MyIndiaBook

1. International Trade Will Continue to Drive Global Economic Growth

Global economic growth in the post-war era has largely been driven by international trade. In particular, the U.S. and East Asia have constituted the twin engines of the global economy.  Going forward, international trade will continue to be the key driver of international trade. 

2. Global Services Era

However, the composition of trade will likely change from goods to services.  By 2050 international trade in services (i.e. global services) will exceed international trade in manufacturing.  This shift will be driven by the following sub-trends:

a. Demographic Changes in Industrialized Countries

The industrialized countries will likely experience tight labor markets as a result of the aging of the baby boomer generation.

b. Technology

Technological advances, particularly in wireless broadband communications, semiconductors and web 3.0 applications. These advances will further improve the value proposition of global services.

3. Resurgent India

India will continue to be the preferred global services destination as a result of its skilled low- cost English speaking workforce.

• Indian global services vendors will continue to capture market share from legacy services companies by through value addition. 
• By 2020, India’ three largest global services companies will be featured in the Fortune 500 ranking of global companies
• By 2025, India’s exports will surpass the US$ 1 Trillion mark.
• By 2050 India will be the world’s largest exporting country and world’s largest economy, driven by services.

In addition, structural changes within the Indian economy will boost India’s long-term growth trajectory.  These structural changes include:

• An increase in savings rate from 20% to 34%
• Greater public investment in infrastructure and education.
• Utilization of PPP model to further boost infrastructure investment
• Productivity gains from leveraging technology
• Rapid growth in low-cost education in remote areas through distance education
• Rapid growth in financial services and insurance aimed at the Base of the Pyramid.

In short, the macro trends that are likely to shape the global economy over the next half-century are well aligned with India’s strengths.  India is therefore likely to sustain a growth rate of between 7-10% until at least 2020.

Raju Agarwal