Europe looking at demonetisation with great interest: BCG’s Burkner
Boston Consulting Group chairman Hans-Paul Burkner believes globalization remains a big trend influencing global economy, despite Brexit and Donald Trump’s rise
New Delhi: Named one of the Top 25 consultants in the world in 2003 by Consulting magazine, Hans-Paul Burkner is chairman of The Boston Consulting Group which just completed 20 years in India. Having spent 35 years at BCG, Burkner who studied economics, business administration and Chinese, culminating in a D.Phil from the University of Oxford, has steered his firm into newer markets focusing increasingly on Asia where he spends most of his time now. In India recently, the 63-year-old spoke to Mint. Edited excerpts:
From where you sit, what are the big trends that you think will influence the global economy?
It is still globalization despite Brexit and Donald Trump and setbacks to openness in terms of trade barriers. Also, there is digitization. I think in the wake of that, there is a backlash in many countries where you need to ensure more inclusiveness and that is driving a lot of their policies, and their election campaigns. So globalization, digitization and inclusiveness, those three things will really change the world over the coming decades but there will also be friction among them.
Globalization means not just movement of goods and services and capital, but also of people which works against inclusiveness. Digitization or automation or technology in general will really mean that people will have to change and to learn things. The manufacturing jobs that are gone will not return, factories will not move from China or Asia back to the US. The new factories that come up in North America or Europe will be fully automated. All this will mean some friction.
But I believe that in the last 25 years, the world has become a much better place. We have fewer people in absolute and relative terms going hungry every day. Life expectancy, with some exceptions, is longer than ever before. The proportion of children, boys and girls, going to school has increased massively as has the standard of living around the world.
This does not mean that individuals or families have not suffered one way or the other. People who have lost jobs have not been able to find new ones.
But the world has become much better and also much more equal because the emerging markets have arisen so much. In all the discussions that we have when we see statements by Paul Krugman or Joseph Stiglitz, they all focus on the US when they talk about rising inequality. It has become less equal in the US and to a lesser extent in Europe. But for the world at large inequality has really come down.
I’m quite optimistic that despite some of the issues related to growth, we will see people working very hard to become workers, entrepreneurs, consumers and will drive change in the world going forward. It will not be straight line. There will be setbacks but the trend line will be positive. That is true in India and China and many South East Asian countries, and even in Africa, though Africa and Latin America are hardly growing any more because they have depended too much on commodities.
Do you think that compared to the last 20 years, in the next 20 years we will probably not globalize as much?
It will be a different kind of globalization. We will see a continuation of globalization but there will be more local, regional, global markets because people will try to get closer in their production of products and services to the customer. You will not have one factory out of which you supply to the whole world but more regional factories. You can also customize your product with 3D printing. It will not happen tomorrow but it will happen over the next two decades. We will also see a lot more services being globalized. It will also not be driven by the Anglo-Saxon model or by the US. There will be more models.
You set up the public sector practice for BCG many years ago. What do you think about the sector in India?
There is a growing determination in India in the federal government but also in the states to get results and to improve productivity. We have been working with the 12 public sector ports with good results. Chief ministers are trying really very hard. We are working with the chief minister in Rajasthan, we are working on the education system in Haryana and it makes me very optimistic that we will see good results going forward. It doesn’t mean everything will go smoothly.
I think demonetisation is a big experiment. It could well be a major breakthrough. Even in Europe, we are looking with great interest at it because in the last year or two there has been discussion on doing away with cash completely. If there is no cash you can really dry up things like the drug trade or the black market economy. People are looking at India to see how it is coming about and also what mistakes to avoid. These things which have never been done before, you cannot expect to run smoothly.
Whenever there is change, people do resist and governments and government agencies make progress step by step.
When you look at all the technologies where we have seen breakthroughs in the last few years, artificial intelligence (AI) is one, 3D printing, desktop manufacturing, gene editing is another. Which one of these do you see having the most disruptive impact over the next few years?
I think the smartphone and connectivity will massively change things. Whether it is AI or 3D printing, all these things depend upon digitization and creating connectivity. I am not in a position to say this is more important than that but the key is to embrace these things rather than try and prevent them because we are afraid of them.
Of the 46 countries in which BCG operates, which to you is the most exciting market?
I would say Asia is the most exciting place. I think in emerging markets in general, there is a lot more openness to embracing the opportunities whereas in Europe, because the population is much older, we are interested in trying to protect the status quo.