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For decades, economists have forecast that pooling people in big cities will lead to improved productivity in developing countries and, ultimately, middle-income wealth. But the rise of automation has begun to short-circuit that path, as robots can take the place of low-cost labor.
Erica writes: Poorer countries are starting to look for other routes to economic growth, but it's not yet clear that they can achieve the same economic record as has been built using traditional low-wage manufacturing.
The big picture: Fast-growing cities in countries like India and Nigeria — some of the world's most distressed — have become home to masses of urban poor, living in abject conditions with little way out. And by 2030, the world's cities are projected to grow by 80% in size, the bulk of it in the developing world, putting even more people in the same conditions.
The backstory: During the industrial revolution, hundreds of U.S. and European cities turned themselves into prosperous manufacturing towns. After World War II, Japan used the same export-led growth strategy to rebuild itself. More recently, China did the same and lifted hundreds of millions of people out of poverty.
But, but, but: Nations slow to move away from the promise of export-led growth are seeing poverty at mass scales in their cities.
By the numbers: The world's fastest-growing cities are stretched too thin to serve their gargantuan populations. The crisis will only deepen as they grow, says Anjali Mahendra, co-author of a new report from the World Resources Institute.
The bottom line: "There’s still a lingering belief that the next success story will be an exporter," says Karen Harris, managing director of Bain Macro Trends. But in many of the world's poorest, biggest metro centers, "you've created a labor force without anything to apply it to."
A bazaar in Varanasi. Photo: Jodie Griggs/Getty
Amazon's share price fell in after-hours trade this evening despite a third straight quarter of record profit, as its model of selling more of its own online merchandise took a hit in India, a key future growth market.
What's happening: Starting tomorrow in India, both Amazon and Walmart have to drop any merchandise sold by companies in which they have an equity stake or an exclusivity deal. The new Indian rules are meant to promote local businesses and prevent the kind of retail destruction that the two big U.S. retailers have wreaked elsewhere.
Amazon's cloud service business buttressed its fourth-quarter earnings, the company said today, but it also said that its growth will slow in the current quarter. Its shares were down almost 5% in after-hours trade.
The bottom line: The Indian policy is an example of a new, more hostile global environment for Amazon, which will have to figure out how to ease its reputation for slash-and-burn retail.
If you're not a teen with an Instagram account, you may not know that a stock photo of an egg recently received the most-ever likes on the platform, Kaveh writes.
Why it matters: That virtual egg may be worth $10 million.
The egg is already making overtures.
Photo: Kevin C. Cox/Getty
Erica writes: I'm from Boston, so I say "sneakers" to describe what you see above. What do you say? Tennis shoes? Gym shoes? I'd love to hear!
Regardless, there's a new way to try them on.
A new app called Wanna Kicks out of Belarus uses augmented reality so shoppers can see how different sneakers would look on their feet, all while sitting on the couch, reports TechCrunch. You can even take the shoes for a walk.