President of Kazakhstan visits pioneering Center of Tomotherapy and Nuclear Medicine, program managed by the Princeton Healthcare Alliance

(Astana, Kazakhstan)Yesterday, August 29th, President Nazarbayev of KazakhstaPHA Logon visited a newly opened Center of Tomography and Nuclear  Medicine at the National Research Hospital in Astana the capital of Kazakhstan. Prime Minister of Kazakhstan Hon. Bakhytzhan Sagintayev and the Minister of Health Hon. Elzhan Birtanov were also in attendance.

President Nazarbayev expressed his support for the outstanding effort by Dr. Abay Baigezhin, Director of the hospital and praised the Consulting Radiation Oncologist Dr. Daniel Fass, Chief Medical Officer of the Princeton Healthcare Alliance (PHA), for bringing this state-of- art technology to the people of Kazakhstan.  Dr Fass, who is internationally recognized as a pioneer in Radiation Therapy with over ten years of experience utilizing  Accuray’s Tomotherapy HI-HD equipment explained to the President the unique advantages of that system in treating many malignancies. “This is the first Tomotherapy installation in Central Asia. It is expected patients from throughout the region will be treated at the center.” said Dr. Fass

The clinic will begin treating patients in November and currently has staff training in the Madison, Wisconsin. Building on the success of this project the Clinic plans on expanding to other therapeutic modalities including immunotherapy and stem cell treatments harnessing the advances in precision medicine . Princeton Healthcare Alliance is dedicated to bringing US technology, expertise and financial solutions to improve the lives of citizens in emerging markets the world over.  Next week Dr. Fass, along with other members of the Princeton Healthcare Alliance, will travel to Tashkent, as part of the Trade Mission led by the Broad Street Capital Group (www.broadstreetcap.com) to identify, structure and finance advanced healthcare solutions for the Republic of Uzbekistan

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U.S. Relaxes Rules on Cuba Travel

A tourist bus in Old Havana on Thursday. U.S. law forbids tourist travel to Cuba but several tour operators said business has been booming.
A tourist bus in Old Havana on Thursday. U.S. law forbids tourist travel to Cuba but several tour operators said business has been booming. ENRIQUE DE LA OSA/REUTERS

The U.S. will allow eligible citizens to travel to Cuba on the honor system, eliminating a requirement for many to seek prior approval and making visits easier for thousands of Americans, according to details released Thursday.

U.S. law forbids tourist travel to Cuba. Under the law, U.S. citizens may visit only if their travel fits into one of a dozen categories, including family visits, humanitarian work and journalism, and many eligible travelers have needed a license from the U.S. government to visit, in addition to obtaining a Cuban visa.

Under the new policy, an administration official said on Thursday, citizens still may only travel to Cuba for eligible purposes, but they will no longer need a U.S. government license to do so.  READ MORE

Yes, America Should Be the World’s Policeman

Bush did too much and Obama too little—but a ‘broken-windows’ model of U.S. foreign policy can be just right

‘If the world’s leading liberal-democratic nation doesn’t assume its role as world policeman,’ writes Journal columnist Bret Stephens, ‘the world’s rogues will try to fill the breach, often in league with one another.’
‘If the world’s leading liberal-democratic nation doesn’t assume its role as world policeman,’ writes Journal columnist Bret Stephens, ‘the world’s rogues will try to fill the breach, often in league with one another.’ PHOTO ILLUSTRATION BY STEPHEN WEBSTER; GETTY IMAGES (COP, BADGE)

When it comes to U.S. foreign policy, Americans must sometimes feel like Goldilocks in the three bears’ house. The porridge that was President George W. Bush’s “freedom agenda”—promising democracy for everyone from Karachi to Casablanca—was too hot. The mush that has been President Barack Obama ’s foreign policy—heavy on rhetoric about resets, pivots and engagement but weak in execution and deeply ambivalent about the uses of U.S. power—is too cold.

What we need instead, as the fairy tale has it, is a foreign policy that is just right—neither too ambitious nor too quiescent, forceful when necessary but mindful that we must not exhaust ourselves in utopian quests to heal crippled societies.

The U.S. finds itself today in a post-Cold War global order under immense strain, even in partial collapse. Four Arab states have unraveled since 2011. The European Union stumbles from recession to recession, with each downturn calling into question the future of the common currency and even the union itself. In Asia, China has proved to be, by turns, assertive, reckless and insecure. Russia seeks to dominate its neighbors through local proxies, dirty tricks and even outright conquest. North Korea’s nuclear arsenal and Iran’s effort to develop one tempt their neighbors to start nuclear programs of their own. And even as the core of al Qaeda fades in importance, its jihadist offshoots, including Islamic State, are metastasizing elsewhere.

As for the U.S., the sour experience of the wars in Iraq and Afghanistan has generated a deep—and bipartisan—reluctance to interfere in foreign conflicts, on the view that our interventions will exact a high price in blood and treasure for uncertain strategic gains. One result is that aggressive regimes seem to think that they can pursue their territorial or strategic ambitions without much fear of a decisive U.S. response. Another is that many of our traditional allies, from Israel to Saudi Arabia to Japan, are quietly beginning to explore other options as the old guarantees of the postwar Pax Americana no longer seem as secure as they once were.

How should an American president navigate through this world of ambitious rogues and nervous freelancers? How can the U.S. enforce some basic global norms, deter enemies and reassure friends without losing sight of our global priorities and national interests? How do we conduct a foreign policy that keeps our nightmares at bay, even if we can’t always make our dreams come true?

When it comes to restoring order in places widely assumed to be beyond the reach of redemption, there is a proven model for us to consult. But it has nothing to do with foreign policy; it has to do with policing our toughest inner cities. And it has brought spectacular—and almost wholly unexpected—results.

Could it be that there’s a ‘broken windows’ cure not just for America’s mean streets but for our increasingly disorderly world?Could it be that there’s a ‘broken windows’ cure not just for America’s mean streets but for our increasingly disorderly world? GETTY IMAGES

The year 1991 was a year of foreign policy triumphs for the U.S., from victory in the Gulf War to the collapse of the Soviet Union. But it was the annus horribilis for American crime, with nearly 1.1 million aggravated assaults, 106,590 forcible rapes and 24,700 murders. In every category, crime was up from the year—and the decade—before. As late as 1995, some criminologists were predicting that a new wave of “super-predators” would descend on American neighborhoods. “If current trends continue, the number of arrests of juveniles for violent crimes will double by the year 2010,” reported the New York Times, citing a Justice Department report.

“Current trends” did not continue.

In 1990, New York City registered a homicide rate of 30.7 murders for every 100,000 people. By 2012, it had fallen to a rate of 5. A similar, if slightly less dramatic, story unfolded in every other major U.S. city. The social deliverance happened despite the fact that many of the factors often cited to explain crime—bad schools, broken homes, poverty, the prevalence of guns, unemployment—remained largely the same from one decade to the next.

What happened? The crack epidemic crested in the early 1990s. The police began developing new techniques to track and control patterns of criminal activity. Between 1992 and 2008, the number of law enforcement personnel rose by 141,000, a 25% increase, and from 1990 to 2000, the adult incarceration rate nearly doubled. More cops on the streets; more bad guys behind bars. It was bound to have an effect.

But something else was at work. In 1982, George Kelling, a criminologist at Rutgers, and James Q. Wilson, a political scientist at Harvard, wrote an essay for the Atlantic Monthly titled “Broken Windows.”

Their core insight turned on a social-science experiment conducted in 1969 by Philip Zimbardo, a psychologist at Stanford. Dr. Zimbardo parked a car on a street in the Bronx, with the hood up and without license plates. Within 10 minutes, vandals begin to pick the car clean of its valuables: battery, radiator, tires. By the next day, people began destroying the car, ripping up pieces of upholstery and smashing windows.

Dr. Zimbardo then conducted the same experiment in tony Palo Alto, Calif., near the Stanford campus. This time, the car—also with the hood up and the license plates removed—sat untouched for several days. So Dr. Zimbardo smashed a window with a sledgehammer. “Soon, passersby were joining in,” wrote Drs. Kelling and Wilson. “Within a few hours, the car had been turned upside down and utterly destroyed.” What to conclude?

“Disorder and crime are usually inextricably linked, in a kind of developmental sequence,” Drs. Kelling and Wilson argued. It had long been known that if one broken window wasn’t replaced, it wouldn’t be long before all the other windows were broken too. Why? Because, they wrote, “one unrepaired broken window is a signal that no one cares, and so breaking more windows costs nothing.”

The idea that the mere appearance of disorder encourages a deeper form of disorder cuts against the conventional wisdom that crime is a function of “root causes.” Yet municipalities that adopted policing techniques based on the broken-windows theory—techniques that emphasized policing by foot patrols and the strict enforcement of laws against petty crimes and “social incivilities”—tended to register sharp drops in crime and improvements in the overall quality of life.

We are disposed to think that, over time, order inevitably dissolves into disorder. But the drop in crime rates reminds us that we can go the other way—and impose order on disorder. Could it be that there’s a “broken windows” cure not just for America’s mean streets but for our increasingly disorderly world?

President Obama often talks about rules. After Syrian dictator Bashar al-Assad used sarin gas to murder more than 1,000 people near Damascus in August 2013, Mr. Obama warned that “if we fail to act, the Assad regime will see no reason to stop using chemical weapons.” After Russia seized Crimea in 2014, he denounced the Kremlin for “challenging truths that only a few weeks ago seemed self-evident, that in the 21st century, the borders of Europe cannot be redrawn with force.”

The language is elegant; the words are true. Yet the warnings rarely amount to much. The U.S. succeeded in getting Mr. Assad to give up much of his chemical arsenal, but the Syrian dictator goes on slaughtering his people, sometimes using chlorine gas instead of sarin. The president’s immediate response to the seizure of Crimea was to sanction a handful of Russians, send a few fighter jets to Poland and Lithuania, and refuse Ukrainian requests for military support.

This is how we arrive at a broken-windows world: Rules are invoked but not enforced. Principles are idealized but not defended. The moment the world begins to notice that rules won’t be enforced, the rules will begin to be flouted. One window breaks, then all the others.

The most urgent goal of U.S. foreign policy over the next decade should be to arrest the continued slide into a broken-windows world of international disorder. The broken-windows theory emphasizes the need to put cops on the street—creating a sense of presence, enforcing community norms, serving the interests of responsible local stakeholders. It stresses the need to deter crime, not react to it, to keep neighborhoods from becoming places that entice criminal behavior.

A broken-windows approach to foreign policy would require the U.S. to increase military spending to upward of 5% of GDP. That is well above the 3.5% of GDP devoted to defense in 2014, though still under its 45-year average of 5.5%. The larger budget would allow the Navy to build a fleet that met its long-stated need for 313 ships (it is now below 290, half its Reagan-era size). It would enable the Air Force to replace an aircraft fleet whose planes are 26 years old on average, the oldest in its history. It would keep the U.S. Army from returning—as it now plans to do, over the warnings of officers like Army Chief of Staff Gen. Raymond Odierno —to its pre-World War II size.

The key to building a military ready to enforce a broken-windows policy is to focus on numbers, not on prohibitively expensive wonder-weapons into which we pour billions of research dollars—only to discover later that we can afford just a small number of them.

Broken-windows foreign policy would sharply punish violations of geopolitical norms, such as the use of chemical weapons, by swiftly and precisely targeting the perpetrators of the attacks (assuming those perpetrators can be found). But the emphasis would be on short, mission-specific, punitive police actions, not on open-ended occupations with the goal of redeeming broken societies.

The central tragedy of the Iraq war is that it took nine months, at a cost of some 480 American lives, to remove Saddam Hussein from power and capture him in his spider hole—which ought to have been the central goal of the war. Yet we spent eight years, and lost an additional 4,000 Americans, in an attempt to turn Iraq into a model of Arab democracy—a “root cause” exercise if ever there was one. There’s a big difference between making an example of a regime like Saddam’s Iraq and trying to turn Iraq into an exemplary state.

A broken-windows foreign policy would be global in its approach: no more “pivots” from this region to that, as if we can predict where the crises of the future are likely to arise. (Did anyone see Russia’s invasion of Ukraine coming?) But it would also know how to discriminate between core interests and allies and peripheral ones.

As Henry Nau of the George Washington University notes in a perceptive recent essay in the American Interest, we should “focus on freedom where it counts the most, namely on the borders of existing free societies.” Those are the borders that divide the free countries of Asia from China and North Korea; the free countries of central Europe from Russia; and allies such as Israel and Jordan from many of their neighbors.

A broken-windows foreign policy wouldn’t try to run every bad guy out of town. Nor would it demand that the U.S. put out every geopolitical fire. American statesmen will have to figure out which of those fires risks burning down the entire neighborhood, as the war in Syria threatens to do, and which will probably burn themselves out, as is likely the case in South Sudan.

Then again, foreign crises rarely present a binary choice between doing nothing and conducting a full-scale military intervention. A cruise-missile strike against a single radio tower in Rwanda during the 1994 genocide could have helped to prevent Hutus from broadcasting instructions for murdering Tutsis, potentially saving thousands of innocent lives at minimal cost to the U.S. Bomb strikes by NATO to lift the siege of Sarajevo helped to turn the tide of the war in the former Yugoslavia against Serbian dictator Slobodan Milosevic, also at no serious cost to the U.S. Perhaps it is time for a strategy that enshrines the principle that preventing tragedy should enjoy greater moral legitimacy than reactingto it.

In his famous 1993 essay, “Defining Deviancy Down,” the late Daniel Patrick Moynihan observed how Americans had become inured to ever-higher rates of violent crime by treating as “normal” criminal activity that would have scandalized past generations of Americans. “We are getting used to a lot of behavior that is not good for us,” the senator from New York wrote. Twenty years later, the opposite has happened. We have defined deviancy up. But having done so, we have tended to forget how much better things are now than they were before.

Americans have lived in a relatively orderly world for so long that we have become somewhat complacent about maintaining it. Perhaps that explains why, in recent years, we have adopted a foreign policy that neglects to do the things that have underpinned that orderly world: commitments to global security, military forces adequate to those commitments, a willingness to intervene in regional crises to secure allies and to confront or deter aggressive regimes.

In recent months, however, and especially since the rise of Islamic State and the beheading of American journalists Steven Sotloff and James Foley, Americans have begun to rediscover certain truths about Pax Americana: If our red lines are exposed as mere bluffs, more of them will be crossed. If our commitments to our allies aren’t serious, those allies might ignore or abandon us. If our threats are empty, our enemies will be emboldened, and we will have more of them.

In other words, if the world’s leading liberal-democratic nation doesn’t assume its role as world policeman, the world’s rogues will try to fill the breach, often in league with one another. It could be a world very much like the 1930s, a decade in which economic turmoil, war weariness, Western self-doubt, American self-involvement and the rise of ambitious dictatorships combined to produce catastrophe. When President Franklin Roosevelt asked Winston Churchill what World War II should be called, the British prime minister replied, “the unnecessary war”—because, Churchill said, “never was a war more easy to stop than that which has just wrecked what was left of the world from the previous struggle.” That is an error we should not repeat.

To say that the U.S. needs to be the world’s policeman isn’t to say that we need to be its preacher, spreading the gospel of the American way. Preachers are in the business of changing hearts and saving souls. Cops merely walk the beat, reassuring the good, deterring the tempted, punishing the wicked.

Not everyone grows up wanting to be a cop. But who wants to live in a neighborhood, or a world, where there is no cop? Would you? Should an American president?

Mr. Stephens writes “Global View,” the Journal’s foreign-affairs column, for which he won a Pulitzer Prize in 2013. This essay is adapted from his new book, “America in Retreat: The New Isolationism and the Coming Global Disorder,” to be published Tuesday by Sentinel.

In Pursuit Of Global Deals…this poem kind of sums up the international business experience

Dealmakers’ Anthem!

Before the sunrise hits the roofs,
Before the birds begin to sing,
As drops of dew roll off the grass,
We hear the bells of global deals ring

Their energy provides the fuel
to drive the shipments cross the globe,
The email bits are cold and cruel,
They’re deals’ blood and players’ hope

The deals take us to strange places,
Exotic towns, abandoned mines,
Through deals we learn people’s faces,
And find the truth between the lines

The deals are like drugs and vices,
They make us high, and crashing lows they bring,
We chase them hard; we sometimes take bad chances,
and yet like junkies we pursue them and ignore their sting

                                                                                                         A. M. Gordin ( ©2011-2014 all rights reserved)
Brought to you by the
A must have tool for anyone involved in international business

A must have tool for anyone involved in international business

Is Ukraine a new Titanic?

“What happens in Ukraine will have global impact.”

308fbb9Recent events in Ukraine have shaken the entire world. Armed conflicts in the middle of Europe and redrawing of the borders under the barrels of heavy military equipment in the 21st century seemed surreal. All this as human civilization was becoming more sophisticated and technologically advanced READ MOREUkraine - Proprietary Fi180 Country Profile - page 1 of 4

“Heavenly Hundred”- Monument to Commemorate those who gave their lives at Maidan, to be installed in Princeton

308fbb9

SPECIAL ANNOUNCEMENT!

PRINCETON COUNCIL ON WORLD AFFAIRS in ASSOCIATION WITH FLUENT IN FOREIGN ACADEMY, BROAD STREET CAPITAL GROUP and NUMEROUS INDIVIDUAL AND CORPORATE PARTNERS IS ANNOUNCING AN INITIATIVE TO CREATE a

“HEAVENLY HUNDRED” (НЕБЕСНА СОТНЯ) MONUMENT

TO COMMEMORATE THE LIVES OF THOSE WHO PAID THE ULTIMATE PRICE FOR DEMOCRACY IN UKRAINE. THE MONUMENT, ONCE COMPLETED, WILL BE INSTALLED IN THE PRINCETON, NJ AREA, WITH THE FAMOUS GROUNDS FOR SCULPTURE MUSEUM SELECTED AS THE PRIMARY LOCATION.

WE ARE HEREBY ARE  CALLING ON THE SCULPTORS AROUND THE WORLD TO SUBMIT THEIR DESIGNS FOR THE PLANNED MONUMENT. THE SUBMISSIONS WILL BE ACCEPTED THROUGH MARCH 30th, 2014.  WINNING DESIGN WILL BE ANNOUNCED ON APRIL 27th, 2014.

TO RECEIVE MORE INFORMATION ABOUT DESIGN SUBMISSION DETAILS PLEASE REGISTER:

Those individuals and organizations wishing to support this project, please email rsigalus@fluentinforeign.com

The stories of 10 of EuroMaidan’s slain ‘heroes’ (VIDEO)

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Davyd Kipiani, native Georgian. Kipiani lived in Kyiv during the last year and was a member of Mikheil Saakashvilli’s party back in Georgia. He died in an ambulance of two gunshot wounds he suffered on Maidan Nezalezhnosti on Feb. 20. Kipiani’s 1-year-old son lost his father.
© http://www.facebook.com/vakhtang.kipiani

By: Daryna ShevchenkoOlena Goncharova, Kyiv Post

As police bullets and tear gas rained down on protesters at Independence Square just after dawn on Feb. 20, the bloody body of one of the first victims of the violence was laid out with a candle memorial near the western barricade on Khreshchatyk Street.

A priest prayed over the body. A woman wept. A man, shaking his clenched fists in the air, shouted: “They are killing our heroes!”

 

Another man draped a Ukrainian flag on the man and then placed a sign above his head with a warning for Ukraine’s president: “Yanukovych, you’re next.”

Central Kyiv became a war zone just after breakfast time on Feb. 20, shattering a truce reached the night before by embattled President Viktor Yanukovych and opposition leaders. Either police and protesters weren’t listening, or they had different orders.

When the bodies were counted, the victims’ total for the day had reached at least 50 people while the total number of fatalities since the start of the EuroMaidan protests is nearly 100 people dead.

In the days since the Feb. 20 bloodbath, funerals have been held, tears have been shed and a collective grief has set in throughout Ukraine with schools and other events cancelled, as well as businesses closed.

Ex-Prime Minister Yulia Tymoshenko, newly freed from nearly three years in prison, urged the tens of thousands of people on Kyiv’s Independence Square on Feb. 22 to never forget EuroMaidan’s “heroes” because the bullets that killed them were meant for everyone.

Read the full story here.

Heavenly Hundred

Felix, or no Felix? That is the Question.

I hope all of you had a terrific holiday season and once again would like to wish everyone health, happiness and prosperity in 2014.  We have a very exciting and event-filled year planned, so over the next couple weeks you will be seeing a number of announcements on the pages of this publication.  Today, I would like to kick off the year by announcing an upcoming release of the completely updated and revised Fluent In Foreign Business™ book.

The new edition sub-titled “A Candid and Practical Guide on how to Grow Your Company by Expanding into Foreign Markets”, will include the 2015 Emerging Markets: KeysToAmerica™ Challenge, as well as additional chapters on Financing Exports and Projects, Franchising Abroad, Picking Most Promising Markets, Risk Mitigation, and new stories about author’s own international business adventures. The new edition of the book is scheduled for worldwide release on March 18th of this year. Those wishing to reserve a signed limited edition hard cover version, please register below. You can also see reviews and sample the original at http://wp.me/P1iIhX-I

Meanwhile we at Fluent In Foreign have a very serious question to all of you:). Should our beloved Global Felix™ be included in the second edition? Some folks who read the book said that having Felix illustrations included detracts from the serious nature of the book, others love the jovial character who makes difficult issues and complex subjects easier to deal with.  Here are some Felix illustrations from the book, each illustrates the main issue of a corresponding chapter. Let us know your opinion, on whether we should include Global Felix in the new edition of the Fluent In Foreign Business?Thank you and all the best in 2014!

CorruptionBulldozerFelix1308 pose 9dibujo 021308 pose 9GlobalFelix

This is what people in 9 emerging markets think about Bitcoin (survey)

This is what people in 9 emerging markets think about Bitcoin (survey)

What do you think these kids think of Bitcoin?

Bitcoin took us on a wild ride this year — it saw highs and lows, attracting both heady optimism and angry tirades from skeptics.

Most of the action happened in established tech markets in the U.S., Europe, China, and Japan, but the greatest implications could be for the developing world.

Jana is a mobile platform that connects brands with consumers in emerging markets. The company also has a research arm and decided to survey 1,800 people across nine countries — India, Indonesia, Philippines, Vietnam, Kenya, Nigeria, South Africa, Brazil, and Mexico — to see what they think about Bitcoin (infographic below).

When asked “have you ever heard of Bitcoin before today,” 48% of Indonesian respondents said yes, followed by 45% in Vietnam, and 34% in the Philippines — all Asian countries. South Africa and Mexico had the lowest response rates of 13% and 16% respectively.

58% of all respondents said they would “feel comfortable” investing in virtual currency. This number was highest in Kenya (74%), which could be due to the popularity of its mobile money service M-Pesa, which means people are already comfortable with digital money. Brazil and Mexico were the only countries where less than 50% of respondents would feel comfortable investing money in virtual currency.

Bitcoin is highly volatile — it soared from under $10 to over $1,200 over the course of the year, with various ebbs and flows. China played a huge part in driving the surge as well as the crashes. China’s largest Bitcoin exchange stopped accepting yuan deposits yesterday  morning, sending the price tumbling to $522. The price has since gone back up to around $700.

One of Bitcoin’s biggest selling points is how cheap and easy it is to transfer money. Traditional cross-border transfers (like Western Union) charge exorbitant fees, while Bitcoin is basically free. Furthermore, it is global and not controlled by one particular government.

Adam Draper, who runs a Bitcoin-oriented accelerator program, said that Bitcoin is still more of an asset than a currency. If and when it stabilizes, the impact could be the largest in countries with emerging economies.

“It is interesting to look at inflationary markets like Argentina, Venezuela, and India, where the value of a Bitcoin could be a better store of value than their own currency,” he said in an interview. “Remittances and cross-border payments are also a big deal, and Bitcoin could change the game if adopted appropriately.”

The respondants in Jana’s survey view Bitcoin as less safe than banks, more safe than the stock market, and comparable to investing in property.

However the Bitcoin ecosystem still has a long way to go before it is feasible or practical for people who don’t have money to gamble. Because Bitcoin is still just that — a gamble.

Jana_Bitcoin Infographic

Prospects for the Global Economy in 2014

CFR. org (Council on Foreign Relations)

Authors: A. Michael Spence, Distinguished Visiting Fellow, Council on Foreign Relations Robert Kahn, Steven A. Tananbaum Senior Fellow for International Economics Ernesto Talvi, Nonresident Senior Fellow and Director, Brookings Global-CERES Economic and Social Policy in Latin America Initiative Yukon Huang, Senior Associate, Asia Program, Carnegie Endowment for International Peace Mark Zandi, Chief Economist, Moody’s Analytics
Interviewer(s): Mohammed Aly Sergie, Online Writer/Editor

The International Monetary Fund expects the growth of the global economy will accelerate to 3.6 percent in 2014 from 2.9 percent in 2013. Five top economic experts offer insights on how to read trends in different regions.

Developing economies will likely enjoy relatively high growth in 2014, while the United States will continue with real growth and Europe’s economy will expand very slowly, says CFR’s A. Michael Spence. Moody’s chief economist Mark Zandi expects the United States to experience its fastest growth in a decade, driven by a reduction in fiscal austerity, a resurgent housing market, and the “superb condition of American corporate, bank, and household balance sheets.”

Europe is growing, and capital is beginning to return, which has made policymakers “buoyant,” says CFR’s Robert Kahn, but officials face the challenge of bolstering the growth rate “before markets again lose confidence in the reform process.”

Well-managed Latin American countries that depended on abundant inflows of foreign capital will have to adjust their growth rates of consumption, investment, and public spending, says Ernesto Talvi of Brookings. Carnegie’s Yukon Huang says China can reach a more sustainable growth path if it deals with its debt problem and boosts productivity.

A worker maintains machinery at TIM stainless steel wire factory in Mexico. (Photo: Tomas Bravo/Courtesy Reuters)

A. Michael Spence, Distinguished Visiting Fellow, Council on Foreign Relations

The 2014 global economy is likely to see a reemergence of the post-crisis pattern of relatively high growth in the developing economies, a continuation of real growth in the United States, and very low growth in Europe.

The U.S. economy is growing at 1.5 to 2 percent in real terms, led by a flexible private sector shifting toward external demand in the tradable sector. Tail winds are coming from growth in the emerging markets (especially China), low-cost energy in shale gas, and extensive deleveraging in the household and financial sector. Fiscal drag from government persists, and the pattern of public-sector underinvestment will remain, diminishing longer-term growth potential.

“[S]tructural rebalancing in Europe will take time and prospective growth will be low in and beyond 2014.”

In Europe, the ECB has stabilized sovereign debt markets and systemic risk is for now substantially reduced. But growth will not follow easily. Most of the south of Europe has nominal unit labor costs well above Germany’s post-reform levels, and the process of rec­­­onvergence with a common exchange rate is slow and difficult. Reforms to increase structural flexibility and accelerate a structural shift toward the tradable sectors have been limited. The net result is that structural rebalancing in Europe will take time and prospective growth will be low in and beyond 2014.

China has announced an aggressive and credible reform program, emerging from the Third Plenum in November. If it is followed by an equally aggressive program of implementation in 2014 and beyond, the growth pattern will start to shift to a new sustainable one consistent with the higher income levels in the economy. Recovery in the advanced countries will eventually restore some growth potential coming from the tradable sector, but probably not in 2014 with the huge European market treading water.

Other major emerging economies, especially those with current account deficits and a pattern of reliance on cheap foreign capital, experienced some instability during 2013 as a result of the tapering announcement and high-speed capital outflows and attendant exchange rate volatility. Corrective action may slow them down into 2014, but they will return to higher growth in the longer run, with China serving as a tail wind.

African countries have been quietly impressive over a decade and through the advanced country crises. This seems set to continue in 2014 and will not be overly dependent on natural resource prices and markets. These so-called “frontier” markets, while not huge in aggregate size, are emerging as resilient star performers.

Robert Kahn, Steven A. Tananbaum Senior Fellow for International Economics

European policymakers are buoyant. The urgent sense of crisis has receded, early signs of growth have appeared, and capital is beginning to return. But Europe is not out of the woods, and the risk that the crisis could return is higher than is commonly understood.

Euro area growth is on track to reach 1 percent next year, following two years of decline. Continued bank deleveraging, an uncertain global growth outlook that will restrain exports, excessively tight macroeconomic policies, and an incomplete framework for monetary union provide powerful headwinds to recovery. Stronger demand is needed to boost growth, and a relaxation of fiscal austerity would be welcome in this regard. The European Central Bank (ECB) also will need to do more to spur new lending, particularly for small and medium enterprises in the periphery, and consider full-scale quantitative easing.

The problem with this forecast is that growth at this level is insufficient to reduce high levels of unemployment, which have reached 26 percent in Spain and 12 percent for the euro area as a whole. Youth unemployment, which averages nearly 24 percent for the eurozone and exceeds 35 percent in several countries, represents a critical threat to Europe’s future.

“European leaders need to win back their publics and make a better case for a faster move to economic and political union.”

Banking union will be the focus of policy efforts to advance monetary union in 2014. The ECB-led stress test, essential in efforts to restore confidence in Europe’s banks, will need to navigate a narrow path forward: too soft and the credibility of the ECB could be irrevocably damaged; too tough and the resultant financial stress could turn today’s green shoots brown in a hurry. Market pressures could return quickly if countries were seen to be abandoning their commitment to reform and financing gaps were to reemerge.

Perhaps the more serious challenge to Europe in 2014 is political. Polls show that austerity is undermining the readiness of Europeans to accept the deeper union that is needed to redress Europe’s economic woes. Parliamentary elections in May are likely to bring a strong antiausterity vote. (A euro-skeptic parliament, in addition to being entertaining to watch, could set back efforts to negotiate a transatlantic trade agreement.) Governments in periphery countries such as Greece and Portugal may find it increasingly hard to sustain support for their adjustment programs.

The challenge, therefore, is to restore growth before markets lose confidence in the reform process again. European leaders need to win back their publics and make a better case for a faster move to economic and political union. Failure to do so could make 2014 the year the crisis returns.

Ernesto Talvi, Nonresident Senior Fellow and Director, Brookings Global-CERES Economic and Social Policy in Latin America Initiative

Latin America, particularly countries such as Brazil and Argentina that are commodity-exporting and less dependent on the U.S. economic cycle, have had close to a decade of exceptional growth, doubling the region’s long-run average. This period of exuberance was underpinned by sound macroeconomic policies, but largely propelled by cheap and abundant inflows of foreign capital and high commodity prices. High growth and active redistribution policies made possible by plentiful fiscal resources led to a 13 percentage point decline in poverty rates in Latin America, a 5 percentage point decline in extreme poverty rates, and the emergence of an incipient middle class.

Since mid- to late 2011, however, Latin America’s growth rates have cooled substantially as growth in important emerging economies lost steam (in particular, China’s growth rate declined from previous skyrocketing levels of 12 to 7 percent) and commodity prices weakened. More recently, international financial conditions have tightened—sending shivers through emerging markets—since the Federal Reserve announced the possibility of a gradual withdrawal of monetary stimulus. As a result, international financial and capital resources are expected to become scarcer and more expensive.

“Countries that are less well-managed economically, such as Argentina and Venezuela, are already in crisis mode.”

Less abundant and more expensive foreign capital and financial resources imply that countries such as Brazil—which are spending in excess of their income and financing that excess with inflows of cheap foreign capital—are soon due for an adjustment in the growth rates of consumption, investment, and public spending that will keep growth rates of the economy in check. Countries that are less well-managed economically, such as Argentina and Venezuela, are already in crisis mode.

Policymakers in the well-managed countries of the region will have to face significant economic challenges stemming from a more adverse external environment and stricter financial constraints. These challenges, especially reigniting growth through domestic transformations, are politically complex and take time to produce effects (e.g., education reform in Mexico). Preserving macroeconomic stability and fiscal probity at a time when a dissatisfied electorate (with high expectations due to a decade of very high growth) will pressure governments to accommodate immediate popular demands at the expense of sound policies. How these tensions are resolved will be crucial in determining the economic prospects of the region in the coming years. For better or worse, in the next decade we will witness the emergence of a very different Latin America.

Yukon Huang, Senior Associate, Asia Program, Carnegie Endowment for International Peace

The Third Plenum of the Chinese Communist Party’s Central Committee laid out in November a bold policy framework for reaching a more sustainable growth path. These policy changes are essential as China approaches the level of income at which many other rapidly growing developing countries experienced precipitous growth slowdowns, the so-called middle-income trap. Going forward, if China hopes to evade this “trap” and maintain growth of 7 percent for the rest of the decade, it will have to address its growing debt problem and significantly increase productivity.

China’s $600 billion 2008 stimulus package pushed up its total debt level by 50 percentage points to more than 200 percent of GDP. Given China’s high savings rate and huge level of reserves, this burden is manageable provided that the targeted economic growth rate can be sustained. Thus a major concern addressed in the Third Plenum was the strengthening of the fiscal system so that local authorities would no longer have to rely on bank credit to finance their basic expenditure needs.

“Fiscal reforms and reduced dependence on banks will improve transparency and promote accountability.”

But more challenging is increasing productivity, since China’s past reliance on ever-increasing investment rates and ready access to low-cost labor is no longer tenable. The two most promising areas of productivity-boosting reform are those that will facilitate a more efficient urbanization process, allowing the economy to benefit from the massive supply of labor still trapped in low-productivity rural activities or smaller cities and increasing the role of private firms, whose investment returns are twice as high as state-owned enterprises.

While these macroeconomic problems are high on the policy agenda of senior leaders, the average citizen is more preoccupied with issues of social justice, corruption, and the environment. Thankfully, many of the actions highlighted at the Third Plenum also feed into the wider changes needed to address these politically sensitive concerns. Fiscal reforms and reduced dependence on banks will improve transparency and promote accountability. Rolling back the power of state enterprises and streamlining government procedures will restrain rent-seeking activities and expand opportunities for private firms. Better-managed urbanization will strengthen the voice of the middle class and improve the environment while also boosting productivity.

Mark Zandi, Chief Economist, Moody’s Analytics

Here’s an intrepid forecast: In 2014, the U.S. economy will experience its fastest growth in a decade.

Supporting this optimism is the fading of fiscal austerity. Under current law—if Congress makes no substantive changes to taxes and spending—headwinds from fiscal policy will diminish rapidly. Lawmakers will again need to agree on keeping the government open and raising the Treasury debt limit, but they seem likely to do so after their earlier brinkmanship brought a negative political reaction.

It would be wonderful if Congress and the Obama administration could undertake substantive entitlement and tax reform, but this seems unlikely, and it isn’t necessary in the near term to allow the economy to improve; our long-run fiscal problems will come to a head in the next decade. As long as lawmakers do no harm, which is a reasonably low bar, fiscal policy will quickly become less of a drag on growth.

“The only missing ingredient to a stronger economy is confidence.”

The housing recovery should also power stronger output growth. Simple demographics support a pickup: The current pace of construction is far too slow to accommodate newly formed households, replace damaged or obsolete structures, and meet demand for second homes. Housing was vastly overbuilt during the bubble, but it will soon be undersupplied, suggesting that construction will be ramped up significantly across much of the country.

An acceleration in housing hinges on the Federal Reserve’s ability to successfully match the pace of future interest rate increases to an improving job market. Home sales won’t be dented by higher mortgage rates if brisk hiring and a falling unemployment rate lift homebuyers’ income and confidence. For the Federal Reserve to gracefully unwind its extraordinary monetary stimulus policies is no small order, but it is doable, and the most likely outcome.

Most of all, optimism about 2014 is based on the superb condition of American corporate, bank, and household balance sheets. Businesses have reduced their costs and are enjoying record profit margins. Banks have recapitalized and are highly liquid. And households have reduced their debt loads and locked in record-low interest rates.

The only missing ingredient to a stronger economy is confidence. It is hard to know what will lift spirits, but with the pain of the Great Recession diminishing and Washington’s standoff expected to fall off the front pages, chances are growing that this will happen in 2014.

As Emerging Markets Slow, Firms Search for “New” BRICs

by Richard Leggett, HBR.org

By all measures, emerging markets are having a tough year. The Economist bemoans their “great deceleration” and HBR featured a well-researched study on how multinationals are becoming less global. However, multinationals still expect their emerging market portfolios to deliver robust growth and increasing profits based on the memory of their performance in recent, more bullish years.

In this new operating environment, I find more and more multinationals looking to new frontier markets for growth while demanding profitability from their emerging-market operations. Using our 200+ clients as a proxy for global sentiment, I find the pivot towards profitability to be significant: 37% of MNCs are focused more on profitability than growth in emerging markets, up 16% from just last year.

To accommodate these new market dynamics, executives are adopting a dual strategy of “going deep” in the BRICs while simultaneously and aggressively pursuing the next frontiers.  Let’s see how this story is playing out in the different emerging market regions.

Asia Pacific

Asia offers a good example of this push to frontier markets. I remember a conversation I had with an executive in 2000. I asked which markets he was focused on outside of China and India. He responded, “for us, China and India are Asia.” It’s been awhile since I heard a similar response, as companies are now expanding aggressively into ASEAN (Malaysia, the Philippines, Singapore, Thailand, and especially Indonesia). This is the result of a growing and affluent middle class that supports private consumption and is bolstered by favorable demographics; over 50% of the population is under 29 years old and approximately 52% live in urban areas.

However, there are some risks. For example, on the Indonesian archipelago, supply chain and distribution logistics present serious challenges — with logistics costs at 24% of GDP, compared with the regional average range of 9-11%. Difficulty in distribution is not unique to Asia and reflects a global trend. According to our recent benchmarking survey of more than 100 senior executives, 94% of executives sell at least partially through distributors, accounting for about 50% of their revenue in emerging markets. Additionally, managing corrupt business practices often makes it difficult for MNCs to realize growth potential in the short term.

Latin America

As executives become more sophisticated in their understanding of these countries, they balance their focus between looking to expand in new markets as the old standbys–namely Brazil and Mexico–have recently slowed to disappointing growth rates. For example, Peru’s rising middle class offers an increasingly attractive choice for consumer goods and retail MNCs looking to diversify their investments beyond established markets.

Quantifying the impressive rise of the middle class, FSG calculates private consumption in Peru is set to grow 54% between 2010 and 2015. Real increases in personal income and access to credit will support growth across all retail categories, but the automotive, consumer electronics, and food and drink sectors will outperform, as consumer taste becomes more sophisticated.  The consumer sector has already begun its high-growth phase as over 36 new shopping centers have been built in Peru over the last 10 years. The three main grocery retail chains in Peru grew from 57 stores in 2001 to 155 stores in 2010.

Eastern Europe, Middle East & Africa

Eastern Europe, the Middle East, and Africa follow the same pattern of slowing growth in traditional strongholds, with opportunities in previously untapped frontier markets. In Russia, having made significant investments in the two largest cities, we are seeing companies expanding into regional markets by relying on third-party distributors, similar to the storyline in Indonesia. Growing beyond Moscow and St. Petersburg allows companies to build market share, strengthen their competitive position, drive profitability, and contribute to long-term sustainability in Russia – and it’s worth remembering that 64% of Russia’s GDP sits outside of the these two cities.

Sub-Saharan Africa is in many ways the last great frontier. Here multinationals are reacting to South Africa’s stagnant growth by looking to the hottest frontier markets globally: Nigeria and, to a lesser extent, Angola. The region has piqued executives’ interest, as it benefits from improving business conditions, demand for infrastructure projects, and a strong demographic profile.  Nigeria is especially attractive, as it is poised to overtake South Africa as the largest African economy afterits GDP grows 40-50% as a result of the government changing the way it measures GDP at the end of the year. Nigeria’s automotive industry is booming, as international car makers are expanding their dealerships and setting up local assembly plants.  Case in point: Ford is planning to introduce at least five new models after seeing a 33% increase in sales in the first half of 2013 in Nigeria. Mercedes-Benz and Skoda have recently expanded in the country with new showrooms and models.

In emerging markets, what began primarily as a growth strategy has evolved to a dual mandate of growth and profitability. Executives must act fast to capitalize on the final frontiers, while market share is still there for the taking. Although each region exhibits similar potential, success for multinationals will depend on identifying the most attractive opportunities for their unique businesses and adopting management best practices that account for the local nuances of each market.

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