What better way to understand concepts big and small than through data visualizations? In this blog series, we curate insightful visuals to provide commentary on events, academic theories and themes related to economics and transportation. Join us as we explore and engage with interesting ideas from around the world.

Business fundamentally relies on trust and contracts help formalize this when circumstances turn awry. While the traditional paper-based system has stood the test of time, it can create bottlenecks and hinder transparency by concealing information from all parties involved in a transaction. This week’s Data Vizdom zooms in on blockchain, showcasing its potential to not only build trust but also improve speed and transparency within supply chains.

The past few years have been tumultuous for businesses, as geopolitics and the pandemic have usurped decades of momentum in the proliferation of global supply chains. While the structure of these supply chains may have changed for some industries due to these pressures, global supply chains are here to stay. Resilience, reliability and flexibility remain critical challenges for suppliers, and enhanced visibility could be the key solution.

Global Supply Chain Pressure Index (GSCPI) – Federal Reserve Bank of New York (August 2024)

The end-to-end digitization of supply chains holds significant potential to deliver maximum value to both businesses and consumers. In practice, this would be an incremental process where organizations not only adopt new technologies but also standardize their systems and processes to facilitate data sharing. Blockchain has a crucial role to play by enabling transaction verification.

But what exactly is blockchain? In essence, it is an internet-based encrypted ledger that allows users to publicly validate, record and distribute transactions in an immutable form. The technology is scalable, providing a platform to create and distribute the ledger to millions of computers across the network around the world. Each transaction creates a block that is validated and immutable, latching on to the previous one in chronological order to form a chain. Both the transaction and the ledger are encrypted to ensure security.

Blockchain technology for supply chains—A must or a maybe? – McKinsey & Company (September 12, 2017)

For supply chain applications, the ledger can be made open only to authorized parties to maintain the integrity of their business operations. The following HBR visual illustrates the advantages offered by blockchain compared to traditional financial ledger entries and ERP systems, which often create blindspots, preventing parties from seeing all relevant flows of information, inventory and money. Blockchain’s chronological storage of transactions allows users to easily track activities within the supply chain, making it particularly useful for complex use cases.

Building a Transparent Supply Chain – Harvard Business Review (May-June 2020)

Amazon’s use of blockchain promises to offer end-to-end visibility across the production process for manufacturers, suppliers, logistics companies and retailers as they coordinate to deliver products to consumers. They have partnered with companies like Nestlé to deploy Amazon Managed Blockchain, tracking supply chains for 15 key commodities and enabling consumers to follow their products from farm to table.

Blockchain for Supply Chain: Track and Trace – AWS (n.d.)

While many companies have started experimenting with blockchain and a few have deployed the technology on a limited scale, McKinsey has modelled a system that demonstrates what an integrated data stream from supply chain participants and external sources on a single platform could look like. They believe such an initiative could be used to exchange demand forecasts. jointly optimize production and logistics schedules, and track operations and asset information in real-time.

Overcoming barriers to multitier supplier collaboration – McKinsey & Company (July 7, 2021)

In conclusion, blockchain holds significant promise for transforming supply chains, but its widespread adoption will require extensive experimentation and collaboration. While it clearly offers value across various use cases, overcoming implementation barriers and achieving widespread success will take time and concerted effort.

Help us make this series even better! We would love to hear your thoughts and suggestions on content makers we should follow to discover noteworthy projects and visualizations. Write to Bilal Siddika on LinkedIn or via email.

What better way to understand concepts big and small than through data visualizations? In this blog series, we curate insightful visuals to provide commentary on events, academic theories and themes related to economics and transportation. Join us as we explore and engage with interesting ideas from around the world.

The global economic landscape is greatly shaped by the cross-border flow of capital, which fosters regional development and enhances competitiveness. This week’s Data Vizdom explores the evolution and trends of Foreign Direct Investment (FDI) within the current geopolitical climate.

FDI refers to an investment made by an investor, company or government that results in at least a 10% ownership interest in a foreign company. These investments have flourished over the past decades due to the easing of regulations and trade barriers, allowing large multinational companies to move people and technology across borders. When expressed as a percentage of GDP, FDI inflows are a good indicator of a country’s competitiveness as an investment destination.

Foreign direct investment, net inflows as share of GDP – Our World in Data (2024)

On the other hand, FDI outflow indicates where investors from a particular country choose to allocate their capital, with developed countries often experiencing net outflows as they pursue international investment opportunities.

Foreign direct investment, net outflows as share of GDP – Our World in Data (2024)

During the early 2000s, over a quarter of these investments were made in the manufacturing sector, with the majority directed toward the services sector. Over the years, investments in services have consistently outpaced those in manufacturing. While inflows and outflows are primarily driven by expected returns, sectoral trends may also be affected by restrictions on investments in strategic industries.

Shifting investment patterns: 5 key FDI trends and their impact on development – UNCTAD (April 23, 2024)

From a global value chain (GVC) perspective, the majority of these investments are directed toward the highest value-added activities, namely sophisticated manufacturing and high-level services. Interestingly, compared to the early 2000s, the proportion of investments in all other stages of GVCs has diminished over the past three years. This makes it harder for countries trying to climb the GVC ladder, as they compete for limited funds and opportunities.

Global economic fracturing and shifting investment patterns: A diagnostic of ten FDI trends and their development implications – CEPR (May 19, 2024)

Trade tensions and the COVID-19 pandemic have led governments worldwide to recognize the risks of over-reliance on trade with a few countries, particularly for strategically significant goods like semiconductors. This realization has prompted a shift in globalization, with countries reintroducing industrial policies and implementing protectionist measures. As a result, FDI is increasingly being directed toward countries that are geopolitically aligned, even if they are geographically distant.

Fragmenting Foreign Direct Investment Hits Emerging Economies Hardest – IMFBlog (April 5, 2023)

The increased uncertainty since the pandemic has led to a global decrease in FDI of about 20%. However, these losses have been geographically uneven, with China experiencing the most significant decline compared to activity five years prior to the pandemic. The redirection of investment has brought opportunities for countries that are geopolitically aligned with the West.

The movement of capital globally is in decline – The Economist (May 3, 2024)

As geopolitical tensions continue to simmer, FDI is likely to continue concentrating within political blocs, potentially reshaping the structure of global value chains in the coming years. Smaller countries that heavily rely on FDI will be particularly affected by their political choices and may also miss out on opportunities to participate in higher value-added activities within GVCs.

Help us make this series even better! We would love to hear your thoughts and suggestions on content makers we should follow to discover noteworthy projects and visualizations. Write to Bilal Siddika on LinkedIn or via email.

What better way to understand concepts big and small than through data visualizations? In this blog series, we curate insightful visuals to provide commentary on events, academic theories and themes related to economics and transportation. Join us as we explore and engage with interesting ideas from around the world.

The rise of social media platforms over the last decade has paved the way for individuals to earn a livelihood by participating in the digital economy. This week’s Data Vizdom shines the spotlight on the creator economy, where creators interact with their audiences and generate revenue by monetizing their content through digital and social media platforms.

The creator economy has been flourishing and expanding in various directions, providing talented individuals with platforms that cater to their unique interests and skills. A study by Goldman Sachs estimates that the size of the creator economy will reach $480 billion by 2027. The infographic below showcases the major platforms that serve different segments of the creator economy, highlighting its breadth. The audience size and potential revenue that creators can generate vary widely between categories and across platforms.

Understanding the Creator Economy – GRIN (April 2024)

While the platforms themselves wield significant power in determining revenue models, revenue shares and the algorithms that decide who gets promoted, things are much more democratic on the creators’ side. Creators producing niche content far outnumber their more popular counterparts. Despite having smaller audiences, their engagement numbers are found to be seven times higher, solidifying their influence over their dedicated followers.

How Your Business Should Tap into the Creator Economy – Harvard Business Review (May 22, 2024)

However, when it comes to earnings, the picture is very different. The largest creators with the biggest audiences tend to earn the most. On Roblox, a gaming platform where creators build experiences for users, traffic is highly concentrated. For example, Brookhaven RP accounts for about 15% of all user engagement on the platform. This trend can also be seen on Patreon, a platform that allows users to support their favourite content creators through recurring subscriptions.

The new rules of the “creator economy” – The Economist (May 8, 2021)

The revenue streams for creators in the creator economy are highly platform-dependent, with sponsored content through brand deals being the most popular mode. The ways through which creators can earn an income have also evolved over time, including selling courses that teach their audience a certain skill or earning tips through features like Super Chat during YouTube livestreams.

Where does creator income come from? – eMarketer (September 14, 2023)

Sponsoring content has become an important marketing channel for companies, particularly for businesses seeking to reach the dedicated followers of niche content creators. In the US, marketing spend is forecasted to increase across all major photo and video-based platforms in 2024.

Instagram leads influencer marketing, even as marketers spread budgets across social channels – eMarketer (September 18, 2023)

A study published in the Harvard Business Review analyzed the effectiveness of influencer marketing spending and found that a 1% increase in influencer marketing spend in China, one of the most developed influencer marketing industries, led to a 0.46% increase in engagement. Furthermore, the study documented the effects of seven key variables on optimizing the ROI of such spending, potentially leading to an average increase in engagement of more than 16%.

Does Influencer Marketing Really Pay Off? – Harvard Business Review (November 24, 2022)

To conclude, driven by diverse revenue streams and significant engagement from niche content creators, the creator economy is set to continue evolving and thriving. For businesses, understanding trends and leveraging sophisticated marketing strategies will be key to benefiting from the growing influence of this dynamic field.

Help us make this series even better! We would love to hear your thoughts and suggestions on content makers we should follow to discover noteworthy projects and visualizations. Write to Bilal Siddika on LinkedIn or via email.

What better way to understand concepts big and small than through data visualizations? In this blog series, we curate insightful visuals to provide commentary on events, academic theories and themes related to economics and transportation. Join us as we explore and engage with interesting ideas from around the world.

Over the past few years, international trade has undergone tumultuous times, and with trade protectionism on the rise, continued growth is uncertain. This week’s Data Vizdom appraises the current state of Free Trade Agreements (FTAs) — instruments designed to reduce trade barriers such as tariffs and quotas for all but certain goods crossing international borders between the signatories.

The rate of international trade’s growth fluctuates with variations in factors such as prices, interest rates and demand. However, with disruptive shifts in geopolitics and the ineffectiveness of supranational institutions in addressing current challenges, the world economy will have to weather structural changes. The visualization below breaks down international trade by commodities between partners, also highlighting the relative importance of each trade relationship for a pair.

resourcetrade.earth – Chatham House (2024)

Looking back, ever since the 1970s, countries have been signing FTAs to gain improved access to each other’s markets. The number of such deals really picked up speed in the 1990s with the fall of the Soviet Union and continued into the 2000s, with an average of 13 deals made every year. Of late, new agreements have been sparse, with just two deals struck so far over this year.

Rumours of the trade deal’s death are greatly exaggerated – The Economist (June 13, 2024)

One potential reason for the slowdown in dealmaking could be the lack of potential partners with whom countries would want to establish favourable terms of trade. Examining the countries signing these agreements, the EU leads with 50 agreements currently in force, nearly half of which have been signed since 2010. China and the US, surprisingly, have far fewer agreements, with about 75% of the US’s agreements entered into before 2010.

The Boston Consulting Group has conducted an interesting analysis to understand the differing motivations of countries negotiating FTAs and to assess the quality of the agreements being signed. By analyzing FTAs between 100 major economies and trade blocs, they developed the Trade Engagement Index (TEI) tool to compare economies based on the usage, depth and relative strength of their trade agreements. Take a look at the visualization below to see how different economies compare with each other.

Which Economies Benefit the Most from Free Trade Agreements? – Boston Consulting Group (February 26, 2024)

They chart the economies based on their scores and categorize them as shown in the visualization below. Countries with the highest usage and depth of FTAs are termed Free-Trade Stalwarts, typically smaller economies that heavily rely on trade. On the opposite side, Independent Movers are countries that rely less on FTAs, either to protect their domestic industries or due to other strategic reasons. Such as China’s use of its scale and competitive cost to access markets.

In conclusion, as negotiating FTAs becomes increasingly time-consuming and complex, smaller scale agreements that address non-tariff barriers are becoming more popular. These targeted deals can be established more quickly and often deliver trade benefits that, in some cases, exceed those of FTAs. Despite this, FTAs continue to be negotiated as countries seek to address broader trade issues and secure long-term economic benefits.

Help us make this series even better! We would love to hear your thoughts and suggestions on content makers we should follow to discover noteworthy projects and visualizations. Write to Bilal Siddika on LinkedIn or via email.