International Data Need to Add Up

A useful analysis requires the understanding of data and a belief both in the data and their issuer. Companies, organizations, and scholars wary widely in their interpretation and use. International comparisons often differ substantially in data collection and quality control. This commentary eases comparisons of research across national borders. Here is an international perspective on research numbers, going beyond quantitative data aspects and embedding human warmth and insights. 

In an era of lengthy and diverse supply chains, investors need to transparently identify corporate action and its effect on the market place. Clear rules of origin are just like license plates. They identify ownership and assign responsibility. Labels cannot simply state “manufactured in the European Union.”

Information needs to be compatible across domains. For example, to compare medical information across nations, one has to segment patient differences by age, country, health patterns, variations in the access to medical care, prophylactic treatment, and pharmaceuticals.

Culture affects personal behavior. For example, research identified the wearing of face masks helpful to viral containment. In Asia, there was ongoing and rapid use of breathing masks. Particularly in wintertime, masks were encouraged both to protect oneself and others from contamination. No negative connotation is associated with the use of a mask. By contrast, in the United States, a mask reflects for many the existence of a medical problem by the wearer. In consequence, masks are not seen as protective but rather as an announcer of risk, which in turn negates their use. 

Social structure matters, particularly as it reflects differences in infrastructure and trust. Not all countries have the capability to fund and collect data within short time spans. The need to save face can then lead to the furnishing of poor data, delivered with elan. In consequence, ‘current’ information may really be old and may not even begin to alert users to important changes in one’s society or social conditions. 

Data work needs to recognize the emotional component of information. How will people feel about their direct exposure to hard and cold numbers alone? How can one systematically but honestly include emotions into one’s analysis? How to cope with self-fulfilling prophecies? What are the short –and long-term effects of optimism with data – particularly when insights can cover the entire range of a scale. For most people numbers are mere indicators of opportunities for action and change. 

Analyses and forecasts need to consider change. An evaluation based on the next quarter may reflect the next 25 years. Insufficient or incorrect reflection of change and innovation may lead to precariously wrong decisions. Imagine the decision-making process for countertrade, where the outcome and conclusion of an agreement may take decades.

Synchronicity is another important dimension. I am reminded of Ludwig Erhard, the second chancellor of the Federal Republic of Germany who was credited with Germany’s postwar “Wirtschaftswunder” or economic miracle. When Erhard concentrated expenditures on some sectors and called for a ‘tightening of belts’ for others, these steps were rapidly and fully implemented by government, firms, and society, leading to a powerful impact. The players actually cared.

On this dimension, President Trump will find his largest risk and opportunity. The coordinated development of a restructured economy accompanied by a synchronous response of all participants with their resources can turn into a wonderful economy that shakes off the problems of post coronavirus rebuilding like a duck shakes off water.   

Apart from human emotions, economic re-emergence requires measurement scales benefiting from recalibration and new benchmarks. For example, a scale measuring export controls which ranges from “no controls” to “tight controls” is only in part complete since it omits policy resulting from subsidies and voluntary restraints. Numbers are only snapshots of a current condition. These conditions are not frozen in salt, but they will change and with them their impact. In a dynamic and complex environment, even the efficacy of Aspirin benefits from review. 

Professor Michael Czinkota teaches International Marketing and Trade at the McDonough School of Business of Georgetown University. He served as Deputy Assistant Secretary for Trade Information and Analysis in the U.S. Department of Commerce in the Reagan and Bush Administrations. 

The Coronavirus: A New Risk of Trade

Over the past three generations, analyses of trade have indicated that speed of innovation and change is supportive of improved living standards. Growth of a country’s international trade has typically been more rapid than growth of the domestic economy. 

There is strong historic support for the benefit of speed. The Roman empire’simpact on thought and development can still be felt today. Its territories, also in the Middle East, were expanded less through armed conflicts, but rather through the speed and improvements offered to its international collaborators. The Pax Romana insured that merchants could travel safely on the roads that were built, maintained, and protected by Roman legions. The common coinage facilitated the speed of business transactions throughout the empire. Central market locations through the foundation of cities and excellent communication systems enabled the development and distribution of innovations. 

But conditions change. On February 2, the U.S. State Department placed China on a travel advisory of ‘Level 4: Do Not Travel’ due to the novel coronavirus (Covid-19) outbreak.  As of February 12, the death toll from the virus is at least 1,113. 

It matters how quickly something can be provided to a specific location. Also needed is control of the speed of distribution combined with the capability to plan for the “what if” question in case a disruption of shipment is required. 

We need to discover and systematically assess possible trouble spots of globalization and highlight the consequences of dependence. It is vital for the formulation of strategic visions to understand the need and capacity for disruption.

In the 1970s, Professor Bernard LaLonde of The Ohio State University expanded his analysis of inventory carrying cost to include the expense of capital tied up in the storage of goods. With interest rates of 17 percent and higher during the Carter presidency, his innovative assessment of expense and risk changed corporate inventory management substantially.  

The speed of Chinese viral contamination sends us a risk signal for trade. We discover that rapid propagation does not just work for incoming and outgoing goods and services. Just as there has been substantial growth in health care tourism, where patients obtain lower cost medical services by traveling abroad, the expansion of viral infection can be hard to contain. 

Rapid distribution outwards and inwards can be deteriorating and distracting. The coronavirus outbreak is our wakeup call to be alert, not just to the benefits but also the risks encountered in international outflows and inflows of services, ideas, thoughts, and goods.

This problematic raises the key issue of how to deal with such risky occurrences. One useful approach is the consultation with experts who have experienced sudden, frequent, and unexpected risk conditions. Such expertise can be sourced best from the Middle East where there have been many past occurrences of uncertainty, scrutiny, and restraint. Local experts may be able to help manage hostile business environments both at home and abroad. They can anticipate repercussions from disruptions and also calm down hyper reactions. And therein lies much of the wheel of fortune: if enough people believe in a condition, their understanding may well become reality. Let us not accept complex issues without expert insights.

Keywords: Coronavirus; Covid – 19; Risk; Global Trade; Outflow; Inflow; Bernard LaLonde; Distribution; State Department; International Trade