Horizons newsletter – week 41 // 2017
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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The battle for the living room is on
For several years, big technology companies have been trying to find a way into peoples’ homes. Google, Amazon and Samsung began by offering separate smart home devices that could be controlled and monitored through an app, such as thermostats, security cameras and appliances. Today, the battle for the living room is between platforms that integrate different devices and services and are operated through intelligent, voice-activated technology. The contest between Alexa (Amazon), Siri (Apple), Google (Google Voice) and Bixby (Samsung) will be about who delivers the best virtual “domestic help” by making home life easier and more pleasant, and by learning about the homeowners’ interests and preferences. Recently, Amazon extended the lead on its competitors by adding a range of new devices to its Echo line of products that work with the Alexa AI assistant. However, the promise of a truly smart home with devices that not only meet household needs, but anticipate them as well, is still unrealized. Whichever company achieves this most successfully, will be the winner of the intrusive technology movement into the home.
Recently, Kurdish Iraq and Catalonia both held independence referendums in which those who voted favored secession. These referendums have quite a few similarities. Both represent historical movements of a people with a distinct identity, although neither has much history of independence. Secondly, both movements were heavily oppressed under a previous regime (Saddam Hussein in Iraq, Franco in Spain) and currently enjoy more autonomy than they have known in the past. Thirdly, in both cases external factors increased momentum: the euro crisis deepened friction with Madrid over taxes, and civil war in the Middle East as well as oil discoveries in Northern Iraq created an opportunity for the Kurds. Finally, in both cases independence will probably not take place soon due to powerful opposition from the central governments and important outside parties (the EU in the case of Catalonia and Turkey and Iran in the case of Kurdistan). However, the referendums are a sign that economic and political shifts put nation-states with powerful regional movements under strain. This can inspire groups in Scotland, the Balkans and possibly even ‘America’s Catalonia’, California.
Managing the Middle Kingdom’s middle-income trap
A famous World Bank study in 2012 showed that of the 101 middle-income economies in 1960, only 13 had become high-income economies by 2008. One hurdle is that economies should shift from ‘basic’ capital investments – like railways, buildings, and highways – to more ‘advanced’, like digital infrastructure, high-tech manufacturing and information technology. China is now approaching this so-called ‘middle-income trap’, and is actively managing its economy’s transition. For example, China laid out a comprehensive plan to become the world leader in artificial intelligence by 2030, has made a string of scientific discoveries in quantum computing, and is set to lead the next generation of wireless network systems. In this light, the upcoming National Congress of the Communist Party will have additional significance: if China can sustain its current growth rates in the next five years it will join a select group of high-income economies. During this event, China’s leadership will present its vision on circumventing the middle-income trap in the coming five years, and provide a first outlook on China’s ‘new economy’.