Andrew Scott at the Asia Pacific Summit 2011


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Last week the Asia Pacific Summit 2011 took place in London, presented by the London Business School and sponsored by leading telecommunications company Telstra International. The Summit brought together a wide scope of experience and perspective – from the academics of the London Business School to the heads of some of the world’s leading businesses.

The two day event incorporated lectures, speeches, case study presentations, panel sessions and interactive workshops all aimed at examining the many potential challenges and pitfalls of doing business in Asia Pacific, as well as key strategies to overcome them.

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Andrew Scott at the Asia Pacific Summit 2011

  1. 1. <ul><li>BACK TO THE FUTURE – ASIA RISING </li></ul><ul><li>Professor Andrew Scott London Business School </li></ul>
  2. 2. Sheer size that makes these countries so important Population (000’s) BANGLADESH 142968 BRAZIL 180641 CHINA (excluding TAIWAN) 1307802 EGYPT, ARAB REP. 69907 ETHIOPIA 71256 FRANCE 60090 GERMANY 82491 INDIA 1094583 INDONESIA 220558 IRAN, ISLAMIC REP. 67468 ITALY 57471 JAPAN 127169 MEXICO 105332 NIGERIA 141115 PAKISTAN 155772 PHILIPPINES 84392 RUSSIAN FEDERATION 142322 SOUTH AFRICA 45192 THAILAND 62732 TURKEY 72636 UNITED KINGDOM 59315 UNITED STATES 294931 VIETNAM 82966 WORLD 6418637
  3. 3. What are BRICS? <ul><li>Don’t think of them as particular countries </li></ul><ul><li>Rather a set of countries with particular characteristics: </li></ul><ul><ul><li>large population </li></ul></ul><ul><ul><li>low-middle income </li></ul></ul><ul><ul><li>policies and institutions that suggest beginnings of process of catch up with rich countries and associated rapid growth </li></ul></ul><ul><li>Rapid growth usually achieved through a combination of high investment, export orientated policies produce rapid economic growth </li></ul>
  4. 4. <ul><li>Main theory of economic growth based around convergence </li></ul><ul><li>A countries potential determined by its steady state – its economic potential </li></ul><ul><li>Steady state determined by economic fundamentals and policy </li></ul><ul><li>The further you are from your steady state the faster you grow </li></ul><ul><li>At the steady state growth relies on technological progress and innovation. Away from steady state growth driven by capital accumulation </li></ul>
  5. 5. Steady State Determinants Always significant Frequently significant Often significant Sometimes significant Education – Primary school Enrolment Regional dummies (Latin America, Sub Saharan Africa) Negative) Exchange Rate Overvaluation (Negative) Government Consumption (Negative) Investment Rule of Law Black market premiums (Negative) Financial Sophistication Health – Life Expectancy Political Rights Primary Products (% exports – Negative) Inflation (Negative) Religious dummies (confucian, Muslim, Protestant) Ethnic Diversity (Negative) Openness Civil Liberties Degree of Capitalism Revolutions, Coups, Wars (Negative) Religious dummies (Buddhism, Catholic) Public Investment
  6. 6. World has seen emerging markets grow fast before
  7. 7. US and Japanese GDP per Capita 1950-2001 Convergence slows as countries catch up
  8. 8. Expect the same from China and India
  9. 9. The World to Come World view dominated by US and Europe
  10. 10. The World to Come Dominance of US and Europe a “recent” phenomenon
  11. 11. The World to Come Dramatic shift in recent times of world economy eastwards
  12. 13. Although economies large due to population size getting rich takes much longer. US likely to maintain “soft power” for long long time
  13. 14. If get full convergence so GDP per capita same around the world this is our world view
  14. 15. Page Fundamentals shift
  15. 16. Rise of the Rest <ul><li>Three stages in the rise of the Rest </li></ul><ul><li>Emerging markets a cheap place to produce </li></ul><ul><li>Emerging markets large population size and growing fast – a good source of demand </li></ul><ul><li>More importantly emerging market trade growing three times faster than world trade, emerging market firms understand emerging market customers better and are likely to go on acquisition spree to help them to their next stage focused on brand and technology </li></ul>Page
  16. 17. Its all about GDP
  17. 19. The Next 11 Page
  18. 20. Page
  19. 21. Page
  20. 22. IMF Forecasts Page
  21. 23. Page
  22. 24. Impact of Crisis – Three Factors (Convergence, Credit, Trade) Page
  23. 25. Page Fears of an emerging market crisis…..