the power of i (india) in brics
DESCRIPTION
Presented by Dr. Amit KapoorTRANSCRIPT
INSTITUTE FOR COMPETITIVENESS -RESEARCH
BRICS
Opportunity
Cloud Power
India
Threat
BRICS
Opportunity
Cloud Power
India
Threat
MIcroeconomics of Competitiveness
Individuals
MAcroeconomics of Competitiveness
Aggregates
Microeconomics of Competitiveness and Macroeconomics of Competitiveness
Natural Endowments Population and GDP’s of the world
India
ChinaUSA
7% of the Land area,5% of the Population,
23% of the GDP
2.3% of the Land area,
17.8% of the Population, 2.6% of
the GDP
7.2 % of the Land area,
19.2% of the Population, 10.4% of
the GDP
Brazil
12.6% of the Land area,
17% of the Population, 2.6% of the GDP
Russia
6.5% of the Land area,
2.8% of the Population, 3.5% of
the GDP
South Africa
0.93% of the Land area,
0.72% of the Population, 0.58% of
the GDP
GDP over the years
19901991199219931994199519961997199819992000200120022003200420052006200720082009201020110
1000000000000
2000000000000
3000000000000
4000000000000
5000000000000
6000000000000
7000000000000
8000000000000
Brazil China India Russian Federation South Africa
GD
P a
t C
urr
ent
Pri
ces
Area in 2011
Brazil China India Russian Federation South Africa0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
84594209327480
2973190
16376870
1214470
Area in 2010, square Km
Population over the years
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2011
0
200000000
400000000
600000000
800000000
1000000000
1200000000
1400000000
1600000000
Brazil China India Russian Federation South Africa
Popula
tion in B
illions
Primary Secondary and Tertiary Sector
World Brazil China India Russian Federation South Africa0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
2.815.30
10.10
17.74
4.04 2.48
26.3228.07
46.7227.12
36.6830.83
70.8766.63
43.19
55.1459.28
66.69
Agriculture (Value Added % of GDP) Industry (Value Added % of GDP)
Services (Value Added % of GDP)
Manufacturing Value Added as a percentage of GDP, 2010
World
Brazil
China
India
Russian Federation
South Africa
0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00
16.71
16.23
29.62
14.54
16.43
14.66
Structural transformation in the World Economy
Source: WDI and Institute for Competitiveness Analysis
5%
33%
61%
Agriculture Industry Services
3%
27%
70%
Agriculture Industry Services
Structure of the World Economy in 1991 Structure of the World Economy in 2010
Imports and Exports as a Percentage of world Imports and Exports
Brazil Russia India China South Africa 0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
1.32 2.63
1.44
10.34
0.53
1.24
1.612.27
9.03
0.61
Share in world total exports (2010) Share in world total imports (2010)
Source: WTO and Institute for Competitiveness Analysis
Projections according to IMF
Source: IMF and Economist Intelligence Unit for 1970-2005:Economist Intelligence Unit forecasts for 2006-20
1971-1980
1981-1990
1991-2000
2001-2005
2006-2020
0
0.5
1
1.5
2
2.5
3
3.5
4
4.54.2
3.43.3
3.8
3.5
Incre
ase in a
countr
y’s
real G
DP
, at
consta
nt
2005
PP
P U
S$
China
United States
India
Brazil
Russia
Indonesia
South Korea
UK
Germany
France
Mexico
Canada
Turkey
Japan
0 5 10 15 20 25 30
26.7
15.9
12.2
2.4
2.3
2.3
2.1
1.9
1.9
1.5
1.4
1.3
1.3
1.1
Contribution to global growth (2006-20, %)
GDP over the years
Source: WDI and Institute for Competitiveness Analysis
2.65% in
2010
2.64% in
2010
0.58 % in
2010
10.43% in 2010
3.53 % in
2010
19901991199219931994199519961997199819992000200120022003200420052006200720082009201020110%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Brazil China India Russian Federation South Africa
FDI Investments
Source: WDI and Institute for Competitiveness Analysis
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-50000000000
0
50000000000
100000000000
150000000000
200000000000
Brazil China IndiaRussian Federation South Africa
Fore
ign d
irect
inve
stm
ent,
net
infl
ow
s (B
oP
, curr
ent
US$)
FDI Inflows and Outflows
Source: WDI and Institute for Competitiveness Analysis
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-1
0
1
2
3
4
5
6
7
World Brazil China
India Russian Federation South Africa
FD
I in
flow
s
as a
% o
f G
DP
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-4
-3
-2
-1
0
1
2
3
4
5
6
World Brazil China India
Russian Federation South Africa
FD
I in
flow
s
as a
% o
f G
DP
Source: A.T. Kearney 2010 Confidence Index, WDI and Institute for Competitiveness Analysis
(1)
(3)
(2)
(6)
(10)
( )
(11)
(19)
(14)
(4)
(8)
(12)
(13)
(5)
(17) Other Gulf states
Hong Kong
France
Vietnam
United Arab Emirates
United Kingdom
Canada
Mexico
Australia
Poland
Germany
Brazil
India
United States
China
1.26
1.28
1.29
1.29
1.29
1.32
1.32
1.32
1.33
1.35
1.43
1.53
1.64
1.67
1.931
2
3
4
5
6
7
8
9
10
11
12
13
14
15
+
+
+
+
+
+
+
+
-
-
-
-
Confidence Index and sought out by many Investors
+
-
Moved Up
Maintained
Moved Down
Not among top 20 in 2007 Index
High ConfidenceLow ConfidenceValues Calculated on a 0 to 3 Scale
Infrastructure development
Source: WDI and Institute for Competitiveness Analysis
Euro-pean Union
World Brazil China India United States
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.084.5
55.1
4.3
62.3
45.5
66.4
Perc
enta
ge o
f P
aved R
oads
World
Brazil
China
India
South Africa
0.0 20.0 40.0 60.0 80.0 100.0 120.0
74.1207925791558
98.3
99.4
66.3
75
Percentage of People with Access to Electricity (2009)
Total Reserves
Source: IMF, WDI and Institute for Competitiveness Analysis
Note: Total reserves comprise holdings of monetary gold, special drawing rights, reserves of IMF members held by the IMF, and holdings of foreign exchange under the control of monetary authorities. The gold component of these reserves is valued at year-end (December 31) London prices. Figures taken are in current U.S. dollars.
1995
1997
1999
2001
2003
2005
2007
2009
2011
0
500000000000
1000000000000
1500000000000
2000000000000
2500000000000
3000000000000
3500000000000
Brazil ChinaIndia Russian FederationSouth Africa
Tota
l R
eserv
es in C
urr
ent
Billion U
S D
ol-
lars
Brazil China IndiaRussian Federation South Africa Rest of the world
Literacy and Sanitation: Critical Areas
Source: WDI and Institute for Competitiveness Analysis
1990 2000 20100
10
20
30
40
50
60
70
80
90
100
World China India
Lit
era
cy r
ate
s a
s a
perc
enta
ge o
f to
tal P
opula
tion
Euro-pean Union
World China India United States
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.099.1
76.5
58.054.0
100.0
Access t
o
Impro
ved S
anit
ati
on F
acilit
ies a
s a
perc
enta
ge o
f P
opula
tion
Note figures for chart 2 are for 2008.
Geopolitical Hotspots
China
IndiaCross-strait relations
Offshore Oil reserves
Kashmir Conflict Tibet Conflict
Source: Deutche, Institute for Competitiveness Analysis
Macroeconomic and Social Issues- China and India
Source: Eurostat, Institute for Competitiveness Analysis
Poverty headcount below 1.25 $ a day
Poverty headcount below 2 $ a day
• High Commodity prices/high dependence on Energy Imports
• Investor Sentiments• Protectionist Trends in
developed markets (and home)
• Huge Income disparities bear the risk of social tensions
USA
India
China
EU 27
0 5 10 15 20 25 30 35 40 45
40
36
41
30
0
10
20
30
40
50
60
70
80
15.92
36.3141.64
75.62
Ch...
China and India : A List of superlatives
China • China is the largest
consumer of Energy and rare earth metals.
• China is the largest exporter of the world today.
• China launched the “world’s largest housing investment program and Macau has become the world’s top gambling destination.
• China is the largest food producer in the world in 2010.
• Biggest consumer of grain, meat, coal and steel.
India • India is the largest
consumer of Gold.• India is the biggest
producer of Tea, Coffee, Jute and Cotton.
• India is the largest producer of sponge Iron and expected to become the second largest producer of steel.
• India is the second largest producer of wheat and largest producer of pulses but needs to import pulses due to growing domestic demand.
Sources : Various sources, Institute for Competitiveness Analysis
Cost Advantage and Growth drivers of Indian IT Industry
Cost Advantage to the India IT services as compared to EU • The cost of an engineer in India is
only about 20-40% in comparison to EU.
• India’s offshore billing is at around 20-35$ per hour which is 50-70% lower than the EU.
• India has the largest number of quality certifications in the field of IT today.
• BPO sector employs around 768,000 people at the end of 2010.
• Knowledge Services Exports or KPO (Next generation services in India) grew at rate of 19.4% per annum and reach $ 1 billion in 2010.
• The contribution of India IT sector to GDP grows from 1.2% in 1977-78 to 6.1% in 2009-10.
• India’s IT/ITeS exports has grown at a compounded annual growth rate of 23.1% between 2005-06 and 2009-10. The software and IT services sector (excluding hardware) posted revenues of 63.7 billion $.
Growth Drivers of Indian IT Industry
• Increasing global spending on IT and Technology.
• Global services providers expanded their base in India to provide onshore-offshore services at a low cost. They have a huge Indian employees strength (Accenture- 40000+, IBM-1,30,000, HP- 15000+, CapGemini- 26000+)
• Emergence of the Global Delivery model by the Indian IT firms and Indian companies have expanded globally through opening offices and M&A.
• Dedicated software technology parks and SEZs in India.
• High connectivity by rail, road and air in major cities where IT companies have established.
• Government Policy supports to IT.• Huge talent pool with more than .37
million graduates and post graduates available to start career in IT.
Sources : Various sources, Institute for Competitiveness Analysis
Cost Advantage and Growth drivers of Indian IT Industry
State Number of SEZ Companies
Andhra Pradesh 59
HP, Amazon, Verizon, Convergys, EXL, TCS, Wipro,
Infosys
Maharashtra 51
Cognizant, Convergys, EXL, KPIT, Msource,
Siemens, Accenture
Tamil Nadu 38Infosys, Wipro,
Accenture, Cognizant
Karnataka 37Infosys, TCS,
Wipro, HP, SIEMENS, Compaq
Delhi and NCR 28
IBM, Genpact, Oracle, American
Express, Convergys, HP
West-Bengal 19IBM, Cognizant,
TCS, Infosys
Gujarat 15 TCS, Infosys, Wipro
Future Opportunities • India is expected to become the hub of
engineering process outsourcing (EPO) and market size will touch 30 billion $ by 2015.
• Bechtel, General Motors, Ford, John Deere, Caterpillar, Silicon Automation Systems and John Brown Engineering are among the global leaders that have established their engineering services divisions in India.
• The KPO industry is now growing rapidly, with several companies establishing third-party operations for functions such as data analytics and data modeling. According to CRISIL, India’s KPO export market constitutes around 8 per cent of the country’s ITeS revenues and employs nearly 3 per cent of its workforce. Growth drivers include the high productivity of India’s human resources and outsourcing of knowledge processes by SMEs.
• Outsourcing of legal and intellectual property research is presently at an early stage of development in the country. However, this space holds tremendous growth potential. India offers impressive opportunities to scale up, with a large pool of legal professionals (with more than 1million lawyers and 70,000 law graduates qualifying every year) and significant cost arbitrage. In addition, Indian lawyers bill at one-tenth of their counterparts in the US (US$ 40 to US$ 60 per hour in India, compared with US$ 350 per hour in the US).
Sources : Various sources, Institute for Competitiveness Analysis
State of Education
Source: Marketing Whitebook 2011-12, Businessworld.
0.02 0.06 0.16 0.34 0.35
0.34
0.8
1.99
2.26
4.98
Faculty in Millions in India 2008
Veterinary SciencesAgricultureEducationLawMedicineLawEngineeringManagementScienceArts
2008 2009 2010 2011 2012 2013 2014 2015 2016 20180.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
11.011.6
12.313.0
13.714.4
15.316.1
17.018.0
Enrollment in Higher Education to grow at 5.6% CAGR
Degree graduates breakup and manpower requirements in India
Source: IGNOU and CII
Construction
Wholesale and Retail
Community Services
IT/BPO
Banking and Insurance
Communication
Hospitality
Transportation and Storage
Healthcare
Manufacturing
Agriculture
Public Admin & defence
Other Business Services
0 5 10 15 20 25 30 35
17
6
6
3
3
2
3
2
1.5
13
32
2.5
0.5
Manpower Intake from 2011-16 (Millions)
26.00%
21.60%
10.20%5.40%
4.80%2.10%1.70%1.60%
1.10%0.30%3.40% 20.80%
BA
B.Sc
B.Com
Open Universi-ties
Polytechnic Courses
Medicine and Pharma
B.Ed
M.Sc
M.Com
Ph.D and higher
MA
Others
Global Players Operation in India and IT service expors
HP $126 billion
Oracle 27881.71 million Rs
Cognizant $4.6 billion
Accenture $21.6 billion
Dell $61.5 billion*
Lenovo $21594 million*
WNS $154.2 million*
Global Players Revenues (In 2009-10)
2006-07 2007-08 2008-09 2009-10 2010-11 2011-120
5
10
15
20
25
30
9.4
11.6
13.314
15.95
17.5
6
8.8
10.4 11.2
13.4
15.12
1.7 1.8
25.8
2.1
14.15
16.67
Project Oriented Outsourcing Support & Training
IT S
erv
ice E
xport
s in U
S $
billion
Source: Company reports Institute for Competitiveness Analysis
* Revenues are for 2010-11
Figures for 2011-12 are projected
IT Enabled Service Sector : Exports Driven
Source: Company reports Institute for Competitiveness Analysis and NASSCOM Strategic Review 2010 The IT–BPO sector in India
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-120
2
4
6
8
10
12
14
16
18
0.50.9 1.1
1.6 1.92.3
2.633333333333332.99047619047619
4.6
6.3
8.4
10.9311.7
12.4
14.828
16.4774285714286
Domestic MarketExports
IT Enabled Service Sector : Exports Driven
Source: Deccan Herald, Business Standard, Assocham Study on BPO and Institute for Competitiveness Analysis
At Present , India's BPO industry is facing a stiff competition from countries like Mexico, Philippines, Malaysia, China, Canada and IrelandAttrition Rates have Increased to 55% from about 40% from December 2010-April 2011
Reasons:1. Campus recruitments
2. Ample employment opportunities
3. Part time Jobs Pharmaceuticals
Financial Services
Retail
IT Sectors
FMCG
Infrastructure
Automobiles
Manufacturing
0 10 20 30 40 50 60 70
60
60
55
55
45
45
45
45
Busin
ess D
om
ain
s in w
hic
h B
PO
serv
ice a
re
off
ere
d
Number of Engineering Education Institutions in India
Source : ENGINEERING EDUCATION IN INDIA, 2007 IIT Bombay
_x000b_< 12 Months
_x000c_12-20 Months >21 Months
0
0.1
0.2
0.3
0.4
Employbility - Engineering Graduates after Degree
Completion
_x000b_< 12 Months
_x000c_12-20 Months
_x000b_> 21 Months
0
0.1
0.2
0.3
0.4
0.5
0.6
Employbility - Diploma Hold-ers after Degree Completion
Source: Handbook of skill scenario in India, 3rd global summit
Infosys
TCS
Wipro
HCL Techno
Mphasis
Oracle Fin
Patni Computers
Tech Mahindra
Rolta India Ltd
0.00 100,000.00 200,000.00 300,000.00
128,307.86
198,068.64
78,025.38
26,435.04
7,392.00
15,044.95
3,685.00
8,432.80
1,577.51
Market Cap in Rs Crore
Mar ' 11Mar ' 10Mar ' 09Mar ' 08Mar ' 070.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
Infosys TCS WiproOracle Fin Tech Mahindra
Opera
ting I
ncom
e Y
ear
on y
ear
IT companies in India
Institute for competitiveness Analysis
11%
32%
4%19%
5%
7%
8%
5%4%
3%1%2%
India Offshoring Industry Structure (2009)
AutomativeTelecomConsumer Electron-icsSemi-conductorsAerospaceConstructionComputing Sys-temsInfrastructureEnergyMedical DevicesIndustrial Automa-tionOthers
16%
13%
11%
10%8%
8%
5%
5%
4%
3%1%
17%
India Offshoring Industry Structure (2020)
AutomativeTelecomConsumer Electron-icsSemi-conductorsAerospaceConstructionComputing Sys-temsInfrastructureEnergyMedical DevicesIndustrial Automa-tionOthers
Source : NASSCOM
IT Offshoring Structure in India
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200
500
1000
1500
2000
2500
3000
3500
4000
Labor Productivity ( Services in US $)
Labor Productivity in India
Institute for competitiveness Analysis
ICT service exports, service exports
Source: WDI and Institute for Competitiveness Analysis
45%
4%
3%
14%
34%
Services exports in Gross US$ current terms
European Union China IndiaUnited States Rest of the world
2005 2006 2007 2008 20090
10
20
30
40
50
60
European Union World China India United States
ICT E
xport
s a
s a
per-
centa
ge o
f Tota
l serv
ice
Export
s
43%
2%14%
7%
33%
ICT Services' exports in Gross US$ current terms
European Union China India United Kingdom
High Technology and Low Technology futures
Hi Tech Low Tech
The Competitive Economy
Apple Economy
Source: Institute for Competitiveness Analysis
Sales Price
Purchased Inputs
Cost of Goods sold
Direct Labor
Value Added
Gross Profit (Value Captured)
SG&A SG&A
R&D R&D
Depreciation
Depreciation
Net Profit
Net Profit
$ 224 Wholesaler Price to Apple
Gross Cost
$45 Retail Margin
$30 Dist.
Margin
$80 Apple Gross margin
Gross margin for 7 Key inputs
$33
$ 144 cost of all Inputs
$ 83 cost of goods for 7 Key
Inputs
$28
Gross margin for 7 Key inputs
$33
Retail Price $299
Wholesale Price $299
Cost of Inputs $144
Cost of sales for 11 key inputs $102
Gross margin for 7 Key inputs $33
$4 other cost Portal player Chip
$78 still to be analyzed
cost for 6 Key Inputs
Cost of 444 still to be analyzed
USA Japan
Korea
Total
Distribution and Retail
$75 $74
Apple $80 $80
Seven Identified Inputs
$7 $26 $1 $34
Portal Player suppliers
$1 $1
TOTAL $163 $26 $1 $190
Apple Economy
Source: IFC Analysis
Component Supplier Company HQ Location
Manufacturing Location
Estimated Factory Price
Cost as % of all iPod Parts
Gross Profit Rate
Estimated Value Capture
Hard Drive Toshiba Japan China $73.39 51% 26.5% $19.45
Display Module Toshiba- Matsushita
Japan Japan $20.39 14% 28.7% $5.85
Video/ Multimedia Processor
Broadcom US Taiwan/Singapore
$8.36 6% 52.5% $4.39
Portal Player CPU Portal Player
US US or Taiwan $4.94 3% 44.8% $2.21
Insertion, test and assembly
Inventec Taiwan China $3.70 3% 3.0% $0.11
Battery Pack Unknown $2.89 2% $0.00
Display Driver Renesas Japan Japan $2.88 2% 24.0% $0.69
Mobile SDRAM Memory- 32 MB
Samsung Korea Korea $2.37 2% 28.2% $0.67
Back Enclosure Unknown $2.30 2% 26.5%
Mainboard PCB Unknown $1.90 1% 28.7%
Subtotal of 10 most expensive inputs
$123.12 85% $33.37
All other inputs $21.28 15%
Total all iPod inputs $144.40 100%
Source: Case study on Apple ipod Ecosystem by University of Berkeley
Population : Complex Perspectives
Source: United Nations, World Urbanization Prospects, The 2009 Revision, Asia 2050, Asian Development Bank
0
50
100
150
200
250
300
274
84
136
3827
178
34
62
32
58
Total Urban Population 2010
China
India
Popula
tion in M
illions
PRC India Asia0
1000
2000
3000
4000
5000
6000
13541215
3958
14171614
4888
Total Urban Population 2010 - 2050
2010Projected 2050
Popula
tion in M
illions
Urban Perspectives
Source: US. Bureau of Labor Statistics, Boston Consulting group , IFC Analysis
total urban population (mn)
Northeast Asia
South Asia
South east asia
Central asia
0 500 1000 1500 2000 2500 3000 3500
1649
805
496
252
96
3247
1284
1261
520
182
2050 2010Urbaniza-tion (%)
Northeast Asia
South Asia
South East Asia
Central asia
0%
10%
20%
30%
40%
50%
60%
70%
80%
41%
50%
30%
42%
52%
64%
74%
55%
65%67%
%
Urb
an P
opula
tion
0-14 Years
15-24 Years
25-49 Years
50-59 Years
60+ Years
All ages0
200
400
600
800
1000
1200
1400
Year 2000Year 2020
Popula
tion in M
illions
0-14 Years
15-24 Years
25-49 Years
50-59 Years
60+ Years
All ages0
200
400
600
800
1000
1200
1400
Year 2000
Year 2020
Popula
tion in M
illions
Demographic Shifts for India
Health Expenditure and Life Expectancy
Source: WDI and Institute for Competitiveness Analysis
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2009
0
10
20
30
40
50
60
70
80
90
European Union World ChinaIndia United States
Lif
e E
xpecta
ncy a
t B
irth
In n
um
ber
of
Years
1995
1997
1999
2001
2003
2005
2007
2009
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
European Union World China India
United States
Healt
h E
xpendit
ure
Per
Capit
a in C
urr
ent
US $
Trade in the World Economy
Source: WDI, WTO and Institute for Competitiveness Analysis
EU 2
7
Brazil
China
Russian
Fed
erat
ion
Indi
aUSA
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0
28.9 24.8
58.7 47.5 51.4
27.6
Tra
de t
o G
DP
rati
o
(2007-0
9)
EU 2
7
Brazil
China
Russian
Fed
erat
ion
Indi
aUSA
0 2 000 4 000 6 000 8 000
10 000 12 000 14 000
10 016
1 969 1 921
5 064
522
12 849
Tra
de P
er
capit
a (
US$,
2007-0
9)
2005 2006 2007 2008 2009 20100
10000
20000
30000
40000
50000
60000
70000
80000 India - EU trade
EU imports from India EU exports to IndiaEU trade with India
Tra
nsacti
ons in B
illions o
f Euro
s
16%
13%
2%
14%
55%
Trade in the world
European Union China India United States
Trade in the World Economy
Source: World 3.0, fig 1.2, pp. 18, by Pankaj Ghemawat
MarketRegulation
Market Integration
European Union
China India United States
World0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
1413964
255
1457
8697
1220 1168
155
944
8275
Imports (Billions of Euro) Exports (Billions of Euro)
Source: WDI, WTO and IFC analysis
No
No
YesYes
World 1.0 World 2.0
World 3.0
World 0.0
Barriers to Entry or Areas of Progress
Source: Photo 1. Great Wall of China, accessed from www.crestock.com Photo 2. Researchers/ People carrying nose cone of a rocket to Thumba, www. Skyscrapercity.com
According to a press release of WTO on 7 April 2011 following the 14.5% surge in the volume of exports in 2010 world trade growth should settle to a more modest 6.5% expansion in 2011.
Trade openness of the region, measured by the trade-to-GDP ratio, is projected to increase for Asian Developing regions sharply from 39.4% in 2010 to 74.4% in 2030 . Among the 12 economies, Hong Kong, China Malaysia Singapore and the Philippines are notable for maintaining very high trade/GDP ratios for a long period of time (Krugman 1995). By the end of the projection period, Thailand and Viet Nam too are likely to join this group of “super trading economies”. People’s republic of China’s trade/ GDP ratio is projected to grow from 41.7% in 2010 to 81.9% in 2030.
Source: Asian Trade Flows: Trends, Patterns, and Projections Prema-chandra Athukorala No. 241 | January 2011
Primary Manufacturing Services0
100
200
300
400
500
600
361
449
392
254
554
338
Sectoral Distribution of FDI Projects, 2009-10
20092010
Trade Projections by WTO And ADB
Competitiveness and World Economy
Context for Firm Strategy and
Rivalry
Related and Supporting Industries
Demand Conditions
• Local rules and incentives that encourage investment and productivity e.g.
- salaries,- incentives for capital investments, - intellectual property protection• Vigorous local competition i.e., - Openness to foreign and local
competition; - Sophistication of company operations
Local availability of suppliers and supporting industriesPresence of clusters instead of isolated firms
Sophisticated and demanding local customers and needs e.g.,- Strict quality, safety, and environmental standards– Consumer protection laws – Government procurement ofadvanced technology – Early demand for products andServices.
Access to high quality business inputs i.e., - Natural endowments,- Human resources, - Capital availability,- Physical infrastructure,- Administrative infrastructure,- Information infrastructure, - Scientific and technological infrastructure
Factor Conditions
• Many things matter for competitiveness• Successful economic development is a process of improving the business environment to enable increasingly
sophisticated ways of competing
Source: The Competitive Advantage of Nations, Michael. E. Porter
Stages of the Economy – Indian Context
Factor-driven economies: Factor-driven economies focus on low-cost basic factor conditions, such as low-skilled labour, natural resources and geographic location. Factor-driven economies need to focus on input costs, macro, political and legal stability, efficient basic infrastructure and lowering the regulatory cost of doing business.
Investment-driven economies: Investment-driven economies would have the ability to produce standard products and services of high quality using efficient methods but at lower wages than advanced economies. Investment-driven economies need to focus on building efficiencies, enhancing local competition, market openness, incentives and rules for encouraging productivity.
Innovation-driven economies: Innovation driven economies would focus on innovative products and services at the global technology frontier. Innovation driven economies would need to focus on advanced skills, advanced infrastructure, incentives and rules encouraging innovation.
Stage 1
Stage 2
Stage 3
Competitiveness and World Economy
Source: The Competitive Advantage of Nations, Michael. E. Porter
SupportActivities
Marketing& Sales
(e.g. Sales Force, Promotion, Advertising,
Proposal Writing, Web site)
InboundLogistics
(e.g. Incoming Material
Storage, Data Collection, Service,
Customer Access)
Operations
(e.g. Assembly, Component Fabrication,
Branch Operations)
OutboundLogistics
(e.g. Order Processing,
Warehousing, Report
Preparation)
After-Sales Service
(e.g. Installation, Customer Support,
Complaint Resolution,
Repair)
Ma
rg
i
n
Primary Activities
Firm Infrastructure(e.g. Financing, Planning, Investor Relations)
Procurement(e.g. Components, Machinery, Advertising, Services)`
Technology Development(e.g. Product Design, Testing, Process Design, Material Research, Market Research)
Human Resource Management(e.g. Recruiting, Training, Compensation System)
Value
What buyers are willing to pay
• Separate local value chains • Integrated global value chain
• Geographic scope of competition is determined by the ability to leverage activities in the value chain across borders Industries differ greatly in the scope of competition
GlobalRegional
(e.g., Scandinavia, Western Europe)
Local / State National
Country Equivalents
Source: Economist Intelligence Unit, National Statistics
Country Equivalents
Source: Economist Intelligence Unit, National Statistics
Country Equivalents - Brazil
Source: Economist Intelligence Unit, National Statistics
Consumption in India : Fuelled by new models
Source: WDI, Marketing Whitebook 2011, Businessworld and Institute for Competitiveness
2010 2020
Rural 245 Billion Pounds
(45- 50%)
Urban 280 Billion Pounds
(50-55%)
Non Retail 590 Billion
Pounds (50-55%)
GDP 850 billion Pounds GDP 1920 billion Pounds
Private Consumption 490 Billion Pounds
Private Consumption 490 Billion Pounds
Urban 120 Billion Pounds
(45%)
Rural 150 Billion Pounds
(55%)
Retail 270 Billion Pounds
(55%)
Non Retail 225 Billion
Pounds (45%)
Retail 270 Billion Pounds
(55%)
Organized Retail 13 Billion Pounds (5%)
Organized Retail 125 Billion Pounds 24%
European Union
World
India
United States
0 20 40 60 80 100 120 140 160 180
77
32
4
169
ATM
Machin
es p
er
100,0
00 a
dult
s in 2
009
Household Income Growth to Accelerate Across India
India will see a reduction of poverty and growth of It’s Middle Class
The Shape of India’s Income Pyramid will Change dramatically as Income’s grow India’s Aggregate consumption will
Quadruple over the next 20 years
Source: Bird of Gold: The rise of India’s Consumer Market, McKinsey Global Institute
Shifts in the Consumer Market in India
Food will remain the largest Consumption Category while communications will grow the fastest
Services growth has been broad based
Shifts in the Consumer Market in India
Source: Bird of Gold: The rise of India’s Consumer Market, McKinsey Global Institute
Emerging Economies: Opportunity Areas
Source: World Bank Report on Sustainable futures
Description Impact Geography Type of investment
Irrigation Raises productivity in certain regions Regional, global Technology, manufacturing
Fertilizer Raises productivity in certain regions Regional, global Technology, manufacturing
Machinery Enables more efficient farming Local Engineering, manufacturing
Commercialization Raises productivity in certain regions Global Logistics, manufacturing
Infrastructure Major challenge to agricultural
expansion, especially in emerging economies
Global Governments, engineering
Land expansion Increases acreage for production Global Private lands, public lands
Biotech crops Crop protection, drought resistance, disease resistance, lower water and
fertilizer input
Choice by region
Biotech, agronomic
2000 2005 2010 2015 E0
5
10
15
20
25
30
16.6
18.8
22.3
26.1
0.5 0.82
4.5
US China
Chinese Productivity
Source: Why manufacturing will return to America, Economist Intelligence Unit, US. Bureau of Labor Statistics, Boston Consulting group , Institute for Competitiveness Analysis
2000 2005 2010 20150
5
10
15
20
25
30
35
40
45
13
20
29
40
Chin
ese p
roducti
vit
y r
ela
tive t
o U
S (
%)
Pro
-ducti
vit
y
17 %
9 %
4 %
3 %
Ratio of
average
Chinese to
average
U.S. wage
rates
Fully loaded factory-worker wages ($/hour)
GDP Projections
Source: Dreaming with the BRICS, Goldman Sachs.
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
China India France Germany ItalyUK US BRICs G6
Projections according to IMF
Source: IMF and Economist Intelligence Unit for 1970-2005:Economist Intelligence Unit forecasts for 2006-20
1971-1980
1981-1990
1991-2000
2001-2005
2006-2020
0
0.5
1
1.5
2
2.5
3
3.5
4
4.54.2
3.43.3
3.8
3.5
Incre
ase in a
countr
y’s
real G
DP
, at
consta
nt
2005
PP
P U
S$
China
United States
India
Brazil
Russia
Indonesia
South Korea
UK
Germany
France
Mexico
Canada
Turkey
Japan
0 5 10 15 20 25 30
26.7
15.9
12.2
2.4
2.3
2.3
2.1
1.9
1.9
1.5
1.4
1.3
1.3
1.1
Contribution to global growth (2006-20, %)
China, India, EU and USA : A comparative Analysis
Source: Institute for Competitiveness Analysis
Brazil Russia India China
Basic Facts and figures
Population of about 19 Million
Population of about 14 Million
Population Population Approximately 1.3 billion
Approximately 1.2 billion
Uniqueness about the Economy
Moderate per capita income levels but inflation has been a consistent problem
Moderate per capita Income levels Growth dependent on commodities
Large service sector given the Level of Income
Large GDP as an aggregate but Low per capita Income levels
Challenges being faced
Economic slowdown, Growth momentum, inflation
Economic slowdown, corruption and overt dependence on commodity exports
Urban Infrastructure, governance challenges, Management of Inbound Capital flows
Carbon Intensity, Middle Income transition
Growth strategies
Targeting Inflation and other Emerging markets in long term
Opportunities in emerging markets+ Commodity exports to EU
Domestic demand+ external FDI FII flows
Domestic demand+ external FDI FII flows
Source: Report by ADB 2050
Asia
PRC
India
United States
0% 10% 20% 30% 40% 50% 60%
51%
22%
14%
14%
32%
11%
6%
21%
Share in World GDP at MERAsia PRC India United
StatesWorld
0
20000
40000
60000
80000
100000
120000
3860047800
41700
98600
36600
2030023700 17800
98600
25900
GD
P p
er
capit
a in $
at
PP
P
Asia PRC India United States World0
50
100
150
200
250
300
350
148
6340 40
292
61
21 1240
191
Asian CenturyMiddle_x000d_Income Trap
GD
P (
trillions $
MER
)Asian century scenario versus middle income trap scenario
Asian century or Middle Income Trap
3% 1%
52%
15%
10%
18%
Asian Century Scenario
Middle East and North Africa Rest of the WorldAsia North AmericaLatin America & Carribian Sub Saharan Africa
5% 2%
33%
24%
9%
27%
Middle Income Trap Scenario
Middle East and North Africa Rest of the WorldAsia North AmericaLatin America & Carribian Sub Saharan Africa
Source: Report by ADB 2050
0 10000 20000 30000 40000 50000 60000 70000 80000 900000
1
2
3
4
5
6
5.07734119768029
1.04659475345572
4.75218380952923
1.18786603786121
1.87257304577875
1.4623701627434
2.67583671918095
3.18543604965609
1.33823389572212
1.690102446562091.81768415650097
3.7356270722108
2.63847621322548
2.2420288519547
4.35996703199084
3.78933409499063
1.7007786074382
2.568269308331382.78174079406741
4.40034982912576
2.44535280686349
3.68618358774824
1.39129149461525
3.352836547115963.20343826415281
3.37871259016977
Switzerland1.94775897745552
2.25490662866012.32625070873789
Income per capita in constant 2000 USD
Gro
wth
rate
s (
2010-5
0),
CA
GR
Income Levels in 2050
Source: Report by ADB 2050, Institute for competitiveness Analysis
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50
200
400
600
800
1000
1200
1400
1600
1800
24617
22270
8165
6429
37143576
2960
2810
27502287 2194
2149
20561954
1878
1502
14801477
1165
11601128856
798 786
732725
711657558529
Income per capita growth rates 2010-2050
Popula
tion in M
ilio
ns in
2050
Population Levels and Growth
Source: Report by ADB 2050, Institute for competitiveness Analysis
0 10 20 30 40 50 60
-8
-6
-4
-2
0
2
4
6
8
10
427195.53
442430.33
263498.39
825460.55
103363.13120851.88
228115.38
246308.16
Percentage Contribution in GDP (2000)
% C
hange in t
he C
ontr
ibuti
on t
o G
DP
(1994-2
000)
Structural shift in Indian Economy (1994-2000)
Institute for competitiveness Analysis
0 10 20 30 40 50 60 70
-10
-5
0
5
10
15
540122.406865079
912659.780674603
479035.193373016
74261.2682460317
1759773.37
303682.270968254
354692.987388889524134.309166667
383815.413944444
Percenatge Contribution in GDP (2010)
(%
change in c
ontr
ibuti
on 2
000-2
010)
Structural shift in Indian Economy (2000-2010)
Institute for competitiveness Analysis
Debt to GDP ratio
AndhraArunachal
AssamBihar
ChattisgarhDelhiGoa
GujaratHaryana
HimachalJammu & Kashmir
JharkhandKarnataka
KeralaMadhya Pradesh
MaharashtraManipur
MeghalyaMizoram
NagalandOrissaPunjab
RajasthanSikkim
Tamil NaduTripura
Uttar PradeshUttaranchal
West Bengal
0 20 40 60 80 100 120
30.1115.9
2839.7
15.213.8
35.532.1
1955.7
70.133.6
24.334.334.4
25.177.4
37.3109.1
59.430.6
35.241.1
80.625.5
42.243.5
41.142.8
Debt to GDP Ratio of Indian States
Prescribed limit ac-cording to WTO for
developing economies
Prescribed limit according to the growth and stability
Pact of EU
Source: State Profiling 2010, Institute for Competitiveness Analysis
Credit Ratings for Indian States
Source: Institute for Competitiveness Analysis
Credit Score Rating Investment Perspective
90 + A+ Very Attractive
81-90 A Attractive
71-80 B+ Sensible
61-70 B Modest
51-60 C+ Vigilant
41-50 C Risky
< 40 D Not to be invested
DelhiChhattisgarh
OrissaHaryanaGujarat
Madhya PradeshGoa
MaharashtraBihar
KarnatakaTamil Nadu
Uttar PradeshPunjab
UttaranchalKerala
JharkhandAndhra
HimachalMeghalaya
J&KAssam
ManipurSikkim
RajasthanTripura
West BengalMizoram
Arunachal
0 10 20 30 40 50 60 70 80 90
80.5672.37
65.3665.3664.87
63.4263.2663.0662.5762.366261.5761.2160.4460.4360.359.859.5359.45
58.3657.5957.21
56.0755.8555.4854.93
52.8751.08
S&P India Rating: BBB - from 2007-10Moody's India Rating: BAA3 from 2004-10
Credit Score Rating Index
Constraints being faced by India
Governance
Low literacy rates
University system
Inflation
Fiscal Policy
Financial Markets :In transition
Trade: Intraregional trade
Agricultural Productivity
Environmental Quality
Constraints being faced by Indian States
Some Plausible Solutions
Solutions to the constraints
Improve Governance ( Focus on PPPs, Greater Information sharing, and Decentralization as a model)
Raise Basic Educational Achievement (Implementation and policy making need to go hand in hand)
Increase Quality and Quantity of Universities (More needs to be done for the larger number of people in the age bracket 16-25 years)
Control Inflation: Why not monitor inflation periodically
Introduce a Credible Fiscal Policy (Having a medium term action plan will help to stimulate growth)
Liberalizing Financial Markets to a greater extent will benefit India greatly
Percentage of Intraregional trade to Interregional trade needs to grow to increase benefits from trade
Using modern tools and techniques (think tractors, drip irrigation) will greatly improve Agricultural Productivity
Improve Environmental Quality (Afforestation schemes and sustainable development hold the future for a green and a prosperous India)
India City Competitiveness
Institute for Competitiveness, India
INDIA IS THRIVING – NOW AND WILL IN FUTURE
% contribution in World’s GDP
Euro-pean Union18% United
States16%
China18%
Japan9%
India4%
Others35%
2030 Projection
Euro-pean Union26%
United States23%
China9%
Japan9%India
3%
Others31%
2010
0
2
4
6
8
10
12
4.03
5.22
3.77
8.37
8.28
9.32
9.27
9.82
4.93
9.108.81
7.80
5.30
GD
P g
row
th (
annual %
)
*value for 2012 and 2011 is for Q1
Source:- World Bank and Institute for Competitiveness Analysis
Institute for Competitiveness, India
MAIN CONTRIBUTORS IN INDIA’S GROWTH
Mah
aras
htra
Uttar
Pra
desh
Tam
il Nai
du
Andhra P
rades
h
Gujara
t
Wes
t Ben
gal
Karnat
aka
Rajas
than
Keral
a
Delhi
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
775,
020
394,
499
391,
372
381,
942
365,
295
317,
786
279,
932
204,
398
193,
383
191,
696
2010-1
1 n
om
inal G
DP
(in
cro
res o
f ru
pees)
Ahmedabad, Surat
Kolkata Ben-
galuruJaipur
Thiruvanantha-puram
Mumbai, Pune
Lucknow, Kanpur
Chennai
Hyderabad
Source:- RBI and Institute for Competitiveness Analysis
Institute for Competitiveness, India
TREND IN POPULATION SIZE AND GROWTH RATE (1901-2011)
1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011 2021 2031 20410
200
400
600
800
1000
1200
1400
1600
1800
-5
0
5
10
15
20
25
30
238.4252.09251.32278.98318.66
361.09439.23
548.16
683.329999999999
846.42
1028.74
1210.19
1338.64133333333
1494.63076190476
1650.62019047619
0.1
5.75
-0.03
11
14.22
13.31
21.51
24.8 24.66
23.85
21.34
17.64
Population (in millions) Decadal Growth rate (in %)
Pop
ula
tion
(in
million
s)
Decad
al G
row
th R
ate
(in
%)
Source:- Government of India Census and Institute for Competitiveness Analysis
Institute for Competitiveness, India
THE RURAL-URBAN DIVIDE
1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 20110%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10.8 10.3 11.1 12 13.8 17.3 17.9 19.9 23.3 25.7 28.5 31.2
Urban Rural
10.3
11.1
1210.8
13.8
17.3
17.9
19.9
23.3
25.7
28.5
31.2
Source:- Government of India Census and Institute for Competitiveness Analysis
Institute for Competitiveness, India
INCREASE IN NUMBER OF TOWNS, UAS AND VILLAGES (1971-2011)
1971 1981 1991 2001 2011
0
1000
2000
3000
4000
5000
6000
7000
8000
2921
40294689 5161
7935
1971 1981 1991 2001 2011
0
50
100
150
200
250
300
350
400
231276
381 382 384
1971 1981 1991 2001 2011
520000
530000
540000
550000
560000
570000
580000
590000
600000
610000
556561556014
579688
593732
608789
Nu
mb
er
of
Vil
lag
es
Towns (in Numbers) Urban Agglomerations (in Numbers)
Villages (in Numbers)
Source:- Government of India Census and Institute for Competitiveness Analysis
Institute for Competitiveness, India
URBANISATION: SIGN OF A DEVELOPING EOCONOMY
1951 1961 1971 1981 1991 2001 20110
10
20
30
40
50
60
70
80
90
18.33
28.3
34.45
43.57
52.21
64.874
Degree of UrbanizationLiteracy Rates (%)Registered Motor Vehicles (No.)
Source:- Government of India Census, World Bank, Road Transport Year Book& Figure and Institute for Competitiveness Analysis
Institute for Competitiveness, India
INDIAN STATES WITH HIGH GROWTH HAVE HIGH URBANIZATION RATE
0 100000 200000 300000 400000 500000 600000 700000 800000 900000 10000000.00
20.00
40.00
60.00
80.00
100.00
120.00
453367.60
5278.88
93867.16 171947.50
120513.18
201308.83
22997.23
413194.19
229352.99
44811.45
39217.9088162.87
326494.60
227049.88
200495.57
887905.30
7209.45
11407.39
4502.65
7663.08
166732.84
205511.09
241676.88
3096.19
409245.21
13561.81
516191.3048353.28
420113.36
GDP (Dec-11)
Urb
aniz
ati
on level
DISRIBUTION OF TOWNS BY SIZE CLASS
Cities Classificati
onPopulation 1951 1961 1971 1981 1991 2001 2011
Class I > 1,00,000 76 102 148 218 300 393
Class II50,000-1,00,000
91 129 173 270 345 401
Class III20,000-50,000
327 437 558 743 947 1151
Class IV10,000-20,000
608 719 827 1059 1167 1344
Class V 5,000-10,000 1124 711 623 758 740 888
Class VI < 5,000 567 172 147 253 197 191Class I UAs/Towns 468
Million plus UAs/Towns
53
Mega Cities 3
Greater Mumbai UA (12.05%)
Delhi UA (26.69%)
Kolkata UA(6.87%)
Institute for Competitiveness, India
Source:- Government of India Census and Institute for Competitiveness Analysis
Institute for Competitiveness, India
SNAPSHOT OF URBAN INDIA IN 2011
10 - 30 million 5 - 10 million 1 - 5 million 0.1 – 1 million
Cities Size Class By Population
Source:- India Urban Conference 2011: Evidence & Experience - IIHS
Competitiveness is the productivity with which a region utilizes its human, capital, and natural
resources
Productivity determines wages and the standard of living – Productivity growth determines
sustainable economic growth
It is not what industries a nation competes in that matters for prosperity, but how productively it
competes in those industries
Productivity in an economy depends on a combination of domestic and foreign firms
Innovation in products and processes is necessary to drive productivity growth
Only productive businesses can create wealth and jobs States compete to offer the most
productive environment for business
The public and private sectors play different but interrelated roles in creating a productive
economy
Leading to the prosperity of the region
Institute for Competitiveness, India
ENHANCING THE PROSPERITY OF URBAN INDIA via
COMPETITIVENESS
Institute for Competitiveness, India
INFLUENCES ON COMPETITIVENESS
WORLD ECONOMY
BROAD ECONOMIC AREAS
GROUP OF NEIGHBOURING NATIONS
NATIONS
STATES, PROVINCES
METROPOLITAN AREAS, RURAL AREAS
Multiple Geographic Levels
[Our Focus]
Source:- Institute for Strategy and Competitiveness
Institute for Competitiveness, India
DRIVER OF COMPETITIVENESS
Quality of overall business
environment
Concentration of resources and urban growth
Policy Coordination among Multiple
Levels of Geography/Govern
ment
Institute for Competitiveness, India
MEASURING COMPETITIVENESS: THE FRAMEWORK
Context for Firm Strategy and
Rivalry
Related and Supporting Industries
Demand Conditions
• Local rules and incentives that encourage investment and productivity .
- E.g. performance based salaries, incentives for capital investments, intellectual property protection• Vigorous local competition i.e., - Openness to foreign and local competition - Sophistication of company operations
• Local availability of suppliers and supporting industries
• Presence of clusters instead of isolated firms
Sophisticated and demanding local customers and needs e.g.,- Strict quality, safety, and environmental standards– Consumer protection laws – Government procurement ofadvanced technology – Early demand for products andServices.
Access to high quality business inputs i.e., - Natural endowments - Human resources - Capital availability - Physical infrastructure - Administrative infrastructure - Information infrastructure - Scientific and technological infrastructure
Factor Conditions
Institute for Competitiveness, India
HIERARCHY OF CITY COMPETITIVENESS INDEX
Overall Competitiveness
Factor Conditions
Demand Conditions
Context for Strategy &
Rivalry
Related & Supporting
Industry
1. Financial
2. Physical
3.
Communication
4.
Administrative
5. Human
Capacity
6. Innovation
1. Demographics
2. Income
Distribution
and Spending
Pattern
1. Competition
Intensity &
Diversity
of Firms
2. Business
Incentives
1. Supplier
Sophistication
2. Institutional
Support
Nearly 200 Indicators
SrinagarJammu
Shimla
Ludhiana
Amritsar
Chandigarh
Dehradun
GurgaonFaridabad
Allahabad
DelhiNoidaAgra
Meerut
Lucknow
KanpurJaipur
VaranasiPatna
Rajkot
Ahmedabad Vadoda
raSurat
RanchiKolkata
Asansol
JamshedpurRaipur
Dhanbad
Jabalpur
IndoreBhopal
BhubaneswarNashik
PuneMumbai
Guwahati
Nagpur
VishakhapatnamHyderabad
Vijayawada
KochiThiruvananthapuram
Kozhikode
BengaluruMysore
PuducherryMadura
i
ChennaiCoimbator
e
Institute for Competitiveness, India
CITIES THAT WE STUDY
Institute for Competitiveness, India
EVERY CITY HAS A DIFFERENT STORY
Crucial to understand each city as what is right for one city will not necessarily be right for another.
“Mega Cities” “Million plus Cities”
Indicators DELHI KOLKATA JAMSHEDPUR
KOCHI
Population 16753235 4486679 2291032 3279860
No. of Branches of Commercial Banks 2177 1121 179 634
Literacy Rate: Female 80.93 84.98 67.33 94.27
No. of GSM users (per lakh) 265 145 11 19
Molestation Incidence 550 226 6 67
Ownership of consumer durable- Home Theater 23 25 19 31
Share of total passenger traffic (airways) 21.8 15.1 0.7 1.1
Consumer Price Index for Industrial Workers 169 178 103* 158
Starting a business cost (% per capita income) 51.1 39.6 51.5 47.2
Institute for Competitiveness, India
LOOK AT THE ENTIRE PICTURE
For instance, Mumbai
Weak Areas Strong Areas
Number of slums
Number of accidental deaths
Total-corruption cases registered
Population density
0
5000
0
1000
00
61300
9093
1228
20925
Media Reach-Press
Literacy rate: Males
Work Force Participation Rate (per 1000)
Paying Taxes (Time)
010
020
030
040
050
0
98.8
94.28
434
271
Institute for Competitiveness, India
Rank City Overall Competitiveness Score Factor Conditions Demand Conditions Context for Firm
Strategy & RivalryRelated & Supporting
Industries
1 Delhi 69.732 1 1 1 10
2 Mumbai 67.856 2 2 2 4
3 Chennai 62.323 4 5 5 2
4 Hyderabad 61.782 3 12 7 1
5 Kolkata 61.464 6 11 6 3
6 Gurgaon 61.167 7 7 4 23
7 Bengaluru 61.100 5 3 8 18
8 Noida 60.406 9 38 3 5
9 Pune 59.854 8 4 9 8
10 Ahmedabad 58.036 15 8 15 7
11 Nagpur 56.942 17 15 12 14
12 Chandigarh 56.842 10 17 25 15
13 Jaipur 56.263 18 6 19 26
14 Coimbatore 55.955 29 45 10 6
15 Kochi 55.884 28 23 14 11
16 Surat 55.726 26 10 17 20
17 Nashik 55.651 33 9 21 9
18 Indore 55.637 11 35 22 37
19 Thiruvananthapuram 55.434 22 18 18 28
20 Kozhikode 55.212 35 19 11 32
21 Mysore 55.118 12 39 30 33
22 Bhubaneswar 54.642 13 42 27 43
23 Vadodara 54.627 32 25 16 25
24 Rajkot 54.607 36 14 20 27
25 Lucknow 54.584 23 16 39 22
A GLIMPSE: CITY COMPETITIVENESS RANK
First 25 Cities
Institute for Competitiveness, India
A GLIMPSE: CITY COMPETITIVENESS RANK
Rank City Overall Competitiveness Score Factor Conditions Demand Conditions Context for Firm Strategy
& RivalryRelated & Supporting
Industries
26 Madurai 54.570 38 36 13 24
27 Bhopal 54.322 16 40 28 40
28 Kanpur 54.318 19 49 38 12
29 Faridabad 54.097 20 32 36 34
30 Ludhiana 54.022 27 28 23 42
31 Vijayawada 53.964 30 20 32 30
32 Guwahati 53.961 14 46 31 46
33 Raipur 53.849 25 31 26 38
34 Vishakhapatnam 53.741 34 22 33 31
35 Patna 53.580 37 21 42 21
36 Jabalpur 53.249 24 50 34 35
37 Agra 53.157 39 29 46 16
38 Varanasi 53.039 45 41 37 13
39 Meerut 52.975 43 34 40 17
40 Puducherry 52.905 42 27 29 39
41 Asansol 52.813 47 13 35 36
42 Dehradun 52.725 31 30 47 41
43 Ranchi 52.575 40 33 41 29
44 Allahabad 52.573 46 26 48 19
45 Shimla 52.295 21 43 43 49
46 Amritsar 52.181 41 24 24 47
47 Jammu 50.621 44 47 49 48
48 Jamshedpur 50.475 49 44 44 44
49 Dhanbad 49.829 50 48 45 45
50 Srinagar 49.732 48 37 50 50
Next set of 25 Cities
Institute for Competitiveness, India
TOTAL POPULATION VERSUS COMPETITIVENESS
48.00 53.00 58.00 63.00 68.000
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
4380793
7208200
5959798
2490891
7723663
9588910
2368145
22463411054686
4681087
3472578
1698560
16753235
2682662
17989541514085
1260419
40102383272335
2460714
6663971
1526406
2291032
4572951
3279860
4486679
3089543
4588455
34878823041038
3447405
12478447
2994744
4653171
6109052
1674714
5772804
1244464
9426959
40621603799770
2912022
813384
1269751
6079231
3307284
41575683682194
45290094288113
f(x) = 491626.06411456 x − 23111674.848131R² = 0.456085574182312
Microeconomic Competitiveness Score
To
tal
Po
pu
lait
on
Institute for Competitiveness, India
TEACHERS IN GOVERNMENT SCHOOL VERSUS
COMPETITIVENESS
48.00 53.00 58.00 63.00 68.000
1000
2000
3000
4000
5000
6000
7000
8000
9000
6856
1527
8388
2994
1032 988
2541
2379
3257
962
3455
1960
5838
2881
1299 1433
6539
2706
3719
4091
5368
1931
2821
5987
1108
6608
1201
5347
3510
2083
4251
1709
2258
3137
7170
2042
5859
954
7254
154
32073544
482
1208
2047
3774
54565092
8128
f(x) = − 26.0610980946404 x + 5060.10971761456R² = 0.0018373379481994
Microeconomic Competitiveness Score
Teach
ers
in
Go
vern
men
t S
cho
ol
Institute for Competitiveness, India
FEMALE LITERACY RATE VERSUS COMPETITIVENESS
48.00 53.00 58.00 63.00 68.0055
60
65
70
75
80
85
90
95
100
59.16
80.29
62.67
72.8
70.47
84.8
76.6
82.0681.4
87.16
79.1679.61
80.93
64.7
75.2
77.6
85.82
78.4274.975.3017023968697
64.63
77.41
67.33
76.89
94.27
84.98
93.16
73.88
78.276.74
65.69
86.93
66.59
85.07
73.43 72.78
63.72
81.2
81.13
66.21
75.26
68.2
77.8
63.47
81.02
90.89
74.4
68.269.92
60
f(x) = 1.00161399019652 x + 20.1110934625409R² = 0.232115262095215
Microeconomic Competitiveness Score
Fem
ale
Lit
era
cy R
ate
Institute for Competitiveness, India
48.00 53.00 58.00 63.00 68.000.4
0.45
0.5
0.55
0.6
0.65
0.7
0.75
0.8
0.523
0.657
0.523
0.73
0.503
0.656
0.4860.496
0.7350.7440.744
0.587
0.72
0.431
0.68 0.68
0.445
0.662
0.4860.486
0.544
0.512
0.431
0.523
0.772
0.503
0.772
0.523
0.730.744
0.523
0.6630.6560.6630.663
0.523
0.421
0.663
0.663
0.498
0.657
0.431
0.654
0.512
0.657
0.772
0.657
0.523
0.6620.662
f(x) = 0.010483927453262 x + 0.020446456692389R² = 0.15918544815916
Microeconomic Competitiveness Score
Ed
uca
tio
n D
evelo
pm
en
t In
dex
EDUCATION DEVELOPMENT INDEX VERSUS COMPETITIVENESS
Institute for Competitiveness, India
CHEATING INCIDENCE VERSUS COMPETITIVENESS
48.00 53.00 58.00 63.00 68.0020
220
420
620
820
1020
1220
1420
266
212
141
275
47
170
1108
163
524
148204
21
154
254240 151
80105
90
461
297
1271
277
750
385
124
234264
187
53
174
77
663
188
26
168
31
63
126
689
115
209
298294
f(x) = 105.874884875056 x − 5342.86249159677R² = 0.283739149709869
Microeconomic Competitiveness Score
Ch
eati
ng
In
cid
en
ce
Institute for Competitiveness, India
DECADAL GROWTH RATE VERSUS COMPETITIVENESS
48.00 53.00 58.00 63.00 68.000
10
20
30
40
50
60
20.96 22.3120.71
15.48
12.01
46.68
28.5
19.65 17.1
7.77
18.46
32.48
20.96
11.91
31.75
18.95
4.71
32.7
14.4
26.91
12.48
15.53
9.72
5.67.31
25.79
15
17.9515.92
8.01
13.3914.39
22.33
51.52
22.3427.72
30.34
34.65
19.87
23.9
12.58
23.56
42.19
2.25
14.16
17.32
8.15
11.89
f(x) = 0.392096913744253 x − 1.34194088310921R² = 0.0145767385471781
Microeconomic Competitiveness Score
% d
eca
dal
gro
wth
rate
(2
00
1-1
1)
Institute for Competitiveness, India
OWNERSHIP OF CONSUMER DURABLES - MOBILE VERSUS
COMPETITIVENESS
48.00 53.00 58.00 63.00 68.0098
98.5
99
99.5
100
100.5
99
99.4
99.7
99.6
100 100
99.7
98.6
100
99.7
98.6
100100
99.3
99.8
100100
99.6
99.9100 100
100
99.3
99.7
99.3
100
99.3
100
98.6
99.7
99
99.899.7
99.7
100
98.4
98.6
100
99.5
98.6
99.5
98.6
100100
99.5
99.399.399.4
99.799.7f(x) = 0.0166353995871989 x + 98.6175998908751R² = 0.0197344931930757
Microeconomic Competitiveness Score
Ow
ners
hip
of
Co
nsu
mer
Du
rab
les-
Mo
bil
e
Institute for Competitiveness, India
THE UNTAPPED ASSET OF COUNTRY: TIER 2-3 CITIES
Consists of pool of opportunities
Avoids the pitfalls of the megacities
More people are moving towards them as they are facing scarcity of land in Mega
cities
Each city has its own competitive edge
Still preferred by many people
For instance,
Tier I cities Tier II and III cities0%
10%
20%
30%
40%
50%
35%
50%
Growth of organized retail
Institute for Competitiveness, India
URBANIZATION LEVEL OF TIER 2 CITIES
Agra
Asansol
Bhopal
Coimbatore
Dhanbad
Indore
Jaipur
Jamshedpur
Kanpur
Kochi
Kozhikode
Lucknow
Ludhiana
Maduari
Meerut
Nagpur
Nashik
Patna
Rajkot
Surat
Thiruvananthapuram
Vadodara
Varanasi
Vijaywada
Vishakapatnam
0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00
45.87
66.93
80.84
75.83
58.13
74.09
52.51
55.55
65.93
68.07
67.15
66.20
59.14
60.64
51.13
68.30
42.53
43.48
43.48
43.48
53.80
49.54
43.43
41.01
47.51
Source:- Census 2011 and Institute for Competitiveness Analysis
Institute for Competitiveness, India
UNTANGLING THE LINKAGES BETWEEN CITY, COMPETITIVENESS
& ECONOMIC GROWTH More advanced economies are more urbanized economies
Cities tend to be the only place where companies and individuals find opportunities for successful
economic activity
Rise of cities is seen as an inevitable part of development but also as a policy challenge
Avoid a political schism between metropolitan and rural regions
Cities have a different role to play in advanced economies
Cities are the places where different types of proximity benefits can reinforce each other
From the competitiveness perspective, the policy imperative is crucial for cities as well as rural regions
and also the same
Cities and the rural regions around them should cooperate closely
The case with Mumbai
Tried to manage the growth by creating artificial boundaries
The approach failed and made living conditions worse
Different policy approach is required that focuses on better public services and land use inside the city
Competitiveness-oriented policy approach can be used that changes the economic fundamentals of where
people live and work
Institute for Competitiveness, India
SECTORWISE TOTAL INVESTMENTS IN PPP PROJECTS IN
INDIA : 2011
Airports
Education
Energy
Health Care
Ports
Railways
Roads
Urban Development
0 50000 100000 150000 200000 250000
19131
1922.47
85141.18
1887.2
82402.67
3913.03
244289.176
99324.61
Project Cost (Rs. Crore)
Source:- PPP Database and Institute for Competitiveness Analysis
Institute for Competitiveness, India
URBAN INFRASTRUCTURE: TRANSPORTATION IN INDIAN
CITIES Chaotic situation in most cities except the mega cities where the number of commuters is so high that the transportation
seems weak Challenges:
- Vast gaps between demand and supply
- Poor infrastructure such as insufficient routes and roads
- Increase in private vehicles which leads to congestion and also slows down the speed of other vehicles such as buses
etc. to 10-12 km
- Leads to environmental pollution
- Absence of comprehensive parking facilities in the city
Chennai Bengaluru Mumbai Ahmedabad Kolkata Delhi0
1000
2000
3000
4000
5000
6000
7000
0
50
100
150
200
250
300
3414
6110
4652
942 956
5771
278.59
205.38
154.02152.71
99.9
138.66
Total Fleet Held Vehicle Productivity (km/Bus/Day)
Operations of Road Transportation in Major Cities: 2010-11
Source:- Road Transport and highways Ministry, 2010-11 and Institute for Competitiveness Analysis
Institute for Competitiveness, India
OTHER MODES OF TRANSPORTATION
• The other major mode of transportation in cities is Railways
• Though it is dominant for the inter city transportation only in cities
• Also has a different face in every region such as in
- Delhi – Metro Rapid Transit System (MRTS) is main lifeline but Local Rails are also present
- Kolkata – The Underground Metro, The Local Rails and the tram, all are widely used by
commuters
- Mumbai – Local Trains however, metro will be operational after short period, as reported by
authorities
- Bengaluru – The introduction of Metro in the city has change the travelling experience of the
commuters
United Kingdom
United States
Japan
Germany
China
India
South Africa
0
1000
00
2000
00
3000
00
4000
00
5000
00
6000
00
7000
00
8000
00
9000
00
1000
000
55019
9518
244235
78582
791158
903465
18865
Passengers carried by railways (million passenger-km)
Source:- World Bank and Institute for Competitiveness Analysis
Institute for Competitiveness, India
URBAN INFRASTRUCTURE: WATER
Ahmed
abad
Amrit
sar
Benga
luru
Bhopa
l
Chand
igar
h
Chenn
ai
Coim
bato
re
Indo
re
Jam
shed
pur
Kolka
ta
Mum
bai
Nagpu
r
Nashik
Rajko
t
Sura
t
Varan
asi
Vijayw
ada
Visak
hapa
tnam
Avera
ge
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
0
2
4
6
8
10
12
14
0.1680.213 0.1850.182
0.332
0.1310.2860.108
0.808
0.246
0.2460.267 0.248
0.146
0.188
0.2170.22
0.3050.244
2
11
4.5
1.5
12
5
3
0.75
6
8.3
4
5
3.5
0.3
2.5
7
3
1
4.3
Production/Population (m3/d/c) Water availability (hours)
Pro
ducti
on/P
opula
tion (
m3/d
/c)
Wate
r A
vailabilit
y (
hours
)
AVERAGE= 0.244
Source:- India Infrastructure Report 2011 and Institute for Competitiveness Analysis
Institute for Competitiveness, India
URBAN CLUSTERS
“Geographical concentrations of industries that gain performance advantage through co-location”
Brings together companies, suppliers, service providers and associated institutions in a particular field
The close proximity – by geography and activities - provides economic benefits
Facilitate commercialization and new business formation through spinoffs and startups
Cluster initiatives can act as policy catalysts for competitiveness
Growth of one competitive firm generate demand for other related industries
Forces firms to improve and innovate
Facilitate technology and knowledge transfer that strengthens the cluster and promotes future growth
Few examples: City Industrial Cluster
Raipur Iron & Steel Cluster
Ahmedabad Chemical Cluster
Surat Gem & Jewelry Cluster
Nashik Engineering cluster
Guwahati Bamboo Cluster
Vijayawada, Chennai
Auto Components Cluster
Bangalore Machine Tools Cluster
Hyderabad Pharma Cluster
Kanpur Leather Cluster
Ludhiana Textile Cluster
Institute for Competitiveness, India
SUCCESS STORY OF CLUSTER IN BENGALURU
The ICT Cluster in Bengaluru has attracted people and is also known as the Silicon Valley of India
Currently Boasts of over 1500 IT firms out of about 3500 IT firms in India
Indian companies such as Infosys, Wipro, Iflex have strong presence
Wholly-owned subsidiaries of MNCs such as Motorola, Texas Instruments and Hewlett Packard have their base
in the city
Around 1/3rd of all of India’s software exports are from the city
United Nations Human Development Report has ranked the city as the 4th in the category of global hub of
technological innovation
Factors that contribute
Educational Institutions and training centers (IISC, IIIT, IIM etc.)
Research Institutions (ISRO)
Government policies (central and local)
Y2K Problem (resulted in giving an important impetus to IT development)
Quality issues
Jobs creation“Bangalore is a model of how an agglomeration can bring prosperity to a poor country”
- Edward Glaeser, Harvard University
Institute for Competitiveness, India
ESTABLISHED IT/ITES HUBS IN INDIA
NCR Delhi
Kolkata
Mumbai
Hyderabad
Chennai
Bangalore
Pune
Total STPI Registered Units by 2006-07: 1400IT/ITeS Majors: IBM, Genpact Oracle, American Express, Convergys, HP, General Motors
Total STPI Registered Units by 2006-07: 166IT/ITeS Majors: IBM, Cognizant, TCS, Infosys, Wipro
Total STPI Registered Units by 2006-07: 1060IT/ITeS Majors: Hp, Amazon, Verizon, Convergys, EXL, Infosys, TCS
Total STPI Registered Units by 2006-07: 900IT/ITeS Majors: Infosys, Wipro, Accenture, Cognizant
Total STPI Registered Units by 2006-07: 630IT/ITeS Majors: TCS, Infosys, Wipro, Siemens, Accenture
Total STPI Registered Units by 2006-07: 635IT/ITeS Majors: Cognizant, Convergys, EXL, KPIT, Msource
Total STPI Registered Units by 2006-07: 1700IT/ITeS Majors: Wipro, TCS, HP, Siemens, HSBC, Compaq
Cumulative software
exports from Bangalore are estimated to be
US$ 11 billion, positioning it as the
leading IT hub of India
Source:- Paper on “Knowledge-based Custer Development in India Opportunities and Challenges”, MIT
Institute for Competitiveness, India
AUTOMOTIVE CLUSTERS IN INDIA
Himachal Pradesh
DELHI
Haryana
West Bengal
Kolkata
Gujarat
Maharashtra
Mumbai
KarnatakaBangalore
Andhra Pradesh
Tamil Naidu
Chennai
Maruti Suzuki, Honda,
Hero, Yamaha, LML
NORTH
GM, TATA, Fiat, Bajaj,
Mahindra, Mercedes Benz,
Volkswagen, Eicher, Force,
Skoda, Audi, Mahindra
Renault, Swaraj Mazda
TATA, HM
EAST
Hyundai, Ford, Mitsubishi
Motors, TVS, Toyota, Volvo,
Royal Enfield, BMW, Nissan,
Renault Nissan
Source:- Harvard Business School – Spring 2012
Institute for Competitiveness, India
ENHANCING CITY COMPETITIVENESS
Focus on
1. Public-Private
Partnerships
- Increases the ease of business, fetches innovative ideas, provide potential
for financing
- One of the successful model is the Delhi Noida Bridge
2. Dealing with
Urbanization
3. Urban Poverty
4. Transparency and Civic
Engagement
5. Other Common
Areas
- Understand the city challenges & search their solutions, improve internal &
external environment
- Some Tier-2 & 3 cities like Guwahati, Bhopal, Faridabad, Coimbatore are
urbanizing at a fast pace- Leads to vulnerable conditions, create issues with respect to sanitation, water,
health , education etc.
- Government programmes: Swarna Jayanti Shahari Raozgar Yojana (SJSRY), JNNURM,
Rajiv Awas Yojana- Engage major stakeholders in most of the development activities
- A tool for the betterment of the democracy and thus the city
- Includes basic amenities, infrastructure, facilities etc. required for a decent
standard of living
Institute for Competitiveness, India
GOVERNANCE
Movement of power
Center
State
Urban Local Government
Therefore,
Clear boundaries between Metropolitan governance body and municipal corporation
Need to make institutional arrangements
Empower Local bodies
Create well defined model for governance structure
Focus should be on managing the change wherein expectations of all stakeholders is taken into
consideration
provide quality services in adequate
quantities to the residents A ‘GOOD’ City = sound political and governance system
are responsive towards the requirements of the businesses
City Mayor
City Management
Service Delivery Agencies
Institute for Competitiveness, India
Focus on
1. Built Character
- Governed by planning norms, building controls and urban policy
- Immediate spatial and visual impact of city’s “Hardware” positively influence the
psyche of people
2. Urban identity
3. Urban behavior
4. Interstitial
urbanism
- Urban contexts of the city strike a deep chord with its residents
- Characteristics such as historicity, accessibility, multi-vocal qualities and
inclusive nature are valued - It replicates itself in recognizable pattern at multiple scales
- Helps to openly engage, individually and collectively
- Adds immeasurable value to the city
- Vitalizes a city, encourage a sense of belonging amongst residents and their
engagement with the city
CITY BRANDING FROM WITHIN
Delhi can be branded if following possibilities are looked upon: Innovatively utilizing the old structures even when urban infrastructure are being constructed Enhancing the inclusiveness of the city via urban villages & historic settlements so as to make them
vibrant contributors to Delhi’s urban experience Improving the basic amenities within the city etc.
Institute for Competitiveness, India
INDIA CITIES ON GLOBAL BENCHMARK
Tokyo (68)Shanghai (55.2)
Los Angeles (61.5)
New York (71.4)
London (70.4)
Hong Kong (69.3)
Paris(69.3)Zurich (66.8)Chicago
(65.9)
Singapore (70)
Delhi (46.7)
Kolkata (37.8)
Chennai (38.1)
Bangalore (44.6)
Mumbai (46.6)
Ahmedabad (41.9)
Source:- Economist Intelligence Unit and Institute for Competitiveness Analysis
Hyderabad (39.4)
Institute for Competitiveness, India
KEYS FOR SUCCESSFUL CITIES
Vision
Entrepreneurship
Specialization
Social cohesion
Governance
ambition for future + desire + shared value system
shaping people and not merely “shaping knowledge”
understand every city’s unique characteristics
Creative city planning which, addresses social issues
Include principles such as, participation, coherency,
competitiveness, subsidiarity, sustainability
Institute for Competitiveness, India
THE CITIES OF FUTURE
Present cities seems stressed on multiple accounts that is, overpopulation, sketchy resources, exorbitantly
high cost of living index, mal governance etc.
So the cities of future would primarily be an itsy-bitsy variation of current cities
Current cities have built in so many contra forces that they are now leviathan white elephants. However it
is being suggested that city of future would be fragmentisation of population clusters
Every employee shall serve many firms
Geography and power would no longer correlate
21st century man is absolutely asocial
Technology will keep on pouring and will make one city advanced and other obsolete
Therefore, cities needs to see their future and then address the stresses bothering them and should not
depend on the vacuous pronouncements of politicians
Indian Market is Highly Regional
Uneven Pattern of
Wealth Distribution
Seasonality
Cultures &
Languages
Strategizing for Success in India
Is it an easy market to crack
Where should we focus
Who are the successful players
Local Mom and Pop Store
The End