* This is my contribution for BusinessWorld Top 1,000 Corporations 2016. I forgot to post this earlier.
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See also:
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3 levels of
disruption
Bienvenido S. Oplas, Jr.
Disruption in business and the macro economy is mainly a
result of innovation by the new leaders and partly complacency by the previous ones.
What used to be great and famous global brands have been overtaken by new and upstarts
which introduce unceasing innovation. This disruption has occurred at three
levels.
# 1: Global
economic leadership has shifted to the developing world
Over the past two decades, or from 1995 to 2015, these
changes have happened:
First, the top four biggest economies in the planet in
terms of gross domestic product (GDP) were the US, Japan, China and Germany, in
that order, in 1995. By 2015, the top four economies were China, US, India and
Japan. Germany retreated while India advanced significantly.
Second, these four developing and high population
countries have experienced GDP size expansion by five times or more in just two
decades: China, India, Nigeria and Vietnam.
The creation of the World Trade Organization (WTO) in
1995 has significantly contributed to faster economic expansion of many
developing countries. Their previously highly-repressed economies – a consequence
of decades of economic protectionism and political dictatorships – have liberalized
their trade and investments.
Third, in terms of GDP size, these five countries were
major “advancers”, mostly from Asia: (a)
Brazil from #9 in 1995 to #7 in 2015, (b) Indonesia from #12 to #8, (c) Korea
from #16 to #13, (d) Nigeria from #33 to #22, and (e) Vietnam from #38 to #35.
Fourth, these five countries, mainly from Europe, dropped
in the ranking in terms of GDP size: (a)
Japan from #2 in 1995 to #4 in 2015; (b) Italy, from #7 to #12, (c) France,
from #8 to #10,(d) Spain, from #13 to #16, and (e) S. Africa, from #24 to #30.
This disruption in global ranking does not mean that the
“retreaters” have stopped growing economically or were growing too slow, but
rather some countries were growing much faster than them and have overtaken
them.
# 2: Global
inequality has declined.
The conventional or orthodox belief is that globalization
has worsened the degree of inequality between the developed west and the less
developed or developing east. This is false. Check the columns on GDP-PPP (purchasing
power parity) per capita in the above table, which show the following:
One, while the average multiple or expansion of GDP-PPP
per person in the G7 countries (US, Canada, Japan, Germany, UK, France, Italy)
over the past two decades was only 1.9 times, those by many developing
countries including the Philippines was 2.5 to 7.7 times.
Two, the degree of per capita income inequality in
particular between the US and China in 1995 was 15.6 times, but declined to
only four times by 2015. Between Japan and India, the per capita income
inequality has declined from 15 times in 1995 to only 6.2 times in 2015. And
between Germany and Indonesia, per capita income inequality declined from 5.7
times in 1995 to only 4.2 times.
# 3: New global
corporate brands have spurred up in the last six to 12 years.
Some 15-18 years ago, my first mobile phone was a Nokia
and my first social media account was Friendster. Starting five years ago until
today, a bigger number of people who took to mobiles and social media hardly knew
those brands.
Today, new brands have surfaced fast, creating disruption
in the communications and information technologies, and commanding hundreds of
millions or even a billion plus followers and subscribers. Among these very
successful brands and their years of creation were: Facebook (February
2004), YouTube (February 2005), Twitter
(March 2006), Dropbox (June 2007), Airbnb (August 2008), Uber (March 2009), WhatsApp
(January 2010), pinterest (March 2010), and instagram (October 2010).
While it is their innovation that brought them to the
front fast, it will also be innovation by newer and upcoming brands that can
topple them from the top.
The market economy and its inherently disruptive,
innovative nature is the most subversive economic system in the planet.
Corporate expansion and bankruptcy, boom and bust, are 100% part of its DNA.
And this makes the system pro-consumers, gifting them with newer, more useful,
more price-competitive products and services.
China leapfrogged to become the world’s fastest growing economy
because of two things: its communist government allowed private property
ownership and free trade to flourish, and it has a billion-plus producers and consumers.
So two important lessons for the Philippine economy to
join the band of disrupters in the planet are (a) have more market competition
and innovation, less government regulations and taxation, and (b) take
advantage of its “population dividend”, a generally young and big population –
a big army of producers and consumers, entrepreneurs and workers, scattered
within the archipelago and across the world.
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See also:
BWorld 195, Health alarmism in TRAIN sin tax hike, March 19, 2018
BWorld 196, Mining tax and TRAIN, March 20, 2018
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