The Indian Sub-Continent – marked by geography and hinduism

Map of the land mass of the Indian Sub-Continent

It is interesting to note that Indian Sub-Continent has remained, very nearly, the land bordered by the Himalayas to the north, the Indian Ocean to the south and the great rivers the Indus and the Ganges on either side. Many of the modern maps of the Indian Sub-Continent area came from traders travelling to the Moghul empire in the early 16th century. Traders sketched small-scale maps of the India Intra Gangem—the land between the Indus and Ganges rivers as the map below shows along with the earliest civilizations around the Indus River. 

Natural Geographical Features of India

But mapping the Indian Sub-Continent has not been limited to the natural geographical features of the land, in fact, many earlier maps exist of the Indian Sub-Continent were made to mark the lay out of the routes to popular pilgrimage centres known as dhams from as early as the 8th century AD. These maps provide an interesting lens through which to view the Indian Sub-Continent by combining the natural features that delimit the geographical area of the Sub-Continent with the marks that Hinduism has made on the land.

Hinduism in the Indian Sub-Continent

Many of the Hindu pilgrimages have been around for centuries. This point is illustrated by the fact that the land is filled with holy places. There are seven sacred rivers, including the Ganges. On its banks is Varanasi, one of seven holy cities, which itself is guarded by 56 shrines to Ganesha, the popular elephant-headed god. The body of Sati, a goddess, is said to be scattered at 108 sites throughout India. And 12 places across the country claim to have one of Shiva’s jyotirlingas—an immeasurable column of the Hindu god’s light.

Interestingly the word "Hindu" is derived from the name of the river Indus, which flows through northern India. In ancient times the river was called the 'Sindhu', but the Persians who migrated to India called the river 'Hindu', the land 'Hindustan' and its inhabitants 'Hindus'. Hence the religion followed by the Hindus came to be known as 'Hinduism'. According to historians, the origin of Hinduism dates back more than 5000 years. Hinduism is commonly thought to be the oldest religion in the history of human civilization.

 

It is generally believed that the basic tenets of Hinduism were brought to India by the Aryans who settled along the banks of the Indus river about 2000 BC. Hinduism does not have any one founder or any one core doctrine that is used to resolve controversies. Furthermore, it does not require its adherents to accept any one idea. It is marked by an attitude which is able to accommodate many different religious and cultural perspectives other than ones own. It is also characterised by a rich variety of ideas and practices resulting in what appears as a multiplicity of religions under one term 'Hinduism'. 

Perhaps one of the most important legacies of Hinduism is to allow the geographical area of the Indian Sub-Continent with its immense ethnic, cultural and linguistic diversity to be joined together.  

New York's Manhattan Grid - a blueprint for the US' biggest city

Aerial view in 21st century of the Manhattan Grid started in 1811

Before it could rise into the sky, Manhattan had to first create the streets, avenues and blocks that would later support the 20th century skyscrapers. In the early 19th century, New York's population was continuing to increase having tripled to 96,373 since 1790 mostly due to the growing port. It was then predicted that 400,000 people would live in the city by 1860. The City planners were entrusted with planning the city in 1811. They proposed a grid for the future city stretching northward from roughly Houston Street to 155th Street in the faraway heights of Harlem as the layout in the photo (above) and map (below) show.

Manhattan Grid Plan

 

The Grid Plan

The grid plan is a type of city plan in which streets run at right angles to each other to form a grid. The Greeks and Romans used City Grids as did the Chinese from 1500 BC onwards. The Chinese Tang 唐 Dynasty laid out their capital city in a grid plan.

The Roman model was also used in Spanish settlements during the exploration of the Americas. In 1573, Felipe II compiled the Laws of the Indies to guide the construction and administration of cities in the Americas. The Laws specified a square or rectangular central plaza with eight principal streets running from the plaza's corners. The grid plan became popular with the start of the Renaissance in Northern Europe. In 1606, the newly founded city of Mannheim in Germany was the first Renaissance city laid out in the grid plan as the map below shows. 

Mannheim Grid Plan

 

Why use grids?

An inherent advantage of the geometry of a proper grid is its tendency to provide regular building space in well-spaced sequences. This maximises the use of the land of a block without affecting street frequency - any frequency of streets produces the same packing effect. Furthermore geometry also minimises disputes over lot boundaries and maximises the number of lots that can front a given street.

Another important aspect of street grids is that traffic flows of either pedestrians, cars, or both, only cross at right angles. This is an important safety feature, since no one entering the intersection needs to look over their shoulder to see oncoming traffic. Hence the grid is a geometric response to our human physiology. It is highly likely that the original purpose of grid layouts comes from the Athenian Agora where the laying out of market stalls into regularised rows at right angles solved the problem of frequent wagon collisions that occurred when the markets were laid out randomly in a field with traffic approaches at odd angles.

New York's Manhattan Grid

The Manhattan grid plan was a far-reaching, visionary and daring plan to urbanize the geographical limits of the Island of Manhattan.The plan called for a regular grid of streets and property lines without regard to the topography of the island itself. This included numbered avenues running north and south roughly parallel to the shore of the Hudson River. The avenues would begin with First Avenue on the east side and run through Twelfth Avenue in the west. There would also be 155 orthogonal cross streets. 

Interestingly, Manhattan’s grid is not perfectly regular. No two blocks are ever precisely the same because the grid indulges variety, building to building, street to street. Some avenues are wider. Broadway cuts diagonally across the north-south streets, and those cuts have made room for public spaces (Union Square, Madison Square, Herald Square, Times Square, Columbus Circle, Verdi Square). 

New York’s grid has proved flexible enough to adapt when the city’s orientation has shifted north-south, and flexible enough to accommodate the creation of Central Park which interestingly was not a part of the original grid plan. It was not until 1853 that the idea for a large area of green space for leisure activities was envisioned.
 

One of the advantages of the Manhattan city grid is that it makes a complex place instantly navigable. Manhattan invites long walks, because walkers can judge distances easily and always know where they are. In contrast other cities such as London which are formed from historic agglomerations of villages, often include vast stretches of nowhere land as they sprawl in ways that discourage easy comprehension and walking. 

 

Finally, perhaps one of the greatest benefits of the Manhattan grid is that it gives order through physical form to a city filled with a diversity of ideas, concepts and people from so many different places. It is not likely that this is exactly what the original city planners had in mind back when they proposed that the Manhattan Grid should "promote the health of the City" back in 1811.  

Kazakhstan - a booming Central Asian Republic

New Foster designed Entertainment Centre in Astana, Kazakhstan's capital.

The five Central Asian nations of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan have collectively gained an immense strategic importance over the last two decades, thanks to their geography and vast deposits of natural resources including oil, gas, uranium and gold.

The 16m citizens of the oil-rich Kazakhstan have plenty to be proud of. Growth has averaged 8pc a year for the past decade, a far better performance than the other Central Asian economies. Average income per person is now over $11,000 a year, twice as much as Turkmenistan and six times more than Uzbekistan, which, with 28m people, is the region’s most populous country. This puts Kazakhstan among the ranks of middle-income nations.

Kazakhstan is already the world’s biggest producer of uranium. It is set to join the world’s top ten oil-producing countries, when the giant Kashagan oilfield in the Caspian Sea comes on stream soon. So far the country has managed to balance cleverly between its giant neighbours, Russia and China, and the US and Europe.

But who are the Kazakhs and what of their ancient nomadic culture?

Map of regions of Kazakhstan

Ancient Greeks had a word for the people who lived on the wild, arid Eurasian land area stretching from the Caspian Sea to the border of China. They were nomads, which meant “roaming about for pasture.” They were wanderers and, not infrequently, fierce mounted warriors. Essentially, they were “the other” to the agricultural and increasingly urban civilizations that emerged in the first millennium B.C.

 

As the nomads left no writing, no one knows what they called themselves. In any case, historical records show that their literate neighbours looked down on the nomads and considered them to be in an intermediate or an arrested stage in cultural evolution. They had taken a step beyond hunter-gatherers but were well short of settling down to planting and reaping, or the more socially and economically complex life in town. But archaeologists in recent years have moved beyond this mind-set by breaking through some of the vast silences of the Central Asian past. Findings in graves from as early as the eighth century B.C. show that the Kazakhs maintained networks of cultural exchange with powerful foreign neighbors like the Persians and later the Chinese. 

 

The first US exhibition devoted entirely to the nomadic culture of ancient Kazakhstan opened in March 2012 at the Institute for the Study of the Ancient World (ISAW) in New York. Nomads and Networks: The Ancient Art and Culture of Kazakhstan focuses on the people of the Altai and Tianshan Mountain regions, located in the eastern part of the country, from roughly the eighth to first centuries B.C. Featuring around 250 artifacts, the exhibition dispels the notion that nomadic societies were less developed than sedentary ones. Rather, they are revealed to have been highly sophisticated, with strategic migratory routes, active networks of communication and cultural exchange with their neighbors. 

 

Artifacts range from bronze openwork stands, superbly decorated with animal and human figures; to “petroglyphs” or rudimentary drawings, which marked important places in the landscape; to dazzling gold adornments that signified the social status of those who wore them. One of the highlights is the recently excavated, but never-displayed material from a fourth–third century upper-class burial-site in Berel, near the Russian/Chinese border, where permafrost conditions enabled the preservation of organic materials. The exhibition contains some 120 artifacts from this rich site.

Beginning in the third century B.C., Chinese luxury items, like the Wusun diadem, appeared in nomad burials, mainly associated with Han dynasty. According to Chinese accounts, the Wusun nomads may have furthered contacts between Central Asian nomads and Han China, at the time expanding westward and in need of horses in its campaign against borderland rivals. The below video provides more insight on the Central Asian nomads and images from the exhibition.

 

Here come the BRICS 金砖 – the new economic powers in the 21st Century

3rd BRICS Leaders Meeting in 三亚, China, 14 April 2011

4th BRICS Leaders Meeting in New Delhi, India, 29-30 March 2012

In 2011 the BRIC Group (Brazil, Russia, India, and China) became BRICS with the addition of South Africa. The BRIC concept, conceived in 2001 by Jim O’Neill of Goldman Sachs, was embraced by the four original countries in 2008, when their foreign ministers met on the sidelines of a Russia-India-China (RIC) trilateral meeting. The addition of Brazil paved the way for the first BRIC summit in 2009

21st  Century economic powers

The BRICS economies are likely to be the most important source of future global growth. They represent more than a quarter of the Earth’s landmass, over 41pc of its population, almost 25pc of world GDP, and nearly half of all foreign-exchange and gold reserves. In 2030, of the world’s four largest economies, three will be BRICS countries. This has important implications for the developed countries in Europe and the US. For example, you cannot solve climate change without the BRICS. You cannot deal with global financial instability effectively without the BRICS. Even if the BRICS are unable to find common ground on a certain topic, it is likely that their views will strongly influence the attempt to find solutions.

The big challenge for the BRICS

The challenge at the moment for the BRICS is to articulate a common vision that will show the rest of the world that it is a powerful alliance. One of the biggest challenges it faces is to think outside of the box and to consider new ideas and to create something that doesn’t yet exist and doesn’t fall apart as soon as a bilateral problem comes up. There are very few powerful alliances in the world without any European or American participation. In this sense the BRICS is unique.

If the BRICS were able to speak with one voice on any issue in global affairs, they would immediately turn into an agenda-setter and a very powerful voice that neither the US nor Europe could ignore. They would provide a serious alternative to the established powers narrative in how to view the world. The US control of the public discourse globally is still quite strong because the emerging countries have not yet articulated an alternative vision.

 

How homogeneous are the BRICS

The BRICS were basically three countries (China, Russia and India) that were part of the Eurasian land mass plus Brazil which is geographically very far away from Eurasia. Russia, India and China have a lot of common history and have known each other for a long time meaning that, until South Africa joined, Brazil was a bit of the odd man out. Therefore the inclusion of South Africa has helped the BRICS become more of a global brand, capable of representing more continents and has also helped Brazil feel less excluded.

For Brazil, Russia, India, and South Africa, the BRICS grouping serves as a forum to underscore their rising economic strength and showcase their emergence as global players. But, for China, which is already recognised as a rising world power, the BRICS offers tangible – not just symbolic – benefits. Consequently, China is seeking, for example, to bring to birth a new common development bank that can help to mobilise savings between the BRICS countries. This proposal will be discussed at the New Delhi meeting this week. The Geo-Trade Blog will follow developments on the proposed new bank.

In terms of Brazil, the Brazilian Government continues to focus on its own region. There is strong acknowledgement in Brazil that it will always be part of the Americas region and that the economic and political ties with that region will always be a priority. Hence under the Rousseff and Lula administrations, the Government has sought to balance the BRICS with the US and other regional groupings such as MERCOSUR. 

 

Furthermore, China has shown itself so far to be a status quo power with respect to the UN system, it opposes enlargement of the Security Council’s permanent membership. It wishes to remain Asia’s sole country with a permanent seat – a stance that places it at odds with India. 

 

Finally how important economically are the BRICS at present

To get some idea of the magnitude of the BRICS compared with overall world exports. Trade within BRICS rose 15 fold from 2001-2010 to $230bn, a big rise of 28pc annual growth but in world terms this volume is still modest when compared with overall world exports in 2011 that amounted to $17.8trn.

A "New" Wonder Material – Super Concrete

Super Concrete viewing deck in the Netherlands

The Romans mixed crushed rock with burnt lime and water to build the Pantheon, which still holds the title of the world's largest unreinforced concrete dome. But modern concrete has typically proved miserably inferior and vulnerable to a slow deformation process called "concrete creep."

French researcher Joseph Davidovits uncovered the chemistry of geopolymers, or super-cements. Davidovits also promulgated the theory that the Egyptian pyramids were built using a similar type of geopolymer limestone concrete - an idea supported by X-ray and microscopic study samples.

Recently the US Air Force Research laboratory has backed using geopolymers to build runways, rocket nozzles, and even glue for satellite components. Iran, situated geographically in an earthquake zone has similarly invested in the idea of super-strong concrete, its engineers have developed some of the toughest building materials in the world.

The new super concrete – ultra-high performance concrete (UHPC)

Super concrete  is based on the traditional ingredients of sand and cement. But, in addition, pure powdered quartz (rather than the tainted variety that makes up most sand) and various reinforcing metals and fibres are added to it. This is why super concrete can withstand more compression than other forms of concrete. Super concrete is also more flexible and durable than conventional concrete. It can withstand pressure many times higher than normal concrete can and therefore can be used to make lighter and more slender structures.
 

For this reason, Iranian civil engineers are interested in using it in structures as diverse as dams and sewage pipes and are working on improving it still further. Researchers in the University of Hamadan in Iran for example, are using polypropylene fibres and quartz flour, known as fume, in their mix. It has the flexibility to absorb far heavier blows than regular concrete. Furthermore researchers at the Ottawa University in Canada are working on enhancing the molecular structure of cement. One way to enhance the internal structure of concrete is to use nanoparticles. For example, using different types of metal-oxide nanoparticles such as oxides of iron, aluminium, zirconium, titanium and copper. At the nanoscale materials can take on extraordinary properties. Although it has been demonstrated only in small samples, it might be possible, using such nanoparticles, to produce concrete that is four times stronger than the current ultra-high performance concrete. 

 

Uses for both civil and military purposes

Super concrete also has considerable military applications. A study, published in 1995, showed that although the compressive strength of concrete was enhanced only slightly by the addition of polymer fibres, its impact resistance improved sevenfold. Hence super concrete has the potential to withstand the impact of big blasts.

An Australian study carried out between 2004 and 2006 confirmed that super concrete resists blasts as well as direct hits. The tests, carried out in Australia, involved a charge equivalent to six tonnes of TNT. This fractured panels made of super concrete, but did not shatter them. Nor did it shake free and throw out fragments, as would have happened had the test been carried out on normal concrete.

The New Geo-Trade Order - the Chinosphere, the Hispanosphere and the Anglosphere

Culture Map from the World Values Survey

In a recent paper published by a London think-tank, the Legatum Institute, its author the Geographer, Joel Kotkin, looks at the world through the prism of culture. The ties of history and habit and of shared experiences and common customs can explain a lot about who does business with whom. For example research shows that two countries that share a common language trade 42pc more with each other. Two countries that once shared imperial ties trade a massive 188pc more. Imperial ties affect trade patterns more than membership of a common currency which boosted trade by only 114pc. 

The Chinosphere

China's growing might is reinforced by its links with the overseas Chinese. Around 70m ethnic Chinese live outside mainland China. Some are descended from those that moved abroad during China's imperial expansion from the 12th to 15th centuries, settling in what is now Indonesia, Vietnam, Malaysia and Myanmar. More recently many have migrated to the US and to other developed countries. 

Overseas Chinese are the biggest innovators in mainland China, around 68pc of the foreign direct investment that China received in 2009 came from places where ethnic Chinese are the biggest group such as Hong Kong, Singapore and Taiwan. Moreover China's government has funded hundreds of Confucius institutes to teach the Chinese language and nurture China's soft power abroad. In business, cultural ties matter because they lower transaction costs. And cultural affinity can super charge communication and foster instant trust the glue of successful business. In this way kinship still counts to foster relationships. Chinese-Americans naturally do business with Shanghai and Singapore.

The Hispanosphere and the Anglosphere

In a similar vein research shows, for the hispanosphere and the anglosphere, the two great European cultural blocks, that the flows of people and information are a massive 93pc higher when compared with traffic flows with the rest of the world. Moreover it is calculated that Spain's ties with its old ultramar provinces in América Latina are even closer than Britain's with its ex-colonies in the US, Ireland, Canada, Australia and New Zealand.

Interestingly, the World Values Survey divides the world into big cultural zones as the chart above shows on the basis of common values. The Anglosphere is currently the world's biggest economic block, it accounts for more than 25pc of the world's GDP. It produces more scientific papers than any other country. In addition, English is the closest the world has to a lingua franca. It has dominated international business and diplomacy in the 20th century and into the 21st century. 

Language Diversity in the 21st century

The Chart below shows the US, China, Mexico and Russia have over 100 languages each, but score relatively low on the diversity index, because English, Chinese, Spanish and Russian have grown to the point where they threaten to destroy the many tiny native languages. By contrast, linguistic rivalry and relative poverty have kept a single language from dominating countries like India and Nigeria, which score high on the diversity index. Both poverty and geography combine to make Congo and Papua New Guinea the most linguistically diverse countries in the world.

Chart of Language Diversity in 21st Century Source: The Economist

Nollywood - Nigeria's thriving Lagos based film industry

Nollywood the second most prolific film industry in the world after India’s Bollywood.

In Lagos, Nigeria's financial capital, and other cities in the South, it's possible to imagine that Nigeria is going to be the next Brazil, an emerging giant. In the North, blighted by environmental degradation, struggling agriculture and collapsed industry, life is no better than in neighbouring Chad, Niger or Mali.

Lagos, the Nigerian business capital, is said by locals to have produced more films than there are stars in the sky. The streets are flooded with camera crews shooting on location. It is hard to avoid Nigerian films in Africa. Public buses show them, as do many restaurants and hotels. Nollywood, produces about 50 full-length features a week, making it the world’s second most prolific film industry after India’s Bollywood. 

Nigerian films are as popular through out Africa as they are at home. It is said that Ivorian rebels in the bush stop fighting when a shipment of DVDs arrives from Lagos. Zambian mothers say their children talk with accents learnt from Nigerian films.Millions of Africans watch Nigerian films every day. 

How did Nollywood come about?

The first true Nollywood film resulted from a failed business venture. In 1992 Kenneth Nnebue, a market trader, ordered a large consignment of blank videotapes from Taiwan. Finding them hard to sell, he hired a theatre director to make a cheap film and copied it onto the tapes to boost their appeal. “Living in Bondage”, the story of a farmer in a big city who loses his wife and is haunted by her ghost, sold more than half a million copies.

Interestingly the market traders still control Nollywood to this day. They make films for home consumption. DVD discs sell for a dollar. Print runs can reach a million. Studios, both in the physical and the corporate sense of the term, are unknown. Market traders double as financiers. All scenes are shot on location and with a shoestring budget of no more than $100,000. Most of the financiers are based in the massive, chaotic market of Idumota in Lagos. 

As soon as a film is released, pirates rip it off. It takes the pirates just two weeks to copy a new film and distribute it across Africa. The merchants must take their money during that fortnight, known as the “mating season”, before their discs become commodities. As soon as the mating season is over they start thinking about the next film.

The merchants curse the pirates, but in a way they are a blessing. Pirate gangs were probably Nollywood’s first exporters. They knew how to cross tricky borders and distribute goods across a disparate continent where vast tracts of land are inaccessible. Sometimes they filled empty bags with films when returning from an arms delivery. Often they used films to bribe bored guards at remote borders. The pirates created the pan-African market for Nollywood films. 

The Secret of Nollywood's success 

One of the key ingredients of success is that the actors in Nollywood films speak English, rather than one of Nigeria’s 514 native languages. Large parts of the continent are familiar with English due to colonialism, and Nollywood’s influence is continuing to spread the language more widely. A further ingredient that adds to their success is that the films’ plots have strong pan-African appeal. They often revolve around the difficulties of new arrivals in big cities, an experience familiar across the continent. The epic film “One God One Nation” portrays a Muslim man and a Christian woman who struggle to marry. “Caught in the Act” (see poster below) shows a wife who is wrongly accused by her own mother-in-law of abducting a child. The overarching theme of Nollywood films is Africa’s trials and tribulations of living in the 21st Century in an increasingly globalised world.

Film Poster for Caught in the Act

Markets and the Power Shift to the Emerging Economies

The weight of economic activity is shifting from the US & Europe to Asia & Iberoamérica

Energy squeeze – higher prices

The longer-term energy story is complex. The developed world is now barely increasing its use of energy and energy demand is projected to remain stable for the forseeable future, at least for the next couple of decades. Energy use in the emerging world, by contrast, continues to grow relentlessly every year.

The emerging world now uses more energy than the old developed world. This is what you would expect to happen, for as the weight of economic activity shifts from the US and Europe to Asia and Iberoamérica, so too will demand for energy. But it means the price paid by the developed world will be increasingly determined by the emerging world. The so called “West” (the US and Europe) has never been in this position since industrialisation. There is a weak parallel with the rise of Opec in the 1970s when the oil producers cut supply and quadrupled the price. At that time, the US and Europe found other sources of oil and reduced their dependence on Opec. But this time the squeeze comes from the demand side, not the supply, and there is not much the US and Europe can do about it.

And what next for the commodities markets 

The Chart below provides an overview contrasting developed countries with emerging economies' share of GDP and their world share of some of the most important commodity markets and other indicators:

Source: The Economist Daily Charts

Many analysts believe that the long-running boom in commodity prices (for some of the world's most important raw materials) has been driven up by financial speculation as much as physical need. Hence the commodities market may be heading for a massive crash on the scale of sub-prime. The commodity boom has not reached the excess so evident in the subprime era but it is pretty big nevertheless. Recently, some analysts have speculated that the gigantic merger between the mining company Xstrata and the commodity trading house Glencore is a signal of the prospect of a looming crash in the commodities markets. Just before the subprime crash, many massive subprime acquisitions came at the end of a massive boom in the securities markets and those doing the deals appeared to have sensed that the party was coming to an end and that they had to do something spectacular to be able to reap the super profits to be had in the final stages of the blowout. The Geo-Trade Blog believes it is possible that this deal may be the signal that the commodity markets are today where debt markets were on the eve of the credit crunch.

Printing Money and Bubbles in Markets

In the immediate aftermath of the subprime crash, printing money or quantitative easing (QE) as it is also known helped a wide variety of financial institutions to avoid facing up to their losses, covertly recapitalising US and European banks that were, to all intents and purposes, insolvent. Over the last few years protests from countries including Thailand, Australia, South Africa and China have been heard complaining that the US' unprecedented monetary expansion was responsible for causing dangerous bubbles in commodity markets going way beyond US equities. The US government also knows, although it denies it, that the more money it prints, the more speculative pressures push up global food prices. 

While the causes behind the Arab Spring unrest in 2011 are complex, it must be noted that it was surging food price that provided the spark. Hence the large emerging economies view "quantitative easing" as a developed country policy aberration, dressed up as a "legitimate technical solution" that they do not agree with at all. Brazil's finance minister has described it as "throwing dollars out of a helicopter and the Russian PM has described it as "economic hooliganism". The emerging economies clearly perceive the current trials and tribulations of the developed countries very differently to the conventional wisdom that underpins the policy decisions and assumptions that justify QE in the developed world. Emerging Economies are aghast that the US is now shouldering declared federal liabilities of $9,100bn - making it by a long way the world's largest debtor. Furthermore US Government debt is set to reach 42pc of GDP by 2015 according to official estimates. And more and more interest is being shown in the fact that the US' total sovereign liabilities including off-balance sheet items such as Medicare and Mediaid amount to $75,000bn - no less than five times annual GDP.

 

South Korea - the Asian "France" or "Germany" of the 21st Century

 K-POP Video on YouTube

 

Overseas trade and the industrial revolution of 19th and 20th centuries

As overseas shipping costs fell during the industrial revolution, it became possible for massive industrial cities to specialise in large-scale production and ship their goods to customers all over the world. The concentration of industry in cities, however, was still largely a product of the fact that it was costly to move goods over land. In a port city, you could bring in inputs, process them into outputs, and ship them back out. If it had been necessary to move intermediate goods well inland for manufacture at any point, costs would have soared, making profitable production impossible.

But transport costs continued falling. Shipping became much cheaper and more efficient. Air freight became an economic possibility. And improvements in trucking and freight rail led to stunning drops in the cost of moving goods over land. And so where once producers had crowded on top of each other in cities to take advantage of specialisation without blowing their budget on transport costs, they now began to spread out: first into the suburbs, then into cheaper regions of the same economy, and then, finally, into vastly cheaper economies abroad. This process facilitated the rapid industrialisation of Asian giants firstly Japan and then South Korea.

South Korea's 20th century economic success
 

In 1960, in the aftermath of a devastating war in the Korean peninsula, the exhausted south was one of the poorest countries in the world, with an income per head on a par with the poorest parts of Africa. At the beginning of 2012 it is richer than the European Union average, with a gross domestic product per person in US dollars of $31,750, calculated on a basis of purchasing-power parity (PPP), compared with $31,550 for the EU. The below graph shows GDP per capita levels projected to 2050.

Goldman Sachs - IPPR: Third Wave of Globalisation Report

 

 

 

Much of South Korea’s economic miracle has been the work of big family run conglomerates, or chaebol. Samsung Electronics, for instance, one of 83 constituent parts of the Samsung empire, has become the market leader with its smartphones overtaking Apple. Korea’s shipyards have just started work on a new class of container ships called the triple E-class which are the largest container ships ever built. Korea’s large companies employ slightly less than a quarter of the workforce and produce more than half the country’s output. 

The chaebol system as with any family business, the moment of greatest danger is when the leadership passes to the next generation. Samsung passed this test in 1987 when the founder handed over to his son, Lee Kun-hee. Now Mr Lee’s son, Jay Y. Lee, has been appointed chief operating officer of Samsung Electronics and a new transition looms. 

The South Korean model of heavy state intervention combined with an aspirational and entrepreneurial culture has brought it huge economic success. The model is being studied closely by Vietnam, Indonesia, Cambodia, Bangladesh and Mongolia as well as the Central Asian republics of Uzbekistan, Kazakhstan and Kyrgyzstan. But aside from the economic success, South Korea dominates the cultural sphere too through the immense popularity of Korean pop (K-pop) (see above video) and television dramas and soap operas in the rest of Asia, as part of the "Korean wave" phenomenon washing across Asia.

Challenges ahead for 21st century

To some extent South Korea’s economic success is dependent on China. South Korea exports more capital goods to China relative to the size of its economy than anyone else, even Germany. 

 

But, there are signs that the chaebol may be stifling innovation and entrepreneurship. They have proved expert at applying and improving existing technology, even the high technology of touch-screen smartphones. But except in some internet businesses and computer gaming, South Korea has few start-ups or cutting-edge technology firms.

South Korea lacks nationwide venture-capital businesses because each chaebol has one of its own. The firms snap up the best and brightest graduates and turn them into company men. In this way the conglomerates act like light-hogging trees in a forest: their canopy may be impressive, but it is hard for anything to grow underneath. As South Korea moves towards the technological frontier, such attitudes will have to change. Innovation is not going to come if everyone shelters from risk in the chaebol.

Furthermore, there is a huge productivity gap between South Korea’s export-oriented chaebol and small and medium-sized firms (SMEs) which dominate services. Value added per worker in small firms is less than half that in large ones. SMEs’ operating profits were 4.5% of sales in 2007, compared with about 7% for large firms. Small firms spend about half as much on research and development as large ones per unit of sales and borrow far more relative to assets. Over time, their performance seems to be getting worse. South Korea, in other words, has first-world manufacturing exporters but currently has third-world services.

Nuclear powered aircrafts, could they become a reality?

Artist's impression of a nuclear powered aircraft

A recent work by Cranfield University's Bhupendra Khandelwal on an air transport model that combines nuclear-powered cruisers with chemical-powered short-range transports considers this possibility. As these long-range cruisers continually fly looping tracks that cross oceans and take them over major population centres, shorter-range aircraft would bring up passengers and cargo that would ride on the cruiser until they reach their destinations, where they would transfer to other short-range aircraft and fly down to land.

He has developed an air transport model (below) that combines nuclear-powered cruisers with chemical-powered short-range aircraft.

Graphic courtesy of Cranfield University Study, UK.

Taking off from conventional airports, flying to and landing on the cruiser, the chemical-powered transport would be optimised for take-off, climb and landing, with no need to cruise. This would reduce emissions, says Khandelwal, as the nuclear-powered transport would carry the aircraft to its destination, where it would detach from the cruiser to descend and land normally.

The cruiser, meanwhile, would have taken off from a remote site. This and its extreme endurance, which significantly reduces the number of take-offs and landings, would minimise the risk of a crash leading to a nuclear incident. Also the cruiser would be unmanned, he says, improving safety and avoiding the risk to a crew of prolonged radiation exposure during the cruiser's extended voyage. For further safety, the cruiser would have back-up chemical propulsion.

Khandelwal calculates this air-transport model could produce a fuel saving over conventional point-to-point flights of 40% for a 1,000km mission, rising to 85-90% for a 10,000km mission, where the chemical-fuelled flights to and from the cruiser would be a smaller fraction of the total.

Nuclear propulsion could be either direct or indirect cycle. In direct cycle, air flows through the compressor, into the reactor where it is heated, and out through the turbine. The risk here is radiation in the exhaust gases. In an indirect cycle a heat exchanger transfers energy from the reactor to the airflow. The radiation risk is reduced, but so too is thrust. 

Khandelwal's work provides much food for thought on new models of air travel in the 21st Century. The Geo-Trade Blog will continue to follow new innovative models for air transport with the potential to reshape travel and trade.

中国 China in 年 2012 – Challenges ahead in the Year of the Dragon 龙年

Special Postage Stamp issued for Chinese New Year - Year of the Dragon 2012

A new political theory: universalists v exceptionalists

In recent years the battle lines in Chinese politics have become clearer. They appear to be drawn between universalists, who believe China must eventually converge on a new value based political theory, and exceptionalists, who believe that China must preserve and perfect the current "Chinese Model". The context for this debate takes place within the political uncertainty in the build-up to the leadership transition combined with a phobia amongst the Chinese elites of political reform.

Nevertheless the philosophical political debate is more real than ever. On the one hand, the term “universal values” 普世价值 is a new one in Chinese Political debate. Many Chinese scholars believe the debate really took off in 2008 after the earthquake in the Sichuan province 四川省 that killed around 80,000 people. A liberal newspaper in the southern province of Guang dong 广东省published an editorial that praised the government's swift response. It said it had “honoured its commitments to its own people and to the whole world with respect to universal values”. The debate continued in December 2008 when a manifesto was issued in support of universal values known as Charter 08. It said, China faced a choice of maintaining its authoritarian system or recognising 普世价值 "universal values". However there is no real agreement on what the universal values are. Some Chinese scholars prefer to contrast what they see as a Confucian stress on social harmony and moral rectitude with the West's emphasis on individual rights.

Furthermore many Chinese scholars are surprised by the notion that multi-party democracy is the form of government towards which all other systems naturally evolve. Chinese academics do not subscribe to the concept of the nation-state, the basis of modern diplomacy developed in Europe. Rather they have developed a different Chinese theory of International Relations. Much of the Chinese theory is based on the notion of 天下, or in English, “all under heaven”. This dates back to the golden age of classical Chinese philosophy, of Confucius, Mencius, Laozi and the rest in the “warring states” period before China's unification in 221BC under the first Qin emperor. 天下 is widely understood as a unified world dominated by one country to which neighbours and those beyond look for guidance and pay tribute.

The concept of 天下, as advocated by the Beijing philosopher, 赵汀阳 Zhao Tingyang, is a utopian concept of universal harmony, unattainable, he concedes, for 200-300 years, where everyone opts into a system of global government. There is no compulsion to opt in and the system is one of equality. However he stresses 天下 is a voluntary choice. There are echoes of 天下 in the 2008 Beijing Olympics slogan “One World, One Dream”. There are also echos of it in the blockbuster film Hero released in 2002 set in the time period of the Qin unification.

Moreover Chinese scholars criticise the notion of "supposed" equality between nation-states, they note some countries are more equal than others. For example, China is a big country and other countries are smaller countries and that is just a fact. They also perceive that national governments often ignore the interests of those without a vote, such as unborn generations (not a usual consideration of Western Politicians) and foreigners.

On the other side of the debate is the exceptionalist camp. It's main ideas have been recently summed up in a book by 张维为Zhang Wei Wei called “The Rise of a civilisational state".中国震撼:一个"文明型国家"的崛起 In this book, Mr Zhang argues that China is unique as the world's only amalgam of an ancient civilisation and a huge modern state and is increasingly returning to its own norms and standards. Liberal Chinese are worried that the exceptionalist school of thought is also attracting the most ardent nationalist supporters, who often claim that the West is trying to undermine China's achievements and keep the country from its rightful place as a great power. 张维为Zhang Wei Wei, recently wrote that China's evolution was “as if the roman empire had never collapsed and had survived to this day, turning itself into a modern state with a central government and modern economy, combining all sorts of traditional cultures into one body with everyone speaking Latin.”

Consequently the new communist party leaders when they come to power during 2012 and into 2013 face a daunting task, to navigate their way through these two competing political philosophies both vying to win the battle of ideas for the future of Chinese political thought.

Demographic challenges on the horizon too

A further serious challenge is related to China's demography. Over the last three decades, China has had its fertility artificially suppressed by the one-child policy and as a result it is ageing at an unprecedented rate according to statistics from the UN's Population Division. In 1980 China's median age (the point where half the population is older and half younger) was 22 years, a common developing country figure. But UN statistics show a worrying trend, China will be older than the US as early as 2020 and older than Europe by 2030. This will likely bring an end to its cheap-labour manufacturing and its dependency ratio with rise from 38 to 64 by 2050, one of sharpest rises the world has ever seen.

Furthermore China will have the added challenge of sexual imbalances, after a decade of sex-selective abortions, China will have 96.5m men in their 20s in 2025 but only 80.3m young women. Given these alarming figures, demography is set to become another serious looming challenge for the new leaders of the Communist Party in 2012. The diagram below shows the UN statistics of the Chinese population on the left in 2000 and a projection on the right for 2050:

Chinese Population Pyramid Source: UN Population Division