UCLA Anderson School of Management Blog

Student Consultants Find that African Cocoa Is Key to Increasing Nigeria’s Non-Oil Exports to the U.S.

Cocoa beans are processed for export at Bole Wole Enterprises, Lagos, Nigeria

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UCLA Anderson MBA students conduct Applied Management Research projects in lieu of a thesis. The nation’s first business school field study program, AMR partners students with top organizations to solve a key strategic problem. In honor of Anderson’s 2017 Impact Week, the theme of which was Purpose + Profit, we’re highlighting stories of AMRs supported by the Center for Global Management that took UCLA Anderson Class of 2017 teams overseas to collaborate with NGOs whose mission-driven work includes such global challenges as health care delivery, international labor standards and environmental conservation.

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By Chigozie Muoto, Jessica Thompson, Rebecca Hilton, Petro Kit and Lucia Ehimika
Winners of the 2017 Deloitte Consulting Award for Management Consulting Achievement

Since the 1970s, Nigeria has been heavily reliant on oil, with over 90 percent of the country’s export value currently coming from crude oil and crude oil products. With the global decline in oil prices, Nigeria needs to diversify its export products and attract foreign investments. The Nigerian Export Promotion Council (NEPC) has a long-term goal to achieve zero-oil exports from Nigeria, and our Applied Management Research team’s project was to devise a strategy to increase export of an agricultural product to the United States.

NEPC is the government agency in Nigeria that is responsible for the regulation, promotion, recording and monitoring of export trade, administered by the Ministry of Industry, Trade and Investment. Our proposal for broadening Nigeria’s non-oil export activity takes maximum advantage of the African Growth Opportunity Act (AGOA), a United States trade act that enhances market access to the U.S. for qualifying Sub-Saharan African (SSA) countries.

After seven weeks of secondary research and prep work, our entire team made the two-day trip from Los Angeles to Abuja, Nigeria, with the goal to:

1. Meet the client and better understand Nigeria’s resources, capabilities and limitations
2. Evaluate the supply capacities of cocoa, cotton, palm oil and hibiscus in Nigeria
3. Explore the current opportunities and challenges of exporters and businesses in Nigeria

UCLA Anderson Forecast’s Second Look at Economic Policy Changes under the New U.S. Presidential Administration

Stocks, the dollar and interest rates soared after the surprising election of Donald Trump on the assumption of a major shift in fiscal policy. Now that immigration and trade issues have moved to the fore, the markets are less certain as to the magnitude and timing of the fiscal changes. In its first quarterly report for 2017, the UCLA Anderson Forecast will discuss the implication of these cross currents and present a second pass at Trumponomics.

Key questions addressed at this quarter’s conference include:

• Can Trump deliver on his proposed tax cuts?
• How much will immigration and trade restrictions weigh on the economy?
• How many times will the Fed raise interest rates this year?

The national forecast

In his outlook for the national economy, UCLA Anderson Forecast Senior Economist David Shulman wrote that some of his current expectations are similar to those of last quarter, including the approximately $500 billion a year in personal and business tax reductions, a repatriation holiday for accumulated foreign earnings, increased defense and infrastructure spending, Medicaid cuts, relaxed regulations, modest changes to trade and immigration policies, and reductions in food and aircraft exports, as several trading partners react to the policy changes. The impact of a large tax cut on an economy at or very close to full employment will likely result in a short-term growth spike, but will quickly fade. The forecast calls for real GDP growth of 2.4 percent, 3 percent and 2.2 percent in 2017, 2018 and 2019, respectively, noting that real growth trails off on a quarterly basis in 2019, as higher interest rates weigh on the economy.

Though job growth appears robust with 170,000 jobs a month expected in 2017 and 2018, the figures will trail off to about 110,000 a month in 2019 and become even slower if the administration embarks on a large-scale deportation program of unauthorized immigrants. Concurrently, the unemployment rate could bottom out at 4.1 percent in late 2018, before gradually rising.

UCLA Anderson Alumna Kate Cochran Recognizes the Entrepreneurial Spirit that Creates Jobs for the Poorest of the Poor

By Isha Patel

For six years, Upaya Social Ventures has helped 12 companies create over 4,100 new jobs for people living in impoverished areas in India. Upaya CEO Kate Cochran (’97) joined [email protected]’s High Impact Tea series to share her experience and future goals for the nonprofit.

Cochran started out in management consulting and realized her passion for international development later in her career at an event for Unitus Labs. For several years, she served as VP of finance and operations, and later as VP of external relations for the organization, which makes seed-stage equity investments in social enterprises to benefit people living at the base of the economic pyramid. She went on to become COO and board member at Vittana Foundation, with whom a UCLA Anderson Applied Management Research field study team collaborated in 2014 on a microfinance-driven student loan project. Eventually, Cochran's long tenure in the nonprofit sector would lead her to Upaya.

An advocate of advancing entrepreneurship, and passionate about international development, Cochran has taken time to fine-tune strategies that allow Upaya to invest in viable companies capable of employing people in impoverished areas. When asked about Upaya’s impact in Indian communities, Cochran simply stated, “We create jobs for the poorest of the poor.”

UCLA Anderson Economic Forecast: What Do Trumponomics Really Mean for the U.S., California and L.A.?

Left to right: David Shulman, Gerald F. Kominski, Kal Raustiala, Jeffrey B. Lewis, Sebastian Edwards

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By Paul Feinberg

The December 2016 UCLA Anderson Forecast conference focused on the ramifications of a Donald Trump presidency on the nation’s economy, as well as on those of California and Los Angeles. The event began with the presentation of three forecasts, with key takeaways for the specific regions.

A roundtable panel of UCLA experts continued the discussion, which was moderated by UCLA Anderson Forecast Senior Economist Jerry Nickelsburg and included Professor Sebastian Edwards, UCLA Anderson’s Henry Ford II Chair in International Management; Professor Gerald F. Kominski of the Department of Health Policy and Management at UCLA Fielding School of Public Health, who is also director of the UCLA Center for Health Policy Research; UCLA Anderson Forecast Senior Economist David Shulman; Professor Jeffrey B. Lewis, who is the UCLA department chair of political science; and Professor Kal Raustiala of the UCLA School of Law, who is also director of the UCLA Ronald W. Burkle Center for International Relations.

Touching on the President-elect’s recent phone call with the leader of Taiwan, Raustiala noted that Trump had often been critical of China during the presidential campaign, and called the phone conversation an “important deviation from U.S. policy and practice.”

“Trump’s inexperience with foreign policy is a concern,” the professor said. “In the field of international affairs, words and rhetoric actually matter.”

UCLA Anderson Forecast Looks at Economic Growth amid Presidential Elections

UCLA Anderson Forecast’s quarterly outlook for the national economy foresees real gross domestic product growth in the 2.0% to 2.5% range throughout 2017 and 2018, where it has been for the past seven years. With the economy approaching full employment, employment growth is expected to slow from what has been a consistent 200,000 jobs per month to about 150,000 per month in 2017 and 125,000 per month the following year. The national unemployment rate is predicted to be in the 4.8% to 5.0% range throughout the forecast period. In California, steady gains in employment are expected through 2018, while the unemployment rate in the state is expected to decrease during the next two years. California’s unemployment rate is expected to be insignificantly different from the U.S. rate at 5.4% by the end of the forecast period.

How Does the Economy Affect the Presidential Election?

This quarter, Forecast Economist William Yu takes a historical look at how “the economy” influences presidential elections. Yu’s research includes state data from 1968 through 2012 and led him to the following conclusions:

• The economic performance factor explains about 10% of variation of votes across states during this period. The non-economic performance factor explains 3.0% of variation.
• The demography factor explains 13% of variation of votes. The religion factor explains 3.0% of variation of votes.
• The state characteristic factor, which we assume remains constant for each state during this period, explains 51% of variation of votes across states.
• The rest (20%) is unexplained, which could be attributed to factors such as candidates’ individual qualities and campaign messages, and strategies compounded with other issues of voter concern in each election cycle. 

America Could Use Some Good Economists in the White House

Ed Leamer is running as a write-in candidate for vice president of the United States

Ed Leamer is running for vice president of the United States.

Leamer, who holds UCLA Anderson’s Chauncey J. Medberry Chair and also serves as director of the UCLA Anderson Forecast, is running as a write-in candidate along with presidential candidate Laurence Kotlikoff, who, like Leamer, is a professor of economics. Kotlikoff, who holds numerous chairs and appointments, is on the faculty at Boston University. Leamer and Kotlikoff first met when the former was teaching at Harvard and the latter was his student.

Leamer holds no illusions about being elected: He realizes that in today’s political climate it is virtually impossible for a write-in candidate with limited resources to actually get the most votes. But even with winning the election off the table, Leamer didn’t get involved as a publicity stunt. Instead, he sees it as a way for him and Kotlikoff to try to bring to the fore what they see as key economic issues.

Leamer sat down with the UCLA Anderson blog to discuss these issues and opened by saying, “Economists are taught to think logically and clearly about all the potential impacts of a policy — not just the surface impact, but that which is unexpected. A famous 19th-century French economist named Frederic Bastiat said, ‘There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.’”

Laurence Kotlikoff is running as a write-in candidate for president of the United States

Politicians, Leamer is implying, often propose policies that, on the surface, look good to voters. But they often do so without considering the indirect impacts. Like the “good economists” that Bastiat references, Kotlikoff and Leamer are focused on what must be foreseen.

Ed Leamer: We represent the youth of America, the future of America, and we want to make sure that the public policies that are put in place are guaranteeing that America’s going to be a great place in a decade or two. We think every bill that goes through Congress should have a youth impact statement. There should be an assessment as to how this affects the youth of America. And if it’s adverse, then we ought to be avoiding that. It ought to get a big red asterisk, saying, “This is not good for the youth of America.”

Q: What types of proposals would avoid that asterisk?

Leamer: From my perspective, there are three things that the nation ought to do.

First of all, we’ve got to have much better employment prospects for college graduates and high school graduates. We need to do something to create the access to good jobs for the youth, and to a large extent that comes from workforce development and better educational outcomes.

Commercial Real Estate Insights from Westfield Corp.’s Peter Lowy

By Carolyn Gray Anderson

The June 2016 second-quarter economic forecast asked hard questions about the overall outlook for the U.S. and California, particularly the future of commercial real estate. In his keynote address, Peter Lowy made the answers sound easy.

Lowy is co-CEO of Westfield Corporation, one of the world’s leading shopping center companies, with retail destinations in London, New York, San Francisco and Los Angeles among its portfolio of 34 malls and 6,480 retail outlets in the U.S., UK and Europe. He is also a chairman of the company. Last year, Westfield Corporation’s approximately 400 million customer visits to Westfield shopping centers generated over $16 billion in retail sales. With new investments underway, Westfield’s value is expected to exceed $50 billion by 2020.

Lowy has 30 years’ experience in the shopping center and real estate investment trust industry and has been with Westfield Group since 1983. So when he told the Forecast audience that his company is thriving, he didn’t have to talk long to convince them — and he may have provided the “sliver of optimism” Dean Judy Olian hoped for when she introduced him.

He identified the three areas where the most significant shifts have occurred and how Westfield is approaching them profitably: technology, consumer behavior and the retail business model.

1. Technology is an opportunity for traditional retail to build stronger connections with its customers.

Lowy evangelized at length on the power of mobile and other technologies to draw consumers to physical locations and to streamline their experience with retailers both in person and remotely.

Westfield’s multivalent app purports to guide shoppers to the nearest mall via the quickest route, advise on the closest parking, enable retailers to download every SKU available to individuals’ phones, and steer the shopper not just to stores but products and services. Naturally, the app facilitates ticket purchases, restaurant reservations and food orders that can be picked up or delivered. “We have already created the technology backbone to connect our customers to these services,” Lowy said. The product was developed by the company’s Westfield Labs, where it focuses on “removing the friction from physical commerce.” The goal is seamless customer experiences whether at a local mall, an airport or in transit.

UCLA Anderson Economic Forecast: Slowly, Steady Growth Continues

 

The UCLA Anderson quarterly economic forecast conference takes place on June 8 at UCLA. Peter Lowy, co-CEO of Westfield Corp., will deliver the keynote address.

Will the Commercial Real Estate Boom Continue?

Commercial real estate prices have more than doubled since the financial crisis lows of 2009, and in many cities the skyline is dotted with construction cranes. Similarly, multi-family housing has been on a tear with rent growth outstripping income growth for most of the current decade, making affordability a political issue. The critical questions professionals will be asking at this quarter’s UCLA Anderson Forecast conference concern whether or not these trends will continue — or if the bull market is over.

All the Anderson economists’ reports will be presented at UCLA Anderson Forecast’s quarterly conference, which features a number of panels focused on commercial real estate and Peter Lowy's keynote address.

The National Forecast

In his Forecast essay for the nation, UCLA Anderson Forecast Director Ed Leamer takes a deep dive into the factors driving the current U.S. economy, one that has been growing steadily at 2% following quarterly growth rates of 3% for the 40 years between 1965 and 2005. Leamer writes that growth since 2010 has been so eerily steady that it is defining an entirely new corridor at 2% instead of 3%. “Something is different, terribly different. What should forecasters be thinking?” Leamer asks. “We are thinking 1.7% real GDP growth in 2016, 2.8% in 2017 and 2.1% in 2018, averaging 2.2, with a strong labor market averaging about 200,000 increases in payrolls per month and a steady unemployment rate around 5%. More of the same, in other words. We are starting to see more evidence of inflation ahead, and are forecasting interest rate increases to keep real rates of interest pretty constant.”

Brazil: The Country of the Future?

By Britney Sussman

I have heard so many different, contrasting things about Brazil throughout my life. Growing up on Kauai, I mainly heard about the great waves, beautiful beaches, and cheap bikinis from the Brazilian surfers who visited the islands. When I lived in Peru for a year and a half, most of the business leaders I met had deliberately avoided talking about Brazil, focusing instead on Chile and Argentina, where they spoke the same language and doing business was just “easier.” I also ran into more than a few backpackers who all reported some version of the same story - “When I was in Brazil, these guys robbed me on the street and they took my wallet, passport, and camera, but man, I still had the best time ever!”

I continued to read countless opposing headlines about Brazil. One moment, it’s the “Country of the Future”, the next, there’s an increase in violent crime. Hyperinflation is finally under control, but at various points during the 90s, inflation was over 3,000%. In 2002, President Lula adopted a moderate platform and made significant strides to grow the middle class, but just last month, he was detained and is being investigated on suspicion of corruption. An article in the Economist says, “Since 2003, some 20m Brazilians have emerged from poverty and joined the market economy. These new consumers buy everything from cars to cookers and fridges to flights.” Simultaneously, Brazil ranks as one of the most difficult countries in the world to do business.

I’ve always been curious about the real story. Does Brazil deserve its place among the other BRIC countries (Russia, India, China), or is the “Brazil Cost” still too large? Is it the “Country of the Future” or is that just a pipe dream? What’s really going on in Brazil?

Autonomous Cars the Driving Force in California’s Technology Future

By Carolyn Gray Anderson

According to Henry Bzeih, chief technology strategist for Irvine-based Kia Motors America, quite literally driving the California economy is what’s to come in autonomous vehicle technology.

Bzeih spoke at April’s UCLA Anderson Economic Forecast, predicting that a major disruption akin to the leap from invention of the wheel to development of the combustion engine — which took millennia — will occur within the decade. In terms of both software and hardware content, the technology quotient for existing automobiles exceeds that of vehicles used for space travel, which means, Bzeih said, “The recipe for a fully autonomous vehicle is already in the car today.”

Bzeih believes that California — and not only Silicon Valley but just as likely Orange County and other parts of the state — will lead the country in vehicle technology innovation. But the hurdles before launch, he said, include psychological and cultural barriers and the fact that California, Nevada, Michigan and Florida are to date the only states in the union that have passed any laws pertaining to autonomous vehicles.

“The answer is convergence,” Bzeih said, and referenced cyberpunk author William Gibson’s observation that the future is already here, it’s just not very evenly distributed. With the proper vehicle-to-vehicle and vehicle-to-infrastructure communication, and the crucial component of good vehicle-to-human interface, companies like Kia can take driver assistance features (like smart cruise control) to partial automation by 2020 and full automation by 2030 — to which Forecast senior economist Professor Jerry Nickelsburg responded that it would still beat the L.A. Metro’s purple line extension into Westwood.

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Read the UCLA Anderson Economic Forecast press release