Brexit Is Already Affecting UK Businesses — Here’s How


This post is by Nicholas Bloom from HBR.org


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According to a survey of over 7,000 business leaders in the UK.

Crony Capitalism, not capitalism is the problem


This post is by Om Malik from On my Om


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The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America….The peril gravely putting our nation at risk of failure is Crony Capitalism. I make this observation as an unabashed capitalist.

This is one of the smart reads. Barry Ritholtz piece is a reminder of the times when America used to mock other third world economies. Growing up in India in the 1970s and 1980s, all I remember is a sense of despondency among those who were people of ideas and innovation. 

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WeWork, and Can the Government Really Print as Much Money as It Wants?


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Youngme Moon, Felix Oberholzer-Gee, and Mihir Desai discuss whether WeWork’s success is sustainable. Plus, can the government really spend as much money as it wants without worrying about deficits? What in the world is Modern Monetary Theory and does it actually make sense?

Research: Are Women Better at Leading Diverse Countries Than Men?


This post is by Susan Perkins from HBR.org


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A study looked at 188 nations over a 54-year period.

The Cost of Self-Driving Cars Will Be the Biggest Barrier to Their Adoption


This post is by Ashley Nunes from HBR.org


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The technology is coming, but it’s going to be expensive.

One Way to Finance Tech Startups Outside of Superstar Cities


This post is by Edward Jung from HBR.org


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Local innovation bonds could help fund ventures in new areas.

Businesses Are Preparing for Brexit — and Bracing for the Worst


This post is by Paul Maidment from HBR.org


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A year and a half after the original vote, the outcome is still uncertain.

5 Questions We Should Be Asking About Automation and Jobs


This post is by Jed Kolko from HBR.org


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We simply don’t know for sure whether automation, algorithms, and AI will ultimately create more jobs than they destroy. Opinions are all over the map. One widely cited study predicted 47% of jobs will be automated, and technological change has in fact contributed to declining employment in recent years. Some are already preparing for a world without work.

But automation has been going on for centuries, and jobs still exist: that’s because automation replaces some kinds of human labor while boosting demand for others. Furthermore, job upheaval today is relatively modest. The mix of jobs in the economy is changing more slowly in recent decades than in the 1940s and 1950s, for instance (see the chart below). Today, economists worry that the labor market isn’t dynamic enough: numerous measures of fluidity and dynamism, like migration and job turnover, have been declining for decades.

 

But this uncertainty

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Competing in the Huge Digital Economies of China and India


This post is by Bhaskar Chakravorti from HBR.org


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The global digital economy crossed an important milestone recently: the number of internet users in two countries — China, with just over 800 million users, and India, with 500 million users  – surpassed the aggregate number of internet users across 37 OECD countries combined. In both countries, users spend more time on the internet than the worldwide average of 5.9 hours per day. They also have room to grow; China has just under 60% of its population online, while India, with one of the lowest rates of internet penetration in the world, has under 25% of its population online.

While it’s tempting to group China and India together as a block of emerging digital markets, they offer several important distinctions, especially for international entities and countries looking to invest. In our Digital Evolution Index (DEI), we place them in the “digital south” which means the full

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What’s Driving Superstar Companies, Industries, and Cities


This post is by James Manyika from HBR.org


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The debate about superstar firms and superstar effects has been intensifying, partly in response to the rapid growth of global US tech companies. However, scratch the surface and the superstar phenomenon may not be quite what it seems. Wider dynamics may be at play.

In our recent research at the McKinsey Global Institute, we examined the superstar phenomenon across firms, as well as sectors and cities. We define superstar to mean a firm, sector, or city that has a substantially greater share of income than peers and is pulling away from those peers over time.  Yes, we found that a superstar dynamic is occurring for firms, cities and, to a lesser extent, sectors. In this article, we will focus mostly on firms, but with some brief commentary on sectors and cities at the end.

We analyzed nearly 6,000 of the world’s largest public and private firms with annual

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How the U.S. Can Rebuild Its Capacity to Innovate


This post is by Sridhar Kota from HBR.org


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Many U.S. firms have long had a simple mantra: “Invent here, manufacture there.” But, increasingly, those same companies are now choosing to invent as well as manufacture abroad. From automotive to semiconductors to pharma to clean energy, America’s innovation centers have shifted east, offering growing evidence that the U.S. has lost what Harvard Business School’s Willy Shih calls the “industrial commons”: indispensable production skills and capabilities. It’s not just that virtually all consumer electronics are designed and made overseas. It’s that the U.S. has lost the underlying capacity to make products like flat-panel displays, cell phones, and laptops; nearly half of the foreign R&D centers established in China now belong to U.S.-based companies.

This isn’t just a lesson for the United States. It’s a lesson for countries around the world: Once manufacturing bids farewell, engineering and production know-how

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How Competition Is Driving AI’s Rapid Adoption


This post is by Jacques Bughin from HBR.org


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Artificial intelligence (AI) is engendering all kinds of breathless headlines, from being able to play Go to spotting rare cancer tumors. But how will AI impact the economy in broad terms? The answer hinges on both on what AI can be used for and the dynamics of a competitive race to adopt AI that’s set to unfold between firms.

New research from the McKinsey Global Institute simulates the potential global macroeconomic impact of five powerful technologies (computer vision, natural language, virtual assistants, robotic process automation, and advanced machine learning). It finds that AI could (in aggregate and netting out competition effects and transition costs) deliver an additional $13 trillion to global GDP by 2030, averaging about 1.2% GDP growth a year across the period. This would compare well with the impact of steam during the 1800s, robots in manufacturing in the 1900s, and IT during

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What Has the Eurozone Learned from the Financial Crisis?


This post is by Antonio Fatás from HBR.org


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This month marks the 10-year anniversary of the Lehman Brothers collapse, the prelude to the worst global financial crisis since 1929. As we pass that mark, we are also approaching the 20-year anniversary of the launch of the Euro. And when the retrospective assessments of the Euro’s first two decades are written, they will all be set in the context of the economic disaster that followed the Lehman collapse.

Back in January 2009 European officials assumed that the crisis was purely a U.S. phenomenon, unlikely to affect European economies. This assumption could not have been farther from the truth; a recession started in Europe in the first quarter of 2009, just a couple of months after it hit the U.S.

But the real tragedy happened later: a timid recovery during 2010-11 was followed by a second recession starting in the third quarter of 2011, from

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Research: How the Financial Crisis Drastically Increased Wealth Inequality in the U.S.


This post is by Moritz Kuhn from HBR.org


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We live in unequal times. The causes and consequences of widening disparities in income and wealth have become a defining debate of our age. Researchers have made major inroads into documenting trends in either income or wealth inequality in the United States, but we still know little about how the two evolve together — an important question to understand the causes of wealth inequality.

We do know that asset prices have been a key determinant of inequality in postwar America, based on our recent research. Although income inequality has been on the rise for decades, wealth inequality hadn’t changed much until more recently. Why not?

Our research demonstrates that wealthier and less-wealthy people own different types of assets: the middle class has a higher share of its wealth in housing, whereas the rich own more stock. An important consequence of this finding is that housing booms lead to

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Why We Shouldn’t Worry About the Declining Number of Public Companies


This post is by Vijay Govindarajan from HBR.org


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Elon Musk recently tweeted that he intends to take Tesla private, that is, to take Tesla off U.S. stock exchanges. In a parallel development, the number of companies listed on U.S. stock exchanges has declined by almost 50% from its peak in 1996, despite dramatic increase in aggregate market capitalization. Many conjectures have been offered to explain this controversial trend. We offer a new explanation: the rising role of digital firms in the U.S. economy.

The number of listed firms can decline because of three developments: 1) bankruptcy, failure, or closure of listed firms, 2) delisting of firms going private or acquired, and 3) decrease in number of initial public offerings (IPOs). All three factors have become more common over time, which we argue stems from firms’ increasing reliance on intangible and knowledge inputs in their business models.

Emerging digital firms compete with knowledge,

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Research: When the Economy Is Good, Employers Demand Fewer Credentials


This post is by Alicia Sasser Modestino from HBR.org


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Although the unemployment rate is currently at a historic low of 4%, economists are still struggling to understand why it remained so painfully high after the Great Recession—and why it took five years to return to its pre-recession level. Our research points to one possible reason: employers increased skill requirements during the recession, when high-skill workers were more plentiful, making it more difficult to fill those positions as the job market began to recover. However, since then, some employers have been lowering education and experience requirements in an effort to clear the backlog of open vacancies.

First, some context. Typically, there’s a stable tradeoff between the unemployment rate and the job vacancy rate (this is known as the “Beveridge Curve”). During a recession, the job vacancy rate falls as the unemployment rate rises, and during a recovery, the reverse happens.  However, after 2009, despite employers

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The Who, Where, and Why of Moving for a New Job


This post is by Andrew Chamberlain from HBR.org


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As cities compete for Amazon’s second headquarters, many flexed their tax incentive packages and real estate options in hopes of luring the tech giant to select their city. It’s tempting to think the right financial perks is all it takes for a company to successfully expand to a new city. In fact, success requires a solid base of nearby talent — or the ability to entice skilled workers to relocate for new job opportunities.

The reality is that most job seekers don’t want to move. Most apply to jobs close to home, with government data showing the urge to move is only declining. So when a company opens a new location, it must expect to draw mostly from the local labor force. In a time when unemployment is near historic lows amid one of the longest economic expansions in history, finding the right talent is harder than ever.

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Why the U.S. Trade Deficit Can Be a Sign of a Healthy Economy


This post is by Roger L. Martin from HBR.org


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“We lose $800 billion a year on trade, every year,” President Trump said in March when he announced his new tariff plan, referring to the size of the U.S. trade deficit in goods. Trump has lamented the U.S. trade deficit repeatedly, tweeting that as a result of it, “our jobs and wealth are being given to other countries.”

The trade skirmishes that have broken out as a result have the potential of becoming a full-scale trade war of the sort that the Smoot-Hawley Tariff Act of 1930 started, which is widely credited with either triggering or deepening the Great Depression.

But what is the trade deficit, and what causes it? And is it a bad thing?

For decades, the U.S. has run a deficit in the trade of goods — in other words, importing more goods than it exports. The dominant narrative is

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If the U.S. Gets into a Trade War with the EU, It Will Lose an Ally in Pressuring China


This post is by Sherman Katz from HBR.org


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The European Union’s recent announcement that it is preparing to retaliate if the Trump administration imposes tariffs on EU-made autos leaves no doubt that EU-U.S. cooperation on global trade will be compromised for some time if the tariffs go into effect. Besides whatever damage the conflict could do to U.S. jobs, industry, and consumers, this conflict will jeopardize essential allied collaboration to confront Chinese state capitalism, the underlying cause of much of the current trade conflict. When EU President Jean-Claude Juncker visits Washington on July 25, the administration should use the visit to find ways to step back from this precipice.

The primary tool of China’s industrial policy is subsidies to state-owned enterprises (SOEs) for key industries such as robotics, advanced computers, and electric vehicles. SOEs receive preferential access to land, finance, telecom, hydrocarbons, and electricity. They enjoy lower taxes and selective anti-trust enforcement to

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Is Your Company Ready for the Rise of Smart Cities?


This post is by Jonathan Woetzel from HBR.org


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The movement to make cities smarter is transforming municipal governments worldwide. But that’s only one side of the story. For companies, smart cities represent major business opportunities — and not only for tech firms selling systems to government agencies.

Technology is reconfiguring traditional roles and divisions of labor. City governments don’t have to provide every type of application and service themselves. In fact, they can’t — and this realization opens the door for other entities with capital and capabilities to step in, particularly where there may be opportunities to generate revenue. Smart cities have become more intricate ecosystems over time, with the degree and mix of private-sector participation varying from city to city.

Even if they don’t become providers of systems or services, many companies will need to adapt in some way as cities become more digitally connected. Digitization has upended industry after industry —

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