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Is the Global Centre of Gravity Shifting to Asia?
NASSCOM
8 October 2013
Dr. Parag KhannaSenior Fellow, New America Foundation
Senior Fellow, Singapore Institute of International AffairsAdjunct Professor, Lee Kuan Yew School of Public Policy, National University of
Singapore
The World of the 1990s
European Union
Japan
India
China
North America
South America
EuropeanUnion
Africa
Asia Middle East
Today’s Global Marketplace
Structural Economic Convergence Accelerates
Where is the Center of the World?
Asian Growth Stacks Up
China India Japan Australia ASEAN0
1000
2000
3000
4000
5000
6000
7000
8000
2011 (USD Billions)
Total = 19 trillion USD
Global Brain Flow: Expats and Repats
Old and New Production Centers
"Historical" market, which is losing dominance (19th and 20th century)
Market growth and new establishment (21th century)
Great growth market (end of the 20th century / beginning of 21th century)
Relocation
Second Phase Relocation
Sources: BrightHub, Scientific American, Lux Research, World
Resources Institute
Leading Sectors and the Spread of Innovation
The “New” New Thing
Country Traditional Industries New Industries
Philippines Agriculture, shipbuilding Electronics, logistics, BPO
Bangladesh Garment manufacturing Pharma, agro processing, ICT
China Industry, agriculture Clean-tech, advance manufacturing, automotive, telecom
India Food processing, industrial machinery, agriculture
BPO/KPO, animation, pharmaceuticals, retail
Singapore Shipping, logistics, refineries Bio-tech, advanced materials remanufacturing, water treatment, alternative energy
USA EU China Japan South Korea Israel India
Scientific Papers Published
2,967,957 3,712,570 719,971 770,252 254,599 108,706 266,230
Patents Filed
490,226 125,774 391,177 344,598 170,101 7,306 34,287
New Products/ Market penetration
IBM
Microsoft
Motorola
Intel
HP
Xerox
Qualcomm
Nokia
Siemens
SAP
Robert Bosch
Ericsson
Philips
Huawei
Lenovo
ZTE
Shenzhen Futaihong Precision
Innocom Technology
Canon
Toshiba
Sony
Panasonic
Honda
Sharp
Samsung
LG
Hyundai
Dongbu
Dexcel Pharma
Teva Pharma
dbMotion
Gamida Cell Ltd
Infosys
TCS
Cipla
Tata Motors
From “Brain Drain” to “Global Brain Flow”
Recovering – and Rising – FDI Outflow
Top 20 Asian MNCs
Rank Company Global 500 Rank Country Revenues ($ millions)
1 Sinopec Group 5 China 375,2142 China National Petroleum 6 China 352,3383 State Grid 7 China 259,1424 Toyota Motor 10 Japan 235,3645 Japan Post Holdings 13 Japan 211,0196 Samsung Electronics 20 South Korea 148,9447 Nippon Telegraph & Telephone 29 Japan 133,0778 Hitachi 38 Japan 122,4199 JX Holdings 41 Japan 119,25810 Nissan Motor 42 Japan 119,16611 Hon Hai Precision Industry 43 Taiwan 117,51412 Industrial & Commercial Bank of China 54 China 109,04013 Honda Motor 64 Japan 100,66314 SK Holdings 65 South Korea 100,39415 Panasonic 66 Japan 99,37316 Petronas 68 Malaysia 97,35517 Nippon Life Insurance 74 Japan 90,78218 China Construction Bank 77 China 89,64819 China Mobile Communications 81 China 87,54420 Indian Oil 83 India 86,016
Huge increases in Chinese Overseas FDI
Asia’s New Iron “Silk Roads”
No. Country YearInvestment (% of GDP)
1 China 2010 47.742%
2 Indonesia 2010 32.574%
3 Japan 2010 19.774%
3 Malaysia 2010 21.416%
4 Korea 2010 29.572%
5 United States 2010 15.836%
Investment/GDP Ratios Higher in Asia
German
y UKFra
nce USA
Canad
a
Mexico
Brazil
Russia
IndiaChina
Vietnam
Malaysi
a
Australi
aJap
an
Saudi A
rabia
South Afri
ca
Nigeria
Egyp
t
Rwanda
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
GDP Growth Rate (2010) % of GDP spent on infrastructure
Infrastructure Investment Delivers Higher Growth
Infrastructure & Jobs on top of the Global Agenda
ASEAN’s Growth DriversUrbanization Demograhics Connectivity Investment
• 2-3% per annum urbanization rate
• Mega-cities and commercial centers
• Average age: 27
• High female participation in education and workforce
• Over 20 regional airlines
• High-speed rail network
• Infrastructure spending rates rising to approx. 8%
• ASEAN Infrastructure Fund
Japan Looks to ASEAN
Convergence of Policy Priorities
• Capital controls; currency devaluation• Long-term infrastructure investment• Industrial policy/national champions• Net benefit laws• Counter-cyclical fiscal policy (“stimulus”)• Reducing Gini co-efficient/inequality• Enhancing productivity/return on capital
Diplomacy without Unity
Can Asia Stay Stable?
China’s “String of Pearls”
This should have been answered by now
India Needs Better Navigation
Look West
Look East
India: States versus the State
The Future of Globalization (I)? The Maersk Triple-E
The Future of Globalization (II)? The 3D Printer
Competition Redefines Regions