Is Slow-balization substituting for Globalization

Slowing down: Scissors can be exported in 20ft-containers, hair stylists cannot

Globalization has dominated the world economy for years. But recent trends are indicating that many major economies are turning their backs on being drawn deeper together. The signs are that there’s a growing desire to be less inter-connected through global networks of capital flows, trade, and technology.

Global trade is becoming less advantageous. There are even cases where it is also on the way to being less feasible.

This is a major turnaround for what in the last half a century had been seen as the prevailing trend that would inexorably move in the same direction.

What is conspiring to slow globalization? The combination of geopolitical shifts, secular trends and trade tensions are just aspects of this story.

Tariffs are a very visible barrier to global trade, but other hurdles, including the US’s foreign investment review, are also diluting any business incentive to globalize, according to senior bankers.

In addition, changes in consumer preferences along with greater purchasing power in emerging markets are boosting regional trade over global trade. Technology is exacerbating these trends by enabling leaner manufacturing methods. The highly acclaimed Dutch trend watcher Adjiedj Bakas calls it “slow-balization”.

When it comes to investment, there are advantages and disadvantages. Barriers to global trade threaten to disrupt major businesses that rely on smooth flows including capital goods, semiconductors, telecoms, and automobiles – indeed any industries where technologies are sensitive and whose supply chains are globally diffuse.

However, increased localization may turn out to be a bonus for those businesses that don’t rely so heavily on foreign markets, and whose products have a critical economic or national security interest. Good examples of these “emerging regional champions” are China’s internet firms, and local payment processors as well as some smaller US internet operators.

SlobalisationGlobalization Goes Into Reverse

Even before trade tensions began to reassert themselves, secular winds of change were already blowing.

About 20 years ago, transportation and communication costs were decreasing and long-haul trade across the world’s oceans became prevalent. McKinsey Global Institute research shows that between 2000 and 2012 the share of goods traded between the same region’s countries dropped from 51% to 45%. This trend is now reversing and regional trade is again gaining traction.

Underpinning this are two things. Goods trade is now growing less fast than service trade. And the success of globalization has led to emerging market countries growing rich enough to be consuming more of the very goods that they have been selling.

In hindsight, it’s a natural evolution of globalization, and, according to McKinsey, the consequence is that between 2007 and 2017 the share of output moving across the world’s borders has dropped from 28.1% to 22.5%.

Trade Patterns Change Shape

Trade patterns are also being encouraged to change. McKinsey reports that the old lean manufacturing approach emphasizing low inventory levels -“just-in-time” logistics – is no longer as popular as it once was.

Now just 18% of the world’s goods trade is founded on labor-cost arbitrage. Indeed, McKinsey expects this share to shrink further as companies streamline their supply chains and adopt more automation.

This is very different from the turn of the century when a large number of businesses based decisions about supply-chains on the ability to source low-cost labor, even when it meant shipping supplies, components and finished goods all over the world.

A final aspect that is also making globalization less attractive is technology. Countries are now thinking differently about the link between economic interests and their national security. The US, for example, is now defining its sensitivity in a much broader manner.

So, taking automobiles as an example, the technology on which driverless cars depend is highly likely to have military applications, and the US doesn’t want foreign powers – least of all China – having any knowledge or influence in this field.

Taking Advantage of Slow-balization

Shifting tides create complex dynamics, but investors can still start thinking about the broad implications by seeking answers to a couple of key questions:

  • How sensitive is a business’s product to a particular country’s economic or national security?
  • What is the reliance on global supply chains, and does this make sense anymore?

Those businesses that are most vulnerable to the effects of “slow-balization” are the ones dealing in economic and security sensitive technologies and still depending on a supply chain that is globally diffuse. Think European capital goods, autos, telecoms, IT hardware, and semiconductors.

It’s less easy to assess internet companies. While the biggest consumer internet businesses are facing higher costs of doing business because platform health and data security are playing bigger roles, smaller rivals could find they benefit for similar reasons.

It’s highly likely companies dealing in sensitive areas, but not closely entwined with the rest of the world, will be better placed. China’s internet firms, for example, are vital for that country’s economic security and outlook but their business has been focused almost exclusively on China itself.

Another area that is worth considering from an investment perspective is payments. Payment firms could be net beneficiaries because they are tuned into issues of tax collection and banking functions as well as national security, while digital payments is unstoppable irrespective of global trade. As a result, payment schemes that are domestically developed could get the edge.

Factory image by kerttu from Pixabay

Salon image by bk_numberone from Pixabay

The Solar Surge: Whither the Sun’s Power?

Solar power

Solar powerSolar power is now cheaper than it ever has been. Costs of the technology have been declining for a decade. The building blocks of solar panels, the photovoltaic (PV) modules, are now not only less expensive to produce but they are also more efficient.

In some places around the world generating solar power is now cheaper than producing equivalent amounts of energy with fossil fuels. Solar projects, as they become cheaper, are better able to thrive with fewer subsidies from government. As a consequence, companies are being encouraged to sign long-term agreements with renewable energy developers.

This boost in the share that renewables hold in the energy market is being played out globally, but Europe is at the forefront of progress.

Forecasters are trying to keep up with solar’s surging success. Indeed, the International Energy Agency’s prediction of global solar capacity has had to be increased 15-fold on what it thought would happen back in 2006.

Researchers now estimate that the share of renewables in the European power system will be more than 70% in the next 10 years. And Asia is likely to be hosting over half of the world’s solar installations in the same period.

Future technological advances are bound to enable solar power to generate even more energy. This in turn will cut utility bills and further boost renewables’ share of the global power mix. There are already significant signs of progress all over Europe.

In the first six months of last year France’s solar market increased by 59% driven in the main by large-scale solar installations. Cumulatively the country’s installed PV power generation surpassed a notable 8.5 GW, with newly installed PV capacity achieving 479 MW. France is steadily growing in stature as a generator of solar energy, backed by political will, a well-developed energy industry as well as a robust economy.

Another example is Germany, which has been taking a key lead in the PV power production for many years, and in 2018 achieved the accolade of being the highest ranking country for solar PV per capita. The German government has made renewable energy a high priority, and the aim is to source 80% of electricity from renewable sources by 2050.

Even though historically Italy has relied on foreign imports to supply a significant amount of its energy, as of last year the country has become another major leader in solar power generation and development with solar PV accounting for 7.9% of electricity demand. When the EU set the target of generating 20% of the continent’s energy from renewable sources by 2020, Italy was among 11 nations that were able to reach this objective ahead of the deadline.

Because the UK has so little sun all year around, it’s nowhere near the top of the tables for PV solar power use.  However, government initiatives are encouraging businesses, homes and schools to introduce solar panels. This plus the decrease in cost of PV technology has helped the UK become a leader in solar power production. Solar has definitely been increasing in popularity accounting for 3.4% of Britain’s total electricity generation in 2017, and increase from 3.1% the year before. By next Worldwide there are more people now working in solar than on oil rigs and in gas fields. The number of people employed is solar is also three times the size of the coal mining workforce.

The factors that might have contributed to solar’s notable growth not only relate to enhanced awareness of the need for environmental sustainability but also to numerous other initiatives. These include tax credits implemented by the US federal government for people who develop or invest in solar energy.

The residential and commercial solar ITC implemented in 2006 was extended through to 2023. With its compound annual growth of 76%, the ITC has boosted annual solar installation growth in the US by more than 1,600% in the past 10 years.

There is no doubt that the Climate Change Agreement in Paris, even though it’s been snubbed by President Trump, along with other initiatives to reduce global warming, has contributed to solar’s boom. The Paris agreement not only addresses issues including food security, deforestation, and poverty, but it also gives guidelines for what can be done to lower carbon dioxide emissions.

A major soft factor is solar growth is its rising popularity. An increasing number of people now see having solar panels on their properties as a symbol of status. This has been exacerbated by the advances in technology and particularly battery storage. The kit is no longer made up of huge, lead-plate batteries loaded with sulphuric acid and expensive to manufacture. The most modern batteries now use saltwater as the electrolyte. Nowadays they are made out of lithium iron and any risks of thermal and fire hazards have been eliminated.

The future of solar can increasingly be seen in the world’s emerging markets. Africa is a good example. Expanding the existing African power grid is essential, but it’s only part of the continent’s power solution. There is a new breed of African entrepreneurs and innovators who are harnessing mobile money, coupled with advances in solar power to leapfrog Africa’s gaps in power generation.

Take Kenya-based M-Kopa. It generates solar-powered electricity and offers storage solutions to households without access to the conventional grid. It then finances payments over a 12-month period through mobile money accounts. Since it was founded in 2011, M-Kopa has not only sold over 600,000 household kits but it has garnered multinational investments from outfits like Japan’s Mitsui.

Uganda-based Fenix is yet another example. It has sold 140,000 solar power kits, also with the help of mobile money. Fenix has now been acquired by France-based major global energy company Engenie, which is using digital technologies to give 20 million people around the world, decarbonised, decentralized energy by 2020. UK-based BBOXX is another business that is distributing solar kits through its agents in 10 African countries.

With companies like these using business models that enable even the poorest households to get electricity for the first time means that solar’s recent significant growth looks set to get an even more powerful shot in the arm – especially when it is considered that in Africa alone about 70% of households earn less than $5,000 each year.

Image by schropferoval from Pixabay

Crochet A Bag Holder With Your Old Bags

Blog posts crafts
Unsightly but useful: Baled plastic bags for recycling

Do you have a habit of throwing your old plastic bags in a ball when you’ve used them to bring the shopping back home?

Some people who are keen on handicrafts create a crocheted bag to store their old bags in and keep them neat and tidy and out of the way.

But why not go a step further and create an even cleverer and more environmentally friendly solution by crocheting a bag holder with yarn that you have created yourself out of recycling your own leftover plastic shopping and grocery bags.

You can make a very pretty and extremely environmentally benign bag holder simply by following these instructions. And an additional bonus is it will cost absolutely nothing – just your own time and effort.

Choose one of the many striking designs for crochet patterns that are available for making a bag holder.

There’s nothing new about the idea of recycling old used plastic bags but think about it: if you take the bags back to the shop for them to recycle, they will simply melt them down and make new bags. This will have the harmful effect of emitting, even more, pollution into the air.

Fusing and joining plastic bags together with an iron can release some very noxious fumes into the atmosphere, stinking out your home.

Get your scissors

So, why not get out a pair of the scissors you already use for handicrafts and set about recycling any old plastic shopping and grocery bags into useful ‘yarn’ with which to make an attractive bag to store your future collection of plastic shopping bags.

Start by first laying out a single plastic bag. The bags most suitable for this are those thin ones that you find in chain grocers like Walmart. Take the bag’s seams and tuck them in at the side and then smooth out your bag so that it’s flat. This doesn’t have to be done so there are no creases and the bag is perfect. It will all look fine in the end.

Now you are ready to cut off the bottom edge of the bag with your scissors. For this, you will need to ensure your scissors are good and sharp because you will find that even slightly blunt scissors are not able to cut plastic bags well.

Once you have cut the edges you need to fold the bag lengthways and cut the folded bag into strips of about one and a half inches wide. Again this does not need to be perfect. As it’s just a guideline you don’t need to hunt for a ruler.

Every aspect of this task needs to be kept as simple as possible. Now unfold one of the cut strips and begin the process of joining. Be careful so the strip doesn’t tear on any fused seam.

Loop the loops

Get hold of another cut strip and unfold this too. Loop the strip around a thumb and index finger while holding the rest in your fist.

Then continue this process of bag joining by bringing the loop that is on your right hand over the strip that is looped in your left hand.

Maintain the loop that is in your right hand, and grasp the strip from your left hand, pulling it a little of the way through the loop that is in your right hand.

Carry on until you can complete the bag joining and tie the knot. For this, you need to place your left hand through the most left part of that strip that you most recently passed through the loop that was in your right hand and let it settle on your left wrist.

Now grasp the other end of the strip that you passed through the loop in your right hand with your left index finger and thumb.

Draw the part that you’ve already pinched in your left hand through the loop that you have on your left wrist and continue to pull the knot until it is tight.

Finally, you are ready to finish joining the bag loops and begin crocheting. It’s very important that use up all of your shopping and grocery bags.

The yarn that you have created out of all your bags is best crocheted using a size K or larger crochet hook.

In the end, you will have a perfectly crocheted bag in which you can store any shopping bags that you collect in future.