Riassunti Testi Inglese Elga Nicolini - Programma 2012/2013

The New Economy – The New Rules for the New Economy.

Selling becomes sociable.

Firms in the growing field of social commerce combine e-commerce with any online group activity, like social networks. The first generation of e-commerce sites was born in the late 1990s and essentially consisted in a sort of online catalogs. The only firm which survived is Amazon, because it mixed together selling and social feedback. The second generation is quite different from the first: it has offline roots and makes its money from flash sales on products advertised to registered users. Examples of the second generation e-commerce sites are the French "Vente Privée" and the American "Gilt Groupe". Nowadays the most successful is Groupon, a combination of the words "group" and "coupon", which buyers print out to pay for their service. For this reason, Groupon is more about people than technology. There is a third generation too, which makes use of virtual currencies and the growing popularity of smart-phones. ModCloth, Lockerz and Shopkick all belong to this last generation.

Powered by demand.

In 2005 Bob Perry, a US designer, offered himself to draw a 30-footer (a boat measuring 30 feet) for the Sailing Anarchy, a website devoted to sailboat racing. At the same time, he was working on a 10 m LOA boat for the Chinese market with Bill Stevens and they both thought the SA 30er would be a reasonable place to start preliminary design work, so they produced a drawing of a 10 m version. Steve Davis, their marine illustrator, also did a perfect rendering of it, but Bob did not hear anything about the project for weeks. One day, the rendering of the 30er was mysteriously on the SA' s home page. This event worked as a teaser: it immediately opened a floodgate of enquiries about how the boat looked like. Bob and Bill decided to invite the site community to take part in the real design process, and all the members agreed. Meanwhile, Bill managed to price out the boat in China for US$39,500, far below the “magic price” Bob had in mind – US$50,000. The SA community, on the other hand, was very disappointed because they thought the price was too low for a high-quality vessel and they also had prejudices about Chinese products. At first, Bill gave the SA board the possibility of holding a hull number for a US$1,000 deposit because of their skepticism; now Bill and Bob have deposits for 75 boats with orders coming all over the world and they can post their finished works, together with their engineer Ben Souquet, on the SA site. For this deep collaboration they have been accused of “design by committee”, but as Bob Perry underlines, it is a sort of “design democracy” within which there are group discussions, but also moments of individualism: Bob has the last word on what concerns the performance of the boat, even if he is open to criticism and new ideas coming from his crew.

Collaborative consumption.

There is a new sector emerging called swap-trading. An example of this is Swaptree. Rachel Botsman is studying the collaborative behaviors and trust-mechanics behind systems like Swaptree. First of all she asks herself why 99% of trades in it happens successfully, and the 1% that receive a negative

rating it is for relative minor reasons. Maybe because technology is enabling trust between strangers. From the pioneer eBay to the today companies like GoGet and Zopa, Rachel Botsman finds a possible answer: human beings are sharing and collaborating again in new appealing ways, moving themselves from passive consumers to creators, to collaborators. Another, immediate example is the huge quantity of videos shared in a minute through YouTube. People now live in a connected age where they can locate anyone, anytime, in real-time, simply from a small device in their hands, so they are moving to a much more collaborative behavior. This happens also because of the financial crash in 2008, that is closely related to the impossibility of going on with hyper-consumption, without destroying the planet and ourselves. All these concepts can be organized into three clear systems. The first one is redistribution markets: you take a used, or pre-owned, item and move it somewhere where it is needed; the motto is “reduce, reuse, recycle, repair and redistribute”, and it discourages waste. The second system is collaborative lifestyles, that is sharing resources like money, skills and time. Last but not least, there are product-service systems. The idea is paying the benefits of the product, without owning it. Examples of this are companies like Zipcar and GoGet, through which you can borrow a car only when it is absolutely necessary, a sort of peer-to-peer car rental. So in the old consumer system, reputation did not matter so much, because credit history was more important; now, with the Web, through commenting, sharing, posting, people actually show how they collaborate, and if they can be trusted. This is a kind of reputation capital, and it will become as powerful as credit rating. Rachel says to us that a revolution is about to happen: human beings are trying to create a more sustainable world built to serve their innate needs for community and individual identity.

Increasing Returns. Self-reinforcing success.

The economist Brian Arthur calls the networked effect of “encouraging the successful to be yet more successful” increasing returns. In fact, in networks we can find virtuous circles in which success is self-reinforcing too. An example is Silicon Valley: each successful start-up attracts other start-ups which in turn attract more capital and skills, and so on. This new phenomenon is not like the traditional economy of scale; first because industrial economies of scale increase value gradually and linearly, while networks increase their value exponentially. Second of all, industrial economies of scale come from a single organization’s effort to outpace competition by creating internal value for less; on the other hand, networked increasing returns are shared by the entire network to create external value. Moreover, this new phenomenon tends to create apparent monopolies, because consumers are not complaining about them, but only competitors. For this reason, in a network economy the real danger is “monovationism”, so there are ways to encourage multiple sources of innovation, that is more competitors. Another risk is an irregular distribution of value, such as what happened to Sony Betamax against VHS or Dvorak against Qwerty. So luck, apart from skills and innovation, plays an important role in the increasing returns’ law.

China’s and India’s economic growth and related issues.

China’s labor tests its muscles.

A heavy labor shortage in China has encouraged workers to organize some strikes in the southeast of the country, that paralyzed Honda and Toyota’s Chinese operation in June 2010. Although the

walkouts were quelled with higher salaries, China’s population growth will drop, and the supply of workers too. Moreover, young Chinese factory workers do not want to toil for low wages for long hours and they often want to attend university. The labor unrest has expanded to bank workers too – educated, organized and knowledgeable about the Internet. So, as the costs of doing business have risen in China, the country is slowly losing work to Bangladesh, Vietnam and Cambodia. Moreover, the cost of living in China is rising and workers’ expectations are rising even faster thanks to the Web and advertising. As a result, Beijing passed a new labor law in 2008 promising stricter enforcement of work regulations, but local governments did not always support these new policies. An example of low local labor conditions is Foxconn Technology, which with its military-style drills, verbal abuse by superiors and pressures, caused a series of suicides among its workers, more than 12 in 2010. Analysts say that Beijing is supporting wage increases as a way to stimulate domestic consumption against Chinese dependency on low-priced exports and foreign investments. All this obviously followed by a heavy censorship against strikes and workers’ emigration.

India’s economy.

Sep 30th 2010 – Some people believe that a big sporting event tells you something important about the nation that hosts it. Despite India’s rough preparation for the 72-nation Commonwealth games, the country is doing well: its economy is expected to expand by 8.5% this year and it will soon outpace China’s. There are two reasons why India will overcome China: the first one is demography. Because of its one-child policy, China’s workforce will start ageing; on the other hand, India has a young and growing workforce thanks to democracy. This last element is the second reason for optimism. India’s state may be weak because of its much-derided democracy, but its private companies are strong. In fact, since the early 1990s, when India dismantled the “license raj” (the result of India’s decision to have a planned economy where all aspects of it are controlled by the state and licenses are given to a select few) and opened up to foreign trade, Indian business has boomed. Moreover, Indian firms are less dependent on state patronage than Chinese ones, and often more innovative, also thanks to the absence of secrecy and censorship. Unfortunately, India has to face many problems too: atrocious and expensive-to-build infrastructure and low literacy rate. For this reason, Indian government wants to persuade private firms to stump up the capital to fix things up, even if the process is slow and damaged by corruption. Maybe doing business in China is yet more convenient, but India’s advantage will grow soon.

Chasing the Dragon (and the Tiger).

China and India contain more than one in three of the world’s population (2.4 billion combined), but liberalization re-connected these countries with the modern world only recently; in the early 1980s in China under Deng Xiaoping and in the early 1990s in India. Even if the two countries have similar economies, China is growing faster and it is now twice the size of India. From one hand, China’s planned economy is dominated by manufacturing - 39% of GDP - and it is based in a great part on foreign firms and exports. On the other hand, India gains just 16% of its GDP from manufacturing and it is strong in services. Moreover, it is relevant to think in terms of the combined effects of both countries together on the rest of the world. For instance, Indian software industry’s success made Western firms see competitors when they once saw collaborators. China’s technology companies are catching up their foreign rivals instead, moving from low-price products and cheap labor to high-price

products and their development in value. Will now British, European and American firms going to be able to adapt in time? A lot of them have successfully reduced production costs in many ways, but others are too focused on short-term gains and are failing to fully comprehend the longer term threats from those emerging markets.

The retreat of the monster surplus.

Nowadays there is a widespread fear that China’s exporters will gobble up foreign markets and manufacturers. The country’s huge exports contributed to a growing current-account surplus, which exceeded 10% of its GDP in 2007. So China’s failure to import as much as it exported, spend as much as it earned and invest as much as it saved, became a big problem. In 2011 China’s current account narrowed to the 2.8% of the country’s GDP, exactly where he should be. The IMF gives four reasons for this phenomenon: China’s exchange rate, its terms of trade, global spending and China’s own investment expenditure. First of all China’s exchange rate has risen. This appreciation encourages the Chinese to make more non-tradable goods and to buy more tradable ones in order to narrow its surplus. Moreover, the rise in investment between 2007 and 2010 through banks’ loans reduced China’s surplus. Unfortunately, this surplus could widen again because China’s high investment could cause a new export boom. Second of all, consumption could not compensate investment, so to force China to rely on foreign demand to keep economy moving. The investment rate has to be sustainable and Chinese government has found ways of imposing its idea of sustainability, as state-owned firms.

India and China – Friend, enemy, rival, investor.

Jun 30th 2012 – Dealings between India and China are stunted in many ways, from the rich cultural links in the past to the border war in 1962. In fact, Indians envy China’s economic rise, but console themselves by the Chinese lack of democracy. Nowadays, China does not seem to think much about India at all and India still looks for trade in the West countries. Only in the last few years, it has begun importing successfully capital goods from China, even if this has led the country to a trade deficit because of the fall of the rupee. Moreover, Chinese firms have more complex forms of production than India’s e this does not produce much that China wants to buy, apart from raw materials, mainly minerals and cotton. So its trade deficit looks likely to stay: more loans from Chinese banks would be good and more foreign direct investment, too. India really needs outside capital and expertise in manufacturing and infrastructure: Chinese investment is an idea whose time as come.

Understanding the rise of China.

Gross Domestic Happiness (GDH).

Shiny Happy People.

Jan 19th 2006 – Politicians mistakenly believe that economic growth makes a nation happier, but surveys show that the industrialized countries have not become happier over time. In fact, rates of depression and suicide in countries like UK and USA have generally increased. Growth does not work, first because it is relative income that really matters: when everyone in a society gets wealthier, average well-being stays the same. Second of all, there has been a complete adaptation to rises in income. Last but not least, human beings are bad in forecasting what will make them happy, so they always choose the wrong things for themselves. Happiness, not economic growth, ought to be the next and more sensible target for the next and more sensible generation, as says Edward Diener in its “Guidelines for National Indicators of Well-Being and Ill-Being”. These guidelines are addressed to local authorities, governments and business leaders in order to underline the right indicators of Well-Being. All these elements to adjust or change the old ones, to spot suitable policies to the demand and to inform to policy debates; research is extremely important, too.

Happy Talk.

Politicians are re-thinking what governments can and should do to make people feel more positive about themselves and their non-economic prospects, they may need to re-think their priorities. First of all, governments can provide opportunities: give the sense people can still learn, still do things. In the Health Domain there has been a shift from exclusive focus on medical services for patients to broader ideas about how to get a fulfilled life. Education wants to eradicate bullying and promoting personal achievement apart from formal examinations. The Labour peer Lord Richard Layard through “Happiness, Lessons from a New Science”, focuses on helping people out of mental health problems. On the other hand, the Conservative housing spokesman, Michael Gove, says public services have to show more “emotional intelligence” and so does the party leader, David Cameron. Conventional economics tends to focus on individuals and ignore how well-being often stems from relationships within families and communities in general. Moreover, governments should seek to alleviate miserableness and to improve well-being, even in Africa, Asia and South America. The medias should help all these reforms, trying not to generate dark and low moods with their cynical and unremittingly negative reporting.

The Happy Planet Index.

Nic Marks has a dream that people can stop thinking about reality and future as a nightmare. Until now, they have focused on the problems through fear, and not on the solutions. Since the First World War we need to produce a lot of stuff, and after that, we have created a national accounting system which is firmly based on production and producing more stuff. In 1968 Robert Kennedy for the first time said that the GDP measures everything except that which makes life worthwhile and if, now, he were still alive he probably would ask us to re-design our national accounting system to be based upon such important things as social justice, sustainability and people’s well-being. Asking a series of questions all around the world unsurprisingly, people say that what they want is happiness, for themselves, for their families, their children, their communities. Money is not so important. Not nearly important as health. So Nic Marks created the New Economics Foundation – the Happy Planet Index – in order to measure all these human aspirations and their role. In the graph shown by Nic we can see that more is bad, that is nations have to produce well-being without putting pressure on the planet. There is a huge array of countries which are around the global average, but others far below it, like

the Sub-Saharan countries. Moreover, there are some countries that are doing better than the global average, first of them Costa Rica. It is the happiest nation on the planet; 99% of its electricity comes from renewable resources, it will be carbon neutral by 2021 and it abolished the army in 1949 to invest in health and education. Maybe the future will be Latin American. Developed countries have to create a collective goal: improve well-being like Costa Rica did. At a government level, they might create national accounts of well-being. At a business level, they might look at the well-being of their employees and their creativity. At a personal level, too. The secrets of happiness, in Nic’s opinion, are connecting, being active and positive, taking notice, keeping learning and giving. Happiness does not cost the earth.

The real wealth of nations.

There is not a monetary measure for the stock of natural, human and physical assets of every nation. GDP is a gauge for income, a flow of goods and services, not wealth. Fortunately, the UN published balance-sheets for 20 nations, including three kinds of these asset: manufactured/physical capital, human capital and natural capital. Judged by GDP, Japan’s economy is now smaller than China’s and USA’s, but according to that new measure Japan in 2008 was almost 2.8 times wealthier than them. Human capital generally is a country’s biggest asset as it is happening in Japan, apart from nations like Nigeria, Russia and Saudi Arabia. Japan is also one of only three countries in the UN report that did not deplete their natural capital between 1990 and 2008. By putting a dollar value on everything, the UN makes all these three kinds of capital comparable, and maybe also replaceable. Some environmentalists are nervous about this last aspect because they consider many of the services the environment provides, irreplaceable necessities. As a result, many natural assets are often hard to price out: bees create honey, which can be sold on the market, but they also pollinate apple trees, a useful service that is not purchased or priced.

Africa – A developing country.

Dead Aid by Dambisa Moyo.

Angola and Portugal: role reversal.

Sep 3rd 2011 – With Portugal’s sick economy, a stream of professionals has escaped from the country to its former colony, Angola. In 2008 there were 45,000 registered Portuguese citizens living there, and a year later 92,000 of them. On the other hand, Angolans were fleeing the civil war in Portugal. Angola is, with Nigeria, the largest African crude oil producer and it is fulfilled with Chinese credit for an amount of $14.5 billion. The IMF reckons its GDP will grow by 7.8% this year and by 10.5% the next one. Even if there are Portuguese building companies and banks in Angola, the tables may be turning. In fact, Angola’s Banco BIC, part-owned by Isabel dos Santos, the eldest daughter of Angola’s president of 32 years, is to buy Portugal’s Banco Portugues de Negocios (BNP) for a fifth of the original asking price of $269m - $58m. Isabel also bought the 10% of Portugal’s Banco Portugues de Investimento (BPI) and a Portuguese cable-television provider, ZON Multimedia; last but not least, another of her companies, Condis, is teaming up with a Portuguese supermarket chain, Sonae. This is definitely the first time for Africa that the dynamics between colony and master have been so inverted.

a) Diaspora bonds b) Measuring global poverty.

a) Aug 20th 2011 - The most common way for emigrants of helping the countries they have left is sending money home, but also diaspora bonds exist. They are bonds issued by poor-country governments and marketed to emigrants in rich countries. This institution works because migrants have different, peculiar characteristics. First of all, they are patriotic, so they are proud to send their savings to help their nation. Second of all they are patient and less nervous than other investors because they exactly know how the political scenario in their country looks like. Last but not least, they are aware that a crash of their country’s currency could mean cheaper investments there. Israel and India have successfully issued diaspora bonds in the past, nowadays Greek is pursuing the idea and Kenya, Nigeria and Philippines too. This because diasporas are rich - they have recently saved $400 billion - and their countries are now creditworthy. Unfortunately, diaspora bonds will face obstacles in the relationships between emigrants and their oppressive governments: we can hardly expect they will bankroll the regimes that drove them away.

b) Sep 30th 2010 – Poor people lived in poor countries in 1990, nowadays Andy Summer of Britain’s Institute of Development Studies shows that almost three-quarters of the 1.3 billion-odd people existing below the poverty line live in middle-income countries. This change reflects the success of developing countries in avoiding misery. Even excluding India and China, the share of global poverty tripled between 1990 and 2008 to 22%. “It is time to change how we conduct development research” said Bob Zoellick of the World Bank and President Barack Obama wants to rethink America’s aid program. Giving is easy, thinking can be a lot harder.

Emerging market bonds.

Emerging market bonds have gained success in investor’s portfolios in recent years. This has been attributed to emerging market bonds’ rising credit quality and higher yields. As is often the case in the investment world higher returns often come with an increased level of risk, also associated to Treasuries and domestic corporate bonds. Before the last two decades of the 20th century, emerging market bonds were issued by developing countries in US dollars denominations. However, in the 1980s Treasury Secretary Nicholas Brady issued bonds to help global economies restructure their debt, particularly South America. From this issuance, growing countries began to issue bonds more frequently, both in US dollar denominations and each government’s currency. Emerging local market bonds were born. This phenomenon coincided with a growing sophistication of the macroeconomic policies of these developing nations, so to give foreign investors enough confidence in their long-term stability. There different kinds these fixed-income assets, like Eurobonds and Yankee bonds and derivatives. The risks of investing in emerging market bonds include the standard risks that follow all debt issues, but these risks are heightened by the economic and political volatility of developing nations. Moreover, there are some risks connected with exchange rate fluctuations and currency devaluations. If you do not want to take part to currency risks, you can just invest in bonds that are dollar-denominated, or issued only in US dollars. Emerging markets debt risk is assessed by rating agencies that measure each developing nation’s ability to meet its debt obligations; the most important are Standard & Poor’s and Moody’s. Credit default swaps (CDS) are investment instruments

to protect bondholders against insolvency. Despite these risks, emerging market bonds offer many potential rewards, such as providing portfolio diversity, hedging currency risks and widening the spread of the yield thanks to the fast growth of developing countries. When investing in these markets is not possible or highly improbable for individuals, many US-based mutual fund companies have a variety of emerging market fixed-income funds to choose from.

Dead aid – Introduction.

We live in a culture of aid, where the notion that giving alms to the poor is the right thing to do dominates. In the past fifty years over US$1 trillion has been transferred in the form of aid from rich countries to Africa, but Africa has received inadequate amounts of aid. It has become part of the entertainment industry, not only a sacred idea of our times; it has become a cultural commodity. Unfortunately, recipients of his aid around the globe are worse off, they are poorer and their growth is slower than ever. “Dead Aid” by Dambisa Moyo shows us this failure of post-war development policy and offers a new model for financing it in the world’s poorest countries, without aid.

Dead aid – A capital solution.

On issuing bonds, a government promises to repay the money it borrows to the lender, apart from an agreed amount of interests. However, bonds issued in the commercial marketplace and aid given in loans are completely different from each other; first because their interest rate is lower. Second of all, aid loans tend to have much longer periods over which the borrowing country has to repay. Last but not least, aid transfers carry less punitive terms in case of default or non-payment than the others. For many developing countries these bonds are a way to help finance their development programs on infrastructures, healthcare and education, but there are examples of nations which succeeded in ceasing to depend on aid pursuing numerous market economy options, like Botswana did in 2001.

Dead aid – Conditionalities.

Conditionalities are rules and regulations set by donors to govern the conditions under which aid is disbursed. You take it or you leave it and donors have tended to tie aid in many ways; first, through procurement. Countries that take aid have to spend it on specific goods or sectors without employing their own citizens, but those of the donor’s country. Second, aid flows only if the recipient country agrees to a series of economic and political policies, like liberalization. Later democracy and governance would make their way, in the hope of limiting corruption in all its forms. On paper, conditionalities made sense, but in practice they failed miserably because they were completely ignored or the aid flows they were related to were not used as they were initially intended.

Dead aid – The Chinese are our friends.

In the last sixty years China had the biggest political, economic and social impact on Africa. This influence was represented in the 1970s by the 1,160 mile railway that connects Zambia through Tanzania to the Indian Ocean and, now, by an aggressive investment assault across the continent through the power of money, instead of violence. As instance, China overtook Japan to be the world’s second-biggest consumer of petroleum products – coming from Africa - after the US and invested in 2004 up to US$900 million there. In fact, in order to be the foreign dominant force in 21st century

Africa, China built roads in Ethiopia, pipelines in Sudan, railways in Nigeria, power in Ghana and so on. During the first Sino-African Summit (2006) the Chinese President Hu Jintao launched his country’s new assault on Africa, which would focus on trade, agricultural cooperation, debt relief, improved cultural ties, training and a little bit of aid, of course, forgiving billions to the continent. The most important aspect of this policy is China’s commitment to foreign direct investment (FDI), achieved both through the government and encouraging Chinese enterprises to invest in Africa throughout preferential loans and buyer credits. China’s investment in raw materials and in the retail sector around capital cities is huge and so does oil investment. As instance, Angola has now overtaken Saudi Arabia as China’s biggest single provider of oil. However, Chinese FDI to Africa has diversified into many sectors, such as agriculture, power generation and infrastructures. Chinese financial services and banking are strong, too. As instance, the Chinese state-owned Industrial and Commercial Bank bought a 20% stake in Standard Bank, Africa’s largest indigenous bank in 2007. To sum up, China’s African role is wider, more sophisticated and more businesslike than any other country’s influence in the post-war period. From the West’s point of view, there is a widespread fear that China, left unchecked, will use Africa as a stepping stone on its relentless development all around the world.

Google in Africa.

Online Africa is developing faster than its online infrastructures because of the most famous America search-and-advertise colossus: Google. As instance, it gives Africans maps of their continent, which were expensive and scarce; now, in Kenya, there are 31,000 primary schools and 6,900 secondary schools marked on Google maps. Moreover, Google helps Africa people in reading online newspapers and websites translated in their own language, such as Swaili, Zulu, and so on. Many complain about Google’s apparent monopoly of Africa’s enormous virgin digital land, but its top man there, Joe Mucheru, assures them that all of this is done in order to help African business and create a useful online community on Google+.

The power of mobile money.

Nowadays more than 4 billion mobile-phones are in use worldwide, three-quarters of them in the developing countries. These handsets compensate for inadequate infrastructures in allowing information to move more freely, and goods too. Connected to this idea there is the phenomenon of mobile money: retailers can take your cash and credit it to your mobile-money account; you can then transfer your money to other registered users and, if they are not, they can redeem it for cash. The most successful example of mobile money is Kenyan M-PESA. It is a faster, cheaper and safer way to transfer money and recipients can spend their time, in the past spent in queue at the post/bank office, doing more productive things. Unfortunately, financial innovation has a bad reputation at the moment, because it is blamed to be responsible for the financial crash in 2008 and also because people are nervous about fraudsters and money-launderers. In the recent months there have been some hopeful signs, as the launch of a mobile-money service in Uganda by MTN, Africa’s biggest operator. On the other hand, banks have to see mobile money not as a threat, but as an opportunity of teaming up with operators in order to reassure regulators and to be more flexible. So, mobile money represents a new way to start a second wave of mobile-led development across poor countries.

On patient capitalism.

Jacqueline Novogratz talks about her experience in creating a micro-finance institution in Africa. She called it “Duterimbere”, meaning “to go forward with enthusiasm” and soon she realized that there were not a lot of business for women in Uganda. So, she decide to help a bakery run by 20 prostitutes, that is 20 unwed mothers who were trying to survive. She managed to transform that charity into a real business, teaching the 20 women to sell on their own way and earn three to four times the national average. Jacqueline learned something too: listening is not just about patience, waiting, but also about learning how better to ask question to people who have lived their entire life depending on charity. She also learned that dignity is more important to the human spirit than wealth and that traditional charity, aid and markets alone are never going to solve the problems of poverty. This experience made Jacqueline build Acumen Fund. It is a nonprofit, venture capital fund for the poor which invested about 20 million dollars in 20 different enterprises creating almost 20,000 jobs and delivering tens of millions of services to poor people. Her first example is that of Advanced Bio-Extracts Limited. It is a company built in Kenya by Patrick Henfrey and his three colleagues; they decided to bring Artemisia plant from the Far East to Africa, because it is the basic component for the best-known treatment for malaria, artemisinin. Using patient capital - money they could raise early on - they purchased from 7,500 farmers and healing about 50,000 people affected. Acumen is helping ABE to raise that patient capital. Jacqueline’s second example is about A to Z manufacturing company, which exports malaria bed nets (with organic insecticide) from Japan to Africa, as a public good purchased by the aid establishment to work with malaria. Its success was huge: they are producing 8m nets a year and they are employing 5,000 people, 90% of whom are women barely skilled. But this is not a long-term sustainable solution; the company has only one big costumer, so if it will occur an emergency – such as avian flu – malaria will not be a priority anymore. For this reason, A to Z and Acumen are going to test the private sector together, making affordable net beds for African people, giving them the dignity of choice and beginning to really listen their needs.

Keynesianism – Macro and micro economics.

Keynesianism – Monetary and fiscal policies.

Keynesian techniques have proved to be blunt instruments of regulation, because they are not rapid, controllable and the crisis has been recognized too late. As these policies are not efficient, they may aggravate fluctuation and cause a new “policy cycle”, and so on. Those on the left point out the difficulties of managing an economy in which key variables like private investment and foreign trade are unpredictable; they solve the problem with a greater public ownership and a more direct and select intervention of the State in the economy. Others promote a laissez-faire policy, instead, because of the State’s over-ambition in stabilizing the market. In particular, Milton Friedman and his “Chicago school” underlines the fact that a modern economy is already self-regulating and nobody has the right to divert its elements.