U.S., China and India Growth to Expand World Economy to $100 Trillion by 2020
Study Conducted by Economist Intelligence Unit (EIU) Shows Personalization, Knowledge Workers and Collaboration Technologies Will Play a Critical Role in Corporate Success.
SAN JOSE, Calif., March 30, 2006 - By the year 2020 a new global economic paradigm will emerge defined by the globalization of companies, the increased role of knowledge workers and the personalization of customer experiences as key factors to economic success, according to a study released by the Economist Intelligence Unit (EIU).
The definitive study, sponsored by Cisco Systems, projects the rapid continued globalization of the economy with the United States, China and India driving more than half of world’s economic growth over the next fifteen years. The study also explores the challenges faced by the economies of Europe and Japan due to aging workforces or relatively lower levels of productivity.
Specifically the study found that tailored customer experiences will play a critical role in economic success. Companies will differentiate themselves and create competitive advantage by creating high touch customer experiences through customization of products and quality of customer services Cisco has found that as production processes and transactions become more commoditized and automated, value with customers lies in hard-to-replicate personal relationships and interactions. These interactions will be heightened by collaboration, high-value services and knowledge workers all enabled by technology.
“This study underscores what we see every day with our customers -The global economy is evolving rapidly as globalization and technology change our industries, our companies and our workforce in ways that we never imagined a decade ago,” said Rob Lloyd, Senior Vice President of U.S. and Canada Operations. “Knowledge workers combined with IT can change customer experiences. Companies that can collaborate globally to create the customer experience will win the competitive battleground.”
The study’s projections of sizeable growth in global economic output despite only a 15 percent increase in workforce also validates the importance that productivity-based interactions will play in economic growth for the next 15 years.
The EIU surveyed 1,656 executives from 100 countries and conducted in-depth interviews with executives, analysts and policy makers in late 2005.
Key findings of the study include:
Economic growth is expected to remain robust over the next 15 years with the United States, China and India accounting for more than 50 percent of all new growth. Overall, global gross domestic product (GDP) will grow at an annualized rate of 3.5 percent.
The US, which will account for 16 percent of the world’s economic growth, will continue to outpace other major developed economies between now and 2020. U.S. growth will be driven by its ability to continue to add knowledge workers to its workforce that are strong in skills such as collaboration, communication, decision-making and leadership. In addition, the US will benefit from interaction-based productivity from continued investment and use of information technologies.
By 2020, China’s economy measured at purchasing power parity (PPP) exchange rates will be on par with the United States and Asia’s overall share of the global economy will rise to 43 percent from 35 percent currently. During this growth period, China is set to have the second largest consumer market and will have the largest tech sector.
471 million net new workers will enter the global workforce, with India accounting for a remarkable 30 percent (142.4 million). China will account for 65 million, with the United States the third-largest contributor with 12.5 million new workers. The EU will experience a growth of 8.4 million workers. The overwhelming majority of new U.S. and EU jobs will be in the service industry.
While price and quality will continue to matter, more than 90 percent of those surveyed believe the importance of the personalization of services will increase dramatically as interactions and customization become vital components of both customer service and worker behavior.
As automation of process becomes more prevalent, companies will increasingly seek competitive advantage by enhancing the productivity and growth of knowledge workers. Among survey respondents, the greatest area for productivity gains is knowledge management. Technology spending will shift to enable knowledge workers to do their jobs better.
The nature of the workforce will continue to change. Two-thirds of executives expect flatter organizations in which independent decision-making and collaborative environments will be the norm. These changes will require a new approach to organizational management and human relations. Customers and suppliers will become more involved in product development, cross-functional and cross border teams will work together more frequently and partnerships with other organizations will proliferate.
While its income per head will lag behind, by 2020 China will be on par with the United States as the leading consumer market. China’s share of global consumer spending will nearly triple in the next 15 years. Asia overall will be the largest consumer region. For example, by 2020 Asia is projected to account for 38 percent of all car sales, nearly double current levels.
About the Survey
As mentioned, the EIU surveyed 1,656 executives in over 100 countries. Nearly a third of those surveyed were CEO level. Respondents were spread fairly equally from Asia-Pacific (30 percent), Western and Eastern Europe (34 percent) and North America (27 percent). The Foresight 20/20 study findings can be found at www.cisco.com/go/foresight2020.
About Cisco Systems
Cisco Systems, Inc. (NASDAQ: CSCO) is the worldwide leader in networking for the Internet. Information about Cisco can be found at http://www.cisco.com. For ongoing news, please go to http://newsroom.cisco.com
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