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World Business Trends: Articles:
The following are excerpts from speeches in the last two years.
A free market world: Today, we have a world of free markets and of dramatic efforts almost everywhere to build open societies, democracies and economic opportunities for all. The national borders to business are falling fast. Globalization - a system that enables firms to operate in a dozen countries and increasingly integrate their research, their production and their marketing, supported by a financial system that knows no national barriers, is a reality. This reality is moving ahead at a tempo that is breathtaking. It impacts every aspect of your businesses. The Internet impact: English is the language of globalization. It is the language of Swiss-Swedish giant ABB and of Royal Dutch Shell. It is the language of the critical medium of our new era - the Internet. You can get prices from the Internet. You can see rivals spreading across nations and into markets that before seemed hard to penetrate. You can see much faster the impact of exchange rate movements on your international competitive position. You can harness technology to make you more efficient and strengthen your alliances with foreign partners. And all of these good things are being improved as we speak. U.S. global business leadership: No nation's business leaders have been more acutely aware of the globalization trend and all that it implies than those who run the largest corporations and the most technology-oriented corporations in the United States. It is no surprise that the leading global companies, measured in terms of their foreign assets abroad, are general Electric followed by Ford with several other U.S. firms also in the top ten. U.S. Economy: Exactly 20 years ago Paul Volcker took a dramatic decision. He was the Chairman of the Federal reserve Board and decided that tight money was vital even if it meant a U.S. recession and the certain election defeat of President Carter. The Volcker anti-inflation strategy has been continued by Alan Greenspan and set a base for economic stability in this country. Greenspan and set a base for economic stability in this country. The combination of globalization, technological innovation and Jack Welch-type corporate leadership has given America in the 1990s an era of exceptional growth, low unemployment and staggering stock exchange gains. Shareholder Power: A major ingredient in the U.S. economic success, which continues to be widely underestimated by economists, is the strength today of shareholder power. Never before have business leaders been so aware that shareholders are willing to shower successful business leaders with vast fortunes, and swiftly show them the door when they fail. The result is a drive for managerial leadership that is fearsome. Managers are being tested. They are being forced to continuously find more productive ways of doing things. They are being forced to use the powers of a global market place and new technologies to secure new efficiencies and greater competitive edge. This zeal is powering the American economy in a relentless manner today. Business restructuring: We are seeing global enterprises emerge of such power and scope that no anti-trust or cartel authority can keep pace with them or really know how they should be controlled. We now see, for example, that the world's 100 largest corporations, measured in terms of the foreign assets that they own, control more than $1.8 trillion of international assets and have annual sales in excess of $2 trillion. We see intense pressures on many emerging market countries to keep their doors open to foreign investment and to maintain the tempo of domestic privatizations - but we must ask if this is all so healthy? How can domestic local firms in these emerging economies really compete with General Electric and DaimlerChrysler and Microsoft? How can weak local authorities in developing countries really monitor the environmental actions of global forestry and natural resources giants? How can local authorities in the poorest developing countries monitor the labor practices of powerful sub-contractors to such giants as Toys R Us and Nike who seek the cheapest labor on the planet to make their products?
Global Social Responsibility
Transnational corporations: We cannot ignore these very real issues. They relate directly to the regulation and to the social accountability and responsibility of the rising number of transnational corporations in the world. Today, there are some 60,000 such companies with more than 500,000 foreign affiliates. Unless, we find ways to tame the global leviathans -- and I hope the ways will be self-regulatory and voluntary for the most part -- then we may have a backlash. This could take the form over time of protectionism, capital controls and competition, not cooperation, between countries in such forums as the World Trade Organization and the International Monetary Fund..
Political and corruption issues: Some countries will not succeed in the boom era. We cannot ignore politics. Several Latin American countries face serious democratic tests in 2000 - starting with Mexico. More serious still are the ethnic struggles that have emerged from Kosovo to Indonesia and from Africa to the Indian sub-continent. Religious fanaticism may undermine all hope of economic and social development. So too may nationalism. And, even the countries that have hurled socialism aside and dictatorships and have embraced capitalism and democracy, even some of these may fail. Russia is clearly the biggest test of all.
Corruption: And, entwined in so many of the political instabilities that we must take into account is the issue of corruption. This criminal activity has already created chaos in Russia, where public officials have massively abused their offices for their private gain. The taxes have gone missing, or just not been collected. Bribes have undermined the rule of law. Bribes have seen the transfer of state enterprises into the hands of crooks, who have looted and transferred billions of dollars out of the country. Foreign investment into Russia has stalled. The optimistic forecast for Russia for 2000 by the IMF, which as a major creditor better be optimistic, is for just 2% growth after zero in 1999. Inflation of more than 20% is also likely in 2000. Similar tales of corruption-led chaos can be told of Indonesia, Nigeria and Pakistan -- countries in which the U.S. has important interests; countries hurled by corruption into political chaos.
A new era starts: We are at the start of an era of enormous economic growth possibilities around the world. The major national economies are coming into balance with strong prospects for growth. Corporate governance has become a major issue and shareholders are increasingly flexing their muscles and strengthening our free market system. The drive for higher productivity and for open international competition is set to strengthen the very fabric of our international economy and make it less prone to recession, especially when central banks have such a strongly shared anti-inflation approach. I believe this bright scenario will prevail, but we must confront the dangers of backlash against the globalization drive. We must recognize that corruption is a prime cause for the undermining of many states, for the crippling of fragile democratic systems in many emerging market economies and for the possible rise in tensions between nations. We have the power to confront these problems and to counter them. I believe we will. There will be setbacks, but I think we can prevail. Thank you.
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