Michael J. Andrew: National governments are on the right track inasmuch as they share the realization that action is needed to reduce the high levels of debt we’re seeing, not just in the eurozone periphery, but across a number of the larger Western economies, including the U.S., UK, France, and Germany. Moreover, emerging markets with large foreign reserve holdings are increasingly voicing discomfort with their degree of exposures to some of the major western governments, so the focus on public spending and debt is a challenge that will persist. The goal must be decisive and cooperative action to build confidence that governments have the capacity to address their challenges. The real issue is how to achieve quality, sustainable growth; austerity programs alone are not the solution.
Reigning in public spending is essential, and it must be done within the context of a longer-term strategy to get growth going again. The debt problems we’re seeing are compounded by the fact that we have a massive deleveraging going on simultaneously in both the public and private sectors. Governments must come together to develop solutions. National leaders understand this, which is why you saw the united response of the central banks last November to provide coordinated liquidity support to the banking sector. It’s why you have the leaders of the major western economies trying to work together to sustain European economic integration through a more intensive central coordination of fiscal policy. So the debt and liquidity issues must be addressed, but Europe must also undertake a longer term restructuring to drive growth. There needs to be a coordinated approach to raise productivity and reduce costs so as to improve competitiveness with fast growing emerging economies.
Emerging markets have been driving the global recovery; yet with their rapid growth and increasing levels of foreign investment they have experienced increased inflationary pressure. National governments will want to take a diligent and persistent macroeconomic approach to ensure that growth and development continue on a sustainable path. China, for example, has demonstrated its willingness to proactively adjust its monetary policy whenever the economic situation demands – so as to manage inflationary pressure or stimulate growth. Across the emerging markets, the focus needs to be on creating balanced economies with stronger domestic markets that are less dependent on exports, and more resilient to fluctuations in foreign exchange.
While the global population is seven billion today, it is estimated that this figure will reach nine billion by mid-century – with virtually all of that growth occurring in Asia, Africa, and Latin America. Every year we are introducing 100 million new consumers of food, water, energy, and medicine into a resource-constrained world. So managing and conserving resources, and resource security will take on increasing urgency. There is also an imperative to improve living conditions and provide opportunity in countries with growing populations. In the emerging nations of the Middle East, Africa, and Southeast Asia, for example, action is needed on basic education, infrastructure, housing, the delivery of adequate healthcare, and creation of living-wage employment opportunities. Among the developing nations of Latin America and East Asia, requirements include enhancing the business environment through regulatory and legal reforms that strengthen transparency, end corruption, and spur business investment and innovation. These countries have evolving needs for higher education and job training to enhance productivity and address the need for skilled labor in key sectors. Also needed are sound environmental policies to reduce greenhouse gas emissions and strengthen conservation.
It is critical for businesses, governments and NGOs to work together to create the platforms and structural changes necessary to deliver economic opportunity. This means focusing on such activities as R&D investment, public-private partnerships, technology transfer, legal and regulatory reform, as well as corporate governance frameworks that engender transparency, efficiency, and trust in the capital markets. Knowledge sharing among national governments is an important component, as they face many of the same challenges and can benefit greatly by learning more about their respective innovations, successes, and experiences. Business also needs to expand its role and work with its broad range of stakeholder groups – to extend its reach and effectiveness not just in matters of commerce, but in areas of social and environmental stewardship as well. By creating platforms to enhance education, improve infrastructure, create job opportunities for rapidly growing working-age populations, and stimulate domestic economies to build the tax base, emerging economies stand a better chance of flourishing and stable societies are possible. .
I agree there is a fundamental shift occurring, and it is taking place not just economically but also politically, demographically, and socially. In the developing and emerging markets of the East and South we’re seeing robust income growth, as well as rising domestic consumption that will make them less reliant on the traditional economic powers. The shift has already changed global trade patterns – there is a new “silk route” – with US$2.8 trillion worth of trade coursing among countries in Latin America, the Middle East, Asia, and Africa. Today, between 50% and 60% of global trade volume occurs between different regional trade areas. Within the next 20 years you’re going to see a different top 10 list of nations in terms of growth and size. Indeed it’s being remade at this moment given China’s rise, India’s rapid growth, Brazil’s emergence – and we have yet to witness the fullness of what is possible in Latin America and Africa. .
Of course, it’s not all smooth sailing for emerging markets. There will be economic, demographic, and social challenges – but the West-to-East and North-to-South shift will continue. This should not, however, obscure the fact that North, South, East and West need each other. Whether it is European car sales in China, or American exports to Brazil, our global-interconnectedness should be clear. .
I’ll answer this in two ways. The most important skill is the ability to develop your personal networks. And I’m talking about more than the use of social media – something deeper and more meaningful than a Facebook page or a LinkedIn account. I’m talking about cultivating deep professional relationships. Be willing to collaborate with others, join work teams, tackle new assignments, and expose yourself to multiple points of view. It will provide moments of learning, career opportunity, and the true reward of strong friendships. In addition, the most important quality an individual can possess is personal integrity. This forms the basis of your reputation – which is not something you can buy; and, once damaged, is very difficult to repair. Integrity never goes out of style, no matter what the business environment.