By cutting unnecessary expenses, businesses can free up resources to explore new marketing avenues. Conventional approaches like advertising initiatives and extensive outbound marketing are not only costly but less effective. As a result, Search Engine Optimization (SEO) has grown hugely in importance because it can simplify the customer acquisition process, cut down expenses significantly, and improve efficiency overall.
The Costly Conundrum of Traditional Marketing
Traditional marketing methods have long been the standard for businesses aiming to gain new customers, but these tactics often demand hefty financial outlays. Paid ads, while viable in the short run, can swiftly gobble up marketing budgets, and once the cash flow stops, so do the leads. Outbound strategies like cold calling and direct mail are both time-eaters and wallet-drainers, with no guarantee of payoff. The outcome? Sky-high Customer Acquisition Costs (CAC) that gnaw away at profits and stunt growth.
SEO offers a compelling alternative. By tweaking your website and content for search engines, you can attract high-quality, organic traffic without the ongoing costs. Unlike paid ads, the benefits of SEO snowball over time and, when done right, can lift your business’s ranking on Search Engine Results Pages (SERPs), making it easier for potential customers to find you. This organic visibility is gold—it means you’re connecting with customers who are actively searching for what you offer, leading to higher conversion rates and lower acquisition costs.
The SEO process starts with thorough keyword research so you can recognize the common terms your potential customers use to find what they’re looking for. You can position your business as an industry authority by crafting high-quality, relevant content that answers these queries. Over time, this builds trust and credibility. And guess what? This persuades more and more customers to choose you over your competitors. SEO also involves optimizing your site’s technical aspects like load speed, mobile-friendliness, and user experience, which are crucial for keeping visitors and turning them into customers.
The Long-Term Benefits
One of SEO’s standout perks is its lasting impact. It does demand an initial investment of time and resources, but the long-term gains are substantial because, unlike paid ads, which cease to deliver once you stop spending, SEO’s results keep on growing exponentially. A well-optimized site can hold its ranking for years with minimal upkeep. This lasting visibility means a constant flow of organic traffic and leads, cutting down the need for pricey ad campaigns and outbound marketing.
SEO also provides invaluable insights into customer behavior via analytics tools. By grasping how potential customers find and navigate your site, you can endlessly tweak your SEO strategy to better suit them. This data-fueled method not only supercharges your SEO efforts but also spills over into other parts of your marketing strategy, upping efficiency and trimming costs.
If you’re based out of Waco, collaborating with a dedicated Waco SEO company can give you a competitive edge. They bring local insights and specialized expertise to your SEO efforts, ensuring your business stands out in regional search results. This partnership can streamline your approach and maximize your reach, driving quality traffic and lowering acquisition costs.
Embracing SEO for a Cost-Efficient Future
Every cent counts, and it would be unwise for any business to overlook the myriad benefits of SEO. By shifting from old-school, pricey marketing tactics to a robust SEO plan, companies can slash customer acquisition costs, reel in high-quality leads, and increase efficiency. SEO isn’t just a marketing tool—it’s a savvy investment that promises steady growth and a leg up in the digital arena.
Weaving SEO into your business game plan could be the key to streamlining operations and locking in a cost-effective future. Embrace the power of organic searches, watch your acquisition costs plummet, and see your customer base soar.
The fashion industry is notoriously challenging, characterized by rapidly changing trends, fierce competition, and economic uncertainties. Many brands emerge each year, but only a few manage to establish a lasting presence. Faviana is one such brand that has not only survived but thrived, carving out a niche in the competitive landscape of special occasion wear. To learn more, I interviewed Amy Moradi Nazar, the third generation behind Faviana’s success, and she shared about the strategies and values that propelled Faviana’s success, which offers valuable insights into what it takes to succeed in the fashion industry.
Building a Strong Foundation
Faviana’s success story begins with its founders, Shala and Paul Moradi, who emigrated from Iran in 1979. Faced with the daunting task of starting over, they combined Paul’s production and sales expertise with Shala’s passion for pattern making and fashion design. In 1988, they founded Faviana.
The early years were tough, requiring substantial support from family and friends. A pivotal moment came in 1989 with the creation of a ruched polka-dot dress, a design that became immensely popular and effectively “saved” the fledgling company. This breakthrough underscored the importance of innovative design and understanding market demand—two elements crucial for any fashion brand’s success.
Embracing Core Values
A pivotal moment came in 1989 with the creation of a ruched polka-dot dress, a design that became immensely popular and effectively “saved” the fledgling company.
Faviana’s unwavering commitment to its core values has been a key differentiator in its journey. These values include bringing out the best, embracing evolution, inspiring elegance, eliminating drama, and showing genuine concern. Unlike many brands that merely pay lip service to their stated principles, Faviana integrates these values into every aspect of its operations. This commitment is evident in the brand’s mission to empower women to feel good and celebrate themselves, reflected in the diverse range of sizes and styles they offer.
By focusing on inclusivity and body positivity, Faviana ensures that every woman can find a dress that makes her feel stunning. This dedication to customer satisfaction has built a loyal customer base and distinguished the brand in a crowded market.
Overcoming Industry Challenges
Faviana has faced and overcome numerous challenges over the years, from economic downturns to shifts in consumer behavior. During the 2008 financial crisis and the COVID-19 pandemic, the fashion industry saw significant declines in sales. Faviana navigated these turbulent times through strategic planning and a steadfast commitment to its core values.
Adapting to Market Changes: The ability to adapt quickly to changing market conditions has been vital. Faviana embraces evolution as a core value, which means continually innovating and staying ahead of trends. The brand’s design team works tirelessly to create styles that resonate with contemporary tastes while maintaining the timeless elegance that Faviana is known for.
Strengthening Retail Partnerships: Another strategic move has been cultivating strong relationships with retail partners. Faviana is known for its impeccable fit and high sell-through rates at the retail level. The brand invests significant time in understanding the unique needs of each retail partner, ensuring a personalized approach that fosters mutual growth and success. This partnership model not only boosts sales but also reinforces brand loyalty among retailers.
Leveraging Family Business Strengths
Operating as a family-owned business has provided Faviana with unique strengths that have contributed to its success. These strengths include strong trust and understanding among team members, shared values, and exceptional commitment and loyalty.
Trust and Communication: In a family business, there is a deep understanding of each other’s strengths, weaknesses, and motivations. This high level of trust and communication facilitates smoother decision-making processes and enhances operational efficiency.
Shared Vision and Values: The shared values and unified vision of the company create a cohesive culture that prioritizes sustainability and legacy. This long-term perspective has enabled Faviana to remain focused on its mission and core values, even during challenging times.
Commitment and Loyalty: The personal investment of family members in the business’s success translates into a high level of dedication and loyalty. This commitment extends to all employees, who are considered part of the “Faviana family.” Such a supportive and loyal workforce is a significant asset in maintaining high standards of quality and service.
The Role of Cognitive Biases in Business Decisions
Understanding cognitive biases is crucial in navigating the complexities of business decisions. Two significant cognitive biases that Faviana has successfully managed are confirmation bias and status quo bias.
Confirmation Bias: This bias leads individuals to favor information that confirms their preexisting beliefs while disregarding evidence that contradicts them. Faviana’s leadership actively seeks diverse opinions and constructive criticism, which helps refine designs and meet customer expectations more effectively.
Status Quo Bias: This bias refers to the preference for maintaining current conditions rather than changing. Faviana counters this by embracing evolution as a core value, encouraging continual growth and adaptation. By actively pursuing new trends, technologies, and customer feedback, Faviana stays relevant and competitive.
Commitment to Inclusivity and Community Engagement
Faviana engages with the community through initiatives like the Faviana Sales Leadership Forum and the Faviana Brand Ambassador Program.
Faviana’s commitment to inclusivity and community engagement is another factor that sets it apart. The brand designs with every woman in mind, offering a range of sizes from 00 to 24W, including the Faviana Curve collection. This inclusivity ensures that every woman can find a dress that makes her feel beautiful and confident.
Faviana engages with the community through initiatives like the Faviana Sales Leadership Forum and the Faviana Brand Ambassador Program. These programs empower retail partners and young women, reflecting the brand’s dedication to inclusivity and empowerment.
Looking Ahead
As Faviana looks to the future, it plans to expand its distribution to additional key retailers nationally and internationally. This expansion will involve increasing the sales and marketing teams to bring Faviana’s designs and mission to a broader audience. The goal is to maintain the high quality and impactful mission that have been central to the brand’s success while reaching a wider global network of retail partners and consumers.
Faviana’s journey in the fashion industry illustrates the importance of resilience, innovation, and adherence to core values. By understanding market demands, fostering strong relationships, leveraging family business strengths, and committing to inclusivity and community engagement, Faviana has established itself as a successful and enduring brand in a highly competitive industry. As the company continues to evolve and expand, it remains dedicated to helping women feel good and celebrate themselves, ensuring that every woman can find her perfect dress and feel truly empowered.
Imagine stumbling upon a hidden treasure, one brimming with jewels of talent and skill, yet surprisingly affordable. That’s exactly what Eastern Europe’s remote workforce represents in today’s global tech landscape. Sergiu Matei, CEO of Index.dev, unveils this gem in a recent interview with me, offering insights that will not only captivate but also enlighten business leaders looking for high-quality, remote tech professionals.
A Pool of Exceptional Talent: The Eastern European Advantage
In the realm of global tech development, Central and Eastern Europe (CE) emerge not just as participants, but as leaders. This region is home to approximately a million developers, a figure that represents a significant portion of the world’s engineering talent pool. But what truly sets these professionals apart is not just their sheer number. It’s their depth of education and expertise, particularly in fields that are foundational to tech innovation – mathematics and science. This rich educational background has fostered a workforce that’s not only technically proficient but also highly innovative and problem-solving oriented.
The education system in CE countries, with its strong emphasis on STEM disciplines, has produced a generation of tech professionals who are adept at tackling complex challenges. This is reflected in their work, where precision, analytical thinking, and a methodical approach are the norms. What’s more, these skills come at a cost that is markedly lower than what you would expect in Western Europe or North America. Companies leveraging this talent pool can access top-tier tech expertise while significantly reducing their operational costs, a strategic advantage in the competitive global marketplace.
Cultural Affinity: Bridging the East and the West
In the realm of global tech development, Central and Eastern Europe (CE) emerge not just as participants, but as leaders.
The prowess of CE’s remote workforce isn’t limited to their technical skills. Another key aspect that sets them apart is their cultural affinity with Western Europe and the US. This aspect is crucial in a world where cross-cultural collaboration is the norm rather than the exception. The shared cultural values and similar business ethics between CE and Western countries create a seamless integration, fostering an environment of mutual understanding and efficient communication.
This cultural alignment manifests in various facets of work – from grasping the nuances of business requirements to the subtleties of team dynamics. It’s particularly noticeable when compared to regions like Latin America or Asia, where cultural differences can sometimes pose challenges in collaboration. In CE, however, the proximity to Western cultural norms means that remote workers are often on the same page as their Western counterparts when it comes to work ethics, communication styles, and business practices. This synergy is invaluable in global business operations, where understanding and adapting to different work cultures can significantly impact project success.
Resilience Amidst Adversity
The resilience demonstrated by CE tech talent, especially in nations like Ukraine, is not just commendable; it’s extraordinary. This region has been at the epicenter of military conflicts and geopolitical tensions that have challenged the very fabric of daily life. Yet, amidst such turmoil, the tech professionals from the area exhibit a remarkable work ethic and unwavering dedication to their craft. This resilience speaks volumes about their character and professional commitment.
The ability of these individuals to compartmentalize and maintain focus on their work, despite the chaos unfolding around them, is a testament to their mental strength and adaptability. They have not only continued to deliver quality work but have also shown the capacity to innovate and creatively problem-solve under pressure. This level of resilience is a crucial asset in the fast-paced and often unpredictable world of technology. For businesses, partnering with such a workforce means collaborating with individuals who are tested in the fires of adversity and have emerged with a sharpened focus and a fortified work ethic.
Overcoming Time Zone Challenges
Another impressive attribute of the CE remote workforce is their adept handling of time zone differences, a frequent hurdle in international business operations. These professionals demonstrate an exceptional ability to synchronize with teams across the globe, especially those on the US East Coast. This alignment offers a substantial overlap in working hours, facilitating real-time collaboration and communication, which are pivotal for the success of cross-border projects.
Moreover, the flexibility exhibited by these workers goes beyond mere alignment with different time zones. They are often willing to adapt their schedules to accommodate the needs of the project and the team, working odd hours or shifting their work patterns as required. This adaptability makes them an incredibly versatile and resourceful component of any global team. Their willingness to bend their work hours for the greater good of the project underscores a profound professional commitment and a deep understanding of the global nature of today’s workforce.
Engagement and Retention in Remote Settings
In the landscape of remote work, especially when spanning multiple time zones and cultures, the challenge of engaging and retaining employees becomes more complex. Matei underscores the critical importance of aligning remote workers with a company’s vision and mission. This alignment is vital for fostering a strong sense of belonging and commitment, which are the cornerstones of a productive remote workforce.
Effective onboarding is the first step in this process. It involves not just acquainting new hires with their tasks but immersing them in the company culture and values. This immersion helps build a deep-seated connection with the company’s goals and objectives, making the remote employees feel as integral to the team as their in-office counterparts. Continual reinforcement of the company’s mission and objectives, through regular communication, virtual meetings, and company-wide events, further strengthens this bond.
Creating a sense of community among remote employees is also crucial. This can be achieved through virtual team-building activities, recognition of achievements, and creating opportunities for informal interactions, which all contribute to a feeling of inclusiveness and team spirit. By investing in these areas, companies can ensure that their remote workforce remains engaged, motivated, and loyal, despite the physical distance.
Innovative Recruiting Strategies
By leveraging personal networks and local insights, they are able to reach candidates who may not be actively seeking opportunities on mainstream platforms.
Recruiting in CE demands innovative approaches to tap into the full potential of the region’s talent pool. Traditional platforms like LinkedIn and local job boards, while useful, only scratch the surface of the available talent. To truly access the depth of highly skilled professionals in CE, companies need to look beyond these conventional methods.
Index.dev has pioneered this approach with its unique referral system and in-country sourcing strategies. By leveraging personal networks and local insights, they are able to reach candidates who may not be actively seeking opportunities on mainstream platforms. This method not only widens the talent pool but also increases the chances of finding candidates whose skills and values align closely with the company’s needs. Such a targeted approach to recruitment ensures a higher quality of hires and contributes to a more dynamic and versatile workforce.
Adopting a Flexible Work Model
In my role as a consultant guiding companies through the transition to flexible work models, I strongly advocate for the inclusion of CE talent in their remote workforce. My experience has shown that incorporating CE workers into these models brings immense value. These professionals are not only technically proficient but also remarkably adaptable, qualities that are essential in the dynamic landscape of remote work.
By integrating CE professionals into their teams, my clients gain access to a wider pool of high-caliber talent, enhancing their competitive edge in the global market. I emphasize the importance of leveraging innovative recruitment strategies to connect with these valuable resources. My goal is to help my clients build robust, versatile, and culturally diverse teams that are not only equipped to handle current challenges but are also future-ready. In doing so, we’re not just optimizing their workforce; we’re also contributing to a more interconnected and inclusive global work culture.
The Future of Work: A Global Talent Marketplace
The transition to remote work, hastened by the COVID-19 pandemic, has redefined the concept of the workplace. Businesses are no longer bound by geographic limitations when it comes to hiring talent. Many international entrepreneurs choose to establish UK companies to support globally distributed teams and international operations, often working with BACG Finance for company formation and ongoing accounting support. This paradigm shift has opened up a global marketplace of skills and expertise, allowing companies to tap into the best talent, regardless of location.
This global reach comes with multiple benefits. It promotes diversity and inclusion by bringing together individuals from various backgrounds and cultures, leading to more innovative and creative solutions. Moreover, it enables cost-effective growth and development, as companies can find the right skills at competitive rates, optimizing their investment in human resources. The future of work is not just about working remotely; it’s about leveraging the global talent pool to build more dynamic, innovative, and inclusive businesses.
Conclusion
CE’s remote workforce is an underutilized reservoir of talent and affordability. Their resilience, cultural alignment with the West, and adaptability to time zone differences make them an invaluable asset for businesses looking to scale and innovate. As the world embraces remote work, turning to regions like CE for tech talent could be a strategic move for forward-thinking companies. The future of work is not just about where we work, but also about who we work with – and the CE workforce is poised to play a significant role in this evolving landscape.
Content is king in today’s fast-moving digital world. Nevertheless, for any blogger or digital marketer, the process of coming up with fresh content that is engaging, time and again, is not so easy. This is where AI-powered paraphrasing tools come in, to make this process easier with guaranteed high-quality results. Here are the top five benefits of using AI to rewrite blog posts.
Enhanced Productivity
The greatest outstanding advantage that comes with using AI for rewriting blog posts is the boosts in productivity. Traditionally, the process of creating content incorporates brainstorming, researching, drafting, and editing; all of which can be pretty time-consuming activities. In essence, this simply means that with the aid of AI paraphrasing tools, this rewriting is automated to give you a number of versions of a blog post within a very short time.
For instance, you can copy-paste an already existing blog post in a paraphrasing tool, give a description of the changes that you need, and within almost no time, have it rewritten. This efficiency saves valuable time for the content maker to do other important stuff like strategy development and audience engagement.
Consistent Quality and Tone
The greatest challenge in blogging is how to get every single piece of a blog posting to hold its weight in terms of quality and tone. AI rewriting tools are made to imitate writing patterns that are human-like in nature, making it possible for rewritten content to produce a natural and interactive tone of its own. In this light, advanced algorithms are put in place and embedded to analyze the original text and come up with a paraphrased version that relates its message more through its readability.
One can even engineer tools like TextFlip.ai to format according to particular style guides or tone preference, ensuring uniformity and professionalism in your content. Especially good for brands wanting to have a cohesive voice across all platforms and mediums.
Improved SEO Performance
One has to drive organic traffic to his blog, and it is vital to develop it through SEO. AI paraphrasing/rewriting tools will then help in creating unique content that not only keeps away from search engine penalties for duplicate content but also, through the rewriting of already existing blog posts, gives one a chance to reinvent valuable content without losing its originality factor.
For example, some tools ensure that the rewritten content passes through AI-based plagiarism AI checkers undetected. Another planetary feature is the preserving of your SEO integrity, all while maximizing the reach of your content. What’s more, their ranking in search engines can be improved by periodically updating and publishing old blog posts with fresh, rewritten content, which will then attract more visitors to your site.
Cost-Effective Content Creation
Professional writers or content agencies will be expensive to hire, more so for start-ups and small businesses that will no doubt have strained budgets. AI rewriting tools ensure a cost-effective alternative by reducing the need to outsource content creation services. ONE time investment or subscription fee can give access to a robust tool that enables on-demand quality content.
For instance, chatgpt rewriter tools have various packages that can work within any needs and budget. Irrespective of the size of the business, it comes quite affordably to most. You’d be able to save tons of money in content creation by using AI to rewrite your blog posts, keeping your business flowing through constant new and exciting content.
Beating Writer’s Block
This has been aghast with many content developers: the evil called writer’s block. Indeed, this might be very frustrating and slow down productivity. ChatGPT reworder can always help in conquering this challenge by giving inspiration and a new look at pre-written material. Just enter some text in the tool whenever you get stuck, then let it rewrite it—in some cases, it evokes new ideas to finish up your writing.
Using an advanced language model can create multiple variations of a single piece of content, offering substantial ideas to be explored. This will not only help one in getting rid of writer’s block but also ensure that your content remains fresh and diverse.
Conclusion
Infuse AI-powered paraphrasing into your content creation, and see for yourself how it can help boost productivity with quality consistency. What’s more, it gives better SEO performance and is cost-effective. evel up the way you do content creation. Fast and efficient creation of engaging, top-of-the-line content—any blogger’s or digital marketer’s dream.
Create more compelling, high-quality content with the power of AI right at your fingertips, which can help you get ahead of the competition—post regularly and drive more significant amounts of traffic to any website. See how you can maximize AI to transform your content creation process today.
It is common to meet the surge in high expectations (AI Hype) and subsequent disillusionment in the journey of technological advancement. Some classic cases include the dot.combubble and, more recently, the electric vehicles. With artificial intelligence capable of taking us into another deep transformative phase, it is prudent that we reflect on the past to guide the future. We investigate if the lessons of those past hypes have been learned, and if they call out extra considerations for today’s AI landscape. To start, this investigation uses the RAG (Red-Amber-Green) risk evaluation framework to then detail tactics and strategies practical for both large corporations and SMEs (Small-Medium Enterprises), developing a sustainable AI strategy.
Elements Related to AI for Each Hype Scenario from dot.com and EV
From the table above, I will share with you the strategies, and tactics that large companies/corporations and small-medium enterprises (SMEs) should implement and execute, to attenuate the impacts and risks emerging from each element to attain SUSTAINABILITY for their business.
Hype and Investment: High valuations and speculative investments, lead to market bubbles– AMBER
Let’s consider the very recent investment shifts from core producers. Elon Musk took the microprocessors out of electric vehicles and supported the development of AI systems. More recently, the investment by Microsoft in OpenAI shows the movement of that company toward AI and cloud services—such as adding AI capabilities to the Azure cloud and releasing the SLM, Small Language Model, for SMEs. Alphabet, the parent company of Google, is investing considerable amounts in AI to make it work on driverless cars and, at the same time, on its AI research.
Everything is aiming to create tools and services to be delivered to businesses.
There is another phenomenon related to investments in AI startups: the hype driven investment landscape has resulted in some concerns. For instance, there is a recognition that many AI startups might be overvalued, raising questions about the sustainability of these investments. High costs associated with training advanced AI models, which can reach tens of millions of dollars, further compound these challenges. This has led to a focus on companies that can offer more efficient AI solutions or support the infrastructure needed for AI development As for M&A, (see last news here) the question out-of-the-hype is if, how the integrations can/will work for businesses. Without forgetting that these activities imply some impacts on the training plans to upskill or reskill the workforce, including managers.
What are the strategies that companies can put in action to reduce the amber and avoid the red RISKS?
Large businesses and corporations: there will be a very granular due diligence process before investment in AI technologies: technology maturity, integration status within start-ups, possible ROI, and strategic fit. Create an internal AI review board with technical and financial expertise to review potential investments. Balanced Investment: Diversify AI investments to balance high-risk speculative ventures and stable, mature technologies. The budget allocation for AI must balance between a percentage invested in experimental projects and the rest put in established solutions.
SMEs – Selective Investments/expenditures: Focus on only the AI solutions that offer an immediate application.
Technological Maturity – AI development should avoid untested assumptions and ensure technological maturity before deployment. – Amber Green
Large Companies/Corporations- Implementing pilot programs to test AI solutions on a smaller scale before full deployment, in a specific department or function to evaluate performance and gather feedback, is the right strategy
Large Companies and SMEs- Vendor Validation means working with reputable AI vendors who can provide proof of concept and case studies from major industries. In different regulations (US, UK EU) there are plenty of suggestions for how to manage the procurement phase. The basic one is to request detailed demos, specific customer references about the features you want to test. If not available yet remember you are not there to help with resources and time to make the solution available for the sake of innovation….
The agility and scale-up with incremental implementation are suitable for both dimensions.
Focus Point 1 – Non-critical or critical areas?
Non-Critical Areas
Critical areas
Most experts argue that the first place to apply AI in a business is in the non-critical areas. This means that it should apply in places not considered at high risk (Customer service, Marketing analysis, and administrative tasks), because in case anything goes wrong, it will not impact processes and reputation.
(Sage (2023))1 This enables companies to adopt while testing AI features and learn how to best continue the adoption in critical areas.
Low Risks, High Hanging Fruits — Slower Process
AI is expected to quickly show value in supporting critical business processes. The strategy is aimed at only those areas where substantive improvements in efficiency and accuracy, at a cost-saving and delivery of value, can be made. On the other side, it is indicative of high risks since, in essential areas, mistakes count. The key is to ensure right from the beginning that AI systems are built robust, reliable, and compliant with all rules. (PwC, 2024)2
High risks- Low-hanging fruits -faster process.
Focus Point 2 – Efficacy or popularity…? Which one drives choices?
I have considered this focus point AMBER/GREEN only because there are other methodologies (as trends) to be considered with d ifferent effectiveness and popularity criteria (the result of hype…). They are also subjected to the companies’ and leaders’ “risk appetite”.
Market Dynamics, ethical practices, and public perception (stakeholders) –RED
Large Companies/Corporations and SMEs – Develop and implement AI ethics policies to conform with industry regulations and standards. The use of Committees to ensure Governance can provide the benefit of creating intermediate functions that can monitor the adherence towards ethics, according to data and algorithms, as already suggested, in addition to governance, accountability rules and audits involving different internal and external roles can guarantee Ethical practices and thus sustainability. For SMEs, the respect of the rules and risk assessments can be performed with the support of local bodies as it happened with Privacy laws.
Regular reviews and updates ensure the identification and mitigation of risks across the organization, including vendor compliance. Still, companies are behind schedule to take the Governance and Accountability matters (Farnham, 2023)3
Here there is an example of Governance and Accountability we proposed (Collina, Sayyadi, and Provitera, 2024)4 as part of the “Data Quality for Decision-making Processes-Funnel.”
Negative effects of hype on public perception: communication to keep transparency with the customers and stakeholders on how AI is being used within the business is an effective way to handle the public perception of fear, and uncertainty, avoiding possible “disillusionment” coming from mismatching between expectations and reality.
Conclusions
Going forward, the AI market also is likely to start entering a phase of diminishing growth as development costs mount and the regulatory eye settles on this new opportunity. (Gartner, 20245; Future Processing, 2024)6. This is an area where safeguards regarding data privacy, transparency in algorithms, and regard for ethics may render compliance quite costly and operationally burdensome. Lastly, the high cost of training and maintaining large AI models could also become a barrier to entry for SMEs and start-ups on the way to sustainable innovation and market penetration (Campos Zabala, 2023)7. This concerns specific strategies to handle this level of complexity required either at the level of large corporations or of SMEs to counteract the risks of hype, manage technological maturity, and handle the market dynamics and public perception. The most prominent organizations can use their power for thorough due diligence, piloting at scale, and active involvement with academic institutions. SMEs must carry out selective investments, be robust in the vendor validation process, and do incremental deployment of AI. Finally, ethical guidelines, adherence to regulations, and transparency in the approach should aim for a sustainable and responsible practice of AI.
Only when businesses learn from the past and adapt to current challenges, will they be able to harness the full potential of AI while mitigating its inherent risks?
Luca Collinais a transformational and AI Business consultant at TRANSFORAGE TCA LTD. York St John University awarded him the Business – Postgraduate Programme Prize and CMCE (Centre for Management Consulting Excellence-UK) for his paper in Technology and Consulting Research Prize. Author/External Collaborator of CMCE.
References:
“Generative AI in 7 Easy Steps: A Practical Business Guide,” Sage Advice US. Available at: https://www.sage.com/en-us/blog/generative-ai-in-7-easy-steps-a-practical-business-guide/ (Accessed: 25 June 2024).
2024 AI Business Predictions. Available at https://www.pwc.com/us/en/tech-effect/ai-analytics/ai predictions.html , (Accessed: 25 June 2024).
Farnham, K., 2023. Top corporate governance trends for 2024 & beyond. Diligent. Available at: https://www.diligent.com/resources/blog/corporate-governance-trends[Accessed 25 June 2024].
Collina, L., Sayyadi, M., and Provitera, M., 2024. The New Data Management Model: Effective Data Management for AI Systems. California Management Review, March.
Gartner, 2024. 3 Bold and Actionable Predictions for the Future of GenAI. [online] Available at: https://www.gartner.com/en/articles/3-bold-and-actionable-predictions-for-the-future-of-genai[Accessed 25 June 2024].
Future Processing, 2024. AI Pricing: Is AI Expensive?. [online] Available at: https://www.future processing.com/blog/ai-pricing-is-ai-expensive/[Accessed 25 June 2024].
Campos Zabala, F.J. (2023). Responsible AI Understanding the Ethical and Regulatory Implications of AI. In: Grow Your Business with AI. Apress, Berkeley, CA
The UK has been predicted by the OEDC to be the worst-performing economy of all advanced nations for 2025. Let us carefully examine the policies that led her there and consider the steps to turning things around.
I. Introduction
Recently, forecasts from the Organisation for Economic Cooperation and Development (OECD) economic report portray a gloomy picture of the UK economy. According to the OECD Report (2024), the UK’s “sluggish” growth prospects have put it on course to be the worst-performing economy of all advanced nations next year. The less optimistic prediction comes as the global economy shows signs of recovery, with growth forecast to remain steady at 3% in 2024 before rising modestly to 3.2% in 2025 (OECD, 2024).
The study of the British economy is important because its performance will affect the rest of the world due to its close link with the global economy through trade and investments. The UK gross domestic product is expected to grow 0.4% in 2024, said the Paris-based think tank in early May 2024 in its latest global economic outlook. That figure is down from a previous prediction of 0.7% and less than all other G7 countries besides Germany, which is expected to be 0.2%. According to the OECD Report, inflation among its 38 member nations is expected to dip to 5% in 2024 from 6.9% in 2023, and then fall further to 3.4% in 2025. By the end of 2025, inflation is expected to return to targets of around 2% in most major economies (OECD, 2024).
The British economy is then forecast to expand by 1% in 2025, behind Canada, France, Germany, Japan and the US as the lingering effects of high interest rates and inflation continue to weigh (Siddiqui, 2024a). Among emerging economies, the OECD said there were also signs of strength. In China, where the economy has struggled in part due to a protracted downturn in the property market, growth projections were revised upward slightly from earlier forecasts.
A high GDP growth, it was argued, would raise the rate of growth of employment, which would reduce the relative size of the labour reserves, create tightness in the labour market, and raise the real wage rate.
It seems that the policy of liberalism, which the UK has been following for the last four decades, is facing a crisis in the sense that the objective it puts forward for the achievement of what it perceives as human freedom is logically impossible to achieve. There is a logical contradiction within itself that has arisen during the development of the economy to which the UK policy elites have no answer (Siddiqui, 2024b).
During the Great Depression and inter-war period, the economic crisis in the UK was resolved through government intervention. The state intervention in the economy was to correct the malfunctioning that may arise because of the spontaneous working of capitalism. This version of liberalism, in which J.M. Keynes played a major role and which he called “new liberalism”, differed from earlier versions of liberalism in so far as those earlier versions had wanted state intervention to be kept to a minimum, in the belief that the capitalist economy would reach “full employment” in the long period.
Under current globalisation, liberalism is when trade and finance are liberalised and get globalised. Because there are no nation-states, economies are open and capital is not essentially national but has been operating as global capital and a national government due to fear of triggering a capital flight, would not attempt to control foreign capital. Neoliberalism is facing crisis due to its failure to reduce unemployment, inequality, and job insecurity. In fact, the post-war Keynesian “demand management”, which was supposed to overcome the crises of overproduction and mass unemployment that plagued capitalism, requires that larger State expenditure, the panacea for the crisis, should be financed either by higher taxes on the rich or no taxes, but largely rely upon through a larger fiscal deficit. However, taxing the rich and increasing the fiscal deficit are both opposed by globalised finance capital which therefore eliminates the scope for any fiscal intervention by the state against the crisis. Then the policymakers can intervene through monetary policy, but opting for such a policy would lead to inflation that compounds the crisis (Siddiqui, 2022).
II. Falling Growth Rates
Among the advanced economies, the UK growth rates are expected to be the lowest. There was a time when a high GDP growth rate was considered necessary for alleviating unemployment and poverty in countries like ours so that no distinction was drawn, let alone any conflict perceived, between “a mere increase in production” and “a large remuneration of labour”.
Between 2019 and 2023, real GDP per head in the UK fell by 0.2 per cent. Among the G7 economies, only the growth performance of Germany (a fall of 1 per cent) and Canada (one of 1.4 per cent) was lower (See Figure 1a and 1b). In the longer term, the UK suffers from a number of challenges such as high inequality, low productivity and economic growth.
A high GDP growth, it was argued, would raise the rate of growth of employment, which would reduce the relative size of the labour reserves, create tightness in the labour market, and raise the real wage rate. Even if the real wage rate does not rise as rapidly as labour productivity in such a case, it would certainly increase faster relative to labour productivity than it would otherwise have done; at any rate, a faster growth of GDP would make workers better off, both by reducing unemployment and raising real wages compared to what they would have been otherwise.
The oil price shocks in the past had led not only to inflation surges but also to large current account deficits in the UK. These have always put downward pressure on the pound. The difference this time is that the pound is allowed to adjust and isn’t the end-all of monetary policy. Although low compared to last year, inflation is still high relative to other advanced economies, and higher inflation affects exports and imports (See Figure 2).
In recent years the real gross domestic products have declined, while the current low growth rates and poor economic performance will have consequences on peoples’ living conditions. And in the long run, continued stagnation will create severe social and political challenges: higher taxes; worsening quality of public services; pervasive disappointment; and zero-sum struggles for advantage.
The pound’s depreciation is destructive when demand for the imported good is inelastic, as in the case of food and energy imports, because a larger depreciation is required to rebalance trade. The exchange rate of pound sterling is also important as it affects imports and exports. Its longer decline since 2008 reflects the economy’s relative medium-term economic performance, but it is this economic decline that should concern policymakers, not the value of the currency.
Figure 3 indicates the exchange rates of the sterling pound to the US dollar and other major currencies. This is compared with two other major currencies: the euro and the Japanese yen. The value of the pound has declined with other major currencies. It is not so much that the pound has declined, but rather that the US dollar has become stronger. The pound dropped by 4.5% in September 2022, and it recovered within an additional week, making the event insignificant compared to currency crises past. Compare this with the almost immediate and persistent 15% decline in the pound-Deutschemark exchange rate in the ERM crisis or the 30% decline in the value of the Argentine peso in January 2002 (Wolf, 2024a).
The UK does not offer a long-term fixed-rate mortgage to consumers, while such options are available in other high-income countries. With few exceptions, mortgagors in high-income countries have broad access to 10-year fixed-rate mortgages, and in most cases 30-year fixed-rate mortgages are available. Unable to insure against interest rate changes, UK households are extremely exposed to monetary policy changes, as the earlier analysis showed. The UK has one of the leading financial centres in the world, but the UK banks are unable to offer financial products that are available globally.
It seems helpful to borrowers to get the opportunity to longer-term fixed-rate mortgages. The UK yield curve is strongly inverted, which means that the annual base rate is now lower for a 30-year loan than a 5-year one. Even when including a risk premium, banks may be able to offer long-term fixed-rate mortgages at competitive rates. Further, low long-run interest rates indicate an excess demand for long-term, pound-denominated, assets.
Ethan Ilzetzki (2022) from the London School of Economics, described the current level of debt as being “high but nowhere close to where it was in the 1950s”. The rise in mortgage costs will substantially increase an already high cost of living and this crisis is to be taken seriously rather than postponing it. According to him, about a third of the UK’s households would experience difficulties in repaying mortgages due to economic crisis. Economic slowdown means housing prices are said to decline by 10 percent, and rents will likely increase. Therefore, certain policy measures need to be taken to correct it. Such measures may include balancing monetary policy and preserving credibility to meet inflation targets. The interest rate increases will increase to millions of mortgagors and indirectly to homeowners, renters, and the rest of the economy.
Fiscal policy should be pro-growth; taxing the rich and corporations and involve broadening the tax base alongside lower marginal tax rates. The government will be pressured to insure households against increased borrowing costs. This should be done in a targeted way and fully funded.
With limited fiscal and monetary space, the mortgage crisis can still be averted through debt restructuring. Banks will have to recognise that they are better off collectively absorbing small, temporary, and voluntary losses on mortgages than potentially larger, unpredictable losses through mortgage arrears, defaults, and house price declines. Government intervention is needed to mitigate problems arising because individual banks have no incentives to participate in such a scheme absent broad participation by other banks.
Unlike the US, France, Italy, and many other countries, UK banks do not offer longer-term (over five years) fixed-rate mortgages. With a steeply inverted yield curve, there is no better time to introduce these products. Government intervention may be required because long-term fixed-rate mortgages are often implicitly or explicitly guaranteed or supported by the government.
III. Crisis of Neoliberalism
Neoliberalism is the mode of operation of contemporary capitalism. This system of accumulation emerged gradually in the late 1970s in response to rising prices and unemployment. Neoliberalism uses state power under the guise of ‘‘non-intervention’’ to strengthen the grip of capital by providing a greater role of the market in resource allocation, and international economic integration (Siddiqui, 2024c). Moreover, financialisation in the UK has caused lower investment in capital stock because shareholders’ power vs workers has increased. As a result, the manager’s key objectives have moved towards short-term returns and raising share prices through dividend payments. These developments of financial capitalism have negatively affected aggregate demand and growth, while redistribution of income favouring the rich who has lower propensities to consume has adversely affected the aggregate demand (Foster, 2019).
Within the ‘‘neoliberal reforms’’, privatisation of the public sector industries and services constituted an important policy element. Public sector ownership was believed to be less efficient for society, and the government should not interfere and regulate the economy. During the 1980s and 1990s, privatisation policy continued unabated, claiming that such a policy would make the UK industries more competitive and efficient. However, by the end of 1990, the UK’s gross investment rate was one of the lowest in the OECD. It seems that the privatisation drive between 1980 and 2000 had little impact on either improving efficiency or raising business investment.
The process of deregulation including the changes in capital requirements of banks and financial institutions and the creation of shadow banking has been important factors in the rise of the financialisation of the economy (Siddiqui and Armstrong, 2017a). Deregulation of the financial sector was fully supported by mainstream economists and international financial institutions. Financialisation has adversely affected investment and accumulation and diverted away from real investment in manufacturing. Financialisation also accompanied widening inequality and the introduction of austerity and cuts in welfare spending in the UK and other advanced economies (Siddiqui, 2017b). Since the 1980s with the introduction of neoliberalism and deregulation, growth has hugely relied on services and the financial sector, including the rise of credit, particularly household credit, which boosted consumer demand. Asset prices, namely housing prices, rose sharply, which gave a false feeling in the market of an increase in wealth and boosted the apparent returns on financial investments. However, there is a limit to how long consumers’ debt can be sustained and rising asset prices are unstable (Siddiqui, 2023).
For example, the privatisation of Thames Water was undertaken by then Prime Minister Margaret Thatcher in the 1980s, a radical change in economic policy as known as neoliberalism, which is facing a critical crisis. Unable to mobilise £500 million from shareholders who have benefitted the company over the years, Kemble Water, the parent company of Thames Water, defaulted on debt service payments of £190 million due in April 2024. Further, the worst conditions of infrastructure resulted from long years of underinvestment under private ownership (Chandrasekhar, 2024).
In the ideologically driven privatisation push after Thatcher’s second term as Prime Minister, she privatised in 1989, ten regional water authorities (RWAs), responsible for water supply, water quality, and sanitation throughout individual river basin areas. Till then water supply and sewerage services were considered to be one of the economic activities that were sites for “natural monopoly” because investment size and technological characteristics did not allow for competition between multiple private suppliers. The mainstream economic theory was that allowing a monopoly to be exercised by private owners would lead to profiteering at the expense of prices paid by and quality afforded to consumers.
Privatisation was not aimed at undermining monopoly, but the Water Act of 1989 protected private monopolies, giving the new private owners exclusive concessions to provide water and sanitation services for 25 years.
The shortfalls in production and quality were partly a result of past government policy. Its ability to provide adequate services was undermined by a decision of the Mrs Thatcher government elected in 1979 to limit borrowing by the RWAs, which held back much-needed capital investments. As has been true of many instances of privatisation since the public sector was wilfully run down to build a case for its handover to private players.
Privatisation was not aimed at undermining monopoly, but the Water Act of 1989 protected private monopolies, giving the new private owners exclusive concessions to provide water and sanitation services for 25 years. Moreover, to attract private investors the government sweetened the sale in a number of ways. While the new private owners of the water and sewerage companies paid a total of £7.6 billion for their acquisitions, the government wrote off as much as £5 billion of debt the RWAs then owed and provided an additional cash infusion totalling £1.5 billion, known as the ‘‘green dowry’’. Private owners who paid a net of around £6 billion, began with a clean financial slate, with substantial freedom to re-price their services.
The UK’s National Audit Office estimated that in the first 15 years after privatisation, the average household bill for water and sewerage rose by 40 percent after adjusting for economy-wide inflation. The company was also lobbying for lower fines and penalties for breaches. But faced with criticism, the regulator, Ofwat, is holding back on providing more concessions. The company has accumulated £14 billion of debt servicing which eats up 28 percent of its annual revenues according to one estimate. But that did not hold back the recent payment of large dividends to its shareholders, totalling £7 billion over the 32 years from 1990 to 2022 (Chandrasekhar, 2024).
Savings and investments are very important for the growth and long-term development of the economy. However, when we look at the data, we find that the UK is the lowest among the G7 world’s major economies as shown in Figure 4. Therefore, various measures should be taken to raise private savings and pension savings above the current level of 8 percent of earnings. Again, it needs to decide which public investments will be essential if it is to achieve its goals. The government can, for example, borrow to invest in expanding the housing supply.
It is vital to examine how the financial sector has evolved and changed since the 1980s and which forces have generated the rapid expansion of the financialisation of the economy in the UK. It seems that financialisation means the increasing role financial sector, financial markets and financial institutions in the operation of both domestic and international economies (Epstein, 2005).
Sharp demographic changes are taking place in the UK and birth has declined, while people are healthier and living longer (as shown in Figure 5). These changes will have a huge impact on the economy and society. At present, the life expectancy has risen to nearly 80 years, of course, it differs to incomes and areas where people live. In the book, The Longevity Imperative, Andrew Scott (2024) notes that we are living longer everywhere: global life expectancy is now 77 for women and 72 for men. This new world has been created by the collapse in death rates of the young. Back in 1841, 35 percent of male children were dead before they reached 20 in the UK and 77 percent did not survive to 70. By 2020, these figures had fallen to 0.7 and 21 percent, respectively. We have largely defeated the causes of early death, by using cleaner food and water, vaccination and antibiotics. This is humanity’s greatest achievement. Yet our main reaction is to fret over the costs of an “ageing” society (Scott, 2024; Wolf, 2024b).
Life expectancy since the Industrial Revolution has doubled as shown in Figure 5 (Wolf, 2024b). Due to the rise in life expectancy, there will be a need to make several changes in people’s careers over a lifetime. Instead of one period of education, one of work and one of retirement, it will make sense for people to mix the three up. It may require people to go back to study, repeatedly. As Wolf (2024b) argues, “We will have to reorganise education, work, pensions, welfare states and health systems. People will no longer, for example, go to university or receive training only as young adults. This will be a lifetime activity. Again, mandatory or standard retirement ages will be senseless. People must be given options to work and not to do so at various stages of their lives. Just raising retirement ages all round is both inefficient and inequitable since life expectancy is so unevenly distributed.”
IV. Rise of Financialisation
In recent decades, the financial sector has grown disproportionately within the process of production and accumulation, and it has penetrated less traditional areas. For instance, in the social areas, financialisation encourages short-term investments and is opposed to economic reproduction and meaning beyond mortgages but into consumers’ credit. This is an expansion of creditors simply, or does it involve a requirement for surplus production and appropriation beyond expected normal commercial activity?
For example, between 1980 and 2015, the manufacturing output fell by 0.4%, and employment fell by 2.6% annually. The growth of UK manufacturing output between 1973 and 2010 was much lower than in other developed countries (Siddiqui, 2020). All these economies had witnessed a fall in manufacturing employment and revenue since the 1980s. However, the decline of manufacturing was much sharper in the UK than in other developed economies. As a result, manufacturing declined and had 17% of the UK gross value added in 1997, compared to 26% in Germany for the same period. And such policy contributed to the long-term slowdown of industries in the UK.
Financialisation or finance-dominated capitalism means the deregulation of the financial sector and the rise of shadow banking and the rise in private sector debts and rise of shareholder’s power and finally the dominance of the financial sector in the overall economy.
The expansion of finance is the key element of neoliberalism. As Saad-Filho (2011: 243) notes, “Financialization and the restructuring of production are underpinned by the transnationalization of circuits of accumulation, which is commonly described as ‘globalization’. These developments have recomposed the previous ‘national’ systems of provision at a higher level of productivity at the firm level, created new global production chains, reshaped the country-level integration of the world economy, and facilitated the introduction of new technologies and labour processes while compressing real wages.” Financialisation has supported a significant rise in the rate of exploitation foremost seen in a corresponding decline in the wage share of national income in most countries (Foster, 2019).
The current recession and stagnation in the UK are related to increased financialisation of the economy in recent decades. The financial crisis of 2008 and soon after the recession of 2009 and then the Eurozone crisis starting in 2010. Financialisation or finance-dominated capitalism means the deregulation of the financial sector and the rise of shadow banking and the rise in private sector debts and rise of shareholder’s power and finally the dominance of the financial sector in the overall economy. With regards to distribution, it means a rise in the share of capital including profits, interest payments and dividends, while a decrease in the share of workers (Siddiqui, 2023).
V. Conclusion
The ‘‘golden period of capitalism’’ i.e., 1950-1973, which was replaced by neoliberalism and pro-market policies in the 1980s both in advance and soon after this policy, was also adopted in the developing economies. However, the neoliberalism period experienced several financial crises, such as Mexico (1994), Turkey (1994), East Asia (1997), Russia (1998), Argentina (2001) and global financial crisis (2008). Epstein (2005) explains the rise of financialisation in the last four decades as ‘‘the expansion and proliferation of financial investments, including financial derivatives and securitisation’’ and the latter is defined as ‘‘the creation and instance of debt securities and bonds, where the interest on bonds and the repayment of the principal comes from the cash flows generated by a separate pool of assets’’.
Margret Thatcher adopted a neoliberal policy with the increased role of market forces in economic policy. Such policy was continued by the subsequent Labour and Conservative governments since then. Thatcher’s economic and social policy aimed at re-establishing the supremacy of the “free market” policies, also known as neoliberalism.
Neoliberalism is widely seen as a political, ideological policy of capitalism into a new development phase. As Foster (2019) notes, neoliberalism is “an integrated ruling-class political-ideological project associated with the rise of monopoly-finance capital, the principal strategic aim of which is to embed the state in capitalist market relations. Hence, the state’s traditional role in safeguarding social reproduction – if largely on capitalist-class terms – is now reduced solely to one of promoting capitalist reproduction. The goal is nothing less than the creation of absolute capitalism.”
Deregulating previously regulated sectors such as power, transportation and communication led to a drastic reduction in trade union memberships and wages. Privatisation of public services has often led to low wage rates under private companies. Reducing trade union memberships and giving up fiscal policy as a tool to keep unemployment low, both these factors have reduced the bargaining power of the workers in the UK.
Financialisation has generated wealth-based and debt-financed consumption in advanced capitalism like the US and the UK, hence creating the potential to compensate for the depressing demand effects of financialisation.
Since 1980, corporations’ borrowing has risen sharply, but this has not transpired into productive investments. Instead, the big corporations have invested this money into speculation and real estate. Big corporations have been reluctant to invest in manufacturing, resulting in low productivity growth. Since the global financial crisis of 2008, this pattern has been seen in the UK. For example, the UK’s productivity growth between 2010 and 2019 was 2%, the lowest recorded since the last 19th century (Siddiqui, 2020). The neoliberal economic policy which the UK pursued since 1979, mobility of capital, keeping real wages low and increasing the rate of surplus value and so on, has proved to be incapable of sufficiently raising the profit rate and rate of productive accumulation and even cuts on taxes on rich and corporations have not helped much.
Mainstream economists assume that the private sector is more productive than the public sector, and their explanation is based on the supply side and does not consider demand-side conditions. They also emphasise the importance of competition and market forces to improve efficiency. They argue that deindustrialisation and relatively poor productivity growth were due to too powerful trade unions, red tape and government regulation.
Financialisation has generated wealth-based and debt-financed consumption in advanced capitalism like the US and the UK, hence creating the potential to compensate for the depressing demand effects of financialisation. High growth of consumers’ domestic demand was financed by household debts, leading to a rise in debts. For example, between 2000 and 2008, private consumption contributed up to GDP growth of nearly 80% in the UK and US and more than 55% in Spain (Hein, 2019).
The 2008 global financial crisis was soon followed by an economic recession. Not only the financial losses should be socialised, but also big banks should be taken over under public control. There seems to be an increased need to rebalance the economy as well as a radical policy change to give a greater role to the manufacturing sector. The UK still has certain areas in competitive manufacturing like aerospace and pharmaceuticals and needs to increase investment, which would lead to increased output and employment in the manufacturing sector.
There are several economic challenges facing the UK economy and the government must take urgent economic reforms such as the country needs a strategic long-term vision. This means that the government should build a rolling five-to-ten-year vision of how the world and national economies might evolve. More government intervention is needed to invest in environment-friendly technologies and skills and encourage innovation to deal with the challenges: demographic change and ageing, climate change (Siddiqui, 2024d). Rising inequality in recent decades must be addressed urgently, and wages should be increased to expand aggregate demands and purchasing power among low-income households.
Dr Kalim Siddiqui is an economist specialising in International Political Economy, Development Economics, International Trade, and International Economics. His work, which combines elements of international political economy and development economics, economic policy, economic history and international trade, often challenges prevailing orthodoxy about which policies promote overall development in less-developed countries. Kalim teaches international economics at the Department of Accounting, Finance and Economics, University of Huddersfield, UK. He has taught economics since 1989 at various universities in Norway and the UK.
4. Hein, E. (2019). “Financialisation and Tendencies Towards Stagnation: The Role of Macroeconomic Regime Changes and After the Financial and Economic Crisis 2007-09”, Cambridge Journal of Economics, 43: 975-999.
7. Saad-Filho, A. (2011) “Crisis in Neoliberalism or Crisis of Neoliberalism?” Socialist Register, Vol.47, pp.242-259.
8. Scott, A. (2024). The Longevity Imperative: Building a Better Society for Healthier, Longer Lives, Basic Books: London.
9. Siddiqui, K. (2024a). Deepening Economic Crisis in the Advanced Capitalism. The World Financial Review, April-May, p. 28-38.
10. Siddiqui, K. (2024b). Neoliberalism and the Performance of the UK’s Economy: A Critical Review. World Review of Political Economy, Forthcoming.
11. Siddiqui, K. (2024c). Climate Change, Capitalism, and Invisible Hands of the Market: A Critical Review. The World Financial Review, April-May, p. 70-78.
12. Siddiqui, K. (2024d). Revisiting the Japan’s Economic Stagnation. The World Financial Review, February-March. ISSN:1756-3763
13. Siddiqui, K. (2023). Marxian Analysis of Capitalism and Crises. International Critical Thought, 13(4), p. 525-545.
14. Siddiqui, K. (2022). Problems of Inflation, War in Ukraine, and the Risk of Stagflation. The European Financial Review, April/May, p. 5 – 14.
15. Siddiqui, K. and Armstrong, P. (2017). Capital Control Reconsidered: Financialization and Economic Policy”. International Review of Applied Economics 32(6):1-19, March.
16. Siddiqui, K. (2020). A Perspective on Productivity Growth and Challenges for the UK Economy. Journal of Economic Policy Research, 7(1), p. 1-22.
17. Siddiqui, K. (2017a). Capital Liberalization and Economic Instability. Journal of Economics and Political Economy, 4(1), March, p. 659 – 677.
18. Siddiqui, K. (2017b). Austerity as a Tool of Fiscal Consolidation: Theoretical and Empirical Perspective (Edi) S. Owsiak, Public Finance, and the New Economic Governance in the European Union, p. 116 – 166, Warsaw: Wydawnictwo Naukowe.
Technology and infrastructure change the world unnoticeably every day, and quite distinctively every thirty years so let us imagine together, if we can, how the world will be seen ninety years from today. Wars, locked to accelerating technological changes, are morphing away from their conventional hundred-year-old strategies into tactics that could lessen brutality and death and yet increase the worries of civilian safety. Whatever happens, future wars will be unrecognizable.
“Hard questions arise when we enter the realm of semi-autonomous and potentially autonomous robotic machines that are at the same time lethal… Moreover, regardless of how smart a robot becomes, it is not clear whether it would ever be ethical for a machine to kill a human.” —Elinor Sloan, Robotics and Military Operations1
If you sleep for ninety years and wake in 2114, you will not see cars, at least not vehicles that resemble cars. Autonomous “levitators” would speed over “roads” that don’t look like the roads we know of today. Your cell phone, if we then still call it that, will be just one neurochip connected to cochlear nerves and another to the tongue and jaw. You’d whisper, “Taxi, please” whenever you’d wish to hail one of those levitating vehicles to take yourself where you wish to go. Addictions to social media feeds will be far worse than what they now appear to be. Suppose the generations of the century are not vigilant. In that case, facts will be tethered to a noisy 24-hour-a-day world news cycle fed directly from feedback loops fashioned by competing media companies manipulating mixed commercial and political biases — that is, if there will still be politics. Imagine the future when the brain is plugged into apps for short-term memory when needed. With embedded technology you will not need to know the time of day; the neurochips within you will know your daily schedule and warn you of each upcoming event of the day at the appropriate hour, or possibly down to minutes, to give you a chance to get ready. More advanced still, Siri, Alexa, or likely some other digital assistant will be a genie in the mind that will give you instant information. if, for instance, you ask about the newest weapons of war, not just saying “Here is what I found on Wikipedia” but feeding you what to believe to be a truthful piece of information.
An MQ-1 Predator, armed with AGM-114 Hellfire missiles, remotely piloted by Lt. Col. Scott Miller on a combat mission over southern Afghanistan. (US Air Force Photo / Lt. Col. Leslie Pratt) Public Domain.
Of course, I’m being fanciful with my futuristic imagination. Like it or not though, there will be change enough to make us feel as if we had entered a posthuman unrecognisable world. The way I see it, there will be changes that we cannot anticipate, and they may be for better or worse. We, the indigenous planet occupiers, will not notice the slow shifts in human accomplishments; the failures and triumphs will blend as time passes with acceptance of human desires, cravings, and ignorance. We cannot destroy the world; all we can do is destroy our existence, vis-à-vis our brilliance of knowing how to break an atom in two. Wars will continue to be wars, but when time moves on will they obey the common laws as they inevitably change from human to autonomous control that has no morals? For the short answer, we probe into four morally intractable facets of changes: the advancements of autonomous weapons, lasers, cyber-ware, and military outsourcing.
But we are still in 2024 with one change we are not noticing: The unmanning of war
We cannot sleep now and wake in 2114 but we can anticipate a likely future where wars are fought from a distance using digital warriors. The ultimate questions are, therefore, who benefits, who will do the fighting, and how lethal will wars be ninety years from now when they will be on digitally smart battlefield theatres in the air, sea, on the ground, and in space? Here, in 2024, it seems that, aside from a few notable scholars in military affairs, there are no political or military leaders expressing concerns about momentously significant technology changes that are shifting warfare paradigms.
Are there concerns? Surely there are! Some autonomous warfare strategies will save lives, but have we properly probed the moral and social ramifications? Let us remember that wars, and how we fight within them, affect science, technology, economics, politics, culture, welfare, the foundations of humanity itself, and who we are as a people. Perhaps, because future wars could be less lethal, some good can come from autonomous battling. But have we thought about possible dangers that could come from new tools of warfare that could be used by criminal players, crime syndicates, militias, and terrorists? Have we thought about what could go wrong with weapons that could be left with AI decision-making independence? Surely, the military establishment has reviewed these questions and answered them in favour of their natural biases, but shouldn’t some overseeing checks be coming from more impartial control groups before funding commitments go too far for eventual international law restrictions?
Robotic Advancement
Not long ago, Isaac Asimov, H.G. Wells, and Jules Verne brought us to the exotic science fiction of drones with a lucid grasp of their power and how they will transform warfare.2 Drones have been with us for a long time. The first unmanned military aircraft was deployed in WWI. Radio command signals from UK Royal Air Force ground operations piloted unmanned biplanes.3 Following that war, small monoplanes were converted to drones that were launched by autopilot from warships. Remote-controlled experimental flying machines have been continuously improving since the early years of the last century. The Soviets had their partially automated TT-26 tanks in 1940, and the Germans had their Goliath, a remote-controlled demolition vehicle in 1944. Neither were effective in WWII trench war battles. The first mobile robot skilled in ground warfighting came in the 1960s under the guidance of master plans and strategies for future wars.4 Advanced technology since the Iraq, Afghanistan, and Ukraine wars has significantly improved precision and distant remote control of small and large aircraft. We are now in the 2020s with a new generation of war systems changing the experience as several advanced countries improve remotely controlled planes, ships, and tanks so that soldiers can remotely target their enemies from a distance halfway around the world.
If the U.S. can pilot an attack far from the battlefield, sooner, or later the supply chain of remote-controlled weapons will be available to almost any allied country that can afford them.
Fighting from a distance is not a new idea. As one myth goes, in the third century BC war with Rome, Syracusans took scientific advice from Archimedes to use bronze reflecting mirrors concentrating sun rays to set ablaze Roman warships. By the late Middle Ages and the end of the Hundred Years War, thanks to chemistry that brought gunpowder and firearms to the battlefields, weaponry rapidly advanced to the concept of the cannon that could lob shells filled with gunpowder almost a mile. The 19th century brought the internal combustion engine that gave us the tractor and automobile, one of the game-changers of warfare, alongside the steam engine, electricity, and radio communications. The most underappreciated yet brilliantly invented tool is the hydraulic pump that is now so commonly used for muscle-power work by cranes and backhoes that replace men digging trenches and hauling inhumanly heavy loads.
Advances in weaponry have not stopped and by technological spiraling, never will. Every new weapon since the trench warfare of WWI has been to kill from a greater distance than was possible before. That war brought us the reconnaissance biplanes, submarines, tanks, and the Zeppelin airship that carried and dropped bombs.5 WWII produced rockets and aircraft carriers, radar, and, should we mention, nuclear bombs? The Vietnam War gave us the gunner helicopter that could fly low and hover over purportedly suspicious things that moved on the ground. And now we have GPS for precision guidance, electronic sensors, minuscule surveillance cameras, air, and sea drones robotically calibrated to hit an enemy far beyond any visible scope with pinpoint accuracy, and automation equipment that was unimaginable at the beginning of this century. So, we must ask ourselves what the next advancements are, for both offence and defence, and whether they will bring fewer deaths in battle.
If we can guide drones remotely, we can do the same with tanks, planes, and robot infantry. The US Army has a fully operational BMP-1 tank equipped with remote-controlled cannons. It has iRobots and PacBots, ground robots with cameras, sensors, dexterous arms, and tank threads that can climb stairs. And ever since the last phases of the Afghanistan War, the US Air Force Predators, armed with 500-pound precision bombs, were controlled by pilots living on army bases in the United States. As Gary Fabricius, a Predator squadron commander said, “You see Americans killed in front of your eyes and then have to go to a PTA meeting. You are going to war for 12 hours, shooting weapons at targets, directing kills on enemy combatants, and then you get in the car, drive home, and within 20 minutes you are sitting at the dinner table talking to your kids about their homework.”30
By that account, it might seem that killer-drone pilots should be far enough away from the battle zone to be safe. Physically safe, yes. Yet even a Predator squadron soldier experiencing killing in virtual separation from enemies has combat PTSD levels equal to, and perhaps higher than, those who battled from trenches on the front lines. That’s partly because virtual pilots know that they are killing. When they sink a ship, sailors die. When they release a bomb, someone is likely killed. And sometimes — too many times — their drones kill the wrong people.
Captain Richard Koll, left, and Airman 1st Class Mike Eulo perform function checks after launching an MQ-1 Predator unmanned aerial vehicle on August 7 at Balad Air Base, Iraq. Captain Koll, the pilot, and Airman Eulo, the sensor operator, will fly the Predator in a radius of approximately 25 miles around the base before handing it off to personnel stationed in the United States to continue its mission. Both are assigned to the 46th Expeditionary Reconnaissance Squadron. Public Domain.
Today’s Predators are just overtures of what they will become. Prototypes always have upgrades. We don’t have to imagine what those upgrades will be, they are already beyond pre-manufactured modelling. The latest versions are not only used for surveillance, but they are also ready to perform ground attacks, spot submarines far below ocean surfaces, and defeat human-piloted fighter jets in air-to-air combat.6,7 The Turkish Bayraktar TB2 drones, armed with four air-to-ground missiles, were used in the Ukraine War. They can fly at 136mph at an altitude of 18,000 feet. The US MQ-9 Reaper drones (recently flying over Gaza searching for hostages in the Israel-Hamas war) manufactured by General Atomics, an American energy and defense corporation headquartered in San Diego, California, is the latest generation of unmanned aerial systems (UAS). They fly by satellite communications, carrying up to 3,000 pounds of weapons including Hellfire missiles and 500-pound laser- or GPS-guided bombs. With dog-fighting capacity, they could knock out human-piloted MiGs.8 In case you are wondering if drones could replace manned fighter planes, the X-45 is a fighter drone that costs an inconsequential $1.8 billion and could compete with an F-35 costing $40 billion.
Humans have many failings but so do machines
Humans are driven by motivation and limited by fatigue, but they can also be goaded by anger and limited by intoxication. Machines with satellite-sharp computer vision can process information to make quick decisions, but GPS blackout technology can jam their missions. Humans can learn, but so can machines as both go through the innovation cycle to get better at what they do. Take Switchblade 600, for instance, a reconnaissance drone-guided missile looking for a target. It is called an “extended range loitering missile,” a drone that hovers until it completes an accuracy check.9 So far, it needs a human to choose its targets remotely before using its AI to establish a clean shot and finish the job. The next stage in drone development for AeroVironment, Switchblade’s maker, estimated to come as soon as next year, will be to remove humans from decision-making. Another example is the fully automatic Turkish STM Kargu-2 drone. A UN report claims that it has been used in the Second Libyan Civil War (2014-2020) conflict to kill an unknown number of combatants.10 These autonomous systems “were programmed to attack targets without requiring data connectivity between the operator and the munition: in effect, a true ‘fire, forget and find’ capability.”11
Launch of XQ-58A Valkyrie uncrewed aircraft. Public Domain.
The US Air Force is experimenting with XQ-58A Valkyrie, a pilotless aircraft run entirely by artificial intelligence that can carry missiles to enemy targets over three thousand miles from its base and return without any human intervention. It is intended to be part of a “fleet of traditional fighter jets, giving human pilots a swarm of highly capable robot wingmen to deploy in battle. Its mission is to marry artificial intelligence and its sensors to identify and evaluate enemy threats and then, after getting human sign-off, to move in for the kill.12 Any instrument of war should be tempered by deep concerns about how much autonomy to grant to a lethal weapon. “It’s a very strange feeling,” test pilot Major Ros Elder said while flying an F-15 fighter alongside an XQ-58A, “I’m flying off the wing of something that’s making its own decisions. And it’s not a human brain.”13
Scary as autonomous weapons are, the new toy of war does not need autonomy to do its job, though that feature will come.
DragonFire laser-directed energy weapon (LDEW) system. The United Kingdom’s DragonFire laser. (photo credit: UK Defense Ministry)
Following a test of DragonFire, a powerful long-range laser weapon that can bring down an advanced fighter jet by cutting through its wings, UK Defence Secretary, Grant Shapp said, “This type of cutting-edge weaponry has the potential to revolutionize the battlefield by reducing the reliance on expensive ammunition.”14 DragonFires will be just one of many counteroffensive weapons of the future battlefield. Its accuracy is stunning; working at the speed of light, DragonFires are able to strike a £1 coin at half a kilometer. These non-explosive devices can work from anywhere without having to be reloaded, and cost about ten of those £1 coins for each firing. By comparison, the US-made Patriot interceptor missile system costs four times the price of one DragonFire but has a better capability of taking down fast-moving targets. Shimon Fhima, Director of Strategic Programmes in the UK Ministry of Defence tells us, “The DragonFire trials at the Hebrides demonstrated that our world-leading technology can track and engage high-end effects at range. In a world of evolving threats, we know that our focus must be on getting capability to the warfighter and we will look to accelerate this next phase of activity.”15
The US Air Force is experimenting with XQ-58A Valkyrie, a pilotless aircraft run entirely by artificial intelligence that can carry missiles to enemy targets over three thousand miles from its base and return without any human intervention.
Some future wars are already in progress. With the improvement of intensive control of airspace, it could change the battlefield for all unmanned aircraft vehicles (UAVs). After the recent Iran attempt to launch a massive attack on Israel, deploying 170 drones and 150 ballistic and cruise missiles, nearly all were taken down by defence interceptors, not lasers. It was a 1,000-mile direct attack from Iranian territory.
Tamara Qiblawi, Senior Investigator for CNN, began her report on Iran’s attempted attack on Israel by saying, “[T]he world held its breath as weapons whizzed through the night sky. They were balls of fire hovering overhead as onlookers across three different countries filmed images that seemed to harken the start of a cataclysmic war.” She then went on to say, “the operation amounted to little more than a terrifying fireworks display,”16 Though Qiblawi suggested that Iran’s intention was a show of retaliation without inciting an exhausting war, Iran’s intention could not have been to fail. Its poor display of weaponry in a show-off battleground theatre will have significantly diminished future international sales of its weapons.
Iran is a major producer of drones and hopes to be a supplier on the international stage. If defence interceptors can take massive drone swarms down with the success seen on April 14, 2024, Iran’s hopes for drone sales must be dropping. Now, with DragonFires ready to be tested on the real battlefields of Ukraine, unless Iran’s drones are vastly improved to avoid interception, those relatively expensive drones will be wasted. Provided that DragonFire works as expected, the laser may also become more capable of hitting fast-moving targets than interceptor missiles, which, for some, cost $1 million per launch and have the disadvantage of being unable to travel at the speed of light.
As if that isn’t enough of unmanned weapon advancement, the US has its RQ-4 Global Hawk, “the flying albino whale,” with a 130-foot wingspan that can fly 60,000 feet above sea level with a preplanned autopilot route range of 8,700 miles.17 It can take off, fly 3,000 miles, and return by itself. Beyond that, there is the Polecat, something different, a bomber drone with “a fully automatic flight control and mission-handling system” able to take off and land without human instruction.18 Soon there will be unmanned solar and liquid hydrogen-powered [unmanned aircraft systems] (UASs), almost the length of a football field.
What about the idea of battlefields in the air? By that I mean command centres that stay aloft at high altitudes. There are plans for airships larger than football fields to be parked in the air like supermassive hummingbirds at a sugar-laced feeder “as high as one hundred thousand feet up, for weeks, months or years, serving as communications relay, spy satellite, hub for ballistic missile defense system, floating gas station, or even airstrip for other planes and drones.”19
What?! That’s right, you heard it here, a battlefield in the sky. What seems to be science fiction is technology moving from fiction to real drawing boards. But those massive, unmanned airships might soon have tiny relatives, “itty-bitty, teeny-weeny UAVs”.20 They are insect-size air vehicles, nanobots weighing less than 10 grams that could hover in one place for a minute or two, have a range of 1,000 meters with a speed of 10 meters per second, quite fast for something that small. Peter Singer, Professor of Practice at Arizona State University Center on the Future of War and the School of Politics and Global Studies tells us that some micro-unmanned aerial vehicles can be the size of dragonflies or maple tree seeds. They are planned to become a new wave of spy drones carrying sensors and cameras powered by chemical rockets. They can self-recharge using electromagnets while hovering over lightbulbs or electrical outlets, climb pipes, and peek into windows to gather intelligence. How’s that for something that must have taken fantastic imagination for anyone living long before 2024?
Huh? Yes, believe it, but whatever else to be known is classified. Someday, these tiny things will become self-propelled missiles that could “deconstruct a target from the inside out.”21 Beware, though. The guiding talent and funding of military robotic research coming from the US is the Defense Advanced Research Project Agency (DARPA), a 67-year-old agency under the Defense Sciences Office of the United States unequivocally responsible for the Internet, email, cell phones, computer graphics, weather satellites, fuel cell, lasers, night vision, and the Saturn V rockets. With such a track record and a budget of almost $4 billion, we should not underestimate DARPA with whatever plans it has for the future. Those plans will certainly involve robotic motherships and swarms of autonomous drones, all, either managed from a distance or left to their autonomous brilliances.
Star Wars fantasies come to life
The scary, creepy, chilling part is that weapons now in draft stages are classified as top-secret. So, we are far from knowing how battles will be fought as early as a decade from now. It is alarming to think that someday we will have robots fighting robots in space. That might be alright. We might have to settle for a Battlestar Galactica programme, but could we handle troupes of robots lobbing whatever they can toss down at whomever they believe is their enemy? Something to think about. Let’s be thankful that humans can think.
Technologies are coming at rapid speeds to operate battlefields with little human control. Humans could continue to operate unmanned weapons remotely, or future robots could take over, autonomously sensing and acting in the world, identical to a law-abiding human combatant. It poses a dilemma that should be thought out soon before it becomes irrevocably decided by military planners.22
If the US can pilot an attack far from the battlefield, sooner, or later the supply chain of remote-controlled weapons will be available to almost any allied country that can afford them. Enemy states at war will fight on some state’s homeland after acquiring remote-controlled weapons. But in the next generation of conflicts, tools will not be just remotely controlled but rather semi-autonomous. And the next after that will be a fully autonomous military with machines gaining more and more autonomy, making decisions on who to attack. Will there be a generation after that? Of course! There always is. Some futurists point to the Energetically Autonomous Tactical Robot (EATR) that could “forage for plant biomass to fuel itself, theoretically operating indefinitely?” While on long-range missions, EATR searches and grabs preferred food with a robotic arm and puts it in its combustion engine “stomach” that charges its battery. No joke. It is one of the US military projects developed by two technology companies and the University of Maryland Park’s Center for Technology Systems Management.23
Technologies are coming at rapid speeds to operate battlefields with little human control. Humans could continue to operate unmanned weapons remotely, or future robots could take over, autonomously sensing and acting in the world, identical to a law-abiding human combatant.
“As our weapons are designed to have ever more autonomy,” Singer tells us, “deeper questions arise. Can the new armaments reliably separate friend from foe? What laws and ethical codes apply? What are we saying when we send out unmanned machines to fight for us? What is the ‘‘message’’ that those on the other side receive? Ultimately, how will humans remain masters of weapons that are immeasurably faster and more ‘‘intelligent’’ than they are?”24 No doubt, remote-controlled mechanical soldiers save lives, mostly on the side using them. As some generals have pointed out, they obey orders, have no fear, do not get hungry, and show no emotions when their robotic partners get hit. There are humanitarian benefits to autonomous warfare; damage is better controlled and mostly limited to infrastructure and opponent war machines, and machines tend to follow rules of behaviour. Of course, there is always the concern of the moral health of military leadership and governance. So, one welcomed advantage is the diminishing number of war crimes committed.
Let’s not fool ourselves, though. Every technological advance brings with it both benefits and problems. Fully independent lethal weapons could be a problem if they cannot distinguish between military and civilian targets. The war in Ukraine is accelerating the research and development of autonomous weapons as the Red Cross addresses concerns about risks of unpredictable slipups beyond human control.25 Controlling the morals of humans is hard enough. Can we do better with robots? With the technical development of autonomous power advancing exponentially over time, we should be better prepared for a future when robots begin to learn, gain independence, and take autonomous control of decisions that were once limited to humans. There will be a time when some players feel immorally comfortable designing robots that can escape their control systems of moral responsibilities in decisions of life and death.26,27
Robot on robot
Today’s private armies are different yet concerning. I estimate that the US will be able to — not that it will — wage a completely autonomous small-scale war by 2035. That would require a remote workforce for operating computer-guiding missiles, drone bombing, and repairs. Eventually, it will cut the living workforce by more than 60%. What will be the role of the International Criminal Court when fully autonomous killer drones and infantry robots are fighting our wars? What happens then, when all sides of combat go on full AI with swarms of synchronised deadly automatons? Wars will continue until one side falls behind in its speed of weapon replenishment — a fight to the last android.
Ukraine has used thousands of semiautonomous drones along with AI drone interceptors. It has already used remote-controlled ground vehicles (UGV) that move up to the front lines and lob bombs into Russian infantry trenches.28 No country possesses fully autonomous robot combatants capable of attacking enemies on the ground; that is just a matter of time before the next technological advancement in weaponry when wars will be fought from remote positions with robot warriors on both sides of a conflict so that all the fighting could ease harm to humans.
The moral responsibility of military robots
As it almost always happens sooner or later in warfare, highly prized, expensive, and advanced weapons are lost, captured, or compromised in battle. Those seized weapons are then studied to be replicated, manufactured, and adapted to an ongoing conflict. They tend to be relatively small and easily transportable. So, what had once been expensive innovating tools of war become widely available cheap knockoffs readily available for counteroffensive battles. Worse, they could be found on the weapons trading black market for sale to anyone from terrorists to revolutionaries.
In late 2020, the assassination of Mohsen Fakhrizadeh, Iran’s highest-ranking nuclear physicist, was carried out by a remote-controlled truck with a covered satellite-operated machine gun and enough explosives to make the whole scene practically disappear so as not to blame Mossad. The killing worked smoothly but some equipment survived and was pieced together for evidence of Israel’s role. If an unmanned vehicle can position itself miles from a stationary remote control and trigger an automatic weapon then so can a tank, or a robot. Making tanks and robots killing machines takes sophistication to a higher level than making Mossad’s truck. But the basic science and engineering behind the truck with a gun is a tad less simple than that of a heavy equipment vehicle with a large-caliber gun mounted on a turret. Knowing how to build automated conventional weapons is now out of the bag of basics so the rest of our world of countries — as well as insurrectionists, revolutionaries, and terrorists — can make their unmanned killing machines. With that, battles will be a robot on robot.
Of course, the basics are not as simple as it seems in words. However, in the best circumstances, moral codes might be part of an autonomous infantry robot’s specs that depend on an initial programme of tactical brilliance that, under unexpected situations, could have objectives clashing with robot sensors. Without a human brain, it might go berserk not knowing when to click the off switch. As Daniel H. Wilson, one of the New York Times bestselling authors wrote in his book, How to Survive a Robot Uprising, “Any machine could rebel, from a toaster to a Terminator, and so it’s crucial to learn the common strengths and weaknesses of every robot enemy. Pity the fate of the ignorant when the robot masses decide to stop working and to start invading.”29
The sciences and technologies needed to build or modify military robots are not as challenging as nuclear fission or cancer research, especially because the software is open-source. So, almost every country in the world is now working on manufacturing and improving military robots. As Peter Singer said in a 2009 US Naval Academy lecture, “These technologies are not like an aircraft carrier or atomic bomb, where you need a massive industrial structure to put them together. A lot of them use commercial, off-the-shelf technology. Some of it is even do-it-yourself.”30 If Somalia, a sovereign state member of the UN vulnerable to conflict or collapse, can possess military drones,31 so can non-state actors, terrorists, revolutionaries, or small groups of activists that are hostile to a state. We might see this scenario as a way to save lives, perhaps because machines would replace living soldiers, and we don’t have emotions over the destruction of a machine or care about damage, other than it might spike a cost in taxes. Doesn’t that put war on the platform of making war acceptably entertaining?
Outsourcing the military
I see an immanent future with commanders, thousands of miles from the attack zone, in limited physical danger being hired by multinational corporations in the business of building android forces for hire. Why not? Russia had its Wagner Group, a shadowy band of hired fighters, and the United States has its Academi (formerly Blackwater) and ArmorGroup (accused of wasteful practices and fraudulent hiring) that will eventually have android armies operating beyond laws and treaties. With progressions in chip technology that permit the automation of almost every industrial product, from electric toothbrushes to military hardware, future wars could be fought as entertainment (think lions and gladiators in the Coliseum) on reality primetime TV camera-captured by robots and narrated remotely, all paid for by advertisers. Tune in for Sunday Night War, with ceasefires during weekdays. Would that be legal? So far, yes, at least in the US, which is far behind in establishing rules for drone warfare. And so far, international law has nothing in its statute books about the use of drones or robotic ground troops. Imagine the profits that drone companies could make to wage war on one country paid for by another. All it takes is money, not the lives of the aggressor. If governments could outsource prison ownership, why not outsource android-wars to save body bags?
Private armies are not new. Carthage employed them against Rome in the First Punic War in the early 3rd century BC., and they probably go back much further than even the epic wars brought to life by the Homeric poets. During the Middle Ages, especially in the Hundred Years War (1337–1453), mercenaries were legitimate essential soldiers fighting outside the authoritative control of the princes or local lords of warring states. Today, they are no different from clandestine cartels without detectible links to a government. Future wars will become outsourced so that corporations can employ warriors to invade or defend, neither knowing nor caring what they are doing. They will become athletic teams to cheer, equipped with guns, bombs, tanks, and fighter jets. Those private players will have a supplying industry of arms dealers willing to sell to anyone as they lobby to convince governments to start wars they say they can win, even when they know they can’t. Private fighters were always a problem in the mercenary system because they often joined for the money and, therefore, could switch employment in the direction of any force that had power and money. They had no attachment to an ideology and were prone to keep or steal weapons to be sold or used to pilfer unsecured villages.
Today’s private armies are different yet concerning. They, and even private citizens, have no sovereign immunities and are bound by customary law and the Geneva Conventions, yet there are human and geopolitical consequences.32 Under the Rome Statute, a treaty-based statute of humanitarian laws, offenders of war crimes, including private individuals, could be tried, and sentenced to many years in jail. But without state-run disciplinary codes and conduct, private armies could work for anyone if they do not attack their home state. We witness that behaviour in Africa, where the UN identified individual mercenary groups moving from conflict to conflict.33
One concern for the future of private armies is the multinational corporations that could replace human fighters with androids, which could make it easier to use force without empathic recognition of non-combatants. Moreover, for states that care about public opinion (even authoritative states do) private armies make going to war more acceptable since citizens care less about losing a private fighter, especially a foreign one, than they do about a state soldier.34 Strangely, though, the citizenry might care more about the loss or damage of robotic weapons than about a private fighter because weaponry is paid for by the taxes they pay.
Cyber vigilantes and the weaponisation of everything
Future wars will be far more autonomous than they are today. That is a concern, but alongside it is cyberwar distortion machines still in their newborn operating stages. We now have amplified disinformation ramblings invading democratic countries to turn propaganda on public policy, not with lethal weapons, but rather by creating culture wars of division and false realities to sway voters in directions that benefit the cyberwarrior whose mission is to support or oppose a military conflict.
What will happen when civilians working from their home countries with civilian wherewithal in digital operations get involved in armed conflicts with other countries using digital technology to influence public opinion? They may be concerned individuals, loyal refugees, patriotic hackers, or professional cyberwar dealers who can, for whatever curiously influenced reason, sabotage economies, hospitals, power stations, and government services, and spread false information to encourage political extremes to confuse voters ready to cast their ballots in elections.35
Cyberwars are not designed for killing but rather intended to win support for disputes that are likely to either start or end as military conflicts. Disinformation wars are not new, though we tend to think that all forgotten history is new. For hundreds of years, we have had flashpoints of conspiracies supported by polarising disinformation with the ultimate purpose of voiding factual trust to rock the existing state of affairs. With new social media tools, disinformation wars can now have geopolitical adversarial foot-soldiers without boots, possibly in pajamas, sitting anywhere in the world at computers providing distrust, uncertainty, fear, and chaos, exploiting belief in conspiracies needed for political division. TikTok, Facebook, and Instagram, electronic war machines with instantly visible battle actions, can have an acute effect on how wars appear. Without grasping the realities of war, they effectively show viral images to win hearts and minds in popular support that empowers one side. It is a relatively new media suitably recognised as electronic warfare.
We know that once fake information comes to social media it tends to run through an echo chamber of multiplying promotion. That’s how social media news works. Across the globe, we are seeing deep divisions injected with peculiar uncertainty. I say that as a euphemism lacking any other way to call it. In truth, the bot machines offer no truth by what Christopher Paul and Miriam Matthews of The RAND Corporation rightly called a “firehose of falsehoods” as a description of Russian propaganda combining “a very large number of communications and disregard for the truth.”36 There is more than that whooshing through firehoses, and it is not a disregard but rather a barrage of disinformation that can topple democratic governments. Firehoses of falsehoods have no defensive valves. Faucets could be closed, but it is too late by the time that happens. Others go on. They are the future weapons against democracies. Of the 195 member states of the United Nations, more than 64 are having elections in 2024. All are under attack by Chinese, Russian, and Iranian bots using heavy-duty disinformation tactics that could sway opinion to benefit hopeful authoritarians and crush the rule of law through constitutional democracies. It is another kind of war. One that does not necessarily kill, at least not before some tyrannical winner surfaces to public aftershocks.
Disinformation wars coming from hackers are not so benign as to be ignored. They can start wars, support wars, or end wars. Russian paid bots have been feeding Kremlin disinformation to the Americas and Western Europe since the 2016 US election to sway support for a presidential candidate who could ignore a planned invasion of Ukraine or abandon NATO. It almost worked in 2020. Who knows if it will work this year? We know that Russian and Chinese state-directed bots have been spreading false narratives, promoting conspiracy theories, and posting online AI-made fake images of mock candidates to mess with the US presidential election this coming November.37 Social media anti-Ukraine cheerleading pro-Russia propaganda has already been parroted to influential broadcasters to be relayed by US members of Congress on the House floor. When one country hires online hacker warriors to meddle in another’s election to target candidates and parties, it might not be warfare the way we know it; it does, though, have an enormous influence on the potential outcome of present and future wars. Fortunately, international humanitarian law still holds strict rules prosecutable as war crimes because cybernetic space has the same international laws as the space we live in. Cyberspace is not a lawless space.
Future wars will follow a marked change in direction, from war plans designed to kill combatants with autonomously launched incendiary weapons to cyberart strategies that strike at the political bases and economic substructures of enemy states.38 Cyberwars rely on accelerating technical advances that will transform weaponry supporting military conflicts while being more accessible to hackers who profit from extremist attacks, criminal activity, and information dealing. If cyberwars between enemy states diminish the number of casualties, there still will be dealers itching for profits. Though the number of global war-related deaths has indeed been declining since the last world war ended, that number is far too high for a civilised world.39 There is a highly disturbing likelihood that future warfare tactics could involve crippling satellites in space by injecting malware to muddle Global Positioning Systems, takeovers of nuclear plants, power structures, or hospitals, raising the odds of there being more deaths; however, if a new world of cyberarts brings war evolution mechanics to new cyberbattle fields where lethal weapons are obsolete and where countermeasures are in place, then perhaps we will not continue to kill in such large numbers. There might still be wars, but not the protracted ones known to those living in the first half of the twenty-first century.40
Mathematical models can theoretically estimate the odds of one country winning over another in battle. Unfortunately, even the best models rely on many hidden variables and educated guesses of the number of troops deployed, the qualities of each side’s artillery, and the number and quality of autonomous machines without souls, no fear of death, or mothers waiting at home. With enough information, mathematics can make some reasonably accurate predictions. But even the most sophisticated models do not guarantee correct better-than-even odds. And they certainly cannot predict, with any moderate precision, the number of real people who will die.
A decade from now
As I said, some countries, especially the US and its allies, will be able to wage a completely autonomous small-scale war by 2035. Soon after, those countries that can afford them will be buying or building uncrewed warships, fighter jets, submarines, swarms of drones, and even infantry fighting vehicles making grave decisions, all with no human operators. The next thirty years of AI technology behind semi-autonomous weaponry is accelerating towards fully proficient know-how in building self-governing tools of war that we may be unprepared for. The potential is not an existential threat. Rather, it breaks morals that define humanity. Elinor Sloan puts it this way in the epigraph of this article: “[I]t is not clear,” she writes, “whether it would ever be ethical for a machine to kill a human.” Are we prepared to risk the degradation of morality by deploying fully independent intelligent machines on battlefields?
It is hard to answer that question since all fortunes of war are unpredictable. Wars could be robots-on-robots. Or…, or…, OR…, could there possibly be an altogether different unexpected scenario? All this noise of autonomous warfare strikes at the insensitivity to moral codes and the foolishness of supporting wars without benefits for either side, benefits other than possible arms sales. Yet — I say partly as a whim, but with seriousness — as wars become more nonsensically autonomous, they may bring us to a time when wars become overwhelmingly wasteful and impractical. There may then be a time of no more international wars. Is it possible to imagine an end to wars? Whoa!!!, you say, but wouldn’t that be wonderful? Yes! That leaves syndicated crime, intranational wars, terrorism, and barbarisms launched by a few of those rogue war-mongering narcissistic failing leaders. They are altogether other matters.
Joseph Mazuris an Emeritus Professor of Mathematics at Emerson College’s Marlboro Institute for Liberal Arts & Interdisciplinary Studies. He is a recipient of fellowships from the Guggenheim, Bogliasco, and Rockefeller Foundations, and the author of eight acclaimed popular nonfiction books. His latest book is The Clock Mirage: Our Myth of Measured Time (Yale).
References:
Braun, William G. Prof.; von Hlatky, Stéfanie Dr.; and Nossal, Kim Richard Dr., “Robotics and Military Operations” (2018). Monographs, Books, and Publications. 20. https://press.armywarcollege.edu/monographs/399/
I advise seeing the astounding animated essay, “How drone combat in Ukraine is changing warfare,” published on March 26, 2024, in Reuters by Mariano Zafra, Max Huder, Anurag Rao, and Sudev Kiyada. See: https://www.reuters.com/graphics/UKRAINE-CRISIS/DRONES/dwpkeyjwkpm/
Steve Mills, The Dawn of the Drone: From the Back-Room Boys of World War One (Oxford: Casemate, 2019) 2.
https://apps.dtic.mil/sti/tr/pdf/ADA568455.pdf
The number of civilian casualties in WWI is between 6 and 13 million, close to 47% of all deaths due to the war.
W. Singer, Wired For War: The Robotics Revolution and Conflict in the 21st Century (New York: Penguin, 2009) 116.
If you want to know almost all there is to know about future wars and have more time to learn about war, I see no easy way other than to read Peter Warren Singer’s awesome book, Wired For War.
United States Air Force, USAF Unmanned Aircraft Systems Flight Plan 2009-2047, 27.
US Air Force, “RQ-4 Global Hawk,” Air Force Fact Sheets, 16 October 2008, http://www.af.mil/ AboutUs/FactSheets/Display/tabid/224/Article/104516/rq-4-global-hawk.aspx (accessed 1 March 2014).
https://apps.dtic.mil/sti/pdfs/ADA612259.pdf
Ibid, Singer, p. 117.
Hew Strachan & Sibylle Scheipers (Eds) The Changing Character of War (Oxford: Oxford University Press, 2011) 340.
Sarah Percy, “The United Nations Security Council and the use of private force”, Vaughan Lowe et al. (eds.) The United Nations Security Council and war (Oxford: Oxford University Press, 2008), 229.
Sarah Percy, “The Changing Character oif Private Force”, Hew Strachan & Sibylle Scheipers (Eds.) The Changing Character of War (Oxford: Oxford University Press, 2011) 275.
https://harvardnsj.org/volumes/vol1/schmitt/
Christopher Paul and Miriam Matthews (2016). “Russia’s ‘Firehose of Falsehood’ Propaganda Model.” RAND Corporation. Doi:10.7249/PE198.https://www.rand.org/pubs/perspectives/PE198.html
Tiffany Hsu, Steven Myers, “China’s Advancing Evidence to Influence the U.S. Election,” New York Times, Tuesday, April 2, 2024.
Sarantakes, Nicholas Evan (2023) “The Future-War Literature of the Reagan Era—Winning World War III in Fiction,” Naval War College Review: Vol. 76: No. 3, https://digital-commons.usnwc.edu/nwc-review/vol76/iss3/7
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2. Keyword Research
Keyword research is basis of any effective SEO technique. Distinguish the keywords and phrases that potential clients are utilizing to look for particular items or services. Tools like Google Keyword Planner and SEMrush can help you find important keywords with high search volume and low competition. Content is king. Regularly creating informative, high-quality articles can help draw in and retain readers. Remember to use target keywords naturally and avoid stuffing.
3. Optimize On-Page Elements
This includes updating meta titles and descriptions, utilizing header labels (H1, H2, H3) to structure website content, and incorporating keywords naturally throughout content. Furthermore, guarantee images have alt text and URLs are clean and descriptive.
5. Build Backlinks
An important component of search engine results is backlinks or inbound links from other websites. Make an effort to build a network of high-quality backlinks by contacting prominent members of the industry, contributing guest posts, and listing your company in internet directories. To increase the authority of your website, a smart link-building strategy can be carried out with assistance from an expert SEO service.
Partnering with an SEO Agency in Taiwan
While it’s possible to implement SEO techniques on your own, collaborating with a proficient SEO company can give significant advantages. An experienced organization has the skill and resources to create and execute a comprehensive SEO plan tailored to your business needs. They can help you remain up-to-date with the most recent SEO trends and guarantee your site follows to best practices.
At GeniusHub, we specialize in helping little businesses in Taiwan develop their online presence through compelling SEO procedures. Our team of experts will collaborate closely with you to comprehend your goals and develop a personalized plan aimed at boosting website traffic and search engine rankings.
Summary
Any Taiwan small company owner hoping to boost their internet presence and attract more customers would be wise to invest in SEO. By collaborating with an expert SEO organization, you can use the power of SEO to drive high-quality activity to your site, upgrade your brand’s visibility, and ultimately boost your sales. Get begun nowadays and observe your business flourish in the advanced landscape.
Investing in stocks is not just about buying and selling stocks. In order to get profit from your investments you must understand the stock market and time your investments. But what does this exactly mean? And how can one know the best entry or exit points for the stock market?
This blog will discuss the importance of timing the market and the various ways to identify the best entry points for the stock market in India.
Market Cycles and Timing
To identify the best entry points for a particular stock, you must first understand the market cycles to time the market.
A market cycle is the pattern of phases that an economy typically goes through. This cycle includes four phases of market growth and decline.
Depending on the market cycles, there are two types of market conditions: the bear market and the bull market.
Bear Market: This term refers to the decline of the market. During this period, share prices continuously drop, which may also result in a downward spiral. It can also be a result of low economic growth or some major crisis, like the COVID-19 pandemic.
Bull Market: This term refers to the rise of the market. It indicates that the economic conditions are favourable, resulting in stock prices going up. Additionally, it becomes an indication of how the investors are feeling about the current market cycle.
A bull market can potentially give you profit and good returns. On the other hand, a bear market can result in low prices, thereby turning your portfolio in red. However, both these conditions can be great opportunities to invest in the market. Since prices are low during a bear market, it becomes a great opportunity to enter the market.
Economic Indicators
It is crucial to know about the current economic and financial conditions before entering the market. Economic indicators can help you assess the economy at large, predict future trends, and make informed decisions.
Some of the key economic indicators are:
Leading Indicators: These help you understand future market trends and economic activity. Examples: the Purchasing Managers’ Index (PMI), the money supply, yield curves, etc.
Lagging Indicators: These indicators are used after an event has happened. They also help confirm the predicted trends and study previous statistics. Examples: the unemployment rate and the Consumer Price Index (CPI).
Coincident Indicators: These indicators give you real-time updates and change with changing economic conditions. They often tell us about the current state of the economy. Examples: Gross Domestic Product (GDP), Personal income, etc.
Expert Advice
Identifying the best entry points for the stock market with the help of experts is crucial. Experts offer key indicators and metrics to gain knowledge across various renowned platforms. The reports of these indicators are often broken down into explanations helping investors understand the crucial aspects of trading and investing.
Therefore, before you enter a market, make sure that you read expert advice, detailed explanations and analyses to attain valuable insights, reduce risks or losses, and make a well-informed decision.
Conclusion
Identifying entry points into the stock market is crucial to increase your profits. To get the timing right, learn about market cycles and terms like bear market and bull market and what they indicate.
You can also understand the various economic indicators that give us key details about current and future economic conditions. You can time the market well with the help of an expert and using a reliable online trading platform.
With less than 25 countries owning high-speed rail services in the world, the development of the Jakarta-Bandung HSR reflects Indonesia’s aspiration to become a powerful middle-income country. Here is a recap of the history, concerns, challenges and benefits that marked this project.
I. Introduction
Over 2.5 million passengers rode the Jakarta-Bandung High-Speed Rail (HSR) from its commercial launch on 17 October 2023 to 17 April 2024, averaging around 415,000 a month and 14,000 a day for the six months, with a peak travel day of 21,537 passengers.1 These figures may not be that impressive for a sprawling and fragmented island nation of over 275 million people. However, they are a highly meaningful harbinger of Indonesia’s aspiration to become a powerful middle-income country through a priority commitment to upgrading its lagged infrastructure, especially transport infrastructure.
The HSR or “Whoosh,” which means fast, efficient, and reliable, as announced by Indonesian President Joko Widodo, marks and heralds a huge leap forward in the modernisation of Indonesia’s transportation. The 142-km-long high-speed line, connecting Indonesia’s capital city, Jakarta, and the fourth largest city, Bandung, the capital of West Java, shortens travel time between the two hubs from over three hours to around 45 minutes, alleviating Indonesia’s biggest inter-city mobility bottleneck which incurs economic costs in billions of rupiah every year. The rail line features four strategically located stations, and the distances between these stations have been meticulously planned to ensure optimal coverage and connectivity. The final cost of this ambitious project is estimated at US$7.2 billion,2 underscoring its significant investment in enhancing regional mobility and economic development.
This monumental project, developed in collaboration with China under the Belt and Road Initiative (BRI) launched in 2013, was managed by a consortium of Indonesian state-owned enterprises (SOEs) that consist of major local companies, namely PT Wijaya Karya (Wika), PT Kereta Api Indonesia (KAI), PT Jasa Marga (toll-road builder), and the plantation company of PT Perkebunan Nusantara VIII. The project also involved a significant partnership with Beijing Yawan HSR Co Ltd, a consortium of Chinese state-owned enterprises, including China Railway International Co. Ltd (a subsidiary of China State Railway Group Co.), CRRC Corporation Limited, China Railway Group Limited (CREC), Sinohydro Corporation Limited (a subsidiary of Power Construction Corporation of China), and China Railway Signal and Communication Corporation (CRSC).3
Source: The Jakarta-Bandung high-speed train in Bandung, West Java, 17 January 2024. (Timur Matahari/AFP)
The development of the Jakarta-Bandung HSR represents the next leap in Indonesia’s train development journey, reflecting the nation’s aspirations for a modern and efficient high-speed railway system. The project, which initially saw competing bids from Japan and China, symbolises Indonesia’s strategic engagement with international partners to enhance its infrastructure. Japan’s offer of a 40-year loan at an interest rate of 0.1%4 and China’s counteroffer of a US$5.5 billion loan for a 50-year tenure at 2% interest underscored the project’s geopolitical and economic significance.5 Ultimately, the Indonesian government’s selection of China over Japan was influenced by financial and technical considerations, marking a significant milestone in the country’s infrastructure development ambitions.
The HSR’s impact and significance spread beyond being just a transformative transport artery. China has touted it as the first of its kind infrastructural system that China built overseas with its integrated system of design, engineering, equipment, technology, and standards through the BRI, Indonesia prides itself on hosting the HSR as the first train system of its kind in Southeast Asia. Both China and Indonesia see the HSR as inspiring more robust and extensive bilateral economic cooperation. This article offers a general and grounded overview of the historical backdrop, construction-operational issues, and emerging prospects of the Jakarta-Bandung HSR as a necessary baseline account that can animate more in-depth research in the future.
II. Leading up to the HSR
Indonesia’s Jakarta-Bandung HSR project stands as a landmark achievement in the nation’s transport infrastructure. It marks a significant leap forward, reflecting Indonesia’s aspirations for modernisation and connectivity. Initiated in 2008 with studies focused on a route extending to Surabaya, it shifted toward the shorter Jakarta-Bandung section after feasibility studies by the Indonesian government and the Japan International Cooperation Agency (JICA) highlighted its viability.6 Launched under President Susilo Bambang Yudhoyono and completed in 2023 during President Joko Widodo’s administration, the project underscores Indonesia’s capabilities in executing large-scale infrastructure projects.
The HSR project is a key development in ASEAN, solidifying Indonesia’s position as one of the few nations with a high-speed rail system. The operation of the KCIC400AF train, one of the fastest train types in the world and a high-speed variant from China’s CRRC capable of reaching speeds up to 350 km/h, underscores Indonesia’s entry into an exclusive global club. As of 2022, data from the International Union of Railways indicates that only 20 countries worldwide have high-speed rail services, representing a mere 10.3% of the United Nations-recognised countries. This achievement both elevates Indonesia’s status on the international stage and demonstrates its significant effort to enhance regional mobility and economic development.7
The project’s journey from inception involved significant leadership and strategic negotiations, reflecting a dynamic evolution from past challenges within Indonesia’s rail system. Before 2009, the railway system management faced critical issues such as ticket scalping and unsafe practices, which were transformed under the leadership of Ignasius Jonan, the then Director of PT Kereta Api Indonesia (KAI). Jonan introduced a series of reforms aimed at improving service quality and safety. These reforms included barring street vendors from stations, introducing air conditioning in economy-class cars, enforcing online ticketing, and preventing passengers from climbing atop trains. Jonan’s leadership effectively addressed the systemic issues facing KAI, setting a turning point and new railway service and management standards in Indonesia.8
Jonan’s reforms set the stage for more ambitious transportation projects to address Indonesia’s growing mobility needs. The Jakarta-Bandung HSR is a prime example of these efforts. Additionally, the expansion of the Greater Jakarta Commuter Rail, the Mass Rapid Transit (MRT) system in Jakarta in 2019, and the Light Rail Transit (LRT) have transformed rail commuting in Jakarta by providing efficient alternatives to private vehicles. This greatly helps the already in-place Bus Rapid Transit (BRT) system, which has dedicated lanes for buses, to ensure capacity and connectivity.
The transition from the chaotic management system of the past to the transformative leadership of Ignasius Jonan and eventually to the development of the Jakarta-Bandung HSR illustrates the dynamic evolution of Indonesia’s railway system. This journey highlights the importance of effective leadership, strategic planning, and international cooperation in advancing national infrastructure projects, setting the stage for a more connected and prosperous future for Indonesia’s rail transportation.
Workers at the construction site of Jakarta-Bandung High-Speed Railway at Tegalluar Station.
III. Construction and Operational Dynamics
The Construction Phase
During the construction phase, a primary concern was prioritising resources. A scholar from Bandung Institute of Technology argued that the Indonesian government should focus on enhancing existing railway services and infrastructure rather than investing heavily in the high-speed rail project. Since none of the intercity railways are electrified, they can serve low speeds of only up to 120 km/hour. However, this is a common debate on spending less money to upgrade an existing system or building a new one.9
Engineers encountered significant challenges while constructing Tunnel 2, located in a clay shale area where the soil easily disintegrates upon exposure to air and water. This project marked the first successful construction in such challenging conditions. The success was facilitated by crucial technology and knowledge transfers between Chinese tunnel and grouting experts and local geotechnical specialists, including those from the Bandung Institute of Technology. This collaboration highlighted the importance of knowledge sharing in advancing construction practices in Indonesia.10
Financial sustainability emerged as a significant challenge, highlighted by a considerable cost overrun of US$1.2 billion. The project’s overall cost, substantially higher than that of building conventional toll roads, raised questions about its economic viability. This sparked concerns regarding the project’s financial sustainability, especially compared to more traditional infrastructure investments like toll roads, which generally require lower capital investments. A comprehensive funding approach to address these concerns was adopted, involving both Indonesian and Chinese stakeholders. The strategy includes significant loans from China Development Bank totaling US$448 million (approximately IDR 6.99 trillion), complemented by capital injections from a consortium of companies from China, Beijing Yawan HSR Co Ltd (approximately IDR 8.4 trillion), and Indonesia’s state equity participation (approximately IDR 3.2 trillion). This strategic funding approach demonstrates a bilateral commitment to ensuring the project’s financial stability and long-term success.11
Environmental and social concerns have become increasingly significant with the HSR project, particularly during its construction phase. This phase involves substantial land acquisition, potentially disrupting local ecosystems and adversely affecting nearby communities.
The Jakarta-Bandung HSR, like the China-Laos Railway (CLR), illustrates potential financial risks linked to large-scale infrastructure projects financed by China. Both projects are part of the BRI and have incurred significant debt due to heavy reliance on Chinese loans. Regarding the CLR, Laos faced substantial debt levels, with the project cost estimated at around US$6 billion, a significant portion of the country’s GDP. Much like Indonesia, Laos relied heavily on Chinese loans for the railway, which exacerbated the country’s debt situation. However, the loan for building the Jakarta-Bandung HSR is a much smaller share of Indonesia’s GDP than the CLR’s financing relative to Laos’ GDP. Nevertheless, these expensive projects raise alarms about their long-term sustainability, as they require careful financial management to ensure that they do not burden the host country’s economy or sovereignty.
Environmental and social concerns have become increasingly significant with the HSR project, particularly during its construction phase. This phase involves substantial land acquisition, potentially disrupting local ecosystems and adversely affecting nearby communities. The West Java chapter of the environmental organisation Wahana Lingkungan Indonesia (WALHI) has reported 23 cases directly related to the HSR project, encompassing environmental issues, licensing problems, social impacts, and workplace accidents. A notable incident occurred during the construction of Tunnel 11 in October 2019, where the use of blasting methods led to extended ground cracks and caused severe damage to dozens of homes.12 Additionally, workers’ improper disposal of excavated soil on streets has contaminated water sources and compromised drainage systems, escalating the risk of floods and landslides in the area.13
Beyond environmental impacts, the Jakarta-Bandung HSR project has raised significant social concerns, particularly highlighted by The West Java chapter of WALHI documentation of agricultural disruption. Since August 2019, in Depok Village, Purwakarta Regency, over a dozen hectares of productive rice fields owned by 16 local residents have been converted into disposal sites for excavated soil from the HSR construction.14 This conversion has rendered the fields unproductive, eliminating a vital source of livelihood for these farmers and underscoring the need for more balanced infrastructure development that safeguards environmental integrity and community welfare. The combination of these environmental and social issues underlines the necessity for a more comprehensive and inclusive approach to large-scale infrastructure projects, ensuring that environmental integrity and community welfare are preserved.
Meanwhile, engineers faced significant logistical challenges while laying tracks for the Jakarta-Bandung HSR, particularly using 50-meter-long rail modules imported from China. These rails were welded into 500-meter sections at the Tegalluar depot, marking the first export of China’s high-speed special rails. This method ensured the railway’s smooth operation by minimising the number of welding points along the track. Initially, this approach was met with scepticism from the Indonesia Railway Company due to a lack of experience in transporting and laying rails longer than 25 meters. However, Chinese engineers presented a comprehensive solution by importing the rails by sea from the Port of Qingdao and selecting Cilacap Port as the entry point. The Chinese team upgraded the facilities to accommodate the imports because the port was not equipped to handle 50-meter rail modules. The team then conducted local trials to ensure the viability of the operation. The project marks a significant revolution in Indonesia’s rail construction methods.
The Operational Phase
Several challenges have occurred as the project transitions into the operational phase. These include electricity blackouts attributed to reliance on a single transmission source, delays and capacity limitations in feeder train services, and an inefficient refund system. Moreover, operational problems, such as signal difficulties in critical sections of the rail line, including industrial forests and tunnels, necessitate technological solutions, such as the enhancement of Wi-Fi networks, to ensure reliability and safety.15 These operational issues are compounded by concerns over social equity, with fears that the HSR might primarily benefit wealthier segments of society who can afford the relatively high-ticket prices, potentially exacerbating existing social inequalities. In addition, the feeder trains’ limited seating capacity of 200 passengers is incompatible with the HSR’s capacity of 601 passengers.
After over six months of operations, the PT Kereta Cepat Indonesia China (KCIC) implemented effective solutions to address initial challenges. The frequency of blackouts has significantly decreased, enhancing the reliability of travel services. Additionally, the KCIC has revamped its refund system, transitioning from a station-only refund process to an online platform. This change facilitates smoother transactions for customers who purchase tickets via the KCIC app. Despite the feeder train’s lower capacity compared to the high-speed rail, customer feedback indicates that issues regarding boarding have been minimal.
IV. Making Differences
Economic Transformation through Direct and Indirect Benefits
The Jakarta-Bandung HSR is poised to catalyse an economic transformation in Indonesia through a multitude of direct and indirect benefits. At the heart of this transformation is the significant job creation attributed to the project’s construction and operational phases, which is expected to lead to a marked decrease in regional unemployment rates. In an earlier short article, we reported figures from China Railway, the HSR’s main builder, that the HSR has created around 51,000 jobs, led to a cumulative purchase of local materials and inputs worth US$5.1 billion, and provided technical training for around 45,000 Indonesian workers.16
The HSR project is a catalyst for growth across several sectors, including steel, construction, and technology, driven by increased demand for materials and expertise.
Furthermore, the HSR project is a catalyst for growth across several sectors, including steel, construction, and technology, driven by increased demand for materials and expertise. This economic ripple effect underscores the project’s role in boosting regional economic vitality. By improving accessibility, the HSR stimulates business expansion along its route and fosters the development of new economic zones, diversifying the economic landscape with boosts in tourism and hospitality services. The anticipated ease in business travel and the allure of investments along the corridor will likely establish new industrial and commercial centres, creating more job opportunities and fostering regional economic development. According to the American Public Transport Association (APTA), such high-speed rail services can significantly amplify economic activity, suggesting that every dollar invested returns up to four dollars in economic benefits through enhanced connectivity of economic centres.17 This efficiency stems from the effective connection of economic centres, which enhances productivity and economic dynamism, painting a promising future for the project’s impact on the regional economy.
This transformation is also evident in the appreciating property values around the HSR stations, which signals an increased demand for residential and commercial properties. According to 99 Group Indonesia, the Jakarta-Bandung HSR significantly influences property values in 14 sub-districts linked to its four stations — Halim, Karawang, Padalarang, and Tegalluar (see map). Areas such as Jatinegara, Kramatjati, and Duren Sawit have seen a substantial rise in residential demand, with spikes of 26.2% near Halim and 34.4% around Tegalluar, as recorded in the first half of 2023. This trend aligns with the KCJB’s operational goals for October 2023 and regional Transit-Oriented Development (TOD) development, marking a shift in urban living and business operation dynamics.18 The HSR project goes beyond simply connecting cities. It can potentially reshape the urban landscape into a network of interconnected, yet distinct, economic and residential zones. This could significantly enhance quality of life and economic efficiency by reducing traffic congestion on highways, similar to the experience in China with its vast high-speed rail network.
Another indirect yet significant benefit of high-speed rail is the reduction in carbon emissions. The previous Jakarta-Bandung route, serviced by the Argo Parahyangan, relied on diesel locomotives — a method known for its substantial carbon footprint. In contrast, the electrified HSR not only modernises travel between these two major cities but does so in a fraction of the time, taking only one-sixth the duration to reach Bandung. This modernisation reduces the amount of fuel used per trip, thereby decreasing overall carbon pollutants.
The Emerging Impact on Satellite Cities
Jakarta-Bandung HSR Route and Stations (Source: Kereta Cepat Indonesia China, SPH Media.)
The introduction of the Jakarta-Bandung HSR heralds a transformative shift in urban and industrial development across key regions near Jakarta and Bandung. By drastically reducing travel times between these major cities, the HSR fosters the development of satellite cities and vibrant urban centres strategically positioned around HSR stations. These emerging areas are poised to benefit from modern planning principles that emphasise sustainable and accessible living spaces, enhancing the quality of urban life.
The HSR project goes beyond simply connecting cities. It can potentially reshape the urban landscape into a network of interconnected, yet distinct, economic and residential zones.
In particular, the HSR project is set to significantly impact the industrial landscape of Karawang, a crucial industrial hub known for its manufacturing plants and areas. The proximity of the HSR station to major industrial complexes such as Karawang International Industrial City, merely 8 km away, and Greenland International Industrial Center (GIIC), just 10.5 km distant, promises to streamline connectivity and logistical efficiency. This enhanced access is expected to transform regional commuting patterns and economic interactions, turning Karawang and similar areas into dynamic hubs of industrial activity and growth and catalysing a broader economic evolution in the region. In addition, the current construction of the Lakeside Commercial District near the new industrial area featuring an AEON mall will add an important commercial space and consumption outlet. This industrial-commercial combination will help Karawang attract professional and skilled workers to find jobs locally and move in as residents who can easily access the HSR, which will stimulate further land development and demographic growth.19
In response to the operational needs of this transformative project, the Ministry of Public Works and Housing (PUPR) is actively addressing the current challenges related to the development of essential toll road access to the Karawang station. This forthcoming toll road is expected to connect the Jakarta-Cikampek Toll Road directly with the station, seamlessly integrating it into the national transport network. The development of this toll road is crucial for maximising the HSR station’s utility and enhancing the rail service’s overall effectiveness,20 thus further improving access to the HRS for potential new local workers and residents.
Outside Bandung sits the Padalarang station (see map). An area surrounded by agricultural land, Padalarang was once argued to be a top contender for rice commodities because of its large planting space. This illustrates that much of the area in Padalarang is underdeveloped for infrastructure, leaving the land unclaimed for large-scale agricultural production. However, since the launch of the HSR in 2023, the area has slowly seen a decrease in green spaces with non-vegetation and sparse vegetation land increasing by 5.3% and 4.51%, respectively. A prime example of this development is the planned Emeralda Resort, a 28-hectare (with future plans up to 300 hectares) residential and commercial development situated 25 minutes from the HSR station and 15 minutes from the Padalarang Toll Road. Other nearby facilities include an international school, IKEA, a water park, and other recreation centres. The lowest price point for a residential property starts at roughly Rp 8,333,333 (US$520)/m2, while the lowest property cost in Bandung averages Rp 3,694,444 (US$230)/m2. The developer intends to establish an enclave for individuals who can frequently use the HSR or comfortably maintain a car, and have the means to support the development’s commercial areas.21
Tegalluar, positioned near Bandung, is on the brink of significant urban growth and economic diversification thanks to the catalyst role of the HSR project. This development is expected to touch on various sectors beyond the industrial, including real estate, retail, tourism, and services. It is set to enhance the tourism appeal of Tegalluar and its environs, making them more accessible and inviting for both local and international visitors, thereby injecting fresh economic flows into the area. The Gedebage area, close to Tegalluar Station, is identified as a new development zone to accommodate overflow from the densely populated sectors of Bandung, aligning with Bandung Regency’s spatial plans. This expansion is encapsulated in the Detailed Spatial Plan (RDTR), which earmarks over 3,500 hectares for a mix of office spaces, industries, housing, tourist attractions, and a lake, covering the sub-districts of Bojongsoang, Cileunyi, Rancaekek, and Solokan Jeruk.22 This growth trajectory aims to bridge economic disparities between Jakarta and Bandung and to foster more balanced regional development.
In contrast to Karawang’s focus on industrial and logistical enhancements via the HSR, Tegalluar is poised to evolve into a dynamic and emerging urban development, showcasing a wide array of benefits across real estate, tourism, and emerging business sectors. The HSR project underpins cross-regional economic integration, streamlining trade, bolstering tourism connectivity, and distributing economic activities more evenly across the region. This strategic development is expected to forge a resilient, diversified economy well-equipped to navigate local and global economic challenges, marking a significant shift toward comprehensive regional growth and prosperity.
People wait in line to board the first high-speed train of the Jakarta-Bandung High-Speed Railway of the day at Halim Station in Jakarta, Indonesia on 5 November 2023. https://en.ndrc.gov.cn/news/mediarusources/202311/t20231123_1362193.html
Enhanced Mobility and Connectivity
The Jakarta-Bandung HSR significantly enhances mobility and connectivity between these major cities, impacting broader regional travel patterns. By providing a fast, reliable, and efficient mode of transportation, the HSR shortens travel times and integrates seamlessly with existing and planned transportation networks. This integration is crucial for leveraging the full potential of the high-speed rail, extending its benefits beyond immediate users to influence overall commuting behaviours and elevate transportation standards in Indonesia. However, addressing first-mile and last-mile connectivity is essential to maximise these advantages. Ensuring smooth transitions to and from the HSR stations is pivotal to avoiding turning what should be a quick trip into a prolonged journey, thereby preserving the time-saving benefits of high-speed rail travel.
This strategic development is expected to forge a resilient, diversified economy well-equipped to navigate local and global economic challenges, marking a significant shift toward comprehensive regional growth and prosperity.
A Jakarta resident working in the city with family in Bandung can now travel by train nearly every weekend. She boarded the train at Jakarta’s Halim Station and arrived at Padalarang Station near Bandung before taking a short motorbike ride home. This trip saves her more than two hours compared to the conventional rail or bus. A Jakarta-based male business executive who frequently travels to Bandung takes the train for comfort and to avoid traffic congestion.23 As travel volume increased, as expected, the HSR stimulated commercial activity at stations, including fast-food restaurants and convenience stores, to meet the needs of travellers. This multiplier effect is consistent and connected with the anticipated land and real estate appreciation of the areas around the HRS stations.
Halim station is connected to the Greater Jakarta Light Rail, Damri Bus, and Jakarta Bus Rapid Transit in Jakarta. Although the HSR is well connected, each transit line has its characteristics. Transferring to the Greater Jakarta LRT requires a 10-minute walk that can be cumbersome for those with heavy luggage. The Damri bus operates a low-frequency route between Soekarno-Hatta International Airport and the high-speed rail station every two hours from 7 AM to 9 PM. Additionally, the Jakarta Bus Rapid Transit (BRT) route 7W functions as a short-route feeder bus to larger BRT stations but only runs from 7 AM to 4 PM, limiting options for passengers arriving in the evening.
Padalarang and Tegalluar stations in Bandung have different levels of connectivity. Padalarang Station is where most people disembark when heading to Bandung City Center. The station offers a dedicated feeder train operated by PT KAI, which runs to and from Bandung Station and the Trans Metro Pasundan Bus route 2D. Meanwhile, Tegalluar Station relies on the Damri bus and the newly operational Bandung Raya Electric Bus to facilitate access to and from the station. These multimodal solutions in Bandung provide better integration, ensuring that the high-speed rail network efficiently serves its purpose of connecting major urban centres.
The comprehensive first-mile and last-mile solutions implemented in Jakarta and Bandung exemplify the commitment to ensuring high mobility and seamless connectivity within the high-speed rail network. These cities are addressing the critical gaps between the main transit hubs and final destinations by integrating various transportation modes such as buses, light rail transit, and dedicated feeder trains. Because of this, passengers can enjoy significantly reduced travel times and improved convenience, which is vital for the acceptance of high-speed rail in Indonesia.
The increased connectivity between the two regions provided by the Jakarta-Bandung HSR goes hand in hand with the expansion of urban areas that bring an increased demand for goods and services. New residents and businesses have primary needs, such as food and healthcare, as well as secondary demands, including furniture, electronics, and leisure products. This rise in consumption will increase logistics demands because more goods need to be transported to these growing areas. The increased volume of goods moving through these areas requires robust logistics and distribution networks, presenting opportunities for logistics companies to expand their services.
Photo below: Passengers aboard a high-speed train of the Jakarta-Bandung High-Speed Railway take photos and videos of a display panel showing the train’s speed reaching 350 kilometers per hour in Indonesia, 5 November, 2023. https://en.ndrc.gov.cn/news/mediarusources/202311/t20231123_1362193.html
Private logistics companies will be interested in growing their operations in this region as they will tap into a new source of revenue. The local government will also have an increased incentive to help these companies with their investments. With increased investment in these regions, road connectivity and transportation networks will gradually increase in quality. These events will then lead to a more efficient logistics network and further economic growth in the region.
Other BRI-enabled Railway Projects in Southeast Asia
The flagship railway projects in Southeast Asia represent a significant leap in ASEAN’s capability to create a modern railway network. Other BRI rail infrastructure projects that are related to railways in Southeast Asia are the CLR and the Thailand high-speed rail. Envisioned to be docked with each other when the entire Thai rail line is expected to be completed around 2028, these projects are aimed at enhancing broader cross-border regional connectivity and economic cooperation.
The flagship railway projects in Southeast Asia represent a significant leap in ASEAN’s capability to create a modern railway network. Other BRI rail infrastructure projects that are related to railways in Southeast Asia are the CLR and the Thailand high-speed rail.
The CLR commenced operations in December 2021 as a collaboration between the two countries to promote economic growth and forge closer ties. The railway spans from Kunming in China to Vientiane in Laos, spanning 422 km through difficult terrain through northern Laos. The project’s key feature is its capability to serve passengers through high-speed travel and cargo rail, maximising social and economic benefits. Through April 2024, over 6 million Laotians had taken the train. During the Laos Water Songkran Festival holidays (13-18 April) in 2024, almost 90,000 people rode the train, 41.8% more than the same period of 2023. By 13 April 2024, one year after the inauguration of the international through train, over 730 trains crossed the China-Laos border directly, carrying more than 700,000 passengers, including 180,000 international tourists from 87 countries and regions.24
Along its route, the CLR is highlighted as a significant contributor to economic and social development. It is also regarded as a high-quality Belt and Road cooperation success story. The railway’s operation has turned Laos from a land-locked country into a land-linked hub in the Indo-China Peninsula, effectively overcoming development barriers and improving the livelihoods of the Lao people. The increase in foreign tourists visiting Laos, the surge in regional trade, and the creation of over 100,000 indirect jobs through progress in logistics, transportation, trade, commerce, and tourism, among other sectors, with 3,500 jobs for the railway itself, are all attributed to the success of this railway project.25
Thailand is also planning to build a high–speed rail that extends from Bangkok to Nong Khai, just south of Laos, and then linked to the CLR across an upgraded bridge across the Mekong River. This project is similar to Indonesia’s HSR, which is also induced by the BRI and will focus mainly on passenger rail, although it will only run at 250km/hour compared to 350km/hour for the Jakarta-Bandung HSR and 160/hour for the CLR. The initial section will travel between Bangkok and Nakhon Ratchasima and was initially planned to begin operations by 2028. However, the progress of construction in 2022 has only reached 15% and is below the 37% completion target.
These projects provide the two Southeast Asian nations with numerous economic benefits. The construction of the railways creates thousands of jobs during the construction and operational phases. The railway also promotes technology transfer and skill development because local workers gain experience working alongside experts from different nationalities. Moreover, the improved infrastructure attracts foreign investments and tourism, which promotes economic growth for the connected regions. If the eventually linked China-Laos-Thailand Railway extends south through Malaysia and then to Singapore as the southern terminus of the Pan-Asia Railway, envisioned back in the 1990s, we can imagine and expect even broader regional development benefits. The recently revived discussion between Malaysia and Singapore about their cross-border high-speed connection bodes well for the less certain but much longer and more effective rail transport corridor between Kunming and Singapore.
V. Navigating the Future
The Jakarta-Bandung HSR marks a significant milestone in Indonesia’s quest for modernisation and enhanced connectivity, signifying a bold leap toward redefining the country’s urban and economic landscapes. This ambitious initiative not only streamlines travel between two major cities but also catalyses broader urban development and economic expansion across its corridor. The project encompasses multifaceted challenges, including operational efficiency, financial sustainability, and social inclusivity, ensuring that its benefits are equitably distributed among all Indonesians. As Indonesia navigates the future, the success of the HSR hinges on overcoming these hurdles with a commitment to financial transparency and environmental safeguards, making the HSR accessible and affordable for all.
This endeavour is a testament to the Indonesian government’s dedication to revolutionising public transportation, envisioned as a precursor to comprehensive public transport reforms. The significant investment in the HSR aims to elevate public transportation standards in Indonesia, enhancing efficiency, safety, and reliability. Moreover, the HSR is a catalyst for sustainable development, embodying Indonesia’s aspirations for a more connected and prosperous future. This is part of a broader strategy under President Joko Widodo’s administration, which prioritises infrastructure for its economic and developmental benefits. The planned extension of high-speed rail connectivity to Surabaya as part of the Jakarta-Surabaya HSR project further illustrates this vision, promising to reduce travel times and spur economic growth across Java.
The continuation of these infrastructural commitments is expected under the forthcoming President of Indonesia, Prabowo Subianto, who has demonstrated a keen interest in strengthening ties with China. His past interactions with the former Chinese ambassador, Xiao Qian, underline a strategic approach to attracting further Chinese investments, crucial for the country’s infrastructure sector.26 Prabowo’s pre-inauguration visit to Beijing, where he met with Chinese President Xi Jinping on 1 April 2024, points to the continued strong partnership between Indonesia and China. As Indonesia looks to the future, integrating such international partnerships and the ongoing development of key projects like the Jakarta-Bandung HSR highlight a forward-looking perspective that aims to redefine Indonesia’s socio-economic trajectory and set a precedent for future infrastructure endeavours in the country and more broadly in Southeast Asia.
Xiangming Chen is Raether Distinguished Professor of Global Urban Studies and Sociology at Trinity College, Connecticut, a distinguished guest professor at Fudan University, Shanghai, and a Research Fellow affiliated with the Resilience Development Initiative (RDI) in Bandung, Indonesia. He has published extensively on globalisation and urbanisation with a recent research focus on China’s influence on global urbanisation and city-making through the Belt and Road Initiative (BRI). His books include As Borders Bend: Transnational Spaces on the Pacific Rim (2005) and The Belt and Road Initiative as Epochal Regionalisation (2020). He has also conducted policy research for the World Bank and the Asian Development Bank.
Michael Hutahaean is a Program Officer at the Resilience Development Initiative (RDI), a prominent think tank in Indonesia dedicated to fostering resilience building and sustainable development. He is deeply engaged in exploring sustainable urban planning, resilient infrastructure, and circular economy topics. In RDI, he has contributed to a diverse portfolio of research projects and consultancies, supported by prominent funders and organisations including the United Nations Development Programme (UNDP), the Wageningen Centre for Development Innovation (WCDI), and the Urban Studies Foundation (USF), among others. In RDI, he works closely with the Regional and Urban Planning (RUP) Cluster and the Water and Waste Management (WWM) Cluster.
Irvin Nathaniel Tobing is an Associate at the Resilience Development Initiative (RDI), a prominent think tank in Indonesia dedicated to fostering resilience building and sustainable development. His research in RDI is primarily conducted under the Regional and Urban Development (RUP) Cluster. He earned his Master’s degree in Transportation Engineering from the University of New South Wales, Australia, specialising in urban logistics. Previously, he worked as an analyst at a logistics startup. His research interests focus on optimising logistics operations in cities and studying the impact of infrastructure development on the economy.
By Terence Tse
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Irvin Nathaniel Tobing is an Associate at the Resilience Development Initiative (RDI), a prominent think tank in Indonesia dedicated to fostering resilience building and sustainable development. His research in RDI is primarily conducted under the Regional and Urban Development (RUP) Cluster. He earned his Master’s degree in Transportation Engineering from the University of New South Wales, Australia, specialising in urban logistics. Previously, he worked as an analyst at a logistics startup. His research interests focus on optimising logistics operations in cities and studying the impact of infrastructure development on the economy.
