Club of Metropolitan European CCIs The international economic situation and CCIs challenges

1. Club of Metropolitan European CCIs The international economic situation and CCIs challenges Carlo Altomonte Milano, June 8th 2012

2. How are we doing ? Today vs. Great Depression Volume of World Trade World Industrial Production Source: Eichengreen and O’Rourke (2012)

3. An heterogeneous picture across countries: GDP Real GDP Growth rates, 2000 – 2014 (forecast) Source: IMF, World Economic Outloook

4. The short-term agenda: eliminate the negative feedback loop in EU Common bank resolution framework Pan-European deposit guarantee scheme EU-level supervision Fiscal compact & ‘Six pack’ Euro-bond scheme (various proposals) Structural reforms Project-bond & infrastructures Role of EIB and EU Budget

5. A (less) heterogeneous picture across countries: trade Volume of Export Growth rates, 2000 – 2014 (forecast) Source: IMF, World Economic Outloook

6. Trade in intermediates is on the rise Source: OECD Trade in intermediates nowadays dominates trade flows, representing 56% of trade in goods and 73% of trade in services in OECD countries. Brazil, China & India each has a share of intermediates in total imports of more than 70%, well above the OECD average of 56%

7. The role of Global Value Chains Source: Der Spiegel, 2001

8. The long-term agenda: capture your share of (growing) global demand Source: OECD

9. How much value added are you able to retain ? Source: US Dep.t of Commerce

10. A comparative analysis of FDI across European Regions Source: Milan Chamber of Commerce

11. The role of organizational structure in Multinational Groups Source: Milan Chamber of Commerce

12. The role of organizational structure in Multinational Groups Source: Milan Chamber of Commerce

13. Conclusions • The world economy is moving from the quick post-crisis recovery to a slow rebalancing, with significant institutional and political challenges / headwinds in the short run (especially in the Euro area, but not only….) • The production structure of the world economy (trade) seems relatively less affected by these dynamics, as trade flows have recovered more homogeneously across countries; also, a significant structural break in production patterns has not emerged in the post-crisis world => GVCs will continue to dominate the world production picture over the next years • GVCs provide a crucial link between a high-skill / low-growth location and fast growing global markets. As such, CCIs should foster an efficient connection between local firms and Global Value Chains • Not only export-promotion policies: fostering imports and foreign participation are key success factors to allow the local business environment to become connected to GVCs • In particular, according to the comparative research carried out by the Milan Chamber of Commerce, attracting more ‘complex’ multinational groups (geographically more extended but relatively less diversified in terms of sectors) in a territory seems to be an important factor to activate links with GVCs and thus foster competitiveness