__________________________________________Anil K. Gupta, Asia’s Rise in an Era of Uncertainty.February 2017. All rights reserved.

Asia’s Risein an Era of Uncertainty

ANIL K. GUPTAMichael Dingman Chair &Professor of Strategy, Globalization & EntrepreneurshipSmith School of BusinessThe University of MarylandCollege Park, MD 20742, USAEmail: agupta@rhsmith.umd.eduWeb: www.anilkgupta.comTel: +1.301.405.2221

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__________________________________________Anil K. Gupta, Asia’s Rise in an Era of Uncertainty.February 2017. All rights reserved. 2

__________________________________________Anil K. Gupta, Asia’s Rise in an Era of Uncertainty.February 2017. All rights reserved.

Key Questions

• Changing Global Landscape?

• Asia’s Growth Prospects?

• Asia’s Changing Geo-Economics?

• Asia’s Risks?

• Strategic Implications?

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Changing Global Landscape

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GDP Growth Rate (%)

Global Growth Trends

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Share of Global GDP

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?

__________________________________________Anil K. Gupta, Asia’s Rise in an Era of Uncertainty.February 2017. All rights reserved.

Neil GorsuchSupreme Court Nominee

Rex TillersonSecy of State

James MattisSecy of Defense

Gorsuch: “found President Trump’s attacks on the judiciary disheartening and demoralizing”

Tillerson: “President Donald Trump's acceptance of Beijing's demand that he re-commit to a "one China" policy was heavily influenced by his new top diplomat”

Mattis: “US Defense Secretary James Mattison Saturday reaffirmed Washington's commitment to defending Japan, including a group of disputed islands which have been claimed by China”

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Asia’s Growth Prospects

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__________________________________________Anil K. Gupta, Asia’s Rise in an Era of Uncertainty.February 2017. All rights reserved.

Asia’s Growth Drivers

• Low per capita incomes Large headroom for productivity growth

• Scale + High absorptive capacity (for capital and technology)

• Embrace of math, science and engineering

• Reasonably strong institutions

• Near-complete absence of “resource curse”

• Limited external dependence

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Asia’s Changing Geo-Economics

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__________________________________________Anil K. Gupta, Asia’s Rise in an Era of Uncertainty.February 2017. All rights reserved.

China’s Changing Geo-Economics

Merchandise Exports/GDP Ratio (%)20.5 33.3 26.3 20.4

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__________________________________________Anil K. Gupta, Asia’s Rise in an Era of Uncertainty.February 2017. All rights reserved.

Japan’s Changing Geo-Economics

10.1 13.0 14.0 15.3Merchandise Exports/GDP Ratio (%)

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__________________________________________Anil K. Gupta, Asia’s Rise in an Era of Uncertainty.February 2017. All rights reserved.

India’s Changing Geo-Economics

9.2 12.2 13.2 12.0Merchandise Exports/GDP Ratio (%) + Services Exports = 7.4% of GDP

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__________________________________________Anil K. Gupta, Asia’s Rise in an Era of Uncertainty.February 2017. All rights reserved.

ASEAN’s Changing Geo-Economics

68.1 68.3 53.3 47.2Merchandise Exports/GDP Ratio (%)

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Asia Becomes More Asian

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FTAs – Signed and In Effect (examples)• ASEAN – China, India, Japan, S-Korea, ANZ• NZ - China• Australia – S-KoreaFTAs – Under Negotiations (examples)• Japan – S-Korea• India – Europe, New Zealand• BIMSTEC

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Asia’s Infrastructure Needs

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2016 Headlines

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2016 Headlines

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2014 2015 2016US 26.9 26.4 26.4Europe 21.5 21.3 21.0Asia 40.2 41.2 41.8

% Share of Global R&D Spend

Data: R&D Magazine

Asia’s Growing R&D Clout

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But, US RemainsOverwhelming Technology Leader

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Asia’s Risks

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__________________________________________Anil K. Gupta, Asia’s Rise in an Era of Uncertainty.February 2017. All rights reserved.

Asia’s Risks

• External policy risks (esp. US)?

• US 2020?

• Breakup of EU?

• Major military conflicts?

• Currency risks?

• Capital flight?

• Slow pace of reforms in China?

• Modi 2019-2024?

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Strategic Implications

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Globalismmeets

Nationalism

FDI > Trade(esp. infrastructure)

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Globalismmeets

Nationalism

Reciprocity > One-Sidedness

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Asia 2025 > US + Europe

Deepen Your Commitment

to Asia

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India & ASEAN –Need to invest a lot

more in R&D and skill-building

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LeverageChina and India as Global Platforms

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Above all, champion/

pursue global/regional stability

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