Is Pakistan the new India?

Not bloody likely.

According to an annual report, titled "Doing Business," put out by the International Finance Corporation (IFC) in late 2007, Pakistan is perceived as a better place for doing business in South East Asia than India in many respects. In fact, Pakistan ranked 76 among 178 economies worldwide, while India held the 120th spot. However, after the assassination in Pakistan of opposition leader Benazir Bhutto in late December, Pakistan has no chance of outpacing India as a prime spot for foreign investment anytime in the near future. The country's economy (which is in shambles now) endured nearly $2 billion in losses in just two days of violence following her murder, according to government estimates.
According to a January article on Forbes.com:

"Until recent months, Pakistan had been an increasingly popular destination for foreign investment, partly because military ruler President Pervez Musharraf introduced liberal economic policies after he came to power in a 1999 coup.

The economy has grown at an average annual rate of 7.0 percent since 2002. The Karachi stock exchange has shot up almost 900 percent this decade.

But the killing of Bhutto, a former prime minister, has left an economic void since she was seen as the only opposition leader with genuine national appeal and strong foreign backing."

All that said, I guess it is safe to say that India will remain as top dog with foreign investors ... for now.

One Cut Cable = $Millions Lost

Lest we be forget that the Internet is based on wires and antennas, consider this news item (Reuters via NYTimes):

A breakdown in an international undersea cable network disrupted Internet links to Egypt, India and Gulf Arab countries on Wednesday, and Egypt said it could take several days for its services to return to normal.

It was not immediately possible to gauge the impact of the disruption on financial institutions. Egypt's telecoms ministry said 70 percent of the country's Internet network was down and India initially said it had lost over half its bandwidth.

The Internet was designed as a military research project, with the goal of creating a network that could not be taken out by destroying a single central computer. Indeed, it's admirable that data traffic could still get through via alternate routes in Egypt and India. But I sometimes think that we don't realize how vulnerable the whole thing is. We are talking about, I presume, a single, lonely cable lying on the sea floor here. How many dollars worth of business and personal data were interrupted by what could been, for all we know, a shark attacking what it thought was a fat and listless eel? Okay, that's unlikely, but the point is that it's pretty easy to disrupt the Internet by accident, and if you know where to strike, you'll virtually guaranteed of some success.


Part of the problem is that we run pretty close to our capacity. That means that cutting even a minor backbone cable (or cyber-attacking an important backbone traffic routing computer) can have an outsize effect as data tries to cram through the existing pipes on the way to its destination. Fortunately, unlike the electric grid, there won't be an overload that shuts down the data traffic routers (the equivalent of electric substations, if you like). Unfortunately, what an overloaded router does is a) become slow and/or b) randomly reject or drop your packets of information. Data that doesn't arrive exactly as you sent it or arrives in partial form is about as useful as electricity that comes on only during odd-numbered minutes of the day.

Capacity does not appear to be getting better. It's kind of like the gasoline refinery situation here in the U.S. or the worldwide oil situation for that matter: there is enough of either, but demand is so close to capacity/production that even a minor supply disruption can affect everyone worldwide. The Internet is a bit more segmented--the traffic disruption in the Middle East and India won't slow us in the U.S. from reaching our Web sites (unless perhaps if they are hosted in those affected areas). But plenty of U.S.-based businesses have important IT operations in India (or companies they rely on with Indian IT operations).

Do you have a backup plan for your company in case Digital Armageddon hits tomorrow?
(image credit: Center for Complex Network Research, University of Notre Dame)

Porn and Pumpkins

When governments are strapped for cash and hesitant to raise income taxes, lawmakers often invent some wacky taxes on random goods, according to a Yahoo! news story this week.

Six states currently enforce a tax on pornography. Texas goes a step further and taxes strip clubs, cheekily calling it the "pole tax." Other states have taxes on the sale of illegal drugs. Enforcible, you ask? Usually only post-arrest. A less scandalous tax comes in October when several states take a percentage of pumpkin purchases. What a trick!

Basically, it seems a lot of politicians use such offbeat taxation to raise revenue without raising the boiling points of the average taxpayer. Have to keep the voters happy, right?

The Recession-Proof State

Our previous blog post highlighted recession-proof jobs and employment sectors, so I thought a recent news story about a "recession-proof" state would be pertinent to mention.

Most Americans now think of Hurricane Katrina when they hear about Louisiana. But with a new governor, economic prowess, and some optimism, this fine state is ready to rebound from its disaster relief image. The gulf state, already the nation's number one producer of crude oil, has purchased 1,500 acres of land in hopes of luring a major automotive plant. Additionally, it offers a unique business tax incentive that specifically targets the booming digital media industry. And sights are set on bringing in biotechnology and life sciences companies to diversify the state's business climate.

With all of the international chatter about the U.S. economic backslide, Louisiana's development team seems undaunted. In fact, Donald Pierson, the state's assistant secretary for economic development, considers Louisiana to be "a little bit more recession-proof."

Is YOUR job safe!?

With the word recession at the tip of every one's tongues these days, I figured it would be apropos to spotlight an article I read today on Yahoo titled "Recession-Proof Jobs in 2008." According to the article:

"Economists at Merrill Lynch and Morgan Stanley say the U.S. is heading for its first-blown recession in 16 years, and a recent CNN poll found that 57 percent of the public believe the U.S. is in a recession already, with the economy topping the list of voter's worries."

The article went on to discuss exactly which employment sectors are recession-proof, and the winners are ...

1. Education
2. Energy
3. Healthcare
4. International business
5. Environmental sector
6. Security

And, in other recession news ... Bush's Congressional leaders completed a deal with the White House today on tax rebates to help revive our failing economy. The $150 billion plan, also includes close to $50 billion in business tax cuts. Under the plan, individuals who pay income taxes would get up to $600 and couples would get up to $1,200 (couples with children would get an additional $300 per child). In addition, individuals who make at least $3,000 but don't pay taxes would get $300 rebates. Only individuals whose income is $75,000 or less and couples with a combined income of $150,000 or less would be eligible for the rebates.

So, it looks like a good portion of us will have some extra money in our pockets soon (around June, according to sources) courtesy of Uncle Sam, who already takes a lot of extra money I could be putting back into the economy out of my pocket every pay period.

It will be good to see some of my own hard-earned cash back in my pocket! I guess this means I can get two scoops in my cone this summer instead of one!

Competitive Trade Logistics Critical for Developing Countries

I came across an interesting article today in the Latin Business Chronicle that talked about a recent report that came out from the World Bank entitled "Connecting to Compete: Trade Logistics in the Global Economy." According to the report, countries in Latin America and the Caribbean ranked way behind several developing countries, especially in Asia, in trade logistics competitiveness. For developing countries, the ability to connect to international markets to ship goods is a key way to increase competitiveness in the global economy. The full report and related information are available here.

America's Great Green Hope

Recently, "green" has become the ubiquitous buzzword used to describe all things environmentally-friendly. But prior to such days of mainstream climate-consciousness, the word "green" often summoned images of the US dollar which, of course, has taken a dramatic dip in value over the last several years, most notably against the British pound, the euro, and, now, the Canadian dollar. Fortunately, yesterday's edition of The New York Times included an article predicting that the worst is over and that 2008 will see the dollar get its groove back. This is hopeful news for investors, and the article offers some expert advice as to what stocks and markets we should put our resurgent greenbacks into.

It's also great news for globetrotters who felt the sting of foreign price tags last year. I had a busy personal travel calendar in 2007 and, after a pricey jaunt to New Zealand and French Polynesia in February, and a two-month summer stay in Wales and England, where the dollar was crippled, I finally learned my lesson when choosing a New Year's Eve destination: Guatemala. The dollar still has buying power in some places! Let's hope this list expands in 2008.

Economic Marks of the New Year

You surely have been inundated with this news story, which is essentially contained within its own headline

Oil breaks $100 as U.S. stockpiles drop

Did you catch this one, though?

Toyota Ousts Ford From No. 2 Spot in U.S. Sales

It's not like we didn't know either one of these was coming--and these aren't really necessarily bad things, in the long term. But I think we may find that, presidential caucuses and primaries aside, it will set the tone for 2008.