In January 2011, Egyptian activists, inspired by a successful uprising in Tunisia, began organizing a demonstration using Facebook. In a matter of days, thousands of protesters – who learned about the event through the social media platform – gathered in Cairo’s Tahrir Square to protest the longstanding Mubarak regime.
Then, in an attempt to quash civil unrest, the Egyptian government soon took the bold step of cutting off the country’s internet access. As the size of protests swelled from thousands to millions of people, the Mubarak regime quickly realized their mistake: never cut off a millennial’s internet access.
Mubarak was ultimately forced to resign after just 18 days of massive protests, but in that time Egypt’s Arab Spring demonstrated two major things: (1) the incredible organizing power of the internet, and (2) the how quickly a government could slam the door on the free flow of information.
The Egyptian government was able to quickly and effectively shut down the chokepoints that connect its citizens to the outside world. Etisalat, for example, is a centrally located routing system that could see up to 58% of Egypt’s IP addresses.
In other words, Mubarak was essentially able to blockade every website in the world by making a few simple phone calls.
A New Era Of Internet Censorship
Egypt’s dramatic internet shutdown became a new template for other precarious regimes, but also sparked a broader global conversation around online censorship.
Today’s infographic comes to us from WhoIsHostingThis and it provides a detailed look at varying levels of internet censorship around the world today.
Internet users in North America and Europe enjoy relatively unfettered access to online content, while most countries in Asia, Africa, and the Middle East have some level of censorship. Torrenting is restricted in almost every country in the world, with a notable exception being Switzerland, where a laissez-faire approach is applied to downloading content for personal consumption.
It’s also worth noting that this map does not address government surveillance, which is ubiquitous even in countries with high levels of internet freedom.
The Anti-Information Age
If you want to liberate a country, give them the internet
–Wael Ghonim, Egyptian internet activist
Much of the world’s population accesses an internet that is at least partially censored. Countries have different motivations for restricting access and filtering content. Below are a few high-profile examples.
When most people think of internet censorship, China springs to mind. This makes sense as the country has a small army (upwards of 50,000 people) monitoring internet activity at all times. Also, much like Egypt, the government forces all online traffic through a mere three central routing systems. This makes it easy for censors to sift through all data entering and leaving the country.
China’s censorship apparatus is so advanced, it can take a very granular approach to repression and enforcement.
The country’s swelling blacklist of 100,000 websites, coupled with harsh penalties for any whiff of anti-government sentiment, have created an extremely restrictive environment for Turkish internet users.
In 2016, the government of Ethiopia blocked access to social networking sites to prevent cheating during the university entrance exam period.
Unauthorized surfing of the internet is a dangerous activity in the Hermit Kingdom. The primary smartphones, tablets, operating systems, and browsers used in the country were all developed by the government, and content on the 5,000 or so accessible websites is tightly controlled.
Slipping Through the Firewall
Even when censoring measures are pervasive and effective, people continually find ways to slip between the cracks. For years, people have used proxy servers and virtual private networks (VPNs) to access content beyond their country’s censorship wall, but censors are getting better at discovering proxy servers and simply blocking them as they would any other site.
As a result, newer techniques are gaining popularity:
Steganography is the science of hiding information. Basically, an innocuous file like an image can be stealthily encoded with information to evade detection by censors. Even changing a single pixel on a series of images can be used to relay a message, provided the recipient knows what to look for.
This circumvention tool uses partnerships with ISPs and other network operators to provide Internet freedom to users. Rather than trying to hide individual proxies, whole networks outside the censored country can become a conduit for the free flow of information.
An Investing Megatrend: How Emerging Wealth is Shaping the Future
Emerging markets are ascending on the global stage and wielding more economic power—and it’s drastically altering the investment landscape.
Globalisation is a rising tide that lifts all boats.
In an increasingly connected world, countries are engaging with global markets more than ever before. As a result, global wealth is shifting towards emerging markets. This megatrend—a global trend with sustained impacts—is profoundly influencing everyday life, society, and business.
Shifting Economic Power
Today’s infographic from iShares by BlackRock explains how emerging markets are classified, along with which countries are growing the fastest—and how investors can follow the money.
What Is An Emerging Market?
Every economy goes through five distinct stages of growth:
- Traditional Society: Based on primary industries, such as subsistence farming.
- The Pre-Conditions of Take-off: Spread of technology creates a more productive agricultural economy.
- Take-off: Industrialisation begins, and technological breakthroughs occur.
- Drive to Maturity: More complex manufacturing, and large-scale infrastructure investment takes place.
- Age of Mass Consumption: Urban society and a tertiary industry dominate, as disposable income grows.
Emerging markets fall into the transitory stages between ‘Take-off’ and ‘Drive to maturity’ as their economies modernise. Today, such countries offer lots of promise, but also come with a range of challenges:
- Pro: Greater return potential, growing middle class, increasing consumption
- Risk: Political instability, lack of infrastructure, lack of market access
Between 2000–2018, emerging markets’ share of global wealth has more than doubled from 10% to 24%. China is a major player in this transformation.
China’s Economic Might
China’s impressive trajectory from agricultural economy to global superpower cannot be ignored. The nation is on track to overtake the U.S. in terms of gross domestic product (GDP, nominal) by the year 2030.
|Year||🇨🇳 China GDP||🇺🇸 U.S. GDP|
China’s enormous growth has a ripple effect on its GDP composition. A more affluent middle class is buying higher-priced discretionary goods—such as cars and electronics—boosting the country’s domestic consumption.
Investors must keep an eye out for other emerging markets that are emulating China’s example.
One Piece Of the Puzzle
China is just one case study—several other economies are also making strides on the world stage. Each country brings unique advantages, but also barriers to overcome.
|Country||Real GDP Growth (2019E)||Strengths||Weaknesses|
|🇮🇳 India||7.4%||✔ Rapidly growing economy|
✔ Vast working-age population
|✘ Red tape
✘ Lack of infrastructure
|🇨🇳 China||6.2%||✔ Good infrastructure |
✔ High R&D spending
|✘ Ageing population
✘ High debt
|🇮🇩 Indonesia||5.1%||✔ Cheap labour|
✔ Diversifying economy
|✘Wide income gap
✘ Lack of infrastructure
|🇲🇽 Mexico||2.5%||✔ Integrated with global economy|
✔ Cheap and qualified labour
|✘ Political unrest
✘ Reliant on U.S. ties
|🇧🇷 Brazil||2.4%||✔ Diversifying economy|
✔ Strategic location
|✘ High production costs
|🇳🇬 Nigeria||2.3%||✔ High FDI|
✔ Diversifying economy
|✘ Political unrest
✘ Lack of infrastructure
|🇷🇺 Russia||1.8%||✔ Natural resources|
✔ Educated workforce
|✘ Political unrest
✘ Lack of FDI
|🇹🇷 Turkey||0.4%||✔ Cheap labour|
✔ Strategic location
|✘ Political unrest
✘ Red tape
Source: Global Finance Magazine
With these major emerging markets in mind, how can investors tap into the global wealth shift?
Where Are the Opportunities?
There are several avenues for an investor to play into this megatrend: structural solutions, consumer goods, and international investment.
Emerging markets are increasingly gaining access to technology. Growth in connectivity is closely linked with improved productivity, and many countries are ripe for a surge in online users.
However, much can still be done to speed up technological adoption, such as boosting 3G/4G network volume and coverage, and lowering the cost of data and smartphones to be more economical.
By helping solve some of these structural constraints through technological innovation, investors can tap into the economic growth of emerging markets.
As disposable income increases, a sizeable middle class will seek out products that elevate the quality of life. In India, domestic consumption is estimated to hit $6 trillion by 2023—four times its 2018 level.
The region’s spending will likely be propelled by higher-priced goods, as well as a wider variety of choices across food, transport, and fitness categories.
Global brands that plan to expand into emerging markets, or companies with a proven track record in these areas, are potential winners for investment.
Last but not least, investors can identify local winners in emerging wealth markets, through active or passive investing.
An active investment strategy would be to directly buy into individual company stocks, listed on a country’s stock exchange. Meanwhile, a passive investing strategy would be to seek out exchange-traded funds (ETFs) covering specific markets, and/or sectors within emerging markets. Many of these are also listed on major exchanges.
Diversifying either or both strategies across two or more countries can help mitigate risk. Investors can also choose index funds that broadly encompass all emerging markets.
As countries climb the economic ladder, the emerging wealth shift continues to gain momentum. By staying attuned to these macro changes, investors may unlock long-term growth from emerging markets.
Visualized: Ranking the Goods Most Traded Between the U.S. and China
This infographic ranks the top 10 exports and imports of the U.S. and China, the two most significant global economic superpowers today.
The Most Traded Goods Between the U.S. and China
From a young age, many of us were taught that sharing is caring.
Many countries have also followed this simple principle, in the interest of growth and prosperity, when doing business on a global scale.
Today’s infographic from HowMuch.net charts the top imports and exports between the U.S. and China, pulled from the Observatory of Economic Complexity’s (OEC) global market data for 2017.
Which items do you find most surprising?
Give and Take: The Trade Relationship of the U.S. and China
Two of the world’s largest superpowers today, the U.S. and China have typically had a long-standing trade relationship going back decades.
The table below shows the top 10 exports the U.S. sent to China in 2017, along with the proportion of each item in the total export value of $132 billion. The top 10 items account for 39% of total exports to China.
The Top 10 Exports from the U.S. to China (2017)
|Items||Value (US$B)||% of Total Exports|
|Aeroplanes and other aircraft||$13.1||9.9%|
|Vehicles with only spark-ignition internal |
combustion reciprocating piston engine
|Electronic integrated circuits; Processors and controllers||$4.9||3.7%|
|Machines and apparatus for the manufacture of semiconductor |
devices or of electronic integrated circuits
|Vehicles for transport of persons||$1.9||1.4%|
|Petroleum gases and other gaseous hydrocarbons||$1.7||1.3%|
While the majority of these are highly specialized, manufactured products─such as airplanes, integrated circuits, and semiconductors─the U.S. still relies on exporting many basic commodities such as gold, copper, and soya beans.
Below is the list of the top 10 imported products from China, and the percent that each product accounts of the total $444 billion in 2017. These top 10 items make up 30% of all products imported from China.
The Top 10 Imports from China to the U.S. (2017)
|Items||Value (US$B)||% of Total Imports|
|Telephones for cellular networks or for other wireless networks||$43.7||9.8%|
|Automatic data processing machines||$37.2||8.4%|
|Trycicles, scooters and similar wheeled toys & other toys||$12.3||2.8%|
|Games; articles for funfair||$5.4||1.2%|
|Units of automatic data processing machines||$4.4||1.0%|
|Electrical static converters||$4.6||1.0%|
|Reception apparatus for television||$4.2||0.9%|
China is best known for its electronics and technology-focused products─with electronics products accounting for two-thirds of the top 10 Chinese imports. In 2017, China also dominated all electronics imports into the U.S., claiming over 60% of the market.
But how has the recent trade war impacted the imports and exports between the U.S. and China?
The U.S.-China Trade War Continues
At one point, China was the United States’ top trading partner in terms of the total value of imports and exports. Since the trade war began in 2018, China has fallen to third place.
For example, soybean exports to China in 2019 are predicted to only reach a third of numbers seen in 2018, and the price of this commodity has been nearly cut in half.
In the first nine months of 2019 alone, the U.S. saw a 13.5% drop in imported products from China, due to actual and threatened increased tariffs. In addition, U.S. exports to China dropped by 15.5%─a significant loss of $53 billion.
The Future of U.S.-China Trade
To date, the U.S. has enacted tariffs on over $550 billion worth of imported products from China. In response to the U.S. tariffs, China has added tariffs to $185 billion worth of exported goods from the United States.
With the 2020 U.S. presidential election looming on the horizon, threats of increased tariffs seem to dominate headlines internationally. If these trends continue, many U.S. businesses—both at home and abroad in China—could find their bottom lines threatened by rising trade costs.
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