated world. Just today (Oct. 10), the World Bank chief said the world is on a “crash course” to automate millions of jobs. But a recent report from Germany paints a less dramatic picture: Europe’s strongest economy and manufacturing powerhouse has quadrupled the amount of industrial robots it has installed in the last 20 years, without causing human redundancies.

In 1994, Germany installed almost two industrial robots per thousand workers, four times as many as in the US. By 2014, there were 7.6 robots per thousand German workers, compared to 1.6 in the US. In the country’s thriving auto industry, 60–100 additional robots were installed per thousand workers in 2014, compared to 1994.

Researchers from the Universities of Würzburg, Mannheim, and the Düsseldorf Heinrich-Heine University examined 20 years of employment data to figure out how much of an effect the growth of industrial manufacturing has had on the German labor market.

They found that despite the significant growth in the use of robots, they hadn’t made any dent in aggregate German employment. “Once industry structures and demographics are taken into account, we find effects close to zero,” the researchers said in the report.

Robots are changing career dynamics

While industrial robots haven’t reduced the total number of jobs in the German economy, the study found that on average one robot replaces two manufacturing jobs. Between 1994 and 2014, roughly 275,000 full-time manufacturing jobs were not created because of robots.

“It’s not like jobs were destroyed, in the sense that a manufacturing robot is installed and then the workers are fired because of the robots—that never really happened in Germany,” study co-author Jens Südekum, from Düsseldorf Institute for Competition Economics, told Quartz. “What happened instead is that in industries where they had more robots, they just created fewer jobs for entrants.”

“In a sense the robots blocked the entry into manufacturing jobs.” “Typically around 25% of young labor market workers went into manufacturing and the rest did something else, and now more workers have immediately started in the service sector—so in a sense the robots blocked the entry into manufacturing jobs.”

The study also found that those who are already in jobs where they were more exposed to automation, were significantly more likely to keep their jobs, though some ended up doing different roles from before. The big downside for some medium-skilled workers, who did manual, routine work, was that it meant taking pay cuts.

“This is where these wage results come in, what we find is that no one was really fired because of a robot, but many swallowed wage cuts. And this has mostly affected medium-skilled workers who did manual routine tasks.” Around 75% of manufacturing workers are medium skilled, and the wage cuts have so far been moderate, he says.

“The robots really fueled inequality.” But Germany hasn’t got it perfect. One core reason for why Germans haven’t been fired in favor of robot, is the country’s famously powerful unions and work councils, which have are often keen to accept flexible wages on behalf of workers, to maintain high employment levels.

“Unions of course have a very strong say in wage setting in Germany,” Südekum says. “It’s known that they are more willing than unions in other countries to accept wage cuts to ensure jobs are secured.”

While robots have increased productivity and profits, and not driven people into unemployment (yet), they haven’t been good news for blue collar workers in Germany.

“The robots really fueled inequality, because they benefitted the wages of highly skilled people—like managers and scientists, people with university education—they even gained higher wages because of the robots, but the bulk of medium-skilled production workers suffered.”

World Economic Forum – Steve Jobs and Jeff Bezos’ mentor used a simple test to figure out who is a true leader – Written by Aine Cain, Careers Reporter at Business Insider and published in collaboration with Business Insider.

You can have the most impressive title in the world and still not be a leader.

According to the late Bill Campbell, who established a reputation as the « coach » of Silicon Valley, only one thing determines whether or not you’re a leader: the opinions of those you’re supposed to be leading.

A former Columbia University football player and coach, Campbell went on to work with and mentor with some of the biggest names in tech, including Steve Jobs, Jeff Bezos, Larry Page, and Eric Schmidt.

Former Apple CEO John Sculley poached Campbell, hiring him away from Kodak to work as Apple’s VP of marketing.

Sculley shared one of the best pieces of advice Campbell ever gave him: « Your title makes you a manager. Your people will decide if you’re a leader, and it’s up to you to live up to that. »

Campbell himself told Sculley he’d come to that realization about leadership from working with Jobs.

« The reality is that you have to earn leadership from the people that you’re working with and who are working for you, » Sculley told Business Insider. « The title doesn’t mean much unless you can earn their respect as a leader. »

Later in his career, Campbell served on Apple’s board of directors. He went on to also become CEO of Intuit from 1994 to 1998 and eventually became the chairman of the tech company’s board.

Current Intuit CEO Brad Smith said he got the same advice on leadership from Campbell, too. Sculley and Smith both said it was the best career advice they’d ever received, and that it’s stuck with them ever since.

« Basically, how you make that happen is if you believe that leadership is not about putting greatness into people, leadership is about recognizing that there’s a greatness in everyone and your job is to create an environment where that greatness can emerge, » Smith told Business Insider. « That’s our definition of leadership. We don’t think leadership is the same as people management. »

World Economic Forum – A history of the battle for economic supremacy – Written by Jeff Desjardins, Founder and editor of Visual Capitalist, in collaboration with Visual Capitalist.

More on the agenda

Long before the invention of modern day maps or gunpowder, the planet’s major powers were already duking it out for economic and geopolitical supremacy.

Today’s chart tells that story in the simplest terms possible. By showing the changing share of the global economy for each country from 1 AD until now, it compares economic productivity over a mind-boggling time period.

Originally published in a research letter by Michael Cembalest of JP Morgan, we’ve updated it based on the most recent data and projections from the IMF. If you like, you can still find the original chart (which goes to 2008) at The Atlantic. It’s also worth noting that the original source for all the data up until 2008 is from the late Angus Maddison, a famous economic historian that published estimateson population, GDP, and other figures going back to Roman times.

A MAJOR CAVEAT

If you looked at the chart in any depth, you probably noticed a big problem with it. The time periods between data points aren’t equal – in fact, they are not close at all.

The first gap on the x-axis is 1,000 years and the second is 500 years. Then, as we get closer to modernity, the chart uses mostly 10 year intervals. Changing the scale like this is a big data visualization “no no”, as rightly pointed out in a blog post by The Economist.

While we completely agree, we have a made an exception in this case. Why? Because getting good economic data from the early 20th century is already difficult enough – and so trying to find data in regular intervals before then seems like a fool’s errand. Likewise, a stacked bar chart with different years also doesn’t really do this story justice.

We encountered similar historical data issues in our Richest People of Human History graphic, and at the end of the day decided it was primarily for fun. Like today’s chart, it has its share of imperfections – but ultimately, it provides a great amount of context and serves as a conversation starter.

OUR INTERPRETATION

Caveats aside, there are many stories that materialize from this simple chart. They include the colossal impact of the Industrial Revolution on the West, as well as the momentum behind the re-emergence of Asia.

But there’s one other story that ties it all together: the exponential rate of human economic growth that occurred over the last century.

For thousands of years, economic progress was largely linear and linked to population growth. Without machines or technological innovations, one person could only produce so much with their time and resources.

More recently, innovations in technology and energy allowed the “hockey stick” effect to come into play.

It happened in Western Europe and North America first, and now it’s happening in other parts of the world. As this technological playing field evens, economies like China and India – traditionally some of the largest economies throughout history – are now making their big comeback.