india & europe win-win game 1 india & europe how to create a win-win game in it ? iit delhi...

India & Europe Win-Win Game

1

India & EuropeHow to create a Win-Win

game in IT ?

IIT Delhi - 24 November 2008

Dr. Jean-Joseph BOILLOTEconomist India-China

Cofounder Euro-India Economic & Business [email protected]


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Challenges ahead

Economic catch up: magnitude and lag

Population challenge: the Window of Opportunity

Global challenges: see climate change

The Services Revolution

Challenges for Europe

Challenges for India


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India and Europe 2025: still distantProjection 2025 en Mds USD (current US $ and current relative prices base 2000)

PIB China US India India* France Germany Japan Brazil Monde2005 2 300 11 100 671 671 1 400 1 840 5 190 615 36 2942025 8 287 19 287 1 890 2 772 1 833 2 692 7 113 605 60 902

PIB/hab2005 1 748 37 222 608 608 22 951 22 169 40 563 3 366 5 6142025 5 749 55 091 1 354 1 986 29 097 33 647 58 486 2 644 7 704

Population Mios2005 1 316 298 1 103 1 103 61 83 128 187 6 4652025 1 441 350 1 395 1 395 63 80 122 229 7 905

PIB % Monde2005 6,3% 30,6% 1,8% 1,8% 3,9% 5,1% 14,3% 1,7% 100%2025 13,6% 31,7% 3,1% 4,6% 3,0% 4,4% 11,7% 1,0% 100%

PIB/hab USA=1002005 5% 100% 2% 2% 62% 60% 109% 9% 15%2025 10% 100% 2% 4% 53% 61% 106% 5% 14%

Pop % Monde2005 20% 5% 17% 17% 1% 1% 2% 3% 100%2025 18% 4% 18% 18% 1% 1% 2% 3% 100%

Croiss. val/an 6,6 2,8 5,3 7,4 1,4 1,9 1,6 -0,1* Scˇnario croissance en volume Goldman Sachs et valorisation CEPII


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… even more per capita

0

10

20

30

40

50

60

70

80

90

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

in 000

USA

Japan

EUR4

China

India

source: Goldman Sachs oct 2003

GDP per Capita in USD at current exchange rate USD


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How long the Demographic Window of opportunity?

CHINA: annual rate of growth total and active population

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

1950-55 1960-65 1970-75 1980-85 1990-95 2000-05 2010-15 2020-25 2030-35 2040-45

Total Pop

old 15-59

: INDIA: annual rate of growth total

and active population

1950-55 1960-65 1970-75 1980-85 1990-95 2000-05 2010-15 2020-25 2030-35 2040-45

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0Total Pop

old15-59


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The World Population 1950-2050 (billion)

0

1

1

2

2

319

50

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

Millions

Europe Eur Ouest USA China Afrique India


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Same in percentage, Different picture!

0%

5%

10%

15%

20%

25%19

50

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

Europe Eur Ouest USA China India Afrique


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Even more with the 15-24 years old group

0

50

100

150

200

250

300

350

40019

50

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

USA Europe India China Afrique


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The Earthquake on the global labor Market 5 years incremental variation of the age group 15-59 % total world

-50

-30

-10

10

30

50

70

90

110

1950-5

5

1955-6

0

1960-6

5

1965-7

0

1970-7

5

1975-8

0

1980-8

5

1985-9

0

1990-9

5

1995-0

0

2000-0

5

2005-1

0

2010-1

5

2015-2

0

2020-2

5

2025-3

0

2030-3

5

2035-4

0

2040-4

5

2045-5

0

India China Europe USA Eur Ouest Afrique


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CO2: a good exemple of the sustainable challenge


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II-The Services Revolution and the standart Economic Theory


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The Services Revolution and the standart Economic Theory


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The Services Revolution and the New Economic Theory of imperfect competition and localisation

1/ The ITC revolution allows an increasing number of services to be produced at TIME and PLACE different from the place of consumption. 2/ The production any services can be henceforth distributed internationally according to the comparative advantages of territories and of the competitive strategies of firms.

3/ The economics of services gets more and more closer to the standart « industrialisation model » and « imperfect competition » : high specialisation, return to scale, cluster and size benefits etc…


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Outsourcing: just a begining!


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Global Gains, yes, but what distribution?Country advantage(45-55% savings)

Vendor advantage(30-40% savings)

OriginalCostbase

FactorCostSavings

AdditionalTelecom& manage-ment costs

Off-shoreLocationcost

Consoli-ation,Standar-Dization& superiorskills

TaskReengineering

Econo-mies ofscale

ProcessReengine-ering

New costbase

Task migration Task levelimprovement

100 60-65

10-15 8-135-7

3-5

Does notInclude gains fromOver-delivery and

continuousimprovement


16And Europe swandich between the USA and India

GrowingEmbryonic MatureEnd of cycle

Timing

Low(High)

Contract manufacturi

ng

IT Offshoring

AccountingHR

Call centers

Banking BPO

High(Low)

Maturity(Value Add)

R&D/Innovation

KnowledgeProcesses

How to reopen the pathway to India with a mixed strategy


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III- Dual challenge Europe and India

a/ for Europe The Brain Drain between Knowledge Based Economies: the EU Human Capital Outflows to the US (Ahmed Tritah survey, CEPII 2008) 1/ EU brain drain to US is about a small number of individuals, but the share of Europeans who are leaving is increasing as one moves along the educational distribution and ladder of occupations that matter the most in the knowledge economy.

2/ Using productivity based brain drain indices it is found that aggregate human capital conveyed by emigrants has increased since the 1990s.

3/ Finally, as a proxy for the of human capital embodied in EU emigrants, Europeans earn a positive wage premium relative to the US natives and even higher for the most recent expatriates cohorts, providing further evidence that the quality of European emigrants has increased.


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a/ for Europe (2)


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b/ for INDIA


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Understanding better the EU New Economic Geography in our Globalized World

india & europe win-win game 1 india & europe how to create a win-win game in it ? iit delhi...

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