Lelo Nxumalo

It is not an overstatement to say that this is THE book to read if you want to learn anything about an emerging view of why and how countries grow. A key take-away for me is the importance of assessing development, not in terms of what people can buy, but instead what people can make. This knowledge and know-how, Cesar describes, is embodied in the products that countries exchange with each other. He thus proposes a new way of thinking about international trade as really an exchange of crystals of imagination (i.e., the products that embody knowledge and know-how).  As to why some places exhibit more "imagination" or crystalization thereof (or make more sophisticated products) he offers an explanation grounded on the difficulties of fostering "links" to create dense networks from which individual "personbytes" can be combined to make more imaginative products. Transaction costs make it difficult to bring knowledge and know-how together. Things li...

Is it better to be smart or connected? In the world of Malaysian corporate finance, the answer might be "both." Continuing with the theme of corporate connectedness, I have calculated various measures of network structure in Malaysia's listed companies to see if "social capital" translates into financial returns. I focus here on two metrics: Degree: Simply the number of shareholders a company has. Think of this as raw popularity. PageRank: Named after Google co-founder Larry Page, this algorithm ranks websites by importance. I applied this to the network of cross-shareholding to determine the quality of connections. A company owned by a major player (like Khazanah) gets a higher PageRank than one owned by obscure holding companies. Figure 1: Visualizing the relationship between connectedness and returns. The graph above confirms my h...

This is a follow-up to my previous analysis of Malaysia's corporate ecosystem. While the last post looked at which companies own each other, this post zooms in on the people . Using the same dataset, I mapped Interlocking Directorates —the extent to which individuals sit on the boards of multiple listed companies. This metric is often used to spot power brokers, conflicts of interest, and the "old boys' network" that directs the economy. Figure 1: The web of Interlocking Board Memberships (2015). Larger nodes = Individuals on more boards. The "Super-Connector" Anomaly The visualization highlights some extreme outliers in the data: Max Board Seats: As of 2015, the most connected individual wa...

The complex interconnections that define modern society are readily visible in our Facebook or LinkedIn networks. But what about the corporate world? I recently began mapping the web of cross-shareholding among Malaysia's listed corporations. Using Social Network Analysis (SNA), I visualized the ecosystem to identify key "communities" and power brokers. The goal? To see if a company's position in this web predicts its financial destiny. The State of Play (2015) Figure 1: Malaysia's Corporate Network in 2015 (Created via Gephi) The map above visualizes the network as of 2015. While I have excluded specific company names, the "super-nodes" (the largest circles) represent the most connected shareholders in the economy—primarily government-linked investment companies (GLICs), fund managers, and international asset managers. A Decade of Growing Complexity ...

One of the growing forces in our understanding of what drives growth in different countries is the Harvard and MIT designed Economic Complexity Index (ECI). According to Harvard's Atlas of Economic Complexity, ECI is "a measure of the knowledge in a society that gets translated into the products it makes. The most complex products are sophisticated chemicals and machinery, whereas the world’s least complex products are raw materials or simple agricultural products. The economic complexity of a country is dependent on the complexity of the products it exports. A country is considered ‘complex’ if it exports not only highly complex products (determined by the PRODUCT COMPLEXITY INDEX), but also a large number of different products." Below is a motion chart showing the ECI and country rankings against measures of economic performance, namely GDP per person. The default graph setting has real GDP per capita on the x axis (the further right the richer a country is) and E...