Emerging markets have often been quoted as one of the strongest investment opportunities because their yearly growth far outpaces that of the developed world. Very simple analysis would lead any observer to believe that developing economies simply do not have the same capital resources as developed economies and, therefore, have more to gain from capital investments. This generalization is derived from the Solow-Swan model for a country’s long-run economic growth, which posits that a country’s income is determined by its per capita level of capital, while also taking into account other factors such as population growth and technological progress. Because of the diminishing marginal returns nature of this function, nations that have lower levels of per capita capital, which are mainly developing economies, have the most to gain from capital influxes.

Taking the implications of this model to their absolute end in conjunction with the increasingly global nature of the world economy, per capita income should converge between nations in the long run. The historical data for economic growth, however, does not reflect our expectations. Using data from the World Development Indicators, we can regress country GDP growth from 1970 to 2005 on GDP in 1970. Keeping the Solow-Swan model in the back of our heads, we would expect the coefficient on GDP in 1970 to be negative because that would mean that having high income was worse for growth over time compared to low income.

Yet, the regression:

Growth1970 to 2005 = β0 + β1 x log(GDP1970)

generates a β1 value of 0.32. The data are telling us that high-income countries were more likely to grow faster than low-income countries in the past forty years. Given that the International Institute of Finance has observed that net capital inflows into emerging markets have been in the hundreds of billions of dollars over the same period of time, the regression’s results make little sense based on normal assumptions of economic growth.

Instead of living with this confusion, we can, instead, question the conventional expectations about the political and economic factors that surround emerging economies. By looking at the data and facts on the ground, the real answer to why emerging markets are underperforming compared to what our standard models predict.

Rising levels of national income are typically associated with higher living standards and higher qualities of life ratings. But, when compared to international improvements, are emerging markets doing anything drastically different? The amount of countries that have entered the highest category of human development, according to the United Nations, has been sizable. What is more concerning, though, is the fact that very few countries that were categorized in the lowest category of human development have not budged from their former positions. And this trend rings true for all countries. While there have been modest gains for quality of life and living standards worldwide over the past forty years, mainly through improvements in medical technology, there is no meaningful difference between the gains of low and high income countries.

Under regular circumstances, anyone would expect that increased investment in these countries would correspond to increasingly higher levels of quality of life and standards of living. In reality, these improvements are not being actualized. The dissonance between expectation and reality becomes especially problematic since it means that, as far as investment goes, the benefit of additional capital must be benefiting some otherwise unexpected group.

Perhaps, what better explains the fact that living standards in emerging markets are not improving at a quicker rate compared to developed economies is the rampant income inequality in emerging markets. A report from the Organization for Economic Cooperation and Development (OECD) notes that income inequality in emerging markets is actually substantially higher than that of developed economies. Additionally, as the report notes, the central reasons for the high levels of economic inequality are very systematic such as enormous education gaps and notable differences between agricultural and urban income. The issues that emerging markets face with regard to income inequality are not same issues that developed countries face such as tax differences between income levels. In the end, these systemic problems leave significant majorities unable to reap the true benefits of national economic growth.

So, where are these gains being made?

A report by the IMF points to the fact that only the largest firms and the wealthiest households are the real winners in many developing countries because they have the best access to credit. This reigns true despite the fact that there is, increasingly so, more credit in developing financial systems. This sort of inequality cuts deeper than just the same drivers of economic inequality that the OECD noted. But what opens the door for extreme income inequality?

One strong explanation for extreme income inequality is corruption. Joel Hellman’s paper, entitled Winners Take All: The Politics of Partial Reform in Postcommunist Transitions, gives a great deal of insight into income inequality in transitioning states. In this, Hellman describes the political process of free-market reform as an undertaking that follows a J-Curve trend. The general effect for the whole economy is that minor economic losses must be made before the economy can start to benefit from opening up.

There is one caveat. Hellman notes that not everyone faces the economic losses in the beginning of the process; in reality, there is a small sliver of the population — which is likely politically connected — that actually makes more income in the early stages of free market reform. What is even more interesting is that these same people have the most to lose as reforms are continued.

The same conclusions that Hellman reached in his paper, sadly, apply to many governments of emerging markets as well. Using levels of political corruption as a proxy measurement for political pay-offs to the wealthy populations in emerging markets, it becomes very clear that the BRICs (Brazil, Russia, India, China) and the MINTs (Mexico, Indonesia, Nigeria, Turkey) still suffer from high levels of corruption in the face of persistently soaring levels of economic growth. Even though the BRICs and MINTs may not be the most corrupt nations in the world, they are seen as the most prominent nations among emerging markets, which is significant in its own right.

The true scourge of the issue that arises from political corruption is not persistent income inequality, but rather, the fact that the regular people of these countries are unable to access the resources necessary to bring about small business activity that drives more powerful economic growth. To clarify, that is not to say that small business activity in developing nations has not grown. Many people and households in emerging markets are beginning to earn more money and open more businesses. Even so, small business activity — similar to that in the United States, which provides services to communities and adds value to local economies — has not grown nearly as much as it could have. Small business activity like this is far more important and valuable for long-term, sustained economic growth that has the potential to set an emerging market onto the path to becoming a developed economy.

With all of this in mind, it comes to no surprise that Brazil, Russia, China, Indonesia, Nigeria and Turkey — to name a few — have economies that are currently slowing down significantly; leading many analysts to change growth forecasts for the worse. Although some of these cases can be attributed to poor monetary policy, politics or external economic influences, it remains true that bottom-up economic activity, through the activation of strong local economies, has the potential to stave off the full force of these slowdowns.

Steps toward local economic progress cannot occur without the necessary structural reforms that place the state’s welfare above the needs of a politically connected minority. When emerging markets begin to focus on the necessary political reforms that lead them into the territory of true, long-term economic growth and development as our neoclassical models would suggest — the entire world will be able to see emerging markets join the ranks of developed economies. Until then, any breakout countries will likely be the exception rather than the rule.

Sharing and collaborating is nothing new. In fact, the human economy has been based on the mutually beneficial exchanges of goods and services since its beginning. The recent transition to an “ownership economy” began with the mass production of goods during the Industrial Revolution over a century ago. This societal model peaked when President George W. Bush was re-elected in 2004 in part by proclaiming an that “the more ownership there is in America, the more vitality there is in America.” Shortly after, however, the 2008 financial crisis occurred and the public accepted that the damage inflicted onto our planet through consumerism is not sustainable in the long run. This, along with the consolidation of Internet technologies, gave birth to a movement that Time magazine included among the “10 Ideas That Will Change the World” and that is seeking to shake the foundations of capitalism as we know it.

The Sharing Economy is a socioeconomic system built around the sharing of human and physical resources. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organizations. The underlying premise of this model is that the world is full of under-utilized assets and resources that could be more efficiently utilized by opening access. Indeed, this concept poses the question of whether we truly need ownership of many of the things we deem indispensable (such as tools, parking spots, and even houses and cars) as opposed to on-demand access that allows others to use them as well.

Still in its infancy, some say where social media was 10 years ago, the sharing economy’s size in its most prominent five sectors (peer-to-peer finance, online staffing, P2P accommodation, car sharing and music/video streaming) was approximately $15 billion in 2014 and projected to grow up to $335 billion by 2025. Looking at the data, along with the overwhelming number of successful companies based on this model sprouting in every industry, one can confidently say that the sharing economy is no fad but rather a new way of doing business.

Clearly the idea of sharing is not revolutionary. The one change that is driving this exponentially growing model is that we now have extremely sophisticated platforms that allow us to instantly connect with and pay for goods and services that we desire at scale and without boundaries. Some companies, like Netflix and Spotify, are simply Internet-era upgrades of old video and music rental businesses that pooled users’ money together to provide them with on-demand virtual access to media. Wikipedia is based on the same principle but instead pools together knowledge and provides access free of charge. Meanwhile, at a local scale and in a physical dimension, the Maine Tool Library charges an annual membership in exchange for access to a myriad of tools that people use infrequently (and so have no reason to own), exemplifying the local face of the sharing economy that is often overlooked. The second, and perhaps more widespread category of sharing economy company provides virtual platforms that enable peer-to-peer (P2P) exchanges of goods and services. Here we find some of the big names, like Uber and Airbnb, along with other clever businesses such as DogVacay (home dog boarding), JustPark (rental of parking spots) and SnapGoods (rental of miscellaneous goods). The exciting takeaway here is that the ability to create scalable, global sharing platforms is allowing for the rise of an unexplored part of the economy, driven by tech entrepreneurs and gradually adopted by the masses.

The benefits of this transition from an ownership economy to one based on sharing and collaborating can be divided into three broad categories: economic, social and environmental. During the Great Recession, some of these trailblazing companies allowed people in distress to convert possessions like their houses and cars from financial burdens into unique and flexible sources of revenue. At the same time, it radically increased the supply and variety of cheaper used goods (also increasing competition and further lowering prices) and low-cost alternatives to services such as home rentals and car rides. While it might certainly hurt multinational mass-suppliers, the sharing economy fosters the principle of value creation, production and distribution operating in synergy with the available natural resources, not at the expense of the planet, promoting the sustainability of human life within environmental limits.

The third and most underrated benefit of this model is that, aided by refined review and rating systems, it is reintroducing trust.  In a time when people are connected to their friends across the country but barely know the neighbors down the road, sharing things with random people we have just met online provides us with a great opportunity to make meaningful connections and boost the re-emergence of community. The truth is that despite all the marketing, consumerism does not promise happiness. Trusting and being trusted, on the other hand, are feelings that all humans yearn by nature, and a study by the Center for Neuroeconomics Studies at Claremont Graduate University has shown that indeed it produces a spike of the pleasant neurotransmitter oxytocin. The legal cases against some of these companies for stripping away worker protections, pushing down wages, and flouting government regulation go to show that there are certainly some issues that arise with this business model. These, however, along with concerns related to liability and insurance, are hardly insurmountable and will be dealt with as the sharing economy matures and evolves.

Looking ahead, as people become more connected and more trusting of these services, perhaps through more sophisticated and integrated evaluation databases, the reach of the sharing economy will expand into and disrupt more industries. The job market will become more uncoupled and dynamic, as more a broad range of flexible part-time opportunities arise to substitute or complement traditional full-time jobs. Meanwhile, as the prices of “owned” goods are driven down by competition, these will start to cut into business’ margins, forcing them to open up and begin to consolidate less behind walled gardens and embrace an open, collaborative model. Once companies assimilate to this “Open Brand API” model and start to integrate, the market will become significantly more efficient as users are able to seamlessly book different services in the same marketplace. Some even argue that the sharing economy is ultimately headed towards a model based on block chain technology that gets rid of the middleman, allowing users to capture 100 percent of the value, and that will become self-regulated. While it might be a little bit further down the road, such a scenario would force us to confront some of the most fundamental belief systems our society is built upon, like the role of corporations, capitalism, and regulatory authorities.

Above anything else, what seems clear is that the Internet-led process of exploiting under-utilized resources, both physical and financial capital and human talent, is unstoppable and exponentially accelerating. Consumers can now become producers and should be excited by the new innovations, while corporations face the choice of adapting and disrupting or being disrupted.

This article was featured on the DBJ Instablog on Seeking Alpha.

The idea behind patents makes intuitive sense. If a company spends significant resources on researching a new product, it should be granted temporary exclusive rights to its findings. This prevents rivals from stealing those results and profiting from them without paying any costs. Otherwise, the innovative firm would end up losing money for developing new technology.

Keeping this in mind, the Toyota Motor Corporation caused quite a stir when it announced this past January that it is inviting its competitors to use Toyota’s 5,680 patents on hydrogen fuel cell vehicles for free until 2020. After all, a patent is by definition protective. So what’s going on? Have the execs of the car company lost their minds? No, it turns out that Toyota’s move to share its patents is a gamble, but it’s not irrational. The challenges of hydrogen production and distribution have incentivized the company to give away its patents in order to give hydrogen vehicles the “critical mass” it needs to overcome these problems and enter the mainstream market.

Understanding hydrogen vehicles 

To understand hydrogen vehicles, one must first understand the process of electrolysis. Electrolysis is the application of a direct electric current (DC) to induce an otherwise non-spontaneous chemical reaction. For example, the electrolysis of water separates water into its component elements: hydrogen and oxygen.

Hydrogen vehicles rely on fuel cells to perform reverse electrolysis, taking in hydrogen as fuel and oxygen from the surrounding air to produce electricity. They also produce as exhaust water vapor (pure enough to drink), meaning hydrogen vehicles emit no greenhouse gasses whatsoever. Compare this to the 1.8 billion tons of carbon dioxide gas most vehicles release, which the Environmental Protection Agency reports accounts for 28 percent of all greenhouse gas emissions in the United States (second only to power plants). And while a kilogram of hydrogen has the same chemical energy as a gallon of gas, fuel cells are much more efficient than combustion engines such that, functionally, a kilogram of hydrogen is equal to more than six gallons of gas.

Hydrogen vehicles even have advantages relative to hybrids and electrics. Because fuel cells are small and thin, they can be stacked for vehicles of greater size – unlike hybrids, which are restricted by their heavy and bulky batteries. Hydrogens can go farther between refuels than most electrics can between recharges: Toyota’s Mirai has a range of 300 miles, compared to 265 miles of Tesla’s Model S (by far the top range for electrics). In addition, hydrogen vehicles can be refueled in three to five minutes, whereas even the Tesla superchargers require at least 20 minutes for a full charge. Given all this, it isn’t surprising that many experts and industry leaders see hydrogen vehicles as the future of transportation.

Promising but problematic

 The process of electrolysis has been well understood since the 18th century, so why have hydrogen vehicles entered the market only now, two decades behind hybrid vehicles? For much of that time, hydrogen vehicles have been too expensive to manufacture to be of consumer interest. Hydrogen fuel cells need expensive platinum as a catalyst in order to perform reverse electrolysis fast enough for the vehicle’s operation. Furthermore, hydrogen is highly flammable and, like all gasses, expands with rising temperatures (such as those found under the hood of a moving car). Luckily, technological advances have lessened the amount of platinum required, and safe ways of containing hydrogen have been developed. According to Toyota, the cost of making key components of the vehicles has fallen 95 percent in the past seven years, allowing them to sell the Mirai at $57,000 (less than a Model S) instead of the $100,000 it projected in 2008.

But no matter the cost, a hydrogen vehicle will need hydrogen. And although it is true that hydrogen is the most abundant element on the planet, the overwhelming majority of it is free in the atmosphere. Therefore, hydrogen must be derived from other substances.

The two main ways of producing hydrogen are electrolysis of water and a process called steam reformation, in which natural gas is reacted with high-temperature steam to separate out the hydrogen from the hydrocarbons in the gas. For obvious reasons electrolysis can be ruled out, leaving steam reformation. But since natural gas is a fossil fuel, and the point of hydrogen vehicles is to reduce dependence on fossil fuels and their consequences, steam reformation isn’t preferable either.

And even if this challenge was overcome, there exist little infrastructure for delivering that hydrogen. Gas stations are of course everywhere and the number of charging stations for hybrids and pure electrics continue to increase, but there are virtually no hydrogen fueling stations. As of when this article was writen, fewer than 70 such stations exist in the entire United States –most of which are in California, where the Mirai will begin to sell later this year. Clearly, having a hydrogen car is one thing, but being able to drive it is another.

“Critical mass” solutions

Fortunately, there is work being done on both of these problems. On the hydrogen production front, new technologies such as fermentation, photobiological water splitting, and renewable liquid reforming are being developed. A hydrogen fueling station in Fountain Valley, a suburb of Los Angeles, has already employed one of the newest techniques. The station uses human waste from a nearby wastewater plant as its hydrogen source by adding bacteria to turn waste into carbon dioxide and methane, which is then converted to electricity, heat, and hydrogen.

More recently, scientists at the University of Glasgow published a paper in Science this past September explaining how they created a method based on the electrolysis of water, which produces hydrogen 30 times faster than the current best processes. This method needs much lower currents than traditional electrolysis, making it possible for renewable energy to power the method and thus making the use of hydrogen vehicles completely emission-free. But while these results are promising, they will require a significant amount of capital for further research and implementation testing before they can be commercialized.

As for hydrogen delivery infrastructure, California has invested $200 million to build 100 hydrogen fueling stations, and is willing to invest more in stations if successful. Toyota has also loaned $7.3 million to FirstElement Fuels, Inc., to build 19 stations in California. The company is also working with Air Liquide S.A. to build 12 more stations in New York, New Jersey, Massachusetts, Connecticut, and Rhode Island, where it will begin selling the Mirai next year. Though these prices sound high, they are actually cost-competitive with gas stations on a cost-per-mile basis, since fewer are needed due to the higher efficiency and thus greater range of hydrogen vehicles. As long as the state or private companies are willing to invest in building these stations, the country could conceivably go hydrogen.

But the key words here are “as long as”. If hydrogen vehicles remain a fringe technology, it risks being pushed out of the alternative niche by hybrids and pure electrics, which already have established infrastructures. Furthermore, hybrids and pure electrics lack the problem of energy source production, so they are already favored and more likely to be further developed. Simply put, if hydrogen vehicles don’t gain significant awareness soon, they will be outcompeted by their alternative bedfellows.

This problem explains Toyota’s actions. Although a major player in the auto industry, Toyota understands that its bid in hydrogen vehicles alone is not large enough to draw the critical degree of attention needed. By giving free access to its patents, Toyota effectively lowers other companies’ entry costs by paying for their research in hopes of interesting more automakers, cell part suppliers, and energy companies to enter the market. This would in turn increase the volume of hydrogen vehicles and related support, which could push hydrogens into the spotlight and attract investors and capital to solve the production and infrastructure challenges discussed above. At or near that point, which Toyota judges to be in five years according to the duration of its offer, Toyota will close off access to its patents and begin focusing on its own research and business. Essentially, Toyota believes that the cost of bringing hydrogen vehicles into the spotlight is more than its profits if hydrogens does not become mainstream.

This isn’t the first time Toyota has employed such a strategy. In 1997, Toyota licensed its patents for hybrid technology to Ford, Nissan, and others, who paid for that access. As Toyota hopes will happen again with hydrogen vehicles, this move increased the volume of hybrid activities and steered significant attention. And sure enough, when hybrids entered the mainstream market in the late 2000s and early 2010s, the Toyota sold nearly a quarter million Prius a year, making the Prius the world’s third best-selling car make in 2012. Toyota is hoping for a repeat performance with hydrogens.

Right now, hydrogen vehicles are starting out small. Toyota plans to sell 700 Mirais this year. Hyundai, which is preparing to sell its Tucson, plans to sell just 60, and Honda just entered its final marketing stages. Meanwhile, General Motors, Ford, and Audi are all in the development stage on their own hydrogen vehicles. As Toyota expands the Mirai market to the five states listed above next year and the other automakers make their own market entrances and extensions, time will tell whether Toyota will succeed in pushing hydrogens into the mainstream market with its strategic loss plan.

It hovered over the annual Dartmouth Homecoming Bonfire. “It’s a drone,” my friend explained. A drone? The only drones I’d every really heard of were furtive aircrafts used for reconnaissance missions and surveillance over enemy territory.

But as the Homecoming weekend came to a close and the green “18” finally rubbed off of my chest, I found the incredible video captured by this high-flying piece of technology. I looked further only to find that the drone market, like the footage I just watched, is soaring. With such a sturdy frame and notable flight stability, these drones have the capability to fly with surprising ability; GPS systems reduce and mostly eliminate any flight error of a pilot from the ground.

In response to the booming commercial drone market, companies like GoPro established strong footholds within the industry. And while GoPro tapped substantial profits from major drone producers, the producers themselves have emerged as the ultimate winners. Parrot, for example, a French tech company that specializes in Drone production, marked a 130 percent spike in drone revenue.

So what is it that makes these drones so enticing? Drones offer a glimpse into the future of technology. They produce 3D landscaping for agricultural research that farmers can use for highly accurate aerial data acquisition. Companies like Amazon—specializing in internet-based retail in the United States—hope to utilize drones in the delivery process. Some daring owners even descended their drone into an active volcano, and when the camera melted from the overwhelming heat, the drone, operating through a programmed safety feature, was able to the owner on its own.

While the civilian drone industry is booming, the military drone industry still dwarves it. Currently, civilian drones make up only 11 percent of the drone industry, although analysts expect this percentage to increase to over 14 percent. Though these numbers still seem low, in an aerial drone market expecting to climb to over 98 billion within the next decade, commercial drones still hold an impressive stake (13.72 billion) in earnings.

Although the fiscal state of the drone market is optimistic, there are still obstacles. In recent dealings, the underfunded Federal Aviation Administration (FAA) has significantly handicapped the drone industry. Companies like Amazon forewarned the U.S. government that “[they] will have no choice but to divert even more of our [drone] research and development resources abroad.”

On the FAA website, several rules restrict drone users and ads litter the page explaining that “the Super Bowl is a no drone zone, so leave your drone at home”. Because these drones classify as “model aircrafts”, they fall under a specific set of rules. They must remain “below 400 feet, away from airports…and within sight of the operator.” Additionally, the FAA claims the ability to “take enforcement action against [those who]…endanger the safety of the national airspace system.”

Recently, in fact, a drone crashed into the White House Lawn, violating the FAA rules that restrict flight over Washington D.C. In an interview with CNN, President Obama even remarked that the incident only calls for more restrictive regulations on commercial drones.

And so, with the future of these drones looking unclear, we are left to grapple with two different ends of the spectrum. On one end we see a commercial drone industry with considerable potential in the technological world, and on the other the careful yet considerably limiting FAA. As mentioned by an entrepreneur interviewed by Fortune, “There’s still a lot of uncertainty, but the time for this industry is now.”

Agralogics calls itself the “Internet of Food” company. Based in Sunnyvale, CA, Agralogics helps farmers by providing them with detailed analytics about their crops – information about everything from weather, thermal energy, soil quality, pollination, and much more. The firm is a unicorn of sorts in Silicon Valley, where tech-driven innovation in agriculture is secondary to flashier, consumer-facing products.

The DBJ sat down with co-founder and CTO Sanjay Dayal to learn more about Agralogics and the food ecosystem.

Dartmouth Business Journal (DBJ): Tell us about the data you collect.

Sanjay Dayal (SD): We look at data not as a means to an end, but almost an end in itself. First, we take data from the public domain. There’s a lot of data around satellite imagery, weather, soil, crops, pests, plant phenologies, growth stages, and much more.

Then there is partner data. There are sensor networks, which are generating an amazing volume of data, at increasing velocity.

Then there is private data, which comes from our customers. This could be collaboration noise or ‘chatter’, it could be how much water they applied, or how much pesticide they are using.

We can see that there’s an explosion of data. Whenever there’s an explosion, there is blindness. Despite so much data being produced, it’s not actually making things clearer. Because of the volume of data, you don’t know what’s relevant and what’s not.

To give you an example, there are soil sensors, which can tell you about 160 different characteristics of the soil. How do you map that to what is relevant to your crop production at different stages? It’s a hard problem. The simplest way is to do a linear regression, try to find what’s important, and then do some kind of closed loop sampling. But it just doesn’t work, because next year, the temperatures are completely different.

So I think what is needed is not necessarily giving data to our customers, but really giving them context.

I’ll give you another example. The CDC does flu modeling. It says “this is how flu is going to spread.” Google does that simply from its users, who are doing searches on ‘flu’. It can actually find out how the flu is spreading better than the CDC, just by looking at searches in different parts of the country. Data has a lot of insights, but just data itself is so much that for most people. It’s unusable. What we do is extract context from it, and then provide that context to our customers.

“Data has a lot of insights, but just data itself is so much that for most people, it’s unusable.”

DBJ: With data coming from the government and sensors, do you foresee problems with expansion in areas where that infrastructure doesn’t exist?

SD: We are very agnostic of where the data comes from. We are not dependent on the data coming in a specific format. We have built our backend to consume as much or as little of the data as is available. If we only get data on high and low temperatures, we will consume that and extrapolate other characteristics. But then there are weather stations which not only give you highs and lows, they give you surface temperature, humidity, wind speed, all kinds of stuff. And that type of data is pretty much available for most regions in the world.

There are at least eight or nine public domain satellites which give you reasonably high resolution data for the entire world. More and more, people are also moving towards putting sensors in their soil. And there’s a lot of math in the background. For places where you don’t have these things, we can do a first-order or second-order approximation.

Now, as more accurate data is available, we can improve our model, and our ability to predict. For regions you don’t have data, you do sampling and then modeling. For regions you have more data, you are more accurate.

I would say that for 90% of the globe, most of the basic data is available. And since this is just the start, we believe that in 10 or 15 years, because of the pressures of global warming, population growth, and unpredictability of weather, we will have more and more precision, which we’ll need when it comes to how we produce, distribute, and consume our food.

So I think your question is very valid in that there are regions where data isn’t fully available, but there are workarounds.

DBJ: Suppose I am a farmer, and I say “My family’s been doing this for generations, I don’t need anyone telling me how to grow my crops.” What would you say?

SD: We are not trying to tell you how to grow your crop, because we know you do that much better than us. But what we can do is make your life easier. Things that you need, the information that you need, we can provide readily to you, on any device you work with.

What crops do you grow, and where do you grow them? It’s a mathematical problem, basically. But the variables are so many, and the volume of data is so large, that individuals cannot do it. It’s not only about how much water you put in, it’s also about the other things. Is my land too wet or too dry? What phenological stage is my plant in? If you’re spraying a chemical the week before flowering, your flowers may not pollinate properly. Things like that are very contextual. Growers know about these things, but we want to make this information so easily available that they do not have to work for it.

Here’s an example. Food production doesn’t happen on Gregorian calendars. You cannot say, “I have planted my tomatoes in April, so I will get a harvest on the first of August.” Tomatoes don’t grow that way. Tomatoes grow based on how much thermal energy is given to that plant. If it’s colder, it will take longer. If it’s hotter, it will take a shorter period of time. You might have heard of the Pennsylvania groundhog, Punxsutawney Phil, which people use to predict whether the winter will be short or long.

And guess what? Most farmers have this clock in their heads today. They say “March is warm this year, so I think I should plant early, because this year kind of resembles how it was four years ago.” They are all working in their minds. What we can do is give them a calendar based on a thermal clock. This tells them that in two months time, this much thermal energy will be given to your plant. And this amount of thermal energy looks like what you got three years ago.

Just that information is very important for the farmer to say “I’ll do what I did three years ago, because I had a great crop that year.”

A lot of planning in the farm happens around when it is hot or not, when it has rained or not rained, how much water has been given to my soil, both by nature and by me? How is the soil losing water, because that determines when I need to water my plants again. All of that is done by heuristics, and because conditions change so fast, your past wisdom may not be applicable to your current situation.

What we can do is help by doing a large-scale analysis of, for example California, and understand how water availability is changing based on reservoir levels, aquifers, etc. We can predict that, and tell a farmer, “these are the new areas that you can expand,” if their current areas are becoming less productive. All of that is very data-driven, and that’s where we think we can help the entire food ecosystem.

The biggest problem for today is that people work for data – data doesn’t work for them, especially in the food ecosystem. We want to turn that on its head.

DBJ: Do you think Agralogics will get to the point where its technology can predict a drought, or a massive crop blight?

SD: Absolutely. I think some of that work is already done by some companies. You might have heard of Climate Corp. Their claim to fame was that they could provide rates for crop insurance based on the weather.

What we have is not only weather-based data, but we have soil data, private data, management practices. The combined data is a much better predictor of success than just the weather. In a few years, I think we’ll have enough statistically significant data worldwide that our system could start to approach that problem.

Right now we’re focused on California, which provides a great sample. We have customers from 24 different crops, across all counties, using our platform. We can actually, in an anonymized way, what’s happening in their fields, both from remote sensing and their private data. From this, we can make larger scale predictions. We’re not there yet, because we need more data. But I think we’ll be there soon.

DBJ: In this day and age, data privacy is very important. But without using private data, is it possible to make such predictions regarding droughts and other phenomenon?

SD: All private data is never shared with anyone else. This is like Google doing an anonymized analysis of your Gmail, but not sharing those contents with anyone. It’s in a very similar spirit, where we only use anonymized data from our customers for our analysis.

Coming back to your first question, ‘can this be done with only public data?’ It can’t. That’s why Google has the public data, but they can’t do it. There is no feedback loop telling them that their analysis is right or wrong. It’s like a scientist only having theories that they can’t test.

So it’s very important to have that private data.

DBJ: You mentioned ‘chatter’. Could you elaborate on that?

SD: When we talk about data, we aren’t just talking about ‘transactional data’, such as how much water or pesticide I used. It’s also about how you came to the decision to apply this much water, what ‘chatter’ happened prior to that decision. Think about a decision to apply a certain amount of water being a communication between the ground staff and the field supervisor. We want to capture that chatter, and see if there was a better way to collaborate. Because unless you optimize that process, the outcome will always be suboptimal.

It’s not just about what happened, but also how it happened.

Around that, we are creating collaboration. So think about a Facebook wall, where field staff collaborate with everyone else around pesticide management, land management, pollination, and the food supply chain. Collaboration between the grower and the processor. Collaboration then between the processor and the distributor. It’s a highly connected ecosystem.

If you look at the food graph, it is superconnected. It is more connected than Facebook. Facebook is a relatively uniform graph, where each person has around the same number of friends. The food graph is much more connected. The way the farmers are connected to consumers: it’s not six degrees of separation. It’s sometimes two degrees of separation,  sometimes 10 degrees of separation. So the graph complexity is pretty high. And these are not reciprocal relationships. So once you look at the graph and say, my god, this graph has to be the basis of any information flow and understanding, you come to that “aha” moment. It’s the data and the ‘chatter’, in the system which needs to be captured first, in order to optimize what’s going on.

DBJ: What has been Agralogics’s biggest challenge?

SD: Every startup has some basic challenges that all startups face. Having a startup is like having a baby. I have two, so I always compare them. Besides the work, it is a lot of faith. You need to believe that what you’re proposing has value. Most of the time, that value is not seen immediately. There is a lot of that effort and proselytizing you have to do, for people who are the change makers, to see that value.

When you try to drive something as big as what we’re trying to do, you cannot do it alone. We need the opinion makers, the people who can make things happen, to be on our side. And we believe that it has to be a much bigger effort than who we are – a tiny little company.

Especially for Agralogics, I see that as a big challenge. We are not trying to come up with a better algorithm to match consumers with products. We are trying to disrupt the food ecosystem. There are very powerful stakeholders who we have to work with, and convince that what we are proposing is good for all of us. And that’s definitely a challenge. We will continue to do that because we believe in this.

DBJ: Where do you see Agralogics in 10 years? or maybe 5 years?

SD: Where we want to be is a ubiquitous platform for anything related to food collaboration. Collaboration can be as simple as the ability of a food processor to inform its customers about what is in their food. For example if there is a pesticide scare, I as a consumer should be able to scan my label, and get a response saying that this particular product is completely free of pesticides. Or the label should be able to tell me exactly how many miles away this was produced. Or it should be able to tell me its actual nutritional content. Today, an apple is an apple is an apple. It doesn’t matter whether it’s an organic apple, whether it grew in rich soil, or whether it was a hydroponic apple. You get the same nutrition information for all of them today. So that is one type of collaboration, where the consumers want to find out information about food.

The other type of collaboration is that which enables growers to grow their crops more optimally. Suppose a bank is trying to give a loan to a farmer, and they want to understand their risks. Right now, the farmer would have to submit documents, monitoring of his fields. The bank guys have to physically visit the fields to make sure the crops are growing.

And then there’s a predictive side of it. Based on all this data, we can start to help countries, financial markets, future markets, to plan better on how to grow food and feed humanity.

But unless we have the data, we’ll never get there. So our first phase is to make sure that the platform is ubiquitous, or at least used by enough people, and enough stakeholders in the ecosystem, that we can go to our second purpose, which is to plan at a much larger scale, at a county, state, national, or even continental scale.

DBJ: That’s great, because my last question was going to be you see any humanitarian potential for Agralogics?

SD: That’s what drives us. It’s a big dream, but all big dreams start small.

DBJ: Is there anything else you wanted to mention Agralogics?

SD: We are about a year old company. One thing I would say is that there are some visionary investors. We are just a seed stage company right now, but we already have some of the most visionary investors in Silicon Valley, who are willing to part with some of their money in pursuit of this dream, which is very satisfying, because sometimes me and [my co-founder] Soumesh say to ourselves ‘We’re not smoking dope, are we?’, and when there are so many very smart people willing to help you, then I think it’s a confirmation that it’s some good stuff. Support of people who are influential is what I believe is the key for doing something at a scale of the problem that we’re trying to address. So far, we have had very good encouragement from people who are the fathers of the Silicon Valley.

Now we have customers, who have validated our solution. Most of the customers we have presented this to are wowed. They tell us that “we were waiting for something like this.” We are very happy to report that there is a strong adoption that is happening as we speak.

DBJ: You’ve worked at startups before. How is it different as a co-founder?

SD: The startup journey is very challenging. This is my first startup as a founder, but I have done two more startups before this. One of them went public, and one of them busted. Then I was at Sybase in its very early stages pre-IPO. I have seen phenomenal successes, and phenomenal failures, but mostly from the eyes of an employee. This time, I am seeing things from the eyes of a founder, and it’s very different. But it’s very exciting. Because that ability to pursue a dream, and seeing the milestones, is more satisfying than anything you can imagine as an employee. The only other feeling better than this was the birth of my sons. It’s at that level.

In 2009, in a promotional presentation to prospective investors, Susan Payne, CEO of the largest land investment fund in Southern Africa, touted Africa as “the last frontier for finding alpha.” Her company, Emergent Asset Management, a private limited liability company based in London, has invested over 540 million dollars in land acquisitions and controls 100,000 hectares of land in a dozen sub- Saharan countries. Once the industrial agricultural projects are fully operational, Emergent Asset Management expects to make annual returns of twenty-five percent or more. Emergent Asset Management is one of many foreign investment companies participating in a massive rush to acquire huge tracts of land spanning the entire African continent. Triggered by the recent financial crisis and high global food prices, investment banks, hedge funds, international agribusinesses, commodity traders, and even governments have amassed an estimated 32.8 million hectares of land in Africa in their quest for high returns and potential profit from future food crises. These corporations claim that they will bring modernization and spur a long needed “rejuvenation of African agriculture”. Agricultural yields will increase tenfold and hunger and poverty will be eradicated.

However, critics assert that talk of eradicating hunger in Africa is simply a cover for the exploitation of natural resources by powerful international corporations. Abetted by the World Bank, outside investors are introducing an industrial model of agriculture, connected to large far-off markets, in complete disregard of local communities. Large scale commoditization of agriculture, with the introduction of genetically engineered seeds protected by Western patent law, are in effect disenfranchising local communities in a movement that can qualify as nothing less than a dispossession on a massive scale and a new twenty-first century form of colonialism.

In most of the developing world, small scale farming remains the most basic foundation of life, playing a crucial economic as well as social and cultural role in local communities. For centuries, the agriculture of developing countries was built upon the local resources of land and water, capitalizing on local seed varieties and indigenous knowledge of farming practices. Farmers save and share seeds, and for tens of thousands of years have been practicing seed selection to develop unique local varieties of food crops.  Professor Miguel Altieri from the University of Berkeley writes in “Agro-ecology, Small Farms, and Food Sovereignty” (2009) that traditional subsistence farming nurtures biologically and genetically diverse small farms with a “robustness” and “built in resilience” that forms the basis of indigenous cultures.

However, seeds are big business for Western corporations like Monsanto and Syngenta which seek to sell their patented genetically modified seeds throughout the developing world, including Africa.  Genetically modified seeds require agricultural chemicals, herbicides and pesticides, also manufactured by the same multinational companies, to be productive.  By imposing a chemical input and GMO seed based agriculture on African farmers, these companies are creating a new form of dependence among African farmers, and new sources of profits for foreign shareholders. Unfortunately, powerful international bodies, such as the World Bank, the World Trade Organization, as well as certain UN affiliated entities, encourage or even coerce African nations to allow Monsanto and Syngenta and other big Agribusiness suppliers into their markets. Under the banner of modernizing agriculture, and also through trade agreements, these companies are given access to the African market where they have few competitors and where farmers often feel that they have no choice but to join the chemical agriculture bandwagon.

While large corporations want to convert African farmers to an agricultural model dependant on chemical input, other Western and Chinese business interests simply want to acquire African land to farm. To this end pressure is put on African governments to “reform” their legal systems governing ownership rights. Traditional African tenure laws view land as a complex interlocking and overlapping system of rights, in which private property cannot be categorized as private property in the same way that it is in much of the Western world. Western conceptions of ownership, Parker Shipton contends in “Land and Culture in Tropical Africa: Soils, Symbols, and the Metaphysics of the Mundane” (1994), “impose alien assumptions or emotional charges on African tenures. Legal language implying human mastery over land misfits some peoples who speak of it more often the other way around”. While true equality is elusive in Africa as elsewhere, Shipton argues that nevertheless egalitarianism has been a “stock theme” in African anthropology. As such, he contends, “An ideal often perceived to underline indigenous tropical tenure systems across the continent might be called fairness and flexibility. According to this principle, access to land should go to those who need and can use it, and no one should starve for special want of it.”

In “Seized: The 2008 land grab for food and financial security,” Grain, an international non-profit research organization, chronicles how foreign corporations are getting new forms of control over farmland to produce food not for local communities but for an international export market. A number of African countries, such as Malawi, Senegal and Nigeria were identified as offering fertile land, relative water availability, and potential farm productivity growth. Within five years, a dizzying 3.28 Million hectares of land across Africa was amassed by a multitude of corporations and countries across the world, and this trend is expected to continue as up to thirty percent of all arable land has been identified as potentially up for grabs.

BlackRock, the world’s largest asset manager, is one of many that have identified African agriculture as a new source of profit. In 2008, it set up a $200 million agricultural hedge fund used to acquire farmland around the world. The life of such a fund is typically 10 years with expected annual rates of returns as high as 400%, with the clear understanding that they will build an industrialized infrastructure in order to mine as much output from the land as possible.  Corporations and countries usually strike deals to acquire land under the pretext that it is “fallow”, but Grain points out that this is rarely the case as local farmers typically utilize land on a rotational basis in order to enhance soil fertility. In other instances local communities are simply not accounted for at all. Jettie Word, policy analyst at the Oakland Institute, reports that a map produced by state technicians in Senegal, before leasing twenty thousand acres of land to Senhuile Senethanol, confirmed the existence of only six of the forty villages that were using the land which was subsequently leased to foreign companies.

The lease and purchase of farmland previously used by small subsistence village based farmers robs millions of Africans of their livelihoods. Furthermore, the elimination of small farmers undermines the moral and ethical underpinnings of rural culture and society. In Stolen Harvest, Vandana Shiva argues that hidden behind complex free trade treaties promoted by Western countries and the World Trade Organization, are shrewd ways to essentially disenfranchise local farmers. “As farmers are transformed from producers into consumers of patented agricultural products, as markets are destroyed locally and nationally but expanded globally, the myth of free trade and the global economy becomes a means for the rich to rob the poor of their right to food and even their rights to life.”

In 2013, leaders of the most powerful western countries convened at the G8 Summit in London to address malnutrition and hunger in the third world. The summit culminated with the signing of the Nutrition for Growth Compact. Hailed as a great humanitarian success by most of the media, the compact received financial commitments from western and Chinese governments that surpassed expectations. Essentially the compact offers African countries public and private money if they strike agreements with G8 countries and their private sectors to ”develop” agriculture. Many critics view this foreign aid as a Trojan horse designed to help Western corporations to exploit third world resources. Critics such as George Monbiot, a columnist for The Guardian, argue that G8 countries use their leverage and funds to force African countries to undertake structural reform, rewrite laws facilitating foreign access to lands, and undertake partnerships with global corporate partners such as Monsanto, Cargill, Dupont and Synegenta.

Under the official purpose of “lifting 50 million people out of poverty over the next 10 years”, this deal is essentially a self interested effort by the G8 countries to take land away from the very people who supposedly need to be lifted out of poverty, and reallocating them to these global corporations. The African countries that agreed to sign the Nutrition growth summit must comply with the demands of the G8 countries or they will not receive any aid. Ivory Coast must “facilitate access to land for smallholder farmers and private enterprises” which in practice means evicting smallholder farmers for the benefit of private enterprises. Already it has signed deals with French, Algerian, Swiss and Singaporean companies leasing 600,000 hectares of prime arable land which Grain reported in “ G8 and land grabs in Africa” will displace tens of thousands of peasant rice farmers. Similarly, Mozambique, Ghana and Tanzania must rewrite laws to promote these same types of “partnerships” and are obliged to draw up new laws granting intellectual property rights in seeds under the pretext that this will “promote private sector investment”. These new intellectual property rights essentially turn staple crops into patented property, owned by companies such as Monsanto and Cargill, which criminalizes sharing and saving seeds thus eliminating centuries of collective innovation by farmers and peasants.

In essence, foreign development undertaken under the pretext of “fighting hunger” or “eradicating poverty” is simply a channel through which to usher in foreign private capital with little regard for the local communities.  “What we are seeing,” writes Vandana Shiva is “the emergence of food totalitarianism, in which a handful of corporations control the entire food chain and destroy alternatives… Local markets are being deliberately destroyed to establish monopolies over seed and food systems.”

Under the auspices of the World Trade Organization and agreements such as the Nutrition for Growth Summit, western countries are forcing third world countries to recognize US style patent regimes. “Instead of the culture of the seed, which privileges reciprocity, mutuality, permanence, and exhaustless fertility, corporations are redefining the culture of the seed to be about piracy, predations, the termination of fertility, and the engineering of sterility”. This new system, Shiva argues, “is transforming farmers highest duties- to save seed and exchange seed with neighbors- into crimes.” Under the pretext of foreign aid and development, the G8 Summit ultimately aims to facilitate a market infiltration of foreign agri-businesses into Africa, turning local farmers into disenfranchised tenant farmers who can no longer claim title to the land they till or the crop they produce.

The new waves of agricultural development have drastic effects on pastoralists, traveling herdsman who follow a seasonal migration pattern to find land for their cattle. About 40% of land had up until recently been dedicated to pastoralism but recent development and foreign land grabs are compromising their access to land and the means of their subsistence. With the guidance of the World Bank, African governments enacted land privatization policies that have made it increasingly difficult for these traveling herdsmen to move across land. In 2006, the Tanzanian government authorized the eviction of Pastoralist communities from the Usangu basin in the Southern highlands of Tanzania without offering them any other land to use. As huge tracts of lands are taken away from them, competition for grazing space has exacerbated conflict and endangered Pastoralism as a viable lifestyle.

There is no doubt that African farming needs support—millions of families struggle to feed themselves, don’t have access to clean water, and die from poverty every year.  The Food Policy Research Institute says that Africa needs to increase its food production by 40%. However, there is no evidence that the arrival of Western agribusiness enriches local people.  A small wealthy urban African elite and foreign stockholders and owners reap most of the benefits.

Could it be that we are once again seeing exploitation and colonialism hidden behind false humanitarian rhetoric? Is this simply a new age of imperialism driven not by lofty political ideals but rather corporate profits?

It is time to acknowledge that combating household food insecurity will involve more than just increasing food production and must instead emphasize access. Helping poor households in rural Africa feed themselves requires introducing low-cost, sustainable enhancements to farming. Intercropping, agro-forestry, composting and soil conservation are all valuable measures to enhance soil fertility and control pests without massive cash outlays for expensive chemicals and fertilizers.




Founded in 2010, Start-up Chile was created as an ambitious program to turn Chile into the innovative hub of South America and attract world-class entrepreneurs. Fully supported by the Chilean Government, Start-Up Chile is an accelerator program that aims to transform Chile into the “Silicon Valley of Latin America.” To make Chile attractive to foreign entrepreneurs, the government provides promising young firms with $40,000 of equity free seed capital, a temporary one year visa to develop their project for six months, access to the most potent social and capital networks in the country as well as various other perks such as free office space. Every year, Startup Chile receives applicants from all over the world and many graduates from the world’s most prestigious education institutions including Harvard, MIT, Columbia and Oxford.

Start-Up Chile has garnered overwhelming praise from the press and social commentators. Stephen Keppel, an economist and writer who is currently Director of Empowerment Initiatives at Univision News, argued in an article in October 2013 that Start-Up Chile, is quite literally “changing the face of entrepreneurship in Latin America” and with it the Chilean culture and economy. In just three years, the program has attracted over 900 entrepreneurs from 37 countries, created 695 jobs and sparked 36 deals with Chilean investors. The Economist coined the term “Chilecon Valley” in 2012 and argued that Chile has successfully exploited Silicon Valley’s weak point by welcoming thousands of entrepreneurs who were turned down in the U.S. due to rigid immigration policies. Kauffman Foundation Vice President of Innovation Lesa Mitchel praised it as “ a unique model other regions of the world should emulate”.

A promotional video on Start-up Chile’s website spells out their mission “They arrive. They work. They connect. They leave and Chile stays connected”. Thus Chile is less interested in attracting the businesses as they are in fostering an “innovative spirit” that they hope will begin to permeate a typically risk averse Chilean culture. In return for the $40,000 in seed capital and the free visa, Start-Up Chile participants are required to engage with Chilean students and often end up mentoring and hiring Chileans. They are required to speak to local entrepreneurs, speak at events, and have held thousands of workshops. The program has engendered in Chile, a country heavily reliant on copper exports, a new spirit of innovation and creativity that the Chileans see as key to their economic future. “The influx of foreign innovators” Keppel argues, “has disrupted the status quo in Chile and introduced a new generation of entrepreneurs to opportunities in Latin America.”  By importing foreign entrepreneurs, the Chilean government hopes that they will inspire homegrown ones. “The idea is to fertilize the local landscape with new ideas and ambitious people” Vivek Wadwha, a visiting scholar at Berkeley argued. “This is a win-win. If all goes according to plan, we will have a thriving innovation hub in Chile-Silicon Valley South”.

Although retaining the entrepreneurs after the six months is not Start-up Chile’s primary concern, over 40% have in fact chosen to stay.  The pro-business government is partly responsible for the high retention rate. Chile has a low 20% corporate tax rate and has fostered a “summer camp environment” with a vibrant community and strong network support. Furthermore, as Europe and the United States continue to suffer from sluggish growth, Latin America, spearheaded by Chile, is becoming of greater and greater interest to foreign investors. Ariel Arrieta, cofounder of NXTP Labs, an acceleration program that provides seed capital, consulting, and training to technological startups, argues that Latin America holds enormous potential as an untapped market with astounding growth prospects. Improving market conditions coupled with a very young population, has created a thriving climate for technology startups and consequently has attracted the attention of many global analysts and early stage investors that hope to latch onto prominent startups.

Start-Up Chile’s detractors criticize the program for funding foreigners (although the program is also open to Chileans) and many note that it’s still too early to see any real benefits from this program to the Chilean people. That said, the Chilean government should be commended for taking such creative actions and attempting to carve out for itself a place in the global economic market. It would not hurt the United States government, plagued by inaction and stalemates, to take Chile as an example and learn some lessons.

Two point seven million; 70 percent; 400 billion. These numbers aren’t just members of a string of trivial figures. According to the Economic Policy Institute, the first is how many US jobs were displaced between 2001 and 2011; the second represents the proportion of the American adult workforce that saw a $1000+ drop in yearly income; and the third gives the dollar amount that the US has lost in export opportunities. What could have possibly caused such huge losses? In a word, China—or rather, its practice of currency manipulation.

Currency manipulation is a country’s practice of artificially devaluing or inflating its own currency, so that the exchange rate between that currency and others around the world is different than what it ought to be in a free market. This imparts a cost advantage to the exports of the currency manipulator, because their goods suddenly become cheaper on the global market relative to other countries’ exports. In an open economy, exchange rates should adjust to trade balances, so that as capital accumulates, demand for local currency would drive up its value. In other words, China’s surpluses should lead to an appreciation of the yuan, eliminating their pricing advantage.

But China doesn’t play by such normal rules. According to prominent national economist Paul Krugman, China uses its trade surpluses to constantly print more of its own money, flooding the market with Chinese yuan and creating demand for American dollars. At the same time, it uses its newly-printed currency to aggressively purchase US dollars and government debt; as of December 2012, China held over $1.2 trillion dollars in US-specific debt and had acquired a massive imbalance of over $3.4 trillion in foreign currency reserves.

Until June 2010, China actually dictated the value of the yuan against the value of the dollar, in essence “pegging” the worth of the yuan relative to the dollar at a ratio of 6.8 to 1. Although China has abandoned this hard peg, the Peterson Institute for International Economics still estimates that China undervalues its currency by up to 40%.

So what does this mean for the United States?

First, it means the distortion of competition. Because currency manipulation makes Chinese goods cheaper relative to those of the US, it also makes American products proportionally more expensive for Chinese citizens to import. Every business day, American consumers buy $1 billion more in Chinese goods than American manufacturers sell to China, which fuels the same kind of trade imbalance that fuels China’s currency manipulation in the first place. Indeed, the Economic Policy Institute estimates that were China’s currency to experience a full revaluation, the U.S. trade balance would improve by up to $191 billion, thereby increasing U.S. GDP by as much as $286 billion, adding up to 2.3 million U.S. jobs, and reducing the federal budget deficit by nearly $1 trillion over 10 years.

Second and more importantly, Chinese currency manipulation translates into the potential for real economic disaster. US dependency on foreign savings exposes our economy to certain risks, but China’s distasteful currency practices only make this truth harder to swallow. According to the New York Times, China’s amassment of trade surpluses is “the most distortionary exchange rate policy any nation has ever followed. Most of the world’s largest economies—the US included—are stuck in a liquidity trap as a result—deeply depressed, but unable to generate recovery by cutting interest rates because the relevant rates are already near zero.” In effect, China’s unwarranted surplus policies have imposed an anti-stimulus that the world’s economies can’t offset. Their artificially under-valued currency is more attractive to businesses and investors than the capital that US banks are reluctant to lend, which siphons demand away from domestic consumption.

While this may just sound like a lot of theory, the unfortunate reality is anything but. Many scholars, including Wayne Morrison of the Congressional Research Service, believe that China’s purchasing of US securities—the predominant mechanism by which China manipulates its currency—was a major contributing factor to the 2008 sub-prime mortgage crisis and subsequent global economic slowdown. “Such purchases kept real US interest rates very low and increased global imbalances,” Morrison argues. As China continues to buy up US debt to fuel its enormous expansion, the American-Chinese deficit only becomes more pronounced, and the scales are further tipped toward the prospect of future asset bubbles and distortions.

Yet the United States isn’t the only nation that languishes beneath China’s currency devaluation. Surprisingly, China’s economic policies have created distortions within the Chinese market itself. On the surface, China appears to be thriving, a competitive economic player in the global exchange—so competitive, in fact, that the Council on Foreign Relations predicts that China’s GDP will eclipse that of the United States in five to ten years. But sustained growth of such enormous magnitude and duration comes at a price, particularly given Beijing’s centralized economic governance structure.

China reserves large parts of its markets for state-owned enterprises, demanding that its government firms dominate industries such as coal and railway infrastructure—these industries can’t go bankrupt. Indeed, the Heritage Foundation observes that state-owned banks control as much as 90% of China’s assets. With such a tight rein on the economy, the Chinese government has unintentionally created a structural distortion in China’s central monetary practices, one that is only magnified by currency manipulation.

Analysis from a study published by New York University’s Stern School of Business notes two distinct mechanisms by which China’s banking practices and central domination destabilize the Chinese economy.

First, it creates an insurance effect on banks. Knowing they can’t become insolvent, bankers become more sensitive to loan volume than to the risks of those loans, which encourages risky lending practices. As loans are given out below the efficient rate, increased demand in the housing sector causes an aggregate increase in borrowing, which increases prices in the real sector above their fundamental value and creates a bubble.

Second, as banks allocate fractions of deposits from savers into the housing sector, they may face interim deposit withdrawals or draw-downs on corporate lines of credit. In this case, unable to meet their liquidity shortfalls, banks are forced to sell assets at short notice or raise equity in the markets, incurring a liquidation cost. And since private Chinese investment and consumption is inversely proportional to the demand for American dollars created by currency manipulation, banks are forced right back to the risky loans incentives that produce the aforementioned economic bubble.

The end result of this economic mess? Massively escalating debt. By China’s own estimates, total local government debt amounts to $2.2 trillion, or around one third of total GDP. Kenneth Rogoff of Harvard University furthers that waves of municipal defaults could present even greater problems for the central government, which is sitting on another $2 trillion debt of its own. On top of that, total corporate, public, and household debt in China totals to about 206% of current GDP. This debt spurs a vicious cycle, whereby China manipulates its currency—and thereby attracts foreign trade and investment—to cover its own economic inefficiency, but this short-term growth produces unsustainable long-term damage.

This sort of economic situation has happened before—China isn’t the first Asian nation to employ currency manipulation in order to rapidly create a booming industrial economy while at the same time producing artificially high growth rates. Japan tried the same thing decades earlier, but crashed in 1990; South Korea, which copied Japan’s developmental practices, experienced its own meltdown in 1997. Indeed, the phenomenon is so common among rapidly expanding East Asian countries that Time Magazine has referred to the situation as the “Asian Developmental Model.”

Under these circumstances, firms rely on heavy-handed direction and subsidization by the state in order to create massive industrial growth. Credit is made cheaply accessible to these firms, which funnel money—both private and public—into government-controlled operations, all while the state continues to reproduce conditions that make local goods attractive (in China’s case, currency manipulation). The problem is that prices can’t stay wrong forever. State-owned companies don’t have to show the same kind of capital returns that private companies do, leading to bad investments and heavy borrowing. Under this pressure, banking sectors buckle and investment bubbles explode. If China continues on its current path, there is a very real possibility that it will become another data point in this economic model.

Is China’s economic collapse looming on the horizon? No one can say for sure. But China’s subsidization and investment through currency manipulation amounts to around 50% of its GDP, unprecedentedly high even for the Asian Developmental Model. As China continues to explore its role in the global marketplace and the global community, it would do well to remember the limits of economic centralization, painfully exposed with the fall of communism in the 1980s. The economy of tomorrow is dependent upon the cooperation of all its players; in the game of globalization, China’s conduct may earn it three strikes and an out.

Ever since the 2008 global food crisis put agriculture back in the spotlight, the international development community seems to have zeroed in on three key themes—smallholder farmers, higher investment in agriculture, and increasing productivity.

Hardly is this approach more evident than Pepsi Co.’s involvement in chickpea production in Ethiopia, a project focused on increasing chickpea yields and helping smallholders get access to markets.

“What’s exciting about this is that in order to manufacture the product, they will buy from smallholders,” said Ertharin Cousin, the U.S. ambassador to the UN Food and Agriculture agencies in Rome.

“In those same places you have jobs being created that are off farm jobs that exist for unskilled labor that was previously unemployed. Those are the kinds of collective partnerships that smallholders benefit from and that the private sector helps drive.”

Yet if the Pepsi project is evidence of the increased attention to African agriculture, it also points to a fundamental problem: multinational corporations are able to legitimize their role in agricultural development by devoting their resources to boosting smallholders’ yields. But all this really does is perpetuate the myth that increasing yields will reduce hunger.

In fact, it is the large seed and agrochemical companies that benefit from the narrative that higher yields will solve world hunger—precisely because they can use that narrative to justify their highly technical approaches. These actors are able to gain acceptance by framing their initiatives as “development,” which inherently becomes associated with “goodwill” and “compassion.”

Yet despite the huge gains in productivity throughout the 20th century, there are nearly one billion hungry people in the world today—stark evidence that enhancing yields and ending hunger are not so closely correlated.

To me, this suggests the need for a fundamentally different vision for global agriculture. Most important, food systems must center on the multi-functionality of agriculture: nutrition objectives, rural livelihoods, climate change mitigation, and adaptation.

This vision was precisely emphasized by the International Assessment of Agriculture Knowledge, Science and Technology for Development (IAASTD) — considered the most comprehensive review of the current global agriculture situation. Altogether, IAASTD represents a stark rebuttal to the highly reductionist approaches that assume yields to be the sole factor in improving food security.

However, the U.S. government refused to endorse IAASTD, largely, I suspect, on the basis that the strategies embraced by IAASTD may pose a threat to U.S. economic interests—namely the large seed and agrochemical companies that the U.S. government believes should be beneficiaries of U.S. international development policies.

Thus the U.S. government’s failure to endorse IAASTD essentially says something more broadly about agricultural development: corporations’ agricultural approaches are incompatible with the equitable model of agriculture espoused by IAASTD.

The agricultural transformation needed today should be anchored by “food sovereignty”—the idea that local communities have control over their markets, their farming practices, and their nutritional adequacy. Locally-led agricultural innovations—relying on agro-ecology—should be at the forefront, rather than the technical approaches often propagated by multinationa corporations and the U.S. government. Beyond their inherent environmental sustainability, these local knowledge-based practices are more socially inclusive and pro-poor, in the sense that farmers aren’t dependent on external inputs. One recent effort to spotlight such small farmer-centered food systems can be seen in the Worldwatch Institute’s Nourishing the Planet Project, focused on sun-Saharan Africa.

“Part of my job with Nourishing the Planet has been to highlight the things that funders and donors don’t know about—the innovations that farmer organizations without fancy websites are doing to prevent soil erosion in Mali, the work being done by Prolinnova in Ethiopia to make sure water gets to crops, the market garden projects in Niger that have helped women boost their incomes from $300 per year to more than $1,500,” Danielle Nierenberg, co-director of the project, told me. “These innovations are overlooked and they have a lot of potential to be replicated and scaled up all over Africa and beyond into Asia, Latin America, and even the United States.”

The challenge now is to redirect agricultural investment away from merely increasing yields and toward the IAASTD report’s idea that agriculture has a wide array of objectives.

“One of the biggest things I learned is that agriculture and farmers are often blamed for things [such as] deforestation and climate change,” Nierenberg said. “I think we’re seeing this shift that agriculture is emerging as a solution to the world’s most pressing environmental and social challenges.”

The shift toward more pro-poor agriculture requires a fundamental rethinking of the neoliberal free market agenda that for decades has dominated the global food system. The result is that food systems are in some cases tailored more toward commodity production than toward guaranteeing food as a human right (this explains why some communities in Africa may export cocoa when they themselves are food insecure). Free market advocates assume that income generation will enable Africans to purchase food produced anywhere, and largely neglect the importance of food self-sufficiency. The fallacy inherent in this ideology came into sharp relief when the 2008 food price spike triggered riots in over 30 countries.

Indeed, the overemphasis on free market agriculture was embedded in European powers’ colonial structures in Africa, according to Macalester College geography professor Bill Moseley.

“The colonial powers in a sense changed local economies from ones largely based on subsistence or engaged in local regional trade, to ones that move away from subsistence production and start producing crops useful to the core powers,” Moseley said. “Related to this was the notion that colonies should be not a burden on imperial powers but be generating enough revenue to be self-sustaining. There was a big push for them to be more export-oriented.”

It appears that African countries’ subordination to Western powers, however, didn’t necessarily come to an end despite the dawn of independence. In response to the debt crisis plaguing many African countries in the 1980s, the World Bank and International Monetary Fund implemented structural adjustment programs, forcing African governments to slash their investments in the agriculture sector. “In theory governments had a choice, but if you wanted any access to international credit you had to adhere to this set of reforms—cutting back on government civil service, cuts to social services, and freer trade,” Moseley said.

The pitfalls of the structural adjustment programs have been acknowledged even by the World Bank itself. But at the same time, the ability for corporations such as Pepsi to legitimize their role in agricultural development suggests that the free market agenda underlying structural adjustment is still very much prevalent today.

That’s why we have to embrace a type of agriculture that suits the needs of the world’s poorest. This movement is going to have be bottom-up, led by African smallholder farmers who push their governments to make food a human right.

Over the past half-century, fast food giants such as McDonald’s and Yum! Brands Inc. have succeeded in entrenching themselves in American culture and establishing strategic positions within the American market. However, the economic downturn in the United States over the past couple of years, coupled with steep commodity and energy prices, the housing crisis, and increased unemployment, have collectively diminished consumer spending and increased production costs. These factors stunted the growth of the fast food industry and stifled corporate profits. The ensuing stagnation has since been compounded by recent health-related initiatives promoting healthier eating, which draw consumers away from fast food and towards healthier alternatives. In turn, the entire situation prompted fast food chains like McDonald’s and Yum! Brands to change their approach. Fast food chains have refocused their attention on international expansion, particularly in the emerging markets.The term “emerging markets” encompasses rapidly industrializing nations like China, India, and Russia. These economies feature explosive growth and an expanding middle class with greater disposable income. In addition, these nations contain significant urban populations and largely unsaturated markets. Jointly, they present rather promising growth prospects for fast food chains. Eager to take advantage of such favorable economic conditions, companies like McDonald’s and Yum! Brands have consistently remained at the forefront of establishing hundreds of new stores in these locations.

Although McDonald’s, which boasts over 32,000 locations in 117 countries, may be the world’s largest hamburger fast food restaurant chain, it is struggling to keep up with its competitor, Yum! Brands Inc. The rapidly expanding and innovating corporation, which owns KFC, Taco Bell, and Pizza Hut, has created a tremendous presence overseas, arguably more so than McDonald’s. It operates an impressive 38,000 restaurants in 110 countries, earning the title of the world’s largest restaurant company.

The two juggernauts together have sparked an industry-wide search for new markets, which has in turn fostered intense competition among opposing chains. This phenomenon is nowhere more evident than in China. With a middle class of over 300 million people and estimates that the figure could reach 500 million within a decade, China is potentially a very lucrative market.

Even though Yum! Brands has already established itself as the prominent fast food company in China, it is constantly seeking to expand its reach. In order to increase brand recognition of KFC in China, Yum! Brands has been opening the equivalent of a new KFC location almost every day. Of its 1,400 new restaurants in 2009, Yum! Brands opened 509 in China alone. In an effort to keep pace with Yum! Brands, McDonald’s has been forced to constantly innovate and expand.

McDonald’s expects to increase spending in China by 40% in 2011, as well as remodel 80% of its existing locations by 2013 as part of its $1 billion global investment project. This comes in response to Yum! Brands’ current domination of the Chinese sphere with 4,000 outlets in the country and 40% of the market share. As of now, McDonald’s clearly lags behind, possessing only 16% of the market share and having just 1,900 restaurants in China.

In addition to trying to outpace the local competition, fast food companies like Yum! Brands have begun to buy out these smaller companies. In April of this year, the company made a preliminary offer to acquire a larger share of the Chinese company Little Sheep Group Ltd., a casual-dining chain that specializes in “hot pot” dishes.

It is important to note, however, that the transition to a more global outlook is not solely limited to the two biggest players in the industry, nor is the growth limited just to China. Other chain restaurants, including Starbucks, California Pizza Kitchen, and Domino’s, all have plans to enter and expand their number of stores in China as well. Fast food chains have also sought out various markets in Eastern Europe, especially Russia. In fact, McDonald’s recently announced its plans to increase its store count in Russia by 15%, which amounts to building 40 new restaurants. This would be in addition to its $174 million investment and 30 new restaurants constructed in 2010.

Despite the massive penetration into these developing economies already, the most significant growth has yet to come. In an attempt to gain larger footholds in regions like India, the two fast food mammoths have made ambitious long-term investments that will likely materialize within the next few years. Most notably, Yum! Brands has plans to quadruple the number of its restaurants in India by 2015, which would bring its number of locations in India to a grand total of 1,000. Already a major contributor to the company’s revenues, Yum! Brands expects that Indian operations will bring in $100 million in net income in that same year. What’s more, the fast food company hopes to derive as much as 60% of its earnings from emerging markets by 2015, which would constitute double what these very same markets earned Yum! Brands just five years ago. To accomplish this, Yum! Brands expects to invest over $120 million to fund this additional expansion, on top of the $100 million invested in 2009. In an effort to keep up, McDonald’s expects to open 30 new restaurants in India in 2011 alone as part of its $1 billion global investment project that is currently underway.

With over 245 million people and a large urban youth population, Indonesia is rapidly becoming an attractive market as well. Yum! Brands recently opened its 400th KFC  in Indonesia, just 32 years since the first one opened there in 1979. And the company shows no indications of stopping at 400. According to the Managing Director of the Asia Franchise Business Unit of Yum! Restaurants International, Yum! Brands plans to have over 1,000 KFC and Pizza Hut restaurants in Indonesia by the year 2015.

However, gaining entry into new markets can be difficult, and requires more than merely constructing the physical plant. Rather, it entails tailoring the operations to the specific region, and more specifically, adapting to the needs of the new clientele. In order to stimulate demand for their products, fast food chains have developed unique food options to cater to the differing tastes endemic to that particular nation. Although such menu alterations may be costly, they are integral parts of capturing market share from local restaurants. For example, McDonald’s removed its iconic hamburger from its menus in India because there, the cow is considered a sacred entity. Instead of beef, McDonald’s offers an extensive vegetarian menu, which features 100% vegetarian patties consisting of potatoes, peas, carrots, and Indian spices. McDonald’s has also launched new additions to its McSpicy line, in hopes of attracting a larger number of customers. Beyond India, the company offers shrimp burgers in Japan, a rice and bean dish in Costa Rica, Big Macs wrapped in pitas in Greece, and burgers with rice patties rather than buns in China.

In the case of China, the fast food giants didn’t stop with simply diversifying their menu options.They have also altered operations in order to adapt to the new environment. McDonald’s has employed a strategy to broaden its reach, increase accessibility, and ultimately bolster ales. To do so, the fast food chain plans on renovating existing locations, increasing the number of drive- through outlets in big cities, and expanding the number of restaurants that feature delivery services, 24-hour service, and McCafés. Yum! Brands has similar ideas to stay competitive, hoping to offer breakfast, home delivery, and 24-hour service in its KFC and Pizza Hut chains. Moreover, Yum! Brands has hired Chinese managers to run its operations in China to gain insight into how the Chinese market works. The fast food company has also taken steps to enhance its perception as a more upscale dining experience by offering menu options like wine and escargot at its Pizza Hut locations in China.

While investments in developing economies have the potential to be incredibly profitable, emerging markets like China also pose potential problems for fast food chains. Such high growth environments often bring high levels of inflation, which translates into higher commodity prices, rent, and labor costs. Despite the elevated costs, the move to emerging markets appears to already be paying dividends. Yum! Brands’ recently released a quarterly report indicating a 13% increase in same- store sales, coupled with a 15% rise in transactions in its Chinese restaurants. Furthermore, 54% of its total profits came from China. McDonald’s appears to be trailing a bit, but still posted a 3.2% increase in sales in the Asia Pacific, Middle East, and Africa region. Evidently, with so much room for expansion in these developing markets, the possibilities seem limitless.