A report by PwC, Future Industry Clusters, shows how accelerating capital flows, seismic demographic changes and the rise of state capitalism will drive the relocation of industrial hubs and change the face of global trade and business.
The report forecasts that, by 2040, Singapore will join Boston, New York and London as a leading centre for asset management expertise ahead of Hong Kong, and that Mumbai will pass Shanghai as the region’s leading centre of film making, challenging Los Angeles as the centre of the film industry.
The PwC report focuses on five key industries: pharmaceuticals, automobile assembly, asset management, filmed entertainment, and tertiary education.
The key drivers for the changes are growing markets, increasing affluence, and the rise of the middle classes in emerging markets, coupled with an ageing population, more moderate regulation and rapid GDP growth in some of the regions. While emerging markets look set to benefit, in certain instances, it is clear that the developed economies retain dominance in cultural and knowledge leadership, particularly when it comes to tertiary education and the pharmaceutical industry.
Yael Selfin, PwC head of UK macro consulting and author of the report, said: “The increasingly globalised economy allows greater specialism. However, while the relocation of certain industries poses challenges for more established markets there are also opportunities as countries race to capitalise and focus on their key strengths. One potential outcome of this industry movement is that India and China will be battling for the global upper hand as they experience rapid growth in their economies.”
The following are the key industry cluster findings:
Asset Management – Singapore is expected to lead Hong Kong as the dominant Asian asset management cluster joining the large clusters in New York, London and Boston.
The availability of public and private capital and increased regulation in US and Europe drives Asian growth.
Automotive assembly – Clusters around Tianjin, Nanjing and Sao Paulo may rise to be among the largest by 2040. The growth of the middle classes in China, India and Sao Paulo will add hundreds of millions of potential car owners to the world market between now and 2040 – requiring a vast increase in production capacity in these regions. Limiting transportation costs will ensure that the assembly locations are kept in the region of the buying markets.
Filmed entertainment sector – Mumbai and Shanghai vie for dominance in Asia and Mumbai is expected to lead in 2040 challenging Los Angeles’s reign. Both Asian cities will have large entertainment centres as they move increasingly into mainstream productions.
Pharmaceutical – Current leading clusters in New York and London to remain the largest but Shanghai is expected to grow in importance helped by improved affluence and ageing population increasing demand for healthcare. Europe and the US will continue to benefit as the concentration of knowledge and R&D in these economies remain significant.
Tertiary education – New York, London and Boston expected to remain principal tertiary education clusters in 2040 due to the depth of quality Universities currently hosted but emerging and developing nations are investing and seeing huge improvements in University standards.
Kevin Valenzia, territory senior partner at PwC in Malta said: “It is clear that the global economic footprint is changing shape and major sectors are already experiencing this change. Emerging markets are coming out of the global recession at a faster pace and companies and countries need to ensure that they are taking strategic decisions that provide them with competitive advantage – this of course also applies to Malta. Understanding where market opportunity is located will be vital.”