So, as regards net investment, in other words the contribution to capital formation, this was more than halved as a percentage of GDP in the mid 1970s. This meant two things. First, capital growth per employee, or per hour worked, fell. For a number of years, investment dropped so much that capital per employee in the business sector actually declined. In other words, each employee worked with less capital. In order to illustrate what capital per employee means, we can take an extreme example, namely what a lone worker can accomplish when digging with a spade and iron bar compared with a hydraulic excavator. The latter represents considerably more capital per employee than just digging with a spade, as well as substantially less physical effort for the worker. Therefore, we should expect productivity growth to fall when capital per employee declines. But there is also another indirect effect. With new capital, new technology is introduced into the production process. Investment is the means for putting new technology and research into practical production. Through investment, new methods and new technology are ushered into production processes. For this reason, we should expect less technological progress in production when capital formation falls. An excavator is so much more than a large number of spades; it represents entirely new technology that affects the whole production process. Figure 1 shows that capital formation, net investment as a percentage of GDP, fell in the mid 1970s from around 15 per cent of GDP to about 5 per cent.
In short, he needs much more depth. Second, cross-functional adaptability. Job functions and business lines are no longer as static and predefined as they used to be. It is increasingly important that finance professionals are exposed to a broader range of business areas. Movement across business lines generates fresh perspectives that could in turn help to drive innovation and identify new areas of competitive strength. A compliance professional, for instance, may start off on compliance matters that pertain to credit activities. Over time, it would be useful to widen his compliance knowledge in other areas of business such as capital markets. This broader exposure will help him to think about compliance and risk management issues across different functions of the bank in a more consistent and coherent fashion. Such a capability will be a key asset when taking on larger functions and responsibilities in the bank. Third, Asian knowledge and expertise. Asia is a diverse mix of economies. They are at different stages of development, with different financing needs and different regulatory and governance structures, not to mention different cultural norms. To operate a successful regional business franchise, finance professionals will need a deep understanding of these differences and know how to navigate the different terrain. Take for example, a corporate banker, who may be advising the treasurer of a Singaporebased multi-national corporation with operations in the region. Each jurisdiction may have different rules and regulations that could impact the cash management and credit needs of this client.