A 2.0L twin-scroll turbocharged SIDI engine was used to evaluate low-pressure loop water-cooled external EGR at operating conditions between 1000 rpm 75 Nm and 3000 rpm 250 Nm. The engine compression ratio was increased from 9.3 to 10.9. The maximum fuel consumption reduction potential, the boost pressure requirements, and the optimized external EGR calibration were determined. Combination of higher compression ratio and external EGR achieved 5-7% better fuel economy over mid-load region when using the twin-scroll turbocharger. A similar (4-6%) better fuel economy was observed over much of the higher-load region, including peak torque condition at 1000rpm, when the required boost pressure was provided by an externally-driven auxiliary boost system (not connected to the engine). The power consumption of auxiliary boost system (supercharger loss) was estimated and considered in fuel economy assessment. The fuel consumption reduction mechanisms of EGR were also analyzed. This study shows that reduced pumping loss attributed to about 0.5% fuel consumption reduction per 10% EGR, heat loss reduction and better mixture properties offered above 2% fuel consumption reduction per 10% EGR. In addition, combustion phasing improvement by adding EGR played the main role to reduce the fuel consumption at knock-limited conditions, up to 4% at low speeds and high loads.