Official G20 Business Summit Publication
Official G20 Business Summit Publication
Official G20 Business Summit Publication
com
Banamex / Citi
Telefonica
Heifer International
Mexichem
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Nextel Mexico
Welcome by Governor Alberto Covarrubias Villasenor, Governor for the State of Baja California Sur
Dear Friends:
As Governor of the State of Baja California Sur, I am profoundly honored to welcome everyone attending the B20 Summit. The G20 Business Summits effort to enrich the G-20 by promoting dialogue between world leaders and the international business community is essential to respond to the global challenges faced in these times of global interconnection. The Summit provides the perfect milieu to strengthen the interests and ties shared by the business community, as well as contribute ideas and develop proposals aimed at international progress. The Government of Baja California Sur is pleased to host this important meeting and hopes it is fruitful for all the attendees. On behalf of the people of the State of Baja California Sur, I offer my best wishes for a successful and productive event.
Sincerely,
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Cinepolis
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Welcome by Alberto Guisseppe Coppola Joffroy, President of Los Cabos Convention & Visitors Bureau
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Marcus Wallenberg
Chairman of the ICC G20 Advisory Group
Nespresso
A few words about the ICC ICC is and has been throughout its long existence a steadfast rallying point for those who believe, like our founders, that strengthening commercial ties among nations is not only good for business but good for global living standards and good for peace. To that end, ICC provides a forum for businesses and other organizations to examine and better comprehend the nature and significance of the major shifts taking place in the world economy. We also offer an influential and respected channel for supplying business leadership to help governments manage those shifts in a collaborative manner for the benefit of the world economy as a whole. In this context, the work of the G8/G20 has been a natural focus for ICC to ensure that government policy is aligned with core business goals of open trade and investment, economic growth and job creation. Our commitment to play a constructive role in representing business views to the G20 is part of this historic mission. The first time we sat down with the G8 was in Houston, Texas in 1990, when American President and then G8 Summit host George H. W. Bush called on ICC to provide a list of business concerns. That tradition has continued for the past 22 years, up to my meeting with French President Sarkozy just last year. It is our conviction that the G20 will develop over time into an indispensable instrument for forging effective international collaboration in an interdependent world whose agenda will have a major impact on core business goals and will increasingly shape the policy direction of national governments and international organizations. For these reasons, we have an incumbent responsibility to ensure that the voice of world business is heard. ICC is the world business organization, a representative body that speaks with authority on behalf of enterprises from all sectors in every region of the world. By virtue of its long history of authoritative involvement in international business policy, and as its Chairman, its my honor to represent ICC here in Los Cabos.
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Zurich
Table of Contents
Welcome by President Felipe Calderon Hinojosa 12 The Path to a Greener Economy
By Brian Anthony Dames
54
Welcome by Governor Alberto Covarrubias Villasenor, 14 Governor for the State of Baja California Sur Welcome by Alejandro Ramirez, Chair of the B20 Organizing Committee 16
Towards Green Growth: Quest for a Better, Secure and Greener Tomorrow
By Steen Risgaard
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Welcome by Alberto Guisseppe Coppola Joffroy, 18 President of Los Cabos Convention & Visitors Bureau Message by Marcus Wallenberg Message by Jean Guy Carrier Message by Gerard Worms The Year of Business Diplomacy EDITORIAL Publishers Note B20: A Mediating Force in Business Diplomacy
By Chrisella Sagers, Managing Editor
Development of the Green Economy and 60 Sustainable Energy Access for All: the Role of the Utilities Sector
By Grard Mestrallet
20 22
Employment
By Tianna Tu
62
64
Anti-Corruption
By Alexander Kojo Abbrem
66
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70
The Los Cabos G20: How Global Business Can Contribute to Global Growth
By Myron Brilliant
36 Policymaking in a Complex World: Putting Trade and Investment Back on the Agenda
By Victor K Fung and Martin Senn
72
Interview with Myron Brilliant, Senior Vice President for International Affairs, U.S. Chamber of Commerce Healthy Weight Can Lead to a Healthy Physical and Economic Future
By Ambassador Lisa Gable
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76
Food Deserts: Community Food Security for the 2012 Farm Bill
By Ashley Edgette
44 Information Communications Technology and Innovation: More Than Technology and Patents
By Robert Higgins
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50
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LEGAL The G20 Summit Magazine is a yearly publication independent of political affiliations or agendas published by The CAT Company. The articles in the G20 Summit Magazine represent the views of their authors and do not necessarily reflect those of the editors and the publishers. While the editors assume responsibility for the selection of the articles, the authors are responsible for the facts and interpretations of their articles. Authors retain all legal and copy rights to their articles. None of the articles can be reproduced without the permission of the editors and the authors.
DSK
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Diplomatic Courier
EDITORIAL
EDITOR-IN-CHIEF Ana C. Rold MANAGING EDITOR Chrisella Sagers EXECUTIVE EDITORS Kirk L. Jowers Courtney H. McBeth Rochelle M. Parker SENIOR CONTRIBUTING EDITOR Jeffrey Hardy WELCOME NOTES President Felipe Calderon Hinojosa Governor Marcos Alberto Covarrubias Villasenor Chair, B20 Organizing Committee Alejandro Ramirez President Los Cabos Convention & Visitors Bureau Alberto Guisseppe Coppola Joffroey ICC G20 Advisory Group Marcus Wallenberg, Chairman ICC Secretary General Jean Guy Carrier ICC Chairman Gerard Worms SENIOR CONTRIBUTORS David Benjamin, Senior Vice President for Anti-Piracy, Universal Music Myron Brilliant, Senior Vice President for International Affairs, U.S. Chamber of Commerce Brian Anthony Dames, Chief Executive, Eskom Holdings Limited Eduardo Eurnekian, President, Corporacion America S.A. Victor K. Fung, Chairman, Li & Fung Group Lisa Gable, President, Healthy Weight Commitment Foundation Kris Gopalakrishan, Executive Co-Chairman of the Board, Infosys Ltd. M. Rifat Hisarciklioglu, President The Union of Chambers and Commodity Exchanges of Turkey Gerard Mestrallet, President and CEO, GDF SUEZ Javier Milei, Head Economist, Corporacion America S.A. Sandra E. Peterson, CEO, Bayer CropScience Steen Risgaard, CEO, Novozymes Martin Senn, CEO, Zurich Insurance Group Ltd. Daniel Servitje, CEO, Grupo Bimbo Francois Vincke, Chairman, Anti-Corruption Commission, ICC CONTRIBUTORS Alexander Kojo Abbrem, Hinckley Scholar Sarah Day, Hinckley Scholar Ashley Edgette, Hinckley Scholar Robert Higgins, Hinckley Scholar Greg Peters, Hinckley Scholar Tianna Tu, Hinckley Scholar GRAPHICS DIRECTOR Henri de Baritault
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HSBC
Publishers Note
Chris Atkins Distinguished Guests: I would like to take this opportunity to thank all those involved for their dedication in helping produce another successful G20 Business publication. It has been a great pleasure working with the International Chamber of Commerce and the G20 Advisory Group; their dedication in bringing together the business and policy leadership to create durable solutions to some of the worlds most intractable problems is inspiring and commendable. Our company is proud to play a small but important part in this process by articulating these messages to both the leadership and the public. The CAT Company is the only enduring publishing company in the field, having published a G8 Summit publication for 16 consecutive years, continuing the tradition and continuing to get great recognition as the Summits foremost publisher. This recognition has allowed our company to produce many official publications in the past. This year, we are truly honored to be chosen as the exclusive publisher of the official G20 Business Summit 2012 in Los Cabos, Mexico. Our company continues to increase the exposure of the publication with help from the massive growth of digital technology, using Scribd.com, Android and iPhone apps, helping our sponsors to reach an unprecedented audience of millions to share their message. Since our first edition of the G8 Summit publication, our company has grown exponentially and we are proud of our ability to bring together important stakeholders in the global business, diplomatic, and policy leadership through the pages of the G8, G20, and APEC CEO Summit publications. We hope you will enjoy reading the editorial we have selected for you and we look forward to seeing you at the next leadership summit. Yours Sincerely
Publisher The CAT Company Inc G8 Summit Magazine Company Ltd The CAT Company Inc President Chris Atkins Advisory Board Peter Atkins Chris Atkins Jennifer Latchman Graphic Design and Art direction Henri de Baritault Founder intro60.com President of Sales Mike Nyborg Sales Executives Chris Atkins Guy Furl John Armeni Don Stauber Mike Nyborg Ray Baker Hinckley Institute of Politics - University of Utah Director Kirk Jowers Intern Manager Courtney McBeth Communication and Outreach Coordinator Rochelle McConkie Thanks To Ana Carcani Rold, Diplomatic Courier Chrisella Sagers, Diplomatic Courier www.diplomaticourier.com Henri de Baritault www.intro60.com
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It is the age of multipolarity. No longer is power, both political and economic, highly focused in one or two countries. As the rest of the world steps into roles of larger economic responsibility, it becomes more important than ever that countries cooperate, ensuring open and free markets to combat a global financial downturn and unemployment crisis. However, if G20 countries are to avoid a second global slump, several major issues must be finally addressed. These issues were supposed to be hammered out, once and for all, at the 2011 G20 Summit in Cannes. Unfortunately, the deterioration of Greeces financial and political stability took center stage due to cascading destabilization of the European Union. Now, even as the global economic mood turns warily optimistic about the future, disjointed national policies focusing on internal growth and protecting nascent industries threatens to hinder or even ruin any recovery progress. It is imperative that the G20 makes concrete progress at this years meeting. This is where the B20 plays a vital role. By organizing the business communities of the worlds largest economies, they provide a venue for coordinated action and a strong voice advocating the political meeting of the G20 to implement business friendly policies. The first area in which the B20 must step in is the battle between the International Monetary Fund and
the G20 economies over capital regulations. In 2010, an IMF study found that countries with regulations on speculation and the flow of capital were hit the least hard by the global recession in 2008; at the 2011 G20 Summit, French President Nicholas Sarkozy called for formation of a code of conduct for these regulations to prevent the piecemeal adoption of different standards across the globe, but nothing was accomplished. This left the issue open for interpretations by the both the IMF and the G20 economies separately that suited the need of each. The IMF, wary of the rise of protectionist policies since 2008, tried to push capital regulations into a status of tactic of last resort. Several of the G20 nations, especially the emerging markets that most of this capital flocked to, felt rather that such regulations should be an accepted tool in a nations arsenal in the quest to retain sovereign control over currency. Without the intercession of the B20 on this issue to negotiate a code of conduct, it is likely a piecemeal policy will continue to develop, further destabilizing the global economy. Protectionism writ-large is another area the B20 must mediate, lest further recovery of job markets be hampered. According to the Peterson Institute for International Economics, every single G20 country has implemented protectionist trade measures since 2008, and in 2008 alone these measures accounted for a loss of U.S.$1.6 trillion, or 10 percent of all global trade. In 2011, the B20 and L20 released a joint statement calling for the end of job-killing protectionist measures. While the sentiment
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COVER STORY
was appreciated, the statement said, it was more important for nations to prioritize youth employment, entrepreneurial support, the greening of jobs, and the fight against the informal economy. As protectionist rhetoric grows ever more en vogue from Occupy movements to U.S. Presidential candidate Ron Paul the B20 must address this desperation by advocating policies to open trade and, above all, create jobs. Finally, the B20 must do more to fight corruption. Austerity measures and economic desperation become breeding grounds for corruption, killing innovation and severely harming struggling SMEs. The World Economic Forum conservatively estimates the total dollar amount of bribes paid internationally to conduct business to reach US$1 trillion, and increases the cost of doing business globally by up to 10 percent. The recent B20 meeting in Mexico, the current G20 President, presented a series of recommendations to President Felipe Calderon on how to best implement the G-20 Anti-Corruption Action Plan that was launched in Seoul, South Korea in 2010. Six themes, as reported by the World Economic Forum, emerged from the meeting including: Making government procurement more transparent Promoting and extending sector-based anti-corruption initiatives Engaging the private sector in the UN Convention
Against Corruption country peer-review process Designing and launching capacity-building opportunities in anti-corruption between the public and private sectors Incentivizing private and public sector organizations to adopt anti-corruption codes of conduct Strengthening the legal and regulatory framework on anti-corruption There have been many great examples of progress made at national levels to strengthen anti-corruption efforts, but there is still much that needs to be done. Public-private partnerships, as well as a strong emphasis on the rule of law, will be the most effective means of battling back the stifling culture of corruption and creating a global business environment that allows SMEs to flourish. The B20 is in a unique position. In an age of globalization, trade is the common thread tying the world together and bringing millions out of desperate poverty. It is not enough for the governments of the world to have diplomatic relations, but business entities must also form some sort of diplomatic corps. The B20 fulfills this on the highest levels of international relations, and therefore has the unique responsibility to mediate and mitigate the international challenges facing business relations today.
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The Los Cabos G20: How Global Business Can Contribute to Global Growth
By Myron Brilliant
As the G20 nations converge in Los Cabos for their 2012 summit, it is important to know that business has a stake in what transpires. The decisions that are made there can influence trade and investment flow. Hence, its an imperative for the B20the private sector, business-side parallel to the G20 groupto contribute its own ideas and agenda to spark the return to global growth. From my perspective, there is not enough appreciation of the G20s considerable accomplishments. Since the economic implosion of 2008, the G20 has asserted itself credibly as a critical entity for financial crisis management and macroeconomic policy coordination. The major task now is for the G20 to improve its interactions with the object of its effortsthe productive private-sector. The global economy is struggling to
return to sustainable and rebalanced growth and the financial sector in particular is still reeling from the crisis and shrinking its balance sheets. Thats going to take a change in mindseton the part of both public sector officials and private sector leaders. Right now, the G20 has largely played the role of a fire code inspector, on the lookout for the next financial structure to go up in flames. Thats necessary, entirely understandablebut not sufficient. Our new focus must be not the next country thats going under, but how our countries are going to grow. But in the midst of crisis, thats a little like asking a fireman to take up a second career as an architect. The skills needed to put out a fire arent the same as the ones needed to reconstruct the building. As its businesss business to know how to growweve got to step up.
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COVER STORY
So how will we know if the G20, with the help of the leading business organizations and their members the B20is on the right path? Here are three leading economic policy indicators to watch for:
demographic trend that we dont currently connect to macro-economic policies: People in developed nations are living longer, and saving longercan we mobilize trillions of dollars in private savings in some better way to fuel growth? 3. Moving beyond the classical trade agenda. Half a century of progress toward the elimination of tariffs and quotas around the globe has helped generate prosperity in the United States and abroad. However, an array of regulatory practicessome inadvertent, and some intentionally designed as discriminatory industrial policies that favor national championsare undermining the promise of liberalized trade. Further, competition policy and enforcement have never been effectively married with trade disciplines. Given the recent proliferation in the number of competition authorities in the world and the rise of state-led capitalism, the need to effectively address the intersection between competition and trade has never been greater. This is why the Chambers Center for Global Regulatory Cooperation is working to align trade, regulatory, and competition policy in support of open and competitive markets. None of these new developments will be possible unless the private sector steps up, and joins the macropolicy debate on how we put the mature economies on a sustained and sustainable growth path. In the session now about to start at Los Cabos, the B20 is critical to the G20s goal of sustained and shared growth. About the author: Myron Brilliant is Senior Vice President for International Affairs at the U.S. Chamber of Commerce, where he is responsible for driving the global business strategy of the organization. He represents the Chamber and its members before foreign governments and business leaders and oversees the largest international affairs team in Washington, D.C.
1. A cease-fire in the Main Street vs. Wall Street rhetorical wars. The phrasing varies from nation to nation, but across the G20, all too many officials have fallen into this Manichean trap, as if the health of a nations financial infrastructure could be severed from the economic fortunes of its people. A scapegoating, blame-laying approach is punitive for everyone and productive for no one. The financial services sector pumps blood into the economy, and as any physician would tell you: if you constrict the patients blood vessels, the body wont recover. Weve got to see that a growing, jobs-generating economy is a two-way streetwhere policies enabling finance, investment and capital allocation are essential to the individuals kitchen-table economic experience of ample jobs, affordable housing, and opportunity for advancement. 2. Developing new ways to finance growth in a high-debt environment. Creative policymakers may find ways to bend the debt curve downward, but the impact will be at the margins: High debt-levels in the mature economies of the G20 wont be going away anytime soon. We need to formulate new financial mechanisms to spark innovation-based growth in mature economies that have accumulated substantial debt. Thats going to require more creativity in our approach to finance, developing new markets and new instruments. What does that mean? Take a
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INTERVIEW
Interview with Myron Brilliant, Senior Vice President for International Affairs, U.S. Chamber of Commerce
[Ana C. Rold]: How is your department working towards leveling the playing field for trade? [Myron Brilliant]: With 95% of the worlds consumers living outside our borders, the United States needs to do everything possible to ensure our exporters can reach them. Unfortunately, while the U.S. market is largely open, many other countriesparticularly booming emerging marketsmaintain tariffs on American goods that soar into the double digits. An array of behind the border barriers also shut out U.S. goods and services. The Chamber has championed initiatives such as trade agreements and investment treaties that open foreign markets and ensure fair play for American workers, farmers, and companies. The global economy is a reality, and American companies of all sizes can find opportunities for growth through trade. This is why we have supported the TransPacific Partnership, Transatlantic Economic and Trade Pact, and supported other mechanisms to deepen our commercial ties to the major economies around the world.
[ACR]: What are the key issues that medium and large size companies should be aware of when it comes to investment abroad? [MB]: Investing abroad is often the only way to tap some markets where exporting isnt feasible. But its critical to go in with your eyes wide open. Ask yourself: What is the tax and regulatory environment like? Its one thing to make my inbound investment, but will I be able to get my earnings out of the country? Is there a risk of dramatic swings in the exchange rate? Will my intellectual property be safe, and how will I defend it? Will I be able to get the labor and inputs Ill need? The rewards of investing abroad can be considerable, but only with proper due diligence and management of the risks. [ACR]: Regulation and compliance are the top concerns for businesses across a spectrum of sectors. What is your position on this issue? [MB]: Yes, tariffs have been slashed around the globe over the
past decades, and while thats welcome progress, behind the border barriers and access to skilled labor are now cited as the top impediments to global commerce. This is in part why the Chamber launched its Center for Global Regulatory Cooperation, which seeks to align trade, regulatory, and competition policy in support of open and competitive markets. The goal is to ensure regulatory or antitrust measures arent used to unfairly block international commerce. It is also why we want to encourage foreigners to work and study in the U.S. and why we want Americans to take advantage of studying abroad. [ACR]: What advice do you have for small businesses looking to export? [MB]: Over 97 percent of the 275,000 U.S. companies that export are small and mid-sized companies, but when you look at the total number of small businesses in the U.S, thats just one of every 100 of these firms. If more small companies were able to seize export opportunities, the
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INTERVIEW
gains in jobs and revenues could be immense. Many U.S. companies are not aware of the services that are available to help them break into new markets, including the U.S. Department of Commerce Export Assistance Centers (USEACs), the Export-Import Bank and the Small Business Administration for small business loans, the World Trade Centers, the National District Export Council, state economic development offices and commerce departments, and many more. And of course the Chamber is ready to work with member companies to expand export opportunities. [ACR]: What laws exist to protect intellectual property worldwide? Are they enough? [MB]: In addition to national laws, several key international treatieslike the WTO TRIPS Agreementrequire governments to implement a minimum standard of protection. Bilateral trade agreements and specialized UN organizations, such as the World Intellectual Property Organization (WIPO), help to update and improve upon those minimum standards. But real IP protection is a matter of both sound laws and strong enforcement: These laws are helping to ensure that intellectual property is protected, but the effectiveness of legal statutes depends greatly on the willingness of countries to enforce them. We are eager to see laws and enforcement efforts continue to adapt to the ever changing challenges which intellectual property owners face. For example, 20 years ago, we could not have imagined the impact that online commerce would have on trade. Today, it is a major vehicle for commerce. We need appropriate bilateral enforcement to protect intellectual property and jobs.
[ACR]: What is the Trans-Pacific Partnership (TPP) and why is the United States so heavily involved in the negotiations? [MB]: Asia boasts the fastest growing economies in the world, and if U.S. companies can get a piece of the action, itll mean growth and jobs here at home. Our best shot at improving U.S. access to those markets is through the nine-nation TPP trade agreement, which aims to set a high standard for fair and accountable trade. The TPP will also help reassert Americas leadership in the most dynamic region of the world. The current participantsAustralia, Brunei, Chile, New Zealand, Peru, Singapore, the United States, and Vietnamare today deliberating whether Canada, Japan, and Mexico should be invited to join as well. The negotiators are also trying to build out TPP as a platform, by creating an agreement that other countries can join further down the road. We hope to see substantial progress this year in the negotiations. [ACR]: The EU is still one of Americas largest international economic partners. Do you believe in a free trade type of an agreement between the two economic blocs? What are the benefits to eliminating transatlantic tariffs? [MB]: The United States and the EU enjoy the worlds largest economic relationship and together generate half of global GDP. Even though tariffs on transatlantic trade are generally low, according to one study, transatlantic commerce is so large that eliminating them would boost our economies by $180 billion over five years. Thats why the Chamber is calling for a Transatlantic Economic and Trade
Pact addressing trade in goods and services as well as investment, procurement, and regulatory issues. By addressing non-tariff barriers as well, we hope to see even greater gains. The U.S. and Europe remain a huge engine for the global economy. We hope U.S. and European leaders gathered at the G8 summit at Camp David on May 19 will commit to launching negotiations for an ambitious transatlantic trade pactand set a target date for the end of this year. [ACR]: What is the relationship between the U.S. Chamber and the WTO? The Chamber strongly supports the global rules-based trading system over which the WTO presides. Since the 1940s, negotiations under the WTO and its predecessor, the General Agreement on Tariffs and Trade, cut trade barriers dramatically and allowed world trade to rise from $80 billion in 1947 to $18.5 trillion in 2010, allowing incomes to rise in country after country. Even with the WTO Doha round of negotiations at an impasse, it is important to recognize that the WTO provides the rules for the global trading system and we are better off with them than without them. Today, wed like to see the WTO move forward with new proposals to add to the great gains in freely-traded goods liberalized trade in services, update the landmark Information Technology Agreement, and clinch an agreement on trade facilitation. As just one sign of our seriousness about this relationship, Chamber President Tom Donohue is the sole American invited to serve on a high-level experts group advising the WTO on the future of the world trade agenda.
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It is not surprising that when the G20 meets in Los Cabos one of the top items on the agenda will be global food security. The issue is already having a huge impact on geopolitics. In fact, the Arab Spring took off when a fruit peddler immolated himself to protest food restrictions that were making it impossible for him to make a living. The issue is only going to grow in importance, as the worlds population of seven billion passes nine billion by the middle of this century. Not only are there more mouths to feed, but increasing numbers of people, especially in China and India, are rightly demanding and obtaining the higher levels of protein that we in the West take for granted. But in the developed world, access to more food has not always led to healthier eating. In fact, wealthy countries, especially the United States, lead the world in obesity. According to the U.S. Centers for Disease Control, about 70 percent of Americans are overweight. About half of them are obese. The trend is getting worse. Obesity rates in the United States soared by more than a third just between 1998 and 2006.
But obesity is becoming a problem without borders. The World Health Organization projects that in five years about 1.6 billion adults around the world will be overweight and about 400 million will be obese. How well we live, how long we live, how much we cost the health-care system, and how much we get to contribute to society depends on how well we look after ourselves. The problem of obesity, for example, carries significant economic costs. In fact, the U.S. spends about $147 billion a year treating obesity-related ailments. That comes to 1 percent of GDP. To get a sense of the economic impact of cost, just consider that the last recession caused the U.S. economy to contract by 1.9 percent. In other words, the annual economic cost of obesity-related ailments is a little over half of the last recession. And unlike the last recession, the cost of obesity doesnt end as part of the business cycle. The economic consequences of obesity show up every day in American offices, factories, and other places of work. Over the course of a year, obesity-related disorders are responsible for nearly 40 million lost workdays, 239 million restricted activity days, and 63 million doctor visits by employees across the country, the U.S. Department of Health and Human Services has reported. There are obviously a number of factors contributing to the growth of obesity, in the United States and elsewhere. But probably the most important is the fact that too many people of all ages suffer from a basic imbalance in the energy quotient of our lives. As the World Health Organization has put it, The fundamental cause of obesity and overweight is an energy imbalance between calories consumed on one hand, and calories expended on the other hand. Too many calories in and not enough calories out. The Healthy Weight Commitment Foundation was created to address this imbalance. We have taken several steps we believe will help deal with the problem by supporting programs for families, schools, and children.
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Fedex
FOOD SECURITY
In the marketplace, we are providing families with more choices. With First Lady Michelle Obama, we announced a new pledge by Healthy Weight Commitment Foundation food manufacturing members to reduce annual calories by 1.5 trillion calories from the marketplace by the end of 2015. In the schools, we are partnering with Discovery Education to provide an energy balance curriculum that promotes nutrition and physical activity education. This curriculum reaches into tens of thousands of U.S. schools, and is available online free of charge. A number of academic studies demonstrate that one of the most effective tools for countering obesity is a strong family sharing healthy meals and engaging in healthy physical activities. A study by the University of Minnesota, for example, found that adolescents who eat with their families grow up to be healthier adults, eating more fruit, dark-green and orange vegetables, and key nutrients. Girls are more likely to eat breakfast as adults. Boys are more likely to consume more calcium, magnesium, potassium, and other fiber. Academics at University of Northern Iowa have found that family participation in physical activities is helpful because children model the behavior of the adults in their lives. Actions speak louder than words. That is why the Healthy Weight Commitment
Foundation is conducting the Together Counts programwww.togethercounts.cominspiring active and healthy living. We encourage families to eat meals together and engage in physical activity as a family. We energize communities to get active together. We provide teachers and school nurses with the resources they need to teach students the importance of active healthy lifestyles. We know the movement is working because we have given them the tools to track their progress. Our future depends on our children, and our children depend on our guidance. Their healthphysical and economicdepends largely on how well we address the problem of obesity together. Lisa Gable is President of the Healthy Weight Commitment Foundation, a first-of-its kind coalition that brings together over 200 retailers, food and beverage manufacturers, sporting goods and insurance companies, restaurants, professional sports associations, trade associations, and NGOs.
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Food Deserts: Community Food Security for the 2012 Farm Bill
By Ashley Edgette
According the United States Department of Agriculture (USDA), the 2012 Congressional Farm Bill contains most federal food and nutrition programs including SNAP, Supplemental Nutrition for Women Infants and Children (WIC), Temporary Assistance for Needy Families and the School Lunch and Breakfast programs. The Farm Bill also includes agricultural commodity programs, crop insurance, international food aid and farm subsidies. It is the engine of all federal food policy in the United States.
A community-oriented approach to food security could shape the infrastructure of food systems in the U.S., increasing the accessibility and sustainability of healthy food to millions of Americans. While it is important to support extant federal food programs, these existing programs must collaborate with more innovative projects to create strong food infrastructure. For example, the USDAs Community Food Projects (CFP) program funds two to three major community food security projects each year. Research conducted
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Dupont
FOOD SECURITY
by the Community Food Security Coalition found that these projects support farmers markets, food security analyses, training programs, transportation infrastructure and urban agriculture projects. CFPs current budget is $5 million.
laborating with Title 1 elementary schools, health clinics and food program assistance centers. For example, bringing Community Food Projects into Title 1 schools brings greater food access, food production, community gardens, grocery stores and farmers markets into low-income neighborhoods. Community Food Projects can support farm to school programs at the urban schools while helping low-income communities receive skilled training in food production, marketing, entrepreneurship and healthy eating. These projects can help systematically integrate food security issues into community planning, promoting public health and economic vitality for food insecure communities. According to the Federal Food and Nutrition Services, the savings incurred from increased food security far outweigh the costs. For example, if improved community food security decreased SNAP participation from $32 million (2009 level) to $18 million (2002 level) the federal government would save $30 billion. The improved public health and local economic prosperity of Community Food Projects are undeniable. Research from the Journal of Immigrant Health recently found that increasing food security in at-risk neighborhoods promotes lawfulness and health care savings and decreases the need for government. Promoting community food security by increasing federal support for Community Food Projects and other community-based food infrastructure is a worthy investment because the United States needs food security to build economic and community stability. Food aid programs and the need for food security are not particular to the United States legislative equivalents of the U.S. farm bill exist all over the world. Community-based food projects are applicable internationally. Examining food production and food access as two parts of the same picture can help nations create holistic food systems. Enabling communities to create projects that meet their food needswhether that is more markets and groceries stores or farms and training programsmakes for strong food security and increased innovation. Ashley Edgette is studying political science, environmental issues, and French at the University of Utah. She plans to study the intersection of community development, sustainable food systems and social justice through city and metropolitan planning. She was recently named a 2012 Harry S. Truman Scholar.
A USDA examination of CFPs over the last decade found that if Congress increased funding for CFPs to $100 million (less than 1 percent the cost of SNAP) and extended funding until 2025 they could fund comprehensive community food security plans, training programs and implementation grants in all 50 states. In 2010, the federal government spent $68.3 billion on SNAP and only $5 million on CFPs. Community Food Projects are a good economic stimulator and less expensive than federal food programs. Extending funding until 2025 would allow these projects to make a significant economic impact. According to the National Farmers Union, annual sales from U.S. farmers markets are up to $1 billion. The USDA reports that Community Food Projects could increase these profitable markets while supporting marketing and purchases by local businesses for small-scale farms. Community Food Projects can help farmers and scientists partner in development, extension and outreach processes for a changing American food system. By supporting farmers networks and farmer-to-farmer mentoring programs the U.S. can help implement knowledge gained from research to farmers local needs. Community Food Projects can integrate within low-income communities through education and health partnerships. These projects can increase the availability of healthy foods for immigrant communities by col-
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Time is racing. The targets are set in stone. Today around a billion people are hungry. To feed nine billion people by 2050, we need to ramp up food production by 70 percent, while conserving resources and preserving the planet. This is no mean feat, especially with agriculture accounting for 70 percent of water use and emitting 14 percent of the worlds greenhouse gases. Against the backdrop of the global food crisis in 2008 and with continuing crop price volatility the world is looking to international multiple stakeholders for smart and timely solutions. While we are witnessing the migration of rural communities into cities underscored by urban agriculture being pinpointed as a new strategic business model this trend is developing somewhat sporadically across the world. Today, smallholder farmers in the worlds poorest regions still produce most of the food consumed
in these countries. And although we look to large commercial farms for answers in developed regions, it is our one-hectare growers who can make an effective difference in plugging the hunger gap on their doorstep. But our smallholder farmers are still not garnering the support they need to leverage their full potential. We now need to sharpen our focus on transforming them into agro entrepreneurs by empowering them to become frontline providers of sustainable food security. At the center of our efforts is Farmer Aep. He stands at the nexus of a three-spoke wheel made up of the worlds greatest challenges - feeding our hungry planet; minimizing environmental impact; and fuelling sustainable growth, health and quality of life. The problem is that Farmer Aep is one of the worlds one billion hungry people. Plus, his farming methods are not always climate-smart. And this is what makes the challenge exciting: While farmers (who make up 50
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FOOD SECURITY
percent of the worlds hungry) are among the greatest beneficiaries of agriculture, they are also at the core of the solution. Aep needs to learn how to drive and safeguard his business by increasing the productivity and efficiency of his crops. To survive and thrive, he requires yieldboosting know-how and tools; weather insurance schemes; consultancy; health services; and also education for his children. And theres more: In striving to feed and simultaneously protect our planet, farmers small and large must be incentivized to adopt productivity-raising techniques that are also climate-smart. With exponential advances in communications and technology, Aep not only receives the latest news on commodity price fluctuations from his local post office, he also has access to real-time tips on the weather, drip irrigation techniques, energy-saving seeding methods, as well as Good Agricultural Practices via his mobile phone. There are a host of impressive examples demonstrating how by investing in agriculture we can develop game-changing, climate-smart methods to drive productivity and yield. But to feed nine billion bellies by 2050, we need to do more. We must club together across countries, industries and governments to fuel our pipeline of talent, products and services to help feed and save the earths inhabitants and habitat today and tomorrow. At this years G20 summit, world food security is a key priority. Because there is no one silver bullet, it is crucial that we unite our thought leaders from key countries to explore how to tailor our solutions - hectare by hectare. And to reach our looming 2050 objective, it is now high-time to execute clear action points within strict timeframes. The World Economic Forums New Vision for Agriculture which aims to achieve 20 percent improvements per decade in the fields of food security; environmental sustainability; and economic growth is a step in the right direction. But with one person like Farmer Aep dying needlessly from hunger every three seconds, we need to act with scale, speed and urgency to achieve our targets. Of course we must build on our multi-stakeholder approach of public-private partnerships featuring governments, NGOs, academics and companies. But going forward, we need to rewire how we fight hunger by putting Farmer Aep at the head of our table of discussions on food security, climate change and growth. Its Aep that has the untapped potential to help steer the ship that can feed and fuel the future growth of our hungry planet. Sandra E Peterson is Chief Executive Officer of Bayer CropScience since October 2011.
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INTERVIEW
Daniel Revitje is Grupo Bimbos Chief Executive Officer, a position he has held since 1997. Daniels leadership has propelled Grupo Bimbo to become a global player in the food industry. Through strategic acquisitions and start-ups in select markets, Grupo Bimbos products have become household brand names in 19 countries around the world. The companys 126,000+ associates regard Daniel as an approachable, action-oriented and market-driven leader who has the passion to reach the companys 2015 Vision of becoming the worlds best baking company and a leader in the food industry.
Constantly seeking answers, and posing challenging questions to his team and managers across the company, Daniel leads by example as he challenges the status quo. He is a curious, avid learner who wants to build a company where people grow, professionally and personally. Daniel serves on the boards of Grupo Financiero Banamex, Coca-Cola- Femsa, Wal-Mart Mexico Advisory Board of Suppliers, Mexican Institute for Competitiveness A.C. (IMCO), The Consumer Goods Forum and the Latin America Conservation Council
(The Nature Conservancy) We asked Daniel about the B20 Food Security Task Force, which he chairs. Q: What is the Food Security Task Force The Food Security Task Force got together in 2011 during the French Presidency of the G20. We were then comprised of 12 companies. Now the group has18 members. We have been analyzing since last year, how to respond effectively to one of the greatest
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concerns of humanity: how will we nourish 9 billion inhabitants by 2050. The Task Force believes that productivity growth must deliver food and nutrition security for all in an environmentally sustainable manner, while assuring economic growth and improved livelihoods and income for farmers. Q: What are the Task Forces recommendations at the G20/ B20 in Mexico this June? We have analyzed nine different issues that range from sustainability, nutrition, land rights, research and development, to investment and risk management. Let me talk briefly about investment. In order to guarantee food and nutrition security, it is necessary to increase productivity and production 50% by 2030. The sectors represented in this Task Force plan to invest an additional $10-15 billion USD. To d o t h i s , w e r e c o m m e n d governments to create an enabling environment through public-policy frameworks that catalyze, de-risk and incentivize sustainable privatesector investment in agriculture. Q: What role does nutrition play in food security? We are facing a global paradigm. On one hand, we have global obesity problems and on the other, serious malnourishment. Currently around the world, there are nearly 1 billion people, which represent 15% of the global population, who are considered to
be malnourished. We are committed to keep expanding availability, distribution and access of appropriate nutritious products. We have to enhance the nutritional value of both crops and food products. To do this, we plan, among others, to incorporate education on nutrition and the benefits of crop diversification into farmer training. At the same time, the Task Force recommends governments to coordinate efforts to take an integrated approach to agriculture, nutrition and health. Q: What role does sustainability have in food security? Sustainability is one of our main concerns. Within sustainability, we state that companies should focus on water efficiency as the most probable choke point for food supply within the next 10 to 20 years. In this respect, one of our commitments is to scale up environmentally sustainable farming practices, including water-efficient and climate-smart agriculture. We have to increase production with the same land extension that we have nowadays. No more deforestation to gain agricultural fields. One of our goals is to achieve Zero Net Deforestation by 2020. We recommend governments to establish programs and incentives that support sustainable production and sourcing practices, including strategies to address water overdraft. Q: Now that we are discussing sustainability, what role do
biofuels play in food security? Biofuels and food should not compete. The Food Security Task Force supports impact assessments to evaluate and minimize environmental and food security impacts of biofuels policies. It is necessary to develop common sustainability standards for biofuels based on full lifecycle impact assessments. We are not against biofuels per se. The Task Force members even recommend governments to develop effective public policy to enable development of environmentally sustainable biofuels. Opportunities for second and third generation biofuels should be explored, but we recommend the removal of subsidies for first generation biofuels. Q: What can we expect from the G20/B20 Summit in Mexico this June? The Mexican Presidency of the G20 has introduced several changes that make this, a more pragmatic and action-oriented forum. As an example, the B20 Task Forces have been working together with NGOs, think tanks and international organizations. Therefore, our recommendations have the consensus and expertise of a larger group of stakeholders. The decisions taken in Los Cabos have to be tractable and accountable. The B20 has created the Advocacy and Impact Task Force to monitor the commitments that we all formalize in June. I would expect this B20/G20 meeting to be the expression of the Public Private Partnership that the global challenges require.
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BrandSouthAfrica.com
Currently coal-fired power stations account for more than 85% of Eskoms installed capacity. The historical legacy of abundant coal reserves has contributed to the reliance on coal for electricity generation. The economy is also energy and electricity intensive and as a result, South Africa is a relatively high emitter of carbon dioxide. A futuristic perspective taken in the South African National Development Plan (NDP) is that in 20 years, South Africas energy will look different: coal will contribute much less to primary energy needs, while gas, nuclear , clean coal and renewable energy resources, especially wind, solar and imported hydroelectricity, will play a much larger role. Therefore, it is within this context that Eskom is diversifying its energy mix to lower carbon emitting technologies in its drive to reduce emissions and respond to the challenges initially espoused in the NDP. Furthermore, Eskoms energy mix draws its existence from the Integrated Resource Plan (IRP) 2010 which is a comprehensive living plan encouraging diversification of electricity sources in South Africa and encourages
Eskom to intensify exploration of new low-carbon emitting technologies. As such, Eskom supports this overarching national approach, as follows, in its comprehensive climate change strategy referred to as the Eskom Climate Change Six-Point Plan: 1. Diversification of the generation mix to lowercarbon emitting technologies. 2. Energy efficiency measures to reduce demand and greenhouse gas and other emissions. 3. Adaptation to the negative impacts of climate change. 4. Innovation through research, demonstration, and development. 5. Investment through carbon market mechanisms.
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GREEN GROWTH
Through the climate change strategy, Eskom has invested resources in exploring new low-carbon emitting electricity sources. One of these programmes is Eskoms renewable energy programme which enhances South Africas first steps towards reaching the NDP energy goals of: Economic growth and development through adequate investment in energy infrastructure and the provision of quality energy services which are competitively priced, reliable and efficient. Local production of energy technology will support job creation. Social equity through expanded access to energy services, with affordable tariffs and well-targeted and sustainable subsidies for needy households. Environmental sustainability through efforts to reduce pollution and mitigate the effects of climate change. Eskoms renewable energy programme recently received a major boost with the World Banks approval of a $250 million funding for the Eskom Renewables Energy Support Project (ERSP). This funding is from the Word Banks Clean Technology Fund which promotes scaled-up financing for demonstration, deployment and transfer of low-carbon technologies with significant potential for long-term greenhouse gas emissions savings. This financial injection supplements the US$260 million provided to Eskom in April 2010 as part of the overall $3.75 billion Eskom Investment Support Package also approved in April 2010. The funding will help Eskom to successfully implement the pioneering and innovative concentrating solar power plant in Upington in the Northern Cape Province and the Sere wind power plant in the Western Cape Province. Eskom is further unlocking the energy source potential of South Africas abundant sunshine and exploring its use as an important investment for energy diversification through the exploration of other technologies such as Solar Photovoltaic (Solar PV) as alternative power generation technologies. In November 2011, Eskom launched a Solar PV installation at its Lethabo Power Station. This launch was a significant statement that Eskom is taking advantage of innovative technologies by using them to reduce reliance on coal for energy generation. Eskom is indeed committed to venturing into renewables with a long-term view of reducing carbon emissions and partnering and leading towards a cleaner energy future. The exploration of technologies such as Solar PV as possible energy sources will also help to free up capacity on the national power grid, which is admittedly under strain. Eskoms commitment to a greener future through Solar was also exhibited at the Conference of the Parties to the United Nations Framework Convention on Climate Change 17 (COP 17). Furthermore, Eskom has an active research programme looking at further harnessing South Africas renewable energy sources for more power generation. The long-term view is to implement renewables at a larger scale and make them affordable for consumers and ensure localisation. Affordability remains a key issue for electricity production and as a country, South Africa is faced with the challenge of reducing the costs of the implementation of low -carbon technologies. One of the ways in which this can be achieved is through local manufacturing and the creation of jobs for the green economy. As electricity reserves remained at low levels it was necessary for Eskom and all electricity consumers to examine opportunities for improved energy efficiency to optimise the use of existing capacity. The country took the decision to return previously mothballed power stations and to construct new power stations which has today become the biggest capacity expansion programme in the country. However, it was also evident that supply solutions had to be support by the reduction
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of demand for electricity to sustain electricity supply as power stations were being built. Although electricity has long been a cheap and abundant resource in South Africa, escalating production costs are the cost drivers in electricity prices and further encouraged Eskom and government to sensitise consumers about the need to save electricity. This stark imbalance in demand and supply has propelled energy efficiency to become the new way of doing business at Eskom and in the country. Energy efficiency is also part of South Africas Integrated Resource Plan (IRP) and is widely recognized as the most fundamental short-term imperative for rapid, ambitious and cost-effective climate change mitigation. Improved efficiency is the most cost-effective, least-polluting and readily-available energy resource and energy efficiency is managed through an integrated and collaborative approach with the South African government, business, and communities playing a significant role. In 2008, South Africans discovered the power of the sun as many took advantage of the Government endorsed Solar Water Heating programme. The solar water heating programme was introduced as a measure to deal with decreasing electricity demand as South Africa faces an electricity shortage with the demand for electricity growing beyond what can be supplied. The South African government released a set of energy saving targets which identified solar water heating as being capable of fulfilling almost 23% of its target for renewable energy. In this regard, the National Energy Regulator of South Africa allocated funds to help develop, promote, and incentivize consumers to switch to Solar Water heating. Moving forward Eskom, in partnership with the government has set a target of 1 million solar water geysers by 2014, with a long-term view of having all houses in SA using energy efficient water heaters such as solar water geysers by 2025. Eskom has been working in close association with the solar water heating industry and the South African Bureau of Standards (SABS) to ensure the quality and efficiency of the systems promoted in its solar programme. To participate in the Eskom programme a supplier must obtain a test certificate from SABS to
verify the mechanical and thermal performance of the specific solar water heating system. This new focus on Energy Efficiency led to the 49M movement. The 49M is an Eskom initiative, endorsed by government and business partners, spurring an urgent need for South Africans to embrace energy savings as a national culture, and joining the global journey towards a sustainable future. 49Ms value proposition is a desire for a better future for all South Africans economically, socially and environmentally. The call to action is for every South African to do their best to reduce electricity consumption. Going forward, Eskom will constantly look at new innovative ideas with a common purpose of reducing carbon emissions. This path to a greener economy will require a collective approach of balancing mutually beneficial interests of innovative technology, economic impact and fostering behaviour change in our usage of electricity. Furthermore Eskom will continue to support the South African governments policy and objectives encouraging the maximisation renewable energy and the ramp up of a renewable energy industry in the country. These collective efforts will ensure that the company responds positively to the expectations arising from the IRP 2010. About the author: Brian Dames is Chief Executive of Eskom Holdings Limited, the national electricity utility in South Africa. During his tenure at Eskom Brian has held various positions in power stations and in the Eskom head office, including nuclear physicist at Koeberg Nuclear Power Plant, Divisional Information Manager, Engineering Manager and later Power Station Manager at coal-fired power plants, General Manager of the Nuclear Division, and Managing Director of the Enterprises Division - responsible for the capacity expansion programme.
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Schneider Electric
Towards Green Growth: Quest for a Better, Secure and Greener Tomorrow
By Steen Risgaard
The world needs to produce more with less. More food, fuel and goods to supply the ever-growing global population, and less environmental impact. The solution is to build a new green infrastructure, one that can sustain the growth we need tomorrow. Building a New Bio-based Economy Novozymes envisions a new green infrastructure that is capable of meeting the worlds growing requirements for energy, water, food and transportation. By switching to a renewable resource base, it will be possible to overcome resource scarcity, and limit or perhaps even reverse the effects of climate change. We call this the bio-based economy and it enables us to move away from fossil-fuel-powered economies based on oil, gas and coal and towards bio-based solutions based on renewable resources such as agricultural residues. Realizing this will obviously need investment. But many complications are hindering progress towards this vision: lack of financing and financing models, inadequate policy framework and regulatory environment, and distortion compared to other investments.
H e a l t h y i n t e r re l a t i o n s h i p s b e t w e e n p o l i c y frameworks, business actions and financing models must be in place to attract investment to build green infrastructure. Businesses need to define what they need from the public sector in terms of policies and risk mitigation schemes, and furthermore to clarify their own roles and commitments. Governments need to consider carefully their stance on issues such as free trade, carbon pricing, fossil fuel subsidies, innovation and energy efficiency and financing models. The good news is that the technology needed to realize the bio-based economy is ready, and in many areas of the world policies and investment frameworks are already mature enough to attract significant private investment. Of course this investment is occurring with the expectation of significant profits. An example of the powerful potential in the new bioeconomy is converting agricultural residues into advanced biofuels, which could create millions of jobs worldwide, economic growth, reduction of greenhouse gas emissions and increased
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energy security by 2030, according to a recent study by Bloomberg New Energy Finance (BNEF), Moving towards a next-generation ethanol economy. According to the BNEF report, the US could generate revenues of over $633 billion in 2030 based on an investment now in rural areas of $96 billion. Similarly, Europe could generate revenues of over $532 billion in 2030, based on an investment today of $80 billion, and China could generate revenues worth $779 billion if current investments equaled $118 billion. This shift would be sustainable, and make a substantial contribution to our need for energy. A huge global resource of agricultural residues can be harvested every year without altering current land use patterns, and without interfering with the food chain. Using less than one-fifth of the agricultural residue available on the fields today, we could produce advanced biofuels replacing an estimated 50% or more of the forecasted 2030 gasoline demand. Already today biofuels make a difference: In the U.S. biofuels replace around 10% of gasoline consumption which has created more than 400,000 jobs and contributes with more than $42 billion to the economy every year. Going forward, the advanced biofuels industry is projected to create 800,000 additional jobs by 2022 and generate economic activity of $300 billion by 2032. The socioeconomic prospects of deploying advanced biofuels go well beyond energy security. In many developing countries, the oil purchased to meet
energy needs takes a significant amount of the gross domestic product (GDP), often leaving no money for other critical investments to move people out of poverty. By establishing a biofuel program, a developing country can start to release the stranglehold that oil has on their finances, while at the same time building profitable domestic agriculture and energy industries. Biofuels create the potential to diversify farmers income, generate huge revenues and create millions of jobs. For example, advanced biofuels could create up to 2.9 million jobs in China, 1.4 million jobs in the USA, and around 1 million in Brazil by 2030. The impact on climate change would also be reduced, as advanced biofuels emit 80% less greenhouse gasses than gasoline. Some production processes even suggest a 110% reduction due to excess power returned to the grid. Bioethanol is just the first step towards realization of the bio-based economy: Bioplastics and biochemicals, in addition to other ways of using biotechnology to make more with less, could transform our oil-dependent world in the next 20 years. The world has a unique opportunity to develop a bio-based economy based on biological resources such as agricultural residues by 2030. This transition from an oil-based economy towards a bio-based economy is, I think, an idea that is worthy of our attention. About the author: Steen Riisgaard is President and CEO of Novozymes A/S, the world leader in bioinnovation.
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Development of the Green Economy and Sustainable Energy Access for All: the Role of the Utilities Sector
By Grard Mestrallet
reduce non-financial risks, and on the other hand, as creating value through the new opportunities of sustainable business. The green economy is based on sustainable business models and efficiently developing the green economy is a means of achieving sustainable development. For the utilities sector, sustainable business implies the development of renewable and low-carbon efficient energy production capacities; the introduction of more flexibility both on the supply and demand side in energy markets, notably through smart grid and smart metering solutions; tapping the significant potential in energy efficiency throughout the value chain, down to the final user. It is also related with smart, green technologies in the environmental sector, supporting the great water cycle in water industries and the circular economy in the waste treatment business, through sustainable solutions aiming to optimise natural resources use and to protect ecosystems. For sustainable business to become the new business as usual, which is essential if we are to meet the ever rising environmental challenges of our planet, further progress is needed. The implementation of large scale, workable sustainable solutions for business requires placing sustainability as a major item on the political and business agendas. The role of governments and regulators in providing the much needed framework to allow this to happen is paramount. Therefore, we expect from the G20 but also from the Rio+20 process efficient and credible commitments and solutions, supported by alliances of stakeholders, including governments, business and civil society. Within the sustainable economy framework, such commitments should notably focus on energy efficiency, cleaner energy mix, the circular economy, as well as research and innovation on topics such as smart grids / networks, CCS, renewable energy, fuel cells, power storage Achieving sustainable energy access for all At GDF SUEZ, we have developed a special programme aiming at promoting such social business
2012 has been called year for sustainable energy access for all by the United Nations. It is also the anniversary year of the Earth Summit at Rio, twenty years ago, when sustainable development was put on top of the international agenda. Significant progress has been realised since then, but much remains to be done, both in greening our economies and pursuing efforts in reducing poverty. The utilities sector, involved in providing essential services to the people, such as energy and water supply, sanitation and energy and environmental services, is deeply involved in these challenges which constitute the main objectives of the forthcoming United Nations sustainable development conference, Rio+20, and which are also at the heart of the efforts of the B20 and the G20 development strategies: building a greener and more responsible economy, and achieving better access to sustainable energy for poor populations. How can we achieve a more responsible, resilient and low-carbon economy? Sustainable development embraces three dimensions: social, economical and environmental, and none of these dimensions can supplant the others. Within the business context, sustainable development should be envisaged, on the one hand, as helping to
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initiatives in the field of sustainable energy access for all. Named GDF SUEZ Rassembleurs dEnergies, this initiative provides technical and financial support for projects that promote access to sustainable energy for disadvantaged populations throughout the world. The Groups aim is to capitalise on this dynamic to foster economic and social development of isolated settlements and regions and reduce energy scarcity for low-income customers. A greener growth must also be envisaged as a responsible, socially inclusive growth. Local development, access to clean energy and poverty eradication programmes need to be part of sustainable business strategies. The green economy should indeed combine human well-being, wealth creation and environment protection with economic and efficient use of resources under a long-term perspective. Businesses are notably expected to offer concrete solutions to provide universal access to essential services (energy, water, mobility, ...) as part of poverty eradication programmes. Social and economic development must be a key objective on the path towards responsible growth. Meeting universal energy access targets will require economic growth, social development and mobilisation of finance. Business investment and private finance can play a major role if the broader financing architec-
ture is well-designed and appropriate consideration is given to the quality of the regulatory and investment climate, which significantly drives the risks and returns associated with these investments. Business has a role to play alongside public institutions and governments in meeting development challenges. When it comes to basic goods such as energy, however, the issue is to build jointly sustainable and solid business models with high social impact. Innovative business models need to be promoted to support social entrepreneurs through investments and technical and managerial expertise. To be viable, this approach must encourage innovative business models that could be integrated either in the core business of the company or as social business. Market-based solutions should be encouraged and also be in favour of the development of new energy sources and new technologies. About the author: Grard Mestrallet was appointed Chairman and Chief Executive Officer of GDF SUEZ in July 2008. Prior to that he was Chief Executive Officer and Chairman of the Executive Board of Suez Lyonnaise des Eaux until 2001.
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EMPLOYMENT
By Tianna Tu
layoffs and slowed down hiring, prohibiting the market from providing the necessary annual labor force growth of jobs to keep the global economy stagnant. As a result, more than 400 million jobs will be needed over the next decade to prevent a further increase in unemployment. And in order to stimulate growth and development, 600 million jobs must be created before 2022. As the International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn stated before the 2010 joint ILO-IMF Conference in Oslo, Norway, the devastation of unemployment threatens the livelihood, security, and dignity of millions of people across the world. The worlds prolonged growth in unemployment, and worse, long-term unemployment, not only has serious economic consequences, but political and social repercussions as well. An entire generation of young people, even those with a college education, cannot find jobs. There are simply not enough employment opportunities to accommodate an emerging workforce of 74.8 million unemployed youth and the millions of people rendered jobless due to the recession. As the amount of people in long-term unemployment increases with high unemployment rates, the current job crisis is propagating future poverty, crime and social incoherence. Though the Great Recession is over, economic stability must be implemented and maintained. Job creation is the key to economic recovery efforts. In an open, global market, world leaders must commit to creating a collective effort to stimulate employment, which will in turn promote economic growth, development and world market stability. Tianna Tu is attending the University of Utah pursuing degrees in Political Science and English, as well as an International Studies minor. After graduation, Tianna plans to attend law school and strive toward a joint J.D./M.P.A. degree.
Since the 2008 global recession, world unemployment rates have alarmingly continued to rise, creating a volatile and increasingly uncertain global economic market. In 2012, the International Labor Office (ILO) estimates that 210 million people are unemployed globally. This is an over 30 million person increase since the financial crisis began in 2007. Such job uncertainty is not just occurring in emerging economies, where the World Bank estimates more than 200 million people have been forced into severe poverty because of the economic downturn, but is highly concentrated in developed nations, where three-fourths of the worlds jobless reside. In advanced and developing economies around the world, elevated unemployment rates are inhibiting market revival. As leaders continue to struggle for a globally sustainable economic recovery, job creation must be the priority. Though the Great Recession officially ended in 2009, the majority of the worlds people are still unemployed, underemployed or employed in informal economic sectors, undermining future market expansion and stability. As such, labor force growth accommodation is essential for economic development. Long-term economic sustainability depends on private sector spending, which cannot occur unless those in the private sector have credible, long-lasting employment. According to the ILO, 45 million job seekers are added to the global market due to labor force growth each year. The financial crisis of 2007 dramatically increased
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University of Washington
Businesses and governments across the world are just beginning to come to terms with the new reality of the post-crisis era. On the one hand, we are grappling with the challenges of operating in an environment of macroeconomic uncertainty. On the other hand, we are striving to leverage emerging trends in business, technology and society to build our enterprises and economies of tomorrow. Unlike earlier crises, our success will be determined not only by the availability of financial capital but increasinglyhuman capital. The services sector, which is an important engine of job creation, continues to play a key role in most economies. This will require a large workforce that is highly skilled in newer skills like IT, Healthcare, Customer Service etc. Given this increasing demand, there is a global war for talent and at the heart of it are three key issues: 1. Changing demographic profiles. Emerging economies like India and China are increasingly becoming the new hubs for talent due to their large demographic
dividend. Advanced economies like Japan, the U.S. and also several European countries on the other hand are facing challenges of an aging workforce. By 2050, it is estimated that the percentage of population above the age of 65 will be close to 67% in Japan, 53% in Germany and 39% in the US. India on the contrast will have only 19% above the age of 65. These disparities are causing a talent imbalance with surplus in a few countries and shortages in others. 2. Technology development and a consequent productivity increase. Advances in technology, especially Information Technology, will disrupt societies faster in the coming years. Cloud, mobile technology, social network and collaboration technologies and big data will provide almost infinite computing, infinite storage and infinite bandwidth at very low cost in the hands of individuals. This will increase the amount of innovation in every sector and aspect of our lives. These developments are redefining jobs of the future and with it, the talent needed for the future.
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3. Skill gaps and Demand-Supply mismatches. It is ironic that at a time when close to 200 million people across the world (40 million of which are in the advanced economies alone) are unemployed, global businesses are still struggling with jobs that remain vacant. Moreover, 75 million of these unemployed are youth. The inability to fill jobs despite huge unemployment is not only due to geographic imbalances in demand and supply but also due to large skill gaps between the needs of the industry and the output of the education systems. It is evident that the talent challenge of the 21st century is global and that each country has its regional peculiarities. It is also clear that the scope of the problem is so diverse and complex that no single stakeholder can address it. Therefore, there is an impending need for collaborative, multi-stakeholder and systemic interventions by governments, industry and academia across advanced and developing nations to overcome the talent challenge. Long-term and sustainable solutions will require structural and systemic interventions. Governments have to make strategic investments in improving the basic educational infrastructure needed to produce high-skill talent on a large-scale and in a sustainable manner. Businesses have to work with the academia to ensure that the talent output is relevant to the needs of the industry and therefore more employable. However, while these are much needed, they require a substantial lead-time to produce the desired results. This is where talent mobility plays a critical role in addressing the current talent challenges in the short to medium term. To begin with, demographic profiles cannot be changed in the short term to cater to the needs of the industry. Secondly, addressing the academia-industry skill-gap challenge also requires long-term collaboration between the industry, academia and the governments. Therefore, mobility of talent between countries (of surplus and shortage of talent) as well as mobility of talent within countries provides a feasible alternative. Contrary to popular belief, research indicates that talent mobility benefits nations of surplus such as India as much as it benefits nations that receive this talent like Europe, the U.S. and other advanced economies. Finally, the challenges of skill redundancy due to
technology developments and productivity improvements impact advanced economies as much as, if not more than developing economies. Countries like India and China have been consistently producing large-scale, high-skilled talent in recent years. Advanced economies can and should tap into this pool in the short-term until they are able to scale their own educational infrastructure to cater to the changing needs of their industries in the long-term. Moreover, talent mobility also provides competitive advantages to both the countries of surplus and countries of shortage. Highly skilled immigrants contribute to the competitiveness and productivity of countries that they migrate to. When they return to their home countries, they leverage the business and technological skills that they have gained abroad. However, effective talent mobility requires concerted efforts between governments and businesses across countries sending and receiving talent. Multilateral agreements are needed that foster labor market reforms and allow easy recognition of skills across countries. Pre-requisite to it all is the need for businesses and governments to assess current skill shortages and also to anticipate potential needs of the future. Businesses have to find means to attract, train and retain the right talent themselves and foster talent mobility within. Finally, student mobility should be promoted as a stepping-stone to talent mobility. Talent Mobility is not the solution to some of the most pressing challenges in the need for large-scale, high-skill talent. It also brings with it a fair share of challenges, particularly in seamless implementation. However, talent mobility is an ideal and much-needed alternative in the interim until the long-term structural reforms in education and labor markets reap its dividends. This is critical not only to stimulate economic growth but also to foster long-term, sustainable growth and human capital strategies. About the author: S. Gopalakrishnan (Kris) is Executive Co-Chairman and one of the co-founders of Infosys. Kris has been voted top CEO (IT Services category) in Institutional Investors inaugural ranking of Asias Top Executives; selected as a winner of the 2nd Asian Corporate Director Recognition Awards by Corporate Governance Asia and was selected to Thinkers 50, an elite list of global business thinkers. In January 2011, the Government of India awarded Kris the Padma Bhushan, Indias third highest civilian honor.
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Anti-Corruption
By Alexander Kojo Abbrem
Corruption thrives when personal interest dominates the political and economic systems. As a natural consequence moral standards and ethical reasoning diminish decreasing transparency and accountability. It was with this understanding that the International Chamber of Commerce (ICC) in 1977 aimed to combat corruption and extortion. Using the ICC as a policy framework, businesses have to implement practical measures, identify, recognize and overcome corruption. A lot has been written, but little attention has been given, to the subject of anti-corruption. Tools and models have been developed to fight the problem. Studies show and the World Bank has confirmed that doing business in a country with medium to high level of corruption is found to be equal to an extra 20% tax on foreign business. Corruption affects more than just the individuals or corporations involved. Case in point, corruption can put national security of countries like India at risk because corrupt officials jeopardize national security in an attempt to line their pocket. India is not the only country to be combating this economic malice. In Africa corruption is rampant because not only is the continent struggling economically but also there is no sense of urgency to fix it. The status quo prevails in most cases making it the new norm. Corruption is especially problematic in developing countries. Today hunger and starvation are the number one problems in countries in Africa with more than half of their populations living under the $2 per day standard. Based on these assertions, the World Bank made its official duty to eradicate corruption by integrating it into it policy and mainstream programs. To address this problem, public and private accountability should be enforced. The accountability measure will help prevent the leaking bowl syndrome being characterized by developing countries. The leaking bowl phenomenon is a state whereby foreign aid is diverted from its intended purpose. Usually the money ends up in the pockets of public officials. For public and private accountability to work, every dollar spent on foreign aid should be accounted for by instituting procedures that measures the before and after impact of foreign aid. In terms of foreign aid, the
target country should be aware of the reasons for the aid and the timeline to affect change with the aid. Aid should be diverted from the recipient by year five if the impact of the aid is not realized. On an ongoing basis governments and public officials should be held accountable in this regard to report for every dollar spent. Secondly, there should be rigorous publications of corrupt countries and its officials. Transparency International (TI) has been a global force in this area. Since its inception in 1993, it has helped and informed the public on the subject. The idea of total eradication of corruption is a noble cause but realistically not feasible in the immediate future. When developing countries move from the echelons of developing to developed, new challenges emerge. In the case of developed countries, there are the constant pressures from lobbyist groups. In the United States for example, there are lobbying groups for every facet of issues the society faces. Countries must set goals to move from the bottom half of the Corruption Perceptions Index each year. An upward mobility on the Corruption Perceptions Index instituted by Transparency International should attract more foreign aid and investment opportunities for the country in question. This will serve as motivation for struggling countries to improve their index ranking in order for them to attract more foreign direct investment. Alexander Kojo Abbrem is an ardent student of global economic and banking issues, currently pursuing a Bachelor of Science at the University of Utah.
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Each year the Leaders of the G20 countries come together with the aim of addressing the planets most challenging issues. This might seem to some as comparable to Sisyphus story pushing time and again a boulder up a steep slope. And indeed, when one reads, at the end of each Summit, the lengthy list of issues the G20 Leaders have addressed or tried to address, one cannot help having a sense of both hope and circumspection. Fortunately, our twenty present day heroes are smart enough to ask some innovative experts, called Sherpas, to lead them on their adventurous and mountainous track to the top. In particular, they ask the business community, reunited in the form of the B20, to help them clear the obstacles laying on their way. That is the laudable yet challenging role given to us business experts, whose mission it is to level the path leading to those exciting summits. Integrity in business, a nice to have instrument or an essential tool? Among the many issues the World Leaders will have to examine at Los Cabos (such as climate change, financial crises or the volatility of natural resources prices), there is one which prompts awe and that is integrity in business. Can such a lofty subject, bordering on ethics and morals, provide a beginning of a solution to the inequities humanity is faced with? Can we hope that ethical business will bring some relief to the problems women and men are struggling with these days? Is business integrity just a nice to have instrument or is it an essential tool in world economic management? At the International Chamber of Commerce (ICC), we believe that integrity in business is essential. If one still doubts this, the youngsters demonstrating on Tahrir Square can provide all the answers. A sound and efficient market, giving each a chance to succeed and to prosper in an environment free from inappropriate public or private interventions should be our aspiration for transparency and good governance. The fight against corruption, fundamental in this context, should become a reflex in all societies, industrialized, emerging as well as developing. Fighting corruption - the same as fighting windmills? In the aftermath of Watergate, ICC decided to make the fight against corruption in all its forms one of its priorities. Since then, the world business organization has put in place a number of efficient tools to fight corruption in the political, administrative and economical environments. Such a titanic fight cannot be done in isolation. Robust and open cooperation
with governments, international public organizations, business federations, chambers of commerce as well as with NGOs is necessary. Is there low hanging fruit to be picked? Under each G20 presidency, we are urged to present practical proposals, which could be transformed into immediate deliverables. We are asked if there is low-hanging fruit that could be easily picked. While concrete measures must always be an aim, what is also needed is long term, systematic planning that will need a succession of G20 Presidencies to be effectively carried out. What can be achieved in the fight against corruption? To create a sound economic environment, we need good international conventions and efficient national laws. Let us call that the nomos. To ensure that the nomos does not become legal archeology, we must create awareness with the people in charge (business executives and political decision makers alike). For the sake of easiness, we call that the logos. And finally, we must deploy sufficient resources and put into place adequate measures to transform nomos and logos into reality. We call that the praxis. The nomos actually is fine, the logos is growing but the praxis is still dangerously lagging behind. Companies, large, medium and small, are not yet convincingly putting into place corporate prevention measures. And that is precisely where our efforts have to be concentrated. It is on the basis of this analysis that the ICC is launching a large scale program to stimulate better training in companies, especially directed towards Compliance Officers. The B20 Anti-corruption plan In order to focus as much energy as possible on their top priority goals, the B20 Anti-corruption Sherpas have identified six priority areas of attention: (i) public procurement, (ii) sector based initiatives, (iii) private sector involvement in peer reviews, (iv) training and education, (v) codes of conduct and compliance programs, especially in SMEs and (vi) solicitation and related issues. On each of these focus areas, experts of a number of organizations and of diverse origins - from the public as well as from the private sector - have been working hard, and with a sense of urgency, to identify the areas with the most immediate need for action. The work to be achieved is daunting but is doable. It requires perseverance, trust and a sense of what we are aiming to achieve in both the immediate and in the long-term.
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Aviancataca Airlines
International Trade
By Greg Peters
The global economic crisis has dramatically altered the climate for international trade and investment. Factors such as currency value and unit labor cost are among the most contentious topics surrounding our international dialogue, as they tend to be indicative of a nations ability to globally compete. China has long benefited from a low currency value, while Germany has been able to make the most of their export-led economy with low unit labor costs compared to the rest of Europe. Subsequently, the recent struggles in the Eurozone periphery have stemmed from the inability to produce, thus leading to enormous trade deficits. Perhaps as a means to combat these deficits, all G20 countries have turned to the primitive policies of protectionism. A recent report from the WTO-OECDUNCTAD reveals that within the last six months, G20 governments have implemented more new trade restrictions than any previously reported period. With staggering unemployment, many government leaders have sought self-reliance. However, according to the joint report, this approach is unlikely to bear fruit; estimates show that trade liberalization will spur long-term employment growth in both the lower- and upper-skilled labor markets. The easing of market access will keep the prospects of Foreign Direct Investment vibrant, an imperative for struggling countries. Government alone can only do so much; in conjunction with business leaders, they can build infrastructural benefits for all, bringing jobs, production and wealth. Furthermore, the presence of FDI will provide more efficient markets. As the level of FDI increases, domestic companies will have the opportunity to test their products and services against top-tier competitors. Only when the population
has an array of choices will a market begin to understand the true nature of their needs and desires. Current rhetoric from international investors and bondholders has been rife with austerity measures; Greeces bailout package epitomizes such an assertion. With continued political pressure from the economic crisis, politicians around the world are experiencing seemingly insurmountable budget deficits. Rather than running up an even higher deficit by continuing to pump public funds into the labor force, domestic policies ought to favor those centered on the liberalization of international marketsa fiscally responsible strategy that takes heed of the interconnected global economy. A going it alone strategy will place undue burdens on the government and its public sector, along with discouraging international investors. Those who can provide opportunities for the growth of wealth need to be met by stable politics. This doesnt have to come at the expense of the spirit of locality. A transparent government, receptive to the needs of its people, can better communicate with the business community and potential investors to bring the most effective message to the population. Without the establishment of this framework, governments and the private sector will fall victim to the dichotomy between them and their constituents. Greg Peters graduated from the University of Utah in May 2012 with a BS degree in Political Science. His forthcoming plans involve furthering his education in public policy and law and pursuing a career in the public sector.
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Cuahtemoc Moctezuma
Policymaking in a Complex World: Putting Trade and Investment Back on the Agenda
By Victor K Fung and Martin Senn
In the heat of the 2008 global financial crisis, the G20 rightly put financial reform squarely in its mandate; however the ongoing need for global economic growth and for inclusive, sustainable development, in an increasingly complex global environment, create a compelling case for the G20 to assume a similar mandate around trade and investment. Why? Quite simply, international trade and investment form the backbone of the global economy, generate jobs and growth, increase choice and opportunity, and provide a pathway out of poverty for developing nations. There is a growing body of evidence showing that countries that trade with others improve their chances for alleviating poverty and enabling their people to share in the wealth of the global economy. East Asias growth over the past quarter century and especially that of Chinais only the most vivid example of the positive role of international trade and investment, and we could find many more. Indeed, in the three years since the G20 has invited business to contribute views to its annual summits, business has consistently argued that trade and investment should be at the forefront of the summits deliberations and commitments. We continue to believe that trade and investment must be the cornerstone of strategies to achieve the G20s aims of promoting sustainable growth and job creation. So, why do we think such a focus is necessary? Because against the backdrop of stalled negotiations on multilateral trade and investment issues, there not only looms a growing risk of protectionism, but also the spectre of an unraveling of the global economic order. These issues deserve a continuing, strategic approach, political leadership and policy co-ordination that can only come from the G20. In fact, trade and investment cut across many of the most urgent and important challenges we face today and in the near future. To name just a few: poverty, where trade and investment will be essential to creating jobs and new economic opportunities; climate change, where trade and investment will be essential to knowledge sharing and implementing new technologies towards a green economy; food security, where
trade and investment will be essential to ensuring a balance between supply and demand; and re-balancing the global economy, where trade and investment spur growth and employment where most needed. Moreover, political will from the G20 is essential for resolving contentious issues where progress has stalled. By making trade and investment a permanent part of its agenda, the G20 will send a strong signal about its focus and commitment, while re-injecting political capital towards commitments that have already been made. Last but not least, protectionist pressures tend to grow in an adverse economic environment. Attention from the G20 as an additional platform for monitoring and commitment could generate the political will needed to resist such short-term actions. There are other reasons why the G20 should provide policy leadership on trade. Certainly, the WTO plays a key role in administering, adjudicating and negotiating global trade rules. However, the advantages and disadvantages of the WTOs broad membership have been sharply evident in recent efforts to make progress on trade and investment issues. The WTOs predecessor, the GATT, was founded in 1948 with 23 member economies. By the time of the WTOs creation in 1995, membership had mushroomed to 123. Today, there are 157 member economies accounting for 97% of world trade. This growth in membership attests to the benefits of the multilateral trade system, and imparts the WTO with legitimacy in the conduct of its tasks. However, the broad, heterogeneous membership also makes it difficult to make decisions quickly and on contentious issues. The stalled Doha Round negotiations present powerful evidence of this institutional challenge. We believe there is room for the G20 to play a complementary role to the WTO, by providing strategic and political leadership to support the rules-based multilateral trading system, so that it can more effectively deliver jobs, growth, and prosperity. With a strong G20 mandate behind it and the continuing attention of G20 Trade Ministers as a coordinating body, the WTO can discharge its key tasks of rule-making, monitoring, and
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dispute resolution to facilitate the smooth flow of goods, services and investment around the world. If the G20 were to make trade and investment a permanent part of its mandate, its agenda could be built around key actions such as: Placing trade and investment at the centre of strategies to foster economic growth, development, and job creation; Guarding against protectionism while keeping trade open, for instance by upholding the principles of non-discrimination and national treatment; Supporting the use of innovative approaches such as plurilateral approaches to achieve meaningful progress on multilateral trade and investment, and Creating a more predictable and stable framework for cross-border investment given its complementarity with trade. These are some of the recommendations that the B20 Task Force on Trade and Investment, which we co-chair, has put forth to the G20 leaders for the 2012
Summit. In an increasingly complex global environment, and with our economies still struggling to recover from the financial crisis and its aftermath, this message makes more sense than ever. The time is ripe for the G20 to put trade back at the center of its strategies for global growth and development. Victor K Fung is Chairman, Li & Fung Group, Hong Kong SAR, China.
Martin Senn is Chief Executive Officer, Zurich Insurance Group Ltd, Switzerland. Messrs Fung and Senn are Co-Chairs of the B20 Task Force on Trade and Investment.
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Empirical evidence shows the existence of a strong positive correlation between GDP growth and trade growth. Thus, a greater degree of openness determines a higher GDP growth and consequently, higher per capita income. There are three stylized facts that support this conclusion: (i) Countries which open their economy experience a growth spurt, while those doing the opposite experience an economic slowdown. (ii) Openness leads to economic convergence: poor countries that are open to trade grow faster on average than developed countries, while poor countries that are closed to trade grow slower. (iii) Countries that are less able to participate in world trade owing to a disadvantage in their geographical position have a lower income due to their isolation. According to the above, economic data for the second half of the twentieth century shows that countries which were always open are on average seven times richer than those economies which remained closed. Trade Policy, Growth and Anti-Crisis Insurance Mechanisms Stylized facts of trade and growth There is consensus among most economists in considering international trade as a beneficial activity which by and large should be encouraged. The main reason for this assessment is that the interaction with other countries profoundly alters the process of economic growth, since they represent a potential supply of products, as well as an outlet for abundant factors. This scheme allows an economic organization that encourages each country to strengthen its productive virtues and specialize in areas where it has greater potential. From this point of view, the main channel through which global trade openness raises income per capita is generated by the effect of an increase in productivity.
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While trade policy in the world has seen great progress, it is also true that this process represents the change in international financial conditions, where the focus shifted from the use of tariffs, taxes, quotas and non-tariff barriers to exchange rate management policies aiming at improvements in competitiveness. Thus, the coordination of monetary and fiscal policies to maintain the currency depreciated confronts us with a new form of trade policy. International evidence shows that those countries that have depreciated their currencies, in spite of having experienced higher inflation rates, have also achieved faster economic growth. Moreover, since exchange rate depreciation typically involves a greater accumulation of international reserves, countries that pursue this
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strategy not only face lower odds of falling into a crisis, but also suffer less in cases where a crisis is inevitable. In short, keeping the currency undervalued not only stimulates the economys growth rate, but also works as an insurance against crises. However, the abuse of these policies by key players (such as China and oil-producing countries), coupled with the U.S. fiscal deficit, conceived the foundations of the recent international crisis. Thus, after some progress in the midst of the worst of the crisis, the above-mentioned emerging countries refused to abandon its strategy of growth, while the developed world continues to struggle to recover at low economic growth rates and high levels of unemployment. In this sense, the lack of commitment in resolving global imbalances and the prevailing threat of a currency war merely encourage protectionist sentiments. Towards an Exit with more Globalization In light of this, there is no doubt that the deepening of the process of trade-openness requires a solution to global imbalances and thus the need to define a set of coordinated actions that could be built on three pillars: (1) Allowing greater exchange rate flexibility by relaxing the use of monetary and fiscal policies in surplus countries, while making progress in reforming the inter-
national financial system, so that countries may count with insurance mechanisms against crises without the need to accumulate exaggerated amounts of international reserves. (2) The reallocation of resources may involve sacrifices in the transition, so it is necessary to create social contention mechanisms to prevent jeopardizing the viability of these reforms. (3) A sustainable fiscal consolidation in the U.S., synchronized with consistent monetary and fiscal policies by other international actors, in order to avoid a rise in interest rates and a drop in economic activity levels. In conclusion, the solution lies in recognizing that globalization is a phenomenon driven by the needs of human beings, which conditions the design of economic policy to be based on cooperation and a long-term perspective. Hence, it is a warning: we must work to avoid a currency war which could lead to a trade war, where we will all pay in terms of welfare. In short, we must work for world peace. About the Authors: Eduardo Eurnekian is President of Corporacin Amrica S.A. and Javier Milei is Head Economist, Corporacin Amrica S.A.
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Turkeys Transformation: A New Path Turkey is now one of the growth engines of the newly emerging multi-polar global system. Its economy is already the 17th biggest in the world and the 6th biggest in Europe. Our country managed to transform itself from an agricultural economy to an industrial one over the last three decades. Private sector investment became the engine of economic growth and job creation. Turkey also performed admirably during the economic crisis. The economy contracted by about 4.8 percent in 2009, but bounced back with 8.9 percent growth in 2010. Turkeys 2011 growth rate hit a record of %8.5 and became the 3rd after China and Argentina among the G-20 countries. The Turkish Private Sector: the New Rising Star The economic transformation of Turkey began in the mid 1980s. Before 1980, the main aim of the Turkish industry was to substitute import gaps. The state was heavily involved in monetary and trade policies. By the efforts of the Prime Minister zal, Turkey transformed into a free market economy. A liberalization and privatization process that revealed respectable industrial cities in Anatolia initiated. Another prominent turning point for Turkey was the 2001 economic crisis. The stabilization program after the crisis and the political stability that came after the 2002 election directly improved the Turkish economy. The shift
from labor intensive and low technology to technology intensive sectors took place rapidly, export-oriented industrialization accelerated and the entrepreneurial spirit of Turkish business community became stronger. Today, Turkey is three-hour-flight away from most countries between Italy and China, and our entrepreneurs dot every part of this 10-trillion-dollar region. This attests to the increasing organizational capability of Turkish business community, which has greatly broadened Turkeys regional influence. A new transformation process is on the rise. The democratic wave in North Africa and Middle East and the debt crisis in Europe will reshape the political and economic structure of the world in the upcoming days. On the other side, China and India are triggering international competitiveness. What must be done is to be prepared for the change. Nowadays, we heavily produce middle-technology products such as white goods, chemical substances, telecommunication devices, medical devices and automobiles. It is of significant importance to switch from medium technology to high-technology production for Turkey to make a leap in the global market and sustain competitiveness. In order to reach our goals, fostering a conducive business environment is among the top priorities of Turkeys reform agenda. Through public-private dialogue, Turkey is adapting investor-friendly policies, reforming its macro- and micro-economic foundations, and improving its investment climate. I believe these
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policies will bring success to Turkey in the next level of its transformation. TOBB as a catalyst for transformation Our grassroots Chamber network has always been among the catalysts of this private-sector-led transformation. As the highest-level representative of the Turkish private sector, the Union of Chambers and Commodity Exchanges of Turkey (TOBB) is supporting domestic political and economic reforms. We serve our 1.4 million members through 365 local chambers and commodity exchanges and 59 sector-specific assemblies. We believe that the economic success is in the hands of the entrepreneurs. These entrepreneurs will create more employment opportunities, invest in research and development, and increase the trading volume of Turkey. Being aware of the importance of entrepreneurship, TOBB established Women Entrepreneurs Board and Young Entrepreneurs Board, and mobilized about 10 thousand entrepreneurs under these bodies. Via these Boards, TOBB plays an important role for the future of entrepreneurship in Turkey. Moreover, TOBB has always been an outward looking actor to develop sound regional integration policies. Our objective has always been to increase the visibility of the Turkish private sector. The more people trust in the virtues of Turkish entrepreneurs, the easier it will be for us to do business abroad. Building mechanisms for sustainable business dialogue, especially in troubled areas such as Palestine-Israel and Pakistan-Afghanistan, is one way to do this. Thus, we are working on doable projects in these regions. Another aspect of Turkeys economic policies is enhancing bilateral and multilateral economic relations. This is also an important issue of TOBBs international agenda. The Foreign Economic Relations Board of Turkey (DElK), established by TOBB, and 109 bilateral business councils have been the driving force behind our market development. One of the key issues of Turkeys upcoming reform agenda entails improving access to the more sophisticated markets around the globe. It has the critical importance to expand and diversify the trade partners. Our market shares in the Far East and Americas are much below than the potential. The Unites States, China, India, Brazil, Japan, Canada, and Mexico are the most developed countries in these regions, but our shares in their imports change between 1 per mil and 3 per mil. We believe the American market, among others, will be a key venue to boost Turkish exports and we are working closely with the American authorities and business community in the scope of the Partnership for a New Beginning (PNB) Initiative. Rooted in President Obamas vision for a New Beginning, PNB is a collection of public-private partners committed to deepening economic and social engagement between the United States and local communities. As chair of PNB Turkey, we seek innovative collaboration between Turkish and American entrepreneurs. Invest in Turkey We, as the Turkish private sector, are determined to be one of the key players in the global economy. With its young population, rising income level, growing global influence, and strong free market economy, Turkey has great potential and offers abundant business opportunities for global companies. The Union of Chambers and Commodity Exchanges (TOBB) is ready to support and guide business initiatives of foreign companies in Turkey and in its close neighborhood. About the Author: M. Rifat Hisarokloglu is President of the Union of Chambers and Commodity Exchanges of Turkey (TOBB). He is also Deputy President of Eurochambres and Vice President, Islamic Chamber of Commerce and Industry.
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Information Communications Technology and Innovation: More Than Technology and Patents
By Robert Higgins
Defining national interest Is it possible to free the mind while imprisoning the soul? Innovation tends to spawn other innovations that may be undesired by some, such as theological, societal and political. The response may be to attempt the adoption technological innovation while limiting the freedoms of thought, speech and assembly. The desired end is to limit the soul, and in so doing limit the mind. The soul longed to fly; the mind invented the airplane. Is it possible to open communications while strangling voices? The Computer Age spawned the information society. During the Arab Spring, information communications innovations facilitated an unforeseen innovation to the definition of national interest by the masses. The soul hungered for freedom; the mind invented collective action. Balancing national interest Information communications are two words that strike hope and fear in every government. The real fear is not that a hostile foreign government will learn secrets, but that everyone will learn secret communications in the pages of The New York Times or that one nations auto manufacturer will learn trade secrets of another nation. The right to innovate and collaborate and the right to secure intellectual property are balanced against national security and well-being. Implementing national interest Pursuing a national strategy to maximize Information Communications Technology (ICT) to produce innovation is significantly more complex than finding the right technology or filing for patents. From the perspective of national interest, information communications technology may result in improvement of a nations competitive position. Or, it may result in a reorganization of national interest. Certainly, ITC has the promise of doing both. Yet, not wringing all the advantages from ICT led innovation is not an option. Time has passed, or is passing, when national competitive advantage (CA) can be had for low cost labor, alone. ICT has the possibility of both stripping and bestowing CA. Moving from production to design is the new development frontier. The All-American Buick is now designed in China. Design studios in Detroit are shuttered. Is it Fiat, or is it Chrysler?
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Regardless of the questions and problems, the overriding theory of global economic development is that global efficiency leads to national efficiency. Some may lose jobs, but the consumer benefits, boosting the national economy. While ICT may give a nation a temporary advantage, new technologies are always on the horizon another nation can grab, leading to a higher standard of living and quality of life for its citizens. In the words of Steve Case, For better or worse, that is true with any new innovation, certainly any new technological innovation. Theres [sic] many good things that come out of it, but also some bad things. All you can do is try to maximize the good stuff and minimize the bad stuff. The issue, then, is how to manage the
process, so that the win column is bigger than the loss column. Is it appropriate to take a laissez-faire approach, or to institute a stronger degree of national direction and control? Regardless of the answer, it is the mind and soul that lead to innovation which can, then, be communicated. The real innovation is in the art of adjusting to that truth within the context of each nations interest. Robert Higgins is graduating with a Master of Arts in International Affairs and Global Enterprise from the University of Utah. He is a Senior Fellow at the International Centre for Policy Studies in Kyiv, Ukraine. He has years of experience in banking, business, NGO management and politics.
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survive and flourish, you have to fully embrace the move to digital. Whether youre in B2B or B2C, its no longer about websites and enewsletters any more. You also have to be on all mobile platforms. iMirus has an enterprise-wide IT solution to help companies create, present and distribute content on all major platforms including web browsers, tablets, and mobile devices. It also integrates with content management systems, e-stores, user management systems, advertising networks, and other third party systems. It is a plug and play solution that is designed to optimize your marketing across all mediums. Coupling the iMirus enterprise system with its professional services and consulting, many companies are accomplishing their new media marketing goals and reaping the benefits mainly reducing costs and generating new revenues. There are endless use cases to have the system can be used across all the vertical markets, but below is a use case associated with the higher education market, and how a specific university utilized the iMirus platform and services to help achieve some pretty complex marketing and communication objectives. The Challenge Kent State University has been faced with the same challenge as just about every university. How do we compete for new students? How do we maximize the student experience, while at the university? How do we effectively communicate with and engage alumni to support the university post graduation? Summed up how do we communicate and engage throughout the entire student lifecycle? The Objective Kent State University realized
that individuals have their digital devices in their hands throughout the day, whether it is their smart phone, tablet or computer. The objective was to create a crawl, walk, run strategy, whereby the Kent State brand would touch potential students (and their parents), current students and alumni effectively throughout their student lifecycle. Kent State University reached out to a group called the TouchPoint Alliance and iMirus to help create and implement this strategy. The Crawl Phase Creating the Communication Strategy and Launching It Kent States primary objective was to move itself fully into the digital age and be able to communicate with prospective students and their families, current students, and alumni. Simply put, they knew they had to create and iPad and Android app. This would allow them to push their brand and message at any time in front of their audience. They contracted with iMirus to build their iPad and Android apps, and one of iMirus partners TouchPoint Alliance, to help create a cross-media marketing strategy. The companies within the alliance that helped with this process were Breakthrough Media, and Trekk Cross Media. The conclusion of this crawl phase would put Kent State in position to move to the next two phases. The Walking Phase - Data Analysis and Reducing Costs At the time of this publication (May 2012), Kent State is in the middle of this phase. The primary objective of this phase is two fold: use the technology platform and data analysis to reduce costs, and prepare for the next operational phase at the end of 2012. Kent State was keeping students and alumni in the know
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Readers can visit Kent States social media pages all within the app via Feed)
through their quarterly magazine. However, the cost of printing and shipping hundreds of thousands of magazines is expensive. Kent State has began to reduce its print circulation by replacing it with lower volume and personalized print publications for those individuals that wanted to continue to get the printed magazine. And for those that only want digital, this is where the iPad and Android apps come in. The cost of creating the apps and producing digital publications for the apps is a fraction of the cost of traditional print. In addition, the Kent State iPad app incorporates various types of media from audio and video, to website feeds from YouTube and the University, to true social media integration with Facebook and Twitter. Before the University began to promote their new app, two of their digital publications had already been viewed in over 47 different companies from students and alumni sharing it with each other, or simply finding it in the
iTunes, Google and Amazon app stores. Kent state had found a path to begin cutting costs and at the same time delivering exactly the kind of information to exactly the individuals that wanted to receive it and they had all the data and direct communication with the end users to prove it. The Running Phase The Next Step In working with members of the Touchpoint Alliance and iMirus, Kent States next step is to start using more of the features and functionality of the iMirus platform to generate revenue. The app and iMirus platform have a number of revenue generating capabilities from providing direct advertising to dynamic advertising. The university plans to create affiliate relationships with many merchants and companies that are close to the university whereby if users
are driven to their sites and make purchases of products or services, Kent State will participate in that revenue. And, probably most exciting of all, Kent State will begin to host live streaming events - from fundraisers to sports events and allow users to video chat with each other during these events. In conclusion, iMirus and its partners are enabling companies with a migration plan. The end result is, you end up reducing costs, generating new revenue, and extending your content and brand to users, when, where, and how they want it. And, in most cases, the ROI is in less than a year. For further information on the iMirus Platform, visit www.imirus. com or email info@imirus.com.
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As the world becomes increasingly more interconnected through global markets, the need for increased financial regulation and inclusion is imperative. While there is strong support from both the public and private sector to bolster the financial regulation system, there are many impediments to implementing the necessary framework. Regulations that are too severe or do not take into consideration the different circumstances of the financial market may have a negative impact on the market in a time that the global market is looking for continued growth. According to International Chamber of Commerce reports, regulation alone is not the final answer for solving current financial troubles. Supervision is a key component for financial reform. There are two levels that a supervisory system must employ, both global and national. Each country should be compelled to have a proactive national supervisory system that will implement a mandate and follow a timetable. One aspect of a global supervisory system would be to ensure that regulations would be implemented consistently throughout all financial sectors around the world. Failure to ensure across-the-board implementation could lead to unbalanced arbitrage opportunities, the simultaneous buying and selling of an asset in order to profit from the difference in price, thus creating a market disruption. This would dampen the economy in a time that it needs growth. As stated in a 2011 ICC report, A well-developed financial system is not only the product of economic growth but also a key driver of such growth. As financial regulations are implemented across the financial system, it is important to take into consideration the possible unintended consequences of these policies in an effort to avoid upsetting global markets. One of the key concerns for the business industry within the new regulatory system Basel III is that it categorizes trade finance and high-risk financial instruments into the same risk class. The ICC report asserts grouping these together will alter a banks ability to provide affordable trade financing to businesses in developing and low-income countries as well as to Small to Medium Enterprises in developed nations. Due to the regulatory capital being substantially higher under Basel III, this could lead banks to seek more attractive products that are higher risk and allocate more of their balance
sheets to speculative leveraged instruments. If the more stringent regulatory requirements are imposed, banks that remained in trade finance could have their costs raised. The ICC suggests that restricting trade finance would be unwise. The ICC-ADB trade register illustrates that trade finance is generally low-risk, self-liquidating and short term in nature. Trade finance is an essential element to growing and sustaining economic markets in both developing and developed nations. For this to continue, trade finance must be grouped in a different regulatory group under Basel III. It is a necessity to improve the regulations placed upon the current financial system, however not at the expense of global markets. For financial regulation to succeed, it needs to be done in a fair, consistent mannerimplementing the necessary changes, while addressing the banks concerns and ensuring the stability of global markets. Sarah Day is a recent graduate of the University of Utah in Political Science with Minors in Campaign Management and Leadership Studies. She recently returned from a Hinckley Internship with the U.S. Mission to NATO in the Public Affairs section. She will spend the next year teaching English and International Relations in Incheon, South Korea, before she will pursue a masters degree in Public Administration.
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together directly and indirectly employed 40 million workers with average weekly wages that are 42% higher than those of non-IP-intensive industries. According to the report, IP-intensive industries represent about 35% of U.S. GDP. Clearly, entire industries and literally millions of employees are depending more and more on the creation and protection of intellectual property. Second, as companies seek to deliver products and services to the marketplace, they are investing more and more in intellectual capital. The problem is that intellectual property is vulnerable to theft namely through counterfeiting and piracy. These trends question whether the global economy can continue to absorb massive losses due to IP theft, counterfeiting and piracy, in terms of lost economic growth, GDP and employment. In order for governments to more fully understand the consequences, this article suggests that its important to have a look into whats at risk from this global spread of intellectual property theft. Our view is that Intellectual Property (IP) is an important component of the overall health of the economy and that much is at risk. The OECD estimated in 2009, for example, that world-wide cross-border trade in physical counterfeits alone represented a US$ 250 billion problem. When in-country counterfeiting and piracy and on-line infringements are figured in, the number reaches nearly US$ 1 trillion. In addition, research done by Frontier Economics for ICCs Business Against Counterfeiting and Piracy (BASCAP) group showed that the G20 governments alone incur an additional 100 billion in indirect costs from counterfeiting and piracy: in lost tax revenues, higher welfare spending, health and other costs of sickness and death caused by unsafe counterfeit products, and economic and other costs of IP crime. Intellectual Property Protection Benefits the Economy Perhaps first and foremost, the development and protection of intellectual property (IP) go hand-in-hand with economic activity, employment and growth in
In the past decade, the emergence of two momentous yet opposing trends are challenging the worlds knowledge-based economy and portray an alarming future economic and employment scenario that will be radically different than it is today. First, intellectual capital is increasingly becoming our most important resource, rapidly replacing land, energy and raw materials in the production equation. As the Economist put it in October 2005, as much as 75% of the value of publicly traded companies comes from intangible assets, up from around 40% in the early 1980s. And a new report from the U.S. Department of Commerce shows that 75 IP-intensive industries
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developing as well as developed countries. Notably, industrial sectors that rely on IPR protection are substantial contributors to the economy. For example, in G8 countries, copyright-based industries and interdependent sectors alone account for approximately 4-11% of Gross Domestic Product and 3-8% of all employment. Copyright-related industries also generate substantial GDP and employment contributions in developing countries: 2-6% of GDP and 3-11% of employment in 14 developing countries and regions studied by WIPO in Latin America, Asia and elsewhere. Brands goods industries account for approximately 7% of GDP in Spain and Germany, and over 14% of all manufacturing in the UK. Moreover, many IPR-reliant sectors show disproportionate growth despite trends of declining prices, and are strategically important in the economy. IPR attracts foreign direct investment (FDI) and promotes R&D and technology transfer in developing countries, driving development and economic growth. The OECD has found that the strength of a countrys patent rights is positively correlated to inward FDI, holding other factors constant. This relationship holds for all groups of countries developed, developing and least developed. OECD economists have found that a 1% increase in a countrys patent protection correlates to a 2.8% increase in FDI, and a 1% improvement in trademark and copyright protection increases FDI by 3.8% and 6.8%, respectively. Similarly, other studies have shown that weak IPRs are significant barriers to international technology licensing, weak IPRs reduce investment in the computer software sector, weak IPRs reduce direct investment in the pharmaceutical sector, and at least 25% of American, German, and Japanese high-tech firms refused to invest directly or through joint ventures in developing countries with weak IPRs. Intellectual Property Protection Promotes Innovation As policy makers search for the magic formula to stimulate economic growth, it has become increasingly clear that innovation both in the form of new technologies and fresh ideas is the key driver of future productivity growth. And, not surprisingly, effective IP protection increases the needed research and development and innovation. For example, patents have a positive impact on R&D spend in most industries, especially pharmaceutical products, where the absence of patents has been show to decrease R&D by 25-35%. Moreover,
firms can earn substantially more from innovations that are protected by IPR, in turn injecting more into R&D. IPR also attracts venture-capital investment for R&D and for the commercialisation of innovative products and services. Intellectual Property Protection Helps Small and Medium Enterprises The SME sector is vital to our world economy and the role of SME businesses is increasingly viewed as that of a powerhouse of employment, innovation and entrepreneurial spirit. SMEs are increasingly important contributors to innovation and creativity. In fact, SME investment in R&D in the US grew by nearly 300% in between 1985 and 1995, while large firm R&D expenditure grew by only about 20%. Moreover, SMEs return on R&D investment can often exceed that of large firms, and SMEs in the US and other countries have been found to contribute approximately 2.4 times more innovations per employees than do large firms.
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Notably, SMEs that use IPR report higher growth, income and employment than those that do not. At least 10% more of surveyed SMEs in the information and communication technology (ICT) sector that used IPR reported growth during the previous 12 months in each of the areas of turnover, market share and employment than those that had not used IPR. 61% of firms that had used IPR reported turnover growth versus 51% among firms that had not used IPR. Intellectual Property Consumers and Society Protection Benefits
There is no question that IPR supports development of a continuous stream of innovative, competitive products and services that benefit consumers. Copyright underlies the continuous stream of new music and films, ever-improving business and games software, books, magazines, newspapers and other published material, photography, and many other related activities including publishing, performing, broadcasting and other media for developing and delivering all of these to consumers. Patents underlie many of the products and services that society relies on for health, energy, communication, transportation and many other human and commercial needs. Products and processes that depend on patents are developed in such diverse industries as the aerospace, automotive, energy, biotechnology, pharmaceutical, chemical, and information and communication technology sectors, and related transportation and distribution sectors. Trademarks support an even wider array of products and services that consumers want and depend on, from clothing and computers to foods and footwear, educational and entertainment products, services, scientific products and even sporting activities. With the world awash in counterfeit and pirated products, G20 efforts to stabilize the economy and stimulate economic growth, trade and employment must include the critical role that intellectual property (IP) protection plays in driving, innovation, development and jobs. The massive infiltration of counterfeit and pirated goods creates an enormous drain on the global economy crowding out billions in legitimate economic activity and facilitating an underground economy that deprives governments of revenues for vital public services, forces higher burdens on tax payers, dislocates hundreds of
thousands of legitimate jobs and exposes consumers to dangerous and ineffective products. For business, these effects lead to greater risk, lower returns on investment, less job creation and in the extreme, market exit. Government efforts to strengthen IP enforcement regimes should therefore not be considered costs, but rather investments that pay tangible dividends to economic development and society. Now is the time to increase, not decrease, the resources committed to stopping IP theft and the illegal trade in counterfeits and piracy. About the Author: David Benjamin is Senior Vice President for Anti-Piracy at Universal Music and CoChair of Business Action to Stop Counterfeiting and Piracy (BASCAP).
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