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Saturday, August 9, 2008

Gobal Economy Matters and Emerginvest

by Edward Hugh: Barcelona

Claus Vistesen and I are both proud and happy to be able to announce that we have been invited to work as "featured analysts" with a new Boston-based start-up - Emerginvest. Manuel has also offered to contribute material covering the relevant political developments in the countries we will be following.

We feel this arrangement is ideal for both parties as Claus and I will now have the opportunity to put some of our theoretical ideas to the test in a very practical context, while we hope that Emerginvest will be able to offer to their visitors and clients the sort of high quality, state of the art macroeconomic analysis which readers of this blog have become used to over the last 18 months. Claus and I have established a new, updated, methodology - based on an evaluation of both demographic and institutional parameters - in order to identify a group of 13 emerging economies which we consider are highly likely to outperform both the rest of the emerging economy group and the OECD economies in terms of a number of key performance indicators over the 2008 - 2020 horizon. This would seem to be a very win-win situation since Claus and I will have the direct opportunity to test our ideas out in a direct face-to-face with the markets, whilst those investors who are willing to take the risk of listening to what we have to say may well get the opportunity to make themselves some serious money.

For our part we hope that through our association with Emerginvest we will be able to develop real-time performance indicators which will confirm (or of course refute) the relevance and validity of the selection procedure adopted.

We would like to point out that we have absolutely no financial connection whatsoever with Emerginvest - although we do heartily endorse what they are trying to do. We are in this simply for the possible kudos which might come from actually being right.

In particular we see the growing trend on the part of the investing community to put an increased proportion of their new investments in emerging markets as one of the most effective and direct ways to address those issues of inter-country wealth and income imbalances which have so plagued our planet for so long - by getting the money from the rich who have it to the poor who need it.

This investment "put" is also a way of addressing the underlying imbalances which exist between the relatively older populations of the developed economies who increasingly need to save, and the relatively younger emerging economies who can benefit from the investment of those savings in their countries. So in a way you can both ensure the future of your own pension and help attack poverty at one and the same time. Again, this is precisely the type of possibility which is normally known in economics as "win-win".

Claus and I will be preparing a series of monthly reports on each of the countries we have selected, and these will appear from time to time on this blog. The first of these, from Claus on Brazil follows directly behind this post. We have also established individual "economy watch" blogs for each country, and links to these can be found at the top of the sidebar.

More theoretical background on the methodology behind this choice can be found across the posts in our Demography Matters as well as here on Global Economy Matters.

Here is the list of 13 countries we have chosen:

South Africa,

We were originally planning on a list of 12, but then decided to add one more, just for good measure. Wikipedia offers the following definition for the "bakers dozen" which seems pretty appropriate given the circumstances.

The oldest known source and most probable origin for the expression "baker's dozen" dates to the 13th century in one of the earliest English statutes, instituted during the reign of Henry III (r. 1216-1272), called the Assize of Bread and Ale. Bakers who were found to have shortchanged customers could be liable to severe punishment. To guard against the punishment of losing a hand to an axe, a baker would give 13 for the price of 12, to be certain of not being known as a cheat. Specifically, the practice of baking 13 items for an intended dozen was to prevent "short measure", on the basis that one of the 13 could be lost, eaten, burnt or ruined in some way, leaving the baker with the original dozen.