Brazilian growth outpacing India and China

For those in the Bay Area whose economic radar hasn't been working of late, Brazil's economy, the largest in South America, expanded by 10 percent in the first quarter of 2010, outpacing China and India. Click through to read the whole piece.

Deika Morrison blog

I wanted to point readers to the new blog of a friend of mine, Deika Morrison. She has an extremely interesting background: she served as a Senator and Minister of State for Finance and Planning for the country of Jamaica, is a business expert, and is a careful thinker. She's also one of the nicest people I know.

I continue to believe that so-called emerging markets are the well spring of innovative ideas in economics and business. Brazil, Israel, Russia, China, Jamaica are all interesting places where necessity has proven to be the mother not just of invention but innovation: Deika's blog should help illustrate what I mean.

Cisco launches Russia/CIS fund

Brent Marcus left a note that Cisco recently announced a Russia focused venture fund. I will be in Moscow in a few weeks and will try to get some first hand information to blog about.

Russian millionare count soaring

Kommersant reports that the number of Russian millionaires is now greater than the number of Indian millionaires. I had to do a double take on this: the first thing that comes to my mind when I think of India is economic growth and transformation. Perhaps that is giving India a bit of short change, since it also boasts a rich cultural and religious history that has influenced large swaths of the globe.

To an extent, this reinforces my belief that Russia is the hidden gem in so-called emerging markets at the moment. While this may be a cause for celebration, it is also a cause for concern: take a deeper look and you'll find that the wealth is being generated predominantly in connection with extractive industries. This means the economy is vulnerable to price pullbacks in commodities and not structured to experience the kind of explosive and sustainable growth associated with technology and intellectual industries. Extraction based economies have had a devil of a time diversifying. The Kremlin is looking to address this in fits and starts (see previous posts that look at some of initiatives of the Ministry of Economic Development and Trade), but it is a decisive matter for the future of the Russian economy that will influence the country for generations to come.

In the meantime, I believe India is doing a lot of the right things, especially by building industry (and wealth) organically, based on intellectual capital. They are still leading the way for emerging markets and in some ways for everyone.

Israeli Startup Panel (This Week!)

There's a panel in the Palo Alto area this week looking at Israeli startups with ties to silicon valley, organized by a local group CoolTech, this week. Israel (Tel Aviv in particular) is one of the few places that has been successful in transplanting the "American" venture capital model. Clearly, enlightened government policies had a formative influence on venture capital development in Israel, as did a business culture tolerant of risk and failure; it is also an incredibly exuberant business environment. In fact, when talking with Israeli VCs, I'm struck by how similar their outlook is to American VCs. And yet, there is undoubtedly more to the story. Israel's domestic market is small and the target for intellectual property is invariably external markets. The differences may in fact be more important than the similarities, since they open up new channels for discovering innovative business models. For that reason, Israel is an essential case study for economies around the globe that aspire to a dynamic technology marketplace.

Creative Thinking in Private Equity

I recently had a chance to attend a meeting with a partner from Aventura Investment Partners as a part of a Wharton program looking at private equity in emerging markets, an area that I find extremely exciting. Aventura is doing several investments in Senegal, targeted at the value chain around agricultural production and also in health care. I can't go into the business models they are using right now, but there is some very innovative thinking required to bring development to areas like rural Senegal. As one of my Nigerian friends recently commented to me, traditional "aid" just hasn't worked. This is the kind of private initiative that has the chance to make dramatic and sustainable changes in a society. I imagine we will see a lot more funds take on challenges around development, especially if projects like these have success.

The Next 4 Billion

I recently got a copy of the joint IFC and World Resources Institute report The Next 4 Billion. I am asking my friends in the technology sector to look carefully at the issues raised by this report: specifically, how to accelerate living standards, productivity and quality of life for the world's poorest using private sector resources and market-based mechanisms. Thinking in the developed world has changed radically in only a few decades: there is a genuine consensus that developing markets aren't there to be exploited, but to be developed into first-class market economies. Many (most?) of my friends are from emerging market countries, so I am confident this will be of interest to many of you.

I am convinced that business models are not yet there, but that that they are waiting to be unlocked by creative and innovative individuals. Since the problems with business oriented models aimed at developing markets is often one of scale, a big part of the solution is likely to be technology based. This is about developing a better future for humankind. Please give it some thought.