The writer is a professor at Ashoka University and former chief economic adviser, government of India. Josh Felman also contributed to this article
Developing countries have been given new marching orders by western economists: your successful export-led model of growth is dead, please find an alternative. If their counterparts in the developing world follow suit, the consequences are clear: without open markets, developing countries’ prospects will shrink.
Consider some important history. The new export pessimism is, of course, not new at all. In the 1960s, Raúl Prebisch and Hans Singer invoked it to argue for industrialisation through import substitution. They noted that developing countries tended to produce commodities, and argued that commodity prices inevitably trend downward. So they insisted that an export-based development strategy would simply not work. Many developing countries consequently focused on their domestic markets — and fell further behind the west.
Meanwhile, the east Asian tigers — Singapore, Hong Kong, Taiwan and Korea — ignored the fashionable consensus and promoted their manufacturing exports. When they succeeded, China followed, using exports to catapult itself from underdevelopment into a superpower in one generation. The hyperglobalisation of the late 1980s brought golden years for developing countries: for the first time in centuries, the poorer countries as a group started to catch up.
This historic progress is now under threat. China’s success has spawned a populist revolt against globalisation, convincing western intellectuals that the advanced world’s political capacity for open markets has been exhausted. This is the claim that developing countries are being asked to accept. Call it export pessimism, mark two.
But there are at least three reasons why developing countries should not succumb to export pessimism. First, the reports of globalisation’s demise have been greatly exaggerated. It is true that world exports of goods have declined to about 21 per cent of world gross domestic product from about 25 per cent before the 2008 financial crisis. But global exports of services have continued to increase, rising to about 7 per cent of global GDP from 6.5 per cent.
Covid-19 could accelerate the growth of services exports. After all, the pandemic is encouraging distanced activities, as opposed to those that require physical contact. Physical shops are being replaced by ecommerce, which can be designed and serviced in developing countries. Similarly, if western companies are going to allow employees to work permanently from home, they can as easily — and more cheaply — be located in developing countries.
Even if global manufacturing exports continue to stagnate, exports of most developing countries can still grow rapidly, as long as they gain market share. This is quite feasible: China’s wages are rising as it becomes richer, causing it to lose competitiveness in low-skilled work. Already, its share of global low-skill exports has declined, allowing other exporters to fill the gap.
How much space will be created for developing countries? Shoumitro Chatterjee and I recently calculated that China still over-exports “low-skill goods” such as textiles, clothing, leather and footwear. One indicator is the enormous difference between its share of the developing world’s exports of such goods (over 45 per cent) and its share of the developing world’s supply of unskilled labour (25 per cent).
China will continue to cede space for geopolitical reasons. Multinationals are slowly exiting the country, insuring themselves against the risk it could be isolated by its trading partners. As a consumer, China could also become a bigger market for low-skill consumer goods. In effect, it would do for poorer countries what the west did for China — provide a ready market for its goods. This, of course, would require Beijing to become less protectionist.
Is there any guarantee that any of these factors will actually lead to export success for poorer countries? No: they will still have to do the hard work of creating the conditions for businesses to compete effectively in global markets. But the opportunities are there.
Western economists, academics and policy advisers must keep those opportunities alive, pushing their own countries to sustain open markets, arguing against protectionism globally, and nudging China in the right direction. At the very least, they should not be purveyors of this export pessimism disguised as pragmatic resignation. If this intellectual dereliction of duty leads to tragic consequences for the poorer parts of the world, they will bear some responsibility.
Scoreboard: Narendra Modi cricket stadium a monument to India’s tycoons
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In this edition of Scoreboard, we discuss what the new Narendra Modi cricket stadium reveals about Indian business, explain how a refereeing row imperils a key broadcasting contract for Turkey’s indebted football clubs, talk to the Thai entrepreneur behind Asia’s answer to UFC, and more.
Narendra Modi cricket stadium also a monument to India’s tycoons
India’s cricket politics were on global display this week when the country’s national team hosted England for the first-ever match at the Narendra Modi Stadium, writes the FT’s Benjamin Parkin from the newly built ground in Ahmedabad.
The game itself was over in two measly days, the quickest Test match since 1935. But the world’s largest cricket stadium, named after the prime minister, will stand as a monument to how Indian politicians have for decades used the country’s favourite sport as a launch pad to greater power and influence.
And the venue also highlights the parallel role that India’s corporate titans have played in shaping the country’s cricket.
Stands at the ground are named after Mukesh Ambani’s Reliance Industries and Gautam Adani’s eponymous conglomerate, India’s most powerful industrialists whose close ties with the prime minister have faced intense scrutiny.
This proved immediate fodder for Modi’s critics. “Wonder whether Modi-ji prefers to bat from the Ambani end or the Adani end,” Prashant Bhushan, an anti-corruption lawyer, wrote on Twitter.
Tycoons have for decades thrown money at Indian cricket. But their sway has grown exponentially — and all the more controversially — with the arrival of the money-spinning Indian Premier League tournament in 2008.
While supporters argue this helped fund grassroots development, critics say the swirl of money, sports and dealmaking leads to conflicts of interest. Cement magnate Narayanaswami Srinivasan was forced to step down as president of the Board of Control for Cricket in India, the sport’s national governing body, in a damaging scandal in 2015.
India’s business leaders have long been cricketing patrons. After independence, sprawling conglomerates such as the State Bank of India and Tata Group hired dozens of promising players, providing a steady income.
The commercialisation of Indian sport has only increased its appeal. No corporation has loomed as large over Indian cricket in recent decades as Ambani’s Reliance, an energy-to-telecoms conglomerate.
It sponsored the 1987 Cricket World Cup, the first held in India, famously hosted shareholder meetings in a cricket ground and owns the successful Mumbai Indians IPL franchise. It is also an owner of the fledgling Indian Super League, a football tournament.
Adani’s involvement in sports has thus far been comparatively limited. The company is, however, rumoured to be among those interested in buying a new IPL team after the BCCI in December approved adding new franchises to the league.
Were that to happen, Ahmedabad-based Adani Group would find at least one world-class ground in its neck of the woods: the Narendra Modi Stadium.
Read the FT analysis of how Modi is harnessing cricket to remake India here.
Fenerbahce vs beIN Sports: refereeing dispute spills off the pitch
A fight between Turkish football club Fenerbahce and broadcaster beIN Sports has spilled off the pitch — and on to players’ jerseys, writes Ayla Jean Yackley in a special dispatch for Scoreboard from Istanbul.
For months, Fenerbahce has complained of bias at the Qatari TV company, which owns the broadcasting rights for the Super Lig, Turkey’s top football division.
The club has accused beIN Sports of using selective camera angles to negatively influence the video assistant referee (VAR) in reviews of controversial plays. BeIN denies the claim. Some industry figures argue that the row distracts fans from the team’s recent lacklustre performances.
The latest salvo came last weekend when Fenerbahce players, including former Arsenal star Mesut Ozil, mocked the broadcaster by using its logo to brandish “beFAIR” on its T-shirts.
The TV company responded by starting legal proceedings against Fenerbahce in an Istanbul court for allegedly violating its intellectual property by misappropriating the logo. The club did not immediately respond to requests for comment.
“Why would we deliberately try to disenfranchise one of the biggest clubs in Turkey?,” a beIN executive told Scoreboard. “It doesn’t make any sense, commercially or otherwise.”
The row could have wider ramifications, imperilling a key source of revenue for Turkey’s heavily indebted football clubs.
BeIN Sports acquired Turkish satellite network Digiturk in 2015, and two years later won a five-year contract worth an annual $500m with the Turkish Football Federation and its clubs to show league matches.
It renegotiated the sum down to $420m for the 2019-2020 season as the country’s economy stumbled and the Turkish lira suffered a sharp depreciation. This season, the coronavirus pandemic forced the figure even lower to $370m.
That’s still a sizeable sum at a time when Turkish clubs have seen other revenue streams dry up in the pandemic.
Nihat Ozdemir, head of the TFF, has said debt at the country’s top four clubs stands at a combined TL14bn ($1.9bn). Fenerbahce’s most recent balance sheet from November said its total debt and liabilities were TL3.29bn ($442m).
Ozil’s signing has sunk the club deeper into the red. His three and a half-year contract will earn him at least €9m and a further signing bonus of €550,000. The club is betting that the player will sell more merchandise while taking the club to a league title — and, with it, lucrative Champions League qualification.
BeIN Sports’ contract with the TFF expires next year. The row with Fenerbahce is devaluing Turkish football rights and could even make beIN Sports think twice before bidding again, said a person close to the TV company’s thinking.
As for Fenerbahce, the “beFAIR” protest ahead of last Sunday’s match did little to improve its performance at home against 10th place Goztepe. Fenerbahce lost 1-0.
Can One Championship beat up the UFC?
Chatri Sityodtong does not lack ambition. The Thai entrepreneur’s aim is to build the mixed martial arts company he founded into a $100bn global sports platform, writes Stefania Palma in Singapore.
One Championship, Asia’s answer to the Ultimate Fighting Championship, is reportedly valued at $1bn after raising $346m from investors including Sequoia Capital, GIC and Temasek.
Founded in 2011, One Championship says its MMA competition is broadcast to more than 150 countries. But Sityodtong has bigger goals.
“We are more than prepared to invest a minimum of a billion dollars into what we believe is a $100bn long-term opportunity,” he told Scoreboard.
The Singapore-based company is considering an IPO in markets including the US, as well as a merger with a special purpose acquisition company to raise funds after receiving inbound interest starting late last year. Private capital is also an option.
“There is a good chance of a fundraise happening in the next 18 months, maybe even as soon as this year,” said Hua Fung Teh, group president at One Championship.
Investors must determine whether fighting talk stacks up to a strong business.
The pandemic forced the company to suspend live events — one of its biggest revenue sources — for three months last year. It cut approximately 20 per cent of its staff last June.
Yet even before Covid-19, the start-up had registered losses of S$130m (US$98m) in 2019, up from S$82m a year prior and S$34m in 2017. This was coupled with cash burn almost doubling from S$78m in 2018 to S$137m in 2019.
Sityodtong said the cash burn rate in 2020 “dropped dramatically” and would continue to fall, while revenues would hit a record high this year.
“I don’t think any $100bn or $200bn company was built off burning, like, 100 bucks a month,” said Teh.
One Championship is now building its entertainment arm. Its first project is a TV series The Apprentice: One Championship edition — a spin-off from the American franchise once fronted by former US president Donald Trump.
Filmed in Singapore last year, the show will air first in Asia next month. The trailer — featuring rock music and glitzy skylines — shows 16 candidates doing physical and business challenges to win a $250,000 pay cheque to work with Sityodtong.
“You bombed, you bombed and you bombed!” he shouts in the trailer. Sityodtong is determined his company steers clear of the same fate.
Amanda Staveley, the financier who tried to orchestrate Saudi Arabia’s takeover of Newcastle United, lost her court battle against Barclays over the UK bank’s 2008 emergency fundraising. The judge ruled that Barclays was “guilty of serious deceit” but did not award damages to Staveley because PCP Capital Partners, her investment firm, could not prove it would have obtained debt funding for a deal.
The International Olympic Committee has chosen Brisbane as its “preferred partner” to host the 2032 summer games. It is the first step in a new selection process, with the IOC beginning non-binding talks with potential host cities rather than undergoing an expensive and competitive bidding process.
RedBird Capital is nearing a deal to pay $750m for a roughly 10 per cent stake in Fenway Sports Group, valuing the ownership vehicle of Liverpool and the Boston Red Sox at more than $7bn, according to Sportico. The FT previously reported the two sides were in talks for a minority stake purchase, after a different deal between FSG and a blank-cheque company helmed by RedBird’s Gerry Cardinale fell through.
Under Armour slashed its sponsorship commitments in half in 2020, after the US sportswear company pulled out of contracts with the likes of UCLA and Cal, two prominent American collegiate sports departments. The company is on the hook for some $362m in sponsorship contracts from 2021 onward, down from $679m before the pandemic.
Inter Milan’s owner is selling a $2.5bn stake in one of its subsidiaries ahead of looming debt repayments. Suning, the Chinese conglomerate part-owned by Alibaba, has also been looking to raise $200m to strengthen the Italian club’s finances.
Tiger Woods was rushed to hospital for surgery after he seriously injured both legs in a car accident. The golf legend was already recovering from his fifth back surgery, which has kept him away from competition.
The new documentary on the career of Brazilian great Pelé strays from the football pitch to ask whether sport can ever break free from politics, according to the FT’s chief film writer Danny Leigh.
Kevin Mather resigned as president and chief executive of the Seattle Mariners after taking aim at two players’ English language skills and claiming one veteran was “probably overpaid”. John Stanton, chairman of the Major League Baseball team, said there was “no excuse” for Mather’s comments.
Retired MLB great Cal Ripken Jr is the latest celebrity athlete to join the board of directors of sports-wagering platform DraftKings, joining Michael Jordan, who was added to the board in September. Ripken Jr played 21 seasons with the Baltimore Orioles, where he earned the nickname “Iron Man” for his streak of playing 2,632 consecutive games.
What do the Toronto Raptors, “Bring it On” and that beguiling Kombucha girl meme have in common?
They’re all part of the savvy, succinct TikToks compiled by social media personality Ashley Docking to recap each game by the Canadian National Basketball Association team. She offers sophisticated analysis of the Raptors’ performance, spliced with movie clips and funny quips, such as by comparing Kyle Lowry‘s game to bitcoin.
Scoreboard is written by Samuel Agini, Murad Ahmed and Arash Massoudi in London, Sara Germano, James Fontanella-Khan and Anna Nicolaou in New York, with contributions from the team that produce the Due Diligence newsletter, the FT’s global network of correspondents and its data visualisation team.
NYSE to suspend trading of China’s Cnooc next month
The New York Stock Exchange is to start delisting proceedings against China National Offshore Oil Corporation to comply with an executive order from Donald Trump that bans Americans from investing in companies with ties to the Chinese military.
The NYSE on Friday said it would suspend trading in Cnooc’s American depository shares on March 9, after determining that the company was “no longer suitable for listing” following the order that the former US president signed in November.
The order banned investing in several dozen Chinese groups that were last year put on a Pentagon blacklist of companies that are accused of working with the People’s Liberation Army and threatening US security. Trump set a January 28 deadline for the ban to take effect, but President Joe Biden pushed the deadline back to May 27.
The NYSE move comes as Biden evaluates a number of assertive actions that Trump took against China during his last year in office. The commerce department last year put Cnooc on a separate blacklist — called the “entity list” — that makes it hard for US companies to sell products and technology to the Chinese oil group.
The Biden administration has not made clear whether it intends to keep Trump’s executive order in place. But the new president and his officials have so far adopted a tough stance towards China over everything from its economic “coercion” to concerns about its clampdown on the pro-democracy movement in Hong Kong to the repression of more than 1m Uighur Muslims in the northwestern Chinese province of Xinjiang.
Earlier this month, Biden used his first conversation with Chinese president Xi Jinping since assuming office to raise concerns about Hong Kong and Xinjiang, and aggressive Chinese actions towards Taiwan. Antony Blinken, secretary of state, also described the detention of Uighurs in labour camps as “genocide”.
Jen Psaki, White House press secretary, has said the administration was conducting a number of “complex reviews” of the China actions that Trump took. The former president put dozens of other Chinese companies on the Pentagon and commerce department blacklists, including Huawei, the Chinese telecoms equipment group.
Bond sell-off roils markets, ex-Petrobras chief hits back, Ghana’s first Covax vaccines
The yield on the benchmark 10-year Treasury exceeded 1.5 per cent for the first time in a year and the outgoing head of Petrobras warns Brazil’s President Jair Bolsonaro against state controlled fuel prices. Plus, the FT’s Africa editor, David Pilling, discusses the Covax vaccine rollout in low-income countries.
Wall Street stocks sell off as government bond rout accelerates
Ousted Petrobras chief hits back at Bolsonaro
Africa will pay more for Russian Covid vaccine than ‘western’ jabs
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