US Competitiveness and Global Competition

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Allen Cole
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1 US Competitiveness and Global Competition John N. Doggett, JD, MBA, Senior Lecturer Global Management, Entrepreneurship & Sustainable Energy McCombs Faculty International Alumni Liaison McCombs School of The University of Texas at Austin john.doggett@mccombs.utexas.edu

2 Strategic Inflection Points Are Scary A strategic inflection point is a time in the life of a business [or a country] when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end. Andy Grove, Only the Paranoid Survive

3 Everyone Needs Ugly Baby Glasses

4 This Is A Matter of Concern

5 Deficits Are a Non-Partisan Addiction

6 The President s Budget

7 What Happens If...? *Expected future yields on 3-month U.S. dollar deposits held in banks outside of the United States

8 If the Yield Curve Inverts...

9 German 5-year Bonds Yield %

10 America is Addicted to Debt 1980 = $ 0.91 Trillion 1990 = $ 3.17 Trillion 2000 = $ 5.67 Trillion 2004 = $ 7.54 Trillion 2008 = $10.57 Trillion Today = $18.14 Trillion 2019 = $20.47 Trillion

11 China is A Savings Machine

12 Follow the Money

13 USA Owes China, Inc. $1.59 Trillion May 2008 (Billion $) Japan= $575.3 China = $506.8 UK = $271.2 Oil Exporters = $164.2 Brazil = $151.4 Caribbean Banking Centers = $104.5 Luxembourg = $75.2 Russia = $63.7 Hong Kong = $61.4 Taiwan = $38.9 Dec (Billion $) China = $1,244.3 Japan = $1,230.9 Belgium = $355.4 Carib Banks = $333.2 Oil Exporters = $285.9 Brazil = $255.8 Switzerland = $190.1 U.K. = $189.2 Taiwan = $174.4 Hong Kong = $172.6 Luxembourg = $

14 China Will Soon Pass The US

15 Look At The White Circle

16 Each Color = 1 Billion People

17 National GDP in 2013 (purchasing power parity) Country GDP Real Growth % 1. United States $ 16,720,000,000, % 2. China $13,390,000,000, % 3. India $ 4,990,000,000, % 4. Japan $ 4,729,000,000, % 5. Germany $ 3,227,000,000, % 6. Russia $ 2,553,000,000, % 7. Brazil $ 2,416,000,000, % 8. United Kingdom $ 2,387,000,000, % 9. France $ 2,276,000,000, % 10. Mexico $ 1,845,000,000, % 11. Italy $ 1,805,000,000, % 12. South Korea $ 1,666,000,000, % 13. Canada $ 1,518,000,000, % 14. Spain $ 1,389,000,000, % CIA World Factbook January 30, 2015

18 China s Growth is Slowing

19 Can India Make This Happen?

20 A Swarm of Inflection Points Japan - Total Trade China - Total Trade $300 $350 $250 $300 $ Billion $200 $150 $ $ Billion $250 $200 $150 $ $50 $50 $ $ Billions $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 India - Total Trade Dr. P. Konana, McCombs Business School, University of Texas at Austin

21 This is a Brazilian Super Tanker

22 An Orange Juice Super Tanker

23 Competing With Innovation

24 Inside Air Canada s Embraer 190

25 Bangalore, India

26 Tata Motors People s Car

27 Tata Motors Newest Ride

28 Tata Motors Newest Ride

29 Welcome to the New China copyright - John N. Doggett, 2008

30 Growth at Warp Speed 30

31 China has 6 of the 15 Tallest Buildings

32 The People s Republic of Communist China?

33 Shenzhen in china31

34 30,000 people lived here in 1983 Source: ikipedia.org/w iki/image:57440.jpg

35 China s Nicaraguan Canal

36 Ghost Towns Built With Debt

37 Extend and Pretend Between 2000 and 2010, China added 28,000 square kilometers of urban space, the equivalent of 322 Manhattans, much of which was devoted to industrial development and housing. To keep the projects going, developers often took out new loans to cover old borrowings, a practice Chinese banking critics call "extend and pretend."

38 America s EB-5 Visa Program

39 Let s Talk About Real Estate Chinese are #1 foreign investors in US, UK and Aussie residential real estate. US - $22 billion in 2014 vs/ $12.8 in 2013 In London, Chinese bought 11% of all properties over 1 million pounds in. Chinese developers are building high end apartments for Chinese buyers in NYC, London, Sydney, etc. Australia and UK are raising taxes on foreign real estate buyers. Financial Times 2/26/2015

40 Is Another Bubble Brewing? Foreign investors purchased $45 billion of commercial real estate in nd only to $47 billion in Mitsui Fudosan Co. (Japan) $1.4 billion office tower on Manhattan s far West Side $259 million for 92% stake in 55 Hudson Yards Greenland Holding Company (China) Funding most of a $5 billion apartment development in Brooklyn $1.4 billion development in Los Angeles WSJ 1/20/2015

41 The Chinese People Hate Dirty Air

42 Worse than Horrible

43 They Want Clean Water

44 The Clock is Ticking

45 Applied s New Xi an R&D Plant

46 Will This Be China s Century? When Xie Lina, a 26-year-old Applied Materials engineer here, was asked recently whether China would play a big role in clean energy in the future, she was surprised by the question. Most of the graduate students in China are chasing this area, she said. Of course, China will lead everything. New York Times, March 17, 2010

47 THE GROWING IMPORTANCE OF CHINA S ECONOMY

49 The Downside of Stimulus Spending China's leaders turned to credit-fueled investment to drive growth after export demand faded in the wake of the 2008 crisis That activity no doubt buoyed growth. But by rushing what normally would be a decade's worth of investment into a few years, China hastened an end of its era of rapid growth

50 China s Economy is Slowing Down

51 Say Hello to the New Players

52 Enter Alibaba

53 Accurate or Over the Top?

54 They Have No Choice

56 Tidal Power

57 Very Straight Forward Technology

58 French 240 MW Tidal Power Plant

59 If The French Can Do It...

60 Under Construction Today 1,320 MW Incheon Tidal Power Station built around islands west of Incheon. Plant will be completed in June Will generate 2.41 TWh annually.

61 Chinese Tide-Driven Turbine Farm

62 Chinese Dynamic Tidal-Power Wall

63 Another Take on Hydro

64 NASA/JPL/Cal Tech Prototype

65 Ocean Thermal Energy Conversion

66 Chinese Ocean Thermal Energy Conversion

67 Ocean Energy for Fresh Water

68 This is the Holy Grail

Foreign Taxes Paid and Foreign Source Income INTECH Global Income Managed Volatility Fund

Foreign Taxes Paid and Foreign Source Income INTECH Global Income Managed Volatility Fund Income INTECH Global Income Managed Volatility Fund Australia 0.0066 0.0375 Austria 0.0045 0.0014 Belgium 0.0461 0.0138 Bermuda 0.0000 0.0059 Canada 0.0919 0.0275 Cayman Islands 0.0000 0.0044 China 0.0000