Future of global mobility and international economy
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Keynote address to Forum of Expatriate Management global mobility EMEA summit on future trends in global economy, demographic change, technology
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Future of global mobility and international economy
- 1. The future of global mobility and the international economy 6 November 2015 Mark Beatson Chief Economist, CIPD
- 2. Nothing is certain, but some things (we think) we know … Known knowns Known unknowns Unknown knowns Unknown unknowns
- 3. “Prediction is very difficult, especially about the future”
- 4. Contents • Globalisation • The international economy • Population change • Known unknowns
- 6. Globalisation Freedom of movement: Goods Services Money People Data Knowledge Proximate drivers Tariff liberalisation Financial liberalisation Transport costs Information processing costs Long term drivers Political openness Technology development
- 7. Globalisation: expansion of world trade 0 100 200 300 400 500 600 700 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Volume of goods and services traded globally, 1980 = 100 Source: IMF
- 8. Globalisation: putting global flows in context (annual average compound growth rate) 7.7% 11.6% 4.1% 2.7% 47.6% Goods (1980- 2011) Services (2001- 2011) Money (2002- 2012) People (2001- 2011) Data (2008- 2013) Source: McKinsey Global Institute, ‘Global flows in a digital age’
- 9. Source: McKinsey Global Institute, ‘Global flows in a digital age’
- 10. Source: McKinsey Global Institute, ‘Global flows in a digital age’
- 11. Top 10 most connected nations, 2012 Rank 2012 Goods Services Money People Data Flow intensity (% of GDP) Germany 1 3 5 7 5 2 110 Hong Kong 2 1 4 3 14 N/A N/A USA 3 8 9 5 1 7 35 Singapore 4 2 3 4 18 5 436 UK 5 13 6 9 7 3 60 Netherlands 6 6 7 15 29 1 157 France 7 9 10 36 15 4 60 Canada 8 16 22 13 9 18 76 Russia 9 19 30 16 2 21 63 Italy 10 11 20 31 16 10 59 Source: McKinsey Global Institute, ‘Global flows in a digital age’
- 12. There are only 6 “truly connected” global cities* •London •New York •Hong Kong •Tokyo •Singapore •Dubai Cities with at least one million residents and major hubs for at least four of the five flows. Source: McKinsey Global Institute, ‘Global flows in a digital age’
- 14. Emerging economies have increased in relative importance 0 10 20 30 40 50 60 % share of global GDP (PPP basis) G7 China India Russian Federation Brazil South Africa Source: IMF
- 15. But there are still wide gaps in living standards 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 GDP per capita (PPP basis, current international $) Brazil China India Russian Federation South Africa G7 Source: IMF
- 16. The short term outlook is reasonably benign -6 -4 -2 0 2 4 6 8 10 % GDP growth by year, constant prices, market exchange rates, 2015-2020 Source: IMF
- 17. China and India are projected to become even bigger global players by 2030 0% 5% 10% 15% 20% 25% 30% Potential output as % share of world total, 2015-2030, 2005 PPP basis Source: OECD
- 19. Population age structures vary Source: Eric Kaufman, Birkbeck College.
- 20. Old-age dependency ratios will increase in most advanced economies – but not everywhere 0 10 20 30 40 50 60 70 80 % (% of population 16+ aged 15-64) 2011 2030 Source: OECD
- 21. Changes become more acute in the long term -20 -16 -13 -12 -12 -11 -10 -8 -8 -8 -7 -6 -6 -4 1 2 % point change in population aged 15-64 as % of population aged 16+, 2011-2060
- 22. Known unknowns
- 23. Technological innovation as the source of long-term growth • Will the USA remain the global technology leader? • Has the pace of innovation slowed down? Or is it set to accelerate? • Has the pace of innovation diffusion slowed down? If so, what’s stopping it? • Impact of climate change – mitigation versus adaptation
- 24. Global commodity prices 0 20 40 60 80 100 120 140 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Constant prices, 2005 $, 2010=100 Source: World Bank Energy Non-energy
- 25. Educational attainment is on the rise everywhere – to varying extents 0 2 4 6 8 10 12 14 16 18 Mean years in education for the adult population 2010 2060 Source: OECD
- 26. Women’s employment can rise further 0 10 20 30 40 50 60 70 80 90 Iceland Norway Switzerland Sweden Netherlands Denmark Canada Finland Germany Austria NewZealand Australia UnitedKingdom Estonia Israel(1) UnitedStates Japan Slovenia France Luxembourg Portugal CzechRepublic OECD-Total Belgium Ireland Korea Poland SlovakRepublic Hungary Spain Chile Italy Mexico Greece Turkey Female employment rate, 2012 Source: OECD
- 27. Political stability • USA • Euro area • UK • Emerging markets: • Brazil • China • India • Russia • South Africa • Systemic versus country risk?
- 28. Societal values and attitudes 0% 10% 20% 30% 40% 50% 60% 70% % of people who would not like to have immigrants/foreign workers as neighbours, 2005/06 Source: World Values Survey, wave 5
- 29. “When my information changes, I alter my conclusions. What do you do, sir?”
Editor's Notes
- Globalisation = degree to which there is movement around the world of: goods and services (see chart); people; money; ideas (think the internet).
- This chart summarises the data in the McKinsey report on the overall growth rates of different components of globalisation. We have seen steady and strong growth in trade of both goods and services. We trade more physical goods and we are now starting to trade services as they become easier to move from one place to another. Growth in finance is not as high but this period spans pre and post financial crisis. Capital flows and investment declines post crisis. Growth in people moving from one country to another (either for short term reasons or as permanent migrants) has not increased as rapidly as growth in trade or financial markets. This is presumably because countries retain the right to decide who enters their country, whereas, if they are WTO members, countries have to abide by rules allowing market access to foreign traders and investors. The growth of data is spectacular in comparison but note this is for a shorter period and that the measure used is the volume of data crossing boundaries. Continuous technology improvement means that more and data can be processed more quickly, and this feeds through into the data used. The growth in the value of the data transmitted may not be as large.
- McKinsey’s calculate an index of connectivity – exact formula not provided. The table gives the ‘top 10’. The left side gives the overall rank with subsequent columns giving the rank for each of the 5 elements separately. ‘Flow intensity’ is a measure of how big these flows are in relation to GDP. Note this is related to country size: small economies like the Netherlands, Singapore or Hong Kong always have measures of flow intensity simply because they are not big enough to specialise in everything. Rankings have not changed greatly since 2012.
- The report also looks at cities and concludes that there are only 6 “truly connected” cities that meet their criteria of having at least a million residents and being major hubs for 4 out of 5 of trade in good and services, money, people and data.