Aurelia Butler

Colombia wants to restore industries such as textiles, fertilisers and metalworking as it seeks to cut its account deficit and wean the country off oil and mining, Bogotá’s new finance minister said.Ricardo Bonilla, who took office this month, also cited pharmaceuticals manufacturing as an area Colombia wanted to develop. “We are very interested in foreign investment that is not so concentrated in oil and coal but in industry.“We have to rebuild the industrial apparatus to be able to have that production in Colombia . . . That does not mean that we do not buy goods but that we want the possibility of a more equal exchange.“Colombia’s performance has been deficient [in recent decades] due to the conviction that it was more important for Colombians to consume cheap imported products than for us to try to produce them.”President Gustavo Petro, a former member of a guerrilla group and Colombia’s first leftist leader, was elected last year promising social reforms and a shift away from oil, gas and mining, though these account for half of the country’s exports. Since then he has bristled against moderates in his government and congress, as well as businesses, and called on supporters to take to the streets to support his reforms.Bonilla took office on May 1 following a cabinet reshuffle in which seven ministers lost their jobs. He previously served as finance secretary under Petro when the latter was mayor of Bogotá.Bonilla replaced José Antonio Ocampo, a renowned professor of economics at Columbia University in New York, who in the 1990s served as finance minister and agriculture minister. Ocampo also previously worked at the United Nations and the central bank.Ocampo was seen as a moderate buttress against an increasingly radical president and on several occasions walked back statements from cabinet members, such as when Irene Vélez-Torres, mining minister, promised a halt to new oil exploration projects.Some analysts suggest Bonilla will be less able — or willing — to restrain Petro’s most extreme instincts. A note from Citibank following Ocampo’s ouster called Bonilla “more ideological” than his predecessor and said any reforms would be harder to pass thanks to a “left-leaning shift” in cabinet.Bonilla, who said he was committed to reducing Colombia’s fiscal deficit, described his role as providing Petro with accurate information. “He wants to hear the truth, with real data and no sweet-talking.” 

Colombia is Latin America’s fourth-largest economy, and gross domestic product grew by 7.5 percentage points last year, but that growth has slowed sharply amid a broader slowdown, while inflation is running at an annual 13 per cent.Petro’s previous coalition in congress fell apart as he struggled to pass a health reform bill that would drastically increase the state’s role in healthcare. At that time Petro said he would “build a new cabinet that will help consolidate the government programme”.Bonilla said: “Governance has always been the order of the day. The concern over recent days is how to rebuild a parliamentary alliance that will move the [reform] projects forward.”A report by rating agency Moody’s published on Monday found that while Colombia’s strong institutions limit the government’s ability for radical upheaval, “a deterioration in business sentiment” risks hurting investment and potential GDP growth. More

Indonesia has emerged as the world’s second-largest supplier of cobalt, contributing to a sharp fall in the price of the battery metal and adding to western anxieties about Beijing’s dominance across the electric car supply chain.The south-east Asian country generated 9,500 tonnes of cobalt last year — 5 per cent of the global supply — up from minimal volumes before 2021, according to an annual market report by the Cobalt Institute, an industry group. That means it has overtaken established producers Australia and the Philippines.The surge in the supply of Indonesian cobalt — a byproduct from its rapidly growing nickel industry — has helped drive prices down from $40 per pound in April last year to about $15, according to Fastmarkets.Despite its rapid growth, Indonesia remains a long way behind the world’s number one supplier, the Democratic Republic of Congo, which holds a 73 per cent global share. However, concerns about human rights at the DRC mines, as well as China’s operational control of many of them, have left carmakers wanting alternative supply sources or trying to change the chemistry of batteries to reduce cobalt usage.The US has introduced the Inflation Reduction Act while the EU has introduced the Critical Raw Materials Act in a drive to reduce their reliance on China for the raw materials for electric cars and to foster supplies domestically or from friendly nations.Indonesia’s emergence as a supplier of cobalt will do little to quell such concerns, given that it is being driven by joint ventures of Chinese companies and local groups.

“The dominance of China in Indonesia poses risks for the wider market, similar to the dominance of DRC production,” the report said, adding that it could undermine the aims of US and EU industrial policies to reduce reliance on China through the EV supply chain.Global cobalt supply jumped 21 per cent in 2022 to 198,000 tonnes, much greater than the 13 per cent increase in demand. The price rallied sharply for a year from summer 2021, but has since plunged, driven by Indonesia’s emergence, plentiful supplies out of the DRC and a downturn in sales of portable electronics.Together with falling lithium prices, the fall has provided some relief to battery manufacturers.But it has also created challenges for getting new projects up and running in the west. For example, Australian-listed Jervois’s project in Idaho, which was set to be the first US cobalt mine to open in decades, suspended final construction at the end of March because of low cobalt prices and high construction costs.The report said that cobalt prices were set to remain below $20 per pound this year and that the market would be well supplied until at least the middle of the decade because of strong supply growth out of the DRC and Indonesia.The surge in EV demand would subsequently push the market into a structural shortage towards the end of the decade with demand set to more than double to 400,000 tonnes by 2030, it said.Indonesia’s cobalt also poses an increasing environmental problem for automakers since its global warming potential at 36 kilogram of CO₂ per kilogram of cobalt is almost four times higher than supply out of the DRC. More

Recent raids by Chinese security forces on US consultancies in China strike right at the heart of the west’s ties with the world’s second-largest economy. Such consultancies provide essential market research and due diligence work to western multinationals that have invested hundreds of billions of US dollars in China over the past decade. It is these multinationals, in turn, that form the leading constituency in western nations for continued engagement with China in the face of intensifying domestic political opposition. Thus, it is little exaggeration to say the future of economic globalisation is at risk. The multiple raids in recent weeks on US companies Capvision, Bain & Company and Mintz — all of which have considerable operations in China — signal a sea change in Beijing’s attitudes to US business. Yet what makes the environment particularly poisonous is the nature of the allegations being levelled by Chinese authorities. Chinese media reported that consulting groups had tapped personnel in “our party and government organs and other clandestine units” to provide sensitive information to clients abroad. CCTV, the Chinese state broadcaster, said in a report focused primarily on Capvision that the group had set up interviews with experts in areas such as government policy, national defence and technology. It claimed a few of these had revealed sensitive and secret information during the consultations.Such allegations come against a backdrop of Beijing’s increased vigilance against espionage. Anti-espionage laws were broadened last month from covering state secrets and intelligence to any “documents, data, materials or items related to national security and interests”, without setting specific parameters for how these terms are defined. This means, in effect, that anything the Chinese Communist party deems suspect can be defined as potential espionage, triggering the search and seizure powers of authorities as well as the incarceration of individuals. Beijing has also displayed a willingness to act. The detention in 2018 of Michael Spavor and Michael Kovrig — Canadian executives imprisoned for more than 1,000 days and charged with spying — sent fear through western business communities in China. The US Chamber of Commerce warned last month that mounting scrutiny of American companies had “dramatically” raised the risk premia attached to doing business in China. The powerful US business lobby group, led by chief executive Suzanne Clark, said in a statement it was “closely monitoring” China’s scrutiny of US professional services and due diligence firms.It may be that Beijing feels that as its homegrown companies climb the technology ladder and expand overseas, it no longer needs the investment of western multinationals it once courted so assiduously. Certainly, the ability of Chinese car companies to win market share from western rivals such as Volkswagen seems to reinforce such a view.Yet much more is at stake. More than one-third of the $3.3tn in goods that China exported in 2021 were supplied by foreign companies operating in the mainland. Multinationals have also been a prime source of technology transferred to local partners over the past four decades, as well as management expertise and advice on how to break into US and European markets.It would be in its own self-interest, then, for Beijing to act to assuage foreign investors’ concerns. It ought to define more clearly what constitutes espionage and what is seen as legitimate industry intelligence. If not, the result could be a fundamental breach between China and the multinationals that have long been its biggest supporters in the west. More

In 1900, the UK had 3.3mn horses. These animals provided pulling power, transport and cavalry. Today, only recreation is left. Horses are an outmoded technology. Their numbers in the UK have fallen by around 75 per cent. Could humans, too, become an outmoded technology, displaced by machines that are not just stronger and more dexterous but more intelligent, even more creative? The threat, we are told, is remote. Yet this is a matter of belief. Maybe machines could do much of what we need to have done better than we could, with the exception of being human and caring as humans do.Yet even if no such revolution threatens, recent advances in artificial intelligence are highly significant. According to Bill Gates, they are the most important development since personal computers. So, what might be the implications? Can we control them?The natural starting point is with jobs and productivity. A paper by David Autor of MIT and co-authors provides a useful analytical framework and sobering conclusions on what has happened in the past. It distinguishes labour-augmenting from labour-automating innovation. It concludes that “the majority of current employment is in new job specialities introduced after 1940”. But the locus of this new work has shifted from middle-paid production and clerical occupations prior to 1980 to highly paid professional and, secondarily, low-paid services thereafter. Thus, innovation has increasingly been hollowing out middle-income jobs.Furthermore, innovations generate new kinds of work only when they complement jobs, not when they replace them. Finally, the demand-eroding effects of automation have intensified in the past four decades, while the demand-increasing effects of augmentation have not. None of this is very cheering, especially since overall productivity growth has been quite modest since 1980. So what about the future? On this, an analysis by Goldman Sachs is both optimistic and sobering. It argues that the “combination of significant labour cost savings, new job creation, and a productivity boost for non-displaced workers raises the possibility of a labour productivity boom”. This would be similar to what ultimately followed the emergence of the electric motor and personal computer. The study estimates that generative AI, in particular, might raise annual growth of labour productivity in the US by 1.5 percentage points. The surge would be bigger in high-income countries than developing ones, though timing is uncertain.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Globally, it suggests, 18 per cent of work could be automated by AI, again with larger effects in high-income countries. In the case of the US, the estimated share of work exposed to AI ranges from between 15 and 35 per cent. The most vulnerable jobs will be office and administrative, legal and architecture and engineering. The least exposed will be in construction, installation and maintenance. Socially, the impact will fall most heavily on relatively well educated white-collar workers. The danger then is of downward mobility of the middle and upper-middle classes. The social and political impact of such shifts appear all too evident, even if the overall effect is indeed to raise productivity. Unlike horses, people will not disappear. They have votes, too. Yet these economic effects are very far from the whole story. AI is a much bigger change than that. It raises deep questions of who and what we are. It might be the most transformative technology of all for our sense of ourselves.Consider some of these wider effects. Yes, we might have unbribable and rational judges and better science. But we might also have a world of perfectly faked information, pictures and identities. We might have more powerful monopolies and plutocrats. We might have almost complete surveillance by governments and companies. We might have far more effective manipulation of the democratic political process. Yuval Harari argues that “democracy is a conversation, and conversations rely on language. When AI hacks language, it could destroy our ability to have meaningful conversations, thereby destroying democracy.” Daron Acemoglu of MIT argues that we need to understand such harms before we let AI loose. Geoffrey Hinton, a “godfather” of AI, even decided to resign from Google.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

The problem with regulating AI, however, is that unlike, say, drugs, which have a known target (the human body) and known goals (a cure of some kind) AI is a general purpose technology. It is polyvalent. It can change economies, national competitiveness, relative power, social relations, politics, education and science. It can change how we think and create, perhaps even how we understand our place within the world.We cannot hope to work out all these effects. They are too complex. It would be like trying to understand the effect of the printing press in the 15th century. We cannot hope to agree on what is to be favoured and what is to be prevented. And even if some countries did, we would never stop the rest. In 1433, the Chinese empire halted attempts to project naval power. That did not stop others from doing so, ultimately defeating China.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Humanity is Doctor Faustus. It, too, seeks knowledge and power and is prepared to make almost any bargain to achieve it, regardless of consequences. Even worse, it is a species of competing Doctor Faustuses, who seek knowledge and power, as he did. We have been experiencing the impact of the social media revolution on our society and politics. Some warn of its consequences for our children. But we cannot halt the bargains we have made. We will not halt this revolution either. We are Faustus. We are Mephistopheles. The AI revolution will roll [email protected] Martin Wolf with myFT and on Twitter More