Over the past two decades, a thin consensus has been emerging on what countries should do to foster economic development and growth. It revolves around a three-pillar formula representing the lowest common denominator among development economists.
The first pillar is about the importance of developing a country's human capital. Human capital fuels economic growth and contributes significantly to higher labour productivity. It is also crucial for innovation and absorption of ideas and techniques from around the world.
No country can expect to grow fast and continue to grow and compete internationally without an accompanying commitment from its government to invest in human capital. So it is not surprising to learn the world invests about 4.6 per cent of its GDP on education.
Countries such as South Korea, Ireland and Singapore are said to owe their fast-tracking to advanced nation status to their high levels of investment in education and human capital.
The second pillar is physical infrastructure. It is an important enabler of economic activity and a prerequisite for inward investment, trade and productive activities.
Over the past five decades, governments across the world have invested in building traditional infrastructure, such as transport networks, sewerage systems and power grids. The trend continues and a recent report from the Organisation for Economic Co-operation and Development expects global investments in infrastructure over the next 20 years to grow to about US$70 trillion (Dh257.11tn).
Lately, governments have also rushed to invest in new infrastructure such as broadband networks and 3G mobile telecommunications systems, which by 2008 amounted to about 5.6 per cent of the world's GDP.
The third pillar is the hardest of them all: good governance. This includes having efficient and transparent public-sector institutions, strong laws on intellectual property rights, a fair competition law and an independent judicial system.
There is no doubt this three-pillars formula will help many countries mobilise their resources more efficiently. But a number of problems arise when one begins to use these as textbook prescriptions for economic development.
Let's start with investments in infrastructure. While infrastructure is seen by development economists as a key enabler of economic growth, policymakers view it more as a driver of short-term economic growth and invest in it accordingly.
Very recently, both new and traditional infrastructure have benefitted from new waves of investments as governments tried to spend their way out of the global downturn. But these investments are often geared towards short-term economic growth, rather than long-term economic growth.
In some cases, it is not clear whether an expansion or upgrade of infrastructure is actually needed. To give an example, 82 per cent of the US population is concentrated in cities and suburbs. Just how much impact would upgrading rural America's access to the internet have on its economic growth?
Unless there is clear evidence that more people would move out of the cities to the countryside as a result of the upgrade, the effect of the new investments in broadband infrastructure on the growth of the rural economy will be dismal.
Investment in human capital has followed a similar logic and has led to more education meaning more higher education. Across much of the world demand for higher education has soared, universities are overcrowded, staff are overworked and the quality of graduates is suffering.
The situation in the UK today is a witness to such policies. Years of New Labour's policy of getting more people into higher education have produced a glut of graduates in the labour market and strained the capacity of UK universities.
In developing countries, the situation is worse. In Jordan, Egypt and across much of the Arab world, masses of university graduates are unemployed, take under-skilled jobs or emigrate. In fact, the oversupply of university graduates has crowded out non-university graduates from the labour market and pushed the incomes of the rest to the bottom.
Good governance is important, and developing countries in particular still need to make long strides in this regard. But the lack of it does not explain the double-digit growth of China and Vietnam, or Russia and India.
This is unless "good" means something else, perhaps more along the definitions of the Harvard University economist Dani Rodrik, or the Financial Times international economy editor Alan Beattie. Professor Rodrik emphasises the stability and predictability of governance structures in an economy, rather than their efficient performance; while Mr Beattie emphasises the effectiveness of countries' institutions, rather than their transparency and correctness.
Companies from the developing world seem to much better understand good governance. Chinese, Indian and Arab telecoms companies are very active and successful in regions such as Africa and central Asia, where good governance is supposedly a rare currency.
Investors, it seems, are driven more by opportunity than good governance, and good governments seem to know that and take it into consideration while attracting foreign investors to invest in their economies.
Unless there is a UN embargo on a country, foreign investors tend to move in on the basis of special arrangements and agreements with the government of the host country, and without demanding substantial reforms to their governance culture and structure.
While infrastructure, human capital and good governance are very important, the question in the minds of many policymakers today is what next? Advanced economies that already enjoy high levels of human capital, infrastructure and good governance are increasingly finding themselves stagnant.
A Finnish delegation to London once put it this way: despite all the hoopla surrounding Finland's investment in new infrastructure, human capital and good governance, the country still occupies a mid-table position in the EU's GDP per capita rankings.
A straightforward answer does not exist and each country probably requires its own answer. But one area worth our attention is efficacy. Countries with similar levels of socio-economic development, along with matching physical and social infrastructure, tend to display different levels of economic performance.
The productivity gap between the EU and the US is consistently in favour of the latter. Northern Europe has higher productivity levels than continental and Mediterranean Europe. Malaysia and Korea started off with similar levels of human development but with different natural resources (Malaysia was richer). Both invested in infrastructure, human capital and good institutions, but South Korea still managed to grow much faster.
Efficacy is an important enigma to explore. Why is it that some countries make better use of their human capital, and physical and social infrastructure than others? Why would one village benefit in gaining access to broadband connectivity more than other villages, and one country benefit from a range of talents, while others allow talent to leave?
Closer to the policy domain, there is a clear need for a better match between investment in physical and social infrastructure and opportunity. The "build it and they will come" approach for investment is a platform for generating inefficiencies in an economy.
Infrastructure, education and good governance are enablers and not drivers of economic development, and accordingly governments should link their investments in infrastructure and human capital to specific growth opportunities, and where an expanded and upgraded capacity will make a real difference.
Dr Sami Mahroum is the director of INSEAD's innovation and policy initiative at the Abu Dhabi campus
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Brief scores:
Everton 0
Leicester City 1
Vardy 58'
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
More from Neighbourhood Watch:
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3ESmartCrowd%0D%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2018%0D%3Cbr%3E%3Cstrong%3EFounder%3A%20%3C%2Fstrong%3ESiddiq%20Farid%20and%20Musfique%20Ahmed%0D%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinTech%20%2F%20PropTech%0D%3Cbr%3E%3Cstrong%3EInitial%20investment%3A%20%3C%2Fstrong%3E%24650%2C000%0D%3Cbr%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%3C%2Fstrong%3E%2035%0D%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3ESeries%20A%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EVarious%20institutional%20investors%20and%20notable%20angel%20investors%20(500%20MENA%2C%20Shurooq%2C%20Mada%2C%20Seedstar%2C%20Tricap)%3C%2Fp%3E%0A
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%201.8-litre%204-cyl%20turbo%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E190hp%20at%205%2C200rpm%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20320Nm%20from%201%2C800-5%2C000rpm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3ESeven-speed%20dual-clutch%20auto%0D%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%3C%2Fstrong%3E%206.7L%2F100km%0D%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20From%20Dh111%2C195%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENow%3C%2Fp%3E%0A
The Africa Institute 101
Housed on the same site as the original Africa Hall, which first hosted an Arab-African Symposium in 1976, the newly renovated building will be home to a think tank and postgraduate studies hub (it will offer master’s and PhD programmes). The centre will focus on both the historical and contemporary links between Africa and the Gulf, and will serve as a meeting place for conferences, symposia, lectures, film screenings, plays, musical performances and more. In fact, today it is hosting a symposium – 5-plus-1: Rethinking Abstraction that will look at the six decades of Frank Bowling’s career, as well as those of his contemporaries that invested social, cultural and personal meaning into abstraction.
Banned items
Dubai Police has also issued a list of banned items at the ground on Sunday. These include:
-
-
-
-
-
-
-
-
-
Political flags or banners
-
Bikes, skateboards or scooters
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3EShaffra%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2023%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDIFC%20Innovation%20Hub%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3Emetaverse-as-a-Service%20(MaaS)%3Cbr%3E%3Cstrong%3EInvestment%3A%20%3C%2Fstrong%3Ecurrently%20closing%20%241.5%20million%20seed%20round%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3Epre-seed%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFlat6Labs%20Abu%20Dhabi%20and%20different%20PCs%20and%20angel%20investors%20from%20Saudi%20Arabia%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3Enine%3C%2Fp%3E%0A
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
