With Estonian parliamentary elections coming up on March 6th, I agreed to participate in the “Minu hääl” (“My Voice”) TV ad campaign by the Electoral Committee, featuring a bunch of celebrities (from music, theatre and such) and a few people from the street (like some elderly and your’s truly).
These are not party ads, e.g not urging you to vote for anyone in specific, but to just remind you to go and vote. Especially as with our notorious e-voting (with both chip-enabled ID cards, but also mobile ID’s as a new thing this time!) it is just a 3 minute effort from wherever you happen to be.
I liked the wordplay they built this thing around – the Estonian word “hääl” meaning both “voice” and “vote”. See all the ads in the series here.
“Well, duh”, you might say, but actually until recently it was not. GDP-wise that is. Based on 2007 numbers, the top economies in the world were:
- the US of A, $13.8 trillion
- Japan, $4.38 trillion
- China, $3.38 trillion
- Germany, $3.32 trillion
China’s economy is 70 times bigger than when leader Deng Xiaoping ditched hard-line Communist policies in favor of free- market reforms in 1978.
China also has a big stake in the U.S. economy, holding $652.9 billion of U.S. Treasuries.
Since introducing free-market policies, China has lifted 300 million citizens out of poverty, according to the United Nations
Global interests spanning African oilfields and South American mines are encouraging China to add to its military might.
And speaking of the future. If both China and US were both to keep their average growth rates, it would take 18 years to change the top spot. However, in the ongoing recession the curves will start changing:
China is one of the few major economies that is on track to have positive GDP growth this year. Merrill Lynch calculates that China will have a GDP growth of 8 percent as compared with a 2.8 percent decline for the United States, a 1.3 percent decline for Japan and a 0.6 percent decline for the European Union.
Under these circumstances, we’re rather talking about a decade?
If you are interested in this power play, I recommend reading the ChinAfrica post from last summer. Or even just see the foreign exchange reserves graph from there.
Last week’s [Baltic Dynamics 2008](http://www.teaduspark.ee/?q=/eng/BD) conference was opened by an address by the [President of Estonia Toomas Hendrik Ilves](http://president.ee/en/), speaking on Innovation. As the full text did not make it to the president.ee website’s [speeches section](http://president.ee/en/duties/speeches.php) yet, I pinged his office and they kindly provided me a full copy in a few hours. Transparent government in action, love it.
As I think this is one of the best condensed summaries of the major issues — such as investments, education, attracting labour — Estonia and Europe are facing developing as technology hotbeds, I am re-publishing the whole text for your reading pleasure. Really worth your time.
**Welcome address of the President of Estonia
at the opening of (innovation) conference ‘Baltic Dynamics’
Dorpat SPA Hotel, Tartu, 4 September 2008**
Ladies and Gentlemen, dear friends,
I am glad to speak here at the opening of the 13th ‘Baltic Dynamics’ conference, an increasingly international meeting, as it should be the case in the field of innovation.
This time the conference takes place at amidst a global economic slowdown, a situation that is frankly unfamiliar for many in Estonia. According to some (admittedly somewhat dire) predictions, this may become the most severe global downturn over the last decade. In terms of our domestic economies, all three Baltic countries stand on the threshold of a paradigm shift; the motor of rapid growth — a competitive advantage based on cheap labor seems to be over. As indeed we have all hoped it would be, for a rise in wages and quality of life is, after all what convergence is all about. But this also creates a new challenge: further development of our economies can come only from higher value added products and services. In this sense innovation is naturally the key to shifting from slowdown to growth.
We must ourselves – how did we reach the state of affairs where we are now? Our economic development has been very rapid, but not always enough forward-looking. The recent slowdown in our economy is – at least to a certain extent – caused by overinvestment in sectors that have provided high yields in the short term (such as real estate) and which are prone to move in correlation with fluctuations of domestic demand. That said, it does not mean that some investments are less necessary than the others, but in the longer term a very small economy cannot rely solely on the domestic market. Indeed, even the second and third largest economies in the world, Japan and Germany cannot rely solely on domestic demand either.
I very rarely have found myself spending several hours on a single magazine article, but Richard Behar‘s report on China in Africa from June issue of FastCompany is very much worth you invest that time too.
This illustration probably recaps the “what” part of the story:
In a word, the chair you sit on and the computer you’re using to read this post more likely than not come from China, no surprise there. What we probably have noticed less as a trend as consumers is that the basic components for making these things, from timber to cadmium, increasingly get shipped to China from Africa.
But what is much more revealing, interesting and depressing in the same time is the “how”.
Post colonial times Europe and the US have kept investing in Africa attaching a lot of soft values to the cold hard cash as conditions: human rights, transparency, saving the environment, democratic values, public education, whatnot. (There is a lot of hypocrisy involved in that too – read part 5 on the US in Equatorial Guinea) Changing whole African societies towards this “western thinking” has slowed the inflow and efficiency of these investments down, feeding in many cases the NGO-s of the donor more than the target countries.
And now imagine that enters a player with a different valueset (communism!) and priorities (feed a double-digit economic growth of a billion+ citizens) and willingness to compromise (bribes, the Earth) … and with a wallet like this:
This report on what China has done in Africa over just 5 years should give you some food for thought on how the world will look like over next 50. Read it..
He shared a very interesting and bold incentive concept that the British Columbia (not even the whole Canada) government has introduced to motivate private investments in small technology startups. Per every dollar invested, the government will pay you 30% back at once. The conditions include holding your investment(s) for five years minimum and a yearly cap of 200,000 CAD total.
So in other words, when you invest 10,000 CAD in a software startup, you get a 10,000 CAD share of equity for the price of 7,000. Or, as an alternative scenario, a private investor can keep investing their capital gained from a previous exit at a rate of 200,000 CAD per year, taking an annual cashback of 60,000 CAD out for their own living expenses as opposed to paying themselves salary.
This scheme is applicable to both direct investments and private investors participating in VC funds, such as the ones Discovery builds.
The results? The district of 4 million people that has been heavy on mining and forestry industries now hosts 70,000 people in tech sector (that’s almost 10x more than Estonia, half the size; comparable to Czech Republic – but their total population is 10M), 8 locally focussed VC funds (larger ones with 500M CAD funds), 8000 mostly small and medium tech companies…
I just love the simplicity as well as braveness of this lever and can only imagine the type of political opposition introducing it could have caused.
I wish Estonian government would spend some time seeking out similar ideas from the world… and implementing the best ones fast.
Just finished a video call with Her Majesty [Queen Beatrix of the Netherlands](http://en.wikipedia.org/wiki/Beatrix_of_the_Netherlands).
She was visiting Skype Tallinn office as part of her state visit to Estonia. I was babysitting at home. One of these physical location misses when [Skype](http://skype.com) really becomes handy.
Also, [Etta](http://gustavpaul.tamkivi.com/2008/05/11/eriti-uusi-sunnipaevi/) joined the ranks of the babies worldwide who have had their first video call while less than 10 days old.