What is the secret to economic success? Stephen Jen: A good baseball team

What are the four most important tech economies in the world - Japan, Taiwan, South Korea, and the U.S. - all sharing? They all love baseball. It's possible that this is more than just a coincidence. This raises questions about the prospects for two other baseball-loving countries: Venezuela and Cuba. The U.S. developed baseball in the mid-19th century, as a combination of rounders and cricket. Baseball is popular among those who have interacted with America for a long time, just as British sports are in Commonwealth countries. Baseball became popular in Japan, Taiwan, and South Korea after World War II, when the U.S. maintained a large military presence. Today, these three economies together with the U.S. account for around 90% of the $40 trillion global tech market capital. The U.S. accounts for most of it, but the three other economies still represent almost 13%.

This could not be a mere coincidence. Taiwan, South Korea and Japan all benefitted from the focus they placed on education during the post-war period, which helped to create highly numerate population, as well their lack of natural resource, which forced them to develop industries geared towards export. Their close relationship with America has also played an important role. It was not just the U.S. Military that had an influence on this part of Asia in the decades after World War Two. American companies also played a role. This became especially noticeable in the technology sector over time.

Since years, there have been many and deep interactions between Silicon Valley companies and entities in Taiwan, South Korea and Japan (both universities and companies). Over 20% of the U.S.'s 10 million tech workers are Asian. Many Asian students also attend school in the U.S. Since the 1970s, research and idea exchanges have become a norm.

China complicates this thesis, as you can imagine. China is a technology giant but it's not a baseball nation. Its rise was due to state-directed policies, its size, and access the U.S. led global economic system. Not because of historical ties with America.

This distinction could prove to be the key. Baseball is not a cause of tech success but rather a sign of American influence. This helps to explain why China’s relationship with Silicon Valley differs from that of other Asian tech giants.

On Deck?

This is an interesting question. What about Venezuela and Cuba, two other baseball loving nations? These two nations are not economic giants.

Their shared love of baseball is a sign that they have historical ties to the U.S. It is a question of whether or not these old links can be transformed into a renewed economic, institution, and strategic alignment.

Venezuela became the world's leading oil producer after the discovery of oil in the early 20th century.

The mid-20th century saw U.S. companies invest heavily in the exploration and extraction oil in Venezuela. This, in turn supplied an enormous amount of crude oil to America. In this period, American oil workers also helped popularize the game of baseball in Venezuela. It quickly became a national sport. The relationship between the United States and Venezuela deteriorated sharply after the rise in inequality and the fall of energy prices, which helped to pave the path for Hugo Chavez’s socialist movement.

Baseball remained, even though most U.S. companies had left. Some may remember that, weeks after the U.S. arrested and captured Venezuelan President Nicolas Maduro, in January, Venezuela beat the U.S. baseball team in the World Baseball Classic Final, which was highlighted by U.S. president Donald Trump in a recent press conference. Baseball is not mentioned to suggest that it leads to tech success. Rather, I want to emphasize the long-standing relationship between Venezuela and the U.S. It is not difficult to imagine a similar relationship being rekindled. Before Chavez, Venezuela exported half its oil production to the U.S. A prolonged period of underinvestment has reduced its production to 1.0 million barrels per day.

Venezuela's historic ties to the U.S., as well as its vast energy reserves could make it a natural ally again. This is not so unlikely, given the warming relationship between Washington DC and the current Caracas government.

Joining the Team

Finally, there's Cuba. Cuban students who returned from the United States in the late 1800s taught them how to play baseball. As well as Americans visiting the island nation. The Cubans are now playing in the U.S. Major Leagues.

This affinity is also a reflection of a long-standing relationship between the U.S. and Cuba. Following the Spanish-American War in 1898, Cuba came under U.S. protection until 1902 when it achieved independence, although the U.S. maintained the right to intervene in Cuban matters until 1934. The proximity of the two countries, as well as their shared history, has helped to strengthen relations between them. Over the years, corruption, inequity, and poor government culminated with Fidel Castro's rise. He overthrew Batista's government in 1959 aligning Cuba to the USSR during Cold War.

Cuba, unlike Venezuela with its oil wealth, does not have a clear path to progress.

The current economic situation of Venezuela is dire. It has high inflation, blackouts, and other shortages. This is partly due to the fact that it no longer receives low-cost energy from Caracas. Cuba's proximity to the U.S., which was a major concern during the Cuban Missile Crisis of 1962, makes it in the best interest of the largest economy in the world to support positive changes.

History suggests that the U.S. should be looking at countries with a history of establishing strategic alliances and influencing change in other parts of the world.

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(source: Reuters)