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Competing Globally — Challenges and Opportunities 30th Annual Management Convention of the Kerala Management AssociationFebruary 3, 2011
Vinod Thomas Director-General and Senior Vice President
Independent Evaluation GroupWorld Bank Group
Competing Globally…
►Global trends►Competitiveness in India►India and its competitors►The future of Kerala
Emerging Economies and the Global Crisis
2008 2009 2010 2011f 2012f-10
-8-6-4-202468
1012
World
High income countries
Developing countries
Real
GDP
gro
wth
(per
cent
)
Source: World Bank
The Resulting Spotlight on Competitiveness
Global recovery but high risks
Deficits, debt, resource
constraints
Productivity gain is the goal
Competitiveness is the means
Productivity Rise in History
China, 2002-09
Rep. of Korea, 1966-77
Brazil, 1961-79
Turkey, 1857-77
Japan, 1885-1919
United States, 1839-86
United Kingdom, 1780-1838
0 10 20 30 40 50 60
Source: World Bank
Period during which output per person doubled, selected countries
Number of Years
Five Challenges for India’s Competitiveness
1. Governance
2. Inclusiveness growth
3. Infrastructure
4. Environment and climate change
5. Innovation
Governance and the Cost of Doing Business
► Well-established democratic institutions, but overstretched government
► Results orientation and decentralization to state and local authorities
► Link to the private sector—ICT
Inclusive Growth and the Two Indias► Reducing the gap between rich and poor,
urban and rural interstate, and within-state disparities
► Generating faster improvements in the poorer states and segments (as in Brazil and Mexico)
► Supporting small-scale enterprises and microfinance to create employment
Quality Infrastructure
► Quality of infrastructure key to foreign investments
► Long gestation and constant maintenance gaps
► Selectivity to ensure fiscal sustainability
post-crisis
Environment and Climate Change► Public and private investments in green
technologies► Incentives and resources for pilots, and
demonstration and technology transfer projects► Carbon market—opportunity for reducing
emission and inducing R&D for low-carbon technologies
► Forest conservation to gain from standing trees—REDD
19961997
19981999
20002001
20022003
20042005
20062007
- 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6
Brazil China India Russian Federation
R&D
expe
nditu
re (%
of G
DP)
Innovation: Spending on R&D
Source: World Development Indicator
Strengths and Weaknesses across BRICK
GDP Growth (2010)
Trade/GDP (2008)
Gen Gov't Gross Debt/GDP (2009)
Poverty headcount (latest available)
Arable land (hectares per person) (2007)
CO2 emissions (metric tons per capita) (2006)Energy use (kg of oil equivalent per capita) (2007)
School enrollment, secondary (% gross) (2007)
Researchers in R&D (per million people) (2005)
R&D Expenditure (% of GDP)
Gross fixed capital formation (% of GDP)
-
0.5
1.0
Brazil China India Russia Korea, Rep. of
Source: World Development Indicator
Kerala Is Different—Or Is It?
► Economic development versus human development?
► Rich potential of human capacity and skills
► Remittances an investments► Eco-tourism and the
preservation of biodiversity► Global lead in information
and technology?
Common Factors in Competitiveness
1. Nations shape their own destinies• BRIC weathered the crisis much better based on
policies preceding the crisis2. Proper blend of state and market is critical• Support rather than supplant markets
3. Unleashing spillover effects is key• Benefits of education go beyond individuals• Quality infrastructure for competition and innovation• Don’t follow the leader find the niche
Thank You!