New Mobility

Global Investor 2.13, November 2013 

Expert know-how for Credit Suisse investment clients 

New Mobility 

Easing global gridlock

Fold out the handle, and 

check in with Global Investor! 

The briefcase handles are perforated, 

so just punch them out and flip 

them up to form the handle. You’ve 

now got a little briefcase of sorts, and 

you’re good to go, as Global Investor 

explores the New Mobility. Be it just 

up the street, across the continent, 

or around the world, we’re moving in 

new directions. 

Important disclosures are found in the Disclosure appendix. 

Credit Suisse does and seeks to do business with companies covered in its research 

 

that could affect the objectivity of this report. Investors should consider this report as 

only a single factor in making their investment decision. For a discussion of the risks of 

investing in the securities mentioned in this report, please refer to the following Internet link: 

https://research.credit-suisse.com/riskdisclosure 

Martina Lubyová Labor migration entails costs as 

well as benefits. Ian Goldin An expert weighs in 

on the modern migration debate. Pedro Conceição 

Economies and education have improved, but 

in Africa there’s still a paradox that exists. 

Dario Hidalgo Mass transit is stretched to the limit, 

and in serious need of a sustainability rethink.

GLOBAL INVESTOR 2.13 Editorial — 03 

Photos: Chou Chiang | Martin Stollenwerk 

Responsible for coordinating the focus 

themes in this issue: 

Nilanjan Das, CFA, is Research Editor 

of Global Investor and Head of Global 

Research KPO. He leads a crossasset 

research team covering global 

equities, bonds, currencies, economic 

and thematic research. He joined 

Credit Suisse in 2009, bringing 15 years 

of research and banking experience, 

including positions at J. P. Morgan Global 

Research and ICICI Bank. He is a 

postgraduate from the Indian Institute 

of Management, Bangalore. 

Sara Carnazzi Weber joined Credit 

Suisse in 1999 and is currently a senior 

economist responsible for long-term 

macroeconomic issues. She has 

ten years of experience in regional and 

spatial economics and contributed 

significantly to the development of the 

regional analysis unit within Research. 

She holds a doctorate from the 

University of Fribourg. 

At certain moments in history, a cluster of innovations reaches a point 

of maturity and comes together to create radical change. Steam 

power, railways and the assembly line came together in the mid-19th 

century’s wave of industrial globalization. After World War II, efficient 

air-conditioning, electricity grids and cold-chain logistics triggered a 

US productivity boom as factory conditions improved, and allowed 

rapid development of the US Sun Belt and then Asian hubs such 

as Singapore and Hong Kong. Typically, these clusters occur when 

new technologies combine with relatively old ones to create something 

radically new that is greater than the sum of the parts. 

Today, we see three such clusters, all related to mobility. First, 

low-cost Internet-based communications like Skype and cheaper 

money transfers combine with the existing technology of long-haul 

air travel to transform the concept of immigration from the old model 

of lifelong change requiring permanent separation from friends and 

family, into a temporary, intermittent activity in which close contact is 

maintained with home. Second, the application of modern informationbased 

control systems to relatively old automotive and bicycle technologies 

presages a revolution in urban and eventually interurban transport. 

And a third is waiting in the wings: the explosion of Internet-based 

learning can help social mobility, for which education is key. 

In this issue, we examine how this New Mobility is set to transform 

economies, lives and social interactions around the world. These effects 

may prove vital in emerging countries, where trend economic 

growth seems to have slowed. Lack of infrastructure, income uncertainty 

and in some cases labor bottlenecks are all possible causes. 

The New Mobility offers some potential solutions, reducing the scale 

of physical infrastructure investment needed to relieve urban gridlock, 

supporting consumption by opening new income streams from migrant 

workers, and upping temporary labor supply in countries facing shortages. 

Those countries that embrace these solutions will benefit from 

a new potential way to reinvigorate growth. 

Giles Keating, Head of Research and Deputy Global CIO

GLOBAL INVESTOR 2.13 Contents — 04 

TECHNOLOGY 

ENABLERS 

MODERN 

MIGRATION 

FUTURE OF 

MOBILITY 

SOCIAL/POLITICAL 

DRIVERS 

If there’s one constant when it comes to human nature and activity, it’s the 

fact that we’re perpetually on the move – whether it’s the search for 

safety and security as millions flee war-torn regions of the world, 

the hope for a brighter economic future elsewhere, simply 

trying to make sure we get through the morning 

commute without being delayed, or making 

a concerted effort to climb the rungs 

toward a higher standing within 

the social order. 

> Pages 08, 18, 30, 44

GLOBAL INVESTOR 2.13 Contents — 05 

New Mobility 

06 

The New Mobility 

Information technologies are reconfiguring the way we travel, 

work and communicate. Giles Keating explores how the New 

Mobility will impact economic growth. 

10 

Migration: Good or bad? 

Is international migration posing a problem, or rather a solution? 

Ian Goldin separates fact from fiction, providing a deeper 

understanding of a complex topic. 

14 

Top shots on the move 

Global Investor presents a collection of portraits featuring ten 

top shots from around the world. Find out where they are 

from, and where they are deployed. Each is unique, but what 

is it that they all have in common? 

20 

Keeping cities moving 

According to Dario Hidalgo, as cities continue to expand, 

the need for effective mass rapid transit becomes all the more 

important. He explains why more roads aren’t the answer. 

24 

So far, yet so near 

With over a billion smartphone users, mobile technologies are 

already transformative. But, says Uwe Neumann, the real boom 

comes once people, processes, things and data are all linked. 

26 

Innovation welcome in a USD 40 billion business 

Remittances from migrants to their home countries have a 

major economic impact. Christine Schmid and Javier Lodeiro 

explain why and look at the role that mobile communication 

technology plays in getting money to those who need it most. 

32 

Moving ahead in Africa 

Where 40% of primary school students drop out, 

there’s a need for more accessible education in Africa. 

But as Pedro Conceição reports, learning and earnings 

aren’t always directly linked. 

36 

(Un)equal opportunity 

Earnings mobility is something that citizens of all the rich 

countries value. Miles Corak examines the roles that socioeconomic 

background and education play in that regard. 

38 

Managing migration 

National migration policies are a complex matrix where demographics 

and economics intersect. Martina Lubyová explores 

the topic of managing labor mobility in a globalized world. 

46 

New mobility models needed 

Urban streets are chronically congested, slowing commuters 

and goods while choking residents with pollution. 

Andrea Schnell and Thomas Rühl present some new solutions 

to what has become a long-standing problem. 

50 

How ideas spread 

If there’s something worth sharing, Duncan Watts wants to 

know about it. He’s made a career of studying how and why it 

is that some ideas get passed up, passed along or “go viral.” 

52 

The China travel surge 

Tourism from China is booming – to such a degree that 

China plans to build 70 new airports by 2015. Scott Booker 

reports on the travel explosion that was worth USD 102 billion 

last year. 

Disclaimer > Page 56 

Podcast on www.credit-suisse.com/globalinvestor

Introduction 

MOBILE LIVES 

The New 

Mobility 

The information revolution is opening up new ways to leverage the “old” economy. 

New control systems ease traffic on congested highways, teaching 

expands beyond the classroom, family ties are no longer broken by distance. 

Does this offer hope for improving the disappointing growth rates 

now affecting both developed and emerging countries? 

TEXT Giles Keating, Head of Research and 

Deputy Global CIO, Credit Suisse 

The digital technologies are starting to transform mobility, 

affecting people, traffic and ideas. First, new cheap 

ways to transfer small sums of money across borders and 

almost free international communication (Skype, Facebook 

...) are now combining with low-cost long-haul air 

travel to change mass migration from the traditional 

model of lifelong upheaval to a new era in which mass 

migration can be temporary, and close contact with home 

is retained. Second, the application of modern information-based 

control systems to the old technologies of 

automobiles, bicycles and public transport promises a 

revolution in urban and eventually interurban transport, 

squeezing far more passenger journeys from existing overstretched 

infrastructure. Third, Internet-based learning, 

still in its infancy but growing rapidly, has the potential 

to reach vast numbers of people, greatly magnifying the 

social mobility that education brings. Taken together, we 

call these three phenomena “The New Mobility.” 

The changing shape of migration is difficult to measure 

directly, but some telltale indicators give an idea of what 

is happening. In the Philippines, one-tenth of national 

income is now earned abroad and sent home to help support 

children and other family members. Much of this 

money seems to come from people who have traveled 

abroad to work temporarily rather than permanently, in 

places such as Hong Kong, Singapore and the Gulf. Javier 

Lodeiro and Christine Schmid analyze the growth of these 

money flows on page 26. 

Large numbers of people also travel from the former 

Soviet Republics to get temporary work in Russia. As an 

example, in Tajikistan this brings in income worth almost 

half of domestic output, the world’s highest figure. Martina 

Lubyová (page 38) provides color on both the benefits 

and problems faced by Russia as it receives these large 

numbers of temporary workers. Gulf states Dubai and 

Qatar rely heavily on temporary workers from the subcontinent 

to fuel all levels of their economy from construction 

and domestic service to fund management, while, 

within Europe, London is a clear temporary migration 

hot spot. 

Modern telecommunications ease pain of leaving home 

Physical separation from family and friends will always 

be an issue, but modern telecommunications mitigate its 

effects substantially. Long-distance international phone 

calls now cost pennies – barely two decades ago, they were 

an almost unaffordable luxury for people on low incomes. 

And seeing people at a distance, largely the preserve of

expensive corporate videoconferences ten years ago, is 

now available via Internet street cafés across emerging 

countries using Skype, while low-end cell phones help 

spread messaging systems like WhatsApp (which send 

text, photos and audio clips) toward the lower end of the 

income scale. Arguably, the impact of these changes in 

boosting temporary migration is only just beginning. 

“Physical separation 

from family and friends will 

always be an issue, but 

modern telecommunications 

mitigate its effects 

substantially.” 

Going abroad to work for a while can bring substantial 

economic benefits. For example, in the Philippines, income 

from abroad has risen consistently for 15 years, providing 

support even when the domestic economy was slowing 

down. Of course, there are adverse effects as well, and 

both good and bad effects have been widely analyzed for 

traditional (permanent) migration, as described by Professor 

Ian Goldin in his excellent article on page 10. The 

newer phenomenon of temporary mass migration is clearly 

more flexible and so should be able to offer a better 

balance of good effects compared to bad. We believe that 

it will grow in scale, as the cost of sending money home 

falls further, cheap airfares proliferate, and services like 

Skype become even more widely used. 

A need for multimodal transit and smarter planning 

Urban transport is starting to be reshaped by information 

technology. Automated bicycle rental is now commonplace 

in many cities around the world (see just one example on 

page 23). Remote-controlled lanes for cars and other vehicles 

are set to move from the lab to public roads within 

the next few years; smartphone apps already allow passengers 

to see when their bus is arriving and to identify 

the nearest taxi. And in future, the boundary between 

buses and taxis may become blurred, with a unified vehicle 

fleet able to switch between shared and exclusive use, 

and between fixed and variable routes, depending on demand. 

Andrea Schnell and Thomas Rühl review these developments 

(page 46) while Eric Höweler (page 49) discusses 

their application to interurban travel. With traffic 

in cities such as Jakarta, Beijing, Mumbai and Manila 

clearly a major constraint on economic growth and highly 

pollutive, and mass transit systems expensive and disruptive 

to build, a new approach is badly needed. Costeffective 

solutions such as bus-ways (see the interview with 

Darío Hidalgo on page 20) can help, but a broader solution 

is to use information technology to increase the passenger-carrying 

capacity of a given road system. This has the 

potential to be far cheaper and less disruptive than massive 

physical construction programs. 

Education is often seen as key to social mobility, but 

this does not apply everywhere. Miles Corak (page 36) 

shows that poor education often persists across generations 

in developed countries, while Pedro Conceição 

(page 32) shows that in sub-Saharan Africa, education does 

not necessarily mean getting a job. Could the New Mobility 

help? It could allow adults to use Internet learning to 

catch up on skills they missed at school, and it could help 

educated young Africans to find worthwhile work abroad 

for a while, without having to leave home permanently. 

Already, Internet-based learning is growing rapidly. Lectures 

by professors from top universities are now available 

to a worldwide audience and online courses like those 

offered by Rosetta Stone provide an intuitive and yet rigorous 

way to learn new languages. Even social networks play 

a role, complementing formal education by spreading key 

ideas, as analyzed by Duncan Watts (page 50). 

Economic growth has slowed recently in many emerging 

countries and their stock markets have seen periods 

of major underperformance. The New Mobility may help 

offer solutions. It can bring relief to the urban gridlock 

that is inhibiting development; it can help to boost consumption 

by opening new income streams from local 

people who are temporarily working abroad, while boosting 

labor supply in other places where it is needed; and it 

may also be able to help relieve educational bottlenecks. 

All this can be helpful for growth in developed countries 

as well. Crucially, it is not just that the technologies are 

there to do this; it is also that the economic incentives to 

apply those technologies are rising. ● 

Giles Keating is Global Head of Research and Deputy 

Global CIO for Credit Suisse. His team conducts the 

fundamental research key to the investment process 

for Credit Suisse clients. As Deputy CIO he plays 

a core role in those investment decisions. He joined 

Credit Suisse over 25 years ago and has degrees 

from the London School of Economics and Oxford, 

where he is an Honorary Fellow. He is chair of 

Tech4All and techfortrade, charities aiming to reduce 

poverty via use of technology.

3,000,000 

Chapter I 

MODERN 

MIGRATION 

Immigration remains a hot political topic, though only 231 million 

people, representing 3.2% of the world’s total population, 

are living outside their country of origin. In absolute terms, 

however, their figure has increased by 50% since 1990. 

13,000,000 

people 

2,000,000 

1,000,000 

500,000 

The arrow’s width shows the 

number of people who have migrated 

from one country to another 

INTERNATIONAL 

MIGRATION FLOWS 

In 2013, 231 million people worldwide 

had left their country of origin 

and emigrated, with the USA being 

their preferred destination. The 

USA is home to nearly a fifth of the 

world’s international migrant stock. 

Migration: Good or bad? 

page 10 

The Silicon Valley advantage 

page 13 

CANADA 

Source: UN DESA 

50 

5 

10 

TORONTO 

Immigrants 

in millions, 2013 

TOP 10 IMMIGRATION 

COUNTRIES OF THE WORLD 

USA 45,785,090 

RUSSIAN FEDERATION 11,048,064 

GERMANY 9,845,244 

SAUDI ARABIA 9,060,433 

UNITED ARAB EMIRATES 7,826,981 

UNITED KINGDOM 7,824,131 

FRANCE 7,439,086 

CANADA 7,284,069 

AUSTRALIA 6,468,640 

SPAIN 6,466,605 

15 

5 

Emigrants 

in millions, 2013 

TOP 10 EMIGRATION 

COUNTRIES OF THE WORLD 

INDIA 14,179,627 

MEXICO 13,201,181 

RUSSIAN FEDERATION 10,820,372 

CHINA 9,333,211 

BANGLADESH 7,725,622 

PAKISTAN 5,617,297 

UKRAINE 5,552,689 

PHILIPPINES 5,491,607 

AFGHANISTAN 5,102,409 



CHICAGO 

SAN FRANCISCO 

LOS ANGELES 

Cities with 1 million or more 

foreign-born residents 

HOT SPOT MIGRANT 

CITIES OF THE WORLD 

The points on the map are the cities 

attracting one in five of the world’s 

immigrants. Combined, these 

metropolitan areas have 37 million 

foreign-born residents. 

CHICAGO USA 

DALLAS USA 

DUBAI United Arab Emirates 

HONG KONG China 

HOUSTON USA 

JIDDAH Saudi Arabia 

LONDON United Kingdom 

LOS ANGELES USA 

MELBOURNE Australia 

MIAMI USA 

MOSCOW Russia 

NEW YORK USA 

PARIS France 

RIYADH Saudi Arabia 

SAN FRANCISCO USA 

SINGAPORE Singapore 

SYDNEY Australia 

TORONTO Canada 

WASHINGTON DC USA 

USA 

MEXICO 

USA 

Population: 320,051,000 

Immigrants: 45,785,090 

14.3% of population 

Migrant native countries 

MEXICO 12,950,828 

CHINA 2,246,840 

INDIA 2,060,771 


PUERTO RICO 1,685,015 

VIETNAM 1,381,076 

EL SALVADOR 1,371,767 

CUBA 1,201,164 

NEW YORK 

WASHINGTON DC 

CHICAGO 

DALLAS 

HOUSTON 

MIAMI 

Source: MPI

UNITED KINGDOM 





INDIA 769,540 

POLAND 687,444 

PAKISTAN 405,878 

IRELAND 360,263 

CHINA 330,659 

GERMANY 315,024 

SOUTH AFRICA 258,990 

BANGLADESH 207,915 

GERMANY 





TURKEY 1,543,787 

POLAND 1,146,754 

RUSSIAN FED. 1,007,536 

KAZAKHSTAN 717,753 

ITALY 433,127 

ROMANIA 383,626 

GREECE 238,220 

CROATIA 233,064 

MIGRATION IS ON THE RISE 

The stock of international migrants has increased by 50% since 1990. The number 

of migrants rose by 77 million between 1990 and 2013, from 154 million to 

more than 231 million, with Southeast Asians and Southern Africans most likely 

to leave their home country. 

International migrant stock as a percentage of the total population 

SINGAPORE SWITZERL AND NEW ZEALAND USA ITALY 

43 

40 % 

LONDON 

PARIS 

MOSCOW 

30 % 

20 % 

10 % 

9 

14 

25 

29 

0 % 

1990 

2000 

2010 

2013 


RUSSIAN FEDERATION 

UNITED 

KINGDOM 

FRANCE 

POLAND 

GERMANY 

SWITZERLAND 

UKRAINE 

KAZAKHSTAN 

SPAIN 

TURKEY 

CHINA 

JORDAN 

AFGHANISTAN 

PAKISTAN 

UAE 

SAUDI 

ARABIA 

INDIA 

BANGLADESH 

HONG KONG 

PHILIPPINES 

SINGAPORE 

DUBAI 

SAUDI ARABIA 




AUSTRALIA 

RIYADH 

JIDDAH 


INDIA 1,761,857 

PAKISTAN 1,319,607 

BANGLADESH 1,309,004 

EGYPT 1,298,388 


YEMEN 461,042 

INDONESIA 379,632 

SUDAN 234,564 

SYDNEY 

MELBOURNE 

NEW ZEALAND 

> 20% 10–20% 1–10% < 1% 

International migrant stock as a 

percentage of the total population 

INTERNATIONAL 

MIGRANT STOCK 

More than a fifth of the population 

in Australia, Saudi Arabia, the United 

Arab Emirates, Kuwait, Kazakhstan 

and Switzerland are non-nationals. 


AUSTRALIA 






NEW ZEALAND 582,761 

CHINA 447,407 

INDIA 364,764 

ITALY 231,650 

VIETNAM 225,749 

PHILIPPINES 189,969 

SOUTH AFRICA 166,731

GLOBAL INVESTOR 2.13 — 10 

MIGRATION 

GOOD OR 

BAD? 

MOBILE POPULATIONS 

Throughout history, migration has always been the most important driver of human 

progress and dynamism. Indeed, economic evidence indicates that migration helps economies, 

both in the developed and developing world. Yet arguments around migration are 

often driven by fear rather than facts. Ian Goldin brings a nuanced view to a complex topic. 

TEXT Ian Goldin, director, Oxford Martin School, University of Oxford


We live in an era of two competing narratives. The first suggests that 

migrants are flooding across our borders, and that they are stealing 

jobs and eroding our country’s social fabric in the process. Alternatively, 

the second argues that in spite of minor short-term dislocations, 

international migration is a boon: it generates innovation and dynamism 

while fueling long-term economic growth. My view is that both of 

these caricatures are too simplistic. The costs of migration are felt in 

the short term and are local, so they have real social and political 

consequences, while the benefits are more diffuse and longer term. 

As with debates on trade, where protectionist instincts tend to overwhelm 

the longer-term need for more open societies, the core role 

that migrants play in economic development is often overwhelmed by 

defensive measures to keep migrants out. The economic evidence is 

clear: migration helps economies, both in the developed and developing 

world. As is the case with trade and in the realm of the free flow 

of ideas, shutting ourselves off from each other is harmful. 

More people, more borders 

Globally, the estimated 231 million migrants in the world make up 

about 3% of the world’s population. Before passports became widely 

adopted about 100 years ago, and particularly in the age of mass 

migration of the 19th century, up to one-third of parts of Europe 

emigrated and over a quarter of the population of the USA were immigrants. 

While the share of our societies that are migrants may well 

be lower today than in previous centuries, the number of migrants 

has certainly grown. In part, this reflects the fourfold increase in 

the number of independent countries over the past 100 years. This 

proliferation means that people who previously moved within a country 

– such as the Soviet Union – are now recorded as migrants. But 

not only has the number of countries quadrupled over the past century, 

so too has the number of people to more than seven billion 

people. More borders and more people result in more migrants, even 

if their relative contribution to our populations or economies declines. 

At the end of 2012, three out of four migrants live in a small group 

of 24 countries, with the USA being the most significant home for 

migrants. Approximately 70 million migrants have migrated from one 

developing country to another, and approximately 65 million have gone 

from developing to richer countries, with about 55 million migrants 

having moved between the different OECD countries, and a rapidly 

growing number – currently around 20 million – having left the OECD 

for emerging markets, where job opportunities are multiplying most 

rapidly. The European Union is the world’s largest experiment with 

visa-free labor migration. Even though emigration from comparatively 

less rich countries such as Romania and Poland was substantial, 

Germany, Italy and the UK were both leading sources and leading 

recipients of migration. The main lesson from Europe is how few 

people migrate, with migration levels seldom much higher than those 

in the periods when greater restrictions applied. Given the levels of 

youth unemployment of over 50% in Greece and Spain, it is remarkable 

that so few young people have migrated. This highlights how the 

arguments around migration are often driven by fear rather than facts. 

Opportunities regarding employment as well as housing and other key 

determinants of demand are at least as important as the supply-side 

push factors that contribute to migration. 

Why do they go? 

It is dangerous to generalize about migration. Of the annual flow of 

around 15 million migrants, most fit into one of four categories of 

Ian Goldin is Professor and Director of the Oxford Martin 

School and Professor of Globalization and Development 

at the University of Oxford. This article draws on his widely 

acclaimed book “Exceptional People: How Migration 

 

by Princeton University Press in 2012. 

cross-border movement: economic, student, social and refugee/asylum. 

There are around 5 million economic migrants each year. Highskill 

migrants bring special talents or training across borders to fill 

gaps in the native workforce. Low-skill migrants tend to fill shortages 

in physical labor or jobs that are less desired by the native labor 

force. About 3.5 million students migrate each year. While some 

countries, such as the UK, insist that students leave, others such as 

Australia and the USA have gained talent by allowing certain students 

to stay. For example, 68% of foreign students who received doctorates 

in the USA in 2000 were still there five years after graduation. 

Social and family reasons account for about 2 million migrants a year, 

as individuals and families aim to be reunited with loved ones. This is 

most common in the nations built largely by more recent generations 

of immigrants (the USA, Canada and Australia) as well as the former 

colonial empires (especially the United Kingdom and France). Conflict 

and persecution push people from their homes and across borders. 

Refugee and asylum seekers account for an average of about two 

million migrants per year. At the end of 2012 there were 15.4 million 

officially recognized refugees worldwide, with 80% of these refugees 

hosted by developing countries, up from 70% ten years ago. It is 

impossible to know how many undocumented migrants there are 

in the world, but in the USA the estimates are that there are about 

11 million out of a total number of around 50 million migrants, or about 

22% of the total. 

By the mid-1990s, more than 30% of documented migrants into 

the USA were highly skilled. Similar trends exist in Europe. Germany 

launched a “green card” program in 2000 to entice workers to fill gaps 

in labor, particularly in healthcare and information technology. Concurrently, 

France worked to attract scholars, scientists and computer 

professionals. As a result, the percentage of skilled migrants into 

EU countries climbed from 15% in the early 1990s to 36% in the >


original 14 EU countries by 2011. This increase in high-skill labor 

movement reflects the priorities of business. Firms recognize that 

they are engaged in a war for talent with their competitors. Govern- 

 

beneficial arrangement. Firms are more agile, adaptive and profitable. 

Governments receive more revenue and thrive off the dynamism that 

high-skilled migrants bring. Yet it is not only higher-skilled migrants 

that are vital. In the USA, unskilled migrants are an essential part of 

the construction and services sector. In the Middle East, the success 

of Dubai or other emirates and Qatar rests on over 90% of the labor 

force being skilled and unskilled migrants. 

“The European 

Union is the world’s 

largest experiment 

with visa-free 

labor migration.” 

Debunking migration myths 

If migrants play such a vital role, why is there so much concern? The 

first myth is that migrants take jobs and destroy economies. The truth 

is the opposite: migration makes economies more dynamic, creates 

jobs and sparks long-term growth. In the USA, migrants have been 

founders of companies such as Google, Intel, PayPal, eBay and 

Yahoo. In fact, skilled migrants account for over half the Silicon Valley 

start-ups and over half of patents, even though they are around 15% 

of the population. There have been three times as many immigrant 

Nobel laureates, National Academy of Science members and Academy 

Award film directors than native ones. Such anecdotal results 

are echoed systematically on a large scale. Research at the Federal 

Reserve Bank of San Francisco recently concluded that “immigrants 

expand the economy’s productive capacity by stimulating investment 

and promoting specialization… This produces efficiency gains and 

boosts income per worker.” Research on the net fiscal impact of the 

immigration of Polish, Czech and other migrants to the UK from the 

ten countries that joined the European Union in 2004 showed that the 

migrants contributed “significantly” more in taxes than they received 

in benefits and services. On a global scale, according to the World 

Bank, increasing migration equal to 3% of the workforce in developed 

countries between 2005 and 2025 would generate worldwide economic 

gains of USD 356 billion. Some economists predict that if 

borders were completely open and workers were allowed to go where 

they pleased, it would produce gains as high as USD 39 trillion for > 

continued on page 16 

Historical overview of migration flows 

The infographic below depicts a number of migratory trends throughout 

the 20th century. Both the source and target destination are shown. 

The reasons are varied, but economic, conflict and social migration were 

the primary drivers of these migratory trends. Source: BBC 

1918 –1919 

Eastern Europe to 

USA and Canada 

1918 

Britain to Australia, 

South Africa and 

New Zealand 

1939 –1940 

Russia to Siberia 

1940 

European Jews 

to USA 

1945 

Turkey to Germany 

1947 

India, Pakistan and 

Sri Lanka to UK 

1950 

Mexico and 

Central America 

to USA 

1950 –1960 

North Africa 

to France, 

Spain and Italy 

1950 –1960 

West Indies to UK 

1973 

Ugandan Asians to UK 

1975 

Vietnam to Malaysia, 

Australia and USA


MICROECONOMIES 

The Silicon Valley 

advantage 

 

 

 

TEXT Vivek Wadhwa, VP of innovation and research, Singularity University, Mountain View, CA 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

96% 

74% 

52%40% 

5.5%1.6% 

 

 

 

 

 

 

 

 

Silicon Valley 

New England 

 

 

 

 

 

 

 

 

 

 

 

S. California 

NY Metro 

United Kingdom 

 

 

 

 

 

52% 

 

 

 

 

 

 

 

 

 

 

Venture capital amount 

raised in 2012. Top five 

regions make up 53% 

of global VC funding 

of USD 42 bn. 

Source: Ernst & Young 

Vivek Wadhwa holds research positions 

at Singularity University and Duke University, 

among others, and is the author of 

“The Immigrant Exodus: Why America 

Is Losing the Global Race to Capture 

Entrepreneurial Talent.”

TOP SHOTS ON THE MOVE WHERE DO 

THEY COME FROM? WHERE DO THEY GO? 

At first glance, the individuals below appear to have nothing in common other than their impressive titles. Take a closer look. 

All of them are well or extremely well qualified and seven out of ten have a multinational and/or a multilingual background. 

With organizations becoming ever more global, managers with strong educations and cross-cultural networks 

are more mobile and in greater demand – than ever. Place of birth Place of work 

Photos: Bain & Co, Deutsche Bank, Newscast, Nokia, Stéphane de Bourgies, PepsiCo, Nestlé, ABB, Anheuser-Busch InBev ®, Coca-Cola 

BAIN & CO 

Orit Gadiesh, an Israeli-American 

corporate strategist and chairwoman of 

Bain & Company, holds degrees from The 

Hebrew University of Jerusalem and 

Harvard Business School. Through her work 

and her involvement in an array of international 

business organizations, Gadiesh 

has worked with hundreds of CEOs and 

senior executives on strategy development 

and, in particular, change management 

within corporations. She divides her time 

on client work between North America, 

Europe and Asia. 

DEUTSCHE BANK 

Anshuman Jain, a British citizen now 

living in London, is co-chairman of the 

Management Board of Deutsche Bank along 

with Jürgen Fitschen. Born in Jaipur, India, 

he studied economics at Sri Ram College of 

Commerce at Delhi University and business 

administration at the University of Massachusetts 

Amherst. At the helm of a genuinely 

global financial institution, Jain – a fluent 

English and Hindi speaker, with some 

German knowledge – is always on the move 

and used to operating across cultural and 

linguistic barriers. 

PRUDENTIAL 

Tidjane Thiam, a dual Ivorian and 

French citizen and CEO of Prudential plc 

since 2009, studied in France and has a 

background in advanced mathematics and 

physics. He started his professional career 

at McKinsey in Paris and New York before 

relocating to Côte d’Ivoire to become CEO 

and later chairman of the National Bureau 

for Technical Studies and Development; 

as Secretary of Planning and Development, 

he was also a cabinet minister. Thiam 

held senior positions at McKinsey and 

Aviva before joining Prudential in 2008. 

NOKIA/MICROSOFT 

Stephen Elop was born in Canada, and 

studied computer engineering and management 

at McMaster University before 

embarking on a management career in IT 

and telecommunications. Elop has held 

senior positions at several companies, 

including Macromedia, Adobe Systems and 

Microsoft. He was appointed Nokia’s first 

non-Finnish CEO in 2010, but moved 

back to Microsoft as Nokia Executive Vice 

President of Devices and Services when 

the latter acquired Nokia’s Devices and 

Services business in September 2013.

NESTLÉ 

Paul Bulcke, CEO of Nestlé S.A. since 

2008, may have stuck loyally to his employer 

since 1979, but his career has taken him 

to all corners of the globe. Born in Belgium, 

Bulcke has worked, or been responsible 

for markets, in places as diverse as Switzerland, 

Germany, Spain, Peru, Portugal, 

the Czech and Slovak Republics, the USA, 

Canada and the Caribbean. Unsurprisingly, 

Bulcke is something of a polyglot, speaking 

French, English, Spanish, Portuguese 

and German in addition to his native Dutch. 

RENAULT/NISSAN 

Carlos Ghosn, French-Lebanese-Brazilian 

manager and simultaneously chairman 

and CEO of Paris-based Renault and 

Japan-based Nissan, is a global citizen. 

Of Lebanese descent, Ghosn was born in 

Brazil but returned to Lebanon with his 

mother at the age of six. He then moved to 

Paris to study engineering, graduating 

from École Polytechnique in 1978. The first 

18 years of Ghosn’s career were spent at 

Michelin (in Brazil and the USA); he has 

been CEO at Nissan and Renault since 2001 

and 2005, respectively. 

AB INBEV 

Carlos Brito is CEO of Anheuser-Busch 

InBev, the leading global brewer and one 

of the world’s top five consumer products 

companies. A Brazilian citizen, Brito 

earned a degree in mechanical engineering 

from the Universidade Federal do Rio de 

Janeiro in Brazil and an MBA from Stanford 

University. He joined Anheuser-Busch 

InBev in 1989 and was appointed CEO 

in December 2005. Prior to joining the 

company, he held positions at Shell Oil 

and Daimler Benz. 

ABB 

Ulrich Spiesshofer, who holds a 

master’s in business administration and 

engineering and a PhD in economics from 

the University of Stuttgart, hails from 

Germany. He became CEO of the ABB Group – 

a world leader in power and automation 

technologies – in September 2013. Spiesshofer 

has worked in multiple jurisdictions, 

including Germany, Switzerland and 

Australia, and now runs a company with 

global revenues of nearly USD 40 billion, 

approximately 145,000 employees 

and operations in around 100 countries. 

PEPSICO 

Indra Nooyi, chairwoman and CEO of 

PepsiCo since 2006, is a US citizen, but was 

born in Madras (now Chennai), India. Nooyi 

received a bachelor’s in physics, chemistry 

and mathematics from Madras Christian 

College in 1974 and a master’s in public and 

private management from Yale School of 

Management in 1978. Before joining PepsiCo 

in 1994, Nooyi served, inter alia, as Senior 

Vice President of Strategy and Strategic 

Marketing for Asea Brown Boveri and 

Vice President and Director of Corporate 

Strategy & Planning at Motorola. 

THE COCA-COLA COMPANY 

Muhtar Kent, a New York-born Turkish- 

American, has been chairman and CEO 

of The Coca-Cola Company since 2009, 

having originally joined the firm in Atlanta 

in 1978. In the course of his career, he 

has held a variety of leadership positions, 

including General Manager of Coca-Cola 

Turkey and Central Asia, President of 

the East Central Europe Division and Senior 

Vice President of Coca-Cola International, 

with responsibility for 23 countries. He 

sits on numerous high-level international 

business committees.


“The core role that 

migrants play in 

economic development 

is often overwhelmed 

by defensive measures 

to keep migrants out.” 

the world economy over 25 years. There are, however, legitimate 

concerns about large-scale migration. The possibility of social dislocation 

is real. Just like globalization – a strong force for good in the 

world – the positive aspects are diffuse and often intangible, while 

the negative aspects bite hard and tangibly for a small group of people. 

The second myth is that migration destroys developing economies 

by siphoning talent away from the places that need it most. There is 

some truth to this. For example, 65% of university graduates from 

Morocco, 60% from Gambia, 25% from Iran and 10% from the Philippines 

leave their home country, usually to move to a developed 

economy. However, the so-called “brain drain” is mitigated twice over. 

First, when these countries become professional training centers, 

they can produce far more skilled laborers at home than they did 

before the “drain” began. The Philippines, for example, provides one 

of the largest sources of migrant nurses to developed economies. But 

while doing so, it now also has more nurses per capita in its domestic 

labor market than comparable countries and even some much 

richer ones, including Great Britain. Second, remittances (money sent 

home from migrant workers to their families and friends) from abroad 

are integral to many developing economies. Remittance payments lift 

people out of poverty. Their impact, if used for entrepreneurship or 

investment at home, is often many times the original value. In 2012, 

officially recorded remittance flows to developing countries reached 

an estimated USD 401 billion. For Tajikistan, these flows amount to 

almost half of GDP and for Liberia and Lesotho around 30%. If managed 

appropriately, with good governance and smart investments, the 

“brain drain” can become the “brain gain” for developing economies. 

Promoting “brain circulation” by which skilled migrants are able to 

return to their home countries and bring with them the technologies 

and investment opportunities derived from their migrant experiences 

can also play an important role in launching domestic growth, as 

Taiwan, Israel and Bangalore in India demonstrate. 

The bottom line 

In the future, it will become even more imperative to ensure a strong 

labor supply augmented by foreign workers. Globally, the population 

is aging. There were only 14 million people over the age of 80 living 

in 1950. There are well over 100 million today, and current projections 

indicate nearly 400 million people over 80 by 2050. With fertility collapsing 

to below replacement levels in all regions except Africa, rapidly 

rising dependency ratios and a decline in the OECD workforce 

from around 800 million to close to 600 million by 2050 is projected. 

The problem is particularly acute in Europe, North America and Japan. 

But the developing world will feel the pinch too; by 2050, some 20% 

of India’s population and a total of 31% of China’s are projected to 

be aged 65 or older. 

Migrants: a key component of the workforce in major developed markets 

Migrants are a vital part of the total population in a number of countries in the 

developed world. The large pies show what percentage of the entire populace are migrants. 

The smaller colored charts indicate the proportion that migrants make up within 

specific age groups. Source: UN DESA 

International migrant 

stock as a percentage 

of the nation’s overall 

population. 

14.3% 

12.4% 

USA 


Of the nation’s 25–29 age 

group, the percentage 

who are migrants. 







18.7% 22.7% 25.4% 

22.8% 25% 21.4%


Additional 

details on our 

map MODERN 

MIGRATION 

on page 8 

Reasons for migration 

The grounds for moving are many. But the main driver is 

economic, as high-skill migrants bring specialized 

talents, while lesser-skilled laborers fill short-term gaps. 

Conflict migration 

Source: Ian Goldin 

2 million 

Despite the fact that migration is a vital element in global development, 

there is no global organization up to the monumental task of assisting 

the flow of people across borders. International migration is the orphan 

among the alphabet soup of global governance organizations. The 

International Organization for Migration is not part of the United 

Nations and could be transformed to play a more active, treaty-based 

global role. A first task is to establish an agreed definition of migration 

and develop a global database, as there is no common statistical 

basis for analysis and to inform shared policies. The second objective 

is to develop rules that can assist migrants, not least with respect to 

pension portability, temporary work permits and basic rights. Migration 

has always been the key driver of human progress and dynamism. In 

the age of globalization, the rising barriers being erected to migrants 

pose a threat to economic growth and the sustainability of our economies 

and societies. Free migration, like totally free trade, remains a 

utopian prospect, even though within regions such as Europe this has 

proved workable. Greater attention needs to be given to the management 

of migration. As John Stuart Mill argued, we need to ensure 

that the real local and short-term social costs of migration do not 

 

Social migration 

Economic migration 

Student migration 

Other reasons 

2 million 

5 million 

3.5 million 

2.5 million 

28.9% 

11.9% 

Switzerland 

Germany 

35.2% 42.9% 43.9% 

17.1% 20.3% 22.4%

Chapter II 

TECHNOLOGY 

ENABLERS 

Mobile technology has radically changed the world over 

the past decade, with mobile penetration soaring, impacting 

banking, travel and many other key industries. 

Keeping cities moving 

page 20 

So far, yet so near 

page 24 

Innovation welcome 

in a USD 40-billion 

business 

page 26 

CANADA 

Mobile payment 

users by region 

THE INCREDIBLE RISE 

OF MOBILE BANKING 

USA 

North America 

3,502,000 

The total number of users of mobile payments rose 

by 55% between 2009 and 2010, to 109 million. 

The greatest number of mobile payment users is found 

in Asia Pacific, far ahead of any other region. 

MEXICO 

23.4 

Source: KPMG 

MOBILE PENETRATION ACROSS THE GLOBE 

The number of mobile subscriptions per 100 people 

increased by more than 60 between 2007 and 

2012 in countries such as the Russian Federation, 

Brazil, Saudi Arabia, Egypt, and Indonesia. 

Change in mobile subscriptions per 100 people 

in 2012 compared to 2007 

Latin America 

8,010,000 

> 60 40 – 60 2 0 – 40 < 2 0 

Source: UN, World Bank

13.9 

GLOBAL CROWDFUNDING 

VOLUME IN 2012 

The total volume of funds raised 

through crowdfunding grew by 

81% to reach USD 2.7 billion in 2012. 

In million USD 

North America 

1,606 

Europe 

945 

10 MOST CONGESTED CITIES 

Three Belgian cities rank among the 

ten most congested European and 

North American cities – a quite 

unenviable track record. In the USA, 

the two worst-affected cities are 

Los Angeles and San Francisco. Only 

commute trips made during peak 

hours, during the week, were used to 

compile this data. 

0.5 

1 

5 

10 

20 

Bilateral remittances estimates 

for 2011 using migrant stocks, 

host country incomes 

and origin country incomes 

in billion USD 

South America 

0.8 

Source: Statista/massolution 

Africa 

0.1 

Asia 

33 

Oceania 

76 

over 

the last 12 months 

BRUSSELS Belgium 85.4 

LONDON United Kingdom 81.7 

ANTWERP Belgium 76.7 

ROTTERDAM Netherlands 65.1 

LOS ANGELES USA 62.8 

PARIS France 60.0 

STUTTGART Germany 59.9 

COLOGNE Germany 56.8 

GHENT Belgium 54.8 

SAN FRANCISCO USA 53.5 

FLOWS OF INTERNATIONAL 

REMITTANCES 

Nearly a quarter of the total international 

remittances sent stem from 

the USA, while India and China are by 

far the largest remittance-receiving 

countries. 

Source: WorldBank 

Source: Inrix 

Western Europe 

7,127,000 

UNITED 

KINGDOM 

GERMANY 

FRANCE 

ITALY 

SPAIN 

CHINA 

JAPAN 

SAUDI 

ARABIA 

UAE 

INDIA 

HONG KONG 

PHILIPPINES 

 

62,828,000 

NIGERIA 

Total 46.4 

18.9 

Total 42.5 

AUSTRALIA 

Europe, 

Middle East and Africa 

27,091,000

GLOBAL INVESTOR 2.13 — 20 More and more of the world’s people are living in (sub-)urban settings. 

MASS TRANSIT 

Keeping 

cities 

moving 

This is stretching many mass transport systems to the breaking point. 

Sustainable transport expert Dario Hidalgo says governments need to rethink 

public transport, focusing on quality, safety and integration. 

INTERVIEW by Richard Hall


Guangzhou Specially 

marked BRT (bus rapid transit) 

lanes connect the city’s mass 

rapid transit stations, ensur - 

ing that there are practically 

no delays in getting riders 

to their destinations on time.


Richard Hall: How did you get into 

mass rapid transit (MRT) and bus rapid 

transit (BRT)? 

Dario Hidalgo: After completing a PhD in 

urban transport planning in 1997, I joined 

Mayor Enrique Peñalosa’s team and worked 

on planning the TransMilenio bus system 

in Bogotá. The government had initially wanted 

a metro, but it became clear that a BRT 

network could be built more quickly and at 

lower cost. It was part of a large-scale urban 

transformation in my home city and was 

an instant success. I have since been involved 

in more than 20 projects worldwide – 

including in cities in Mexico and others as 

diverse as Lima, Accra, Istanbul and Indore. 

The TransMilenio BRT project in Bogotá 

has become quite famous. Why? 

Dario Hidalgo: TransMilenio is a lowcost, 

high-impact system. The first phase 

(40 km) was completed in just three years 

(1998–2000). It captured international attention 

due to its high capacity – more than 

40,000 passengers per hour, per direction – 

and an innovative public-private partnership 

model. The city builds the infrastructure, and 

local entrepreneurs (currently seven groups 

with nearly 2,000 buses) own and operate 

 

Today the BRT is 106 km long and carries 

more than two million passengers a day. 

Its success helped mainstream the concept 

worldwide. Our database www.brtdata.org 

indicates that 150 cities have BRT and bus 

corridors; 115 of these have been created 

since 2000. 

Dario Hidalgo has spent the last 24 years helping local 

and national governments in Latin America, Asia and Africa 

plan sustainable public transport systems. He publishes 

regularly in academic journals and holds training courses 

worldwide. Dr. Hidalgo is based at NGO EMBARQ’s 

in Bogotá, Colombia. 

Can you describe some of the typical pitfalls 

you face when building a BRT network? 

Dario Hidalgo: Experience around the 

globe shows the great potential of BRT, but 

planning, financing and organizational difficulties 

should not be papered over. The important 

thing is not to rush into implementation 

until all the planning has been thought 

through. Also, every city is unique, so copy/ 

paste doesn’t work. Most of the obstacles 

are institutional rather than technical. Such 

projects are inherently complex as they 

involve aligning a baffling array of interests. 

Strong political leadership and well-crafted 

communications are essential. One of the 

big advantages of BRT systems is that they 

can frequently be realized within an elected 

leader’s term of office. 

A new report written by the Institute for 

Transportation and Development Policy and 

EMBARQ is titled “The Life and Death of 

Urban Highways.” Your thoughts? 

Dario Hidalgo: Traditionally, urban transport 

planning has been all about moving 

cars, not necessarily people. As a result, 

most cities in the world have focused on 

expanding road networks. The result has 

been appalling. Clearly, creating more roads 

does not solve congestion; it brings more 

cars to the streets. It’s like trying to fight 

obesity by expanding the size of our pants! 

Several cities – Seoul, San Francisco, 

Toronto, Vancouver – have actually begun 

removing urban highways and replacing 

them with public-transport infrastructure. 

We urgently need to reallocate funding from 

urban parking and highways to sustainable 

transport. 

Where are you currently involved in BRT 

projects? How important is it to be on site? 

Dario Hidalgo: We support sustainable 

mobility and urban development initiatives 

in Mexico, Brazil, Peru, Turkey, India and 

China. We also work with researchers from 

Chile, USA, Portugal and Australia via the 

ALC-BRT Centre of Excellence (www.brt.cl), 

and support 30 Latin American transit 

agencies in their quest for quality and 

integration (www.sibrtonline.org). On-site 

meetings are particularly important when 

it comes to convincing decision makers. 

Where are the biggest BRT projects today? 

Dario Hidalgo: The construction of a 

150 km BRT network in Rio de Janeiro in 

preparation for the FIFA World Cup and 

2016 Summer Olympics, and the expansion 

of Metrobús in Mexico City from 95 to 200 km 

are two notable examples. The introduction 

of BRT in Mumbai and Bangalore may be 

among the most challenging, and capacity 

enhancements in the saturated corridors of 

Bogotá and Istanbul will certainly be major 

undertakings. We expect around 30 cities 

to introduce BRT 

primarily in Asia – but also, in the near 

future, Africa. 

How is MRT/BRT changing mobility 

patterns in both the 

developed and developing world? 

Dario Hidalgo: We have observed a 

cultural shift in Europe and, increasingly, 

the USA. People used to aspire to live in a 

house in the suburbs and commute. Today, 

more and more people want to live in the 

city itself – in denser, mixed-use areas. 

We don’t know how this trend will evolve in 

“Urban transport planning 

has been all about moving cars, 

not necessarily people.”


1 

1 Bogotá A combination of pedestrian crossings, 

footbridges, cycle paths, roads and bus 

lanes ensures that commuters and other 

travelers can reach their destinations safely and 

efficiently, regardless of the mode they opt for. 

2 Guangzhou China’s bike-sharing 

programs are the biggest in the world. 

As in Hangzhou, there will also be well over 

100,000 bicycles provided for public 

sharing programs in Guangzhou by 2020. 

2 

Photo: Institute for Transportation & Development Policy 

the developing world, but mass transit planning 

provides an excellent opportunity to 

influence the future shape of cities. Places 

such as Copenhagen, Curitiba and Singapore 

show how successful strategies that 

dovetail land use and transport planning 

can be. We must adapt these models to fit 

the needs of rapidly emerging economies. 

This needs to happen fast before car-centric 

urban sprawl takes root. Interestingly, 

the Chinese cities of Wuhan and Hangzhou 

have set up the two largest bike-sharing 

programs in the world (90,000 and 60,000 

bicycles, respectively). Hangzhou plans to 

expand to 175,000 bikes by 2020. It’s a 

revolution on two wheels! China now also 

leads the world in metro systems, with 

Beijing and Shanghai already surpassing 

London as the longest networks. 

Public transport usage is very high in 

Latin America. In US cities, it accounts for 

just 3%–4% of urban trips. How do 

you see this evolving? 

Dario Hidalgo: Transit ridership is growing 

rapidly in the USA. More people are 

choosing urban lifestyles. In the major urban 

centers a culture of membership rather 

than ownership is emerging thanks to 

social networks and car-sharing programs. 

In Latin America, on the other hand, we see 

the opposite trend: a growing middle class 

is now able to own more cars and motorcycles, 

and public transport usage is declining 

in most cities. The key in Latin America is 

to improve service and safety, which may 

require subsidies, and to introduce congestion 

charging and parking management 

schemes. 

How do you see the future of MRT/BRT as 

cities expand and technology develops? 

Dario Hidalgo: Some of the key innovations 

are in vehicle technology. Trains are 

 

are catching up with cleaner propulsion 

technologies such as natural gas and hybrid 

electric. The overarching goal must be to 

create multimodal, integrated public-transport 

networks with “last mile” connectivity 

to onward transit services as well as car and 

bike sharing. Mobile user interfaces, which 

are improving all the time as smartphone 

penetration rises, play an increasingly 

important role here. Smart ticketing systems, 

including electronic purses, are likewise 

becoming available on mobile devices. I see 

these technologies being further integrated 

ing 

innovation turning everything on its head. 

Can you describe your most unusual 

MRT/BRT journeys? 

Dario Hidalgo: Crossing the Bosporus 

Strait and jumping on and off the fast and 

frequent Istanbul Metrobüs; gliding through 

The Strip in Las Vegas on a shiny golden 

bus-cum-tram; and rattling through hectic 

and historic Mexico City in a hybrid bus. 

My most surreal experience was sharing 

a train carriage with 700-plus people in 

Mumbai, which has the world’s highest


MOBILE CONNECTIONS 

So far, 

yet so near 

As mobile technologies increasingly facilitate Internet access from anywhere 

and at any time, a new economy is arising. It is not only reshaping the 

way people interact, work and learn, but also increasing productivity – bringing 

people, processes, data and things closer to build a smarter world. 

TEXT Uwe Neumann, Senior Equity Analyst, Credit Suisse 

In the 1990s, the PC was the “go-to” device to access the 

Internet. Not anymore. The rising penetration of mobile 

phones has placed the Internet in our pockets (mobile Internet). 

According to Ericsson’s mobility report, total global 

smartphone subscriptions hit the one-trillion mark in 2012, 

and will reach 4.5 trillion by the end of 2018, covering more 

than 60% of the world’s population. Making use of this immense 

potential means exploring new ways of communicating 

– possibly redefining the concept of mobility altogether. 

The next step is connecting people, processes, data and 

things. Cisco calls this the “Internet of Everything” and predicts 

that things connected to the Internet will surge from 

10 trillion to 50 trillion by 2020, essentially creating many 

new networks. This will likely reshape the way people work, 

interact and learn. It can, in turn, be capitalized on by companies 

globally through improving productivity, accessibility 

and visibility. Imagine that a medical procedure is not conducted 

in a doctor’s office anymore, but that a patient waiting 

for a check-up receives a scanner in the form of a pill 

delivered to the home. The pill is then swallowed and the 

information is automatically transferred to the treating doctor 

over the Internet. Here, for the patient, mobility means not 

having to travel while still receiving a service. According to 

Cisco, USD 2.5 trillion of value over the next ten years will 

likely be generated globally through higher labor efficiencies 

and improving collaboration. Technology trends, such as cloud 

and mobile computing, virtualization, Big Data and increased 

processing power, are driving this “Internet of Everything” 

economy. Given the huge opportunities of the market environment, 

CIOs worldwide have become more attuned to the 

mobile-first technologies, and are increasingly noting the 

critical importance of a mobility strategy to remain competitive 

in future. 

A mobility strategy ticks several boxes. One major box is 

enabling employees to better collaborate and use the exponential 

power of networks. Metcalfe’s Law – named after the 

founder of network equipment company 3Com, Robert Metcalfe 

– states that the value of a network increases proportionately 

to the square of the number of users. This means 

that people not only simply use the network, e.g. a virtual 

Internet meeting, to gain information about a company’s initiatives, 

but that a “network effect” can also be achieved, 

allowing people to quickly find the person best suited to 

provide advice/services for customers or process development. 

Other examples are virtual research and development 

teams, which increase the mobility of knowledge. Mobile 

virtual collaboration teams are enhancing and managing creativity, 

increasing knowledge-sharing, adding cultural aspects 

and improving organizational performance. However, 

this is not limited to large firms or the office workspace in 

general. Smaller companies (SMEs) can now gain access to 

information, education and advice from experts in highly 

specialized fields transcending geographic boundaries. Virtual 

platforms enable finding specialized employees easily 

and even find temps for one-off tasks, without having to 

provide a workspace. Some SMEs can even take shape in a 

virtual mobile Internet world, where like-minded people work 

together on a project without ever meeting in person. On a 

private basis, shared painting applications offer an opportunity 

to participate in a painting project where various painters


from around the world work on a single picture. While this 

does not (yet) replace meeting in person, it enables people 

to acquaint themselves with their counterparts and to lay the 

foundation for relationships. 

Another box that a successful firm’s mobility strategy 

needs to tick is the ability to share large digital files and 

provide intelligent digital work platforms to bridge the physical 

gap and share both work and ideas immediately on a 

global basis. Tele- and video-conferencing solutions should 

be accessible from a variety of mobile devices. According to 

IT research firm IDC, one interesting trend is the use of more 

web-based software solutions, such as Microsoft Lync, over 

traditional ones that require special hardware in cases such 

as video-conferencing. In this context, two IT infrastructure 

trends support the increasing use of software-defined mobility 

solutions. First there is the already well-known Bring Your 

Own Device (BYOD) trend. It enables an employee to stay 

connected with family and friends, while also with the company’s 

network by using their own mobile devices. Second 

is the Bring Your Own Application (BYOA) trend whereby 

employees can use cloud-based applications from external 

providers and the corporate network at the same time on 

their own devices. For example, a single department of a 

firm could decide to use a meeting application, such as 

CloudOn, GoToMeeting or Asana, downloaded from an external 

provider to arrange or attend meetings virtually, share 

files or collaborate on projects. This could turn out to be 

Collaboration, video, mobility drive value in the IoE economy 

In the Internet of Everything (IoE), there continues to be exponential 

increase in the connectivity between people, processes, data and things. By 

2020, the number of such connections is predicted to grow from 10 trillion 

to 50 trillion. Cisco foresees that an incredible USD 14.4 trillion will be at 

stake in the new IoE economy, as the ever-changing capabilities of collaboration, 

video and mobility will facilitate the sharing of insights and data 

while cutting costs, accelerating innovation and reducing time to market. 

Source: Cisco 

M2M 

USD 6.4 tn 

People-to-people 

Machine-to-machine 

Machine-to-people 

M2P 

USD 3.5 tn 

P2P 

USD 4.5 tn 

Uwe Neumann, CEFA, joined Credit Suisse Private 

Banking in 2000 as an equity analyst responsible 

for the telecom and technology sector. He has 

28 years of experience in the securities and banking 

business, including 18 years in research. He holds 

a Master in Economics from the University of 

Constance, Germany. 

much more efficient compared to the company’s own collaboration 

tools, which may not be specialized enough for 

the department’s own purposes. In addition, employees can 

even create their own applications, which they can use or 

share with others over the companies’ communication networks. 

However, these initiatives on the part of companies 

to encourage employees to take advantage of a highly connected 

virtual world require investments in IT infrastructure. 

Companies are thus setting up cloud-based and virtualized 

IT infrastructures that make their operating systems independent 

of the hardware. 

But there is also a flip side. The BYOD and BYOA 

business practices also leave companies vulnerable to 

cybercrime. With the proliferation of data communication in 

the virtual world, the number of cyberattacks is increasing 

exponentially. According to a United Nations report, more 

than USD 1 trillion was lost in cyberspace in 2008 due to 

online fraud, identity theft and loss of intellectual property 

globally. In addition, demand for privacy is rising, as not 

only can people’s online activities be tracked and monitored, 

but also their offline ones as a result of location 

signals from mobile devices. 

Swifter data processing, greater efficiency, independency 

of location, instant information retrieval and cost reductions 

are all benefits waiting to be reaped and are likely 

to outweigh the risks and disadvantages. The new opportunities 

allow us to become smarter in everything that we are 

doing together – from receiving medical care to developing 

ideas and realizing their benefits – be it in a virtual space or 

face-to-face in the real world when we move beyond the


Where brick-and-mortar retail banking 

doesn’t exist, smartphone technology 

and other modern systems are enabling 

those in emerging economies to access 

mobile financial services. 

Photo: BFG Images


MOBILE MONEY 

Innovation welcome 

in a USD 40-billion 

business 

Countless millions in poorer regions of the world depend on the cash transfers that 

migrant family members remit from abroad. But accessing those payments and obtaining 

other vital financial services have not always been easy. The situation is beginning 

to change, as banks and telecom operators are now establishing partnerships. 

TEXT Christine Schmid, Head of Global Financials Research, and Javier Lodeiro, Equity Research Analyst, Credit Suisse 

Migrants transferring remittances to their home countries have an 

important economic impact on many developing economies. As large 

sums are transferred through informal channels, the exact figure is 

USD 406 billion 

was sent home by migrants to developing countries in 2012, representing 

roughly the combined 2012 gross domestic product (GDP) 

 

to developing countries will grow to USD 534 billion by 2015. On 

average, each of the 231 million migrants sends USD 1,800 to her or 

his family per year. This cash flow is critical as many of these payments 

are made to poorer parts of the world population that struggle 

to make up for money shortfalls, especially in times of economic 

turbulence. As such, remittances exhibit a countercyclical behavior 

and contribute to reducing poverty. Often excluded from traditional 

forms of banking, the beneficiaries rely on such payments for their 

consumption of daily goods or financing projects. These days, classic 

remittances are supported by new service models and technological 

development, which thus helps to support economic growth. 

Owing to the increasing adoption of smartphones worldwide, and 

with Internet data traffic growing at high double-digit rates, traditional 

forms of banking such as branching and ATMs (automated 

teller machines) are no longer sufficient. As a result of modern technology, 

new companies are entering this line of services with an increasingly 

bright future. Modern forms of banking can supplement 

remittances and diversify a country’s financing needs. 

Over the last 15 years, growth in remittances has been fastest in 

Asia and the Pacific, followed by Africa, while the slowest growth has 

occurred in the Middle East. The graph on page 28 shows remittance 

growth in selected countries, highlighting a stable growth pattern. In 

total, the 2008 financial crisis had no significant impact on remit- 

10% of GDP in many 

countries, such as the Philippines, Bangladesh and Haiti. 

Today’s remittance service providers at risk 

Given the dependence on remittances in some countries, public awareness 

is focusing on the transaction costs of remittances. Accord- 

10% or 

USD 40 billion of funds remitted annually. In some countries, remittance 

fees can exceed 15% (e.g. in Japan it is 18%). The estimated annual 

remittance fees of USD 40 billion are a sizeable amount considering 

that in particular it is migrant families with modest backgrounds 

who rely on them. To maximize the impact of remittances on local 

economies, the G8 embarked on the “5x5” objective in 2009, aimed 

at reducing the cost of remittances by 5% p.a. within five years. >


TWO SUCCESSFUL FINANCIAL SERVICES MODELS 

DEVELOPED WORLD 

LENDING CLUB 

This company is active in offering a peer-to-peer social 

network in the USA that brings borrowers and investors 

together online and leaves the banks out of the picture. 

Lending Club checks the borrower’s request for a loan, 

based on the information submitted, and assigns the loan 

with respective interest payments if approved. The investors 

buy “Notes” which represent a portion of a loan. 

The company earns money by collecting small fees from 

both the borrower (one-time processing fee) and investors 

(service fee). For the low 10% of applications that are 

successfully granted a loan (thus implying a focus 

on creditworthy borrowers), the result is lower rates 

and quicker processing, while lenders obtain higher 

rates. As such, investors have earned an average net 

annualized return of over 9.5% since 2007. 

EMERGING WORLD 

M-PESA 

A highly successful example of how to succeed in a developing 

country with mobile money technology is Kenya’s 

M-PESA, which is used by 40% of the country’s adult population. 

The number of domestic transactions now exceeds 

Western Union’s transactions worldwide, making up 17% 

of Kenya’s GDP in 2011. The system is based on an idea 

from Vodafone whose affiliate Safaricom cooperated with 

the Central Bank of Kenya and successfully recognized the 

ability of mobile phones to lower the costs of transactions 

for poor people. Without even visiting a bank, customers 

are able to deposit cash, exchange it for electronic value 

at retail outlets such as gas stations, and withdraw or use 

it for payments if desired. The company has capitalized 

on strong latent demand for domestic remittances, a lack 

of different systems and competition, transparent pricing, 

a supportive banking regulator and its presence in rural 

areas, thereby quickly establishing a critical mass of 

customers. Crucially, these customers gained trust in the 

system very quickly due to the advanced technology of 

the company Rackspace, which used a satellite streaming 

strategy and experienced professionals to enable security, 

constant real-time transaction data and 24-hour customer 

support. M-PESA’s ability to make every transaction 

profitable distinguishes it from banks that often struggle 

to make money from small-value customers, without 

engaging in business relationships with them. 

Growth of remittances in selected countries Remittances from migrant family members abroad to those living in emerging countries have seen a steady increase 

over the last two decades. This rate accelerated, in some cases significantly, as we entered the new millennium. Remittances to Nigeria increased ninefold between 2004 and 2009, 

surpassing the amounts sent home to those in Pakistan, Bangladesh and, briefly, the Philippines. Source: World Bank 

Remittances of selected countries (USD bn) 

25 

Bangladesh Nigeria Pakistan Philippines 

20 

15 

10 

5 

0 

2012 

2011 

2010 

2009 

2008 

2007 

2006 

2005 

2004 

2003 

2002 

2001 

2000 

1999 

1998 

1997 

1996 

1995 

1994 

1993 

1992 

1991 

1990


Thus, the final savings in remittance fees over the five-year period 

would exceed USD 9 billion by 2014. 

 

costs have contracted by 9.8% since 2008 (and by 15.9% if special- 

 

savings achieved are definitely positive for the receivers, the targets 

have been missed so far, and more has to be done. As usual, competition 

is a key driver for lowering transaction fees. Mobile banking 

or modern banking models in general could reduce the transaction 

costs of remittances. New models could also be used to underwrite 

loans for projects and ultimately fund the economy using new technology 

to circumvent the lack of traditional banks. 

 

tial 

of mobile phones to capitalize on the “unbanked” population, reduce 

costs and facilitate remittance payments, there are a few pitfalls that 

need to be avoided. After all, mobile financial services do not have a 

high penetration in all growth markets yet. In many emerging economies 

such as Tanzania, Ghana and Kenya (see the box on M-PESA) 

people have never done business with a bank, but are using mobile 

financial services regularly. In countries such as Pakistan, Nigeria, 

Argentina and India there is still considerable potential to improve the 

use of mobile financial services. One difficulty lies in the fragmented 

structure and lack of convergence in the mobile technology systems. 

Other problems include the reluctance of banks to engage in partnerships 

with telecom operators, the unregulated nature of the business, 

network security, customer privacy, liability, fraud prevention and 

standardization. Hence, governments need to assist by creating a 

regulatory framework, and companies need to adapt their business 

models to their customers. 

Under these circumstances, it follows that traditional companies 

offering financial services such as banks are only partially key to ac- 

 

points in the right direction, a solo attempt by banks will not suffice 

to minimize costs. Instead, mobile network operators with the technological 

know-how to develop relevant services and systems should 

contribute to increasing the use of mobile devices for transacting 

remittances, and thus lower costs. Moreover, innovative attempts 

by companies to build on their clients’ Internet presence in order to 

evaluate their credit ratings help to generate additional sources of 

loans in developing countries. This can be especially fruitful where a 

large proportion of the population does not have access to banks and 

loans, but are avid users of new technologies. Similarly, in the case 

of developed markets, companies like Lending Club (see box) also 

aim at reducing transaction costs by omitting an intermediary financial 

institution. Last but not least, willingness among banks to engage in 

partnerships with mobile operators as seen by the Kenyan company 

M-PESA (see box) is also critical to ensuring the ongoing success of 

 

 

Christine Schmid CFA, is Head of Global Financials 

 

has covered Financials for 14 years and coordinates the 

 

 

 

Javier Lodeiro CFA, FRM 

 

insurance sector and US 

 

 

Additional 

details on our map 

TECHNOLOGY 

ENABLERS 

on page 18

CN 

Low Middle High 

Inequality of economic 

opportunity index 

No 

information 

Chapter III 

SOCIAL/POLITICAL 

DRIVERS 

INEQUALITY OF ECONOMIC OPPORTUNITY 

Countries with low inequality of economic opportunity, such 

as Norway, are those that have a higher degree of intergen - 

er ational or social mobility. Countries characterized by 

greater inequality of economic opportunity, such as Brazil, 

have a higher degree of income inequality. 

Source: IZA 

Countries with low inequality of economic opportunity have 

the highest social mobility. A rising number of university 

graduates choose to emigrate, among them many scientists. 

Moving ahead in Africa 

page 32 

(Un)equal 

opportunity 

page 36 

Managing 

migration 

page 38 

HOW WELL-EDUCATED ARE YOUR IMMIGRANTS? 

US 

46.9 CANADA 23.7 

CN US UK 

38.4 USA 5.0 

CA UK AU DE 

The proportion of recent migrants to OECD countries holding 

a university degree rose by 5 percentage points to 31% between 

2000 and 2010. Luxembourg, Denmark and the Netherlands 

benefited most from this trend. Among the native-born population 

the proportion increased 4 percentage points to 29%. 

IN 

University graduates as % of total, percentage-point change 2000–2010 

Recent immigrants 

Native born 

LUXEMBOURG 

DENMARK 

NETHERLANDS 

GERMANY 

AUSTRALIA 


CANADA 

HUNGARY 

AUSTRIA 

OECD AVERAGE 

USA 

NEW ZEALAND 

FRANCE 

NORWAY 

SWEDEN 

BELGIUM 

ITALY 

SPAIN 

PORTUGAL 

GREECE 

IRELAND 

FINLAND 

–10 –5 0 5 

10 15 20 

25 

TOP 10% VS. BOTTOM 10% 

After taxes and transfers, the richest 

10% of the population in OECD 

countries earned 9.8 times the 

income of the poorest 10% in 2010, 

with the largest gaps recorded 

in Mexico, Chile and the USA, and 

the lowest in Denmark, Finland and 

Belgium. 

COUNTRY 

COLOMBIA 

PERU 

Multiplier 

10.0 

5.0 

OECD AVERAGE 

AR 

PE CO FR 

ARGENTINA 

9.8 

CANADA 

8.9 

7.1 BRAZIL 8.3 

USA 

15.9 

US CA DE 

MEXICO 

28.5 

CHILE 

26.5 

Sources: Economist/OECD 

Source: OECD

CN 

UK 

US 

UK 

US 

Amount of 

immigrated scientists 

Native scientists 

going abroad 

% % 

Other 

origins 

Other 

destinations 

BRAIN TRADE 

Switzerland has the highest percentage 

of immigrant scientists. More 

than half of its researchers are 

non-Swiss, a large proportion being 

German. On the other hand, a third 

of the Swiss scientists emigrate, 

with the USA and Germany being their 

main destinations. On the other 

extreme, Japan was the most insular 

country surveyed, exchanging the 

least scientific talent with the rest of 

the world. 

US UK DE 

37.6 SWEDEN 13.9 

RU DE 

US CA AU 

32.9 UNITED KINGDOM 25.1 

IT DE 

UK US 

21.8 DENMARK 13.3 

DE 

US UK DE 

27.7 NETHERLANDS 26.4 

IT DE 

FR US UK 

18.2 BELGIUM 21.7 

IT FR DE 

US CH UK 

23.2 GERMANY 23.3 

US DE 

56.7 SWITZERLAND 33.1 

DE 

US UK CA 

17.3 FRANCE 13.2 

IT 

US DE UK FR 

7.3 SPAIN 8.4 

US UK FR DE 

ITALY 16.2 

Source: IEEE Spectrum 

RUSSIAN FEDERATION 

IT 

FR 

AR 

3.0 

ES DE FR 

INDIA 

US 

39.8 

CHINA 

SOUTH KOREA 

5.0 JAPAN 3.1 

KR CN 

45.5 AUSTRALIA 18.3 

13.1 

15.1 

13.6 

IRELAND 

9.1 


10.0 

6.0 6.1 

5.3 5.4 5.6 

DENMARK 

NORWAY 

SWEDEN 

FINLAND 

BELGIUM 

NETHERLANDS 

6.9 

GERMANY 

6.7 

HUNGARY 

6.0 

POLAND 

7.7 

FRANCE 

7.2 

SPAIN 

PORTUGAL 

9.3 

ITALY 

10.2 

10.8 10.7 10.7 

8.9 

8.0 

GREECE 

TURKEY 

ISRAEL 

AUSTRALIA 

NEW ZEALAND 

JAPAN 

SOUTH KOREA


SOCIAL MOBILITY 

Moving 

ahead in 

Africa 

Education is often seen as playing a crucial role in improving social mobility and raising 

incomes. However, these remain elusive goals in modern sub-Saharan Africa, which cannot yet 

guarantee the supply of talent it needs to industrialize nor fully absorb the talent it produces. 

Pedro Conceição reflects on the paradox of mobility and educational attainment in Africa. 

TEXT Pedro Conceição, chief economist, regional bureau for Africa, United Nations Development Programme, New York


Malawi Phoya, an author and blogger, 

takes a few minutes out to relax in his 

office in the center of the city in Blantyre.


 

drop out of primary school.” 

Giselle Weiss: Broadly speaking, how 

would you characterize the educational 

landscape across Africa? 

Pedro Conceição: First off, it’s very 

important to recognize the economic progress 

that has been achieved across the 

continent since the turn of the millennium. 

From the mid-1970s until around 2000, 

economic performance in Africa (and here 

I mean sub-Saharan Africa) was terrible. 

In fact, for many years, per capita growth 

was actually negative. Along with the 

resurgence in economic growth since about 

2000, the share of people living on less 

than a dollar a day has been going down, 

quite rapidly. And education, too, has 

been improving fast. 

How do you measure that ? 

Pedro Conceição: Around 1990, which 

is the benchmark year for the Millennium 

Development Goals (MDGs – something we 

use a lot at the UN to measure progress), 

about half of the population of school 

age was not enrolled in either primary or 

secondary school. The figure for enrollees 

is now close to 80%. The MDG is to get 

to 100% enrollment in primary education 

by 2015. We are unlikely to meet that 

target. But you can see that the progress 

has been dramatic, especially in the 

context of rapid population growth. That 

creates huge pressure to increase educational 

opportunities. 

According to the UNDP’s Human Development 

Index (HDI), sub-Saharan African 

countries actually come out on top with 

respect to speed (not level) of progress 

based on indicators of income, education 

and health. But you’ve also said Africa 

is the most unequal region in the world. 

Pedro Conceição: When we look at the 

developmental challenges in Africa, we tend 

to focus on extreme poverty. What is less 

emphasized is the level of inequality in the 

distribution not only of income, but also 

education and health. In other words, a very 

poor child in Africa is much less likely to 

get to a school and to be healthy than a child 

from even a middle-income family. That is 

true everywhere, obviously, but it’s much 

more accentuated in Africa. When we 

adjust the HDI (which is just an average) 

to account for inequality, Africa takes 

the largest hit. 

How does that affect social 

mobility in everyday life? 

Pedro Conceição: About 80% of the 

people who are employed in Africa are 

in what is called vulnerable employment. 

They are working, but they are working 

for their family, for their farm, for their own 

consumption – activities that do not necessarily 

pay a wage. If you break this down 

between men and women, you find that 

85% of women in Africa work in vulnerable 

employment compared to 70% for men. 

Moreover, the literacy rate for women is 

about 65% compared to about 75% for men. 

This is particularly troublesome because 

we know that education of girls and women 

is very effective in driving many developmental 

outcomes. 

A companion article to this interview states 

that, in the industrialized West, education 

is the single most important determinant of 

an individual’s earnings prospects. Is that 

also true of Africa? 

Pedro Conceição: Things are changing a 

little bit in parts of the developed world 

now as a result of the financial crisis. But in 

general, in a country like the USA, the 

higher the level of education, the higher the 

income and level of employment. In Africa 

we actually don’t see that everywhere. 

What we see in some countries – and here 

statistics are very poor, and a challenge – 

is that the higher the level of education, the 

higher the level of unemployment. 

Why? 

Pedro Conceição: The structure of the 

economy of those countries is not yet 

able to fully absorb highly educated people. 

Of course, it varies from place to place. 

For example, in cities like Nairobi, where 

you have a very sophisticated financial 

sector emerging, and companies building 

around information and communication 

technology (ICT), you can indeed absorb 

skilled workers. In fact, countries where 

opportunities exist in natural gas and oil 

have a dearth of the engineers, lawyers, 

accountants and financial analysts they will 

need to fully exploit these opportunities. 

At the same time, two-thirds of the labor 

force in Africa still live in rural areas. 

Pedro Conceição: Yes, and there the 

challenge is very different. Unlike Asia and 

Latin America, Africa has not had a green 

revolution. Agricultural productivity levels 

are still very low. 

The American economist Robert Reich 

has asked, “If we had a strategy designed 

to increase jobs and wages, what would 

it look like?” How would you answer that 

question for Africa in the context of mobility 

and educational attainment ? 

Pedro Conceição: I go back to this point 

about agricultural productivity because the 

Pedro Conceição is Chief Economist at the United Nations Development Programme’s 

(UNDP) Regional Bureau for Africa. He previously served as Director of UNDP 

Development Studies. He is a specialist in global public goods and on the economics 

of technological innovation and development.


1 

Additional 

details on our 

map SOCIAL 

AND POLITICAL 

DRIVERS 

on page 30 

Photos: Dawin Meckel, Ostkreuz (2) / Michel Gounot, Godong, Corbis 

benefits would increase farmers’ income, 

reduce prices of food staples, and in crease 

the purchasing power of people in both 

rural and urban areas. This could trigger 

demand for nonagricultural activities in 

rural areas, which would be a stepping 

stone toward industrialization. Africa has 

been deindustrializing. So investing in 

agricultural productivity is critical, as well 

as removing barriers to entrepreneurship 

and creating new business opportunities. 

And making the most of the technological 

opportunities that do exist, like ICT. 

Among young people who do have 

oppor tunities, to what extent have returns 

on educational investment in Africa 

been affected by brain drain? 

Pedro Conceição: It’s a challenge. But 

there are now efforts by some countries 

to draw on the diaspora through remittances 

and sometimes by endeavoring to 

attract professionals in medicine or finance 

or law to come home. 

What are the opportunities for and barriers 

to the mobility of talent, both within 

and between African countries, and abroad? 

Pedro Conceição: We are not yet there 

at all. In fact, enhancing regional integration 

in Africa is a big focus of attention. For 

example, intra-African trade is very low – 

below 10%. The figure for the European 

Union is much higher – close to 70%. And 

that is just for goods, which are much easier 

to move than people. I was recently in 

Maputo, in Mozambique, which is still one 

of the poorest countries in the world, but it 

is having a commodity boom in natural gas 

and coal. Companies there need people 

and skills that are not available. As a result, 

workers are coming from outside the 

continent, less so from other countries in 

Africa. In general, moving around Africa 

is difficult everywhere. 

What are the challenges to creating 

greater mobility through education? 

Pedro Conceição: The key challenge is 

to ensure that children master basic literacy 

and numeracy skills. For this to happen, we 

have to avoid children dropping out of 

school. In Africa, two out of five students 

drop out of primary school. We also have 

to focus on the quality of the education 

that is provided, not just in basic skills, but 

also in agriculture and new technologies. 

Could we come back to this issue 

of Africa and industrialization? 

Pedro Conceição: Africa is at an advantage 

when it comes to industrialization 

because salaries are very low. In fact, if 

you look at labor costs alone, Africa could 

compete with China, Bangladesh, and 

many countries in East and Southeast 

Asia. But industrial activities are being 

squeezed between nonproductive agricultural 

expansion and low-value-added 

services. Moreover, the problem of indirect 

costs – such as good roads and a stable 

power supply – makes it very tough 

for manufacturing to progress in Africa. 

Yet it must progress to create the 

high- or even decent-paying jobs that 

it needs to move ahead. 

2 

1 Sokouraba, Burkina Faso 

Open learning: an adult literacy class pays 

close attention to their instructor. 

2 Lilongwe, Malawi A doctor is at work 

examining specimens under a microscope in 

the parasitology lab at a local hospital.

The golden rule 

Inequality lowers mobility. In "equal" countries like Denmark, 

children`s prospects do not depend on their parents` standing. 

In contrast, in the United Kingdom, high inequality 

shapes opportunity at both ends of the income ladder. 

Source: Miles Corak, in The Economics of Inequality, Poverty and Discrimination in the 21st Century (ABC-CLIO, 2013), 

and Tom Hertz et al., B. E. Journal of Economic Analysis and Policy, vol. 7, pp. 1–46 (2007). 

0.5 

1 

Association 

between parent 

and child earnings 

USA 

Italy 


0.4 

France 

0.3 

Sweden 

Japan 

Germany 

New Zealand 

Canada 

Australia 

0.2 

Finland 

0.1 

Norway 

Denmark 

2 

Association 

between parent and 

child years of schooling 

0.1 0.2 0.3 0.4 0.5 0.6 

1_The vertical axis is the strength of the relationship between parent and child earnings: as you move from bottom to top, the lower the degree of 

income mobility across the generations. 2_The horizontal axis is the strength of the tie between parent and child years of education (i.e. how much higher 

a child’s education is for each extra year of parental education). As you move from left to right there is less education mobility across the generations.


INTERGENERATIONAL MOBILITY 

(Un)equal 

opportunity 

Education is the single most important determinant of an individual’s 

earnings prospects, says Miles Corak, especially in this era of 

increased globalization and technological change. Income gaps within 

countries make a good start in life all the more important. 

TEXT Miles Corak, economist, Graduate School of Public and International Affairs, University of Ottawa 

In the USA and the United Kingdom, where income inequality was 

the greatest among rich countries a generation ago, about 50% of 

the earnings advantage of relatively well-to-do parents is passed on 

to their children. The advantages of birth, or for that matter the disadvantages, 

are similar in Italy and France, where the level of earnings 

inequality is comparable, but much less in Finland, Norway and Denmark, 

where labor market outcomes are not as polarized. 

In this relative, intergenerational sense, earnings mobility is something 

that citizens of all the rich countries value. It speaks for equality 

of opportunity, and the notion that children can grow up to become 

all that they can be. Talents and energies, not the happenstance of 

birth, ultimately determine life prospects. 

Systems play a major role too 

between schooling levels across the generations is barely noticeable. 

The OECD has gone so far as to state that “the United States is one 

of only three OECD countries that on average spend less on students 

from disadvantaged backgrounds than on other students.” Education 

is the key to one’s earnings prospects. This is all the more true in an 

era of increased globalization and technological change. Those with 

the right skills have managed to ride this wave of change that has 

affected all of the rich countries. As a result, income gaps have grown 

within countries, making it all the more important for children to have 

a good start in life. The best-educated parents have more resources 

and incentives to invest in the future prospects of their children. But 

where inequality has grown the most, education mobility is the lowest, 

 

Photo: iStockphoto 

And while intergenerational earnings mobility is not the result of any 

one public policy, cultural value or labor market institution, the nature 

and quality of schooling certainly play a central role in offering both 

an escalator to the top for those from disadvantaged backgrounds, 

and a trampoline that preserves the status of the advantaged. 

Affordable, high-quality and accessible schooling from the early 

years onward is surely the most significant gateway to higher incomes 

for children born to lower-income parents. But, at the same time, an 

education system with early tracking, varying quality and selective 

access preserves existing socioeconomic inequalities. It is no surprise 

that earnings mobility across the generations varies to such a 

significant degree across the OECD countries: these countries have 

very different education systems that are associated with differences 

in education mobility. 

In the UK, a child with university-educated parents is virtually assured 

not to be a high school dropout. Every extra year of parental 

schooling is associated on average with six tenths of an extra year 

for the child. But in Finland, Norway and Denmark, the association 

Miles Corak is a full professor at the University of Ottawa, working on social 

mobility, inequality and social policy in the rich countries. You can learn more 

about his research at milescorak.com or on Twitter@MilesCorak.


Collingwood Estate, in East London’s Whitechapel 

district. It has a distinctly multi 

home to many new immigrants and asylum seekers. 

Photo: Stuart Franklin/Magnum Photos


MOBILITY POLICY 

Managing 

migration 

Around the world, nations are only too aware of the strategic importance of labor 

mobility, as well as its benefits and the obstacles to achieving it. Reliance 

on migrants, both skilled and unskilled, is a complex proposition in the context of 

fragile domestic economies, no matter how sensible it seems. Martina Lubyová 

reviews some of the major policy trends in managing migration and their implications. 

TEXT Martina Lubyová, director, Institute of Forecasting, Slovak Academy of Sciences, Bratislava 

Immigration policies run in cycles. In the 19th century and early 20th 

century, the USA generally encouraged immigration, not least to 

settle the West and to build the railroads, but became more selective 

after 1920. Similarly, during the UK’s period of rapid expansion during 

the 1950s and 1960s, New Commonwealth immigrants from metal 

workers to doctors could enter and stay in the country at will until the 

Commonwealth Immigrants Act of 1962 ushered in an era of ever 

greater restriction. Today, as labor becomes increasingly mobile, most 

national immigration policies are geared toward managing migrant 

flows with the primary goal of securing economic growth. 

The OECD’s International Migration Outlook 2013 observes that, 

in recent years, migration policies have tended to follow broader labor 

market (and, to a lesser extent, demographic) objectives. Since the 

1990s, policies on both sides of the Atlantic have been tested by 

economic booms and busts, new patterns of movement, post-9/11 

concerns about terrorism and recently the Arab Spring. Many countries 

are currently in the process of fundamentally revising immigration 

legislation in response to these developments. 

When a domestic population is aging, declining or inactive – here, 

the European Union, the USA and Russia are prominent examples – 

bringing in foreign workers provides much-needed hands. Governments 

everywhere aspire in particular to attract skilled labor to enhance 

productivity. Two major policies employed by governments to 

attract skilled labor are points-based systems and quotas. For example, 

a special skilled-worker visa program created in 1990 called 

H-1B is credited with fueling the information technology boom in the 

USA. The flip side of government strategizing is the needs and ambitions 

of individuals. Naturally, mass migration flows are also a perpetual 

feature of armed conflicts and humanitarian crises worldwide. 

But, according to the UN Population Fund, fueled by globalization, 

economic migrants are the world’s fastest-growing group of migrants. 

Policies track the labor market 

 

of the recession, with a tendency toward greater stringency. In Australia, 

Canada and the UK, for example, recruitment procedures for skilled 

migrants have been made more selective. The UK especially, where 

net migration (the difference between immigration and emigration) 

peaked in 2010 at 252,000, has increased funds requirements for all 

migrants and restricted work placements and permit duration for students. 

In the USA, an effort to overhaul the country’s immigration 

rules – including cutting red tape for employers and easing the path 

to citizenship for America’s 11 million undocumented immigrants – has, 

of this writing, stalled in the House of Representatives. 

To address issues related to the EU’s labor shortages and aging 

population, in 2009 the European Parliament passed the so-called 

Blue Card Directive, which aims to fast-track and harmonize the 

procurement of work permits for highly skilled non-EU citizens. Neither 

a points-based nor a quota system, Blue Cards are contracts 

of limited duration, though they can be extended. Not all EU states 

have implemented the Directive, though those that have include Germany, 

the Slovak Republic and Hungary, which are all moving to > 

continued on page 42


Home may be where the heart is, 

but for one family it’s a long way 

from where the work is 

GUIZHOU 

CHINA 

1,850 KM 

SHANGHAI 

GUIZHOU 

PROVINCE 

Photos: Patrick Zachmann/Magnum Photos


SHANGHAI 

The divided family Zhu Qi Yong and his wife Wang 

Gui Qin are migrant workers living in the poor area of 

Pudong in Shanghai – 1,850 kilometers separate them 

from their children, who live with their grandparents in 

their native village Xin Zhou Zen in Guizhou Province. 

To provide for their family, they cook in their tiny 

apartment for other migrant workers laboring on big 

construction sites. They deliver the meals directly to 

the construction site. Their two sons, seven-year-old Zhu 

Hai Xing and five-year-old Zhu Hai Nan, see their 

parents just once a year when they return home for two 

weeks during the Chinese Spring Festival.


“Most national 

immi gration policies 

are geared toward 

managing migrant 

 

goal of securing 

economic growth.” 

attract new skilled migrants. Indeed, the German government announced 

in July 2013 that it had already issued 8,879 cards. 

Not all migration takes place between nations. Especially in large, 

emerging market countries where the level of local development 

dictates job opportunities and needs, policies reflect the efforts of 

governments to direct the flow of labor from region to region. In 

China, for example, the “hukou” (household registration) system persists 

as a means of pumping low-cost rural labor into the country’s 

booming urban economies. However, securing the social rights of 

migrant workers and their integration remains a challenge. Ongoing 

talk of reform has as of yet produced no concrete results. In India, 

the Mahatma Gandhi National Rural Employment Guarantee Act, 

passed in 2005, is intended in part to stem “distress” migration to 

cities by promising 100 days of minimum wage employment to a third 

of India’s rural households. 

legal residence and working status, it does not provide access to 

social benefits or insurance. 

Owing to the dire state of their economies, countries such as Spain, 

Greece and Portugal have reduced their budgets for measures aimed 

at promoting labor market integration of migrants. At the same time, 

in 2011 and 2012, Spain enacted new measures aimed at providing 

vocational training to the unemployed who had lost their benefits, not 

explicitly for, but including migrants. Greece lowered the number of 

proof-of-work days required for permit renewal from 200 to 120 per 

year, and extended voting rights to migrants. In the face of a continuing 

weak labor market, Portugal’s new National Integration Plan 

promotes rights and training for immigrants. 

In 2011, Denmark reversed its decade-long trend toward stricter 

immigration laws. Among other things, the government eased family 

reunification rules. Moreover, changes to the Immigration Act of 1999 

now entitle immigrants to social assistance from the moment they 

arrive in Denmark, and discourage residential segregation. An initiative 

titled “We Need Everyone,” rolled out in 2012, targets immigrants 

struggling to find a job due to personal or social problems. 

Today, migration policies are a tool for addressing the economic 

and social challenges of the globalizing world. Developed countries 

attract migrants to boost economic growth or to mitigate the consequences 

of population aging and decline. Developing countries 

that cannot generate sufficient job opportunities use emigration as 

a valve for excess labor or as a source of remittances. While today 

migration policies are primarily governed by immediate economic 

concerns, their long-term consequences will mainly concern the 

social sphere. Successful integration of foreign populations and 

building inclusive multicultural societies should thus be a priority of 

 

 

Mitigating social pressures relating to migration 

Whatever its impulse or manifestation, labor migration entails benefits 

as well as costs for the receiving and sending countries (see the 

article by Ian Goldin in this issue). As a result, the national migration 

policies of developed countries are often governed by their integration 

agendas. Although these agendas differ, the Scandinavian countries 

represent one distinct group that generally offers open, publicly supported 

and relatively generous schemes aimed at integrating foreign 

residents into their societies. The United Kingdom, the Netherlands, 

Japan and the USA, in contrast, opt for more restrictive schemes 

characterized by limited migrant entitlements and a shift of the costs 

and responsibility for integration to migrants themselves. 

So, too, does Russia, whose economy depends on migrant workers. 

Most immigrants come from the former Soviet republics, which 

have a visa-free travel regime with the Russian Federation. Yet the 

majority of immigrants must have a work permit, for which there is a 

quota. Many migrants thus end up in the shadow economy. In 2010 

the Russian authorities introduced so-called patents for illegal migrant 

workers who work for private households, primarily as gardeners, 

drivers, cooks and housemaids. While the purchase of a patent grants 

is Director of the Institute of Forecast- 

 

and Associated Fellow at CERGE-EI in Prague. She 

com pleted her PhD at CERGE-EI in 2002 and worked at 

the International Labor Organization’s Sub-regional 

 

and Central Asia. She is a co-author of the OECD’s 

International Migration Outlook 2013.


Photo: Caro/Muhs/Keystone 

n-Friedrichshain, the new S-n-Ostkreuz 

concourse. To cater for the growing number of 

 

upgrading its current infrastructure.

75% 50–75% 0–50% 

Percentage of population living in urban 

areas exceeding 100,000 people 

Chapter IV 

THE FUTURE 

OF MOBILITY 

2030 — AN URBAN WORLD? 

By 2030, 92% of French, 91% of Brazilians 

and 87% of Americans will live in urban 

areas. The corresponding figures in China 

and India will only reach 62% and 40% 

respectively. 

Source: UNICEF 

Global mobility will continue to rise in the coming decades, 

creating millions of jobs and generating more air passenger 

traffic. More people will also move to urban areas. 

New mobility models needed 

page 46 

How ideas spread 

page 50 

The China 

travel surge 

page 52 

EMPLOYMENT GROWTH IN THE T&T SECTOR 

The global travel and tourism (T&T) sector today employs nearly 

100 million people, representing 3% of all employment. When 

indirect jobs are taken into account, the industry contributes to 

around 1 in 11 jobs. These figures are likely to rise further, with 

approximately 66 million direct jobs set to be created worldwide 

by 2022, with Asia benefiting most. 

USA 

332M URBAN POPULATION 

87% URBAN 

MEXICO 

105M URBAN 

POPULATION 

83% URBAN 

USA = 1,139 KM 

Regional contribution of the global travel and tourism sector’s total 

employment growth between 2012 and 2022, in thousands of jobs 

SOUTHEAST 

ASIA 

SOUTH ASIA 

OCEANIA 289 

7,348 

9,820 

OTHER 

6,580 

EUROPE 

2,437 

4,709 

NORTH 

AMERICA 

23,947 

4,513 

465 

1,413 

4,513 

NORTHEAST 

ASIA 

LATIN 

AMERICA 

1,689 

CARIBBEAN 

MIDDLE EAST 

NORTH AFRICA 

SUB-SAHARAN 

AFRICA 

Countries forecast to have 

the most developed high-speed 

train lines in 2025 

HIGH-SPEED TRAIN LINES 

China, Japan and Spain have the 

densest high-speed rail networks in use 

today – lines where trains can travel 

at more than 250 kilometers per hour. 

In 2025, the number of high-speed lines 

is forecast to have more than doubled 

worldwide to 51,677 kilometers. 

BRAZIL 

198M URBAN 

POPULATION 

91% URBAN 

Source: Oxford Economics 

Worldwide high-speed train lines in 2013, 

in kilometers 

IN OPERATION = 21,365 km 

UNDER CONSTRUCTION = 13,964 km 

PLANNED = 16,347 km 

FORECAST TO BE OPERATIONAL IN 

2025 = 51,677 km 

Source: UIC

EVOLUTION OF AIR PASSENGER TRAFFIC FLOWS BETWEEN MAJOR DESTINATIONS 

World air passenger traffic is forecast to annually grow by 5% between 2011 and 2031, with the greatest 

increase in air passenger flows to take place within South Asia, as well as between South Asia and Southeast 

Asia during these two decades. 

Source: ICAST, India 

PORTUGAL = 1,006 KM 

SPAIN = 5,525 KM 

FRANCE = 5,200 KM 

GERMANY = 2,257 KM 

ITALY = 1,318 KM 

SOUTH ASIAN FLOW 

in South Asia 524% 

from Southeast Asia 417% 

from Europe 320% 

from Middle East 306% 

SOUTHEAST ASIAN FLOW 

in Southeast Asia 334% 

from China 281% 

from Africa 285% 

MIDDLE EAST FLOW 

from Africa 285% 

SOUTH AMERICAN FLOW 

in South America 280% 

SWEDEN = 750 KM 

TURKEY = 2,805 KM 

CHINESE FLOW 

in China 281% 

RUSSIA 

99M URBAN 

POPULATION 

77% URBAN 

FRANCE 

61M URBAN 

POPULATION 

92% URBAN 

TURKEY 

70M URBAN 

POPULATION 

78% URBAN 

IRAN 

72M URBAN 

POPULATION 

80% URBAN 

PAKISTAN 

121M URBAN 

POPULATION 

46% URBAN 

CHINA 


62% URBAN 

JAPAN 

86M URBAN 

POPULATION 

73% URBAN 

JAPAN = 3,622 KM 

CHINA = 22,619 KM 

NIGERIA 

144M URBAN 

POPULATION 

64% URBAN 

INDIA 


40% URBAN 

PHILIPPINES 

73M URBAN 

POPULATION 

58% URBAN 

INDONESIA 

146M URBAN 

POPULATION 

54% URBAN 

INTERNATIONAL TOURISM BY REGION OF DESTINATION 

In 2012, international tourist arrivals exceeded the 1-billion mark globally 

for the first time ever, up from 940 million in 2010. Europe will remain the most 

visited region over the next decades, though Asia Pacific will be catching up. 

International tourist arrivals received (in million) 

AFRICA 

MIDDLE EAST 

AMERICAS 

ASIA PACIFIC 

EUROPE 

2010 2030 

50.3 

60.9 

134 

149 

7.4 % 

8.2 % 

149.7 248 

13.7 % 

204 

535 

29.6 % 

475.3 744 41.1 % 

Source: UNWTO


URBAN CRAWL 

new 

mobility 

models 

needed 

The appeal of cities is unstoppable, and half the world’s population now lives in urban surroundings. 

Traffic in some cities regularly slows to a crawl, while noise and air pollution reduce the quality 

of life. With more and more people crowding themselves into a limited space, existing road and 

rail links are impeding the expansion of capacities. The situation calls for new solutions. 

TEXT Thomas Rühl, Head of Swiss Regional Research, and Andrea Schnell, Research Analyst, Credit Suisse


Developing into an industrial center has transformed Shenzhen 

into China’s most densely populated city. The number of private cars 

has risen from 1 million to 2.25 million in the last six years alone. 

According to the IBM Commuter Pain Index, only Mexico City is less 

commuter-friendly. The young Asian metropolis is a good example of 

the main problem currently afflicting large cities: jobs in the services 

sector are primarily being created in the center and at transportation 

hubs, while housing is largely provided in the surrounding agglomeration. 

The capacities of the transportation infrastructure are unable 

to keep pace with the enormous growth of the population and commuter 

numbers so that traffic congestion and delays are the order of 

the day. Alongside the urban sprawl an “urban crawl” is emerging as 

commuters and goods move at a snail’s pace. 

Cities as melting pots of ideas and places for the efficient exchange 

of knowledge are thus forfeiting their economic strength, while emissions, 

air pollution, noise and accidents reduce the quality of life of 

the inhabitants. Time losses throw a monkey wrench into the works 

of cities and impede economic growth. According to Texas A & M, the 

average commuter in Washington D.C. loses 67 hours a year sitting 

in traffic jams, with corresponding setbacks in terms of recreation, 

consumption and working time. Few cities were laid out for major growth 

at the outset. New York City is an exception: the Commissioner’s Plan 

of 1811 gave Manhattan its characteristic street pattern – the visionary 

basis for subsequent growth. Cities with medieval structures – such 

as the large European cities – were never planned for any similar type 

of growth. Capacity expansions are considerably more difficult owing 

to the lack of space. 

The “smart” city 

The example of Masdar City in Abu Dhabi is an attempt to plan a 

climate-neutral and mobility-enhanced city in the open countryside. 

As well as the revolutionary supply of energy from renewable sources, 

the city was originally planned to be completely car-free. Mobility was 

to be ensured largely through public transportation. However, the 

introduction of personal driverless “podcars” has now been dismissed 

and replaced by electric vehicles. This way, the different mobility needs 

of the 50,000 or so planned inhabitants and around 60,000 additional 

commuters are to be met. The approach adopted by Masdar 

City serves to illustrate both the possibilities and technical and financial 

limitations of mobility planning. 

The ideal planned city has a secure, reliable, low-emission and 

comfortable transportation system for passengers and goods, offering 

maximum efficiency. Infrastructure and land use planning need 

to be designed in a manner that enables the city to grow further 

without resulting in congestion. Most global metropolises are confronted 

with significantly more complex challenges than Masdar City: 

major adjustments to the transportation networks are impossible or 

enormously expensive. The most promising enhancement options are 

described in the adjacent boxes. 

Road to the smart city is a bumpy one 

Investments in transportation systems have extremely long-term returns. 

The risks of opting for the wrong technology are illustrated by 

examples such as the failed “future technology” of monorail. Various 

cities such as Sydney and Seattle introduced this technology, but 

owing to the high investment costs, monorail has been unable 

to achieve major success as a mass means of transportation. Different 

incentives for governments, businesses and the scientific > 

NEW AVENUES: A MOVE IN THE RIGHT DIRECTION 

TRAFFIC REDUCTION WITH INCENTIVES 

AND TECHNICAL SOLUTIONS 

Modern ICT solutions allow people to work anywhere. 

Home offices and decentralized, company-independent 

shared desks in residential areas help reduce commuting. 

For production enterprises, the campus model offers 

homes for employees close to the production sites. 

TECHNICAL MOBILITY MANAGEMENT 

Adaptive control elements (traffic lights, speed limit signs, 

lane signs, adaptive public transportation connections 

and information apps for passengers, e.g. Hot Stop.com) 

can enhance the capacity and reliability of existing road, 

bus and rail links. Commuters should be able to plan 

in detail the best possible modal split of transportation 

means (car, train, bike, foot) depending on the current 

traffic situation. Indicators at bus stops and on mobile 

phones enable travelers to react to delays and connection 

breakdowns. The Future Urban Mobility Project in 

Singapore, an example of an integrated mobility management 

project being implemented in cooperation with 

the Massachusetts Institute of Technology, is based on realtime 

data and a profound understanding of traffic flows. 

ECONOMIC MOBILITY MANAGEMENT 

The road pricing system in Singapore and carpool lanes 

are successful examples of incentive mechanisms to make 

roads more efficient for all users. The sharing economy 

trend has fostered the emergence of new business models 

such as the Mobility car-sharing system in Switzerland, 

Barclays Cycle Hire in London and Zimride in San 

Francisco. Real-time ridesharing or taxi-sharing based on 

mobile phone apps transforms private mobility into 

ad hoc public transport models. Data about disruption 

is shared by users with other road users via apps such as 

Waze. 

TECHNICAL INNOVATIONS 

The latest developments in IT, sensor and communication 

technology mean that new solutions may soon become 

reality: interacting vehicles can form “trains” over longer 

distances, thereby making road traffic more efficient 

and environmentally friendly. Another step is the driverless 

car (e.g. from Google) that allows the driver to 

sleep or work during the journey. As the vehicle parks by 

itself, parking spaces can be some distance from the 

user’s destination, thereby significantly enhancing the 

flexibility of cities in terms of spatial planning. 

NEW PUBLIC TRANSPORTATION SYSTEMS 

The efficiency of trains can be massively enhanced if they 

no longer have to stop. Priestmangoode design consultancy 

in London proposes a system that allows trams to be 

connected to the side of non-stop high-speed trains and 

thereby simultaneously combine the role of platform and 

local distribution. Further ideas are innovative rail systems 

such as the proposed Hyperloop between Los Angeles and 

San Francisco, a linear-induction-powered train-in-a-tube.


community are exacerbating the problem of selecting a technology. 

Furthermore, the Google driverless car serves to exemplify the innovation-hampering 

impact of regulations and insurance issues: 

California had to carry out legal changes prior to the first road test. 

The legal consequences in the event of an accident have not been 

clarified: Is it the passenger who is liable or the car manufacturer? 

We therefore think that innovative technologies will prevail more among 

users (smart vehicles) than among infrastructures (smart roads). 

Since the origins of civilization, cities have decisively shaped history. 

Mobility and the exchange of ideas are the crucial benefits of cities 

and key to the competition for attracting businesses. Cities that 

tackle the “urban crawl” will thrive. Those unable to adapt their mobil- 

 

Andrea Schnell joined Credit Suisse in 2012 as an economist focusing 

on the Swiss economy, particularly locational quality and public 

- 

 

 

Thomas Rühl joined Credit Suisse in 2005 as an economist responsible 

 

 

and tax competition, he has been a consultant for several Swiss can- 

 

Ring Roads of the World 

The graphic on the left is a 

composite image consisting 

of stacked layers, all in the 

same scale, representing 

the ring roads surrounding 

some 27 international cities. 

Houston, Texas, has the 

largest such system, with 

Beijing, China, coming in 

at number two. This awardwinning 

image, titled Ring 

Roads of the World, was 

originally created by the 

Rice School of Architecture, 

located in Houston, Texas. 

Source: Thumb Projects 

1 mile 

Illustration: Thumb/New York, originally for Rice University School of Architecture


SHAREWAY 2030 

Navigating 

a megalopolis 

The American dream of seamless commutes, suburbia and big cars 

has turned into something of a nightmare for many. Architect Eric Höweler 

contemplates a radically different model for the USA’s Northeast Corridor. 

INTERVIEW by Richard Hall 

Richard Hall: How did the 

“Shareway 2030” project take shape? 

Eric Höweler: Some auto manufacturers 

are realizing that streetscapes 

are being transformed to deprioritize 

the car and they want to understand 

the wider urban context better. So 

Audi’s research team asked six archi - 

tecture firms to submit “visions” for 

the future of urban mobility. We chose 

to pitch a remake of the Boston-to- 

Washington (BosWash) megaregion 

envisioned by Jean Gottmann in his 

1961 book, “Mega lopolis.” 

What exactly is BosWash? 

Eric Höweler: At the heart of 

BosWash is the notion that many cities 

in the USA are no longer discrete 

entities; one metropolitan area often 

spills over into the next. The megalopolis 

1960s futurists imagined for the 

year 2000 is now a reality. Within the 

BosWash region, which is now home 

to over 53 million people and generates 

one-third of the nation’s GDP, 

America developed a number of (sub-) 

urban prototypes – cul-de-sacs, strip 

malls, drive-thrus – which have been 

exported all over the globe. These 

experiments are no longer sustainable. 

So we tried to reimagine mobility 

and collective consumption patterns 

in such a megaregion in 2030. 

So, it’s an alternative 

American dream? 

Eric Höweler: In a way, it is. 

Car ownership and the wider narrative 

of freedom and social mobility are 

certainly intertwined in the USA. 

As architects, though, we tried to conceive 

of urban mobility in its widest 

sense. The Shareway encompasses 

housing and suburbs, the train/plane/ 

car/bike interface, “last-mile” 

strategies, house sharing and urban 

agriculture. 

How would the transport 

component of Shareway work ? 

Eric Höweler: The core consists 

of a bundled transit system connecting 

public and individual transport to a 

single artery running along the 

400-mile stretch of Interstate 95. 

The Shareway is a network of hubs 

and pathways (including a high-speed 

train running above the I-95) in 

which people and cargo would travel 

along a “stacked” route. Bundling 

allows passengers to switch between 

the different transport modes and local 

and national transit. To help reduce air 

traffic in BosWash and accommodate 

larger planes and cargo ships, the 

Shareway would link the high-speed 

transport network to a multilevel 

“Superhub” in Newark. 

What other innovations 

does Shareway propose? 

Eric Höweler: In addition to these 

mobility scenarios, we imagined a 

“Sharestay” time-share system for 

houses where you only pay for the 

time you actually spend in a building. 

And we experimented with urban 

agriculture schemes (“Farmshare”) 

and an innovative rotating road 

surface (“Tripanel”) that would flip 

between city street, park and energy 

source. Shareway ultimately aims to 

replace isolated, unimodal commutes 

and inefficient, dispersed infrastructures 

in the BosWash region with 

a tightly meshed transport ecosystem 

orchestrated by smart software and 

social media. In this world, access – 

switching and sharing – would matter 

more than ownership. 

Eric Höweler is a registered architect, 

architectural writer and co-founder of Höweler 

+ Yoon Architecture LLP, an interdisciplinary 

 

Assistant Professor at Harvard University’s


Giselle Weiss: Your early research is associated 

with the wildly popular idea of six 

degrees of separation, which far predates 

you. How did that idea spread? 

Duncan Watts: I don’t know. But the 

notion that we are all connected through 

a short chain of acquaintances has been 

around for a long time. It shows up in 

a 1929 short story called “Chains” by the 

Hungarian poet Frigyes Karinthy. And 

the urbanist Jane Jacobs speculated about 

it in her famous book, “The Death and 

Life of Great American Cities.” 

They didn’t call it six degrees 

of separation, though. 

Duncan Watts: No. That label comes 

from the title of a Broadway play of the 

1990s by John Guare. The actual history is 

a little involved. But in any event, in 1967 

psychologist Stanley Milgram set out to test 

the idea by having people in Boston deliver 

letters to people (“targets”) in Omaha, 

Nebraska, through the intermediary of 

others known only on a first-name basis. 

He found that the average length of the 

letter chains that reached the targets was 

six. He called it the small world problem. 

DISPERSION 

How ideas 

spread 

Every human advance, and what we call culture, relies on the 

human capacity to embrace new ideas en masse. But how does that 

happen? How does an idea become so compelling that it is worth 

sharing? More important, how is it that ideas come to be adopted? 

Duncan Watts has made a career of studying how ideas spread. 

INTERVIEW by Giselle Weiss 

“Some things 

do spread quite 

a lot … but they 

are very rare, 

one in a million 

events.” 

Where did your research come in? 

Duncan Watts: In the 1990s, I was 

studying synchronization among crickets – 

who chirps with whom. Then one day 

on the phone, my dad asked me whether 

I’d ever heard of the idea that everyone 

is only six handshakes away from the 

president of the United States. It occurred 

to me that both problems involved networks, 

and that interested me. 

What makes the idea so powerful? 

Duncan Watts: We’re attracted to 

the Enlightenment idea of ourselves as 

independent individuals who decide 

what we want to do and go out and do it. 

But the reality is that we’re very much 

enmeshed in social relations. Everything 

we do and care about involves other 

people. These are network concepts. 

Recently, you’ve been working on the 

structure of viral diffusion, for example, 

of tweets on Twitter. What’s that about ? 

Duncan Watts: We’ve been mapping 

the spread of information, particularly 

online. When you think about how information 

spreads, it’s natural to liken it 

to the spread of a disease. In fact, people 

have been doing that for a long time 

in marketing. And it’s been popularized 

in recent years by people like Malcolm 

Gladwell, author of “The Tipping Point,” 

who very explicitly draws the analogy 

between the spread of behaviors or beliefs 

and diseases. 

That sounds reasonable. 

Duncan Watts: At a certain level, 

it is. But it’s tempting to go a step further 

and apply the same mathematical models 

that have been developed to understand 

the spread of a disease to the spread 

of ideas or products. 

What’s wrong with that? 

Duncan Watts: There are all sorts 

of models of how things spread, and they’re 

often incompatible with each other. Moreover, 

we have very little data to test any 

of these models. For example, if you want 

to trace the spread of an idea, you have 

to be able to observe that person A has that 

idea, and then that person tells B, and then 

person B has the idea, and now person B 

tells person C. Mapping this out in a population 

of millions of people with hundreds of 

thousands and millions of things to observe 

is a tremendously difficult process. 

So how do you approach it ? 

Duncan Watts: We’ve done a lot of work 

using Twitter data – news, media, images –


where we can, to some approximation, 

observe everything. And we can also track 

exactly where everything is at a given point. 

People who study diffusion are generally 

looking for a critical threshold where ideas 

go from not spreading to spreading like 

wildfire. 

And what have you found? 

Duncan Watts: Initially, we found that 

nothing really spreads like that. In a study of 

millions of observations, 99% of everything 

that happened, every “adoption” of an 

idea, was within one degree of the source. 

Which is almost the opposite of spreading. 

In other words, I tweet something and 

you re-tweet it. Your followers see your 

re-tweet, but they don’t do anything. 

It’s the re-tweet that we pay attention to. 

When we described this result to our 

colleagues, however, they often didn’t like it. 

Why? 

Duncan Watts: People are convinced 

that certain things “go viral,” and that’s what 

interests them. So they would say, “We 

know some things spread. Look at ‘Gangnam 

Style’ or the use of Hotmail or Facebook. 

Maybe you didn’t see anything 

spread, but you must only have looked at 

things that weren’t any good.” So then we 

did a second study where we really looked 

at everything on Twitter – a billion observations 

– for an entire year. And sure enough, 

we found that some things do spread 

quite a lot. But they are very rare, one in 

a million events. And even they don’t 

look like “social epidemics.” 

Why not? Surely “Gangnam Style” 

is a social epidemic? 

Duncan Watts: Epidemic models 

assume that ideas become popular by viral 

word of mouth. But in the media world, 

information can also spread because some 

major channel or site picks it up – it gets 

on the front page of Yahoo! or the “New 

York Times” or whatever – and a million people 

or a hundred million people see it. And 

a bunch of them re-tweet it. That would still 

be popular, but we wouldn’t say it had 

spread virally. So when something becomes 

popular, is it a “broadcast” or is it “viral”? 

Intuitively, you might guess one or the 

other. But when we looked, we found tremendous 

diversity: some popular things 

are pure broadcasts, and some display 

pure viral spreading. We also found about 

every conceivable mixture of the two. 

There’s no typical way in which things 

become popular. 

“This is not 

about cat videos 

going viral – 

it’s about changing 

people’s 

minds, and their 

behavior.” 

Duncan Watts is a principal researcher at Microsoft 

Research NYC and an A. D. White Professor-at-Large 

at Cornell University. From 2000 to 2007, he was 

at Columbia University, then at Yahoo! Research. 

He is the author of “Everything is Obvious (Once You 

Know the Answer): How Common Sense Fails Us” 

(Crown, 2011). 

 

Duncan Watts: Unlike diseases, where 

in general you only have one thing spreading 

at a time, in ideas, it’s always a contest. 

Everything that’s spreading on ing 

for oxygen with everything else that’s 

spreading on Twitter. It’s hard to be exposed 

to one particular idea because there’s just 

so much other stuff to pay attention to. 

Occasionally something is able to rise above 

the noise, and everybody hears about it and 

pays attention to it. But that is extraordinarily 

rare and somewhat arbitrary. If you’re a 

social media strategist or a digital advertising 

agency, basing a marketing or other 

strategy on triggering a social epidemic is 

probably not the best use of your resources. 

You are also investigating the nature of 

cooperation between people. How is that 

related to the spread of ideas? 

Duncan Watts: The spread of information 

and the spread of cooperation are both 

examples of social influence, so they’re 

related, at least in principle. But it’s also important 

to understand that different types of 

influence are likely to spread in different 

ways. Me persuading you to change your 

political views is very different from me persuading 

you to click on a video. 

How so? 

Duncan Watts: People do not easily 

adopt ideas that involve changing their conception 

of themselves. Not accepting the 

idea of climate change might be tied up 

with your political ideology, your suspicion 

of government and your dislike of elite 

intellectual types. When is an idea something 

that you can adopt just because it’s 

obviously right or obviously interesting? 

And when is it something that is going 

 

it’s tied up with all these other things? 

What are the stakes? 

Duncan Watts: This is not about cat 

videos going viral, even if sometimes that’s 

what we study because it’s what we have 

the most data about. Really, it’s about 

changing people’s minds, and their behavior; 

and one way or another, everyone – 

governments, corporations, marketers, policymakers 

– is in the business of trying to 

change people’s minds. Understanding how 

that happens is one of the big questions 

of social science. It’s frustrating that we’ve 

been thinking about this for so long and 

have very little in the way of concrete answers. 

But maybe this particular period of


Comparison of Chinese travelers who travel 

abroad for business and for leisure 

96% 

for leisure 

52% 

for business 

and education 

Comparison of Chinese travelers who travel independently and those 

who travel as part of arranged groups, according to hoteliers 

70% 

of guests travel 

independently 

30% 

of guests 

travel as part 

of arranged 

groups 

Sources of information that Chinese travelers use, and rely on most 

Newspapers 

Social media 

27 % 4 % 2 % 16 % 

16 % 

Loyalty schemes 

Use 

Rely on most 

Travel magazines / brochures 

Promotions / deals 

42 % 6 % 8 % 

35 % 

Travel agents 

Family 

46 % 11 % 15 % 

45 % 

Online accommodation / travel websites 

Online review sites 

50 % 12 % 16 % 

47 % 

Friends 

Travel guides 

60 % 15 % 11 % 

55 % 

Source: Hotels.com/Pandodaily


TRAVEL AND TOURISM 

The China 

travel surge 

Thanks to more relaxed government restrictions on foreign travel and the rise 

of the Chinese middle class, with higher disposable incomes, Chinese outbound 

tourism is enjoying remarkable growth despite the economic slowdown 

of recent months. A survey by Hotels.com highlights current trends. 

TEXT Scott Booker, president, Hotels.com 

According to the China Tourism Academy, China became the world’s 

largest outbound tourism market in 2012, overtaking Germany and 

the USA, with an estimated 83 million overseas trips made by Chinese 

citizens. That number is estimated to rise to 200 million by 2020. Earlier 

this year, the Chinese government published its Outline for National 

Tourism and Leisure, which, among other topics, is aimed at 

sparking an increase in outbound tourism by encouraging employers 

to promote the use of leave days and also to give Chinese workers 

more freedom and flexibility of where and when to travel. 

Presently, most outbound travel from China originates in the three 

major cities, Shanghai, Beijing and Guangzhou. China plans to build 

70 new airports by 2015 and to expand its existing 100 airports. Lowcost 

carrier activity and route expansion in Asia continues to increase, 

many with China as a key part of their future networking planning. Air 

Asia, Scoot by Singapore Airlines, Jetstar, Peach by ANA, Cebu Pacific 

and others are all helping to build Chinese inbound and outbound 

flows. Several airlines have also announced new non-stop long-haul 

services to China beginning in 2013. In 2012, we carried out our firstever 

Chinese International Travel Monitor (CITM), examining the impact 

of the huge growth in Chinese outbound tourism and the response 

by the global hotel industry to benefit from this rapidly 

developing trend. The 2013 CITM (http://press.hotels.com/citm/) is 

richer in data than last year’s, as we also surveyed 3,000 international 

travelers from China to gain a better understanding of the consumer’s 

viewpoint. The results point to some interesting trends. 

Governments paving the way 

Many governments around the world are helping to invigorate the market 

by relaxing visa requirements. The China 2020 Strategic Plan is 

a core element in the Australian 10-year tourism strategy. Chinese 

visitors to European countries participating in the Schengen agreement 

only need to have a visa from one of the countries in order to 

be able to visit all 26 members comprising 22 EU countries and 4 from 

the European Free Trade Association. The UK has pledged to review 

the visa application process for Chinese tourists by seeking a joint application 

for the UK and Schengen countries. 

Tourist boards are funding aggressive marketing campaigns. For 

example, VisitBerlin aims to position Berlin as the most important new 

Gateway to Central Europe in the Chinese market and to double the 

visitor numbers in two years. Mexico expects to boost the number of 

Chinese travelers visiting the country in 2013 by 30%, helped by a 

relaxation in visa restrictions. Russia Tourism Year, with more than 200 

events staged in China in 2012, prompted 343,000 Chinese tourists 

to visit the country that year, a 47% increase over the previous year. 

Bucking the group trend 

China’s international travelers are still among the wealthier of China’s 

citizens, with an average yearly household income of RMB 109,922 

(USD 17,752) compared with the Chinese average of RMB 49,920 

per year. However, nearly a quarter of travelers have household incomes 

of less than RMB 70,000 per year. Nearly all of the Chinese 

international travelers surveyed have been abroad for leisure reasons, 

while over half have visited other countries for business or educational 

purposes. In a growing trend, nearly two-thirds of Chinese travelers 

say they prefer to travel independently and not as part of a group. This 

development has also been confirmed by hoteliers. Overall, 61% of 

hotels say they have seen an increase in the number of independent 

Chinese travelers in the past two years. This figure rises to 74% in 

the Asia-Pacific region, 69% in Latin America and 62% in North 

America, but falls to 46% in Europe. Independent travelers are also >


Scott Booker is President of Hotels.com, a leading online 

accommodation booking website that started as a telephone 

 

2002. There are now more than 85 Hotels.com sites worldwide. 

Hotels.com is part of the Expedia group. 

younger and equally likely to be male or female. Many will have already 

studied abroad, and thus are more familiar with how to fit comfortably 

into a foreign environment. These travelers tend to avoid travel 

agents for advice, preferring to use online travel, accommodation and 

review websites. They also consult a wider range of information 

sources before booking. Social media play a much higher role in their 

decision-making process. When it comes to accommodation choices, 

independent travelers’ decisions are more widespread: three-star hotels 

followed by four-star, with 10% plumping for five-star properties; 

but hostels and back-packing establishments and B&Bs are also significant. 

As with Chinese travelers as a whole, sightseeing, dining and 

shopping are still the most popular activities when traveling internationally. 

Nonetheless, cultural attractions such as the theater, concerts, 

comedy shows are slightly more appealing to this group. 

Knowing the customer 

Nearly six out of ten travelers state that the ability to accept Chinese 

payment methods is the single most important offering from international 

hotels. With a bias among wealthier travelers, most respondents 

choose language-related items, such as translated literature, website, 

TV programs and newspapers, as among the more important services 

a hotel can provide. Also on the wish list, in decreasing order of importance, 

are more Mandarin-speaking staff, on-site restaurants serving 

Chinese food, Chinese breakfast and Chinese room service. 

Many countries now recognize the potential of the Chinese traveler 

boom. The UN World Tourism Organization has reported that Chinese 

travelers spent USD 102 billion on international tourism in 2012, 

40% more than in 2011, overtaking Germany and the USA as the 

world’s biggest spenders. This remarkable growth in travel in Chinese 

outbound tourism, largely due to more relaxed government restrictions 

on foreign travel and the rise of the Chinese middle class with higher 

disposable income, does not appear to have been impacted by the 

slowdown in overall economic growth seen in China over recent 

months. The desire to explore foreign lands and enjoy new experi- 

 

 

 

The wish list 

The reality 

 

 

 

 

 

 

 

 

 

 

Interested in far away lands, but staying closer to home The top ten 

destinations Chinese travelers want to travel to compared to the destinations they 

actually travel to, based on hotel bookings. Source: Hotels.com 

TOP SPENDERS 

Rank 

 

 

 

 

 

 

 

 

 

 

Top spenders in international tourism: China jumps to first place. In the 

last three years, China has vaulted past both Germany and the USA in terms of international 

tourism expenditure. Source: 

BIG SPENDERS ON HOTELS 

Rank 

 

 

 

 

 

 

 

 

 

 

International 

tourism expenditure 

billion USD 

2011 2012 

Population 

millions 

2012 

Consistently among the big spenders on hotels Countries where Chinese 

travelers are among the top spenders on accommodation Source: Hotels.com


MODERN HOSPITALITY 

Mixing business 

and pleasure 

 

Hotel des Bergues in 2005, it now caters to the global business and diplomatic community. 

 

INTERVIEW by Giselle Weiss 

Giselle Weiss: What is the single 

biggest change you’ve observed in 

the hotel industry in recent times? 

José Silva: We are historically a 

business hotel. Today, people combine 

work and pleasure. It’s no longer 

just a matter of going to the gym. 

Sightseeing used to be something 

leisure guests did. Now you have 

a business partner booking an hour 

at a museum between meetings, 

or going for a bike ride. 

What explains the change? 

José Silva: Technology has 

transformed people’s business lives. 

It is so in our face! We are always on 

the phone, or dealing with e-mail or 

checking company websites. Consequently, 

work and play have merged. 

Which nationalities stay at the hotel ? 

José Silva: Geneva’s a bit different 

from other areas of Switzerland. 

So while we do see an uptick in clients 

from emerging markets, at present 

our base is still primarily Europeans 

and North Americans, unlike Interlaken 

or St. Moritz, which are more specialized. 

We have 500 international 

organizations here, which contributes 

to a more global clientele. 

And yet India and China each 

have over a billion people. When 

they start to travel more … 

José Silva: … they will change the 

nature of the hotel industry. Like 

Americans changed the nature of the 

hotel industry. You can get eggs 

and bacon for breakfast now anywhere 

around the world. 

What are today’s guests looking for ? 

José Silva: Personalization. It used 

to be that what people wanted was 

choice. So you’d offer a big breakfast 

buffet. Now people expect you to 

know their preferences, whether 

that’s family activities or DVDs. Our 

hotel has 115 rooms, and each room 

is assigned one of our six personal 

assistants who do nothing but 

personalize the preferences of every 

guest. That kind of service requires 

careful observation. 

A 2011 report by the IBM Institute for 

Business Value, titled “The Personalization 

Paradox,” cites the power 

of social media as a source of information 

about guests’ unique preferences, 

but also the challenges it poses. 

José Silva: People want personalization, 

and value the effort we take 

to know about them. But we are very 

careful to use only information clients 

have told us or made public elsewhere. 

Is TripAdvisor complicating your life? 

José Silva: TripAdvisor and 

distribution channels have obviously 

drastically changed the world. Instant 

value-for-money comparisons can 

be done at the tip of a finger. As a 

hotelier, you can’t avoid it. And if you 

are good at what you do, the increased 

transparency pays off because 

success is rewarded so much faster 

than in the past, and sometimes 

overnight. 

How would you sum up the 

significance of mobility for the travel 

and tourism industry ? 

José Silva: Some people still see 

traveling as a nice but expensive 

thing to do. In fact, compared with 

other human activities, traveling is not 

so expensive. It has become part 

of entertainment and culture, and it’s 

here to stay. Traveling has become 

a way of life, a basic need. 

 

Four Seasons Hotel des Bergues Geneva. 

He previously worked for Four Seasons 

 

and beverages division, and later opened 

a Four Seasons in Lisbon, Portugal, 

before making the move to Switzerland.

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13C023A

Authors 

Credit Suisse Global Research 

Nikhil Gupta 

Thematic Research Analyst 

Nikhil Gupta joined Credit Suisse Private Banking 

in 2011, and is currently part of the thematic 

research team. He has six years of experience, 

 

research. He is a postgraduate from the Indian 

School of Business, Hyderabad. 

> Pages 8–9, 18–19, 30–31, 44–45 

Uwe Neumann 

Senior Equity Analyst 

CEFA, joined Credit Suisse Private Banking 

in 2000 as an equity analyst responsible 

for the telecom and technology sector. He has 

28 years of experience in the securities and 

banking business, including 18 years in 

research. He holds a Master in Economics 

from the University of Constance, Germany. 

> Page 24–25 

Imprint 

Credit Suisse AG, Investment Strategy & Research, 

P.O. Box 300, CH-8070 Zurich 

Publisher 

Giles Keating 

Editors 

Nilanjan Das, Sara Carnazzi 

Editorial deadline 

21 October 2013 

Production management 

Markus Kleeb, Katharina Schlatter 

Concept 

arnold.kircherburkhardt.ch 

Design and realization 


Angélique Bolter, Claudia Veit, Maja Davé, 

 

Sacha Steiner, Rahel Frick (project management) 

Editorial support 


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Christine Schmid 

Head of Global Financials Research 

CFA, is Head of Global Financials within the 

single security research unit. She has covered 

14 years and coordinates the 

 

in 1993 in accounting, and later portfolio 

management. She holds a Master in Economics 

from the University of Zurich. 

> Page 26–29 

Javier Lodeiro 

Equity Research Analyst 

CFA, FRM, joined Credit Suisse in 2010 as an 

equity analyst responsible for the global insurance 

sector and US banks. Javier has 18 years 

of experience as a buy- and sell-side analyst. 

He holds a Master in Economics from the University 

of Bern. 

> Page 26–29 

Andrea Schnell 

Research Analyst 

Joined Credit Suisse in 2012 as an economist 

focusing on the Swiss economy, particularly 

ly, 

she held positions in the public sector as 

 

Swiss National Bank, and as a researcher at 

ETH Zurich. She holds a Master of Science in 

Business and Economics from the University 

of Basel. 

> Page 46–48 

Thomas Rühl 

Head of Swiss Regional Research 

Joined Credit Suisse in 2005 as an economist 

providing Swiss economic analysis. He leads 

the Swiss Regional Research team, focusing 

 

systems, tax competition, regional business 

 

consulting mandates for several Swiss cantons 

and the Swiss Confederation. He holds a Master 

in Economics from the University of Zurich. 

> Page 46–48

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Global Investor provides background analyses on current topics, as well as long-term 

trends and their possible effects on financial markets and investments. Earlier editions 

of Global Investor have addressed the following topics, among others: 

You can order these research publications at www.credit-suisse.com/shop (Publication Shop). 

Beside the above-mentioned issues, you can also order or download issues of Global Investor covering 

other investment themes, as well as a wide range of interesting reports and handbooks. 

GI 2.09 

Global megatrends 

GI 1.10 

 

GI 2.10 

Urbanization 

GI 1.11 

Emotions and markets 

Over coming decades, the 

impact of megatrends on 

global economic growth, 

 

companies, and the stance 

of policymakers and regulators 

will be profound. We 

are now focusing on the 

massive forces of change 

unleashed by the rise 

of a multipolar world, by demographics 

and by pressing 

issues of sustain ability and 

human powers of inventiveness. 

This edition of Global 

Investor explores how these 

megatrends will play out, 

where the opportunities lie 

and which old certainties 

could fall by the wayside. 

cial 

crisis, governments 

and central banks took 

drastic steps to stabilize 

 

But there are risks arising 

from government intervention, 

such as the 

 

 

balances in the developed 

economies. Thus, investors 

may face considerable 

market volatility 

going forward. To restore 

stability, governments 

 

 

ative and global solutions. 

A failure to do so could 

result in a prolonged 

period of economic – 

and political – disorder. 

In the advanced countries, 

80% of the population 

lives in urban centers. 

Worldwide the share is 

50%, and by 2050 it will 

likely be two thirds. Cities 

of all kinds will remain 

the key locus of wealth 

creation. Where wealth is 

on the rise, the demand 

for diverse consumer services 

steadily increases. 

The drivers of successful 

urbanization – from highquality 

transport infrastructure 

and modern 

telecommunications to the 

provision of innovative 

cultural services – may 

offer exciting opportunities 

for astute investors. 

enced 

by behavioral traits 

that obstruct the cold logic 

of rational investment 

goals. Who can honestly 

say they are as willing 

to sell an asset at a loss as 

they are to sell one at a 

 

outlook is the same for 

mune 

from collective panic 

 

Academic studies have 

sought to understand how 

such behavioral factors 

drive markets. Investment 

professionals have used 

these insights to try to 

improve their judgments 

about where the market 

is going.

Global Investor 2.12, November 2012 


Global Investor 1.13, June 2013 


Healthcare 

Entering the digital era 

Big Data 

Taking a quantum leap 

Bernardino Fantini It’s a long way from hand washing to the Human 

Genome Project. Dr. Devi Shetty A visit with a cardiac surgeon who has 

big ideas – and a bigger heart. S.Yunkap Kwankam 

How healthcare 

is just a phone call away. José Gómez-Márquez 

Clever minds are hard 

at work engineering better healthcare. 

Michael Chui The race is on to capture value and gain insight – by looking for 

the diamonds in the proverbial data haystack. Florian Michahelles Big Data 

enables decision-making based purely on the data, not opinion or experience. 

Katy Börner 

Her data-based cartography helps us to see and recognize 

Jürgen g Galler 

Big Data analytics is shaping 

the future of almost every industry: Quo imus? 

GI 2.11 

Inheritance 

GI 1.12 

Design 

GI 2.12 

Healthcare 

GI 1.13 

Big Data 

In the face of slowing 

economic growth, inherited 

wealth could regain some 

of its former primacy. 

The many facets of inheritance 

range from assets 

and institutions to the 

passing on of ideas to 

future generations. In the 

latest edition of Credit 

Suisse’s Global Investor, 

a roster of expert authors 

and Credit Suisse specialists 

look at the effects 

of inheritance on people, 

society and economies. 

Great design in business 

goes beyond innovation 

and marketing to create an 

icon that sells itself. 

Successful design can 

turn a small company into 

a big one, a struggling 

second-ranker into a 

dominant player. A few 

designs are timeless. 

 

certain Zeitgeist or stage 

of technology. When 

that passes, the company 

may be weakened if it 

cannot repeat the design 

success. 

Across the vast universe 

of modern global healthcare, 

probably the single 

most important driver of 

change, with the greatest 

potential for innovation, is 

information and communication 

technology. Examples 

range from using 

genomics and computers 

to simulate disease treatment 

and outcomes, to 

making patients partners 

in their own healthcare, 

to designing low-cost 

medical tools in resourcepoor 

settings. 

Companies have always 

needed to know their 

customers, and doctors 

have always needed to 

know their patients. Big 

Data provides a way for 

them to do this on a scale 

and speed that are vastly 

larger and faster than 

could ever have been conceived 

in the past – and 

that can detect previously 

invisible connections 

between diverse aspects 

of people’s commercial, 

medical and social lives.

Expert know-how for investors 

www.credit-suisse.com/globalinvestor 

 

 

a collection of Global Investor publications downloadable free of charge 

in PDF format. The main articles are also available via podcast. 

Demographics 

Multipolar world 

Economy 

Sustainability 

MAGAZINES 

You can download all the Global Investor 

editions since 2005 in PDF format. 

SPECIALS 

See the Global Investor knowledge 

website for animations and special features.

GIE 1545764 

www.credit-suisse.com/globalinvestor

FACETS OF MOBILITY 

TEXT by Richard Hall 

Mobility means different things to different people, 

but the topic invariably stirs strong emotions. 

Being mobile is about much more than getting from 

A to B; it ties into far-reaching trends – industrialization, 

innovation, migration, wealth creation – 

as well as deep-seated human experiences of 

hope, ambition, progress and self-betterment. The 

dream of mobility, in its broadest sense, is the 

lifeblood of economies and a catalytic force in individual 

biographies. This booklet showcases, in 

vivid photographic form, some of the many facets 

of mobility referenced in the main publication: 

making the most with the least, off-piste entrepreneurial 

thinking, finding ingenious solutions to 

age-old problems, the rise and fall of cities, visions 

of wearable technology, the quest for ever more 

extreme pastimes, the limits of mass tourism in 

emerging countries, shifting definitions of the 

workplace, the future of hypermobility in the USA, 

transience and permanence, the reshaping 

of traditional rituals through technology and 

the fantasy of instantaneous travel.

By the sweat of his brow 

There is something impressive and simultaneously absurd about this Shanghai street scene 

from French artist Alain Delorme’s “Totems” series. The teetering mass this worker is pulling has 

intentionally been augmented using Photoshop – perhaps to emphasize the human cost of the 

Chinese economic miracle? The diminutive profile of the individual against the soulless concrete 

monoliths in the background highlights some of the complexities of mass rural-urban migration.

Onshoring tech talent – offshore 

Visa restrictions can make it hard for foreign entrepreneurs seeking funding to operate in the USA. Blueseed intends 

to solve this problem by creating a unique start-up community on a cruise ship off the coast of San Francisco, 

in international waters. This scheme would potentially enable entrepreneurs from anywhere in the world to launch or 

expand their business(es) a stone’s throw from Silicon Valley, but without the need for a US work visa. Blueseed 

aims to convert the vessel into a co-working and co-living space equipped with high-speed Internet access and will offer 

daily transportation to the mainland. So far, over 1,400 individuals from 68 countries have expressed interest in 

living on Blueseed. Successful companies will receive advice on how to transition to Silicon Valley proper.

Breaking 

the mold 

After fracturing his arm 

and having to endure the 

constraints of a heavy, 

rigid plaster cast for several 

months, Jake Evill, a recent 

architecture/design graduate 

from Victoria University, 

New Zealand, decided to explore 

better ideas. The 

result – the Cortex cast – is 

a 3D-printed brace that 

maps the contours of the 

patient’s arm, but provides 

support where the wrist 

needs it. It also allows freer 

movement of the thumb 

and fingers. Though still at 

the prototype stage, the plan 

is to manufacture a product 

that is not only flexible, 

but lightweight, washable, 

ventilated and recyclable.

Motor City 

running 

on empty 

Long a major port and center 

of US automobile manufacturing, 

Detroit has suffered 

disproportionately from the 

forces of deindustrialization 

and global competition, losing 

25% of its population between 

2000 and 2010. In July 2013, 

Detroit filed the largest 

municipal bankruptcy case 

in US history.

The 

wearable 

web 

Google Glass, currently 

still in the testing phase, 

is the Internet giant’s first 

foray into truly mobile, 

head-mounted augmentedreality 

devices. Among 

many other things, the 

smart specs respond to 

voice commands and 

allow you to share what 

you see in real time. 

They also display satnav 

directions on a miniature 

screen.

From hands-free to zero G 

Virgin Galactic, part of Richard Branson’s Virgin Group, plans to offer suborbital spaceflight to individuals 

willing to pay USD 250,000 plus a USD 20,000 deposit. Passengers will experience a brief period of weightlessness 

on their journey to an altitude of over 62 miles. The first operational flights are scheduled for next year.

Swimming 

with the 

crowd 

Keen to escape the searing 

summer heat, thousands of 

visitors pile into an artificialwave 

pool at a tourist resort 

in Daying County, Sichuan 

Province, southwest China. 

The saltwater attraction has 

apparently been luring an 

average of 12,000 guests a day 

during the summer months 

as temperatures broke the 

40-degrees-Celsius mark. Extreme 

overcrowding has forced 

management to reinforce 

safety procedures at the site.

Making office 

shares work 

Assuming participants have complementary needs, 

office sharing can be an attractive option and 

alleviate the isolation some freelancers associate 

with working exclusively from home. It may also 

be a pragmatic way to minimize rental costs 

in desirable locations.

Getting there 

ultrafast 

Billionaire investor and PayPal 

founder Elon Musk has revealed 

plans for a “Hyperloop” 

transport system that could 

one day shuttle passengers and 

cars between Los Angeles 

and San Francisco in aluminum 

pods at up to 800 mph.

Always on 

the move 

French artist Xavier Veilhan 

is known for his highly 

distinctive, site-specific creations, 

often statues or 

large-format sculptures, 

which he installs in cities, 

parks and other spaces. 

While many of his works are 

about deconstructing or 

redefining classical iconographies, 

this series of giant 

mobiles explores process: 

movement, flux and the interface 

between object and 

abstraction. The installation’s 

motions seem hypnotic 

and repetitive, but can any 

single sequence of dances 

ever be repeated identically?

A mobile 

wedding 

More and more Chinese newlyweds 

are choosing to travel to 

Europe to repeat their marriage 

vows in landmark tourist 

spots such as Neuschwanstein 

Castle, Germany – one of 

the most popular destinations.

Picture sources: Totem #7, 2009-2011 © Alain Delorme | Blueseed | Jake Evill Design | Yves Marchand & Romain Meffre | Frazer Harrison, Getty Images | Virgin Galactic | 

Stringer China, Reuters | www.LouisRafael.com | Tesla Motors | © Veilhan / 2013, ProLitteris, Zurich | Michael Dalder, Reuters | Trevor Williams/Fiz-iks, Getty Images 

The dream of be(am)ing there ... now 

Star Trek popularized it, but the vision of instant “travel” (quantum teleportation or “beaming” in modern sci-fi 

speak) has been around since time immemorial. Although the notion of zapping from one place to another without 

passing through the space in between may seem ludicrous, this may be possible at the subatomic level where the 

normal laws of motion do not apply. The idea is that minute particles can become “entangled” and that whatever 

you do to one particle will instantaneously affect the other, irrespective of the distance between them. Rather than 

traveling from point A to point B, information appears at point B and simultaneously disappears from point A.

New Mobility

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