Accelerating Impact from Strategic Partnerships to Policy Entrepreneurship

Where are we at?

How to accelerate innovation nationally

How to engage the world.

A Chat with Team8, a VC from the Israeli Intelligence Unit

I was fortunate to tune into a conversation with Liran Grinberg the Managing Partner of Team8 Capital, a global cybersecurity VC. He founded Team 8 in 2014 with the former Head of Israeli intelligence unit, 8200, Nadav Zafrir.

Team8’s company-building Foundry model de-risk process to venture investing, which is a process of “co-founding and serial-investing.” This led to serial investing into enterprises such as the creation of Sygnia ($250M exit with x60 return in 3 years) and Claroty, the world’s leader in Industrial Cybersecurity, backed by Rockwell AutomationSiemensSchneider ElectricGeneral MotorsBMW Group and more.

Here are three main advantages to having 8200 as the backbone of Team8.

So what is Unit 8200, and how does it contribute to the success of Team8 Capital?

  1. Level of talent is high. In Israel there is a mandatory service, and Unit 8200 is an elite military Israeli unit. The Team 8 leadership had access to the 1% of the 1%, those who had can new companies or can help build new companies. They were security entrepreneurs, cyber operating partners, and top talent from the largest unit within the military.
  2. Training is high. They start practicing leadership at a young age in the military and in technology. Under Team 8, under the Cyber and Data division, they build products and services to protect from cyber threats for data at scale.
  3. Culture is failure-tolerant and bottom-up. As 18, 19 year olds, they military entrants have their first year, second and third year to experiment with their new ideas each year. The graduates of the 8200 naturally fuel the tech ecosystem and the “startup nation.” 

Another really interesting aspect to the model of Team8 was the venture-building model and the formation of the “Team8 Village,” a critical mass of mass of talent through which a platform- they built out a process for entrepreneurs, engineers, and the investors.

Instead of focusing on commercial innovation, Team8 geared attention to the VC world and the intersection of academia, inventions, and startups and how to enable the backbone of startups to be more influential. As incumbents, enterprises have a lot of resources and access to the markets like understanding of the customers, they are bureaucratic and it is hard for them to innovate. Startups solve very concrete problems. They don’t have much resources or any research capability, and the success rate is very low. So Team8 chose to ask –  how can VCs act as a platform to solve difficult questions?

Team8 helps enterprises digitally transform. The companies or LPs become strategic investors.They don’t often have the muscle power to build something from scratch. So therefore, they passively help build the model to impact the type of problem to invest in the company.

For a gate of four hours, Team8 brings a challenge and companies together with engineers and the leadership. They bring together companies without lack the technical domain expertise from different geographies with a similar problem. For instance, they brought together data scientists and enterprises that 2 entrepreneurs usually would do in the garage. Team8 then conducts technical due diligence to help them grow.

If the problem is big enough, they build the company from scratch. They have 12 companies so far. This whole model – the platform team, village, the process – the investors, and everyone – has de-risked the investing process. 

Liran began working closely with founding teams on the ideation of Team8’s first companies, including Sygnia which was acquired by Temasek for $250M, and Claroty which is backed with $100M in funding, alongside Illusive Networks, Hysolate, Curv and more. Liran then transitioned to build and lead Team8’s Go-to-Market Group across its marketing, business development and market research functions, alongside the formation of a tightknit community of hundreds of C-level executives from the world’s leading enterprises. Combined, the two initiatives have become a powerful and differentiated advantage of Team8 in accelerating the success of its portfolio companies. 

His venture-building model with Israeli’s top talent is not only tackling the world’s greatest cyber security challenges, but also the backbone of the startup nation Israel is today.

Accelerating Tech for a Secure and Sustainable Future

When you think of working in the defense industry, you are right think about the arms – the military equipment, missiles, submarines, helicopters, etc. You’re quite right. So what it mean to be working in sustainable solutions in the world of defense tech?

The idea of working with the private sector for public applications is not new. In the past, most predominant forms of spending were through governmental entities such as DARPA  as R&D directorate and for weapons and military development – the Central Intelligence Agency’s publicly funded venture capital firm – In-Q-Tel or the Defense Innovation Unit.

Their sponsored research today became the technologies in our daily lives – the GPS, the Internet, the microwave, artificial intelligence, were all products from the State investments in technology.

Emerging technologies today have far outpaced the contracting model, where it now needs to move towards venture financing. The types of threats we are facing today including cyber – are outside the security contractor supply chain. The existing model’s ability to keep pace in future warfare is questionable.

The world of defense tech is an interesting one, where it extends beyond the traditional arms to encompass artificial intelligence (AI), quantum computers, cyber, robot, 5G (5th generation), urban air mobility (drones) mobile communication, and aerospace technologies.

At the current Center, we build a hub of: a) challenging technical problems; b) globally shared security challenges c) the intersection of commercial and public sectors, and d) with significant economic upside. We seek to work with venture capitalists accelerating dual-use early-stage technologies by facilitating technology transfer, and forming strategic alliances. 

We work with a network of highly vetted global advisors and partners, enabling us to map technologies to globally shared security challenges. We base our selection on performance, application of technologies to our partner’s mission capacities, and on complete alignment of interest. 

So how can defense tech serve as means for sustainability?

Aerospace and automobiles both rely on high technologies but are both major manufacturing industries relying on advanced materials, electronics, embedded systems, mechanical components, engines, and structures.

The basic idea is the same – you invest into new technologies that are more efficient, faster, smarter but to invest into clean technologies doesn’t also release toxic chemicals or with greater mitigation mechanisms to control GHG emissions.

The battery-powered electric airplanes are, believe it or not, already here. By investing into dual-use (commercial and public) technologies, clean technologies in the commercial sector could be bolstered with public sector investments. Through partnerships and their collaboration with domestic and foreign defense conglomerates, we can accelerate the progress of companies making a material difference in carbon emissions through increased incentives.

The vision is to invest into technologies to help advance the capabilities of the defense sector to have advanced technologies and to develop technologies that will enable the industry to shift from nonrenewable to renewable resources for energy and materials in a significant way – and thus will help to achieve a secure and sustainable future.

The How-to Guide on Harnessing Private Capital for Good


Surveying Korea’s Impact Ecosystem

Korea’s growth initially depended on a low wage, educated and disciplined labor force to produce goods for exports from its predominantly agricultural state possessing few natural resources. When the state prioritized economic development with a combination of state planning and entrepreneurship, South Korea had set forth on a trajectory into a prosperous, industrial society.

A combined effort of state and entrepreneurs later became family-owned conglomerates, capital-intensive in manufacturing, construction, and steel industries. The conglomerates today including Samsung, POSCO, LG, and others became the foundation for the social innovation and IT entrants.

The government followed suit to ascertain its policy framework. The Social Enterprise Promotion Act (SEPA), which became effective in 2017, resulted in the establishment of the Korea Social Enterprise Promotion Agency (KoSEA), a state-run incubator for SEs. It followed suit with the establishment of the Korean Social Investment Fund (KSIF), a social consulting organization which promotes sustainability amongst businesses, the Seoul Social Economy Support Centre, as well as a range of SME financing products and preferential access to public procurement bidding.27

Areas of investments are thus defined by the social and local needs identified by the government. Social enterprises are defined as those that perform business activities of producing and selling products and services while pursuing such social purposes as providing vulnerable social groups with social services or jobs to improve the quality of life of the local residents.

Korean governments have made efforts to mobilize participation of the private sector and civil society in furthering social development. However, actual contribution of business and financial communities has been slow compared to other advanced countries.

In Korea, social investment has an impact-first orientation than as mechanisms for financial returns. Ventures that became interested in investing in social enterprises with social and financial returns came about with leading enterprise ecosystem with incubators and accelerators. Venture groups like D3 Jubilee and Crevisse Partners built awareness around impact investment opportunities by accelerating the operations, equity investing, and building capacities for shared learning. Social venture acceleration and incubation are also done by other institutions like MYSC, HGI, and SK Happiness Foundation.28 These incubators act as intermediaries for social entrepreneurs to build operations and secure external partnerships.

These incubators act as intermediaries for social entrepreneurs to build operations and secure external partnerships. Sopoong, which was launched by the founder of Daum, is an impact investing venture group. It invested in SoCar, a car-sharing company based in Seoul. SoCar obtained public parking spaces with the government support and then it obtained funding from the Seoul Social Investment Fund. And subsequently, the business secured funding from private investors Bain Capital and SK Group to exit.[9]

South Korea is one of the most business-friendly environments to foster entrepreneurship. There exists sufficient government support with incubation, procurement, funding, policies, and incubation expertise with government grants on public-private partnership investments, such as green finance, SIBs, and other investment mechanisms. However, despite the many approaches and investment opportunities, impact investing is still not as active in South Korea. There is a limited impact investment opportunities in public and real estate markets that would have competitive financial returns with impact. There is also general skepticism that impact investment could have high returns. The domestic laws also are not conducive for a more flexible impact investment approaches. For instance, nonprofits cannot keep more than five percent of its own equities.

Here are the recommendations for each stated industry.


The idea of social innovation is considered as derived from the political left. This is due to the forefront advocate of social innovation was from Park Wonsoon, the Mayor of Seoul City.[10]

Social innovation is seen as a partisan. The main point of criticism is that a social innovation budget will be used to support many activists and practitioners, mainly from the civil society. Civil society organizations are seen as more progressive and often in opposition to those with conservative perspectives.

The word “social” is misunderstood, as traditionally, South Korea has been a government and corporation driven society. When the Korean government’s social innovation task force first talked about social economy, they found that the general public were uncomfortable with the word ‘social’ and asked “if it meant socialist.”[11]  

The most effective way to address these challenges is to create a public consensus and influence policy. By pursuing a blended finance model or large government-led funds, they can spread awareness of social investment opportunities and also pursue a mechanism where it shares risk with the other stakeholders.

From the government arm, it needs to lay the groundwork for the agenda to be embraced and embedded across the funders – institutional and venture capital. The momentum needs to also be balanced with political commitment, alignment with local cities, and the existing infrastructure to allow for the legal framework for impact investors and social innovators to flourish. 

Asset Management Funds

A well-constructed impact portfolio is globally diversified with multiple asset class and sub‐asset class allocations. The primary difference between an impact portfolio and a traditional portfolio involves the investment philosophy and process of the underlying managers and funds the portfolio invests with; asset managers that are integrating environmental, social and governance (“ESG”) criteria into their investment process and are transparently monitoring the impact of their efforts are preferred when constructing an impact portfolio. Furthermore, although portfolio risks and returns are compared against traditional benchmarks, impact metrics are also tracked.

However, challenges persist for social innovation sectors to participate in the global economy in South Korea, as there is simply a lack of public equity listed companies with competitive financial and impact returns.

In the United States, asset management solutions pursue a blended finance model with social goals integrated into the investment process. Adoption of corporate shared values, sustainable development goals, and global agendas are still nascent in the Korean social venture scene. For large asset management institutions in Korea without blended social objectives, there is a niche to invest in risk or growth capital for social enterprises. An impact-based portfolio could invest in market‐rate and/or below‐market‐rate investments, depending on the investor’s risk‐ return profile and impact intent.

Across geographies, sectors, or stages of market or company development, over-investment in impact practices may create a drag on financial returns. Whether this drag is an acceptable “tradeoff” for the level of impact return and/or level of evidence of impact is a choice each investor will need to make. It may be possible to surmise that certain investments with particular impact goals and standards for impact evidence are likely to have a wider range of potential deviations from “market-rate” returns.

Impact Enterprises

In South Korea, the idea of social innovation focuses on citizens leading the ideation, planning as well as implementation of projects. One of the existing obstacles is that there is simply a lack of social enterprises capitalizing on financial returns or have strong operational resilience. Korean institutional frameworks separate strictly the planning and implementation stage when funding social enterprises. Impact enterprises should be diligent to carve out a unique competitive differentiation in their respective markets to ensure sustainable financial viability. Similarly, they should be diligent to seek out collaboration opportunities to achieve the benefits that derive from size and scale.

For these social enterprises, they should proactively measure the social and environmental objectives as directly tied to the business model. Therefore, the measurement of these indicators may be no different from measurement of the business indicators. In addition, reporting of the impact and financial metrics will help to drive further accountability and transparency among organizations.

These organizations can also enroll in approval processes that help promote sector accountability and transparency. B Corp that evaluates the social and environmental impact of companies and funds and assigns them a score based on certain criteria. GIIRS measures the social and environmental impact of funds and companies and provides comparable and verified metrics and ratings. These ratings in such approval processes can help legitimize social enterprises and further its global potential applications.

A common language around social metrics and standards allows stakeholders to communicate more effectively, benchmark and compare investments, and evaluate social and environmental performance. Comparable metrics like using SDGs allow investors to employ different strategies on the social bottom line, and thus are important for mainstreaming impact investing. Intermediaries can play a key role in advancing this common language. South Korea can maximize its competitive edge in technologies and entrepreneurship, have them adaptable for SDGs to extend its global reach.

The funders generally are left to government, a program introduced by institutional investors, nonprofits, and other accelerators than from its value-driven institutional asset management model.

What South Korean ecosystem currently lacks is a mechanism to import knowledge of overseas impact investing trends. With strategic partnerships with global fund managers, the incubated companies can extend their reach and learn from best practices. Multi-stakeholder partnerships and collaborations will become increasingly important in realizing these shared value opportunities.

[1] AVPN, Social Investment Lanscape in Asia – South Korea

[2] Inter-American Development Bank, 2016, Study of Social Entrepreneurship and Innovation Ecosystem in South East and East Asian Countries: Final Reflections

[3] 뉴스프리존, 부산시, ‘CCVC 코리아임팩트 펀드’ 195 조성,   

[4] Ibid.

[5] Global Innovation Exchange, KOICA,

[6] KOICA, Guideline for KOICA to Utilize Impact Investment and Blended Finance, 

[7] Ibid.

[8] 이철영, 임창규, 임팩트 투자, 투자의 미래,

[9] Ibid.

[10] Social Innovation Exchange, Conversation with the Social Innovation Task Force,

[11] Ibid.

Bumpy Roads of China Ahead: Domestic Agenda and Financial Realities


China today is the second largest global economy, the largest exporter and has the largest exchange reserves in the world.

Chinese reforms for its economy began with Deng Xiaoping’s opening agriculture, defense, industry, science, and technology for development with state-led macoeconomic policies. The economic reforms under Deng’s era increased its role of capitalism and the market with less government control over the economy. This opened up China to overseas investment and introduced market incentives to foster entrepreneurship and state-owned companies and allowed China to become the world’s second largest economy with manufacturing and construction might.

When President Xi Jinping and Premier Li Keqiang stepped in on 2012, the administration unveiled new economic measures some bold and some aimed at promoting a more balanced domestic economic model. It can be divided into three issues: Comprehensively Deepening Reform, which gives a decisive role to the market economy; Promotion of New Type of Urbanization, which aims to give an urban family registry to farmers for families who have moved from rural to the urban, and Macro-Control, which aims to specify a reasonable range for economic management through fiscal measures.

China has been encouraging domestic and foreign investments to support its economic recovery with a fiscal monetary policy for a more market-driven economy to strengthen the resilience of global trade and investment flows. It also sought to reduce reliance on American industrial imports, such as semiconductors, and advance its own competitive advantages in technologies like artificial intelligence.

President Xi’s new vision of development also sought to build partnerships with countries of geopolitical implications for China to jointly develop third-country markets and locate more investable opportunities. This ambitious outward foreign direct investment strategy has been called the Belt and Road Initiative.

Concerns remain about Chinese domestic political stability with regard to its suppression of minorities in furthering the domestic agenda and its potential spillover in countries of investment and trade relations. China’s relatively slow economic growth in the recent years, existing financial risk with increasing debt, and a trade war with the United States question whether it can maintain competitiveness in an economy dependent on high capital spending and the expansion of credit.

There are diverging and opposing arguments about Chinese financial outlook as well as its political ambitions. Experts attempt at dissecting China’s growing power and influence, as they are reshaping the Asian security landscape, global economy, and the dynamism of global governance.

This report is an attempt to examine the risks and opportunities for China in context of its domestic social challenges, strategic technology development trends, and investment opportunities in the increasingly multipolar international systems.

Disclaimer: This report is intended solely for internal purposes and is not to be distributed publicly under any circumstance. Any views expressed or implied contained within the report are those of the writer’s. A deeper subject-level understanding and examination of the topic is needed for a full analysis of the subject concerned.

1.    Slowdown of Economic Performance

The 2018 for China was a slow year comparative to the past twenty years. Its economic growth came at 6.6 percent in 2018, the slowest since 1990, and slower than the 9.5 percent average of the past 40 years.

Its rate of economic growth has raised questions on the role of its excessive debt in the country, the impact of its trade war with the U.S. and the general trajectory of regime given its overseas ambitions over the state control of the economy. The cited reasons for its slow growth is multifold – one including that the growing export-led economy has now reached its point of diminishing returns. Some point at Chinese fueling of the economy in the latest financial crisis and the underlying currents in the Chinese economy as the main reasons.

When the financial crisis had hit in 2007, China released an ambitious CNY 4.0 trillion (USD 585 billion) stimulus package. It was launched with massive investment to fuel economic growth, causing concerns that it could be building up asset bubbles, overinvestment, and overly capacitate the account surplus.

Xi’s policies are fiscal than monetary in nature. China is looking to put a floor on growth than on the credit-fueled economy to balance its bottom-line economic growth of at least 6 percent for the next foreseeable years, for the income levels to rise, and to meet the target of creating 11 million jobs a year. Xi also aims to curb excesses in dividends in productivity growth that has risen about 2.4 percent from the annual 1.9 percent. It forecasts debt will be flat at the ratio of 276 percent of the GDP and to rise about three percentage points in 2019 than the average annual 15-point increase for the past eight years.

With China set the inflation rate goal as the upper limit and the growth rate and employment goals as the lower limit; if the economy is within the range, short-term economic stimulus measures will not be taken with economic system reform and economic structural adjustment given priority.

Xi’s approach which gives the role of the market force to allocate its resources, retreats from its role in allocating the resources and limited to basic functions like the macroeconomic management, market regulation, public service delivery, and supervision of society.

2.    Debt of China

Debt exploded in China over the past decade after the stimulus used in the 2008 financial crisis. The rating agency, Standard & Poor’s, reported that China has “huge hidden debt” of between $5.5 trillion and $6 trillion as of 2018.

The debt at the local government level is “not very good debt…. [Historically,] the Chinese government has had to write down debts like this a lot in the past.” China’s local governments have established so-called “local government financing vehicles” that fund projects with debt raised from the China Development Bank against mostly land as collateral. “The question is how deeply involved are the local government financing vehicles in this type of borrowing, and with what risks.”

Country’s economic challenges withstand, as banks are forced by the government to continue to lend to companies struggling with debt. Xi’s focus on the supply-side of the economy has channeled its resources towards state-owned firms, less efficient than private sector economies and its causing the Chinese yuan to weaken with interest rates rising.

China has another plan to pump in spending into the economy, but its payoff may not be very effective. “Banks do not want to lend, so the government is forcing them to lend. The idea is to put money where it is more productive, in the private sector,” said Alicia García-Herrero, the chief Asia-Pacific economist at the French bank Natixis.

Chinese companies own a striking number of international assets, and financial difficulties can create international pressures. Many Chinese companies with western assets have taken out unsustainable debts.

The government policy to growth also seems misguided as its injection of cash into the economy with unmatched productivity growth. The idea is to get banks to force more loans to companies that may default and to flourish the role of the private sector and ultimately to shed debt. The goal for China is to rebalance for sustainable growth away from manufacturing and cheap export-led industry sector and government spending towards a more sustainable growth.

3.    China’s Tech Nationalist Agenda

To counteract the slumping economy and to rein in the escalating debt levels, Chinese policymakers have called for a more “proactive fiscal policy” that include tax cuts and introduced its “Made in China 2025” policy. It is a techno-nationalist agenda calling for Chinese global leadership in various technological sectors by 2025, with value-add from predominantly foreign intellectual property.

The goal for China is to de-risk its supply chain by reducing reliance on US imports in key areas such as semiconductors and have supremacy in tech sectors such as artificial intelligence, 5G telecoms, internet of things, self-driving cars, and battery technologies.

Chinese intend to reduce imports from the U.S. and not components made by US companies in China. The value of products that US companies made and sold in China was about $250 billion last year, almost double the $130 billion in products imported from America.

The area where U.S. and China conflicts the most significantly is in semiconductors. This industry is where American industrial leadership and China clash significantly. China seeks to ramp up availabilities of alternatives to US semiconductors. The semiconductor industry is one of Chinese clear ambitions, as out of $300bn committed to help deliver “Made in China 2025,” some $150bn is earmarked to upgrade China’s capacity in semiconductors.

Computer chips are the foundation of today’s digital economy and national security. China is currently reliant on semiconductor imports, therefore China blends its state and corporate resources in pursuit of its chip ambitions. It has incentive programs to attract engineering talent from elsewhere, notably Taiwan. Firms like Huawei have a proven ability to innovate and is well on its way to develop its domestic supercomputing industry.

Huawei’s new computing chips are aimed at powering artificial-intelligence applications. The line of semiconductors includes a chip that is installed on servers and performs complex AI tasks like programming algorithms, as well as a second chip for more routine functions on smartphones and other devices.

China is well-positioned to compete in the consumer economy especially in the field of artificial intelligence. Its tech platforms like Alibaba, Xiaomi, Baidu growth trajectories puts them at growth levels that will eventually surpass Microsoft, Facebook, Google, Apple and even Amazon. This is because China has more consumers than North America with capital, people, and computing power, therefore more data for how AI can scale without interference. The platforms have enormous consumer base, generating more data than any other nation, given its 750+ million daily Internet users. Chinese lack of privacy protection makes it a lot easier to openly collecting data as well.

With the development of domestic semiconductors, China can simultaneously upgrade Chinese industry achieving self-sufficiency and paving the way for artificial intelligence supremacy.

Chinese quest has been undoubtedly coupled with going after US technology and intellectual property. America has legitimate concerns about the national-security implications of being dependent on Chinese chips and vulnerable to Chinese hacking.

4.    U.S.-China Trade Tensions

Thus, China’s response to the trade war is set to be carefully calibrated. Chinese companies are being told by Beijing to cut reliance on US technology and intellectual property in their supply chains, replacing them where possible with alternatives from Europe, Japan, Korea, Taiwan and elsewhere.

The US-China trade started with the US disapproval over China’s technology appropriation policy. US began its levies on tariffs on the promise that Beijing would follow through on protecting IP rights and to buying American products.

The U.S. began three rounds of tariffs on Chinese products, a total of $50 billion worth of goods. The first two rounds put in 25% tariffs on $50 billion worth of imports, and Beijing had retaliated putting $90 billion of tariffs on imports to China. The U.S. met with another set of tariffs on a total of $200 billion at 10% threatening to increase to 25% unless the countries come to a deal. The latest levies would put all of Chinese exports under US duties.

Ultimately, both countries would be hurt from the trade wars in the short-term, but China would be significantly more hurt by the trade war. China is more vulnerable to US control of exports of goods than in the U.S. Tariffs making Chinese exports more expensive and punishes the Chinese economy. China responded with tariffs on American exports on US like soybean.

China is at disadvantage – the total share of trade of Chinese GDP is much higher, and Chinese exporting industry employs a massive number of people. In a slowing down economy, China cannot afford to lose its competitive advantage. Also raising tariffs would mean the global value supply chain would be affected. Other countries would be more reluctant to work with China. Its most vulnerable sectors on consumer goods or finished or intermediate goods would be affected.

China also cannot afford to dump its holding of US debt, which is more than a trillion-dollar worth, the US treasury holding will decrease in value. The US would have to offer higher interest to lure interest to keep covering its federal debt, but there still will be buyers.

For Trump, the U.S.-China trade talks has political repercussions. Trump faces voters next year. Xi’s public persona is affected by the trade war, but it will not face voters. Trump needs a verdict that he is tough on China for the 2020 run.

Trump recently delayed a planned increase of tariffs on Chinese imports to 25 percent, from 10 percent, that was scheduled to take effect March 1st. China has offered to lower tariffs on U.S. farm, chemical, auto and other products and offer to buy natural gas from the U.S. and reduce tariffs on imported vehicles. A decision has yet to be made over lifting of the existing U.S. tariffs. They are scheduled to meet again on March 27th.

5.    Belt and Silk Road Initiative

The effects of trade disputes with the United States has led to Chinese ambition to balance its economic growth and financial risks by revamping its investment opportunities overseas. Chinese manufacturing capacities are now challenged by a lower cost emerging market, like Vietnam, and therefore, China is now pursuing a strategy where it invests in infrastructure to reroute the global trade.

Belt and Silk Road Initiative (BRI) is an ambitious plan modeled after the Ancient Silk Road. It would ultimately be a 21st economic belt connecting China to leverage its routes and take advantage of the global trade in areas like industrial parks, mines, fiber optic cables – making it easy to trade with China.

The domestic consequences of China’s initiative are ramping up. Officially China states its five major goals for the purpose of BRI – policy coordination, facilities connectivity, unimpeded trade, financial integration and people to people bonds.

China wants to sign economic agreements with the Belt and Road countries to access new markets; to promote Chinese investment; to secure its supplies of food, resources and energy; to export Chinese products and services; to enhance the yuan’s role as a global currency; and to increase its soft power.

China calls it a “win-win” strategy. For instance in Pakistan, China offered to build a brand new port a corridor, which would effectively connect an economic belt, an alternative route for oil. This led to a huge boost of domestic construction companies in China, increases manufacturing capacities in lower cost areas, and gradually optimize its geostrategic ambitions based on today’s global order.

China claims its competitive advantage is that it claims a far fewer demands offering billions of dollars to corrupt countries and authoritarian regimes with the promise that eventually these countries will have to pay China back.

6.    Domestic Social Challenges

Countries Beijing is making alliances with sometimes wrought with terrorism and otherwise other authoritarian traits. As a frontier of the hub of the one Belt, Beijing has promised its internal dissenters to bring prosperity and stability to the Xinjiang Uyghur Autonomous Region. In some ways, the GDP growth has been achieved, however the national minorities in the region may not share the sentiment.

The Chinese Communist Party (CCP) declared in 2014 that the government would launch a “counter-terrorism campaign” that focused geographically on China’s western regions. The thesis was to “construct walls built with copper, iron, knits, and by boosting police readiness through mass surveillance and mass management.”

As a result, without any evidence of an organized threat, Xinjiang saw an emergence of authorities stepping up mass surveillance programs and security presence. Xinjiang is a region with 11 million Turkic Muslim Uyghurs, and regional stability and State control in Xinjiang is critically important for the success of Xi’s “Belt Road Initiative,” for which it is the primary land route for trade and investment in Central and South Asia, Europe, and the Middle East.

Recently, the Office of the United Nations High Commissioner for Human Rights (OHCHR) examined a report submitted by human rights organizations, and accused China of holding as many as a million Muslims in concentration camps. According to this report, “…The government has implemented militarized security measures, invasive policing, and community surveillance, including through “big data analytics”; forced hundreds of thousands of people into “re-education” camps; and drastically restricted ethnic language, culture, and religion…”

Millions of ethnic Uyghurs and Kazakhs have been imprisoned just due to their ethnicity, culture, and religion to assimilate them into the Han culture. The security threats used in Tibet are used also in Xinjiang, for instance, the installing of QR codes in the homes of the Uyghur Muslim community to get instant access to the residents of the Muslim community.

Beyond the surveillance technologies, Uyghurs have also experienced forms of torture and are currently facing massive imprisonment in re-education camps.

Xinjiang is situated in the border and are points of stability and security for the Chinese interests. Its threats in the social cohesion and stability can also threaten its national security priorities.

Just due to the ethnic distinction, Uyghur ethnicity have accelerated an assimilation process and to build a security framework to reinforce the process through its surveillance, control, and coercion mechanism. It ultimately breaks its ethnic lineages and its unique practices.

7.    Pulse Check: BRI and Sustainability Question

The Chinese state is willing to easily overlook human rights violations and sacrifice its citizens for the larger goals of the Belt and Road Initiative. Although there are a lot of countries as investment cases to examine, this scope examines Pakistan and Sri Lanka to glean into the sustainability of the initative.

The adoption of the Belt and Road Initiative, which was formed to connect China’s trade routes in Central and Southeast Asia with ports, roads, and other infrastructure lines, has also been criticized for lacking transparency, its questionable adoption methodologies, and its debt burden to the nations. The nations’ environmental and social conditions are not often taken into account in the infrastructure process.

It’s become the thorny patch for the U.S. allies as they voice concern over the BRI adoption mechanisms. The Australian government was one of the fifteen countries to sign a letter expressing concern over the treatment of Muslims and demanding Beijing to respond to its human rights concerns. Australia has also refused to sign up for the BRI despite its geopolitical significance.

The BRI has already made significant strides with countries signing up to the treaties, cooperation, and other funds. However, hard data on the benefit to the domestic economy, increase in the number of jobs, or even foreign exchange reserves is unclear.

The sources of funding are the following: The China Development Bank and the Export–Import Bank of China would grant a special loan of $250 billion yuan and reached an additional 830 billion yuan by 2018. The Chinese government itself pledged USD $15.5 for the creation of the state-owned fund devoted to BRI, and the Asian Infrastructure Investment Bank (AIIB) is also expected to provide funds as well with a capital of $100 billion. The Bank of China has also issued four rounds of international bonds for OBOR with a total value of more than USD $10 billion.

In July 2018, a total of 234 out of 1,674 Chinese-invested infrastructure projects in 66 Belt and Road countries since 2013 have encountered enormous difficulties. Scandals related to the projects are multifold – both domestic and abroad presenting clear challenges ahead for Xi’s ambitious global agenda.

The corruption scandals run rampant as the grant is initially given to the Chinese officials. It is rather easier for Chinese officials to obtain a greenlight and a large amount of money, and without a clear anticorruption mechanism, tracking the use of money can be difficult. The Supreme People’s Procuratorate of China’s website states corruption occurs in the processes of decision making, examination and approval, land acquisition, and material procurement of the projects.

“…After terms are reached with a host country, funds are transferred directly into the Beijing-based bank accounts of China’s state-owned enterprises, which build the project often with Chinese materials. This is a model Beijing has employed extensively in Africa. Once Beijing’s political blessing for a project is communicated via funding from its policy banks, China’s national- or provincial-level state-owned enterprises build it, often with little or no political or financial risk assessment or market research.”

The investments also come with a price tag on the domestic economy. Local governments are suffering from lack of funding in areas of education, medical care and social welfare. Students in Leiyang broke out in protest as the lack of resources in public schools led to the government cutting its class sizes and transferring students from public school to a private school with much more expensive fees and problematic dormitories. The provincial city has racked up 2.464 billion yuan of outstanding debt at the end of 2017, or 111% of revenue.

A success case seen with the Chinese overseas investment is Pakistan. For Pakistan, its rural fishing village in Gwadar is now undergoing construction to transform into an urban port city. China signed a plan known as the China-Pakistan Economic Corridor, or CPEC. China has pledged to spend $63 billion toward Pakistani initiative with more than 1,000 people, half of them Chinese, now working to complete a 660-meter container terminal. The strategic advantage is clear for China – it could allow all ships carrying goods from the Persian Gulf to directly move through its port. Pakistani faces both peril and promise, as its ambitious undertaking would mean: “ten years’ tax concessions, 90-year leases for Chinese companies and cheap imports will impact the competitiveness of existing domestic industries.” Pakistan would also have to potentially be laden with a huge debt burden with an already increasing trade deficit with China.

For China, its “primary interest in Pakistan is geopolitical rather than strictly economic, and therefore, for China, repayment of the debt burden will be secondary to maintaining a good political and economic relationship with Pakistan,” said Mushtaq Khan, an economist and former chief economic adviser at the State Bank of Pakistan.

The U.S. Department of State has its suspension of security assistance to Pakistan, but Pakistan has seen a growth despite its rampant terrorism and poor governance infrastructure of 5.4% in 2017, a fastest rate in 10 years. Some concerns over Pakistani port becoming a military base lingers.

Other countries have not been so lucky. Sri Lanka, when China began operating the port of Hambantota, the construction began with an ambitious stride under President Rajapaksa’s looming election. However, now the Mattala Rajapaksa International Airport is cited as “the world’s emptiest international airport” with only four regular flights in use per week. Sri Lanka also had to grant over a 99-year lease of its port to China to cut its overwhelming debt, an external of $48.3 billion. Sri Lanka is a strategic point for the BRI as a main oil shipping route. China could foreseeably takeover the territory as Sri Lanka’s sovereignty has been compromised in the region.

The mega construction and infrastructure projects also require the Chinese state to make considerable efforts to protect its assets and potential external threats. The military-build up is essential to securing Chinese geopolitical interests to balance against the U.S. administration and also for its capitalist development. However, in the current economic situation, further increasing military spending means cuts to education, social welfare or other public spending, which will eventually cause more mass incidents like the one in Leiyang.


The Western globalization model has not lead all countries into prosperity.

The U.S. offers an option in a sea of debt that compromises independence, whereas Beijing’s broader ambition for a global scenario may work. While some countries became the emblem of “Asian Tigers,” China, Central Asia, or North Africa were left behind. There was a governance deficit for many countries that it developed without a proper institutional infrastructure.

If the BRI were to be moderately successful then institutional governance and the way the government is conceived will be profoundly different from the western era of globalization, which had stemmed from the 1980s. Chinese cultural, educational, and political models would stream down without a governance deficit. Countries would model themselves on China, as Japan and Korea have in their stages of development.

China, a country with an exponent experience in development and in export-led manufacturing with a fifth of the world’s population would transform the world economy by shifting the Eurasian landscape. It is an extremely large-scale infrastructure investment that produced the rapid economic growth in its own domestic history.

Chinese model is a successor model of globalization for the developing world, where the growth is a bit faster than of the developed world. The developing world now provides 51-52% of the wealth and it will two-thirds the global GDP.

Chinese communist party state would effectively lattice the continent with fluidity as a dominant and hegemonic superpower with its neocolonial approach of seeking control of ports. It is expected the Eurasian landscape can be developed like China, as China has the experience in economic development, the financial means, and a vision to create a sub global system in its own.

However, the question is really in how these would be financed. Currently in observing the investment trends in the BRI projects at the expense of its domestic economy, it is extremely reminiscent of its own domestic strategy – which is to pump in stimulus without an unmatched sustainable growth in the domestic jobs and at rote suppression of the potential dissenters.

It is skeptical that the Chinese public funding would be ultimately matched with its market principles and its regulatory political character. These countries would develop its trading capacities, upsetting the U.S. uphold in its trade pressures with China.

Observing the trade-conflict and its fiscal outlook and the domestic challenges would be crucial for the emerging economies when they would engage in the large trading opportunity in China. All investment should support the domestic economy and a sustainable, balanced growth grounded in its sociocultural roots.

The ambition in the amount of money is enormous, and there is a real risk in local governments not being able to withstand the Chinese pressure to adopt the Chinese sociopolitical models. For countries like Hong Kong, it is easy to replicate the story with its language and cultural ties. For other countries, its traditional and legal systems may have to be substantially affected.

Countries receiving massive investment to fuel economic growth could also experience similar financial domestic issues, such as asset bubbles, overinvestment, and an account surplus along with its social structures.

The alternative is a comprehensive strategy led by world’s democracies to project values of freedom, democracy, personal autonomy, innovation, and information to counter the Chinese narrative. However, with an unmatched domestic infrastructure and governance systems, it may be difficult to attract the emerging markets excluded in the Western globalization systems.

An ideal trade relation is the one in which it exposes the country to a global competition by reducing barriers to foreign goods. Trump’s America First policy and its pulling out of the multilateral negotiations, such as the Trans Pacific Partnership ultimately has allowed Chinese an increased role in the Asia. It was an ideal platform for China to land on a more ambitious economic trading system where the U.S. is less involved and for an expanded influence for overseas investments.

The financial outlook for China is that the economy may continue to decelerate, as Chinese economy is trying to squeeze debts. Chinese economy is patiently waiting for the stimulus driven recovery to take hold. China needs to be more comfortable with slower growth and also working the economy through the transition from an export – to a consumer led economy. With Chinese motives under increasing scrutiny, China also needs to build upon its public diplomatic instruments that Chinese economic development efforts are less hostile, but a more harmonious attempt for a mutual long-term growth. Only then China can overcome international scrutiny of its political legitimacy balanced with economic stability and achieve its long-term global governance agenda.


KPMG, China Outlook,

Financial Times, The U.S. cannot halt China’s march to global tech supremacy,

International Policy Agenda, China’s Quest for AI Supremacy,  

Financial Times, Xi Jinping has changed China’s winning formula,

The Asean Post, China’s economy under Xi Jinping,

The National Interest, China’s Economic Slowdown is Inevitable,

K@W, Why China’s Economic Troubles Run Deep,

NPR, Trump Sets Tariffs on $200 Billion in Imports from China,

Bloomberg, U.S. and China Near Deal That Could End Most U.S. Tariffs,

Asia Policy, The Belt and Road Initiative: China’s New Grand Strategy?’s_New_Grand_Strategy

Channel News Asia, Beijing hopes ‘One Belt, One Road’ will deliver peace, prosperity to Xinjiang,

Joint Civil Society Report Submitted to The Committee on the Elimination of Racial Discrimination for its Review at the 96th Session of the combined fourteenth to seventeenth periodic report of the People’s Republic of China (CERD/C/CHN/14-17) on its Implementation of the Convention on the Elimination of All Forms of Racial Discrimination

CFR, Conversation with Wang Yi,

China Daily, Multination Asian bank plans capital of $100 billion,

Economic Times, China’s China’s BRI comes under severe criticism on its fifth anniversary,  

Foreign Policy, China’s New Silk Road Is Getting Muddy, 

The Wall Street Journal, A Broke Chinese City Is Raked Over the Coals by Furious Citizens,

Nikkei Asian Review, China’s Belt and Road working? A progress report from eight countries,

Leveraging Contemporary Technologies to Denuclearize North Korea

*This is an exploratory research paper submitted to the Bureau of Arms Control Verification and Compliance for how can Blockchain be used as a solution for achieving peace in the peninsula.

The successful inter-Korean dialogues continue, as they pledged together in the historic Panmunjon Declaration for “no more war on the Korean Peninsula” and declaration for a “new era of peace.” The mood was described as hopeful and optimistic, as Kim announced that he is suspending ballistic missile and nuclear testing, closing the Punggyeri-nuclear test site to “join the international desire and efforts for the total halt” to nuclear tests. 

 However, “complete denuclearization” in the Declaration remains ambitious and vague, leaving room for interpretation on both sides. In the much anticipated U.S.-DPRK bilateral, success of the talks will depend on each party’s definition of extensive disarmament. 

Washington is looking for a comprehensive “all-in-one” approach on “complete and verifiable” denuclearization, whereas North Korea is looking for an incremental, synchronized nuclear disarmament. 

 Previous agreements have fallen through in the stages of implementation. To take the steps toward the long-term goal of complete denuclearization, the Trump administration will have to design a long-term balanced framework where both parties are comfortable with the level of transparency and security in designing a verifiable dismantlement process. 

 Verified dismantlement in a nutshell is to obtain high confidence that the program no longer exists and that reconstitution will be difficult and likely to be detected relatively quickly or at least long before significant quantities of banned items are produced. In this sense, the dismantlement is called irreversible. 

Verifying North Korean for nuclear disarmament may be historic – in calling for an unprecedented extensive inspection campaign miles across industrial sites and hidden tunnels with clandestine labs and facilities from 40 to 100. The International Atomic Emergency Agency (IAEA) estimates around 300 inspectors to keep track of uranium and plutonium flows through factories and equipment of potentially 20 to 60 nuclear weapons. 

It would be very difficult to find military specialists trained to prevent arms from detonating along with multilateral oversight with China and Russia. The paper surveys methodologies and synergism of technologies available as a baseline for what it means to have a complete denuclearization ensuring security, transparency, and irreversibility to accommodate political climate and the North Korea’s sprawling nuclear complex. 

 Data Sources 

 The Comprehensive Nuclear Test Ban Treaty Organisation (CTBTO), a central authority in nuclear proliferation, immediately called for North Korea to consider signing and ratifying the 1996 Comprehensive Nuclear-Test-Ban Treaty (CTBT). It is a “legally binding in force CTBT” as the only way to solidify the moratorium on nuclear testing, which was an essential step towards the “ultimate goal: a world free from nuclear weapons.”

CTBTO collects, processes, and analyses data from the 337 facilities of the International Monitoring System, such as the Global Alarm System to detect all nuclear explosions and 80 extremely sensitive sensors to detect radioactivity. It also registers dispersion of radioactivity stemming from all other sources anywhere in the world, in particular to nuclear accidents. 

Verification, or measurements and procedures that the negotiated activity is taking place, are often done through the traditional systems, but there is a serious need to utilize full range of technologies to detect and characterize nuclear activity, equipment, and materials. One being, to be able to use various sensor detection radars to differentiate between the accidental nuclear activities or elicit, and also to be able to examine its ending of production in the full lifecycle – in substantive, verifiable, and secure ways. 

Open source data, seismic technology, and geospatial information analysis are used as well as other mediums to mitigate challenges in detecting nuclear activities. A method on the horizon is the public technical means, one where concerned citizens and the public participate in the process of arms control using smart phones or citizen sensors to collect and analyze data and information. Social media is also cited as a tool, to examine the field verification activities. However, this methodology also must accompany a larger public campaign about data privacy and mitigate potential deception and falsification, and in a country like North Korea, where ICT infrastructure is seriously constrained, the option to use public technical means to monitor verifiable denuclearization are not available. 

There are audio-visual tools, to evaluate the completeness and correctness of information. Multimedia data, such as photographs, videos, and audio recordings at nuclear facilities, it may be used to enhance preparation for in-field verification by helping to visualize physical attributes of facilities and equipment, thus aiding in such safeguards activities as design information verification and environmental sampling. 

 Another emerging source is the emerging earth observation tools such as satellite imagery equipped with high-definition videos, and emerging synthetic aperture radar systems, and thermal infrared. The deployment of high-definition (HD) video cameras on small satellites could facilitate close monitoring of motion, short-lived, or quickly changing phenomena to detect fissile materials in distance. The denuclearization of North Korea means securing international and regional security. 

Multilateral agreements between nuclear weapon possessing states – developing variety of options to meet the diversity of possible scenarios, including optimizing technologies to maximize their robustness, minimize intrusiveness as well as building cohesive configurations of approaches to cover the diverse set of facilities and objectives. 

Data Fusion Model 

Making sense out of the disparate data source is not in the future. The heterogenous data streams can be integrated through validation algorithms and systems. 

Voluminous amounts of data are being generated on a daily basis from a multiple data streams. The most effective way to monitor verification of nuclear facilities is for the data to proceed in real-time and stored persistently. 

We can detect anomalies in the data, such as unusual nuclear activities or potential elicit activities in pattern of behavior or what constitutes nuclear weapons development activity prohibited under the treaty, drawing a line between activities exclusively weapons-oriented and those peaceful or for dual use those that can serve both military and/or civilian purposes. This would help clarify whether an application other than nuclear weapons development is plausible, such as a firewall to look at presence and absence of activities and their evolution over time. 

There exist many approaches today, but one this paper will explore is the method of efficiently fusing heterogenous data streams by gathering a network of dependencies within a dataset and compare the different networks to quantify the similarities. A mathematical proof based deductive process can be hard to scale due to the exact modeling of the programming language; therefore, the paper will opt to fusing an algorithm to create a normative pattern. 

First of all, the data has to be collected in a standardized matter and cleaned-up so each dataset contains similar fields. For the data be digestible and to be able to be interpreted, the model can use APIs, or a systems integration application layer that can interface with different systems into the data fusion model. 

Data fusion can be modeled with different methods and techniques based on the relations of the data source. For instance, two sensors monitoring the same site could be considered as redundant to increment the confidence of the data. If it is of two different viewpoints, it could be complimentary. When fusing original information to the new, such as additional audiovisual tools, it could be considered as cooperative. 

This pattern-based vulnerability discovery graph would essentially be a data governance model, acting as a meta data layer as a single version of the truth. It acts as a data validation layer providing integration access through the data fusion running the anomaly detection software among distributed sources. 

As participation allows, using novel open data, multimedia or geospatial can be used as synthetic data to ensure we are able to detect the anomalies with minimal false positives. Later, injecting real data into the dataset can validate the algorithm for no false positives. 

The data fusion model and its overlapping interface would allow analysts to detect unusual patterns of events and activities that support attribution of the source of illicit activity. 


U.S. officials worry that DPRK would hide key nuclear materials or facilities. Now, how can we ensure no entity purposefully tempers with the data?

In North Korea, Blockchain has been used in illicit procurement networks as a means of avoiding sanctions, but its applications, such as storing records, clearing and settling accounts, and ensuring validity and execution of contractual arrangement, could allow us to also view when a data has been viewed or modified. It would ensure data integrity in nuclear, satellite command, and control to permanently log crucial intelligence on whether a hacker had modified something in a database. 

The spread of nuclear weapons technology consist of a rainbow of decentralized, sometimes overlapping and sometimes fragmented systems of international agreements, informal arrangements, and national legislation. Not surprisingly, differences in national implementation and enforcement continue to frustrate efforts to keep dual-use goods and technologies out of proliferator hands. These implementation gaps, coupled with the sheer volume of global trade and commerce, have reduced the barriers to entry for intermediaries and created pathways for illicit procurement networks to exploit. 

Any measurement system in such a regime necessarily requires tamperproof certification and authentication. As is easily imagined, the security system is what assures the integrity of the process to prevent both cheating or leakage of military secrets. The DPRK leadership likely suspects the other parties’ commitment to rewards and their motivations for conducting certain verification activities. This dismantlement model recognizes the initial lack of trust among the parties and allows confidence building through the successful implementation of initial cooperative steps towards verified dismantlement. 

Verification would occur throughout the process, and incentives and security guarantees would be implemented in stages linked to the dismantlement and verification steps. 

AI is concerned with building algorithms which are capable of working with (processing, or operating with) data while it is still in an encrypted state. As any part of a data process which involves exposing unencrypted data represents a security risk, reducing these incidents could help to make things much safer. The AI data fusion model could help make decision about whether the transactions should be investigated. Having each decision recorded on a datapoint by datapoint on a blockchain to be audited with the various stakeholders, would ultimately be a machine learning-powered algorithm with a decision making process.

The way we could achieve this is by integrating the data fusion model into an encrypted ledger, the segmented verified databases built and implemented only upon databases have been verified can reduce the stress of troubleshooting and finding abnormal datasets. 

The data quality assurance or maintenance of the server can be offloaded onto a Cloud, potentially maintained by the CTBTO to have a third party all stakeholders are politically comfortable with. 

The Blockchain model would be in a permissioned ledger to only allow a few selected members could access it, and distribute the files across the network to have files available even if part of the network is broken. This would ensure the file would not be tempered, a highly robust database that can only be read and updated only with this with permission. 

When a data has been created for the purpose of model building, licenses which cause restriction or permission can be specified by the party. Blockchain technology then makes the process of doing this relatively easier. 

A centralized, or permissionable,  Blockchain model, where roles are granted to certain users to interact with the ledger for a trusted set of users would only allow for the IAEA Member States or selected parties to view the data. For instance, when a report is transmitted into the data, it would be distributed across separate entities. They would be able to view when and if the data is valid, unique, and authenticated, as verified by the data fusion model. Using private key encryption, IAEA could also only share the meta data only deem suitable for sharing, and only allow certain entities with permission to view more sensitive information. 

Supply-Chain model 

Blockchain has been discussed as a method in the supply-side controls, but there remains discussion on whether blockchain-based systems will help or hinder monitoring for illicit transactions and fraud. It opens up possibilities for transactional monitoring, as it could help ensure transparent and real-time monitoring across all transactions. Moreover, trade and finance systems based on blockchain mean that financial transactions need not be conceptually separate from trade-related transactions (i.e., shipping and insurance), thereby increasing the granularity of information available to regulators, enforcement, and intelligence agencies. 

The Trump administration is now looking for ways to continue to peaceful talks to sustain the momentum to pursue a creative, realistic, and conciliatory way to move forward with credible steps toward disarmament of North Korea. The task has been accomplished by states willing to make the necessary political commitment and resources- with detailed models and verifiable dismantlement of gas centrifuge and nuclear weaponization programs for application in North Korea. 

While the weight of that demand is heavy on any verification system, the certain consequences of failure require no less. To that end, we will have to close disparities between treaty compliance and the existing verification means available to serve that function. Otherwise, the imbalance will continually jeopardize the shared nonproliferation and disarmament aspirations of this century. Strengthening verification standards and practice through modern technology will ultimately strengthen transparency and security inherent in the verification model and renew commitment to compliance. It will then serve not only as a catalyst to future agreement, but also enhance the certainty that those security challenges that nations choose to meet by agreement will not be illusory. 

Investments with Political Vehicles

(Originally written: 10.12.2018)

American leadership promotes of governance, democracy, human rights, and global stability. How does this translate into social investments overseas?

Businesses consult political risk, such as power structure and roots of political legitimacy, to make decisions on overseas investments. Democracy, which involves social systems, tax laws, and a regulatory environment, enables a positive, sustainable, and local growth for social enterprises.

Economic growth often provides legitimacy to dictatorship, but democracy provides a stable political environment, with less corruption or government seizures of business. Therefore, it protects financial return with the discipline of the market by supporting our key allies under diplomatic turmoil.

For instance, India is an economically independent country with aims to enhance its strategic space and capacity for independent agency. If the objective of bilateral economic engagement is to accelerate the integration of the two economies, only a resolute defense of the free market with an open focus on increasing FDI – would allow it to overcome its vast development deficits to liberalize the economy while strengthening state capacity.

India can increase the use of digital payments and support digital finance technology projects to not only scale its technologies, but strengthen its resilience.

The most important task in strategic logic of each bilateral relations is the success of the affiliation, and how its benefits are to be conceived. Especially in a country where geopolitical rivalry coexists with economic interdependence.

Investment readiness remains a key issue for ventures. It requires understanding of risk and how to price it. Transaction and reporting requirements can be quite high. By opening up the private capital to solve difficult foreign policy challenges fundamentally guide critical capacity building and equip allies to support strategic priorities. Therein, it responds to on-the-ground conditions targeting specific vulnerabilities for sustainable and scalable growth of enterprises. I hope we can provide a role in development – the social impact investment ecosystem – to create liquidity in the market incentivizing a genuine strategic partnership with deep-rooted shared interests.

Translating Risk for Social Impact

“Successful private equity needs macro-economic and micro-economic factors. These include political stability, sophisticated capital markets, corporate governance, strong entrepreneurial structure, and proper benchmarking. Other factors include fragmented markets, low competition, and comparability of funds.”

— Markus Ableitinger, Director of Capital Dynamics

(Originally written: 10.12.2018)

Businesses did not begin to champion social impact or corporate social responsibility until they were truly faced with understanding counter risk to global operations – the effects of environmental, social, and governance in networked operations and stakeholder management. They saw that portfolios with “impact” or ESG indicators have outperformed those during the 2008 downturn, and found impact investing as a method to mitigate short-term risk for long-term value creation. Essentially then, risk tolerance becomes to what extent do we want our dollars to be philanthropic and the type of risk to a portfolio, climate, technology, etc., are equivalent to the opportunity of innovation in the portfolio companies.

However, there is substantial lack of language of risk mitigation in impact investments or studies of political determinants of venture capital investments. Yet, VCs include political stability among the important determinants of receiving VC funding.

The supply of VC comes from the share of risk capital provided by private investors. Along this line, the macro factors are mainly general economy, technological opportunities, entrepreneurial environment, and political risk.

Markus Ableitinger, Director of Capital Dynamics says, “successful private equity needs macro-economic and micro-economic factors. These include political stability, sophisticated capital markets, corporate governance, strong entrepreneurial structure, and proper benchmarking. Other factors include fragmented markets, low competition, and comparability of funds.”

Moreover, venture capitalists and investors are growing in Singapore taking advantage of the country’s political stability, highly educated workforce and strategic location. Despite the fact that micro, macro and even legal determinants of VC financing have more or less been analyzed; changes in political stability of countries have received little attention.

VC investment intensity is the total value of stocks traded, the significance of IPO in a fixed effects model, GDP growth (GDP) as well as inflation, labor market rigidities, and some of the political risk variables – investment profile, socioeconomic conditions, corruption and other determinants.

Given the increasing frequency and intensity of political/economic crises, a more systematic method of measuring political risk and evaluating its impact on market prices is required for emerging markets. Businesses can successfully mitigate and manage macro-political risk in emerging markets with targeted preventive investments into portfolio companies.

For instance, with Khashoggi, the United States is about to sanction specific entities and France and others could also back sanctions, which would affect countries with commercial deals with Saudi Arabia and have a certain number of days to wind down the activities depending on the products being sanctioned – that would translate into – from relying exclusively on export products to opening up domestic companies and technologies less variable to political activities.

For VCs, where we’re concerned with risk in maintaining profits, sustaining economic growth and protecting investments from market fluctuations, we have to manage threats in regulatory relationships, overall legal environment, and geopolitics critical to smooth operations.

Today’s environment requires innovation by companies by both sensing and understanding these risks and in adapting risk management to include networked-based models of information sharing. Each area of risk management is becoming a strategic value for an enterprise, and must be mainstreamed into the entire organization’s value proposition – beyond philanthropy and the CSR paradigm.When portfolio companies are scanned for threat and vulnerability for types of risk, we’re also able to measurably predict the role of companies with business processes that can conduct mitigation potentially as a supply chain partner. We can effectively then incentivize companies for mergers and acquisition, monitor its capacity for IPOs, and others – by geopolitical prediction.