Friday, 28 September 2007

Necessity (and poverty) breed invention

Across Africa, the practice of 'beeping' is spreading fast. This involves calling a friend or contact on his/her mobile phone but hanging up immediately. The friend gets a missed call and returns it - and he/she incurs the call cost and not you!

The phone companies are working out ways in which they can get (small amounts of) revenue from these 'missed calls' and are introducing new 'call me back' services.

So both parties are trying to maximise their value and minimise their costs .... quite productive, really.

Sunday, 23 September 2007

USA should become a high-skilled economy

Atlanta Federal Reserve Bank President Dennis Lockhart said recently that higher productivity is needed to help retain high-end manufacturing jobs in the United States and even reverse some of the forces of outsourcing.

In a panel discussion on the regional economy at the Southern Governors' Association annual meeting, Lockhart said some companies had found that producing quality goods was not always compatible with seeking out the lowest cost of labor.

St. Louis Fed President William Poole went further and said that governments and businesses needed to help with a transition that shifts Americans to higher-skilled jobs.

... and you thought the USA was a high-skill economy!

Tuesday, 18 September 2007

Canada fails to capitalise

Though Canadian companies have been investing in new machinery and equipment, they have failed to realise all the productivity benefits, a new study from Statistics Canada suggests.

The gap in labour productivity -- or real gross domestic product per hour worked -- between the United States and Canada has been steadily widening since the 1960s, and grown significantly since 1980, said the agency's report on long-term productivity growth in the two countries.

From 1961 to 2006, labour productivity in Canada and the U.S. increased at virtually the same annual average rate -- 2.1% in Canada and 2.3% in the U.S. -- over the 45-year period.

However, significant differences appear when the data is broken down into shorter time periods, and when the factors behind the improvements in productivity are examined.

"The drop off after 1980 is very striking," said Glen Hodgson, chief economist at the Conference Board of Canada.

Between 1961 and 1980, labour productivity in Canada improved 2.9%, while in the U.S. it grew 2.5%. But from 1980 to 2006, Canada improved 1.5%, while the U.S. grew 2.2%, the Statistics Canada data showed.

The reasons behind the growth rates were also different, the agency noted.

"In Canada, investment in capital was the most important factor in the growth of labour productivity," the report said. "In the United States, however, the main factor was improvement in production efficiency."

By contrast, in the U.S., the improvements in productivity are largely due to "multifactor productivity (MFP)," generally associated with technological or organizational change or economies of scale.

Thursday, 13 September 2007

Effectiveness changes

Most people with PVRs (personal video recorders such as Tivo in the US and Sky+ in the UK) use them to fast forward through adverts between programmes. This clearly bothers advertisers and agencies. Now a survey has shown that the adverts least likely to be bypassed are (not surprisingly) short, direct ones - not 'lifestyle' adverts where it takes 2 minutes to work out what is being advertised.

It reminds me of a 'restaurant' I was passing on my first ever visit to New York. It was called "Eat Here Now!". I did. Sometimes short and sweet is very effective.

Monday, 10 September 2007

The Race is On

In perhaps the boldest environmental move by any nation, President Oscar Arias of Costa Rica has announced that Costa Rica will be carbon neutral by 2021 - probably the first in the world to be so.

Hydrocarbons - including gasoline and diesel - already bear a heavy tax burden, making fuel there more expensive than in any other country in Central America. Three percent of these taxes fund Costa Rica's cutting-edge program of payment for environmental services, called the National Forest Financing Fund (FONAFIFO), which compensates landowners for growing trees.... the program doles out almost $15 million a year to more than 8,000 property owners.

Monday, 3 September 2007

Productivity to Turkey's Rescue?

The Turkish economy has a typical development dilemma – which can only be resolved by productivity growth. Currently unemployment is at 9.8 per cent and needs to be down below 6 per cent for a socially sustainable growth path for future years. On the other hand, the added value per product must rise to enable Turkey to be more competitive.

This requires Turkey to focus on high-productivity sectors (currently the automobile industry shows good productivity) rather than low-productivity ones (such as textiles).

In fact it is unlikely that Turkey could survive in many of the low-productivity and labour-intensive sectors in the longer term - Turkey’s recent development has made life expensive and the cost of labour significantly exceeds that of China, India and so forth.