Saturday, January 4, 2020

Is the Government Maximizing Digital GDP?

There is a growing body of evidence that the current economic measures are not capturing the full power of the digital economy. More particularly, digital content and the digital economy are not fully utilized. The Theory of Transactional Clusters starts to build a broad/general theory based on existing cluster research to better determine how information sharing within the digital economy impacts innovative growth.

Data has exploded over the past few decades. The value associated with digital services, software, and its impact on industry development is elusive at best. Older models are limited by the assumptions gained during their historical development. GDP is one such measure of national output but often doesn't do well in calculating digital value. Research has shown that digital content can increase GDP by as much as 6% (Byrne & Corrado, 2019).

From an economic standpoint, digital content represents only a sliver of total economic value. According to one of the largest Chinese technology manufacturers Huawei Technologies Co, we are skipping over a significant portion of our productive value in the GDP debate (Wladawsky-Berger, 2017). There is real value that will drive future markets and we have only just started to calculate that value. 

The Federal Research discussion on the value of consumer goods is broken down into the home goods that we buy to access networks and the subscription services for digital services (Byrne & Corrado, 2019). The value not reflected in standard GDP measurements amounts to approximately $1,775 per connected user per year from 2004 to 2017. The formula they use for the value of consumer digital services is below (hardware+subscription):

(Byrne & Corrado, 2019)
There is growing consensus that digital innovation has real value and influence on the development of new wealth. If we add in business development networks (i.e. collaborative networks) into the overall mix we will likely find that the value of efficiencies and innovation isn't being fully realized. We are missing a golden opportunity to develop areas of our nation that spearhead new ways to return manufacturing back to the U.S.

One of the major advantages of technology is that it creates spill over that speeds the pace of cluster growth.. "The digital spillover happens when technology accelerates knowledge transfer, business innovation, and performance improvement within a company, across supply chains and amongst industries, to achieve a sustainable development economic impact"(Xu & Cooper, 2019, p. 24).


Principle: Data services and technology have real value on innovation and GDP.


Consider that emerging online networks and software empowers companies to collaborate in ways that was not possible 20 years ago. Information is increasingly being shared and having major impact on jobs, life, and the economy as we know it! Those networks lead to innovation that is responsible for things like new cell phones and improved government efficiencies.

As much as $1.7 Trillion can be added to the economy by 2025 through digitization (Xu & Cooper, 2019). The same report said that 24.3% of the global GDP will be from digitization. Matched with proper cluster management it is possible that number could be much larger putting the U.S. on a leading path of inventors and builders. 

Principle: New inventions and the Butterfly Effect Increase Cluster Development.

In the cluster model the right factors lead to innovation and in turn impact the growth potential of the entire cluster. Think of a new manufacturing method in one company and how it is quickly adopted throughout the cluster to strengthen the entire system. The networks (physical and virtual) improve the speed of technology transference to other members of the system that creates benefits for the entire cluster. 


Principle: Technology can Increase Innovation through Connecting Ideas


Innovation occurs by connecting new and unique ideas to solve problems. Companies that are in close proximity to each other, share resources, and have movement of employees (spill over) have an easier time innovating. In the cluster model it is possible to see how creative destruction (Schumpeter) leads to pressure to innovate through the need for change, the firm invests in new products/services, and the social networks create and disseminate that innovation throughout the entire cluster. 


In the physical world, companies have an advantage by being next to each other and share physical assets. In contrast, in the virtual world companies have the mutual advantage of sharing intellectual resources. Physical proximity enhanced with digital interactivity that leads to product innovation through the sweat spot of economic growth. 


According to an article in Wall street Journal the U.S. has the largest digital economy 35% of GDP when compared to 18.5% average for other advanced nations (Wladawsky-Berger, 2017).  The number further represents about 1/3 digital assets and 2/3 digital spill over. Spill over often results in additional innovation as its make its way throughout its cluster.


The digital economy is going to continue growing. According to a 2017 Huawei Technologies Co., Ltd. and Oxford Economics study entitled Measuring the true impact of the digital economy, the digital economy will move from 15.5% of the entire global economy in 2016 to 24.3% in 2025. The U.S. should be leading that growth sector by making adjustments now to enhance future invention and manufacturing sectors.


More interesting the same study found that for every $1 invested in digital technologies over the past three decades a whopping $20 was added on average to GDP (Xu & Cooper, 2019, p. 24) That was much higher rate of return when compared to other investments that maintained on average a $3 return per $1 invested. As investment in technology increases so does wealth increase for a nation.

Principle: Investments in national technology leads to high impacts on GDP.

Interactive clusters strength is based in part on its infrastructure. Of which, the ability to share data and information relies heavily on high speed data delivery that can move ideas and resources quickly. Cities that invest in their technology infrastructure may find better opportunities for future growth as networks form to improve cluster development.

Principle: Technology infrastructure can enhance cluster development.

Our digital GDP provides a major strategic advantage that will lead to national innovation when harnessed properly. It is through this digital economy and the innovation it provides that new products that enhance manufacturing occur. When we put people to work building the products our companies invented we will find, not only our national wealth growing, but also our personal and local income.


There are two important things to consider when fitting this study into an economic cluster research....


1. Digital collaboration networks create value for businesses within a cluster. 

2. Bunching these networks into interactive clusters may enhance GDP through market driven innovative outcomes.

The study I'm working on fits with modern cluster research but was developed semi-independently from other theories. It has a few advantages that include sustainable development and the connecting of a few theories into one that may lead to break out markers. It is not a finished product but you may read about how far I am HERE 

David Byrne, Carol Corrado (2019) Accounting for Innovations in Consumer Digital Services: IT still matters Federal Reserve Board, Washington, D.C.https://www.federalreserve.gov/econres/feds/files/2019049pap.pdf

Wladawsky-Berger, I (September, 2017). GDP Doesn’t Work In A Digital Economy. The Wall Street Journal. Retrieved https://blogs.wsj.com/cio/2017/11/03/gdp-doesnt-work-in-a-digital-economy/

Xu, W. & Cooper, A. (2017). Measuring the true impact of the digital economy. Huawei Technologies Co., Ltd. and Oxford Economics.
  https://www.huawei.com/minisite/gci/en/digital-spillover/files/gci_digital_spillover.pdf

Thursday, August 15, 2019

Is China Surpassing the U.S. in Intellectual Capital?

The U.S. is losing its intellectual advantages when measured against other emerging nations like fast growing China. Intellectual capacity fuels our economy with new products and services and when this declines economic positions change. China's intellectual capacity seems to be racing at breakneck speed to match U.S. superiority in PhD candidates, scientific publications and patents. To retain the nation's current economic position there must be renewed interest in the development of educational and Ph.D programs to push innovation to the forefront of scientific discovery. Patching holes in the brain drain seems more pressing when we compared to intellectual outputs in other nations.

We live in a complex society that insists on increasing amounts of technology and knowledge to manufacture new products.  According to the article Do We Need More Scientists? in National Affairs there was a serge of investment into science in the 1950's when the USSR launched Sputnik, (Teitelbaum, 2003).  In the 1970's and 80's research institutions warned of the consequences of not having enough scientific capacity. The Dot.Com boom of 1990's again saw shortages of U.S. scientific ability widen and we began to recruit heavily from overseas to narrow that gap.

The U.S. is in a difficult era where significant amounts of our manufacturing shifted to cheaper international locations. Compounding the problem further, our schools are wobbly and don't consistently produce the skill levels needed to foster adequate scientific development. Attracting investment in manufacturing and development rests in part on our ability to develop useful intellectual capacity.

To more clearly discern if we have enough intellectual capital we can look at a couple of markers that include the hiring of doctors from overseas, Ph.D. graduates, scientific publications and patents.

H-1B Visas

Intellectual capital and our ability to general new ideas has always been central to innovation. New ideas are build from study and research that converts into knowledge of the past and ideas on how to solve problems for the future. The U.S. imports intellectual capital through a visa program based business skill needs. H1-B visas, while not always Ph.D. levels, do provide an indication of need for further scientific and technology oriented skills.

According to the Pew Research Center, since 2009 the demand for H-1B Visas have skyrocketed and meet quotas within the first weeks of application dates (Ruiz, 2017). From 2000 to 2018 the U.S. saw business submit work visa applications increase from around 110,000 to 200,000 respectively. Approximately 90% of applications are from the STEM related fields such as computer, math, science, engineering, etc...  Of these applicants 5% are Ph.Ds and 4% are Master Degree holders.

Work visas are a strong indicator that we have such a high demand for certain types of skill and knowledge that we import it.  While many of these recruits have something of value to provide our country they should be used more as a cushion between increased demand and lack of supply. Chronic short-falls in talent should concern stakeholders of industry-education misalignment.

Ph.D. Graduates

OECD reports 68 thousand U.S. PhD (.03 % of population) candidates graduated in 2014 out of 214 million citizens (Gray, 2017; OECD, 2016).  In the same year, Germany had 29k Ph.D. graduates (.035% of population) divided by 81.2 million population.  In contrast, in 2014 China is way behind the long curve by graduating 53,853 new Ph.D graduates (.004% of population) out of 1.364 billion people (Mei, 2018).

When we compare Ph.D graduates of the two countries over a given time-frame we can gain a deeper insight into the nature of the problem. China has a large population of relatively uneducated low-skilled workers. They have increased their PhD. institutions. We can see this change in comparing graduated during a certain time frame. The U.S. graduated 47K Ph.D students in 1998 and 67k in 2014 (OECD, 2016)  China over the same time frame  graduated 7.5 K in 1998 and 53K in 2014 (Mei, 2018).
Scientific Publications

Another way to look at growing innovation is through the eyes of scientific publications. Doctors often publish much more than any other educational group and indicates the presence of scientific activity. Reviewing publications will tell you a lot about which countries are creating and developing some of the most thought provoking advancements. It is those advancements that make the biggest difference.

 The Organization for Economic Cooperation and Development indicates that U.S. is growing in scientific publications but China is increasing its intellectual capacity at a much higher rate (OECD, 2016). Between 2003 and 2012 China went from 90K to 400K (+77.5%) highly cited papers. Comparatively the U.S. went from 390K to 590K (+51%) highly cited publications during the time period.

You can see from the chart that it is possible China may have surpassed the U.S in scientific publications. If not yet it wont be long! It is important consider that scientific publications lead to scientific discovery. It also provides some understanding of intellectual and innovative capacity. Much will depend on the quality of the publications for development. 



Patents

Patents help gauge improvement in the protection of intellectual discoveries and innovative products. They often include new products, additions, technologies, and discoveries. In 2014 The U.S. had 615,243 patent submissions and out of these 326,032 patents were granted as original (U.S. Patent and Trade Office, 2016). Comparatively, China in 2014 submitted a whopping 964,859 patent applications and was awarded 246,895 patent grants (WIPO, 2019).

While the U.S. is still producing the most patents in the world, the Chinese are trending up quickly. For example in 2008 the U.S had 185,224 patent approvals and in 2014 that number increased to 326,032 (U.S. Patent & Trademark Office, 2016). Comparatively, China in 2008 had 2,329 patent approvals and in 2014 earned a whopping 246,895 patent approvals (Wipo, 2019).
How can we Improve U.S. Intellectual Capital?

1. Rethink Education. Education is vital to today's success as an individual and as a nation. We are not graduating enough people with STEM skills and must rely on importing that talent from overseas. The need to use education to prepare Industrial Era factory talent has been replaced by Big Data Era demand for higher order thinking skills. Our schools will need to set the preparation work in the early stages of life and foster them throughout people's lives.

2. Cultural Adjustments. We should think of science as an essential aspect of our lives. Move scientific thinking from the periphery of learning to its center. Exposure brings awareness of the influence of science to the general public. When people are exposed to science in popular media, formal education and within their daily lives more critical ways of viewing the world occur.

3. Adjust the Labor Market and Incentives. Most students don't like math, logic, and all the different components that make their way into fields of science. While we may not be able to control how people feel we can better ensure that those with science degrees can find jobs. Companies that import new talent through the H1-B visa programs should first consider American talent before engaging in international recruitment.

Mei, Y. (2018). Transformation and trend of doctoral education in China and Poland (1980s-2010s) A comparative study. 21st Century Pedegogy, I (47-60). https://www.degruyter.com/downloadpdf/j/ped21.2018.1.issue-1/ped21-2018-0008/ped21-2018-0008.pdf

OECD (2016). OECD Science, Technology and Innovation Outlook 2016.  Retrieved June 27th, 2019 from https://read.oecd-ilibrary.org/science-and-technology/oecd-science-technology-and-innovation-outlook-2016_sti_in_outlook-2016-en#page149

Ruiz, N. (April, 2017). Key facts about the U.S. H-1B visa program. Pew Research Center. Retrieved https://www.pewresearch.org/fact-tank/2017/04/27/key-facts-about-the-u-s-h-1b-visa-program/

Teitelbaum,, M. (Fall 2003). Do We Need More Scientists? National Affairs, Retrieved
https://www.nationalaffairs.com/public_interest/detail/do-we-need-more-scientists

U.S. Patent and Trademark Office (2016). U.S. Patent Statistics Chart Calendar Years 1963 - 2015. Retrieved
https://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm

WIPO (2019). China-Statistical Country Profiles. World Intellectual Property Organization. Retrieved July 1st, 2019 https://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=CN

Permission to republish with proper attribution. Dr. Murad Abel








Wednesday, May 29, 2019

Selecting Your Research Pantheon!

Research teams can be complex and best ensuring that a research product succeeds is by staffing it with the right people that have the knowledge complete the work. I'm working on conducting a research project and have put together a team of interested scientists and professors. Each brought with them certain skills and a diverse background to ensure that their contribution is meaningful.

I put together a few ideas on how to select your research team. They are generic enough to apply to most situations.

1. Define Your Research, Objectives and Plans: Before you start putting your team together you should have a pretty good idea of what you want to do. Make sure that you have everything defined before moving forward.

2. Select Your Team on Skills: Your team will determine your potential success. Ensuring that you bring on board the right skills is essential. You may want to think in terms of experts in the field, familiarity with research design, people who can help create practical outcomes, etc....

3. Create Timeline and Plan: Having milestones and timelines helps to keep people on track. It is helpful for people to know when deliverable are due. Just make sure you build in some spare time in case there is an unexpected delay.

4. Designate Tasks: To complete your timelines and time-frames you need to apply the skills specifically. Therefore, put people on the teams and tasks they can do well.

5. Regular Check-Ins and Follow Ups: It is helpful to have check-ins to ensure that you are meting your deadline. Allowing each person to go around and discuss what they are working on helps to keep everyone else informed.

Sunday, May 26, 2019

Giving Back to Kids-Keeping Orphanages Supplied

Yesterday I had the opportunity to go down to the orphanages and bring some needed supplies. One of the things they need is cleaning stuff, toilet paper, and other items that are more mundane. Most people want to buy food or bring used clothing but in many cases they need other things such as cleaning supplies, new soccer shoes, and other items. At the present time I'm focused more on providing shoes for their soccer team as well as ensuring they have the basic supplies they need.

When you frequent these orphanages on a regular basis you come to realize that these kids have needs for love, affection, and a relationship. They begin to remember you and know your name. They grab your hands and walk with you to tell you something about their lives. They want to feel special!

That is one of the reasons why I want to spend some time working with them. They are pliable human beings that allow my activities to make a difference. One kind word, a few resources, and some encouragement and these kids can do some amazing things. We set them up for a better life their parents could not provide.

Of course my dog Chewy loved the attention as well. :)πŸ’“πŸΆπŸ•πŸΆ

If you want to contribute to basic supplies or items such as soccer shoes send me your donation and I can spend when I go down. We have jerseys but no shoes for the soccer team...so this is on my mind.  PayPal muradabel@gmail.com  Venmo Murad Abel @muradabel

Please remember that my personal information is only for direct supplies, food, etc....

You may be more interested in donating to a sustained 401K that has been around for 26 years. They do a great job. If you would like to donate for the general need to sustain life through Corazon De Vida which is a U.S. based non-profit. https://www.classy.org/fundraiser/1984592

These kids need a ton of supplies.


Monday, May 20, 2019

4 Tips on Marketing in the Wine Industry

Dr. Murad Abel
Marketing is an essential down to earth need of any successful business. Whether you actively marketing on social media or you provide great customer service for referrals you will inevitably need to keep people interested in your product. In the wine industry marketing takes a unique turn as businesses must blend image, atmosphere, service and quality to achieve their goals.

With a solid strategy and focused effort they can bring interest and excitement to their wine.

Spend some time in Baja or in Napa Valley and you will soon find luxurious wine mixed with beautiful environments. Wine enthusiasts from all over the world travel to the area to get their taste buds teased by the unique offerings of each winery.

Image: Each winery creates an image that makes statements about who they are, what they want to accomplish and what they hope to achieve. Successful images fit within the core wine demographic but still niche enough to attract high return customers.

Atmosphere: The atmosphere is what creates memories and returns. No one want to sit in a garage and drink wine out of a box. Providing the right atmosphere makes a big difference in the overall ability of people to get immersed in their environment to create the total experience.

Service: Service helps people to fell special. People don't spend money or buy things unless it is out of necessity or they will feel good about themselves. Service provides them with positive feelings and images of their worth within the business.

Quality: If you are going to spend your time traveling, vising wineries and savoring the flavors you do not want to be purchasing cheap dollar store wine. Make sure your offerings are some of the best.

Saturday, May 11, 2019

How Entrepreneurs Find the Value of their Products

94th Aero Squadron
New entrepreneurs have a great product and a great idea! They next great widget is going to hit the market by store. There is a problem! They have nooooo idea what that product is worth! This is particularly true with new product launches and unique products. The value is dependent on its market and to best improve your chances of launch success you would be best served by knowing how to find a value.

A product priced too high might fail just after launch and not be able to gain momentum with consumers. A price that is too low might generate a lot of sales but could end up damaging the long-term brand image of the company. Low quality and value is not something most companies want to be seen as.

Below are three methods you could use. They may be modified based on the individual circumstances and factors associated with the market.

Cost Method: The method of cost plus some safe margin. You should figure out what you need to break even and then what you need to make a reasonable return on investment. At this point you know what number is the bench line where above means you are doing better than expected and a little below means the product has ties up capital.

Perceived Value: Consumers may see different value based on their product. Typically they make some type of mental comparison and then determine what they would be willing to pay for that product. Sampling consumer price points can be helpful in determining what the wider market would be willing to pay.

Market Comparison: It is beneficial to compare your product and its features to similar products in the market to determine its competitive place. Depending on which strategy you plan on using, the market average becomes a type of benchmark. Know how your product's features line up against competitors.