How to Fire Up an Export-Led Economy… Step one, steer clear of the Cuckoo Clocks
There are more than a few memorable lines in Carol Reed’s classic film, The Third Man: most of them delivered by Orson Welles, and it seems he wrote these, too: “In Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo Da Vinci, and the Renaissance. In Switzerland, they had brotherly love and five hundred years of democracy and peace… what did they produce?... The cuckoo clock”. In a world that has become ever more restless and uncertain since Vienna in 1946, there’s a clear lesson to be learned from those prescient words… don’t get stuck making cuckoo clocks.
In 1950 the United Kingdom was producing 25.4% of the World’s manufactured exports; television, computers, and radar were all invented there, innovation was thriving, and it had highly successful automotive, shipping, and aviation sectors: but within sixty short years, everything went into reverse. Most of the UK’s domestic car and truck companies had gone out of business by 2013, the last British-based (and Japanese-owned) television factory was closed down in 2009, and Britain’s share of global manufactured trade had almost literally been decimated (shrivelling to 2.9% by 2010). As Peter Mandelson said at the time, with striking naivety but a laser focus on reality: “We’ve forgotten how to make things”.
And things weren’t about to get any better either…
By the beginning of this year, the seventh and eighth largest categories of UK manufactured exports were, respectively, off-road vehicles and custom-made jewellery (www.ibisworld.com), and that’s not a million miles away from making cuckoo clocks. Brexit hasn’t helped either, of course …last year, UK exports to non-EU countries fell by 5.1%, despite Whitehall’s much-vaunted search for new, era-defining trade deals.
So just for a moment, let's imagine that you’re running a major economy, and you can choose exactly where to deploy your manufacturing and service resources: where will you put them? Obviously not into cuckoo clocks and custom-made jewellery (although I’m sure each have its own virtues): no, you’re going to go for something much more significant, something bigger…something capable of driving a healthy balance of trade and with it, future economic growth: you won’t need to hesitate long, because the answer’s obvious: you’re going to go all in on Emerging Technologies.
And that’s precisely what India’s been doing for the last twenty years.
A Global Technology Hub
The Subcontinent is now one of the world’s biggest exporters of IT and BPO services and home to more than 5 Million people employed in so-called Technology Capability Centres: particularly, of course, in the hot spots of Bangalore, Pune, and Chennai. And over the course of the last twenty years, India’s technology exports have grown by 14%, reaching a giddy $157 Billion by the end of last year: to put that in context, the UK’s total manufactured exports in 2022 were $37.77 Billion…added to which the former mother country still managed to rack up a significant balance of payments deficit.
The sheer scale of the Subcontinent’s baked-in technology expertise (not to mention its crude commercial success) has been transformative in remodelling India as a global hub for technology and innovation (www.ey.com/en_in/india), perfectly positioned to meet the demands of major corporates that are increasingly looking to build technology platforms on a worldwide scale: India offers them precisely that potential.
So, where once it was viewed (with some justification) as what EY described as a “technology back office”, India has now become a much more fluid, highly skilled, hybrid environment for emerging technologies: powering “the digital fabric of the world’s largest corporations” (that’s EY again). And that means way more robotics, machine learning and AI, as well as “run the business” and consulting services based on a vast wealth of experience in design, full-stack digital engineering, and innovative product development.
India currently accounts for more than 45% of Global Capability Centres worldwide, and up to 70% of global technology headcount is based in India: all of which feeds, in turn, into its domestic investment streams that are increasingly powering the fastest-growing large economy on earth.
It’s a whole lot better than making cuckoo clocks…
It’s become cliché that the world is increasingly closely connected and interdependent…but it is, and emerging technologies are at the heart of those changes.