53 posts categorized "World Economic Forum"

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.

September 24, 2014

Public Policy: innovation’s underrated enabler

AMNC POST-EVENT BLOGAt the World Economic Forum’s Annual Meeting of the New Champions (AMNC) this year, Tianjin Mayor Huang Xingguo (pictured) discussed some key drivers of innovation—ideas, entrepreneurship, convergence. But he also brought forward what might be considered an underrated contributor: public policy.

Public policy—if not business-friendly and irresponsibly administered—can stifle an economy. But, if well-crafted and executed, public policy can just as easily enable a culture of innovation. It may be the unglamorous side of innovation—but a side that is critical all same and proving to be especially impactful in China.

Take entrepreneurship. For innovative ideas to be nurtured, entrepreneurs need to have a level playing field on which to launch their businesses and compete against large, established entities. That is, public policy must allow equal access to credit, fair competition, transparency of information for all, and the capacity to set up a business without excessive bureaucracy. But in China, entrepreneurs still face steep hurdles in this regard. State-owned enterprises have easier access to funding and continue to skew the competitive landscape1. In addition, setting up a business remains challenging: China ranks 158 on the World Bank’s 2014 Ease of Doing Business indicator on starting a business. In response to this, China has been streamlining business registration processes and, according to Premier Li Keqiang’s remarks at the AMNC, this has led to more than 8 million new businesses in 2014 so far.

Convergence is also an area in which China is seeking to improve. Collaboration among institutions of higher learning, private industry, and a free flow of information are key to encouraging innovation—as clusters such as Silicon Valley demonstrate. China has made concerted efforts to build clusters and special economic zones that promote the convergence innovation needs to grow. One of the first of these, the Shenzhen technology cluster—which includes companies like Huawei and Lenovo, a range of universities, and is located next door to Hong Kong—is now rivaling Silicon Valley in terms of international patents2.

To keep this momentum going, however, public policy must promote local and foreign direct investment in growth sectors of the future, such as advanced manufacturing, e-commerce, IT sciences, mobile technology, and life sciences. Part of this will involve China continuing its significant emphasis on promoting research and development: the Chinese government has steadily increased its targets for science and technology in its five-year plans (FYP), going from a target of 1.5 percent of GDP in its 10th FYP to 2.2 percent in its latest FYP (12th)3.  But part of it will also involve stronger IP enforcement. Even Premier Li acknowledged that IP protection is critical to “stimulate the enthusiasm for innovation.”   Listening to both Premier Li and Mayor Huang at the AMNC, it is clear that the Chinese government sees the value in business-friendly policy that enables innovation. If successful, China’s public policy may very well become an important conduit and, in the words of Premier Li, “the blood of innovation will flow unhampered.” 

 

1 Foreign Affairs, 16 December 2013; 2 The Age, 30 December 2013; 3 Manufacturing Competitiveness Study, Deloitte China


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.

September 08, 2014

Talent: the next high-tech innovation

PRE-AMNC BLOGThe theme of the World Economic Forum’s Annual Meeting of the New Champions 2014 (AMNC), “Creating value through innovation,” brings to mind some of the amazing advances in technology that has allowed companies to minimize bureaucracy, tap new markets, and extend their supply chains the world over. But how has innovation had an impact on one of their most valuable resources—talent?

It may not be entirely clear that innovation has a role to play when recruiting and retaining employees. And no wonder: many companies are still struggling with just how advances in technology can be used to innovate in the talent space. More than 40 percent of executives surveyed in Deloitte’s 2014 Global Human Capital Trends report said their companies were “not ready” to address talent as it relates to technology. But with aging populations, an increasing demand for a more select set of skills, and knowledge growing out of date at an alarming rate, the pressure to use technology to innovate is more critical than ever.

Digital technology can play a powerful role in both attracting and keeping employees. The most significant impact, of course, has been through the rise of social media. In 2013, more than 67 percent of internet users around the world used a social network at least once per month. The figure will rise to more than three out of four internet users by 2016.  And worldwide, more than one-third of workers use social media for career and employment decisions. That jumps to 51 percent in the Asia Pacific region. 

This trend is particularly prominent among millennials. For this demographic, living with digital technology is not a new reality—it’s the only reality. In almost every country, people under age 30 (and those with a college education) are more likely to engage in social networking and use a smart phone, according to a Pew Research poll.  This access and connectedness has shaped millennials’ views of work. Nearly three-quarters, according to Deloitte’s millennial survey, see themselves working independently, rather than for a company. Forty-five percent will choose workplace flexibility over pay.

Companies need to adjust their recruiting and work models accordingly. Many are already using social media extensively—more than 60 percent of HR executives say they rely on social tools for sourcing and advertising positions . But social media can do much more. With blogs, targeted ads, stories, and word-of-mouth, social media can raise a company’s profile, building appeal before ever even advertising a position.

Keeping employees also requires an innovative approach; 60 percent of millennials will leave their companies in less than three years.  Open talent networks, in which companies tap the right talent as needed, allows workers the flexibility they are seeking. Open talent networks encourage work to be designed on a project basis—a model that appeals to many millennials. Work can also be broken down into discretionary parts that can be farmed out over the network—freeing up the time of employees for more productive and challenging work.

To be sure, digital technology is still making its mark when it comes to talent. But with so many of the AMNC’s participants comprising the employers and employees of the future, the value to be created by innovating in this space couldn’t be more relevant.


Dttl_garycoleman_56x56Gary Coleman is Managing Director, Global Industries, of Deloitte Touche Tohmatsu Limited. He will be moderating the panel “Got Talent” on 11 September at the World Economic Forum’s Annual Meeting of the New Champions 2014.

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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April 09, 2014

Talent: the first step to innovation?

Post WEF LATAMBuilding innovation is one of those hot topics that yield all sorts of discussion about disruptive technology—the cloud, 3-D printing, social media, digital infrastructure, et cetera. But what spurs innovation may come down to something much more basic: talent. And at the World Economic Forum on Latin America  (WEF LATAM) last week, it was clear that participants from this region agree.

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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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February 11, 2014

Impact investing: An investment approach starting to interest mainstream investors

This article was co-written with Erik Classon

Blog_tree_money_300x200Since the term, ‘impact investing,’ was first coined in 2009 by the Monitor Group ("Investing for Social & Environmental Impact: A design for catalyzing an emerging industry"), a great deal of interest has grown around this concept. Initially the dialogue around impact investing was concentrated among a niche set of players identifying themselves as impact investors (e.g., social entrepreneurs, foundations seeking to expand beyond grant-making, focused impact investing funds and public sector/supranational organizations). 

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