India becomes the new global economic growth pole: What does it teach our businesses?
Harvard University’s Center for International Development (CID) growth projections have featured India on top of the list of the racing economies till 2025, expecting an average annual growth of 7.7 percent. The study suggests that India’s growth path is because the country is well positioned to continue diversifying into new areas.
Before India, China was topping the list.
Thanks to the new capabilities
“India has made inroads in diversifying its export base to include more complex sectors, such as chemicals, vehicles, and certain electronics,” the CID research suggested.
The larger oil economies are experiencing the deadfalls of their dependence on a single resource. India, Indonesia and Vietnam have acquired new capabilities, allowing for more diverse and complex production that predicts faster growth in the coming years.
What does it tell to the business owners?
Economic growth declines to follow one easy pattern. The nations that are presumed to be the fastest-growing — India, Turkey, Indonesia, Uganda, and Bulgaria — are distinct in all political, institutional, geographic and demographic dimensions.
They share a focus on expanding the capabilities of their workforce that leave them well placed to diversify into new products and those of increasingly bigger complexity.
The three types of economies (read “businesses”)
The projections classify countries into three basic categories.
1. The countries with too few productive capabilities to quickly diversify into related products.
2. Those have enough skills that make diversification and growth easier, which includes India, Indonesia and Turkey.
3. The advanced economies such as Japan, Germany and the US that already build nearly all existing products, so that advancement will require pushing the world’s technological edge by inventing new products, a process that implies moderate growth. Do you see how similar it is to a big fat corporate?
“Growth in emerging markets is predicted to continue to outpace that of advanced economies, though not uniformly,” says CID’s new growth projections.
The growth projections focus on measures of each country’s financial complexity, which captures the diversity and finesse of the productive capabilities embedded in its exports and the ease with which it could further expand by developing those skills.
How do you think you can diversify your business for better scalability? Tell me on Twitter: Bipin Domy Thomas