India will become a bigger economy than Japan and the third biggest behind China and the United States in the next three decades, Lord Swraj Paul, non-resident Indian industrialist and British Ambassador for Overseas Business, has said.
Addressing a distinguished gathering at the Executive Development Centre for UBS AG in Wolfsberg, Switzerland on Monday night, Lord Paul referred to the rapid strides made by China and India and said: "The long-term prospects for India, while from a lower starting point, are, if anything better. Its fifty-year growth rate is put at just above five per cent."
Speaking on 'Manufacturing and Globalisation' Lord Paul, who is the co-chairman of the India-United Kingdom round table, said, "India will not overtake the United States over this period but will become a bigger economy than Japan and thus the third biggest behind China and the United States, in the space of thirty years."
However, "this does not necessarily indicate that these countries with their massive populations will become richer than the West," he cautioned.
Even by 2050, "China's GDP per head will still be half that of Britain, and less than 40 per cent of the United States. India's will be less than 30 per cent and 20 per cent of Britain and the United States, respectively."
"Unmistakable though is the extent of catch up, especially as these countries will retain their labour competitiveness for years to come.
"While the West will remain richer for the foreseeable future, the economic picture of the 21st century is a relentless shift of economic power to the East," Lord Paul, who is also the Chancellor of the Wolverhampton University in the UK said.
He said while many commentators treated these statistics as an example of the threat that "we face in Europe, we should also bear in mind that such growth gave manufacturers greater opportunities to sell into new emerging markets."
Other long-term economic debate has been focused on demographics, and how stagnant or declining populations would slow the global economy.
"As a person who is passionate about manufacturing, I would take the opposite view -- there will be a huge source of global growth in the next fifty years, with the prospects being if anything better than the last fifty.
"This rapid internationalisation, which leaves manufacturing more exposed than any other sector of the economy, is also having a huge impact on the ownership of companies," Lord Paul said.
Noting that different countries have different industrial organisational structures, Lord Paul said twenty years ago, there was concern that Japan had a superior economic model to the US.
"This drove US companies into a healthy re-examination of their flaws and challenges. The same needs to be done today in every developed country," he said.
"We all need to consider the situation in China and India and how best to compete and take advantage of the situation there. These improving economies are creating new and bigger markets. What we need to do is to treat them as partners and not as a threat.
"This is not a war where one economy's victory is another's loss. We all win when things go forward, but if we are not realistic about our strengths and how to act on them, we could go backwards."
The prescription for Europe, Lord Paul said, was that it must invest more in innovative products.
Business experts, Lord Paul said, recognised that the stimulation of innovation in manufacturing is a key issue for the future, but they also knew that innovation is a very complex process since it affected society, as well as the economy.
"On one hand it provides new and more interesting work, with higher pay and better prospects. But it demands more and better skills, continuous learning and commitment, higher professional standards and education in numeracy and information technology. All this depends on how well we teach and encourage science and technology at school and university.
"And this is where China and India are getting ahead because they are improving their educational standards so fast. In fact, the United States is showing a preference for graduates from the Indian Institute of Technology. So we must improve the quality of our educational institutions further."
Lord Paul said Europe must ensure that its policies did not protect and shelter inefficiency, but promoted competitiveness, enterprise, innovation and skills.
