The Weightless Economy

Until this morning (call me ignorant) I had not come across the concept of the 'weightless economy'.  It was mentioned by an economist while talking about the recovery of the New Zealand economy.

So what is it?  I honestly don't know but I have a book on reserve at the local library that I am going to get out shortly (within the next hour) and will start reading.

Here is an excerpt from an article published in The Economist -

What is the weightless economy?

"By the weightless economy, I mean that part of the economy comprising the following four categories:

1. Information and communications technology (ICT), including the Internet.

2. Intellectual property, including not only patents and copyrights but more broadly, namebrands, trademarks, advertising, financial and consulting services, health care (medical knowledge), and education.

3. Electronic libraries and databases, including new media, video entertainment, and broadcasting.

4. Biotechnology, which includes carbon-based libraries and databases, as well as pharmaceuticals.

(Source: http://econ.lse.ac.uk/~dquah/tweirl0.html)

Here's my hypothesis - a weightless economy is one that uses and embraces the knowledge economy and virtual skills of people to generate revenue and ultimately create wealth.

The idea of an economy that is not centred on bricks and mortar, buildings or manual trades strikes me as being real common sense.  It also begs the question - are you lowering or increasing your weight as a part of the economy?

Am I right - let's wait and see.  In the meantime here a few websites I found that focus on the aformentioned concept -

http://www.nzinstitute.org/index.php

http://www.investopedia.com/terms/w/weightless-economy.asp

http://openlearn.open.ac.uk/mod/oucontent/view.php?id=399092&section=1.3.4

 

Highlights from the Index of Economic Freedom

Every year the Index of Economic Freedom is published.  in the executive summary there a few key points made which are very interesting and very debateable.  I list some of the points I enjoyed in the following list.

• The positive relation-ship between economic freedom and prosperity is confirmed yet again in the 2010 Index.

• Gross domestic product per capita is much higher in countries that score well in the Index. The positive relationship holds true at all levels of economic freedom but becomes even more dramatic as economic freedom increases.
• Economic freedom improves the overall quality of life, promotes political and social prog-ress, and supports envi-ronmental protection.
• The 2010 Index provides strong evidence that economic freedom has far- reaching positive impacts on various aspects of human development. Economic freedom corre-lates with poverty reduction, a variety of desir- able social indicators, democratic governance, and environmental sustainability.
• As a result of increasing government interference in economic activity in many countries, overall progress toward greater economic freedom has been interrupted.

And here is the real kicker -

• Increased government spending did not improve economic crisis performance.

   

What do you think?

Source:http://www.heritage.org/Index/

 

My thoughts on NZ's trade agreement with Hong Kong

What a great idea!  Negotiate a trade agreement with the most competitive and financially sound market in Asia.  No trade agreements are ever reached without a lot of hard work, a lot of schmoozing and without a doubt a lot of concession making.

Here are a few basic facts about Hong Kong -

• Population:7.0 million,
• GDP (PPP): $306.5 billion, 2.4% growth, 5.7% 5-year compound annual growth, $43,924 per capita.
• Unemployment: 3.5%
• Inflation (CPI): 4.3%
• FDI Inflow: $63.0 billion

(Source: http://www.heritage.org/index/country/hongkong)

Here are a few basic facts about New Zealand -

• Population: 4.3 million
• GDP (PPP): $115.4 billion, -1.6% growth, 2.0% 5-year compound annual growth, $27,029 per capita
• Unemployment: 4.2%
• Inflation (CPI): 4.0%
• FDI Inflow: $2.0 billion

(Source: http://www.heritage.org/Index/Country/NewZealand)

So Hong Kong wins in all areas.  Interestingly New Zealand ranks at number four in the region on the Index of Economic Freedom.

So what do these numbers tell us?  Hong Kong has strong wealth, a growing economy and will provide huge possibilities for trade in the future.

What interests me about these trade agreements is what does New Zealand have to offer that Hong Kong would want to partner up with us?  Seriously.  New Zealand has a lot of land, a lot of primary goods e.g. dairy products, tourism and wood products.  Another thing that New Zealand has is a lot of smart and analytical people.

China and Hong Kong are both friends of New Zealand and a lot of kiwi's (slang) head over to those countries to establish, grow and expand their business opportunities.  I sincerely hope the economic benefits of such an agreement create waves into the future and not just ripples in the short term on a very big pond.

So we shall wait and see how this relationship develops over time.  I would expect that there will be few tangible results or effects for at least 3 to 6 months.

If anyone needs any help - I'm always available.