Stakeholder Capitalism

But to really reach its potential, the country will have to make strides in education, health care, and infrastructure, so that all its people have a chance to reach their full potential and the country can do away with its ever-rising inequality. Because even as the top-line growth in the country accelerated in recent years and decades, income and wealth inequality in the country got out of hand as well. The macroeconomic reforms the country made helped unlock a more competitive economy in many industries, both domestically and internationally. But they did little to help the many rural farmers and the urban working class get ahead, whether in education, health care, or income.

The Bigger Picture

The 2020s onward may also see the continuation of the deepening Afrasian ties, which could complement the rise of China. Basic infrastructure, education, and health care, as well as sufficient access to finance have for decades been lacking in many African economies. But thanks to China's transformation to a quasi-advanced economy and the country's willingness to invest in Africa, some of those constraints are now disappearing.

China may consider Africa to be the next major manufacturing hub once Southeast Asian opportunities have dried up. In effect, Africa could be for China what China was for Western countries. Already, countries such as Angola, Ethiopia, and Kenya are major recipients of Chinese investments.143 According to the Brookings Institution, these investments are largely focused on transport and energy, but once the roads, railroads, and electricity are available, they could also provide the basis for manufacturing.

So, while emerging market growth overall may be slowing, some of Africa's markets may continue to develop quickly,144 including those where China has a major stake. In East Africa, for example, Ethiopia, Kenya, Tanzania, and Uganda are expected to hit between 6 and 8 percent growth in the coming years, in part thanks to their ties with China. In West Africa, the outlook for Côte d'Ivoire, Ghana, and Niger are also positive. Nigeria and South Africa, on the other hand, the two most populous countries in Africa, have narrower paths to growth. The COVID crisis hit South Africa particularly hard, and Nigeria had been growing slower even before the pandemic hit.

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1

70 Jahre Kriegsende, Schwabische Zeitung, Anton Fuchsloch, May 2015, (in German) http://stories.schwaebische.de/kriegsende#10309.

2

Wie der Krieg in Ravensburg aufhort, Schwabische Zeitung, Anton Fuchsloch, May 2015, (in German) http://stories.schwaebische.de/kriegsende#11261.

3

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4

Organisation for Economic Co-operation and Development (OECD), Eurostat, https://ec.europa.eu/eurostat/statistics-explained/pdfscache/1488.pdf.

5

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6

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7

The company was founded as the Otto Maier Verlag and later changed its name to Ravensburger.

8

Company interview with Heinrich Huentelmann and Tristan Schwennsen, August 2019.

9

Ravensburger, About Ravensburger, https://www.ravensburger-gruppe.de/en/about-ravensburger/company-history/index.html#1952-1979.

10

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11

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12

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13

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16

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17

The term “global village” was coined by Canadian thinker Marshall McLuhan in the 1960s.

18

“The World Economic Forum, a Partner in Shaping History, 1971–2020,” p.16 http://www3.weforum.org/docs/WEF_A_Partner_in_Shaping_History.pdf.

19

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20

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21

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22

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24

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25

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26

Gross debt position, Fiscal Monitor, April 2020, International Monetary Fund, https://www.imf.org/external/datamapper/datasets/FM.

27

Global Footprint Network, https://www.footprintnetwork.org/2019/06/26/press-release-june-2019-earth-overshoot-day/.

28

Kuznets was born in Pinsk, then part of the Russian Empire. Nowadays, Pinsk is part of Belarus.

29

“Political Arithmetic: Simon Kuznets and the Empirical Tradition in Economics”, Chapter 5: The Scientific Methods of Simon Kuznets, Robert William Fogel, Enid M. Fogel, Mark Guglielmo, Nathaniel Grotte, University of Chicago Press, p. 105, https://www.nber.org/system/files/chapters/c12917/c12917.pdf.

30

A direct quotation of Kuznets’ autobiography for the Nobel Prize committee. The Nobel Prize, “Simon Kuznets Biographical,” 1971, https://www.nobelprize.org/prizes/economic-sciences/1971/kuznets/biographical/.

31

“GDP: A brief history,” Elizabeth Dickinson, Foreign Policy, January 2011, https://foreignpolicy.com/2011/01/03/gdp-a-brief-history/.

32

Ibidem.

33

“Beyond GDP: Economists Search for New Definition of Well-Being,” Der Spiegel, September 2009, https://www.spiegel.de/international/business/beyond-gdp-economists-search-for-new-definition-of-well-being-a-650532.html.

34

Phone interview with Diane Coyle by Peter Vanham, August 18, 2019.

35

Measured in constant 2010 US dollars.

36

World Bank, GDP Growth (annual %), 1961–2018, https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG.

37

“What's a Global Recession,” Bob Davis, The Wall Street Journal, April 2009, https://blogs.wsj.com/economics/2009/04/22/whats-a-global-recession/.

38

United States Census Bureau, International Data Base, September 2018, https://www.census.gov/data-tools/demo/idb/informationGateway.php.

39

“World Economic Outlook,” International Monetary Fund, Updated July 2019, https://www.imf.org/en/Publications/WEO/Issues/2019/07/18/WEOupdateJuly2019.

40

“World Economic Outlook,” International Monetary Fund, April 2019, Appendix A https://www.imf.org/~/media/Files/Publications/WEO/2019/April/English/text.ashx?la=en.

41

This concerns GDP growth based on market exchange rates (see corresponding row on table cited in footnotes 11 and 12).

42

“World Bank Country and Lending Groups,” World Bank, https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups.

43

“The Great Emerging-Market Growth Story is Unravelling,” The Financial Times, June 2019, https://www.ft.com/content/ad11f624-8b8c-11e9-a1c1-51bf8f989972.

44

See the IMF estimate of 2019 above. For the IIF estimate of Q1 2020, see https://www.iif.com/Portals/0/Files/content/Research/Global%20Debt%20Monitor_July2020.pdf.

45

“Coronavirus Lifts Government Debt to WWII Levels—Cutting It Won't Be Easy,” The Wall Street Journal, August 2020, https://www.wsj.com/articles/coronavirus-lifts-government-debt-to-wwii-levelscutting-it-wont-be-easy-11598191201.

46

“Resolving Global Debt: An Urgent Collective Action Cause,” Geoffrey Okamoto, IMF First Deputy Managing Director, October 2020, https://www.imf.org/en/News/Articles/2020/10/01/sp100120-resolving-global-debt-an-urgent-collective-action-cause.

47

“Gross Debt Position, % of GDP,” Fiscal Monitor, International Monetary Fund, April 2020, https://www.imf.org/external/datamapper/G_XWDG_G01_GDP_PT@FM/ADVEC/FM_EMG/FM_LIDC.

48

“Inflation Rate, Average Consumer Prices, Annual Percent Change, Advanced Economies,” World Economic Outlook, International Monetary Fund, April 2020, https://www.imf.org/external/datamapper/PCPIPCH@WEO/ADVEC/OEMDC.

49

International Monetary Fund, DataMapper, https://www.imf.org/external/datamapper/GGXWDG_NGDP@WEO/OEMDC/ADVEC/WEOWORLD.

50

“Youth Dividend or Ticking Time Bomb?” Africa Renewal, UN, 2017, https://www.un.org/africarenewal/magazine/special-edition-youth-2017/youth-dividend-or-ticking-time-bomb.

51

“EM Youth Bulge: A Demographic Dividend or Time Bomb?” Jonathan Wheatley, Financial Times, May 2013, https://www.ft.com/content/f08db252-6e84-371d-980a-30ab41650ff2.

52

National Institute of Population and Social Security Research, Japan, http://www.ipss.go.jp/pp-zenkoku/e/zenkoku_e2017/pp_zenkoku2017e_gaiyou.html#e_zenkoku_II.

53

“Gross Debt Position, % of GDP,” Fiscal Monitor, International Monetary Fund, April 2020, https://www.imf.org/external/datamapper/G_XWDG_G01_GDP_PT@FM/ADVEC/FM_EMG/FM_LIDC.

54

Ibidem.

55

“U.S. Central Bank Cuts Interest Rate for 1st Time Since 2008,” CBC, July 2019, https://www.cbc.ca/news/business/federal-reserve-interest-rate-decision-1.5231891.

56

“United States Fed Funds Rate, 1971–2020,” Trading Economics, https://tradingeconomics.com/united-states/interest-rate.

57

This practice is common in many oil- and gas-producing countries, such as Iran, Russia, Saudi Arabia, Iraq, the UAE, Libya, and Kuwait, but also in other emerging markets such as China, Indonesia, Mexico, and Egypt. See: “Energy Subsidies, Tracking the Impact of Fossil-Fuel Subsidies,” IEA, https://www.iea.org/topics/energy-subsidies.

58

“Public Spending on Health: A Closer Look at Global Trends,” World Health Organization, https://apps.who.int/iris/bitstream/handle/10665/276728/WHO-HIS-HGF-HF-WorkingPaper-18.3-eng.pdf?ua=1.

59

“Global Infrastructure Outlook,” Global Infrastructure Hub, https://outlook.gihub.org/.

60

“We'll Live to 100—How Can We Afford It?” World Economic Forum, http://www3.weforum.org/docs/WEF_White_Paper_We_Will_Live_to_100.pdf.

61

“Labor Productivity and Costs,” Bureau of Labor Statistics, https://www.bls.gov/lpc/prodybar.htm.

62

“Decoupling of Wages from Productivity,” OECD, Economic Outlook, November 2018, https://www.oecd.org/economy/outlook/Decoupling-of-wages-from-productivity-november-2018-OECD-economic-outlook-chapter.pdf.

63

“Some Notes on the Scientific Methods of Simon Kuznets,” Robert Fogel, National Bureau of Economic Research, December 1987, https://www.nber.org/papers/w2461.pdf.

64

“Global Inequality is Declining—Largely Thanks to China and India,” Zsolt Darvas, Bruegel Institute, April 2018, https://bruegel.org/2018/04/global-income-inequality-is-declining-largely-thanks-to-china-and-india/.

65

“Upper-Middle-Income Countries,” World Bank, https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups.

66

“China Lifts 740 Million Rural Poor Out of Poverty Since 1978,” Xinhua, September 2018, http://www.xinhuanet.com/english/2018-09/03/c_137441670.htm.

67

“Minneapolis Fed, “Income and Wealth Inequality in America, 1949–2016,” https://www.minneapolisfed.org/institute/working-papers-institute/iwp9.pdf.

68

“Piketty's Inequality Story in Six Charts,” John Cassidy, The New Yorker, March 2014, https://www.newyorker.com/news/john-cassidy/pikettys-inequality-story-in-six-charts.

69

“World Inequality Report, 2018,” https://wir2018.wid.world/files/download/wir2018-summary-english.pdf.

70

The Precariat: The New Dangerous Class, Guy Standing, 2011, https://www.bloomsbury.com/uk/the-precariat-9781849664561/.

71

Interview with Kalle Lasn by Peter Vanham, Vancouver, Canada, March 2012.

72

“World Inequality Report, 2018,” https://wir2018.wid.world/files/download/wir2018-summary-english.pdf.

73

“How Unequal Is Europe? Evidence from Distributional National Accounts, 1980–2017,” Thomas Blanchet, Lucas Chancel, Amory Gethin, World Economic Database, April 2019, https://wid.world/document/bcg2019-full-paper/.

74

EU income inequality decline: Views from an income shares perspective, Zsolt Darvas, Bruegel Institute, 2018, https://www.bruegel.org/2018/07/eu-income-inequality-decline-views-from-an-income-shares-perspective/.

75

“Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data,” Emmanuel Saez and Gabriel Zucman, The Quarterly Journal of Economics, May 2016, http://gabriel-zucman.eu/files/SaezZucman2016QJE.pdf.

76

“Share of Total Income going to the Top 1% since 1900, Within-Country Inequality in Rich Countries,” Our World in Data, October 2016, https://ourworldindata.org/income-inequality.

77

“How America's 1% Came to Dominate Equity Ownership,” Robin Wigglesworth, Financial Times, February 2020, https://www.ft.com/content/2501e154-4789-11ea-aeb3-955839e06441.

78

It is nevertheless interesting to note, as Branko Milanovic has done, that while wealth inequality—driven primarily by stock ownership—is large and growing, there is no longer a true “capitalist” class as Karl Marx alleged in the 19th century. Wealthy households do get a large share of their wealth from “capital,” but not all of it: as a matter of fact, most “wealthy” people do also work for a living, having often well-paid positions in finance, legal, or medical industries.

79

“The American Economy Is Rigged,” Joseph Stiglitz, Scientific American, November 2018, https://www.scientificamerican.com/article/the-american-economy-is-rigged/.

80

“Mortality and Morbidity in the 21st Century,” Anne Case and Angus Deaton, Brookings Institute, March 2017, https://www.brookings.edu/bpea-articles/mortality-and-morbidity-in-the-21st-century/.

81

“Deaths of Despair, Once an American Phenomenon, Now Haunt Britain,” The Economist, May 2019, https://www.economist.com/britain/2019/05/16/deaths-of-despair-once-an-american-phenomenon-now-haunt-britain.

82

“Variation in COVID-19 Hospitalizations and Deaths Across New York City Boroughs,” Journal of the American Medical Association, April 2020, https://jamanetwork.com/journals/jama/fullarticle/2765524.

83

“Total Public and Primary Private Health Insurance,” Organization for Economic Co-operation and Development, https://stats.oecd.org/Index.aspx?DataSetCode=HEALTH_STAT.

84

“Global Social Mobility Index 2020: Why Economies Benefit from Fixing Inequality,” World Economic Forum, January 2020, https://www.weforum.org/reports/global-social-mobility-index-2020-why-economies-benefit-from-fixing-inequality.

85

“Fair Progress? Economic Mobility across Generations around the World, 2018,” The World Bank, https://www.worldbank.org/en/topic/poverty/publication/fair-progress-economic-mobility-across-generations-around-the-world.

86

“ibidem”.

87

“Some Notes on the Scientific Methods of Simon Kuznets,” Robert Fogel, NBER, December 1987, https://www.nber.org/papers/w2461.pdf.

88

These two sentences are adapted from “The World Economic Forum, A Partner in Shaping History, The First 40 Years, 1971-2010,” http://www3.weforum.org/docs/WEF_First40Years_Book_2010.pdf.

89

The Limits to Growth, p. 51, http://www.donellameadows.org/wp-content/userfiles/Limits-to-Growth-digital-scan-version.pdf.

90

Ibidem, p.53.

91

Ibidem, p.71.

92

“Earth Overshoot Day,” Global Footprint Network, https://www.overshootday.org/newsroom/press-release-july-2019-english/.

93

“Delayed Earth Overshoot Day Points to Opportunities to Build Future in Harmony with Our Finite Planet,” Global Footprint Network, August 2020, https://www.overshootday.org/newsroom/press-release-august-2020-english/.

94

“Statistical Review of World Energy 2019, Primary Energy,” BP, https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/primary-energy.html.

95

“Fossil Fuels, Fossil Fuels in Electricity Production,” Our World in Data, https://ourworldindata.org/fossil-fuels.

96

“Statistical Review of World Energy 2019, Primary Energy,” BP, https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/primary-energy.html.

97

“Global Resources Outlook 2019,” http://www.resourcepanel.org/reports/global-resources-outlook.

98

“Water Scarcity,” UN Water, 2018, https://www.unwater.org/water-facts/scarcity/.

99

“ibidem”

100

World Economic Forum, 2016: https://www.weforum.org/press/2016/01/more-plastic-than-fish-in-the-ocean-by-2050-report-offers-blueprint-for-change/.

101

“22 of World's 30 Most Polluted Cities are in India, Greenpeace Says,” The Guardian, March 2019.

102

AirVisual https://www.airvisual.com/world-most-polluted-cities.

103

“Soil Pollution: A Hidden Reality,” Rodríguez-Eugenio, N., McLaughlin, M., and Pennock, D., FAO, 2018, http://www.fao.org/3/I9183EN/i9183en.pdf.

104

“Extinctions Increasing at Unprecedented Pace, UN Study Warns,” Financial Times, May 2019, https://www.ft.com/content/a7a54680-6f28-11e9-bf5c-6eeb837566c5.

105

“ibidem”.

106

UN Intergovernmental Panel on Climate Change, 2018, https://www.ipcc.ch/site/assets/uploads/sites/2/2018/07/sr15_headline_statements.pdf.

107

“New Climate Predictions Assess Global Temperatures in Coming Five Years,” World Meteorological Organization, July 2020, https://public.wmo.int/en/media/press-release/new-climate-predictions-assess-global-temperatures-coming-five-years.

108

“Here Comes the Bad Season: July 2019 Is Likely to Be the Hottest Month Ever Measured,” The Atlantic, https://www.theatlantic.com/science/archive/2019/07/july-2019-shaping-be-warmest-month-ever/594229/.

109

Telebasel, Sich entleerende Gletschertasche lässt Bach in Zermatt hochgehen, https://telebasel.ch/2019/06/11/erneut-ein-rekordheisser-hochsommer-verzeichnet/.

110

“Migration, Climate Change and the Environment, A Complex Nexus,” UN Migration Agency IOM, https://www.iom.int/complex-nexus#estimates.

111

“ibidem”.

112

“Burning Planet: Climate Fires and Political Flame Wars Rage,” World Economic Forum, January 2020, https://www.weforum.org/press/2020/01/burning-planet-climate-fires-and-political-flame-wars-rage.

113

“Our house is still on fire and you’re fuelling the flames, World Economic Forum Agenda, January 2020, https://www.weforum.org/agenda/2020/01/greta-speech-our-house-is-still-on-fire-davos-2020/.

114

“Top 5 Tech Giants Who Shape Shenzhen, ‘China's Silicon Valley,’” South China Morning Post, April 2015, https://www.scmp.com/lifestyle/technology/enterprises/article/1765430/top-5-tech-giants-who-shape-shenzhen-chinas-silicon.