Club of Metropolitan European CCIs
The international economic situation
and CCIs challenges
Carlo Altomonte
Milano, June 8th 2012
How are we doing ? Today vs. Great Depression
World Industrial Production Volume of World Trade
Source: Eichengreen and O’Rourke (2012)
An heterogeneous picture across countries: GDP
-5
-2.5
0
2.5
5
7.5
10
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
(f)
2013
(f)
2014
(f)
United States World BRICs Euro area
Real GDP Growth rates, 2000 – 2014 (forecast)
Source: IMF, World Economic Outloook
The short-term agenda: eliminate the negative feedback loop in EU
Common bank resolution frameworkPan-European deposit guarantee scheme
EU-level supervision
Fiscal compact & ‘Six pack’Euro-bond scheme (various
proposals)
Structural reformsProject-bond & infrastructuresRole of EIB and EU Budget
-15
-10
-5
0
5
10
15
20
25
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
(f)
2013
(f)
2014
(f)
United States World BRICs Euro area
A (less) heterogeneous picture across countries: trade
Volume of Export Growth rates, 2000 – 2014 (forecast)
Source: IMF, World Economic Outloook
Trade in intermediates is on the rise
Trade in intermediates nowadays dominates trade flows, representing 56% of trade in goods and 73% of trade in services in OECD countries. Brazil, China & India each has a share of intermediates in total imports of more than 70%, well above the OECD average of 56%
Source: OECD
The role of Global Value Chains
Source: Der Spiegel, 2001
The long-term agenda: capture your share of (growing) global demand
Source: OECD
How much value added are you able to retain ?
Source: US Dep.t of Commerce
A comparative analysis of FDI across European Regions
Tabella 4 (numerazione del Report) - Sintesi
Region N. of firms
Avg. N. Empl.
Avg. Tot. Assets
Avg. Revenues
Avg. ROE
Avg. EBIT
Avg. K/L
Avg. LP
Avg. ULC
Avg. TFP
Brussels Capital Region 780 113,79 355.749,98 48.017,81 15,81 2.229,38 1.106,7 182,93 0,62 2,87 Baden-Württemberg 1.155 240,43 83.857,86 51.006,41 15,42 3.548,83 350,90 98,9 0,71 2,13 Bayern 1.623 210,51 92.922,90 43.413,74 12,33 3.158,59 526,05 116,77 0,72 2,22 Brandeburg 115 187,44 110.292,75 38.042,49 14,41 3.274,31 346,19 80,15 0,68 5,99 Madrid 3.475 97,34 97.039,34 30.636,86 19,39 1.411,65 545,16 99,12 0,67 4,34 Cataluña 3.626 64,41 26.941,15 17.436,34 16,10 722,75 330,97 75,85 0,69 3,07 Île-de-France 12.565 45,72 45.473,86 15.118,91 23,20 615,44 383,27 107,07 0,75 2,96 Rhône-Alpes 6.817 29,2 11.783,30 7.424,35 23,78 312,37 223,44 79,14 0,74 2,12 Leinster 1.507 105,32 210.648,26 38.174,56 25,82 2.417,44 983,12 73,56 0,69 1,55 Lombardia (Milan) 12.982 42,83 25.300,62 12.813,13 12,49 545,64 550,36 92,87 0,63 3,3 Lombardia (No Milan) 15.012 27,01 8.862,49 6.453,26 11,81 313,02 412,95 72,29 0,63 2,06 Inner London 6.902 107,35 315.846,37 27.634,58 25,73 1.301,07 885,30 146,34 0,7 2,39 Outer London 2.429 154,08 124.257,20 31.750,59 28,72 1.179,72 518,20 92,42 0,7 1,54 Total 68.988 57,99 70.283,71 16.728,10 18,11 754,95 473,42 93,35 0,68 2,73
Source: Milan Chamber of Commerce
The role of organizational structure in Multinational Groups
Regione N. affiliate N. gruppi N. medio controllate
N. medio paesi
Brussels Capital Region 780 420 226.7 33.3 Baden-Württemberg 1,155 520 136.3 23.3 Bayern 1,623 706 131.1 21.9 Brandeburg 115 56 233.6 24.1 Madrid 3,475 1,186 148.1 24.3 Cataluña 3,626 942 129.3 21.8 Île-de-France 12,565 1,749 119.2 21.3 Rhône-Alpes 6,817 433 144 21 Leinster 1,507 733 174.7 24.5 Lombardia (Milan) 12,982 1,285 127.4 22.3 Lombardia (No Milan) 15,012 507 97.4 15.9 Inner London 6,902 2,448 71.1 10.5 Outer London 2,429 635 114.1 18.5 Totale 68,988 6,653 57.8 10.9
Source: Milan Chamber of Commerce
Regione GIC
Medio
Gruppi (%) con affiliate in paesi a regime fiscale
favorevole
Gruppi (%) con affiliate in più di un continente
Gruppi (%) con affiliate
nel comparto finanziario
Diversificazione settoriale
Brussels Capital Region 2,33 1 0,92 0,91 0,72 Baden-Württemberg 1,89 0,8 0,88 0,72 0,69 Bayern 1,84 0,8 0,83 0,71 0,68 Brandeburg 2,04 0,73 0,82 0,71 0,68 Madrid 2,19 0,86 0,87 0,79 0,69 Cataluña 1,97 0,8 0,87 0,72 0,67 Île-de-France 1,94 0,82 0,89 0,75 0,68 Rhône-Alpes 1,79 0,75 0,81 0,73 0,65 Leinster 2,34 0,74 0,88 0,85 0,65 Lombardy (Milan) 1,79 0,76 0,82 0,73 0,65 Lombardy (No Milan) 1,35 0,53 0,61 0,61 0,56 Inner London 1,47 0,5 0,86 0,58 0,51 Outer London 1,77 0,65 0,88 0,64 0,63
The role of organizational structure in Multinational Groups
Source: Milan Chamber of Commerce
Conclusions
The world economy is moving from the quick post-crisis recovery to a slow rebalancing, with significant institutional and political challenges / headwinds in the short run (especially in the Euro area, but not only….)
The production structure of the world economy (trade) seems relatively less affected by these dynamics, as trade flows have recovered more homogeneously across countries; also, a significant structural break in production patterns has not emerged in the post-crisis world => GVCs will continue to dominate the world production picture over the next years
GVCs provide a crucial link between a high-skill / low-growth location and fast growing global markets. As such, CCIs should foster an efficient connection between local firms and Global Value Chains
Not only export-promotion policies: fostering imports and foreign participation are key success factors to allow the local business environment to become connected to GVCs
In particular, according to the comparative research carried out by the Milan Chamber of Commerce, attracting more ‘complex’ multinational groups (geographically more extended but relatively less diversified in terms of sectors) in a territory seems to be an important factor to activate links with GVCs and thus foster competitiveness