LIFE AFTER A BIG BLACK HOLE… A COMPETITIVE OUTLOOK FOR 2009, AND BEYOND
FACING GLOBAL CHALLENGES
COPENHAGEN 8 SEPTEMBER 2009
STEPHANE GARELLI PROFESSOR AT IMD AND AT THE UNIVERSITY OF LAUSANNE, SWITZERLAND, DIRECTOR WORLD COMPETITIVENESS CENTER DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
« THE TROUBLE WITH OUR TIMES IS THAT THE FUTURE IS NOT WHAT IT USED TO BE.. »
PAUL VALERY, 1871 - 1945 DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
COMPETITIVENESS IS ABOUT WINNING
GDP
ECONOMI C GROWTH PROFIT
QUALITY O F
LIFE
MANAGIN G PROSPERI TY SUSTAINABILI
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
TY
A CRISIS IN THREE ACTS ACT I
ACT II
ACT III
FINANCIAL CRISIS
ECONOMIC CRISIS
SOCIAL CRISIS
VALUE DESTROYED
GDP DESTROYED
JOBS DESTROYED
WORLD
WORLD
WORLD GDP
WORLD GDP
SHARES
- $50’000bn
V
LOANS
FOR SALE
V
- 5%
-V 50 MILLION
HOUSES
SAVINGS
ECONOMY
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
EMPLOYMENT
STEPHANE GARELLI
ACT I
THE FINANCIAL CRISIS DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
SOLVING THE FINANCIAL CRISIS… THE STANDARD MODEL
1. FLOOD THE STREET WITH MONEY
2. PACK THE BAD DEBT AWAY
BAD BANK…
3. RECAPITALIZE AND TAKE PART OWNERSHIP
4. LATER, RESELL THE BAD DEBT OR THE SHARES DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
BAILING OUT THE WORLD $789bn
$209bn $450bn $586bn $151bn $41bn
$111bn
$68bn
TOTAL COST
STIMULUS:
LOAN GUARANTEES:
$3’200bn
$2’700bn
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
US BUDGET DEFICITS: THE LEGACY 1999: +$236bn
2009 DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
- $1750bn
- 13% OF GDP
STEPHANE GARELLI
1750 BILLION DOLLARS!!!
2 MILLION DOLLARS PER DAY
0 DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
8 SEPT. 2009
STEPHANE GARELLI
THE EXIT STRATEGY? IT IS EASIER TO STAY OUT
THAN TO GET OUT! MARK TWAIN 1835 - 1910 DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
IN ADDITION: AN OCEAN OF DEBT… $11.2 tn
+ $ 3.7bn per DAY!
US NATIONAL DEBT
$7.0 tn $6.0 tn $5.0 tn $4.0 tn $3.0 tn
1990
2000
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
2009 STEPHANE GARELLI
DEBT IN THE G20 as a % of GDP
114% 106%
78% 2007
2010
2014
+ $9,000bn DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
THE EMPIRE STRIKES BACK
MORE GOVERNMENT POWER ! HELP
GOVERNMENT DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
BUSINESS STEPHANE GARELLI
A GOVERNMENT BIG ENOUGH TO GIVE YOU EVERYTHING YOU WANT
THOMAS JEFFERSON 1743 - 1826
IS STRONG ENOUGH TO TAKE EVERYTHING YOU HAVE
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
ACT II
THE ECONOMIC CRISIS DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
THE WORLD ECONOMY
Q1 Q2
ANNUAL % CHANGE (12 month period) EURO AREA
-4.6
-5.6
UK
-10.9
RUSSIA NOSE DIVING CH -2.4 POLAND OR -6.2 SWEDEN -4.1 LEVELLING-OFF? SPAIN HUNGARY -5.1 NL (compared to previous quarter) CZECH. REP
ITALY
0.8 -7.6 -3.4
-6
AUSTRIA -4.4
-13.8
TURKEY
-5.9
GERMANY
FRANCE BELGIUM
-2.6 -3.8
3.7%
-2.4
-10.3
1.4% -0.6
COLOMBIA CHILE BRAZIL ARGENTINA
-0.4%
Q2 0.4
THAILAND
-3.2% MEXICO
-6.4
AUSTRALIA
DENMARK -4.1
VENEZUELA
JAPAN
-4.5
-4.9 +1.3% TAIWAN -7.5 -2.5 KOREA SINGAPORE -3.5 +20.4% -2.8 SOUTH AFRICA MALAYSIA -3.9 INDONESIA
-1.8
-1.0% HONG KONG
2.0
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
INDIA
- 3.9%
4 5.8
-3.8 CHINA
STEPHANE GARELLI
7.9
FOLLOWING EXCEPTIONAL YEARS! EXPORTS OF GOODS (bn$)
2008
117
2001
1465 51 1428
571
633
266 230 DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
729 STEPHANE GARELLI
1300
RECESSION IN FOUR SIZES…
1990
1973 - 2001 DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
WHICH RECESSION?
OR
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
THE ECG « U » RECESSION
BEFORE
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
AFTER
STEPHANE GARELLI
WILL STIMULUS PLAN WORK?
REVENUES ? D N E SP
SAV E?
WEALTH CONSUMERS DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
QUIZZ (NO ANSWER…) 1. HOW MANY PRODUCTS IN A TYPICAL HOME?
2. HOW MANY MORE CAN YOU BRING IN? DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
DRIVERS OF ECONOMIC GROWTH REPLACEMENT ECONOMY
FIRST BUY ECONOMY
A PURCHASE INTRODUCES A NEW PRODUCT
A PURCHASE REPLACES A N EXISTING PRODUCT
« DRAMATIC » INNOVATION
PURCHASING POWER
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
IS INNOVATION VALUE ? US PATENT OFFICE
EVERY YEAR
DELIVERS
40 NEW MOUSETRAP PATENTS 4,400 MOUSTRAP PATENTS SINCE 1838! DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
ACT III
THE SOCIAL CRISIS DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
AND THE TERRIBLE TWO… JOB LOSS WORLDWIDE 2008 - 2009
50 MILLION
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
WHY INFLATION? IN FAVOR
1. TOO MUCH LIQUIDITY
2. STIMULATE ECONOMIC GROWTH
3. REDUCE DEBT
AGAINST
INVENTORIES...? OVERCAPACITIES...? DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
IN NEED OF A PURPOSE… « A BUSINESS THAT MAKES NOTHING BUT MONEY
IS A POOR BUSINESS! » HENRI FORD 1863 - 1947 DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
A NEW SENSE OF ETHICS BEING GOOD AT WHAT YOU DO
BEING GOOD AT WHAT YOU ARE DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
THE POWER GAME IS CHANGING
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
WHO IS HAVING THE MONEY? Foreign currency reserves
$1953bn
$1019bn $385bn
$305bn
$256bn
$205bn
$204bn
$767bn
TREASURY BONDS ( Total: $3265bn) DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
NEW PRIORITIES FOR MONEY FINANCIAL ASSETS
INFRASTRUCTURE
GOVERNMENT BONDS
LOCAL AND REGIONAL
INDUSTRIAL ASSETS
EVERYWHERE DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
LOCAL COMPANIES
AT HOME STEPHANE GARELLI
A WORLD OF NEW BRANDS…
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
GOOD NEWS
YES
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
THE ORIGIN OF GROWTH? EMERGING MARKETS
M
LE D ID
SS A CL
CLEAN TECH
LIFE EXPECTANCY
INCREASES 5 HOURS PER DAY
Y T I IL B A N I A T S SU DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
EMERGING «LESS POORS » EL D O M S. U B W NE
AGE AND WELLNESS R E TH O AN STEPHANE GARELLI
? E F LI
IS IT SUSTAINABLE?
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
VOLATILITY… 147$
75$ 70$ 16$ July 2008
1999
NOW
- 27% FOOD INDEX DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
RECOVERY? STEPHANE GARELLI
AND FROM THERE? BUT
300 LITERS OF METHANE PER DAY!
60% AGRICULTURAL LANDS ARE FOR ANIMAL FEED
15’000 LITERS OF WATER FOR 1 KG OF BEEF DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
ENVIRONMENT IS BIG… MR FARADAY, WHAT IS THE USE OF ALL THESE INVENTIONS? WILLIAM. E. GLADSTONE
I AM NOT QUITE SURE… BUT I KNOW THAT ONE DAY YOU WILL TAX THEM... MICHAEL FARADAY DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
THRIVING THROUGH A BIG BLACK HOLE
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
WHERE WE COME FROM…
WORKING BETTER
WORKING CHEAPER
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
WORKING ELSEWHERE
STEPHANE GARELLI
THE NEXT FRONTIER:
S E C O PR
S E S
S T C U D O PR
e.g IPOD PURCHASING ORDER
COST EFFICIENCY DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
SATISFACTION STEPHANE GARELLI
NEW: REDUCING COMPLEXITY… « THERE IS NOTHING SO USELESS AS DOING EFFICIENTLY
SOMETHING THAT SHOULD NOT BE DONE AT ALL… » PETER DRUCKER, 1909 - 2005 DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
A SMALL SECRET IN COMPETIVENESS…
THE IMD WORLD COMPETITIVENESS YEARBOOK 2009
DIVERSIFICATION OF THE ECONOMY
COMPETITIVENESS OF SMEs
NR 1.
NR 2.
EASE OF DOING BUSINESS NR 3. DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
CHANGING THE MINDSET
COMPETENCIES AND SKILLS
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
THE BIGGEST DANGER… « WE STARTED TO BELIEVE OURSELVES
ALL THE GOOD THINGS THAT WE WERE TELLING TO OTHERS » ANONYMOUS CEO…
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
THE SPIRIT OF COMPETITIVENESS…
POURQUOI –PAS? JEAN-BAPTISTE CHARCOT 1867 - 1936
WHY NOT? MENTALITY
DANISH GROWTH COUNCIL, CHRISTIANSBORG, 8 SEPT. 2009
STEPHANE GARELLI
