34 posts categorized "Economy"

November 25, 2014

G20: Insights from the Social Progress Index 2014

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The G20 provides a valuable opportunity for leaders to discuss a wide range of global economic issues and to use their collective power to make a difference. The G20’s immediate task is breaking the cycle of low growth, including diminished business and consumer confidence.

A common observation we have is that governments are at, or close to, the limits of macroeconomic policy responses. We observe now there exists a challenge for governments they need to think beyond the usual macroeconomic levers to support social progress. I believe growth on its own without social progress is an empty goal.

In the past we have seen that traditional approaches to solving society’s most complex and challenging social problems have are not been sustainable. These complex problems take time to come to fruition, therefore we need to apply fresh thinking and to act with a sense of urgency.

There is a growing recognition of the need to measure progress over and above GDP to understand the sustained impact of any growth strategies. A more holistic framework of progress measures is needed. Deloitte is working with the Social Progress Imperative, a non–profit which is driving the global debate on measuring what matters most to advance progress through their Social Progress Index (SPI). Designed to complement GDP, and other economic indicators, this new index measures a country’s social and environmental strengths and weaknesses to help prioritise investment decisions.

By examining the SPI indicators and comparing G20 countries we demonstrate the ways in which the SPI can be used to unlock opportunities for true growth in Australia and examples of how these opportunities could be solved through the solution economy. Of the 40 G20 countries the Netherlands, Sweden and Canada ranked the highest in terms of social progress, among G20 countries Australia ranked 6th on the SPI.

Australia’s key social challenges identified through the SPI, when compared to other G20 countries including:

  • Affordable housing: in Australia housing affordability has continued to decline. 862,000 lower income households were experiencing housing stress, comprising 15.8 per cent of all Australian households and 28.2 per cent of low income households in 2002–035. In addition 105,237 people in Australia were homelessness in 2011.
  • Adult literacy: even though Australia does well on the high level measure, there are problematic trends below the surface. In 2011–12 around 3.7% (620,000) of Australians aged 15 to 74 years had literacy skills estimated at below Level 1, with a further 10% (1.7 million) at Level 1 and 30% (5.0 million) at Level 2 (noting that the assessment scale ranges between below Level 1 – the lowest rating – and Level 5).
  • Obesity: the growing trend in overweight and obesity is reflected in Australia. Between 2007–08 and 2011–12, the rate of adult overweight and obesity significantly increased nationally to nearly two thirds (from 61.1% to 63.2%). Children are also affected with a quarter (25.3%) of children (aged 5–17 years) being overweight or obese in 2011–12, (17.7% overweight and 7.6% obese).

I am excited to deliver some  good news: governments, non-government organisations, individual investors and the private sector have been moving towards the solution economy. This will provide new ideas and solutions to social problems, improved communication and collaboration to break down historical silos and unlock true growth. There is a real opportunity to bring new approaches and perspectives to solving society’s most complex challenges, to take an outcomes based focus and collaborate to deliver improved outcomes. If we are to realise the benefit of solving these issues we need to act swiftly and united.


Au-andrew-johnstone-burt-1x1Andrew Johnstone-Burt is the national leader of Deloitte Australia's public sector group. He has a range of specialist skills across policy reform and fiscal sustainability in the public sector in Australia, United Kingdom, and Europe. Along with 10 years’ military service, Andrew has more than 20 years’ advisory experience in strategy, people, change and ICT. He is regarded as a trusted adviser for a number of Australian federal and state government departments.

November 11, 2014

India’s rebound: will the world be patient?

India report_image7At the World Economic Forum’s India Economic Summit this past week, the new Modi government was under particular scrutiny. But as the event concluded, it was clear that most participants were bullish about India given the actions that the government is proposing—with a note of caution, though. With the government now six months in, reforms seem to be slow in coming—and that could be a problem.

The thing is, there’s a lot to be done in order to meet the potential the world is seeing in India right now. A major challenge is the employability of the Indian working population. With one million workers set to enter the job market every month as India’s under-25 population comes of working age,  creating jobs is paramount. But India, like much of the world, is experiencing a talent paradox: 60 percent of India’s total population is available for work, but only 25 percent is capable of being used by the market. How to address this issue was the topic of a session I moderated last week at the summit. Of the many solutions put forward, several proposals the Modi government is seeking to implement were discussed and applauded.

But employability is just a start—to create jobs India must improve its competitiveness overall. With the right policies in place, employability and skills can straightforwardly be improved. But items like infrastructure are long-term investments and are critical to moving raw materials and resources as well as bringing in the FDI needed to boost manufacturing. According to Deloitte Global’s report, Competitiveness: Catching the next wave in India, clearing up bottle-necks in construction projects—some of which the Modi government has already taken action on—will be critical to improving growth.

Creating a pro-business environment will also play a role. India dropped in the World Bank’s latest Doing Business Index, released two weeks’ ago, slipping to 142—the lowest among the BRICS.  While this is a lagging indicator and will most likely improve next year, regulation, taxes, and labor laws all need reforming if “doing business” in India is to improve. The most competitive countries in the world, according to the 2014 WEF Competiveness Index—Singapore, Switzerland, and the United States—all rank in the top 20 on the World Bank index. With that in mind, Modi has vowed to move India into the top 50 of the index.

With promises like this, Modi is clearly putting the world on notice that India is getting ready to take its place as a leading economy. And if the WEF summit last week is any indication, the world is eager to be a part of that journey. But as one speaker at the event’s closing plenary commented, there won’t be a big bang in India; rather reform will come in increments. The question is, will the world wait?


Dttl_garycoleman_56x56Gary Coleman is Managing Director, Global Industries, of Deloitte Touche Tohmatsu Limited. He is a member of Deloitte’s Global Markets Committee and is the lead partner in Deloitte’s strategic relationship with the World Economic Forum. Follow him on Twitter @gcoleman_gary.

June 24, 2014

Innovation in defense: Convergence and catching up

Env_glb_ho_1333_hiNations invest in defense technologies to protect their citizens and also to drive economic growth and prosperity. In Deloitte’s latest Global Defense Outlook, we found that 50 nations spend more than $1.7 trillion every year on defense, and national leaders expect to gain strategic benefits from their investments.

Gaining military advantages from innovation in defense technology is getting harder and more expensive. Changing global economic realities are leading toward catch-up and convergence, reducing the relative advantages of investment in high-tech defense systems. These trends are becoming more evident worldwide.

Catch-up is driven by macroeconomic realities. Higher-income nations among the Top 50 defense spenders (the United States and most of the Eurozone) have led defense innovation for more than 70 years and are responsible for most of today’s advanced weapons, including stealth, unmanned systems, precision strike, naval aviation, and cyber-related systems. These nations reduced defense investment by about 8 percent between 2008 and 2013, confronted by high debt, slow economic growth, and competing demands for deficit reduction and social services.

The lower-income nations among the Top 50 (China, Russia, India, Brazil, Saudi Arabia, Iran, Pakistan, and others) have traditionally spent less and followed the technology lead of the high-income nations. Because these nations are growing faster than the higher-income nations and hold lower levels of debt, they are increasing defense spending. Russia is undertaking the most expensive buildup of its defense since the breakup of the Soviet Union, increasing defense spending by 16 percent between 2013 and 2016. China’s defense spending has doubled over the past 10 years and will increase by 12 percent in 2014.

Convergence is happening because it is cheaper to copy than to create. Innovation can provide competitive advantages in warfare just as in commercial markets, but innovators face high costs and risks. In the United States, defense innovation is concentrated in 80 major defense acquisition programs (MDAPs), including the F35, expendable launch vehicle, and other high-technology systems. These systems are loaded with cost and risk. In fact, the U.S. General Accounting Office reported that the MDAPs have overrun budget estimates by $448B and are an average of 28 months behind schedule – solid evidence that gaining a technology edge in defense is a risky and expensive undertaking.

Copying defense technology is much cheaper. For example, the Chinese Navy boosted its power projection capability by purchasing a used Russian aircraft carrier for $20M and towed it home. This low-cost investment establishes carrier-based aviation in China, an early step toward what Chinese officials call “the century of the sea.”

Lower-income nations are catching up in defense spending as they exploit economic growth and favorable debt positions. The result over the decades ahead is likely to be technological convergence, with advanced defense technologies increasingly available to state and nonstate actors. To learn more, read the Deloitte Global Defense Outlook 2014: Adapt, collaborate, and invest. Please share your thoughts or questions by commenting below!


JackJack Midgley is a director in Deloitte’s strategy practice, advising leaders in the defense and intelligence communities. He leads development of Deloitte’s annual Global Defense Outlook. Follow him on Twitter @jackmidgley.

June 12, 2014

East Asia: What engines of growth need

WEF EA post blogIn his opening address at the World Economic Forum on East Asia, Vietnamese Prime Minster Nguyen Tan Dung said that efforts to boost the region’s engines of growth are needed to help reinvigorate slowing growth rates. And according to a number of other leaders at the event, there are a variety of ways to achieve this.

Chief among these is the growth-enhancing potential of ASEAN’s full economic integration in 2015. The ability to function as one industrial and production base was seen by leaders as critical to the region’s competitive advantage—putting it possibly on par with the regional power of the European Union. ASEAN’s ability to participate and negotiate as one region in a range of free-trade agreements—including the Trans Pacific Partnership and the bilateral ASEAN Plus One agreements—also provides considerable opportunity to attract foreign investment to its markets. With the burgeoning middle class of a country like Indonesia—where consumers are now more and more in a position to buy cars and electronics—the draw is strong.

Leaders at WEF East Asia also pointed to the importance of regulatory reform as a means to spur growth and competitiveness.  To this end, a minister from Cambodia touted his country’s receptivity to investment, noting that “every sector is open to FDI” and that there are no “alien investor” laws in his country. One Malaysian government official emphasized that his government is “pushing hard” for reforms to improve competitiveness. Already, ASEAN countries have made significant progress on lowering barriers in the trade in goods across the region—with tariffs on more than 99 percent of goods expected to be at zero by 2015. ASEAN is now working on liberalizing regulations pertaining to services to ease access across borders in such sectors as banking.

The focus on services and the difficulty of moving to this next stage, however, points to a continuing stumbling block in ASEAN’s ability to function as one region—the lack of connectivity. Not only do services like finance need a strong ICT network to facilitate transactions and connectivity among countries, businesses in both services and the manufacture of goods alike need well-developed physical transport to ease movement in this geographically dispersed area. The ASEAN Open Skies initiative, which will allow all airlines within ASEAN to compete on intra-ASEAN routes, is one initiative that aims to promote better connectivity among ASEAN nations and there is hope it will be implemented in 2015. But rail, roads, seaports, airports and broadband are all areas in need of investment. On the bright side, the scale of the transport infrastructure requirements—as a minister for transportation from Singapore noted—can represent a substantial opportunity for international financing institutions as well as for public-private partnerships.  

All of these efforts can accelerate the engines of growth and help rev up East Asian economies. But will they bring high-quality growth—that is, the kind that encourages innovation and stimulates quality job formation? There are indications that this may be the case. President Aquino in his opening address noted that the Philippines’ rates of employment for graduates in IT, business processing operations, and electronics exceed 70 percent, with some sectors exceeding 90 percent. And the greater competition that ASEAN economic integration brings is expected to spur businesses to become more innovative and compete more keenly for talent, according to the minister from Cambodia mentioned above.

However, there is one thing that all of these efforts to drive engines of growth need—and that’s stability. The prime minister from Vietnam made this clear in his remarks: “Development is not possible without peace and stability.” He pointed out that any disruption in the region’s shipping lanes—a distinct possibility given recent tensions with China—could mean major disruptions to East Asia’s economy and the world’s. So even if East Asia gets the engines of growth to again fire on all cylinders, the geo-political environment may turn out to be the most critical—and most challenging—factor holding the region back.


Dttl_garycoleman_56x56Gary Coleman is Managing Director, Global Industries, of Deloitte Touche Tohmatsu Limited. He is a member of Deloitte’s Global Markets Committee and is the lead partner in Deloitte’s strategic relationship with the World Economic Forum. Follow him on Twitter @gcoleman_gary.

May 21, 2014

The Philippines: the next GVC success story?

Manila, Philippines blog jpegAccording to the United Nations, economies with the fastest growing global value chain (GVC) participation “have GDP per capita growth rates some 2 percentage points above the average.”1 Much of the remarkable growth in Asia is attributable to this ability to participate in GVCs. The Philippines, where the World Economic Forum on East Asia is opening today, may very well be the next example of this success.

With a 7.2 percent growth rate in GDP in 20132, the Philippines possesses many of the traits needed to move up the global value chain. Not only does it have a stable macro-economic environment, but the country also has a emerging services sector, particularly in business process outsourcing (BPO)—services like call centers and IT that are often outsourced from developed economies. The BPO market in the Philippines now accounts for 9.5 percent of the worldwide market, with metro Manila the second-largest global outsourcing destination.3 And more than 50 percent of the Philippines’ overall GDP value-add is contributed by services.4

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May 15, 2014

Nigeria’s new numbers

Nigerian flagRecently, the Nigerian government announced new GDP numbers that now make it the largest economy in Africa. Having overhauled economic data for the first time in two decades, the GDP figure rose by 89 percent from 2003 to 2010. It’s a number that caught the attention of the world and was much discussed at the World Economic Forum (WEF) on Africa, held last week in Nigeria’s capital city of Abuja.

But is GDP really the best measure of success? If you listened to the debate at WEF, the answer is, probably not. Because when you look behind a remarkable number like that, you can see there are many factors not addressed by this figure—factors that provide clues as to how the economy is really unfolding and how it is impacting quality of life.

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April 29, 2014

Cautiously optimistic: Innovation and Chinese FDI

Aisa Society Image for blogA few months ago, after Summer Davos, I wrote and spoke about China’s new commitment to innovation. Chinese Premier Li Keqiang in his opening address had talked of holding the banner of innovation high and the reforms his government were proposing to achieve that goal. I stated at the time that I was cautiously optimistic about the potential these reforms held.

Just recently, I again had the chance to discuss China and innovation, this time on a panel hosted by the Asia Society in New York City. With the session focused on China’s growing investment in U.S. high-tech companies, inevitably the question of innovation came up—and if these Chinese companies were looking to U.S. acquisitions to help build a culture of innovation at home. Innovation remains a challenge in China, with issues from lax enforcement of intellectual property laws to the difficulty of starting a business contributing factors. Moreover, questions have been raised about whether China’s educational system encourages the kind of creative thinking that generates innovation.

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March 31, 2014

WEF on Latin America: Getting there from here

Panama.According to the competitiveness index produced by the World Economic Forum (WEF), “innovation-driven economies” is the third and highest stage of development. Many Latin American countries are now poised to make the transition to this stage. Most of the remaining countries are only a step or two behind. 

But how does an economy become innovative-driven? One way is by promoting innovation-driven entrepreneurship. That’s the focus of a panel I will be participating in this week at WEF on Latin America in Panama City. Entitled “Innovating for Competitiveness,” the session will explore what steps the region can take to promote not just entrepreneurship but the innovative new businesses that propel an economy into that sought-after “stage three.”

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January 28, 2014

Davos 2014: Optimism with a healthy dose of reality

Post-davos photoWith economic recovery seeming to finally take hold this year, I was not surprised that many of the Davos 2014 speakers sounded a positive note for the future. Nowhere was this more evident than in the remarks from country leaders. But these leaders understood that there is still a lot of work to be done—and it was striking how in sync they were when it came to the challenge going forward: building and sustaining growth.

South Korea is focusing on entrepreneurship and building a “creative economy,” where individuals are encouraged to start businesses and put “innovation into action,” according to President Park Geun-hye. Similarly, Liberia is making strategic investments in education and focusing on public-private partnerships to spur the rise of small and medium businesses. Mexico is working to promote start-ups by reforming fiscal policies to allow greater access to credit.

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January 27, 2014

Shaping the future together

Deloitte Davos Live video screen_300x200Times of global change require leaders with a global vision – leaders who inspire confidence and foster innovation. I see this attitude reflected in Davos. I have noticed a remarkable shift of attention at this year’s World Economic Forum. While the meetings in past years focused heavily on finance and the banking industry, representatives of the global technology industry are clearly the thought leaders now.

At the same time, politics seems to have been pushed into the background somewhat – especially, European representatives are less visible this year. But Europe’s image has not yet fully recovered after the Euro crisis and the world is closely watching how European banks will perform in the stress tests.

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