2020 Will See a Pick-Up in Global GDP Growth and Global Trade, Despite Continuing Trade Tensions

"After a gloomy year, the world's major industries are looking for an upturn in 2020. However, much will depend on policies in the US," says a report by The Economist Intelligence Unit (The EIU), the research arm of The Economist, in its Industries in 2020 report.

In its Industries in 2019 report, The EIU "highlighted five major risks that could undermine global business during the coming year. Four of those risks came true: the deepening of the US-China trade war, an emerging market downturn, tussles over technology and sanctions on Iran. These all dented economic growth and consumer confidence, dragging down sales across several business sectors during 2019. The fifth risk we mentioned, Brexit, has still not happened, but continues to overshadow business in Europe."

The EIU is "expecting a pick-up in global GDP growth and global trade in 2020, despite continuing trade tensions. However, regional trends will diverge, leading to mixed growth forecasts for the six major business sectors covered in this report: automotive, consumer goods and retailing, energy, financial services, healthcare, and telecoms. While there will be opportunities on offer, there are six factors that will determine the direction of these industries in the coming year:

• "A sporadic recovery. Although the global economy will accelerate, growth will be led by an upturn in non-OECD markets, while OECD markets will remain subdued. However, GDP growth in China will also continue to slow, affecting global demand for many goods and exposing problems with manufacturing overcapacity.
• "A watershed election. The US presidential election in November 2020 will be a turning point for several sectors. The re-election of the Republican president, Donald Trump, would slow the rollout of renewable energy, for example, while a Democrat victory could bring new efforts to reform healthcare, as well as sharp increases in corporate taxes.
• "From trade to regulation. The US-China trade war will broaden to affect markets including the EU and Japan. However, the focus will turn from tariffs to regulation, particularly that of the financial and technology sectors. We expect more US sanctions against Chinese companies, as well as legal skirmishes over intellectual property.
• "Asian alliances. While the US continues to raise trade barriers, Asia is forging ahead with new trade deals. The 16 countries in the proposed Regional Comprehensive Economic Partnership (RCEP) aim to sign an agreement in 2020, creating the world’s biggest free-trade agreement. Meanwhile the 11 countries in the overlapping Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will continue to ratify that deal, while opening negotiations with potential new joiners such as China.
• "Brexit hangover. Even if Brexit happens on January 31st 2020—as currently expected—uncertainty will not disappear. The transition period could be fraught, with short-term disruption to trade flows heightening political wrangling over future trade deals.

What is more, "These factors will affect all six of the industries covered in this report, to varying degrees.

"The automotive sector, which has tumbled in 2019, will benefit somewhat from the recovery in many emerging and developing markets. We see car sales heading into positive territory after dropping in 2019. However, commercial vehicle sales in particular will come under pressure from global trade trends as the US continues to threaten vehicle-producing countries such as Mexico, Germany, Japan, South Korea and China with increased tariffs. Brexit will also bring enormous challenges for Europe's vehicle sector, particularly for UK-based producers.

"Consumer markets will also be badly affected by global trade tensions, particularly in the electronics sector, while the political turmoil in Hong Kong will dent sales of luxury goods. This, combined with retail’s greater reliance on developed markets and the rise of online retailing, will slow global retail sales. We expect retail sales to rise by just 2.2% in volume terms, down from 2.5% in 2019.

"For the energy sector, the pledges made under Paris Climate Change Agreement in 2016 will begin to take effect in 2020, making this the base year against which 2030 targets will be judged. However, with the US on the brink of withdrawing from the agreement, global progress will be slowed. The target of slowing global warming to less than 2 degrees centigrade is looking increasingly unattainable, unless the US election results in an unexpected policy change. The oil sector will also be vulnerable to political shocks, although we expect slow consumption growth to keep prices range-bound.

"The financial services sector will see little uplift from accelerating global growth, because it will be more affected by the slowdown in core OECD markets. The economic weakness of developed markets will keep interest rates low, maintaining the pressure on banking and investment margins. Several major financial hubs, including Hong Kong and London, will also be fragile amid difficult political conditions. However, the expansion of digital banking will hold immense promise for increasing financial inclusion in emerging markets.

"For the healthcare sector, too, the US presidential elections will be a particular watershed. Debates will rage over healthcare reform and drug pricing. With other countries also bearing down on prices but expanding access to healthcare, we expect global health spending to accelerate sharply, while spending on pharmaceuticals slows.

"In the telecoms sector, investment in 5G and fiber fixed-line services is likely to be a top priority in 2020. However, companies will have to invest with little certainty of a return and with regulation still uncertain. Moreover, the US-China trade war will continue to pose a major risk, given the dominance of Chinese companies such as Huawei in the build-out of telecoms infrastructure."

The report adds: "As a result of these trends, our key global forecasts for the six industries covered by this report are:

• new-car sales will recover to grow by 1.7%, but CV sales will edge down by 0.1%;
• retail sale volumes will increase by 2.2%, slower than the 2.5% reported in 2019;
• global energy consumption will rise by 1.8%, with particularly strong growth for renewables, while oil prices will remain range-bound;
• bank balance sheets and lending will expand by 6.5%, with Asia leading the expansion;
• healthcare spending will climb by 6.2% worldwide in US dollar terms, despite growth of just 3.1% for pharmaceuticals; and
• global mobile subscriptions will increase by 3%, fixed lines by nearly 2% and broadband subscriptions by 6%.

"Despite these mixed forecasts, there will be opportunities on offer for companies that are competitive and international enough to take advantage. Even so, they will have to be nimble to adapt to rapid changes in the business and political environment."

Lastly, The Economist produced a video presenting its predictions for the top stories of 2020.

What are your predictions for 2020?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Adoption of IoT Among Enterprises Will Drive Overall IoT Growth in the MENA Region

The previous post focuses on a report by GSMA Intelligence, the research arm of the GSMA, a UK-based trade organization, about how the mobile technology sector is predicted to reach just over $220 billion by 2023 in the Middle East and North Africa (MENA) region. "The 2020s will see 5G activities become more widespread across the region. . . . By 2025, there will be 45 million 5G connections across the region, accounting for 6% of total mobile connections." The rise of 5G in the MENA region will lead to the adoption of connected devices or Internet of Things (IoT). This is the subject of another report published by GSMA Intelligence.

Realizing the Potential of IoT in MENA presents five key findings:

IoT connection growth in MENA second only to Asia-Pacific

"IoT connections in the Middle East and North Africa (MENA) region are growing at a rate second only to Asia-Pacific. With a well-established smart city vision acting as a catalyst for the IoT market, initiatives from governments and the mobile industry are expected to be fundamental in helping IoT revenues reach $55 billion by 2025. The commitment to and innovation in IoT seen across MENA is also expected to benefit the GDP of the regional economy to the tune of $18 billion in 2025."

Operators need to move beyond connectivity to monetize IoT

"The region's IoT ecosystem (which includes operators, IoT vendors, systems integrators and business customers) needs to exploit the synergies available from 5G-based IoT deployments to innovate, adopt and deploy new services. These include 'applications, platforms and services' – a category of IoT services expected to win a majority share of the market worth more than $30 billion by 2025. To take a greater share of the IoT revenue opportunity, operators need to move beyond connectivity into strategic partnerships with ecosystem players and even governments to launch new value-added services."

Governments play a pivotal role as policymakers and customers

"Mobile operators and the ecosystem as a whole cannot gain traction without the vision and support of regional and national policymakers to develop the IoT market and capture the social, commercial and economic benefits available. Governments can play a pivotal role as both policymakers and customers, as they have their own digital transformation agendas. National governments can encourage IoT market growth through regulation (e.g. smart fire alarms) and by exploiting the power of IoT sensors and automation to enhance public services."

Strategic opportunity lies in integrating security and data protection in IoT

"This report illustrates the market potential across MENA's IoT ecosystem and points to growth trends in smart cities, industrial IoT and consumer IoT. But it also recognizes the challenges, with the biggest likely to be around security and data protection. The region has a strategic opportunity to lead on security by design and ensure cybersecurity and data protection are built in from the start. The GSMA and mobile industry have contributed to the security initiative by introducing the GSMA's IoT Security Guidelines and IoT Security Self-Assessment. This report includes examples of best practices from the global regulatory environment."

Mobile operators are vital to the success of IoT in the region

"Mobile operators possess foundational assets and capabilities for targeting the IoT ecosystem in the form of 5G and NB-IoT networks, the power of the SIM, and key customer-facing channels and partnerships to help take IoT propositions to market. Operators are in the process of establishing these assets in the IoT ecosystem, making them vital to the success of IoT services in the region."

Based on other reports and conversations my colleagues and I recently had with business leaders and government officials in the MENA region, there is a focused effort to rapidly scale the industrial IoT industry. The report encouragingly notes: "Adoption of IoT among enterprises will drive overall IoT growth in the region, resulting in industrial IoT connections overtaking consumer in 2018 and forming the majority of connections (57%), reaching 624 million in 2025 (see Figure 5). Governments in the region are both major customers and policy enablers of this industrial IoT."

Moreover, "Utility companies are installing smart meters to monitor customers' use of energy or water in near real-time, cutting costs and helping balance supply and demand. For example, Egypt and UAE utilize IoT-enabled water management to deal with insufficient groundwater reserves. Kuwait's Ministry of Electricity & Water in partnership with Zain and SAP is connecting over 1 million smart electricity and water meters, enabling real-time access to usage and billing data."

Lastly, "Smart buildings will continue to be the largest industrial segment throughout the forecast period, followed by smart metering."

Which IoT applications, platforms and services do you think will succeed in the MENA region?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Mobile's Contribution in the MENA Region Will Reach Just Over $220 Billion by 2023

"5G services have become a reality in the Middle East and North Africa (MENA) region," notes a report authored by GSMA Intelligence, the research arm of the GSMA, a UK-based trade organization. "As of October 2019, 10 operators had launched commercial 5G services in five GCC Arab States. Mobile operators in these countries are aiming to be global leaders in 5G deployments, while certain governments view the technology as a potential enabler for their digital transformation ambitions."

The report, The Mobile Economy: Middle East and North Africa 2019, further says, "The 2020s will see 5G activities become more widespread across the region, with trials and commercial launches expected in non-GCC countries. By 2025, there will be 45 million 5G connections across the region, accounting for 6% of total mobile connections."

While subscriber growth is slowing, mobile internet adoption continues to rise rapidly. "The MENA region has some of the most penetrated mobile markets in the world," the report explains. "By the end of 2018, nearly half of the 25 countries in the region had unique subscriber penetration rates of 70% or more. For context, the global average at the end of the same period was 66%. In the more mature markets of the region, subscriber growth has slowed to below 2% annually. However, there are still significant growth opportunities in frontier markets in the region, where subscriber penetration rates remain below 50%. On average, the region will record a CAGR of 2.7% between 2018 and 2025."

On the topic of mobile contributing to economic growth and addressing social challenges, the report says, "In 2018, mobile technologies and services generated 4.5% of GDP in the MENA region – a contribution that amounted to $191 billion of economic value added. The mobile ecosystem also supported 1 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with just over $18 billion raised through taxation. By 2023, mobile's contribution will reach just over $220 billion as countries increasingly benefit from the improvements in productivity and efficiency brought about by the increased take-up of mobile services."

The report's fourth and final chapter addresses how data privacy and governance take center stage in an expanding digital ecosystem. I concur with the assertion that "[f]or the digital economy to achieve its full potential, consumers must trust the online environment." The report adds: "As of 2019, more than 130 countries have enacted privacy and data protection laws. This number continues to grow, including across the MENA region."

What is more, "The European data protection regime, underpinned by the EU General Data Protection Regulation (GDPR) and its precursor – the EU 1995 Data Protection Directive, influenced the development of analogous legal frameworks around the world, including some countries in the MENA region. However, in most MENA jurisdictions, the protection of privacy and safeguarding of personal data is provided under general provisions of law rather than specific data privacy or data protection laws."

In addition to 5G, the report also addresses two additional trends shaping the digital landscape: cashless payments and blockchain. Regarding the former, citing the World Bank's 2017 Global Findex, the report asserts: "Cash is still the dominant form of payment across MENA, despite nearly 60% of adults owning a bank account. But this is changing rapidly, helped by growing innovation and investment in digital payment platforms as well as government policies to stimulate cashless payments. For example, Saudi Arabia has set an e-payment target of 70% by 2030, from just 18% in 2016, as part of the government's Vision 2030 reform plan. In Egypt, the government signed a law in April 2019 mandating the use of cashless payment by public and private entities."

As for the latter, "Distributed ledger technologies (DLTs) – including the most prominent example, blockchain – originated around the same time as bitcoin in the late 2000s, but are now being explored for financial, enterprise and public administration applications around the world. The MENA region is no different, with the growing application of DLTs across verticals and public sector services."

The report importantly mentions that the "GCC countries are global leaders in the international money transfer market due to the large expatriate population across the region. Saudi Arabia and the UAE are the world's largest outbound remittance markets; the UAE Central Bank reported that remittances from the country grew 3% in 2018 to total $46 billion. Blockchain has emerged as a key technology to facilitate international remittances."

Infographic: GSMA Intelligence

What mobile services or platforms is your business developing or utilizing in the MENA region?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Big Data Solutions Will Positively Impact 150 Million Lives over the Next Five Years, Says GSMA Report

"Mobile big data offers an opportunity to create widespread social impact in line with the United Nations Sustainable Development Goals," explains a report prepared by PricewaterhouseCoopers Australia on behalf of the GSMA. "Governments and development agencies are seeking new ways to improve how they design, implement and monitor projects through harnessing more accurate, timely and accessible information. The proliferation of mobile networks combined with new capabilities in leveraging 'mobile big data' (MBD) presents a generational opportunity to address this problem since MBD solutions already generate rich and timely insights that can now be harnessed to drive social impact."

Mobile Big Data Solutions for a Better Future outlines how advanced mobile network analytics and AI can be applied to drive societal impacts supporting the UN Sustainable Development Goals (SDGs). The report includes an analysis of five cases where mobile big data solutions could have a significant impact. A detailed methodology describing how the potential impacts have been calculated is outlined in the full report.

Access to healthcare (SDG #11)

• 60 million people could have better access to healthcare due to more informed infrastructure planning via mobile big data solutions that target health facility deployment planning.

Managing air pollution (SDG #13)

• 120,000 lives could be saved across the world’s most populated cities as a result of better-informed measures to limit air pollution, resulting in lower congestion and better transport planning.

Disaster response (SDG #13)

• More than 25,000 lives could be saved from natural disasters in major at-risk countries by 2025 as a result of mobile big data solutions being able to aid quicker evacuation from dangerous areas.

Disease prevention (SDG #3)

• Communicable diseases could be significantly reduced from spreading by targeting locations at risk of exposure through mobile big data solutions to understand population movements. This could result in 650,000 fewer cases of tuberculosis alone in the next five years.

Financial inclusion (SDG #10)

• 70 million more adults could take up financial services in countries with large 'unbanked' populations as a result of mobile big data solutions targeting groups to raise awareness, trust and confidence in digital financial services.

Image: GSMA

Lastly, the report notes: "Realizing the potential of MBD places a call to action upon stakeholders to adopt change at a local and global level, through the following steps:

• Secure commitment and encourage collaboration between public organizations, civil society, NGOs, mobile network operators and stakeholders to work together and understand how MBD solutions and capabilities can help solve problems, save lives, enhance project outcomes and reduce cost. This will involve securing commitments to MBD adoption, identifying challenges and barriers to uptake for the use of MBD to create social impact, direct and indirect, as well as encouraging mobile network operators to harness their wider mobile big data efforts to specifically create MBD sets which can be leveraged appropriately for social impact.
• Invest in and refine end to end processes in implementing organizations spanning project identification, design and execution, so that MBD solutions result in integrating insights and creating measurable impacts. This will involve identifying change initiatives in government agencies and development organizations to adopt and use MBD solutions, investing in skills and organization development and in new ways of working. Organizations will also have to learn how to measure MBD contribution to attaining the UN SDGs for 2030, and embed such measurement approaches into projects and supporting processes for project management.
• Design MBD solutions for scale so that countries and organizations can move quickly from being stimulated by inspiring examples of social impact, to achieving widespread scale through repeatable implementation in different and localized environments and circumstances. This will involve implementing agencies and mobile network operators working with others to build sustainable solutions and scale impact.
• Adopt privacy and ethics practices and frameworks to continue to promote responsible use of data for generating social impact in public projects.
• Build sustainable models for solution development and scaling, so governments, development agencies, execution partners, mobile network operators and other ICT companies can work together to implement MBD solutions which are sustainable over a long period of time and are supported by business models that encourage continued investment and innovation by all parties involved.

As explained by the GSMA, I appreciate how the "report illustrates ways in which governments and development agencies are able to harness the power of mobile big data; improving the ways in which they design, implement and monitor public projects." And I concur that "[i]f these MBD solutions are adopted at scale, they can help to tackle global challenges and deliver social impact."

Do you agree that big data solutions will positively impact 150 million lives over the next five years?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Global Economy Will Be Poorer by 2050 Due to Climate Change, Says EIU Report

"The world will be poorer in 2050 due to the impacts of climate change," according to Resilience to Climate Change: Why developing countries will be most affected by 2050, a paper published by The Economist Intelligence Unit (The EIU). "How much poorer, and the distribution of this loss, is the goal of our new study into the economic impact of climate change."

By 2050, The EIU expects "the global economy to be 3% smaller than our baseline projections. At the country level, climate research to date has shown that it is most likely that those countries that are poorer and with higher average temperatures that will be the most affected."

The paper, however, contains three case studies demonstrating that "this does not have to be a prescription of how the impacts will unfold in a given country; governance, institutional quality and policy effectiveness all have the potential to curtail economic losses." These case studies "highlight the importance of both economic development and policy effectiveness to tackle climate change."

Importantly, "Being rich matters when it comes to minimizing the economic impact of climate change. Economists believe that institutional quality is a major determinant of long-run economic growth, but our results also point to the importance of institutional quality in minimizing the impact of climate change. Poor institutions, therefore, can simultaneously harm economic growth and exacerbate the negative impacts of climate change."

The paper further explains that "[i]nstitutional quality matters for a country's resilience to climate change via two policy areas: adaptation and mitigation policies. Adaptation policies," according to The EIU, "are defined as a country's initiatives and costs undertaken to adapt to climate change, as opposed to mitigation policies that aim to reduce emissions. Such policies are wide-ranging and country-specific, but may include: building flood defenses, improvements in water storage, protection of energy and public infrastructure, improvement in agricultural infrastructure, marine forecasting and early warning systems for aquaculture industries."

As reflected in the image below, the paper finds that:

• Africa is the least resilient region to the impact of climate change (4.7% smaller), followed by Latin America (3.8%), the Middle East (3.7%), Eastern Europe (3%) and the Asia-Pacific (2.6%).
• North America (1.1% smaller) and Western Europe (1.7%) display the most resilience and are likely to see the least impact economically because both regions are richer and more prepared to tackle climate change from an institutional standpoint.

Lastly, The EIU presents its climate change modelling framework that combines "elements of the Dynamic Integrated Climate-Economy (DICE) model, developed by American economist and 2018 Nobel laureate, William Nordhaus, and our new Climate Change Resilience Index. A truncated version of the DICE model is used to capture the global impacts of climate change and the central assumptions that are made at the global level. The truncated DICE framework is then linked with a country-level Resilience Index for the 82 countries that The Economist Intelligence Unit forecasts out to 2050, thus enabling the economic impact of climate change to be estimated at the country level."

The eight indicators that make up the index are:

1. Loss of land/physical capital due to extreme climate/weather events
2. Impact on public services, basic needs and government expenditure
3. Impact on agricultural sector (Loss of Crop yields)
4. Loss of Labor productivity
5. Tourism Loss
6. Trade Loss
7. Adaptation Costs
8. Mitigation Costs

What economic development initiatives and policies should governments implement to tackle climate change?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

GSMA Forecasts North America's Mobile Technologies and Services Sector to Generate Close to $1.2 Trillion in Economic Value by 2023

In a press release about its new report, the GSMA, a UK-based industry association, "highlighted North America as one of the most advanced mobile regions in the world – a result of significant operator investments in 5G." Authored by GSMA Intelligence, the research arm of the GSMA, The Mobile Economy: North America 2019 "forecasts that almost half of the region's mobile connections will be running on new 5G networks by 2025. This is being fueled by operator spending on new networks, which is forecast to total more than $380 billion (Capex) between 2018 and 2025. These investments are increasingly being focused on building-out 5G coverage across the region, enabling a range of new services for consumers and enterprise."

The report reveals that:

• There were 321 million unique mobile subscribers in North America in 2018, representing 83 percent of the population. The number of subscribers is forecast to rise to 345 million (85 percent of the population) by 2025.
• The US is by far the largest market in North America (278 million unique subscribers), followed by Canada (29 million) and the Caribbean (15 million).
• Around three quarters of the region's mobile connections are running on 4G networks.
• The share of 4G connections will decline over the coming years as the market moves to 5G. New 5G networks are forecast to account for 46 percent of connections by 2025.
• Mobile technologies and services generated 4.2 percent of North America's GDP in 2018, equivalent to $937 billion in economic value. This economic impact is forecast to increase to almost $1.2 trillion by 2023 (4.8% of GDP).
• The region's mobile ecosystem also supported 2.3 million jobs (directly and indirectly) and made substantial contributions to the funding of the public sector, with almost $123 billion raised through taxation last year (not including spectrum fees).
• North America’s mobile sector is on track to generate $280 billion in revenue this year, a result of high levels of consumer engagement and spending on mobile services.

On the topic enabling the transition to a zero-carbon economy, the report importantly says: "Mobile technology's biggest impact on climate change comes from its ability to enable other sectors of the economy to reduce their greenhouse gas (GHG) emissions. Operators in North America are providing connectivity for digital solutions that reduce GHG emissions, such as by reducing energy use or travel and transport."

Moreover, "As part of its efforts to fulfill the delivery of the UN Sustainable Development Goals (SDGs)," the report explains that "the mobile industry is making a specific commitment to SDG 13: Climate Action, reflecting the urgent need to accelerate action to limit global warming to 1.5°C by 2050."

Regarding connected devices (Internet of Things or IoT), the report notes: "The advent of 5G strengthens the development of the IoT market in North America, which will increase by 3.6 billion connections to a total of 5.9 billion connections by 2025." What is more, "Though short-range technologies (e.g. Wi-Fi and Bluetooth) will retain a dominant presence, licensed cellular technologies will provide connectivity for an increasingly large number of trusted connections. Underpinned by operator deployments, LTE-M and NB-IoT will both experience robust growth."

As for cybersecurity, the report explains: "From e-commerce to online banking, online services provide myriad benefits, such as increased convenience and access to cheaper products. However, it also exposes consumers to privacy and data protection risks. In 2018, there were 1,244 data breaches in the US, which revealed nearly 450 million records – a 100% increase compared to 2017. Rising cybercrime is fueling consumer privacy and security concerns, which are the primary reasons for inactivity online."

What investment or business opportunities are you seeing in North America's mobile industry?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Report Presents a Number of Steps Companies Can Take to Appeal to Millennial Customers in Asia

The previous post on this blog focused on a report commissioned by the Singapore Economic Development Board that examines the ways in which the consumer behavior and digital habits of millennials in Asia converge or diverge from those in other parts of the world. The Economist Intelligence Unit's (The EIU) Asia's digital millennials: Opportunities for businesses serves as the second of a two-part research program that explores what Asia's accelerating pace of digital adoption means for businesses, with a look at their strategies and operations. "In this EIU paper, executives from some of the biggest tech companies in the region share their experiences and approaches, illustrating that whatever their size or pedigree, companies must challenge their own thinking about what works."

In terms of improving a company's relationship with its customers, the findings include:

• Businesses must match their mobile presence with a physical one, building trust and awareness by giving savvy consumers a chance to see, touch and try their products.
• Companies must engineer their mobile platform to suit the tastes and expectations of users who are likely to demand of e-commerce platform more than just shopping, including entertainment, social connectivity and foreign products they can't buy locally.
• Companies must create friction-free customer experiences by incorporating local preferences for payments platforms into their online services.

In terms of improving internal workflows and leveraging a business ecosystem, the findings include:

• Companies must use their marketing, public-relations (PR), retail and supply-chain teams as hyperlocal eyes and ears to better understand and take advantage of the unique opportunities Asia’s ecosystems offer.
• In a motivated but skill-starved region, companies must build strong local teams with a digital mindset.
• Companies must build partnerships to complement their strengths with those of others—even potential competitors.

"In general," the report explains, "companies must keep a close eye on what underlying consumer demands they are aiming to address so as to fully capitalize on what Asia has to offer. These demands might change as the region evolves, so companies must also pay attention and adapt."

Moreover, "To keep up with increasingly sophisticated millennial consumers in Asia, companies in the region must be prepared to make a number of changes, from hiring staff to the products and platforms they build, including overhauling their online and offline strategies and thinking differently about their internal processes and the overall consumer journey."

Based on my recent travels to Asia, I am able to attest that the "fast-growing and dynamic region" is "rife with change." How is your business appealing to millennial customers in Asia?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Report Examines How Asia's Millennials Are Shaping the Digital Economy

"The world's millennial generation is a major driving force behind the digital economy," asserts a report by The Economist Intelligence Unit (The EIU). "Their consumption patterns and preferences underpin the growth of new interconnecting ecosystems of recreation and commerce."

Commissioned by the Singapore Economic Development Board, Asia's digital millennials: Mobile, social and borderless examines the ways in which the consumer behavior and digital habits of millennials in Asia converge or diverge from those in other parts of the world. This report is the first of a two-part research program that explores how millennials are shaping the digital economy through their use of online and mobile technologies for recreation and commerce. This post focuses on the second part of the research program.

The report importantly notes: "Relative to millennials in Europe and the US, those in Asia are unique in that they are both digital and mobile natives, with many in the more recently developing markets of South-east Asia and China having gone online first through their mobile phones." To highlight the differences in their consumption habits borne out of this unique experience, The EIU surveyed 826 millennials across 12 countries in Asia and the West. They found that Asian millennials are much more likely than their Western counterparts to:

Be heavier users of chat/messenger services and use those and other social networks to influence their purchasing decisions and those of others. "The importance of chat to Asian millennials underlines its growth as a platform beyond messaging. This offers opportunities for companies to engage them through more advanced features, such as chatbots, both those driven by artificial intelligence (AI) and those with real staff. The readiness of millennials to share their experiences provides opportunities for businesses to convert millennial customers into influencers."

Have adopted mobile e-payments faster, selecting it as their favored means of payment (over debit cards, still the most popular method in the West). "Millennials' comfort with mobile payments offers opportunities for businesses to build better mobile experiences for their websites, and integrate both website and app with a smooth hand-off to a broad range of payment options that encourage the mobile user to complete a purchase on the phone."

Photo: The EIU

Have deeper and broader tastes, stretching from local and global, making their preferences both complex and unpredictable. "This embrace of international content and products offers companies in Asia a chance to both expand the range of internationally sourced goods and services they offer, and to reduce the friction and cost for obtaining those products. South-east Asian millennials, for example, are just as picky about the cost of shipping as their Western counterparts (51% said it was very important in both groups), suggesting that there's room for businesses to find cheaper ways to ship goods around the region."

The report produced the following conclusion:

Asia's millennials have grown up in a world that has changed more rapidly than that of their counterparts in the West. The rise of mobile communications infrastructure has transformed connectivity in much of the region, providing services and goods potentially more advanced than those in more developed countries.

This report adds to the growing evidence that Asian millennials are much more likely to be regular international online shoppers in the next three years—62% of South-east Asians and 72% of East Asians agree or strongly agree, versus 47% of Westerners. Similarly, they're much more likely to use their mobile phone for cashless transactions in the next three years: 73% of South-east Asians and 79% of East Asians agree or strongly agree, versus 57% of Westerners.

At the same time, they have absorbed and adapted a much broader range of influences—local, regional and global—compared with their Western counterparts. An Indonesian millennial is likely to be as comfortable with South Korean messaging apps as with Facebook, and to buy from a Chinese vendor as from a Western one. This has created a discerning generation with an advanced grasp of technology and sophisticated tastes, matching and often surpassing their Western counterparts in the devices they own and what they do with them.

Asia's millennials are also more likely to consume e-books, online newspapers and magazines, mobile gaming apps, music streaming and podcasts, and social media, than counterparts in the West. The leapfrog in connectivity has created a generation eager to consume more, if their needs and tastes can be understood and catered-to by today's globally minded businesses.

How is your business capturing the opportunity to satisfy the demand of Asia's millennials?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Mobile Is Accelerating Digital Transformation in Pakistan, Says GSMA Report

"Mobile technology is at the heart of digital transformation in Pakistan driving social development and economic growth," explains a report by GSMA Intelligence, the research arm of the GSMA, a UK-based industry association. "Digital transformation is underway in the country, with government and public institutions as well as private and development organizations using digital platforms to increase engagement and improve service delivery to its citizens."

The power of mobile to accelerate digital transformation in Pakistan discusses the following:

• Pakistan government socioeconomic aspirations in context;
• Digital transformation in Pakistan and the role of mobile technology;
• Mobile technology contribution to social and economic progress in Pakistan; and
• Opportunities ahead to accelerate the impact of mobile-enabled digital transformation on socioeconomic progress.

Based on my experience of working in developing countries such as Afghanistan, Uzbekistan, and Iraq, I concur that a "knowledge-based economy is built on the foundation of common access to fast, reliable and affordable digital content and services by individuals, businesses and public institutions." The report notes that in "Pakistan, this is primarily enabled by mobile technology, which now provides access to digital services for more people in the country than any other communications technology; 70% of internet users in Pakistan only ever access the internet on a mobile phone."

The report further says: "Rising smartphone adoption means more people are able to use feature-rich and IP-based digital content on their mobile devices, mitigating the challenge of much lower penetration of PCs and other data-enabled devices. The Pakistan Citizens Portal, which connects government organizations both at federal and provincial levels, is powered by smartphone apps on the Android and iOS platforms, so can be accessed by people on mobile devices."

Moreover, "In addition to internet connectivity, mobile technology enables cellular IoT (Internet of Things) connectivity for a variety of personal and industrial devices. Currently, IoT applications in Pakistan include solar-powered home solutions enabling off-grid rural households to power electronic devices; on-board diagnostics (OBD) devices for fleet management; and IoT solutions integrated with vehicle and motorcycle insurance products to reduce theft. In future, cellular IoT connectivity and services will play a vital role in implementing smart city solutions, which can help governments at different levels to cope with rapid urbanization and improve security services."

The report's key findings include:

• Mobile broadband networks now cover 80 percent of the population and 97 percent of internet connections are mobile;
• Pakistan has nearly 700,000 cellular IoT connections across areas including agriculture, clean energy and safe water solutions;
• Mobile technology is the primary channel for digital financial services, digital birth registration initiatives, digital health solutions and digital learning;
• Mobile operators and the ecosystem also provided direct employment to around 320,000 people in Pakistan in 2018;
• The mobile ecosystem in Pakistan plays an increasingly important role in economic growth, contributing around $16.7 billion, equivalent to 5.4 percent of GDP; and
• Enablement of digital ecosystem is largely supported by timely policy interventions for the facilitation and enablement of the industry and most importantly the end-user.

What mobile products or services do you think should be developed to help accelerate Pakistan's digital transformation?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Making Money on Their Investment, Teams That Win, and Eight Other Things Angel Investors Care About

A significant amount of my weekly schedule is meeting with startup founders to hear their investment pitch. While I have particularities in what I want to hear in a conversation with the founders, I enjoy learning from other angel investors on what they value.

The Alliance of Angels, a group of angel investors who invest in Pacific Northwest startups, held an event, "The Top 10 things That Angel Investors Care About," on Nov. 12, 2019 in Seattle, Wash. featuring Lowell Ricklefs of Traction Advising. While you can view the presentation slides here, this blog post will focus on a few points that I found useful.

I strongly agree with Mr. Ricklefs that founders should not "spend too much time in the weeds about your product." Rather, they should discuss how they will "build a business that clients will love." This is what I call the "WOW Factor." What impresses me most when I hear an investment pitch is the founding team's plans to build a business that clients or customers will love.

As indicated in the slide on the right, Mr. Ricklefs discussed how angel investors want to invest in a company that is led by a strong management team. Not only do angel investors want to support a company lead by a team that is experienced, passionate, and knowledgeable, but that want to support those founders possessing common sense, integrity, and strong leadership skills. Each one of us periodically come up with a great business idea and a few may be able to create a product. However, it takes a winning team to execute a business plan effectively.

With respect to a go-to-market strategy, Mr. Ricklefs is correct to note that "the biggest problem early stage companies have is driving scale" and "you have to establish traction then scale." He says angel investors want to know your path of driving awareness to interest to engagement to revenue.

The presentation importantly notes angel investors care about a company's pricing model. The founders must explain how they will make money. "Revenue is king (license, transactional etc.)," says Mr. Ricklefs.

I appreciated the discussion on how investor pitches should cover exit scenarios. When should investors expect to receive a return on their investment and what is the internal rate of return (IRR)? 5x IRR? 10x IRR? Mr. Ricklefs recommended that founders provide a few examples of similar companies that have produced successful exits for their investors.

The presentation's concluded with a few basic points for founders including the importance of articulating their message clearly and succinctly. "Don't make [the investor] try to decipher what you are saying," Mr. Ricklefs advises. He also recommends not spending "time pitching to investors who don’t invest in your space."

While various risks are mentioned implicitly in his presentation, I recommend founders include a slide specifically addressing the company's risk factors. A company that is unable to produce the anticipated IRR does so not because of the lack of opportunity, per se, but because of one or more of the following risks: product risk, technology risk, market risk, management risk, scale risk, capital risk, and exit risk. A discussion on the adverse impact climate change may have on a company's operations may be necessary. Founders who are aware of the risks to their venture demonstrate their focus on building a business that clients will love.

What do you think angel investors care about?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Report Examines the Factors Enabling Businesses in Sub-Saharan Africa to Scale Up

Having done business in the world's second largest continent, I concur with a report's assertion that the "rise and fall of interest in Africa has been contingent on its promise for growth." Published by The Economist Intelligence Unit (The EIU), the report adds: The demographic advantage and increasing per-head income spur investors but the regulatory complexities and political risks they encounter turn sentiment. Businesses on the continent are innovative and eager to expand but this is often impeded by limited access to new markets and growth finance. Delivering on the promise of economic growth is closely tied to the ability of home-grown businesses to scale up, so policymakers must establish an environment that enables businesses to thrive.

Sponsored by the Dubai Chamber of Commerce and Industry, Promise and perils: Scaling up businesses in sub-Saharan Africa "examines the factors enabling businesses in sub-Saharan Africa (SSA) to scale up." The report considers "the policy environment, state of technology and infrastructure, and financing options that allow businesses to access markets in other countries on the continent and beyond. In addition, it explores the role of foreign investors in facilitating business expansion, focusing on those based in the" six Gulf Co-operation Council (GCC) countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

The report's key findings include:

• Policies for regional integration are helping African businesses gain greater access to other markets.
• Expanding telecommunications networks are facilitating the growth of internet connectivity, mobile money and new digital services that build on it.
• Progress in transportation projects are improving physical connectivity within and between countries in Africa and driving operational efficiencies.
• Foreign companies with expertise in infrastructure development and emerging technologies are capitalizing on Africa's scaling-up potential.
• High interest rates offered by domestic banks are a perennial problem for businesses seeking growth finance.
• Alternative sources such as venture capital (VC), private equity (PE), development finance institutions and even crowdfunding have been more appealing.
• Corporations are fueling African business expansions, through direct stakes and VC funds.
• Gulf investment is concentrated in East Africa, with the UAE leading the charge.

The report correctly explains that "financing has long been a bugbear. A quarter of African" small and medium-sized enterprises "surveyed by the European Investment Bank between 2011 and 2017 said access to finance was their biggest obstacle. Improving the depth, speed, cost and variety of financial tools is central to business growth, whether it be from commercial banks, PE, VC, development finance institutions and even crowd-funding."

Furthermore, "PE, which tends to focus on more established firms looking to scale up, closed 1,022 deals worth US$25bn across Africa between 2013 and 2018" as reflected in the chart below. "VC also seems to be gathering a healthy head of steam: African start-ups enjoyed an almost fourfold increase in VC funding in 2018, raising a record US$725m across 458 deals. They are receiving bigger tickets above the US$5m mark too."

"In terms of investment through PE and VC," the report notes "information technology (including internet services), financial services and consumer goods and services have attracted the highest volume of investments over the past five years." As indicated in the chart below, "The fintech sector was, in 2018, by far the largest draw for finance-raising. The data show that EdTech is the fourth biggest draw, which, combined with cleantech at second, shows the centrality of social and environmental narratives to business in Africa. Other sectors of note in Africa include mobility, which is drawing interest from foreign start-ups."

I agree with the report's conclusion that "Africa's growth recovery offers hope the continent can return to its GDP surge in the earlier part of the millennium—but only if its businesses can scale within and across borders. Policy improvements, including trade and customs unions, financial harmonization, and transport integration, are helping companies build regional footprints."

Encouragingly, "Start-ups are attracting VC from some of the world's biggest brands and reaching the international stage through global IPOs. But a perception challenge remains, with many citing political risks as an impediment."

Lastly, "As businesses on the continent scale up, foreign investors are playing an important role on two fronts: building infrastructure that enables African businesses to scale and investing directly in SMEs to facilitate growth."

Do you agree with the findings of the report?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Deal Activity to Female-Founded Startups Has Improved, but Roadblocks Remain

A report sponsored by Microsoft for Startups and Goldman Sachs' Launch With GS accurately asserts: "The VC industry has historically been a boys' club. Women have been underrepresented on both sides of the table as investors and as company founders. Considering that women make up half of the world's population and an even larger percentage of buying power, this underrepresentation is a problem not only for talented female entrepreneurs, but also for an industry that relies on scalable ideas to reach its potential."

The report, however, encouragingly notes that "[p]rogress has been made in recent years, and the oft-cited figures mask some of these improvements. For example, deal activity to female-founded startups has quadrupled over the last decade. In 2010, 823 VC investments were made in startups led by women; by 2018, that figure rose to 3,477, and 2019 is on pace to come close to that mark. This indicates that more women are becoming VC-backed entrepreneurs every year, and we expect that number to keep growing as supportive networks for female entrepreneurs continue to expand."

Released on Nov. 11, 2019, PitchBook-All Raise All In: Women in the VC Ecosystem highlights global and US-focused trends surrounding female-founded companies and female-led VC funds throughout the last decade.

The report's main findings include:

 

Some cities are better than others for female founders. New York and Los Angeles see comparatively high tech deal activity relative to Silicon Valley, despite Silicon Valley's much larger ecosystem.

What it means: Female founders can utilize these datapoints to determine which ecosystems (and VC firms) to target when they're on the fundraising trail.

Female-founded startups have a consistent history of exiting faster than male-led startups. Moreover, female-founded companies are exiting as a faster rate year-over-year compared to their all-male counterparts.

What it means: This reaffirms past research on enhanced business performance for female-founded companies. Venture investors, family offices, foundations and other prospective startup investors can use these datapoints to bolster their arguments for investing in more female-founded startups.

Only 12% of US VC checkwriters are women. Past research has found that female general partners are twice as likely to back female founders. Many (if not most) investment pitches are initiated by company founders, who approach investors looking for an opportunity to talk about their companies, and there are numerous indications that female founders often actively seek out VC firms with female checkwriters to pitch to.

What it means: VC firms can help in a big way by hiring or promoting more women into checkwriting roles. They will likely see an increase in incoming deal flow and open themselves to opportunities that other firms may miss.

56% of limited partners have women in decision-making roles. Limited partners are the original capital source for the entire VC industry, and where they invest their money has a significant downstream effect on future deal flow.

What it means: LPs can play a role, as well. They can use their influence to push for female-focused funds-of-funds, which are funds that take stakes in funds instead of startups. Such funds would ultimately provide more resources for female founders and provide an initial source of capital for female investors looking to set up their own VC firms.

It is worth mentioning the "ratio of female-founded startups has improved substantially since 2010, when they made up only 11.8% of the market. By dollars invested, female-founded startups took in almost 18% of all capital invested last year, higher than the 12% to 14% range typically seen since 2013. More notable, though, are the combined dollar amounts in recent years. Last year, more than $46 billion was funneled into female-founded startups, more than doubling 2017's value. For perspective, only $3 billion went to female-founded startups in 2010, translating into a more than 15-fold increase over the past decade."

What is more, "The gradual rise in female-founded startups can be traced to several factors, including market awareness of the gender imbalance, stronger mentorship networks for women and more women entering the venture side of entrepreneurship."

As an investor in several female-founded startups, it is reassuring to read: "Female-founded startups are exiting at an increasing pace. 2018 saw $26 billion in total sales (through acquisitions or IPOs) for female-founded startups. 2018 was also the fourth consecutive year with at least 200 exits from female-founded companies, which have slowly gained market share over the past 10 years, with 14% of total exit count in 2018. In addition, the number of exits for female-founded companies is growing at a faster rate YoY than exits for companies with all-male founding teams."

Are you investing in female-founded startups?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Identify, Execute, Monitor, and Manage: A Continuous Four-Stage Risk Analysis Process

"In an increasingly interconnected and complex world, it is vital to understand the external risks to your business" The Economist Intelligence Unit (The EIU) correctly notes in a report on how to navigate corporate risk. "Whether a firm is looking to understand the possible impact of" the trade war between the United States and China on its international "investments; the likelihood of new environmental regulations being implemented; or the threat of social unrest disrupting supply chains, being able to identify and understand risks offers the chance to put in place mitigation strategies that could help avoid significant losses. Failure to do so can prove terminal for businesses."

The EIU advises that "[t]o prevent this, risk analysis can be broken down into a continuous four-stage process:"

1. Identify

"Before identifying the external risks they are facing, firms need to understand and quantify their financial exposure—an important dimension of this is geographical." Furthermore, "This type of mapping exercise has become increasingly important in recent years, as global supply chains have become stretched across a growing number of territories, including cyber space, and exacerbated by examples of growing trade protectionism and political risk more generally. A clear understanding of a firm's exposure should highlight key areas of weakness and dependency. This, in turn, allows the firm to start thinking about which risks will need to be prioritized, as there will be trade-offs required when allocating resources for mitigation.

"Once a firm's exposure has been mapped, detailed and understood, the next step is to assess what exactly could put investments and operations at risk. Some of this should already have been achieved by the exposure-mapping exercise. For example, if the majority of sales revenue is earned in a particular country, then difficulty in taking money out of that country would be an obvious primary concern. However, the likelihood of this becoming a problem has historically been much lower within the EU than in emerging markets in Asia, such as Indonesia and Vietnam."

I concur that "[a]pplying this kind of political and economic historical awareness, external country experts can help provide the contextual knowledge and experience to understand which scenarios are more or less likely to occur in particular countries, including scenarios that firms may not have previously considered. This last point is particularly important—thinking outside the box is necessary, as market consensus can severely limit risk analysis."

2. Evaluate

The report accurately explains: "Each possible risk needs to be quantified in order to compare and evaluate them." My colleagues and I have adopted The EIU's methodology by giving "each risk scenario a probability score, and also a score for the likely impact on businesses' profitability. Combined, this gives an overall intensity score . . . . This process allows for the creation of a moving intensity scale—the risk scenario watchlist—as the scoring for different risks changes over time."

3. Monitor

"Without a system in place to monitor key business risks, the assumptions and analysis made by firms can become out of date very quickly."

What is more, "Navigating such shifts requires a monitoring system that cuts through the noise. Firms need to stay in tune with exactly what is going on in a country and to stay on top of geopolitical relationships, by receiving regular country-level alerts and speaking with country experts."

I am fortunate to be surrounded by a network of talented individuals located in key economies around the world where each share information and insights on geopolitical or socioeconomic events they are observing.

The report importantly adds: "One further way in which firms can improve monitoring is through the ability to track specific triggers that are likely to set off identified risk scenarios. This can then act as a form of early-warning system. Some broad examples include: disputed elections or food price spikes as drivers of social unrest in less stable countries; currency devaluations as a precursor to the implementation of capital controls; or falling natural resource prices in commodity-export dependent countries, leading to a drop in government revenue and, consequently, cancellations or delays to government-led infrastructure projects. In addition, some other increasingly important triggers include environmental protests or tensions and major geopolitical disputes, both of which have, for differing reasons, preceded a rise in successful cyber-attacks against governments and associated companies.

"Although many political events are difficult to predict precisely, a combination of specifically selected triggers and the development of, or use of analytical firms with, on-the-ground contacts will go a long way to helping firms prepare for the worst."

4. Manage

"Once key risks have been identified and are being monitored, firms will have a better idea of how to manage them. The intensity scale allows for prioritization, which can be adjusted as events and policies change on the ground. But, to mitigate effectively, firms also need an understanding of the exact areas that will be impacted by a particular scenario, both within their business and also in the wider business environment."

Lastly, I appreciate the report's concluding paragraphs:

Certainly, the global trends towards governments introducing more active environmental and data protection policies, as well as growing trade protectionism, indicate that firms need to pay special attention to managing regulatory changes in coming years. Firms that are able to identify possible regulatory shifts and put in place contingency plans to adapt before such shifts are implemented will have a better chance of success. Whatever the best strategy for each business, the ability to identify, evaluate and monitor key external risks should dramatically improve risk-mitigation efforts.

In an age of increased unpredictability and event risk, firms and governments are more than ever seeking to insulate themselves from the consequences. Global businesses cannot avoid risk—and too much risk aversion can be bad for growth—but they can prepare for risk, just as they can for opportunity.

Does your business employ a continuous four-stage process of analyzing risks? Do you have an alternate solution to understanding the external risks to your business?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

'Doing Business 2020' Indicates a Steady Convergence Between Developing and Developed Economies, Particularly in Business Incorporation

A post published on this blog presents a variety of risks when choosing to do international business. Such risks include government effectiveness (does political culture foster strong business environment?), stability (how stable are political institutions?), legal and regulatory (will the legal system safeguard investment?), and tax policy (are taxes low, predictable and transparent?). To help make informed decisions about effectively executing an international growth strategy, my colleagues and I find the World Bank's annual Doing Business report quite useful.

Published on Oct. 24, 2019 using data current as of May 1st, Doing Business 2020, "is the 17th in a series of annual studies measuring the regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies—from Afghanistan to Zimbabwe—and over time.

"Doing Business covers 12 areas of business regulation. Ten of these areas—starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency—are included in the ease of doing business score and ease of doing business ranking. Doing Business also measures regulation on employing workers and contracting with the government, which are not included in the ease of doing business score and ranking.

"By documenting changes in regulation in 12 areas of business activity in 190 economies, Doing Business analyzes regulation that encourages efficiency and supports freedom to do business. The data collected by Doing Business address three questions about government. First, when do governments change regulation with a view to developing their private sector? Second, what are the characteristics of reformist governments? Third, what are the effects of regulatory change on different aspects of economic or investment activity? Answering these questions adds to our knowledge of development."

The report's opening paragraph correctly notes:

At its core, regulation is about freedom to do business. Regulation aims to prevent worker mistreatment by greedy employers (regulation of labor), to ensure that roads and bridges do not collapse (regulation of public procurement), and to protect one’s investments (minority shareholder protections). All too often, however, regulation misses its goal, and one inefficiency replaces another, especially in the form of government overreach in business activity. Governments in many economies adopt or maintain regulation that burdens entrepreneurs. Whether by intent or ignorance, such regulation limits entrepreneurs' ability to freely operate a private business. As a result, entrepreneurs resort to informal activity, away from the oversight of regulators and tax collectors, or seek opportunities abroad—or join the ranks of the unemployed. Foreign investors avoid economies that use regulation to manipulate the private sector.

The report's main findings include:

• Doing Business captures 294 regulatory reforms implemented between May 2018 and May 2019. Worldwide, 115 economies made it easier to do business.
• The economies with the most notable improvement in Doing Business 2020 are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India and Nigeria (see image below). In 2018/19, these countries implemented one-fifth of all the reforms recorded worldwide.
• Economies in Sub-Saharan Africa and Latin America and the Caribbean continue to lag in terms of reforms. Only two Sub-Saharan African economies rank in the top 50 on the ease of doing business; no Latin American economies rank in this group.
• Doing Business 2020 continues to show a steady convergence between developing and developed economies, especially in the area of business incorporation. Since 2003/04, 178 economies have implemented 722 reforms captured by the starting a business indicator set, either reducing or eliminating barriers to entry.
• Those economies that score well on Doing Business tend to benefit from higher levels of entrepreneurial activity and lower levels of corruption.
• While economic reasons are the main drivers of reform, the advancement of neighboring economies provides an additional impetus for regulatory change.
• Twenty-six economies became less business-friendly, introducing 31 regulatory changes that stifle efficiency and quality of regulation.

How does this report help you implement your business' international growth strategy?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.