India to outdo US, Japan in economic growth

NEW DELHI: Emerging economies, including India, will overtake the developed countries in economic growth by 2050, with the popularity of India and China as investment destination is rising while the attractiveness Europe and North America is slipping, says a study.

"The seven new global powers by 2050 will comprise the so-called BRIC economies (Brazil, Russia, India and China) together with Indonesia, Mexico and Turkey," says the Ernst and Young European Attractiveness Survey 2007.

These seven emerging countries would overtake the economies of the G7 countries, Britain, Canada, France, Germany, Italy, Japan, United States, in terms of gross domestic product (GDP) but whether India can develop its infrastructure at pace with that of global investment remains to be seen, the survey added.

The developing economies will outdo the G7 if it manages to mend the loopholes regarding transparency, fairness and infrastructure development. India's popularity is rising as 26 per cent respondents said the country is amongst their top three preferences in 2007 whereas the figure was just 11 per cent in 2004.

The survey highlights that with intensifying competitive cost pressure, companies across the world would resort to offshore services and manufacturing to lower cost and higher growth economies such as China and India.

One company in five intends to relocate all or part of its European activities outside the region and for this they look forward to the Asian countries. "China attracts the interest of 50 per cent of respondents currently undergoing a relocation search, while India is considered by 30 per cent of voters," the survey said.

Europe's attractiveness for foreign investors declined significantly in 2007, though it has managed to maintain its lead as the most attractive global investment region, the survey says.

However, the survey cautions that the mature economic markets in Europe are losing their hold on investors as the emerging economies of Asia gain further momentum. This change in foreign investor interest towards Asian countries is because of high skilled labour power cost effectiveness and good ground for Research and Development (R&D) activities.

Asia has shown a significant gain and narrowed the gap with Europe and in the list of preferred regions China has moved up to the second position this year, while India has attained fifth position in the league.

Western Europe tops the chart with 55 per cent respondents naming it as one of their most preferred business locations followed by China which received the vote of 48 per cent respondents, while India managed to hold on to the fifth position with 26 per cent decision makers voting in its favour, the survey said.

Central and Eastern Europe grabbed the third position (39 per cent vote) whilst the United States and Canada shared the fourth slot with 38 per cent respondents voting in their favour for the preferred location for investments.

The global business world has become increasingly multipolar, the survey said adding that "the attractiveness of the traditional top ranked regions of Europe and North America is giving way to a rise in popularity of India and China".