The New Global Economy
The 19th annual International Economic Forum of the Americas brought together 180 speakers from around the world and over 3,000 participants to discuss how to return the global economy to a strong, sustainable growth path. The theme of the conference, “A New Economic Cycle: New Realities, New Frontiers”, allowed for wide-ranging discussions of global trends in economy, governance, and pensions; energy, natural resources, and sustainable development; and international trade, innovation, and health; as well as in depth analysis of the implications of these trends for specific industries, sectors, companies, and institutions.
The CIC asked conference participants to talk about the greatest opportunities and challenges these trends are creating for the global economy, and to sum up the attitude or approach that they are adopting to enhance their probability of achieving success over the next 5 years. Their answers, published here, demonstrate the value of bringing together experts with original insight into the forces shaping our new global economic cycle. Networks of expertise like those forged at the International Economic Forum of the Americas are critical to our successfully navigating disruptions in the economic landscape. The Conference of Montreal is committed to providing a space to forge and strengthen those networks, and to facilitating exploration of the most pressing economic issues of our age.
Nicholas Rémillard
President and Chief Executive Officer
Joseph J. Andrew
Global Chair, Dentons
Dominic Barton
Global Managing Director, McKinsey
Perrin Beatty
President and Chief Executive Officer, The Canadian Chamber of Commerce
Greg Becker
President and Chief Executive Officer, Silicon Valley Bank
“Beware biased pessimism”
What should concern all of us involved in the global economy is biased pessimism. When I read that China is slowing from 8 per cent to 7 per cent growth, I become worried about China. That is biased pessimism. My concern about China’s growth trajectory isn’t based on any real statistical analysis. Consider that the base for the 7 per cent growth rate we’re so terrified of would be double what it was three years ago.
Biased pessimism is the biggest problem in the global economy. Everywhere people are so focused on global economic data, they are forgetting to look at data for the individual markets and sectors they want to invest in. Legitimate analysis that acknowledges the reality of individual countries or companies’ circumstances has disappeared and has been replaced with analysis that always looks for what’s wrong.
We’ve developed this bias because we were so badly beaten up during 2008-09. But that is exactly what happened during the Great Depression – the story of the 1930s was uneven economic development that eventually led to war. Biased pessimism can have social and military consequences as well, not just economic ones.
How do we fight this mentality? We review actual analysis of a given economic circumstance and the alternatives rather than reach for impartial conclusions. We focus on creating frictionless economies and building a global market based on frictionless interactions and transactions. Doing that will counteract biased pessimism. When you clear space to let companies do what they want in order to give consumers what they want, realistic optimism can take root.
The generation that will be in power by 2025 has grown up assuming a frictionless word, assuming that people should be able to speak and do business with each other no matter where they are. They are driving us toward a frictionless economy, and that is creating just as many, if not more, opportunities today to invest and trade than there were in 2007.
“Invest for the long term.”
A convergence of historic shifts is transforming the global economy. Foremost, emerging countries – especially China, India, and Indonesia – have overtaken Western powers as engines of growth. 313 cities in emerging Asia will fuel a third of growth in global GDP through 2025, and a rapidly expanding Asian middle class will number over 2.7 billion. These consumers will fuel demand for consumer goods and infrastructure. $13 trillion, three times today’s annual investment in infrastructure, will be needed in Asia in 2025.
The pace of innovation is also increasing exponentially. In 1975, the world’s fastest supercomputer cost $5 million. Today, an iPhone 4 contains the same computing power. Advances in artificial intelligence, machine learning, and voice recognition are making it possible to automate many knowledge worker tasks. Continued progress could impact $7 trillion in value currently generated by knowledge workers globally – equivalent to half of the 2011 GDP of the United States.
Underlying these massive opportunities are changes to the basic assumptions that underpinned prior growth models. After a century where decreasing resource costs fed global economic expansion, a 147 percent rise in commodity prices since 2000 has wiped out the earlier decline. Demographically, the large baby boom and young developing economy populations that have driven historical growth will be unable to drive future growth. For example, emerging economies will only have three workers to support each retiree by 2050, a decline from a ratio of ten to 1 in 2000.
Any one of these developments has profound implications for companies and governments around the world. Together, these changes create a new context that presents great challenges but also vast opportunities.
The core attitude or approach global businesses adopt to enhance their probability of economic success over the next 5 years would be “invest for the long term.”
“Innovation”
The most important megatrend that Canadian businesses face today is globalization itself. The world’s economy continues to evolve into a complex tapestry of global value chains in which final products are produced from a wide variety of components and services that can come from anywhere. Trade agreements, improved transportation, and rapidly-evolving technologies like digitization all make it easier for businesses to source and sell anywhere in the world.
As a result more Canadian companies are specializing in niches that they can supply better than anyone else in the world – everything from software to components to financial services – to customers throughout the world. The company that faces the greatest risk going forward is the one that either misunderstands or is in denial about what globalization means: there are very few truly local markets any more. Companies therefore need to benchmark themselves against the very best in the world and be prepared to seek out opportunities wherever they exist.
If I were to sum up the attitude that Canadian businesses should adopt to best increase their chances of achieving success in a globalized economy, it would be “innovation.” Unfortunately, it’s a term that gets overused to the point that its meaning is largely drained out of it. To me, it means always looking for opportunities and for new ways of doing things better. The number of major companies that got their start during tough economic times is a reminder that while less adaptable businesses may disappear, many companies find that periods of economic upheaval create opportunities to present new and imaginative solutions to problems. No matter whether that upheaval is generated by economic cycles, political changes, or revolutions in technology, every change brings with it the opportunity to do something better. Institutions with a nostalgic view of what the future should look like may not survive, but those that understand how the world is changing and that have the capacity to offer new or improved products can do extremely well.
Canadian businesses should also look to share the benefits of innovation. Enormous opportunities now exist to help African countries develop their economies and provide higher living standards to their people. This is a priority for Dr. Kim, the President of the World Bank. As a physician, he saw the devastating effects of poverty in the developing world and he understands the urgency of improving living standards for the very poorest people on the globe. But he also understands that our goal should not be simply to sustain people living in poverty, but to help them escape it. Providing foreign aid is an essential role of governments, but our objective should be to move countries over time from aid to trade, which will give them the opportunity to support themselves. This is where the private sector comes in: it can marshal resources that will dwarf what governments are capable of doing, and it can use its investments and the transfer of technologies to help developing societies become self-sustaining.
“Space to grow”
So much of turning entrepreneurship into successful, high-growth companies depends on the individual. Wherever governments and companies are doing things to allow individuals to express their creativity, their entrepreneurship, their ideas – those are the areas where you’re likely to get success. There isn’t one thing from a government perspective or a business perspective that will guarantee a vibrant start-up sector and the creation of high-growth companies – immigration and tax reform are two critical areas but even changes there won’t be determinative. As I tell our clients, in our innovation economy, the bottom line is that it’s hard, and it’s supposed to be. If it was easy, anyone could do it. Great companies are not created through an easy process. Almost every successful company we work with goes through its ups and downs. It’s dependent upon the CEO, the management team, the leadership team, and the founders of the company to successfully pivot to a different business model when circumstances require it.
David Biette
Director, Canada Institute, Woodrow Wilson Center
Alpheus Bingham
Founder and Board Member, Innocentive
Gordon Feller
Director, Urban Innovation, CISCO
Christoph Frei
Secretary General, World Energy Council (WEC)
“Managing Politics”
Politics present the biggest challenge to improving North American trade. The business community understands that managing border politics is critical – they are the ones pushing hardest for regulatory cooperation, and they are also the ones thinking ahead to the bigger, longer-term challenges related to infrastructure and labour mobility.
To make North American trade as efficient as possible, we need better roads, better railway networks, and better ports. America needs to make better use of the skills that our workers have, and we have to do a better job at making sure the people with skills that could benefit our economy aren’t getting turned away at the borders.
Most often, it’s not that there’s a lack of will to find ways to move goods more efficiently and ease the way of new workers into the economy, it’s that the ideas on how to move forward get so caught up in politics. The immigration bill now being debated in the United States. is a perfect example: it’s already deeply politicized, despite the fact that inducing more flexibility and mobility in the North American labour market – particularly at the executive-level – should be a priority. The costs of insufficient mobility and flexibility in the labour market are all too evident in many European countries.
While in an ideal world we might throw open the borders between Canada, the United States, and Mexico and let the market settle naturally, but for now the United States and Canada both still want and need the border. The United States needs the border to assuage the psychological damage that we sustained after 9/11, and to make sure anyone else who may want to harm us doesn’t get in. Canada needs the border so that it can continue to be Canada. With this in mind, we need to focus on making it easier for businesses operating throughout North America to do so more efficiently.
We will never be able to detect every threat, but we are managing border risks. We need to do better at managing border politics.
“Less push, more pull”
For much of human history, solving problems has been more about supply than demand. People tend to look through the solutions they have on hand, pick the one that seems most relevant, and try to adapt it to solve the new problem. This is the round-peg, square-hole approach: essentially, you’re reshaping a particular innovation or tool as best you can in the hope that it will prove sufficient to fix whatever problem it is that you’re trying to solve. When you take this approach, you do end up with a solution, but it’s unlikely to be the best solution for that particular problem.
Online crowd-sourcing encourages the opposite approach – it allows the problem to pull a solution. We now have the ability to share problems on a global scale, to open up our quest for answers to a vast pool of individuals who may in fact have exactly what we’re looking for, or know how to go about finding it. What emerges through this demand-driven process is a solution specifically designed with a particular problem in mind. You’re much less likely to be settling for second best.
To publicly ask for help with solving a problem isn’t easy – we all like to present ourselves as having all the answers. Governments are more familiar with the idea of seeking advice from external sources, but they too need to experiment more with this idea that one can become a “solution-finder” who operates on a global scale, rather than a problem-solver limited to in-house resources.
Crowd-sourcing is not a panacea, certainly, but even if it only ever solves a small percent of the problems we face, it has the potential to make an enormous difference. “Flattening” problems – rendering problems accessible to experts from many different fields – invites contributions from people who can see the issues in an entirely different light, and who therefore may notice something that would otherwise be ignored. Crowd-sourcing as a whole flattens access to knowledge and the ability to take advantage of new innovations, as people who would never otherwise have been able to connect and learn from each other can do so by taking part in the virtual problem-solving process, from anywhere in the world.
It’s amazing how many people out there have profoundly creative ideas and are ready and willing to share them. Their motivations for contributing are diverse, but the results are the same – better solutions, faster. I think there are many challenges we could make progress on by pushing less and pulling more.
“Resilience”
Global trends today demand that we become more resilient. This is a challenge for most of us, because we assume that we can’t be strong and flexible – that our business models can’t be bendable and robust. We’re too comfortable with the way we did things yesterday and assume tomorrow won’t require anything different of us. But this is the wrong mentality for a world in the midst of big economic, political, technological, and environmental transitions. What worked for the world of yesterday may be wholly inadequate for the world of next week.
If you have a system based on principles of resiliency, you can anticipate disruption. That means when defenses get breached, they can be repaired faster. Resilience increases our ability to organize ourselves to maintain our core purpose even under radically changed circumstances.
Many of our systems and institutions are not ready for the kind of dynamic disruption that is defining the new global economy. Military forces in both the U.S. and Canada are exceptions: the defence forces are spending a lot of time and effort looking at climate change, and preparing for the disruptions to their operations that come with severe weather events and global warming. The military seems to have accepted that protecting the heartland demands putting politics and ideology aside, looking at the facts very squarely, and getting ready for phenomena that might not be prevalent for 10 years. Most civilian institutions aren’t doing the necessary long-term planning to upgrade infrastructure, especially in the U.S. They are not acting as resiliently as they should be, which will make it much harder for them navigate global trends.
“Mind the Trilemma”
Twenty years ago there was one signal that triggered development in renewable energy: the price of oil. Now there is a multiplicity of signals including oil price, decoupling gas prices, emissions prices, and post-Fukushima nuclear costs. The complexity of signals today is a huge difference in the energy landscape that cannot be ignored when considering what the future mix of world energy sources will be.
Another difference is the increasing speed with which the energy market is changing. Twenty years ago, many decision makers in both the public and private sectors didn’t think the energy landscape could change dramatically because it took so long to build new infrastructure and because resources were limited. It’s taken 8 years for shale gas to grow from 3.2 percent to 32 percent of the U.S. energy mix. And there is so much more. The U.S. has about 20 trillion cubic meters of shale. Canada has 10 trillion. China has 38 trillion. It will take time for the shale revolution to be replicated elsewhere, but a global transformation is underway. Five years ago we’d still be debating peak oil. Now nobody’s asking if we’ll run out of energy. At the same time, we’re transitioning into an era where environmental issues are prioritized and holding governments accountable for pollution issues is emphasized.
Things are changing very quickly, and the complexity of the market during this period of transformation means that you have many more signals to read when making decisions, but energy is not an area where you can be opportunistic. You can’t invest in something one day and the next day something else – the costs of infrastructure are too huge. To overcome this, you must always consider whether or not your decision will achieve three fundamental objectives. First, will it increase your energy security and competitiveness? Second, will it enhance your performance overall? And third, will it increase social equity? It is not all about the environment, energy security, or access. We should keep this trilemma in mind at all times.
Mark Lambrides
Division Chief, Energy and Climate Change, Department of Sustainable Development, OAS
Timothy Ryan
Global Head of Regulatory Strategy and Policy, JPMorgan Chase
Walter Schroeder
Chairman, Dominion Bond Rating Services
Strobe Talbott
President, Brookings Institution
“Efficiency and diversification”
Many of the members of the OAS want to be able to generate more of their energy indigenously so as to become as self-sustaining as possible. I see more and more countries reacting to the realization that they could be paying less for energy by investing in new energy infrastructure, participating in exchanges of information regarding technological innovation and regulation, and collaborating in regional projects. All of these efforts are ones that the OAS helps to facilitate in different ways. For example, we’re helping those without significant oil and gas or hydro resources to develop their biomass and geothermal energy sources, such as the Caribbean Island federation of St Kitts and Nevis. The Federation has the potential to become self-sustaining based on renewables alone, or even to become an energy exporter to neighbouring islands as a result of the geothermal reservoir below them.
Countries throughout the Americas are making great progress in the energy sector. Peru in particular has done an incredible job of electrifying rural areas. Brazil’s success with ethanol is also impressive and offers lessons to others investing in that area. The countries that are making the most headway toward more self-sustaining energy positions are those embracing diversification, so moving away from heavy reliance on only one or another energy source. They are doing this because they no longer see this as a viable pathway to energy security over the long term, environmentally or economically. We are going to see some adaptation of energy policies to the natural gas boom, of course, but natural gas imports are likely to increase alongside other sources of energy, not divert investment from renewables. Many OAS members are painfully aware of the impacts of climate change, from melting glaciers to drought, as well as the cost of building new infrastructure to transport LNG.
Efficiency must be part of any diversification strategy. Countries working toward energy security need to think about how to diversify in the most efficient way possible, about how to craft a policy that reflects their own natural resource endowments, their geographic position and weather patterns, and their exposure to disruptions in the global energy market, in order to make the most progress in sustainable development, and contribute to climate change mitigation. At the OAS, we believe that stable democracies rest on sound economic foundations, and that sustainable development is critical to building and maintaining a sound economy. Efficiency and diversification are two values that will keep up the momentum of sustainable development in the Americas.
“Trust across platforms”
The biggest issues I see facing financial service providers going forward is how to regain the trust of their clients, and how to sustain that trust going forward. The first issue is the legacy of 2008. We [JP Morgan Chase] were in a position then that enabled us to spare our clients the worst effects of the crisis, but quite frankly, we still need to rebuild our clients’ trust because that is absolutely fundamental to everything we do.
Trust matters today more than ever before because of the new technological innovations that are allowing clients and banks to interact in many more ways than just in person. The more communication channels we have, the more opportunities we have to engage with clients, but also the more potential vulnerabilities we create. Mobile banking, to take just one example, has the potential to transform the way all of us do business, to make transactions more efficient as well as accessible to many more people, but not if security and privacy concerns end up undermining trust. So we [financial service providers] must also innovate in how we establish and strengthen relationships with our clients. That means learning how to signal our intentions candidly and responsibly – to our clients and to the market – across all of these various new platforms, including Twitter. It means continuing to be a world leader in protecting the data of our customers, and ensuring we have a sophisticated capacity to deal with cyber threats.
The trust of our clients is essentially what will carry us through the challenges of the global economy and the new technologies that are shaping it. The complexity of the financial world today demands not only that the ways in which we deal with our clients increases their trust in us, but that they increase trust in the industry as a whole. This will only become more important, if new efforts at global financial regulation are not better synchronized and prioritized.
“Patience”
Credit rating agencies have only two strengths: credibility and independence, and they lost a lot of their credibility when the 2008 crisis hit. For a long time ratings agencies rated through a cycle of five years, but some have changed their behaviour recently. Historically, if something negative happened during that period that was absorbable, they didn’t change the rating. They acknowledged that economies go through recessions and encounter setbacks of various kinds.
That acknowledgement is gone. Many commentators are no longer waiting for short-term issues to be resolved – they are cutting ratings immediately instead of distinguishing between structural problems, which demand a cut, and temporary problems with a viable solution. At DBRS we know fixed-income investors want transparency and stability. Too many governments are taking too severe cuts, especially in Europe. We need to be patient instead of overreacting.
Canada is a case in point. We had severe problems in mid 1990s, but while we were dealing with them, no one creamed our rating. Our unemployment rate was between 8-10 per cent; in places like Newfoundland, it was up in the double digits, just like Spain is now, but that was not reflected in ratings cuts. Canada saw it had problems and took severe measures to correct them, after which it went on to run 10 straight surpluses. But we didn’t get back on track overnight. The patience that was granted to Canada then needs to be offered on a global scale now.
“Coherence and balance”
Right now, the coherence of U.S. domestic and foreign policy reflects the state of the U.S. economy overall: bad economic times make for bad policy, and we’re seeing this across the board. The frustration and anger people are feeling at the slow economic recovery is driving reactive, short-term thinking, which leads to incoherent policies on everything from Iran to alternative energy.
Take climate policy both within the U.S. and internationally. We have an opportunity now to use natural gas as a bridge fuel to a low-carbon economy. But, based on the conversation I see happening [in the U.S. today], I’m not all that optimistic that we’re going to seize it. There are a significant number of civil society and faith-based groups emphasizing the trans-generational threat posed by climate change, but inside government, political paralysis is derailing attempts to develop a coherent response. There are representatives on both sides of the aisle that want to see movement away from fossil fuels as the failed Kerry-Graham-Lieberman bill demonstrated, but there are also those representatives that don’t.
During the nuclear age the existential threat was very apparent – the mushroom clouds – left no doubt in people’s minds that dealing with nuclear weapons was imperative. Now, despite the fact that extreme weather is everywhere – each time I fly across the United States at this time of year I factor in delays based on the increased frequency of storms – we don’t seem to have grasped the scope of the danger. I don’t know what it will take to overcome the domestic partisanship around this issue, but we can’t wait for a better economy in order to act, not if we want our descendants to have any chance of advancing – economically or otherwise.
There are many new ways to get information out about the global challenges we face today. While I never thought I would commit an act of Twitter, I see the value in it now for me personally, and for think tanks generally. Researchers need to leverage Twitter and other platforms to increase awareness of public policy challenges like natural resource development, and to enrich their own work. The trick is to strike a balance between being active on social media and developing an online profile, and producing in depth research – whether books, reports, or long-form articles. I myself and all of my colleagues are struggling with this now, because we know that finding that balance is critical to our sustaining and expanding our relevance and impact going forward.
Jean-Claude Trichet
Former President, European Central Bank
Maria van der Hoeven
Executive Director, International Energy Agency
Geoffrey Wilson
President and CEO, Toronto Port Authority
Yuen Pau Woo
President and CEO, Asia Pacific Foundation of Canada
“Grow our advanced economies”
The crisis may be behind us, but advanced economies still have problems. When we look at the extraordinary, bold monetary policy being implemented by central banks in advanced economies, we can see many are still not functioning normally. More hard work by public and private sector actors is required to address the issues. We need fiscal policies that will correct present imbalances and monitor future ones closely.
There is still much work to be done in the medium and long term. The main issue we have to consider now is whether the time and space being given by central banks to various countries in order to allow for recovery is being utilized correctly; we need to ensure they are using it to move forward in a better direction.
Until now, advanced economies have been helped by the resilience of emerging economies which are continuing to grow at a rapid pace. The growth of emerging economies is offsetting in a very large measure the slowing of growth and continuing recessions in many advanced economies. But this will not last forever. Creating real growth and development in advanced economies has become a major problem.
I don’t buy the argument that there are no new products that can drive increased growth in advanced economies. We are still in the midst of a wave of advancements in information technology, and we are still exploring how to permit more of this type of development. Bu we have a lot of work to do when it comes to macro policies that will lead to more stable markets and sustainable growth in advanced economies in the medium and long term. In Europe, we need to correct the weaknesses in the economic union. The currency union is more solid. I have always been a true believer in the euro and continue to trust in its resilience and ability to guarantee stable European price levels.
“Get back on track”
A couple of years ago, everyone was talking about the climate. Today, the fragility of the economy is at the forefront. We do have to solve our economic issues, of course, and we will. But the moment we solve them, they’ll be gone. Climate change and the related energy issues won’t disappear even when we decide to fix them. The climate issue is something we have to start solving now, which means acknowledging both that the demand for energy is rising, and that two-thirds of CO2 emissions are coming from energy-related infrastructure.
Government leaders have declared that they want access to energy for all, but that they do not want the temperature of the planet to rise more than 2 degrees Celsius. We are not on track to achieve this. We are heading towards maybe a 5.3 percent increase.
There is still no international agreement in sight, so in the meantime we need to use energy as efficiently as possible, limit the use of coal in power plants, reduce the amount of methane being emitted into the atmosphere, and end subsidies that encourage wasteful consumption. We need to use natural gas as a bridge fuel to a cleaner future, to balance the grid where renewables provide energy intermittently. We must do these things if we do not want to exceed our target.
I am not optimistic that we can get back on track. The signs that we need to act are there for everyone to see, but we still don’t even have a global agreement on CO2 pricing. I tell the people who deny the signs to have a look at the Arctic where we are now discussing the economic potential of the North Pole. The North Pole route opening up for trade year round is a result of the ice cap melting because of rising temperatures.
Getting back on track means translating concern over the signs into action.
“Creativity and speed”
The Toronto Port Authority (TPA) is a bit of a hybrid. We’re a government business enterprise and, as such, are expected to be self-sufficient. We have to think and act like the private sector, while staying aware of the fact that we play a pivotal role in the economy of the city as steward of the waterfront and Billy Bishop Airport.
The airport today constitutes about 85 percent of what the TPA does. Historically, the intermodal systems we used to facilitate more efficient trade focused on ships, rail, and trucks. Today, airports are becoming increasingly central to economic growth. People want efficient access when they fly to do business. When you have an airport like Billy Bishop with proximity to downtown, linked to one like Pearson with global presence, you have a very powerful, complimentary economic model – and an almost unbeatable combination for the future.
But all modern cities can always be doing things better. We all wrestle with how to keep turning our natural competitive advantages into opportunities for growth. We need to be driven entrepreneurially, which means operating with both creativity and speed.
At the TPA, we need to be creative in order to achieve our mandate to be successful and profitable in all of our business lines, while providing our stakeholders with the infrastructure they need. We also need speed because we don’t do things alone. At our airport, a classic collaboration takes place between an award-winning airport combined with the partnership of two world-class airlines. These airlines set the pace and we know our success depends on keeping up. Together, acting creatively and with speed, we are finding new efficiencies and deriving economic benefits for the City of Toronto.
“Strategize for specifics”
The biggest global risk we face now has to do with the nascent global economic recovery. We could still fall back into a triple- or quadruple-dip recession; economic stimulus in parts of economy could end badly because of the creation of asset bubbles or a financial market implosion could ripple through the banking sector. I’m optimistic we will recover, but longer term, there are risks related to need for structural change. We need China to transition away from a model of economic growth that is bad for China and the world where the returns of income growth are skewed towards the owners of capital instead of labour. Structural reforms can redress some of that imbalance, and because these kinds of reforms are good for a much larger group of citizens, I’m optimistic as to the chances they will succeed.
If they succeed, we will have a more prosperous China that can take up more of the slack in global demand and provide more support for the global economy. This would then create many new opportunities for growth, especially for Canadian exporters. So far, the ability of Canadian businesses to sell into emerging markets has not required much modification or adaptation of our products, but the next phase of Chinese economic growth (as well as Indian and Indonesian) is going to require that Canadian exporters actually understand what’s going on behind the market – it’s going to require that they learn the culture in order to modify their products. The Indonesians won’t buy our food products or clothing items or smart phones in the exact same configuration as North American consumers.
Given this shift, Canadian businesses that want to succeed in Asia, China, or India need strategies tailored to specific interests. They need strategies driven by something more than a generic belief in the value of market diversification. Diversification is good, but it’s a macro concept – interesting but vague, like “geopolitical competition” between China and the U.S. If you are in the auto sector, or any other sector, you need a strategy specific to your business, because relationships with these emerging markets are going to become far less straightforward than has been the case until now.
