Milken Institute

2005 Global ConferenceApril 18, 19 and 20, 2005

Los Angeles, CA

Milken Institute

2004 State of the StateOctober 13,2004

Beverly Hilton, Los Angeles

Panel Sponsored by:

109876543210

700

600

500

400

300

200

100

0

PPP$ Billions

Democracy and National IncomeLevel of Democracy and Average Annual Growth

More DemocraticLess Democratic

109876543210

10

8

6

4

2

0

-2

-4

Percent

10-Year Growth5-Year Growth

Democracy and Economic GrowthLevel of Democracy and Average Annual Growth

More DemocraticLess Democratic

Most DemocraticPartially DemocraticLeast Democratic

450

400

350

300

250

200

150

100

50

PPP$ Billions

Democracy and National IncomeLevel of Democracy and GDP in PPP Terms

Most DemocraticPartially DemocraticLeast Democratic

5

4

3

2

1

0

Percent

10-Year Growth5-Year Growth

Democracy and Economic GrowthLevel of Democracy and Average Annual Growth

9994898479

100

80

60

40

20

0

Percent

40s 50s 60-64 65-69 70s +

Employed Men by Age Group Percent by Year, 1979-2000

9994898479

100

80

60

40

20

0

Percent

40s 50s 60-64 65-69 70s +

Employed Women by Age Group Percent by Year, 1979-2000

9994898479

100

80

60

40

20

0

Percent

40s 50s 60-64 65-69 70s +

Non-Labor Force Men by Age Group Percent by Year, 1979-2000

9994898479

100

80

60

40

20

0

Percent

40s 50s 60-64 65-69 70s +

Non-Labor Force Women by Age Group Percent by Year, 1979-2000

Asian Higher Education LandscapePercent of Workforce with Secondary Education or Better

Untapped Potential: Growing Pool of Postsecondary Students…

TaiwanHong Kong

South KoreaChina

JapanThailand

100

80

60

40

20

0

Year 2000Year 2020

Non-High School

16%

Some College17%

Associate8%

Bachelor +26%

High School33%

Supply: Highest Level of Education(25 years and older)

Total personsage 25 and over:177.0 million

17% Bachelor only

The Workplace DemandRapid and Accelerating Demand for Skilled Labor

60%

20% 20%

45%

35%

20%

65% 15%

20%

1950 1991 2000

12.4 MM 56.4 MM 91.2 MM

Skilled Unskilled Professional

Population GrowthProjections, 2005-2025

20252020

20152010

2005

130

125

120

115

110

105

100

95

Index 2005=100

More Developed RegionsLess Developed Regions

World Population – Urban vs. RuralAs Percent of Total Population, 1980-2030

20302025

20202015

20102005

20001995

19901985

1980

65

60

55

50

45

40

35

Percent

*U.N. ProjectionsUrban Rural

Inflow of Foreign WorkersPer 100,000

FranceItaly

JapanU.K.

U.S.Canada

AustriaAustralia

GermanyNew Zealand

700

600

500

400

300

200

100

0

Per Hundred Thousand

Net Number of MigrantsBy Selected Country, 1995-2000

ChinaMexico

IndiaPhilippines

IndonesiaArgentina

FranceJapan

U.K.U.S.

1500

1000

500

0

-500

Thousands

Migrant StockAs Percent of Population, 2000

IndonesiaPhilippines

MexicoIndia

ArgentinaJapan

U.K.France

U.S.

14

12

10

8

6

4

2

0

-2

Percent

Top 10 CountriesNumber of Patents granted, 2003

Country Per Million PeopleJapan 994South Korea 779United States 289Sweden 271Germany 235France 205Luxembourg 202Netherlands 189Finland 187Switzerland 183

Residential Patent ApplicationsPer 100,000 Residents

ChinaRussian Fed.

CanadaFrance

AustraliaU.K.

U.S.Germany

SwitzerlandJapan

350

300

250

200

150

100

50

0

# of patent applications

IT - Most Active Area of Outsourcing2004

IT,28%

Human Resources,

16%

Sales & Marketing,

15%

Finance,11%

Admin.,9%

All Others,21%

Top 10 Fastest Growing OccupationsNumbers in Thousands of Jobs, 2002-2012

Occupations Number PercentMedical Assistants 215 59Network Systems and Data Communications Analysts 106 57Physician Assistants 31 49Social and Human Services Assistants 149 49Home Health Aides 279 48Medical Records and Health Information Technicians 69 47Physician Therapist Aides 17 46Computer Software Engineers, Applications 179 46Computer Software Engineers, Systems Software 128 45Physical Therapist Assistants 22 45

Change

Top 10 Fastest Growing IndustriesNumbers in Thousands of Jobs, 2002-2012

Industry Number PercentSoftware Publishers 173.7 67.9Management, Scientific, & Technical Consulting Services 405.6 55.4Community Care Facilities 382.3 55.0Computer Systems Design & Related Systems 635.0 54.6Employment Services 1763.5 54.3Individual and Vocational Rehabilitation Services 597.3 47.1Ambulatory Health Care Services 669.8 46.4Water, Sewage , and Other Systems 22.5 46.4Internet Services, Data Processing, and Other Info. Services 244.3 46.2Child Day Care Services 316.1 43.1

Change

93

9

80514537261917

5 96 8

93 105127

5845

4733

2672 2778

3456

2063

12761014

757472453295145105

4033

6464

Q3 99

Q4 Q1 00

Q2 Q3 Q4 Q1 01

Q2 Q3 Q4 Q1 02

Q2 Q3 Q4 Q103

Q2

CampusesCoursesRegistrations

Online Learning Growth

Fiscal years

32% Compound Growth Rate

China and Education

• Between 1978 and 2002, more than 580,000 Chinese students have studied abroad.

• Of these students, more than 150,000 have returned home. 270,000 of the remaining students are continuing their studies at universities or institutes of higher learning.

• As a whole, the number or returned overseas students accounts for a big percentage of the total number of people working in education and scientific research.

Individuals Granted Asylum in U.S.Top 10 Nationalities, 2002

Nationality 1997 2002PercentChange

China 485 5,713 1078%Colombia 48 4,958 10229%India 871 1,081 24%Ethiopia 451 1,044 131%Haiti 699 989 41%Armenia 248 959 287%Iran 416 716 72%Cameroon 79 708 796%Liberia 478 602 26%Iraq 5,777 560 -90%

Countries With The Most WorkersPeople Aged 15-64 Currently EmployedRank Country Millions

1 China 766.92 India 442.23 United States 145.14 Indonesia 102.65 Brazil 79.26 Russia 78.07 Bangladesh 69.68 Japan 68.49 Pakistan 52.1

10 Nigeria 45.1

Demographic TrendsBy Region

Major Area

Pop.Size, 1999(millions)

Pop.growth

rate,1995-2000 (%)

Life Exp.1995-2000

(years)

1995-2000avg. # of

children per women)

World 5978 1.3 65 2.7More Developed Regions 1185 0.3 75 1.6Less Developed Regions 4793 1.6 63 3.0

Africa 767 2.4 51 5.1Asia 3634 1.4 66 2.6Europe 729 0.0 73 1.4Latin America 511 1.6 69 2.7North America 307 0.8 77 1.9Oceania 30 1.3 74 2.4

Foreign Students in JapanBy Country of Origin, 2003

China, 64.7%

S. Korea, 14.5%

Taiwan, 3.9%

Malaysia, 1.8%Thailand,

1.5%

Other, 12.2%

Indonesia, 1.4%

Pace of Economic GrowthNumber of Years to Double Per Capita GDP

ChinaChina

KoreaIndonesia

JapanU.S.

U.K.

70

60

50

40

30

20

10

0

Years

1885-1919

1970-88

1780-1838

1966-77 1978-87 1987-96

1839-86

Japan – Births & Deaths2000-2030

2025-302020-252015-202010-152005-102000-05

1.7

1.6

1.5

1.4

1.3

1.2

1.1

1.0

Millions

BirthsDeaths

Population Growth- Japan2000-2030

2025-302020-252015-202010-152005-102000-05

0.8

0.6

0.4

0.2

0.0

-0.2

-0.4

-0.6

Growth Rates

U.S.MDCsJapan

50E40E30E20E10E009080701960

100

80

60

40

20

0

Percent of population

15- to 64-year-old

Over 65-year-old

Japan: Growing Older Population,Declining Working Population

Population Growth - Russia2000-2030

Year Population (mil) Growth Rate (%)1960 119.6 1.61970 130.2 0.91980 139.0 0.71990 148.1 0.62000 146.0 -0.12010 142.3 -0.32020 139.0 -0.22030 132.9 -0.3

Life Expectancy

20011980

80

78

76

74

72

70

68

66

64

Age

RussiaGermanyIsrael

Computer ProgrammersAverage Salaries, 2003

Country Salary RangePoland & Hungary $4,800 - $8,000India $5,880 - $11,000Philippines $6,564Malaysia $7,200Russian Federation $5,000 - $7,500China $8,952Canada $28,174Ireland $23,000 - $34,000Israel $15,000 - $38,000USA $60,000 - $80,000

Global Entrepreneurship PatternsNumber of Publicly Listed Companies

20001999199819971996199519941993199219911990

10

8

6

4

2

0

Thousands

United States CanadaIndia Japan

United States vs. EuropeJob Creation

020098969492908886848280

140

130

120

110

100

90

Index 1980=100

United StatesEurope

Education Expenditure Per student(As Percent of GDP per Capita)

MexicoU.K

JapanU.S.

GermanyKorea

AustraliaItaly

FranceSwitzerland

35

30

25

20

15

10

Percent

Primary LevelSecondary Level

Student-Teacher RatioPublic and Private Institutions

ItalyFrance

U.K.Spain

MexicoU.S.

ChinaGermany

JapanCanada

24

22

20

18

16

14

12

10

8

Ratio

Labor Force Participation RatesPopulation Aged 25-64, By Gender

TurkeyMexico

KoreaJapan

AustraliaGermany

FranceCanada

U.S.U.K.

100

80

60

40

20

Percent

malefemale

Number of ImmigrantsBy Country of Origin

20001900

16000

14000

12000

10000

8000

6000

4000

2000

0

Thousands

EuropeAsiaLatin America

U.S. – Economy at a Glance

U.S. - Data Series Oct Nov Dec Jan Feb Mar2003 2003 2003 2004 2004 2004

Unemployment rate, (%, SAAR) 6 5.9 5.7 5.6 5.6 5.7Change in Payroll Employment, (ths., SAAR) 88 83 8 159 46 (P) 308(P)Average Hourly Earnings* 15.4 15.5 15.5 15.5 15.52 (P) 15.54(P)Consumer Price Index** - 0.1 -0.2 0.2 0.5 0.3U.S. Import Price Index*** 0.1 0.5 0.7 1.5 0.4 0.9Employment Cost Index****Productivity*For Production and Nonsupervisory workers on Private Nonfarm Payrolls, SAAR** All Items, U.S. City Average, All Urban Consumers, 1982-84=100, 1-Month Percent Change, SAAR*** All Imports, 1-Month Percent Change, Not SAAR****Compensation, All Civilian Workers, Quarterly Data, Percent Change, SAAR*****Output per Hour, Nonfarm Business, Quarterly Data, Percent Change from previous Quarter at Annual Rate, SAAR(p) Preliminary

0.72.6

China’s Growth Exceeds Its NeighborsReal GDP Growth

20042002200019981996199419921990

15

10

5

0

-5

-10

-15

Percent Change, Year Ago

China IndonesiaKorea MalaysiaPhilippines Thailand

United StatesReal GDP Growth

030201009998979695949392

10

8

6

4

2

0

-2

-4

Percent Change, SAAR

2004 Capital Access Index

4.6

4.8

5

5.2

5.4

5.6

5.8

Hong K

ong

Netherl

ands U.K.

Singa

pore

Switze

rland U.S.

Austra

lia

Finlan

d

German

y

Denmark

New Ze

aland

Irelan

d

Canad

a

Swed

en

Taiw

anSp

ain

Franc

e

Icelan

dJa

pan

Austria

Belgium

Portu

gal

Israe

l

South

KoreaNorw

ay

The Global Education Market

DemographicsHigher Education

MarketOutsourcing

Branding

Cons

olida

tion

InternetGlobalization

Six Megatrends Shaping the Global Higher Education Market

Consumer Confidence IndexConference Board

030201009998979695949392

160

140

120

100

80

60

40

Percent Change, Year Ago

U.S. International TradeExports vs. Imports (Goods and Services)

030201009998979695

30

20

10

0

-10

-20

Percent Change, Year Ago

ExportsImports

200220001998199619941992199019881986

14

12

10

8

6

4

2

0

700

600

500

400

300

200

100

0

US$ Trillions US$ Billions

Global Futures MarketNotional Amounts

Interest Rate (L)

Currency (R)

Equity Index (R)

Global Options MarketNotional Amounts

200220001998199619941992199019881986

25

20

15

10

5

0

150

120

90

60

30

0

US$ Trillions US$ Billions

Interest Rate (L)

Currency (R)

Equity Index (L)

U.S. UnemploymentCivilian Unemployment Rate

009590858075706560

11

10

9

8

7

6

5

4

3

Percent

Rising U.S. Retail Gasoline Prices

04020098969492908886848280

3.0

2.5

2.0

1.5

1.0

0.5

US$/Gallon

Real (2004 dollars)

Nominal

Proj

ectio

ns

200019951990198519801975197019651960

70

60

50

40

30

Percent of GDP

Is the World Threatened by U.S. Budget Deficits?

Relative Unemployment Rates

7.07.17.25.2N/ALatin America

8.07.810.18.9N/AEuropean Union

6.04.05.65.67.2United States

5.34.73.22.12.6Japan

N/A3.12.92.51.8China

20032000199519901985

Relative Growth RatesReal GDP Growth

1.14.01.80.63.16.3Latin America

0.83.62.53.12.51.4European Union

2.63.82.71.83.8-0.2United States

2.02.81.85.24.69.6Japan

7.58.010.53.813.57.9China

200320001995199019851980

200320022001

135

130

125

120

115

110

105

100

Yen Per Dollar

Sep.11, 2001

Bush’s Speech at the UN about Iraq

Congress authorized use of

force in Iraq.

Saddam statue toppled.

Decline of the Dollar 9-11 and Iraq

200320022001

1200

1000

800

600

400

200

Basis Points

Risk Spread, 9-11 and Iraq

Sep.11, 2001

Bush’s Speech at the UN about Iraq

Congress authorized use of

force in Iraq.

Saddam statue toppled.