TPT January 2012

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January 2012 99 ›
Global Marketplace
hydrate, a crystalline compound consisting of gas molecules
surrounded by a cage of water molecules. Hydrate commonly
forms during offshore gas drilling when water is condensed in
the presence of methane at high pressure and low temperature.
The Herald’s Shin Hyon-hee noted that the ministry has pledged
$9.2mn over the next five years to the Korea Institute of Industrial
Technology, a state-run think tank, to pursue the desalination project.
The nascent technology reportedly costs up to 50 per cent less than
existing methods that involve evaporation or reverse osmosis. Seoul
also hopes to recruit corporate participants to a plan to set up a
desalination plant with a daily capacity of 20 tons by 2015.
Business
Bucking the tide, Canada does very
nearly everything right
Kurt Badenhausen, who covers “data-driven stories” for Forbes,
observed that, during the run-up to every US presidential election,
countless Americans threaten to move to Canada if their candidate
is beaten. While few of them follow through, the 2011 instalment
of Forbes’s annual “Best Countries for Business” suggests that a
move north may exert a stronger attraction than ever to disaffected
Americans.
Canada ranks No 1 in the Forbes rankings, up from No 4 in 2010,
for reasons summarised by Mr Badenhausen. While the US is fearful
of a double-dip recession and Europe struggles with sovereign debt
issues, Canada’s economy has held up better than most. The $1.6tn
Canadian economy is the ninth-biggest in the world and grew 3.1
per cent in 2010. It is expected to expand 2.4 per cent in 2011. (“The
Best Countries for Business,” 3 October)
Canada skirted the banking meltdown that scourged the US and
Europe. The Royal Bank of Canada, Bank of Nova Scotia, Bank
of Montreal and other banks avoided bailouts and were profitable
during the financial crises that started in 2007. As noted by Mr
Badenhausen, “Canadian banks emerged from the tumult among the
strongest in the world thanks to their conservative lending practices.”
Canada is the only country that ranks in the top 20 in ten of the 11
metrics that Forbes considered. It is in the top five for both investor
protection and the absence of red tape, which measures how easy it
is to start a business. Credit goes as well to a reformed tax structure;
a Harmonised Sales Tax was introduced in Ontario and British
Columbia in 2010, with the goal of making Canadian businesses
more competitive. Reduced corporate and employee tax rates also
contributed to the country’s improved tax status.
“Three-quarters of [Canadian] exports end up in the US each year,”
wrote Mr Badenhausen. Thus, he said, Canada leans “heavily” on the
US economy. But, while unemployment in the US stays stubbornly
above 9 per cent, it is 7.3 per cent in Canada. The 25-year Canadian
average is 8.5 per cent. Currently the eurozone unemployment rate
is 10 per cent.
› The US ranked No 10 in Forbes’s reckoning, down from No 9 in
2010. The world’s largest economy at $14.7tn continues to be
one of the most innovative, ranking sixth in patents per capita among
all countries. Sweden, No 7 overall, comes in tops for innovation.
Here is the full list of the Forbes top ten for business in 2011:
Canada, New Zealand, Hong Kong, Ireland, Denmark, Singapore,
Sweden, Norway, Britain, the United States.
The US economy
Watchers of the world’s largest economy
can breathe easier: growth speeds up as
consumers and businesses spend more
With Americans returning to consumer mode, at least tentatively,
and companies stepping up their investment in equipment and
software, figures released 27 October by the Commerce Department
showed that the US economy grew in the third quarter of 2011 at the
fastest pace in a year. Surpassing its pre-recession peak for the first
time, gross domestic product – the value of all goods and services
produced – rose at a 2.5 per cent annual rate, up from 1.3 per cent
in the prior three months.
“It ain’t brilliant, but at least it’s heading in the right direction,”
Ian Shepherdson, the chief US economist for High Frequency
Economics, a data analysis firm, told the New York Times (27
October). “I want to see 4 per cent. But, given that people were
talking about a new recession, I’ll take 2.5 or 3, thanks very much.”
Household purchases, accounting for fully 70 per cent of the
economy, increased at a 2.4 per cent pace in the quarter, more
than forecast by economists. Corporate spending, which has been
strong throughout the recovery, continued to grow as well, with a
13.3 per cent increase in non-residential building and a 17.4 per cent
increase in equipment and software purchases.
The increase in US business investment is at least partially explained
by a rush to qualify for a larger government credit. In a compromise
fashioned in the highly polarised political climate of Washington, the
Obama administration offered to extend for two years the so-called
“Bush tax cuts” for all tax brackets. The controversial accommodation
to the wealthy – the price of a jobless-benefits extension wanted
by Mr Obama – allows companies to depreciate 100 per cent of
investment in capital outlays in 2011 and 50 per cent in 2012.
› A contributor to the late-October uplift was the agreement by
European leaders on steps that included recapitalising the
continent’s banks. At least in theory, this moved Europe closer to a
resolution of the sovereign-debt crisis that Federal Reserve policy
makers had identified as a risk to the American economy. Certainly
the news was enough to cause US stocks to surge. The Standard
& Poor’s 500 Index climbed 3.4 per cent to 1,284.59 at the close of
trading in New York, extending its biggest monthly rally since 1974.
Dorothy Fabian, Features Editor (USA)