THE CHAZEN INSTITUTE REPORT ON THE WORLD BUSINESS & ECONOMY

Beyond the Crisis:
Growth Prospects and Critical Challenges for Major Economies over the Next Ten Years
SHANG-JIN WEI & ROY ALLEN December 2010

Authors: Shang-Jin Wei is Director of the Jerome A. Chazen Institute of International Business, Professor of Finance and Economics, and N.T. Wang Professor of Chinese Business and Economy at Columbia Business School and School of International and Public Affairs, Columbia University. He is also a Research Associate of the U.S. National Bureau of Economic Research, a member of the Council on Foreign Relations, and a Research Fellow of Londonbased Center for Economic Policy Research. He was previously Chief of Trade and Investment Division at the International Monetary Fund, Associate Professor at Harvard University‘s Kennedy School of Government, and the New Century Chair Senior Fellow at the Brookings Institution. Roy Allen is a Research Coordinator at the Jerome A. Chazen Institute of International Business at Columbia Business School. Acknowledgement and disclaimer from the authors: This report has benefited from the superb editorial assistance of Betsy Wiesendanger, and helpful comments from Sheena Iyengar, Gita Johar and Oded Netzer. However, the authors are solely responsible for the content and any possible errors. This report does not necessarily reflect the official position of the Chazen Institute, Columbia Business School, or any other persons or entities affiliated with the Institute. About the Jerome A. Chazen Institute of International Business: The Jerome A. Chazen Institute of International Business serves as the focal point for Columbia Business School‘s major international programs and initiatives and supports, sponsors and promotes thought leadership and frontier research on topics related to the global economy and business. The Institute provides forums for collaboration and learning among students, faculty members and the global community, connecting these constituencies with experiences, cultures and practices in markets across the globe. The Chazen Institute plays a leading role in shaping international business policy and education through research, symposia and conferences, experiential learning programs, curricular innovation, and the creation of intellectual content and its translation to wider international business communities. Please visit http://www4.gsb.columbia.edu/chazen/ for more information.

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The Jerome A. Chazen Institute of International Business International Advisory Board Wolfgang Bernhard ‗88 Arnold L. Chavkin ‗77 Jerome A. Chazen ‗50 David F. Chazen ‗86 Tomas Hazleton ‗91 Ehud Houminer Fred Zuliu Hu John H. Makin Meera Mayer ‗86 Raymond G. Viault ‗69 Lulu Wang ‗83

Faculty Advisory Committee Jagdish N. Bhagwati Fangruo Chen Sheena Iyengar Wei Jiang Gita Johar Christopher Mayer Robert Mundell Hugh Patrick Stephan Penman Joseph Stiglitz

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Table of Contents

Executive summary Objective Part I: Key findings Part II: Growth projections and top challenges for individual countries Part III: Appendix

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individual countries face different challenges. Despite both being star performers. and inflation. For emerging market economies as a whole. While China is likely to remain a fast-growing economy. Even within a given country group.  For developed countries as a whole. its annual growth rate is projected to be around 6% over the next decade rather than the breakneck annual rate of 9-10% a year of the last decade. corruption. of business executives and professionals in 31 major economies who are graduates of Columbia Business School. corruption. and government inefficiencies stand out as the top challenges. Over the medium term.Executive Summary This forward-looking report aims to identify new opportunities for growth in major economies and to diagnose critical challenges that need to be addressed to avoid underperformance. Australia and Canada are projected to be the best performers among developed countries. These countries as a group are projected to grow much faster than developed countries.   The next decade is the decade of emerging market economies. The key findings from the survey are summarized below. Interestingly. As both countries are major commodity producers. government debt. India and Nigeria could have growth rates that will rival or even surpass China‘s. China and India have different growth constraints.  The critical constraints to growth vary by country. This report could provide useful information for business leaders on which risks to hedge against when conducting business in a particular country. it is particularly noteworthy that poor infrastructure is not   4 . they are well positioned to benefit from the rapid growth in emerging market economies. Respondents from China think the most significant barriers to growth are rising labor costs. which tend to import raw materials and other commodities. government inefficiency. The sample size by country varied from 5 to 657 respondents. and poor infrastructure are the most severe constraints that could hinder growth. The survey asked respondents to project the growth prospects and critical constraints for the country they currently work in. high inflation is not yet considered a grave concern. Emerging market economies and commodity producers will lead the pack. conducted October 12-27. 2010. This report is based primarily on a survey. Policy makers may also find this information useful because it could signal where to invest limited political and fiscal resources to deliver maximum sustainable growth for their country. tax rates and regulations. in spite of aggressive monetary policy actions in several countries.

based on the answers of those surveyed. corruption. and government inefficiencies as the most significant constraints to growth. India. in comparison.considered a major problem. 5 . has poor or inadequate infrastructure.

While generally not professional forecasters. this report provides a transparent analysis of both the growth prospects and the main economic challenges for 31 major economies over the next 10 years. With this objective in mind. Hong Kong Germany India Greece Respondents from both major Israel Italy emerging markets and major high-income Lebanon Japan economies were asked to project the average Mexico Netherlands annual growth rate for their country over the Nigeria Norway next 10 years.Objective of the report While parts of the world are still finding their way out of the global financial crisis of 2007-2009. 6 . The second part provides additional details for selected individual countries. Turkey The first part of this report contains United Arab Emirates key findings. A major source of data is a survey. 2010. Singapore United States We include only countries for which there is South Korea a relatively high degree of agreement among Thailand respondents. A set of appendices contains more information about the survey and the response rate by country. and their responses may be Table 1: Economies Included in the Survey indicative of the sentiment of business Emerging Markets Developed Markets professionals in the country for which they Argentina Australia are surveyed. The survey was designed by Brazil Belgium researchers at the Jerome A. A companion report (to be released separately) will analyze housing markets in major economies. conducted during October 12-27. The respondents come from diverse backgrounds and have varied levels of experience and areas of expertise. of business executives and professionals in these countries who are graduates of Columbia Business School. Respondents were also asked Philippines Switzerland to identify the three most critical challenges Russia United Kingdom that could derail the growth for their country. the respondents have on-the-ground experience. both business leaders and policy makers must look ahead to identify new opportunities for growth as well as diagnose and address critical challenges that might lead to underperformance. Chazen Institute Chile Canada of International Business at Columbia China France Business School.

Japan. and Mexico all tie for last place among developing countries for 10-year growth. India and Nigeria are projected to surpass China‘s growth rate. Switzerland. Though impressive when compared with the high-income country standard. As major commodity producers and exporters. Small players become stars: Australia and Canada are predicted to be the fastest-growing developed countries over the next decade. which have a voracious demand for commodities. which has weathered the economic crisis relatively well. ranks first in our sample.5%. Japan‘s anemic growth is expected to continue over the next 10 years. the survey responses allow us to conclude.Part I: Key findings New growth leaders: For the last three decades. and Italy come in last. with a high degree of confidence. both are well positioned to benefit from the rapid growth in emerging market economies. Italy. we can be more certain when making comparisons between groups of countries. Nigeria‘s high levels of growth in recent years are expected to continue. For example. 3% growth would mean these countries will not catch up to developed countries any time soon. which is hindered by debt. China has been the fastest-growing major emerging market economy. with predicted annual rates of 3%. For example. government inefficiencies and bureaucracy. is predicted to grow at a meager annual rate of 1%. Among developed countries. with a predicted annual growth rate of 7% over the next 10 years. with predicted annual expansion of only 1. On the other hand. Australia. 7 . Words of caution: The reported growth projection for a country refers to the median response from all respondents in that country. with expected growth of 7. Meanwhile. Bringing up the rear: Argentina. the lowest rate in the sample.5%. that the group of emerging market economies is projected to continue to grow faster than the group of developed countries. while the median growth projections suggest that India may surpass China’s growth rate over the next 10 years. both have projected annual growth of 3. As the number of respondents is relatively small for some of the countries. Lebanon. While it is projected to be a star performer over the next 10 years (with an average annual growth rate of 6%). is tied for first place with Canada among developed countries. it will take an additional survey with a larger sample to formally confirm this. the sampling variation often does not allow us to make precise comparisons between countries. India.3%. and poor infrastructure. lifting hundreds of millions of people out of poverty in a relatively short time span.

5 3 3 3 Developed Countries Australia Canada Spain United States Norway Belgium France Germany Greece Netherlands United Kingdom Japan Switzerland Italy 3.5 1 Note: Values are the median projections. must rely on innovation as the primary driver of growth. can base their growth partly on catching up – adopting technologies and manufacturing processes already matured.5 1. with comparatively abundant capital and skilled labor.Table 2: Growth Projections 2010-2020 (average annual rate) Emerging Markets India Nigeria China Philippines Singapore Turkey Chile Russia Thailand Brazil Israel South Korea United Arab Emirates Hong Kong Argentina Lebanon Mexico 7. on the other hand.6 4. In fact. Emerging markets. which states that initial level of income matters for subsequent growth rate.7 2.5 4 4 4 4 3. 8 .5 2 2 2 2 2 2 1.3% 3. This is consistent with economic theory. Developed countries.5 4. This relationship between medium-run growth and GDP per capita provides a useful benchmark of growth for a country. Emerging economies play catch-up Emerging markets are predicted to grow much more quickly than the developed countries in our sample.3 3 2. it is not surprising that countries with an already high level of income tend to grow more slowly than countries whose relatively lower income level (and hence lower cost of labor) provides more room to catch up quickly. Since innovation is inherently more difficult. the fastest-growing developed countries have growth rates comparable to the slowest-growing emerging markets.5% 7 6 5 5 4.5 4. and combining them with less expensive labor inputs.

are predicted to grow faster over the next decade than higher-income countries. Singapore.7%.A. at an annual rate of 2.E. and crises in other countries. Turkey. 8 India Predicted Annual GDP Growth 2010-2020 (Percent) 7 Nigeria 6 China Chile Turkey Russia South Korea Lebanon Mexico Spain Argentina Emerging Market Economies Japan Italy U. which already have high GDP per capita. though respondents from that country fear rising labor costs.S. and Chile are expected to have impressive growth rates. inflation. In fact. Note: not all points were labeled for clarity.5% a year for the next decade. and the United Arab Emirates. Hong Kong.Figure 1: Income and Opportunities Lower-income countries. and is PPP adjusted.A. Russia. Singapore stands out with exceptional annualized growth of 5% predicted over the next decade. with more opportunities for growth. these countries are expected to catch up with richer countries considerably faster than 9 . are all projected to expand at rates above the trend line. Respondents from the United States look beyond the current crisis and project that the country will again become a growth leader among high-income countries over the medium term: growth is predicted to be above the benchmark. obtained from the International Monetary Fund's World Economic Outlook. Among middle-income countries. Most European countries fall even below a benchmark trend line: only Spain and Norway are above it. rich countries might be expected to have relatively low levels of growth. 10 11 Given their high GDP per capita. Norway U. With each country predicted to grow around 4. In contrast. Hong Kong Singapore 5 Philippines 4 3 2 Developed Countries Trend Line 1 0 7 8 9 Income per capita (log scale) Income per capita is for the year 2007.

The Philippines is also predicted to grow slowly compared with countries that have similar levels of initial income. Relative to the trend line that links the projected 10-year growth with the initial income. Countries above this line are expected to speed growth over the next decade.E. 9 Predicted Annual GDP Growth 2010-2020 (Percent) India 7 Nigeria China Philippines Singapore Brazil 5 U.A. S. The Chinese income level is twice as high as India‘s. South Korea Australia Emerging Market Economies Developed Countries 45° Line Trend Line -1 -3 -3 -1 1 3 5 7 9 Predicted GDP Growth 2011 (Percent) Note: not all points were labeled for clarity. both India and China are positive outliers. Another interesting relationship is the (dashed) trend line. Figure 2: Growth Momentums and Reversion to the Normal State: Comparing Projections for 10-year versus 1-year Growth Rates Predicted growth over the next year and next decade tend to be similar for most countries. which have predicted growth of only 3%.Mexico and Argentina. while its income level is somewhere between India and China. However. The Philippines‘s 5% annual growth rate is respectable in an absolute sense. One benchmark line is the 45 degree line. and countries with faster growth in 2011 are expected to slow down. Even when taking into account these countries‘ starting positions. A. This line illustrates that countries with slower growth in 2011 are pedicted to speed up over the next decade. and so it is not too surprising that China‘s growth is projected to be somewhat lower. it is projected to grow much more slowly than either country. 3 Greece Germany 1 Italy Spain Canada U. whereas countries below it are expected to slow down. 10 . respondents think these two countries will continue to be exceptional success stories over the next decade.

has shown encouraging signs of renaissance in an impoverished region that had been left behind in previous decades of world development. for example. expansion drops slightly from 8% to 7. Despite this diversity. mindful of its debt crisis.5%. with a predicted annual rate of 2% over the next decade. tax rates and regulations. With different challenges to growth facing developed and developing countries. indicating the diverse set of challenges that countries face.Comparing 10-year growth predictions with one-year predictions helps us better understand how respondents think their countries will evolve over the next decade. we asked respondents. there was a tendency for respondents in developed countries to mention lack of innovation or an aging population as top challenges to growth in their written responses. Nigeria. Singapore‘s astonishing 7% predicted GDP growth in 2011 is expected to decrease to an annualized rate of 5% over the next decade. We can illustrate this point by comparing China and India. different countries face different critical constraints to economic growth. different policies will be needed to improve economic performance. what do you think the greatest challenges to economic growth will be for your country?‖ Respondents could choose up to 3 challenges from a list of 14 options. Critical Challenges to Growth Growth predictions give a sense of how well countries are expected to do over the next decade. high inflation is not considered by respondents to be a grave concern (Figure 3). ―Over the next ten years. In comparison. In general. They think the country will eventually return to growth. China‘s growth drops from 8% to 6%. corruption. The ―reversion to the normal state‖ also implies that the best performers in the short run are projected to grow a bit less spectacularly over the medium run. government inefficiencies. Greece illustrates this well: respondents. predict a decline in GDP of 2% in 2011. Interestingly. along with a number of other sub-Saharan countries. In India. and poor infrastructure are the most commonly mentioned constraints that could derail growth prospects (Figure 4). in spite of the aggressive monetary policies undertaken by many developed countries. government debt.‖ In other words. The written responses we received differed greatly both between countries and often within a country. Not surprisingly. Even within a given country group. two star 11 . government inefficiency. corruption is not considered a rampant problem. respondents may base their 10-year predictions partly on their 1-year predictions. For developed countries as a whole. We also allowed respondents to provide a write-in response. for emerging market economies. However. but they do not tell us why a country may do well or what factors may hinder its progress. To help answer this. Nigeria breaks from this trend: growth is expected to increase over the next 10 years from its 2011 predicted rate. the distance between the best and the worst performers over the next decade is thought to be smaller than over the next year. respondents also appear to see a ―reversion to the normal state. and economic crises or recessions in other countries stand out as the top challenges.

and crises in other countries: only 20% indicate debt as a top challenge to growth. few respondents indicate debt as a top challenge. we average first across individuals in a country to get the percentages for each country. then average across the countries. and the United States. and other crimes 0 10 20 30 40 50 Percentage of Respondents Note: We asked respondents to list up to three top challenges to growth over the next ten years. Instead. Perhaps fearful of servicing the debt. Among developed countries. it is the primary concern for most respondents. respondents are more concerned with lack of education or training in the workforce. On 12 . no respondent from Norway. Not surprisingly. The percentages are calculated by weighting each country equally – that is. France. In contrast. despite a fairly high debt-to-GDP ratio. Rising labor costs are not yet a major concern. and Belgium are worried about tax rates and regulations. Except for its corruption problem. and inflation. which has a large sovereign wealth fund from petroleum earnings. due to Australia‘s low debt-to-GDP ratio. corruption. reports debt as a key concern. It is particularly noteworthy that poor infrastructure is not considered a major problem. Percentages do not add up to 100 because respondents could choose up to three challenges. And over half of respondents from Norway. In contrast. For China. In most developed countries. a top challenge to growth over the next 10 years is government debt. the most important constraints to growth are rising labor costs. For Japan. corruption. respondents in Greece actually mention tax rates and regulations more frequently than debt as a prime challenge. theft. respondents from India list poor or inadequate infrastructure. and government inefficiencies as the top three challenges. China looks quite different from other emerging market economies. respondents have other concerns such as tax rates and regulations. tax rates and regulations are often seen as a primary challenge.performers in the emerging market group. Belgium. Figure 3:Top Challenges for Mature Economies Government debt Tax rates and regulations Government inefficiencies and bureaucracy Economic crises or recessions in other economies Labor regulations or disputes Lack of education or training of labor force Unpredictability of government policies Rising labor costs Poor or inadequate infrastructure Political instability Access to finance Corruption Inflation Kidnapping. It is noteworthy that in Germany. the United Kingdom. the United Kingdom. robbery.

This contrast illustrates a tendency for smaller. respondents name this as a top challenge. While there are many developed countries where crises in other economies are reported relatively infrequently. the number is 62. Figure 4: Biggest Worries for Emerging Markets Government inefficiencies and bureaucracy Corruption Poor or inadequate infrastructure Economic crises or recessions in other economies Lack of education or training of labor force Political instability Unpredictability of government policies Rising labor costs Inflation Tax rates and regulations Government debt Kidnapping. which is interesting given the high debt-to-GDP ratios both countries face. In larger countries such as the United States. export-dependent economies to show greater concern for the well-being of other economies. Government inefficiencies and bureaucracy are reported by 65% of respondents in Italy as a key barrier to expansion. government inefficiencies and bureaucracy are the most frequently reported top challenges to growth in emerging markets. While in most developed countries. Australia and Canada are exceptions: only 5.the other hand. then average across the countries. and the Netherlands.6% of respondents from Australia mention it. Switzerland. Canada. and other crimes Labor regulations or disputes Access to finance 0 10 20 30 40 50 Percentage of Respondents Note: We asked respondents to list up to three top challenges to growth over the next ten years.5%. on the other hand. The percentages are calculated by weighting each country equally – that is. robbery. In Greece. On average. only 11% of Australians list tax rates and regulations as a top challenge. by contrast.7%. Percentages do not add up to 100 because respondents could choose up to three challenges. respondents cite government inefficiencies and bureaucracy more frequently than debt. In the United States. theft. those surveyed focus more on home-grown challenges to growth. the number is only 16. this challenge is the top vote-getter in Australia. the lowest percentage among developed countries in our sample. we average first across individuals in a country to get the percentages for each country. Respondents from East Asian economies tend to think their governments are run fairly well in comparison with other emerging market economies: only 4 economies (out of 17) have fewer than 30% of respondents mention bureaucracy as a top 13 . In both countries.

Among emerging markets. Singapore (0%). Among both developed and developing economies. whose exports are largely comprised of natural resources. on the other hand. Nigeria. the Philippines. and Singapore (0%). Turkey (16. Respondents in emerging economies do not all think that corruption is a top challenge. and only 13% of respondents from China listed the challenge. on the other hand. Respondents in Brazil. The twin challenges of bureaucracy and corruption can feed on each other: one way of circumventing overly bureaucratic rules is through bribery. Lebanon. facilitated by a high savings rates. seem to have paid off: no respondent in the country indicates infrastructure as a top challenge to growth. and Chile. Nigeria. Fastgrowing economies need to extensively invest in infrastructure to keep up with increasing demand.2%). crises in other countries is the most frequently reported challenge. more than half of respondents in Russia. corrupt officials. Corruption is the second biggest concern for this group of countries.7%). including China (29. The other country where bureaucracy is not frequently reported as a top challenge is Turkey. by contrast. Hong Kong (0%). exportdependent economies are more concerned with crises in other countries than their counterparts in larger economies. Singapore.7%). Hong Kong (16. have an incentive to increase the amount of red tape so that they can increase the bribery payments they receive. and India cite corruption as a top barrier to expansion.challenge. and the United Arab Emirates (0%) provide exceptions. respondents in smaller. No respondent in Brazil. Inadequate infrastructure is a commonly reported problem for emerging economies.7%). on the other hand. In most developed countries. In Hong Kong. and Russia. Chile‘s dependence on copper makes it vulnerable to a contraction in the commodity‘s demand. or Nigeria reports crises in other economies as a top challenge to growth. 14 . These countries also report being plagued by government inefficiencies and bureaucracy. India. mirroring concern over the global economy reported by respondents from Australia. India. corruption is not reported as a challenge at all. frequently cite infrastructure as the top challenge to growth. though: Argentina (16. China‘s strong investments in infrastructure. fetching just under 20% of the vote.

5 Belgium France United States Italy Spain Japan Greece 3.0 2.3 4.1 6.7 4.9 Emerging Market Economies Countries Receiving a Score of Incompetent Handle Challenges Handle Crisis Developed Countries Countries Receiving a Score of Incompetent Handle Challenges Handle Crisis Thailand India Russia Mexico Lebanon Nigeria Argentina 3.1 2.1 3.5.1 3. Table 3 reports the average scores for each country across these four subgroups (the sample size by country can be found in Table A.8 4.4 3.7 2.4 4.3 2.8 2.1).7 4. Brazil South Korea Philippines Israel 5. ―In your opinion. We also split countries into developed or emerging markets. 15 .1 4.‖ A score of 4 (basically competent) or above for a country‘s handling of challenges indicates that the public believes the government is competent in this regard.7 5.9 2.‖ We also asked respondents to rate their government‘s handling of the 2007-2010 economic crisis on a scale from 1 to 6.0 Switzerland Canada Norway Netherlands Australia Germany United Kingdom 4.Table 3: A Crisis of Confidence We asked respondents.2 3.0 4.9 3. how confident are people in the country in the ability of the government to adopt the right policies over the next decade to deal with these challenges?‖ They were asked to rate this confidence on a scale from 1 to 6.E. Scores given to crisis handling range from 1 (very incompetent) to 6 (very competent).3 4.4 5.7 1. with 1 being ―very unconfident‖ and 6 being ―very confident.7 4.7 3.5 3.2 5.3 4.0 4.6 2.0 4.4 4.8 4.8 4.0 Note: each score given to the ability to handle challenges ranges from a minimum of 1 (very unconfident) to a maximum of 6 (very confident).0 4. based on whether their average challenges score was above or below 3.5 4.8 3. with 1 being ―very incompetent‖ and 6 being ―very competent.0 4.A.8 2.4 2.7 4. We split countries into two groups.2 4. Emerging Market Economies Countries Receiving a score of Competent Handle Challenges Handle Crisis Developed Countries Countries Receiving a score of Competent Handle Challenges Handle Crisis Chile Singapore China Turkey Hong Kong U.9 2.0 2.2 4.3 4.4 3.0 3.9 4.0 1.9 3. whereas a score of 3 (basically incompetent) or below indicates incompetence.6 4.0 4.6 5.7 3.5 3.6 2.9 3.

1.Rising to the occasion: The average score for public opinion across all countries on ability to handle challenges over the medium term is 3. higher scores for crisis handling suggest that individuals tend to think their governments did a good job of managing the crisis. Winners among the wealthy: The U. has impressive predicted growth of 5% on average over the next decade.A. Perhaps the respondents think that the relative unsophistication of these countries is enough to give them a high growth potential and that their governments are not expected to add much to the growth momentum. Singapore. also has the highest score on this measure.5. The high growth predictions respondents gave these countries are likely tied to the belief that the government can handle challenges to growth: each country received a score of ―confident‖ on public faith in the ability of the government to handle challenges to growth. with debt worries in the former and a full-fledged debt crisis in the latter. This presents a bit of a paradox. 16 . as noted earlier. with India receiving a score of 3.1 (―basically confident‖) and Nigeria a score of only 2 (―unconfident‖). Spain and Greece.E. countries receiving a score of ―incompetent‖ for their ability to handle challenges tend to receive noticeably higher scores for crisis handling. at 4. Both countries also have serious impediments to further development: well over half of respondents in each country indicated both corruption and inadequate infrastructure as top challenges to progress over the next decade. at 5. While not conclusive. Respondents do not have much faith in the ability of their governments to handle these issues. the country with the fasted growth in this group. while the score for handling of the crisis is noticeably higher. given their overall ability to handle economic challenges. Misplaced optimism? India and Nigeria have the highest predicted growth over the next 10 years. which is very high when compared with other wealthy countries. In particular. Singapore.. the second lowest in the sample.3 — between ―confident‖ (5) and ―very confident‖ (6). are exceptions. Singapore. and Hong Kong are all growth outliers among rich economies when we take into account GDP per capita.

Rising labor costs are also a top concern. Average predicted growth is 3. This may reflect a sense that the worst of the crisis has not yet hit Australia or could be due to the country‘s dependence on exports of natural resources. contrary to the beliefs of most rich countries.Part II: Growth Projections and Top Challenges for Selected Countries This section provides a brief context and analysis for each country that received 10 or more responses. especially when compared to other high-income countries.3% over the next 10 years. This rate is impressive. and other crimes Corruption 67 50 17 11 11 11 11 11 6 6 6 6 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years.14) Top Challenges to Growth Economic crises or recessions in other economies Rising labor costs Inflation Access to finance Tax rates and regulations Government debt Poor or inadequate infrastructure Political instability Labor regulations or disputes Unpredictability of government policies Government inefficiencies and bureaucracy Lack of education or training of labor force Kidnapping. between ―competent‖ (5) and the highest score of ―very competent‖ (6) — the highest among developed countries.5% in 2011 and 3.2. cited by half of respondents. Respondents from Australia. cited by two-thirds of respondents. Coefficient of variation for 10-year growth estimate: . One sign that the country is weathering the crisis is that respondents think Australia‘s growth will actually slow over the next 10 years. are impressed with the government‘s management of the crisis. ―Crises in other countries‖ comes in as the most frequently reported barrier to expansion over the next 10 years. theft. Advanced Economies: Australia (18 Respondents. robbery. a country that appears to be emerging from the global economic downturn relatively unscathed. They give it an average score of 5. 17 .

Nonetheless. more respondents from France cite labor regulations as a prime challenge than any other country in our sample. Coefficient of variation for 10-year growth estimate: . with predicted annual growth of 2%. France‘s debt has increased as a percentage of GDP since the crisis. and other crimes Poor or inadequate infrastructure Inflation Political instability 74 65 35 35 26 13 13 4 0 0 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. In light of the widespread protests in October 2010 over raising the retirement age from 60 to 62. 18 . it is understandable that 65% of respondents in France see labor regulations or disputes as a top challenge to growth. Respondents think the public is ―somewhat unconfident‖ in the government‘s ability to handle challenges to growth and give the country a score of 2. like many developed countries. and. spending on entitlement programs as a percentage of GDP is projected to balloon as its population ages.9. While debt is reported more frequently.France (23 Respondents. France is predicted to perform on par with most European countries over the next decade.41) Top Challenges to Growth Government debt Labor regulations or disputes Government inefficiencies and bureaucracy Tax rates and regulations Economic crises or recessions in other economies Unpredictability of government policies Rising labor costs Lack of education or training of labor force Corruption Access to finance Kidnapping. Only Spain (56%) and Chile (40%) can compare. robbery. at 74%. theft.

Along with most of Europe. represents a typical developed country among our sample. As the second largest exporter in the world (and the largest until 2009 when it was displaced by China).34) Top Challenges to Growth Lack of education or training of labor force Government inefficiencies and bureaucracy Tax rates and regulations Economic crises or recessions in other economies Unpredictability of government policies Government debt Labor regulations or disputes Access to finance Political instability Kidnapping. only 20% of respondents report debt as a primary challenge to growth – a lower percentage than reported by either country. theft. average annual growth over the next 10 years is predicted to be 2%. however. The most frequently reported top challenges include government inefficiency and bureaucracy. Coefficient of variation for 10-year growth estimate: .8 for opinion on ability to handle barriers to growth.Germany (10 Respondents. tax rates and regulations. Debt woes of less-stable EU countries and a possible German-financed rescue effort reinforce worries about crises in other countries. It is understandable that 40% of respondents are concerned about crises in other countries. and other crimes Corruption Rising labor costs Inflation Poor or inadequate infrastructure 40 40 40 40 20 20 20 10 0 0 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. in many ways. Respondents give Germany a score of 3. Germany. putting it roughly in the middle among developed countries. 19 . robbery. and economic crises or recessions in other economies. It differs in several interesting ways. Despite having a debt-to-GDP ratio above Spain‘s and just below that of the United States. Germany‘s economy is highly dependent on demand for its exports from other countries.

Unfortunately. government inefficiencies. respondents are not optimistic that the government will solve the country‘s challenges to growth: Italy receives a score of 2. With 65% of respondents worried about infrastructure. 20 . robbery. Coefficient of variation for 10-year growth estimate: . which further makes Italy an outlier compared with other developed countries. even when compared to other developed countries. and bureaucracy.34) Top Challenges to Growth Poor or inadequate infrastructure Government inefficiencies and bureaucracy Government debt Corruption Tax rates and regulations Political instability Lack of education or training of labor force Unpredictability of government policies Labor regulations or disputes Economic crises or recessions in other economies Inflation Kidnapping.4 on ability to handle challenges. theft. low for a developed country.Italy (17 Respondents. the lowest in our sample. Italy stands out among developed countries: in every other developed country. and other crimes Rising labor costs Access to finance 65 65 47 41 29 18 12 12 6 0 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years Italy is one first-world country that has many third-world problems. fewer than 20% of respondents report infrastructure as a top challenge. and annual growth is predicted to be 1% over the next decade. Corruption is also cited as a chief problem (41%). respondents more frequently report being concerned with infrastructure. Though Italy has a high level of debt to GDP.

It was the country that was thought most likely to surpass the United States in innovation and economic vitality. Japan has already reached a high-income status and remains wealthy. a shining example admired by other economies in Asia and elsewhere in the world. October 2010 Japan was once a growth miracle. Japan is a worthy case to be studied by countries that are currently considered as growth leaders. To be sure. But it is no longer considered a major growth engine for the world that will displace the United States any time soon. 21 .Japan (18 Respondents) Japan's GDP Growth 1980-2010 8 6 4 GDP Growth Rate 2 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 -2 -4 -6 Note: GDP Data from the International Monetary Fund's World Economic Outlook Database. Indeed.

and other crimes Access to finance Corruption Poor or inadequate infrastructure 88 53 24 24 18 18 12 6 6 6 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. Japan is predicted to continue its anemic expansion over the next 10 years. theft. Coefficient of variation for 10-year growth estimate: . Burdened by public debt.Japan (18 Respondents. and bureaucracy.1 (―incompetent‖) for public opinion on ability to manage challenges to growth over the next decade. Respondents are not optimistic that the government will handle these difficulties well. 22 . with respondents anticipating a median growth rate of only 1.46) Top Challenges to Growth Government debt Government inefficiencies and bureaucracy Unpredictability of government policies Tax rates and regulations Economic crises or recessions in other economies Political instability Lack of education or training of labor force Labor regulations or disputes Inflation Rising labor costs Kidnapping. roughly 4 out of every 10 respondents indicated either unpredictability of government policies or political instability as major barriers to growth. robbery.5%. government inefficiencies. giving an average score of 2. One concern is the lack of stable leadership in recent years.

robbery.57) Top Challenges to Growth Economic crises or recessions in other economies Rising labor costs Tax rates and regulations Government debt Labor regulations or disputes Lack of education or training of labor force Government inefficiencies and bureaucracy Inflation Political instability Unpredictability of government policies Poor or inadequate infrastructure Corruption Access to finance Kidnapping. theft. 23 .Netherlands (19 Respondents. Those surveyed think the public has confidence in the government‘s ability to handle its challenges to growth. and other crimes 53 47 26 26 26 21 16 16 11 5 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. falling nearly 25% in 2009. respondents report economic crises or recessions in other economies most frequently as a top challenge to growth. Exports from the Netherlands took a hit during the crisis.3 on this measure. especially to other European countries. predicting growth of 2% on average each year for the next decade. Coefficient of variation for 10-year growth estimate: . Respondents also cite rising labor costs as a chief problem. Perhaps because of its relatively small size and high dependence on exports. making the country an outlier among developed nations. the fourth highest among developed countries. Respondents are also cautiously optimistic about growth. with a score of 4.

United Kingdom (36 Respondents. Like many developed countries.7 on this measure. theft. Respondents think the public is essentially neutral about the government‘s ability to handle barriers to growth over the next decade: the United Kingdom receives a score of 3. Coefficient of variation for 10-year growth estimate: . debt. While only 22% of respondents view inflation as a primary problem. and other crimes Political instability Corruption 64 56 28 28 22 17 17 17 17 3 3 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. this percentage is higher than any other developed country.24) Top Challenges to Growth Government debt Tax rates and regulations Government inefficiencies and bureaucracy Labor regulations or disputes Inflation Lack of education or training of labor force Poor or inadequate infrastructure Economic crises or recessions in other economies Access to finance Unpredictability of government policies Rising labor costs Kidnapping. the Bank of England predicted that it will continue to exceed its 2% inflation target by about a full percentage point in 2011. tax rates. and regulations are reported as top challenges to growth in the United Kingdom. 24 . robbery. between ―somewhat unconfident‖ (3) and ―somewhat confident‖ (4). In November 2010.

United States (657 Respondents) United States' GDP Growth 1980-2010 8 6 GDP Growth Rate 4 2 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 -2 Note: GDP Data from the International Monetary Fund's World Economic Outlook Database. Again. however. even when the economy recovered. its growth trajectory remains unclear. or experience its own ―lost decade. While it seems unlikely that the United States will match the 90s boom. As the United States continues to recover from its 2007-2009 recession. After the bubble burst. growth took a turn for the worse. growth remained slow compared with boom years in previous decades. perhaps in the range of 2-4%. the American economy grew rapidly for nearly a decade.‖ 25 . during the dot-com boom. October 2010 -4 Following the Volcker recession. it remains to be seen whether the economy will return to moderate levels of growth. the United States showed impressive growth for the rest of the 1980s.

and other crimes 62 39 32 28 23 17 16 15 13 4 4 3 3 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. most frequently mention public debt as a top challenge to growth. 26 . but a 2. reported by nearly 30% of respondents. Respondents. Another primary concern is lack of education or training of the labor force.7% for the United States. robbery.United States (657 Respondents. this suggests worry that continued technological development will slow without a highly skilled labor force. who are likely concerned about massive federal deficits since the crisis.28) Top Challenges to Growth Government debt Tax rates and regulations Government inefficiencies and bureaucracy Lack of education or training of labor force Unpredictability of government policies Economic crises or recessions in other economies Inflation Poor or inadequate infrastructure Access to finance Labor regulations or disputes Rising labor costs Political instability Corruption Kidnapping.7% average growth rate places the United States fourth among the 14 developed countries in this report. Coefficient of variation for 10-year growth estimate: . Average annual growth for the next decade is projected to be a respectable 2. This number is low compared to growth of 5% or above for several emerging market economies. In a country whose growth relies largely on innovation. theft.

robbery. has been in decline for decades. 27 . Respondents also cite lack of education or training of the labor force as a top concern.Emerging Market Economies Brazil (17 Respondents.9 on this barometer. Brazil is in a club with Turkey and Chile in this regard: about 60% of respondents in each country think a skilled workforce is essential for further progress. as a percentage of GDP. theft. Media reports suggest that air transport in particular will need to be improved in preparation for the country‘s hosting of the 2014 World Cup and 2016 Olympics. placing Brazil in the middle of the pack among emerging market economies. assigning a score of 3. Over 70% of respondents in Brazil report poor infrastructure as a top challenge for the economy. they predict annual growth of 4% over the next decade. Coefficient of variation for 10-year growth estimate: .24) Top Challenges to Growth Poor or inadequate infrastructure Lack of education or training of labor force Government inefficiencies and bureaucracy Tax rates and regulations Corruption Labor regulations or disputes Government debt Inflation Kidnapping. and other crimes Access to finance Economic crises or recessions in other economies Political instability Rising labor costs Unpredictability of government policies 71 59 53 41 35 12 12 6 6 0 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. The country‘s investment in infrastructure. While respondents think the public is somewhat confident on the country‘s ability to handle these barriers to expansion.

which could reflect a sense that the country‘s transition away from dependence on natural resources will require workers with new capabilities. robbery.5%. Respondents think the public has confidence in the government‘s ability to handle these and other top challenges to growth. Respondents in Chile. giving Chile the highest score in the sample.15) Top Challenges to Growth Lack of education or training of labor force Economic crises or recessions in other economies Labor regulations or disputes Government inefficiencies and bureaucracy Rising labor costs Poor or inadequate infrastructure Tax rates and regulations Unpredictability of government policies Inflation Corruption Access to finance Kidnapping. such as copper. which is impressive compared with Argentina and Mexico: these countries both have comparable levels of GDP per capita. 28 . and other crimes Government debt Political instability 60 60 40 30 20 20 10 0 0 0 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. perhaps concerned with the country‘s dependence on natural resources exports that have volatile prices. Predicted average annual growth over the next 10 years is 4. with a score of 5. list crises or recessions in other countries as a top concern. but Argentina and Mexico have predicted growth of only 3% a year. Coefficient of variation for 10-year growth estimate: .4 on this measure. Another chief worry is lack of a skilled workforce.Chile (10 Respondents. theft.

Whether the country will continue its impressive expansion over the next decade is of worldwide interest.China (24 Respondents) China's GDP Growth 1980-2010 16 14 12 GDP Growth Rate 10 8 6 4 2 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Note: GDP Data from the International Monetary Fund's World Economic Outlook Database. The Chinese economy cooled off during the financial crisis but did not fall much below 10% growth.‖ China has been a growth miracle in the last three decades. this growth has lifted hundreds of millions of people out of poverty and has made China an integral part of the global economy. from agriculture to industrialization. The country has maintained high rates of growth in this time. Compounded over decades. often in excess of 10%. October 2010 With three simultaneous transitions from central planning to market economy. 29 . and from extreme isolation to the ―world factory.

robbery. Partly because of its past success. Respondents‘ answers may indicate concern over whether this trend will continue or that a governmental crackdown on inflation will be at the expense of GDP growth. China‘s predicted growth falls from 8% in 2011 to an average annual rate of 6% over the next decade.22) Top Challenges to Growth Rising labor costs Corruption Inflation Government inefficiencies and bureaucracy Unpredictability of government policies Political instability Labor regulations or disputes Economic crises or recessions in other economies Lack of education or training of labor force Government debt Access to finance Kidnapping. theft. Coefficient of variation for 10-year growth estimate: . Though China‘s inflation is not high in absolute terms. which can make new growth opportunities harder to come by. it has been steadily increasing since 2009. tied for third highest among emerging market economies. The country makes an impressive showing on public confidence in ability to handle challenges to growth over the next decade. Rising labor costs are by far the most frequently reported challenge to growth: two thirds of respondents list this as a primary concern. 30 . with food prices rising 10% in October 2010 relative to the year before. receiving a score of 4 (―confident‖). and other crimes Poor or inadequate infrastructure Tax rates and regulations 67 38 38 29 21 21 17 13 13 4 4 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years.China (24 Respondents.

Those surveyed think public opinion is favorable concerning the ability of the government to handle challenges to growth. dollar. concern over inflation may reflect fear of quantitative easing in the United States.30) Top Challenges to Growth Economic crises or recessions in other economies Inflation Rising labor costs Government inefficiencies and bureaucracy Poor or inadequate infrastructure Political instability Unpredictability of government policies Kidnapping. and other crimes Access to finance Government debt Lack of education or training of labor force Corruption Tax rates and regulations Labor regulations or disputes 75 42 33 17 8 8 8 0 0 0 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years.5% over the next decade. predicting an annualized increase of 3. Given the Hong Kong currency board‘s tie to the U. Respondents are also optimistic about sustained growth of the territory.Hong Kong (12 Respondents. giving a score of 4 (―basically confident‖) on this measure. Three quarters of respondents from Hong Kong think crises or recessions in other economies are a serious challenge to growth.S. Coefficient of variation for 10-year growth estimate: . reported by 42% of respondents. robbery. The next most frequently cited challenge to growth is inflation. reflecting Hong Kong‘s high degrees of trade and financial openness. theft. 31 .

India (10 Respondents) India's GDP Growth 1980-2010 12 10 GDP Growth Rate 8 6 4 2 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Note: GDP Data from the International Monetary Fund's World Economic Outlook Database. Growth has been just shy 10% in 2006 and 2007. While economic expansion slowed in 2008 and 2009. according to the IMF‘s World Economic Outlook. October 2010 In the decades following India‘s independence. Having been a success story for the past two decades. Growth eventually picked up. especially in the past two decades. however. the country‘s growth is predicted to increase to nearly 10% in 2010. it remains to be seen whether the country will continue its impressive recent growth or return to less favorable rates seen in decades past. the country‘s economy grew relatively slowly. 32 .

5% over the next decade. India‘s poor infrastructure is seen as a top challenge to growth by 80% of respondents. respondents are more concerned with the availability of skilled labor than rising labor costs as constraints to growth. Coefficient of variation for 10-year growth estimate: . the highest in our sample. Despite these issues and despite a score of 3.India (10 Respondents.13) Top Challenges to Growth Poor or inadequate infrastructure Corruption Government inefficiencies and bureaucracy Lack of education or training of labor force Inflation Unpredictability of government policies Rising labor costs Tax rates and regulations Kidnapping. 33 . respondents predict annual growth of 7. Corruption and government inefficiencies and bureaucracy are also primary concerns.1 (―basically unconfident‖) for public opinion on the ability to handle challenges to expansion. Because of the country‘s low wages and relative dependence on service exports. robbery. and other crimes Political instability Economic crises or recessions in other economies Access to finance Government debt Labor regulations or disputes 80 70 50 40 20 10 10 0 0 0 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. theft.

Lebanon (10 Respondents. and other crimes Rising labor costs Labor regulations or disputes 90 80 40 40 30 10 10 0 0 0 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. respondents from Lebanon overwhelmingly indicate political instability as a top challenge to growth. This is a significant drop from 2011 growth of 4%. In the wake of the assassination of former Prime Minister Rafic Hariri in 2005 and subsequent assassinations of other high-profile leaders. those surveyed think the public lacks confidence in the ability of the government to handle these challenges and predict that the country will grow at only 3% annually over the next decade. respondents also cite inadequate infrastructure as a top challenge to growth. robbery.51) Top Challenges to Growth Political instability Poor or inadequate infrastructure Government debt Corruption Government inefficiencies and bureaucracy Economic crises or recessions in other economies Tax rates and regulations Lack of education or training of labor force Inflation Unpredictability of government policies Access to finance Kidnapping. suggesting long-term concern over the country‘s growth potential. Because its infrastructure has been weakened by its 1975-1990 civil war and conflicts with Israel. theft. Coefficient of variation for 10-year growth estimate: . 34 . largely due to conservative lending practices by its banks that resulted in an inflow of capital at the height of the crisis. Though Lebanon has endured the economic downturn well.

Respondents are not very optimistic about growth in the country. and other crimes as top challenges to growth. theft. These crimes are destabilizing and can discourage investment and tourism. Coefficient of variation for 10-year growth estimate: . theft.Mexico (29 Respondents. tied for lowest among developing countries. but it is surprising that they are viewed as more problematic to economic progress than lack of education or training of the labor force.31) Top Challenges to Growth Kidnapping. with annual growth predicted at 3% over the next decade. which ties with corruption as the next most worrisome issue. robbery. Respondents from Mexico most frequently report concern over kidnappings. and other crimes Lack of education or training of labor force Corruption Government inefficiencies and bureaucracy Economic crises or recessions in other economies Labor regulations or disputes Tax rates and regulations Poor or inadequate infrastructure Unpredictability of government policies Political instability Rising labor costs Access to finance Inflation Government debt 59 41 41 34 24 14 14 10 10 3 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. robbery. 35 .

Coefficient of variation for 10-year growth estimate: .23) Top Challenges to Growth Government inefficiencies and bureaucracy Corruption Poor or inadequate infrastructure Unpredictability of government policies Kidnapping. the Philippines has not been able to replicate the economic success of some of its neighbors in east and southeast Asia. reported by more than 60% of respondents. In spite of a number of favorable fundamentals. 36 . Corruption is the second most critical challenge to growth. Government inefficiencies and bureaucracy are reported as a top challenge to growth by nearly 80% of respondents in the Philippines. robbery. theft. Infrastructure is another worry. and other crimes Lack of education or training of labor force Government debt Access to finance Economic crises or recessions in other economies Political instability Labor regulations or disputes Tax rates and regulations Inflation Rising labor costs 77 69 62 46 15 8 8 8 8 0 0 0 0 0 0 20 40 60 Percentage of Respondents 80 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years.Philippines (13 Respondents. the highest percentage in any country in our sample.

reported by over 60% of respondents.22) Top Challenges to Growth Corruption Poor or inadequate infrastructure Government inefficiencies and bureaucracy Unpredictability of government policies Rising labor costs Inflation Access to finance Economic crises or recessions in other economies Tax rates and regulations Lack of education or training of labor force Labor regulations or disputes Kidnapping. 37 . and other crimes Political instability Government debt 82 73 64 27 18 9 9 9 9 0 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. robbery. respondents to our survey mention poor or inadequate infrastructure as a top problem almost as frequently as corruption. Russia has not had spectacular growth. Respondents give a score of 3 (―somewhat unconfident‖) for public confidence in the government‘s ability to handle challenges. the country is predicted to grow 4. Another primary challenge is government inefficiencies and bureaucracy. In addition. Corruption is its top challenge to growth. Coefficient of variation for 10-year growth estimate: . and relatively sophisticated science and technological capabilities. In spite of its vast natural resources. a well-educated labor force. cited by over 80% of respondents. theft. which is high compared to other countries in its income range.Russia (11 Respondents. Despite this.5% annually.

are crises in other economies and government inefficiencies and bureaucracy.30) Top Challenges to Growth Economic crises or recessions in other economies Government inefficiencies and bureaucracy Tax rates and regulations Political instability Corruption Labor regulations or disputes Unpredictability of government policies Inflation Rising labor costs Lack of education or training of labor force Kidnapping. robbery. high compared with other economies at a similar level of income. South Korea is the third largest economy in Asia. and other crimes Government debt Poor or inadequate infrastructure Access to finance 32 32 27 27 18 14 14 14 14 9 5 5 0 0 0 20 40 60 80 100 Percentage of Respondents Note: We asked respondents to list up to three top challenges to growth over the next ten years. at 32%. respondents do not seem to think that these varied challenges will be serious hindrances to growth. 38 . and was the host of the most recent G-20 summit. which is predicted to be 4%. The most frequently cited challenges.South Korea (24 Respondents. theft. Respondents from South Korea have diverse opinions on what will hamper the country‘s growth. Still. every other category is considered a top challenge by at least 5% of respondents. Coefficient of variation for 10-year growth estimate: . While no respondent indicates infrastructure or access to finance as a prime concern.

5% annually over the next decade. robbery. Respondents predict growth will be 4. and government inefficiencies and bureaucracy. being the next two most frequently reported barriers to growth. With political turmoil since 2006.22) Top Challenges to Growth Political instability Corruption Government inefficiencies and bureaucracy Lack of education or training of labor force Poor or inadequate infrastructure Rising labor costs Economic crises or recessions in other economies Labor regulations or disputes Tax rates and regulations Unpredictability of government policies Kidnapping. Despite these concerns. there is room for optimism: the average score for public opinion on governmental ability to handle these challenges is 3. including a coup against then-Prime Minister Thaksin Shinawatra. Distrust in government is further reflected by corruption.2. which is on par with other countries at a similar income level. theft. close to the neutral score of 3.5. and other crimes Government debt Inflation Access to finance 76 41 35 24 18 12 12 6 6 6 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. 39 .Thailand (18 Respondents. Coefficient of variation for 10-year growth estimate: . it is understandable that respondents in Thailand think political instability will be a top hindrance to growth over the next few years.

A supply of skilled labor is necessary for the country to transition away from agriculture and manufacturing toward a more service-based economy. Respondents in Turkey report lack of education or training of the labor force as the top challenge to growth. Respondents think people have hope that the government can solve these challenges: the country receives a score of 4 (―basically confident‖) on this measure. Turkey seems poised to do well. theft.Turkey (12 Respondents. and other crimes 58 50 25 25 25 17 17 17 17 17 8 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. Another big worry is unpredictability of government policies. Coefficient of variation for 10-year growth estimate: . reported by half of respondents. With annual growth predicted at 4.13) Top Challenges to Growth Lack of education or training of labor force Unpredictability of government policies Economic crises or recessions in other economies Poor or inadequate infrastructure Access to finance Rising labor costs Government inefficiencies and bureaucracy Government debt Corruption Political instability Tax rates and regulations Labor regulations or disputes Inflation Kidnapping. even when compared with countries at a similar level of income.6% over the next decade. robbery. tied with China and Hong Kong for third highest score among emerging market economies. Turkey sits in both Europe and Asia and has ambition to join the European Union. 40 .

44% of respondents from the United Arab Emirates list government debt as a top challenge to growth. respondents think the country will be able to maintain an annualized level of growth of 4% over the next decade. including a 2009 restructuring of the debt of Dubai World. theft. Ultimately.20) Top Challenges to Growth Government debt Government inefficiencies and bureaucracy Lack of education or training of labor force Access to finance Economic crises or recessions in other economies Unpredictability of government policies Inflation Rising labor costs Tax rates and regulations Political instability Poor or inadequate infrastructure Kidnapping. and other crimes Labor regulations or disputes Corruption 44 39 33 33 28 22 22 11 6 6 0 0 0 0 0 20 40 60 80 Percentage of Respondents 100 Note: We asked respondents to list up to three top challenges to growth over the next ten years. Coefficient of variation for 10-year growth estimate: . robbery. Despite Abu Dhabi‘s large sovereign wealth fund from oil revenues. comparable to other rich emerging market economies such as Hong Kong and Korea and well above growth rates predicted by developed countries. which has received enormous financial help from Abu Dhabi.United Arab Emirates (18 Respondents. making it the most frequently cited issue. The country receives a score of 3. the investment company that manages and supervises a portfolio of businesses for the Dubai government. 41 . This is likely because of Dubai‘s debt.9 – close to ―basically confident‖ (4) – on public opinion concerning the ability of government to overcome obstacles to growth.

by Country Country United States Argentina Australia Austria Belgium Bermuda Brazil Canada Chile China Colombia Denmark Dominican Republic France Germany Greece Hong Kong India Indonesia Israel Italy Japan Lebanon Mexico Responses 657 7 18 1 5 1 17 9 10 24 4 2 3 23 10 8 12 10 1 6 17 18 10 29 Country Monaco Morocco Nigeria Norway Netherlands Pakistan Panama Peru Philippines Portugal Russia Saudi Arabia Singapore South Korea Spain Sweden Switzerland Thailand Turkey Trinidad and Tobago Taiwan United Arab Emirates United Kingdom Responses 1 2 5 7 19 1 1 1 13 1 11 2 8 24 9 1 8 18 12 1 2 18 36 42 .Part III: Appendix Description of Sample and Survey Using Columbia Business School‘s alumni database. We included only countries for which we received five or more responses. we compiled a list of countries in which at least eight alumni currently live. Table A1: Number of Respondents. Respondents were given the option of skipping any question they were unwilling or unable to answer. We then sent a survey to all alumni living in these countries. Respondents were asked to answer all questions for the country in which they currently live. Table A1 reports the number of responses.

58 3.23 0.26 0.66 3.48 0.55 0.48 5.25 1.25 6 2 6 5 7 3.22 0.19 0. The coefficient of variation.61 0.5 5.5 8 1.75 3.25 2 1 2 Mean 4.33 2.Table A2 2011 Growth Predictions Country Argentina Australia Belgium Brazil Canada Chile China France Germany Greece Hong Kong India Israel Italy Japan Lebanon Mexico Netherlands Nigeria Norway Philippines Russia Singapore South Korea Spain Switzerland Thailand Turkey United Arab Emirates* United Kingdom United States ISO ARG AUS BEL BRA CAN CHL CHN FRA DEU GRC HKG IND ISR ITA JPN LBN MEX NLD NGA NOR PHL RUS SGP KOR ESP CHE THA TUR ARE GBR USA Responses 6 18 5 17 8 10 23 23 10 8 10 10 6 17 16 9 25 18 5 6 11 11 8 22 9 6 16 12 17 32 628 Median 3. is a measure of agreement among responses.19 1.60 0.63 0.17 0. A high coefficient of variation (in absolute value) can indicate disagreement among respondents.34 1.27 0.50 5.11 0.18 1.68 0.00 1.16 1.52 7.23 0. When there are 10 or more responses.15 2.37 -0.49 1.16 0.33 5.33 0.41 6.87 0.24 1. Winsorizing reduces the influence of extreme values by replacing the largest and smallest values. values 1 2 3 4 5 6 7 8 would have winsorized values of 2 2 3 4 5 6 7 7.70 4.2 1.42 0.21 0. caution should be placed on interpreting predictions.67 1.35 -1.09 0.5 1.64 4.43 0.20 0.43 0.52 1.83 2.51 2.18 0.88 Standard Deviation 2.18 4.24 1. and coefficients of variation are calculated by first winsorizing the data.72 Coefficient of Variation 0. * With a coefficient of variation above 1. 43 .49 1.69 0. calculated as the standard deviation divided by the mean.36 0.25 0.87 1.80 1.41 0.86 0.50 1.15 0.47 0.89 0.7 4.51 0.5 2 -2 3.6 0.39 1.56 4.85 7.5 1.07 0.42 6. we winsorize the largest and smallest 10% of observations within a country (rounded down to the nearest integer).69 1.40 2.85 1.00 0. We winsorize the largest and smallest values when there are fewer than 10 responses. For example.81 1.09 0.43 0.56 1.38 Notes: The reported means.75 0.45 2.87 0.32 0.19 0.5 8 3 1 1 4 3.85 0. standard deviations.22 0.69 5.93 0.4 5.43 0.24 0.81 3.5 5 2.11 0.

92 0.73 4.06 0.29 3.28 Notes: The reported means.08 3.14 0.24 1.43 4. Winsorizing reduces the influence of extreme values by replacing the largest and smallest values.15 0.29 1.34 0.23 1.00 0. calculated as the standard deviation divided by the mean.41 0.99 0.66 0.5 4 1 1. and coefficients of variation are calculated by first winsorizing the data.23 0.24 0.14 0.94 2.60 2.20 0.36 1.24 0.77 0.54 0. is a measure of agreement among responses.16 0.00 0. caution should be placed on interpreting predictions.18 0.5 5 4.98 7.57 4.73 Standard Deviation 0.13 1.50 4. * With a coefficient of variation above 1.84 4.06 7.40 5.5 3 3 2 7 2.57 0.5 6 2 2 2 3.00 2. 44 .20 5.3 2 4 3.15 0.04 1.34 0. values 1 2 3 4 5 6 7 8 would have winsorized values of 2 2 3 4 5 6 7 7.27 2.85 0.41 0.22 0.13 0.92 0.10 0.22 0.00 3.5 4.13 0.46 0.44 1. We winsorize the largest and smallest values when there are fewer than 10 responses.5 7.Table A3 Predicted Average Annual Growth over the next 10 Years Country Argentina Australia Belgium Brazil Canada Chile China France Germany Greece Hong Kong India Israel Italy Japan Lebanon Mexico Netherlands Nigeria Norway Philippines Russia Singapore South Korea Spain* Switzerland Thailand Turkey United Arab Emirates United Kingdom United States ISO ARG AUS BEL BRA CAN CHL CHN FRA DEU GRC HKG IND ISR ITA JPN LBN MEX NLD NGA NOR PHL RUS SGP KOR ESP CHE THA TUR ARE GBR USA Responses 5 18 5 15 7 10 23 21 9 7 9 10 5 13 16 8 26 17 4 6 11 10 8 22 9 6 15 11 16 33 614 Median 3 3.66 1.70 0.46 0.5 4.31 0.59 1.35 3.22 0.43 0. When there are 10 or more responses.6 4 2 2.5 5 4 3 1. A high coefficient of variation (in absolute value) can indicate disagreement among respondents.7 Mean 3.99 1.00 3.97 1.45 1.28 0.00 0. The coefficient of variation.22 0.15 0.47 0.76 1.83 4.91 1.63 3.46 0.10 0. standard deviations.34 0.69 0.71 3.77 Coefficient of Variation 0.51 3.3 4.30 0.20 1. For example.59 0.51 0. we winsorize the largest and smallest 10 percent of observations within a country (rounded down to the nearest integer).30 1.70 5.12 5.12 0.23 0.

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