Globalization: Part III
Aging workforces & brain drains
Key Questions
How do we solve aging workforces worldwide?
Can population growth be sustained in developed nations?
Where are migrants moving?
Topics Covered
Developed Demographics
Value Creation
Human Capital Flight
Globalization Series
Developed Demographics
Value Creation
Value can be a subjective thing. This is a huge topic that I will delve into in another post, however for practical purposes let’s say that value is generated in the form of ideas. The expression below is a common economic model in which the stock of knowledge (A) can be proportional to output (Y).
We saw in Part I that manufacturing and trade hubs generate value through production and exchange of consumer goods. Here we will talk about areas of the world where innovation/knowledge generate immense value.
Innovation Hubs
A large portion of the consumer goods we enjoy today originate from special areas in the world. The iPhone is still a dominant smartphone and it all started in San Francisco Bay. Silicon Valley is the birthplace of the modern tech industry.
Nowadays the hardware for almost all tech companies is made overseas in Asia, while the software and designs are made domestically.
Shenzhen is another area of interest. It could be considered the global capital of hardware. One interesting thing is that Shenzen is a special economic zone. This is essentially a government designated zone with advantages for businesses and foreign investment to foster economic productivity.
Special Economic Zones
Financial Hubs
Billionaire Cities
“Elon Musk Is Planning a Texas Utopia—His Own Town” (WSJ, March 9, 2023)
Crown Prince Mohammed bin Salman Al Saud (MBS)
Marc Lore - American entrepreneur billionaire
Human Capital Flight
Generally, the trend is that people are moving to city centers no matter their nation or culture. Another thing to note is that immigration is becoming more popular. I would speculate that this is due to globalization (increased international awareness/opportunity) and overall rise in incomes/standards of living (financial resources available). We can reasonably assume that people are opportunistic and will always generally seek the greatest outcome for themselves or their family.
Both low and high income earners are finding it advantageous to immigrate. Low income workers make far more in developed countries, and often will send it back home with favourable exchange rates. An interesting trend is that high income workers are congregating in specific regions of the world: US/Canada, Swiss, Israel, Dubai, Singapore, Australia/New Zealand. It is easy to understand why these locations are attractive; all of them are, or contain, cities that rank among the top in the world for quality of life or technology/business opportunity.
Things like consumer, business, and investor confidence must be diligently built to create prosperity. Unfortunately, it is hard for new areas to generate this reputation and this is why we are seeing concentrated areas of capital. This uphill climb is the reason why many African American businessmen are investing in African companies/infra to foster future investment.
As I covered in my State of Superpowers 2023 post, America will remain dominate due to inherent geography and plethora of domestic industry. Another reason to add to this list is that everyone in the world wants to move to America. It is the home of the largest companies in the world, the richest consumer market, and cutting edge innovation. The immigration statistics do not lie and it appears this will remain true for the foreseeable future.