Responsible Growth in a Global World

1
Responsible Growth in a Global World
Opportunities and Threats

• Prof. Dr. Renate Schubert

2
Overview

• What is Responsible Growth?
• Globalization - Strengths/Weaknesses of
  Switzerland
• Globalization - Threats to Responsible Growth
• Globalization - Opportunities for Responsible
  Growth
• Globalization - Challenges for Switzerland
• Specific Challenges for Industry, Science and
  Education

3
What is Responsible Growth?

• Responsible growth means that an economy is
  growing such that future generations and other
  countries/regions have similar growth
  opportunities
• Close relation to the notion of sustainability
  to satisfy the needs of todays generation
  without endangering the satisfaction of future
  generations needs

4
Some Determinants of Responsible Growth

• Strong and reliable institutional framework
• Well educated workforce
• Efficient and flexible labor markets
• Stable macroeconomic conditions
• Technological innovations
• Open markets

5
Some Determinants of Responsible Growth

• Protection of natural resources and environment
• Climate change mitigation
• Development assistance
• International cooperation

6
Which are the Challenges for Switzerland? Part I

• As we will see, Switzerlands current position is
  not bad
• However, threats are significant and increasing
• Key areas of action have to be identified

7
(No Transcript)
8
Globalization Strengths of Switzerland

• Global comparison Switzerland is well positioned
• 1) Global Competitiveness Index 2008 (World
  Economic Forum)
• ? Switzerland ranked 2nd of 134 after the
  United States for its overall competitiveness
• ? ranked 2nd for its sophisticated business
  culture and 3rd for its innovation capacity

9
Globalization Strengths of Switzerland

• 2) World Competitiveness Yearbook 2008 (IMD
  Lausanne)
• ?Switzerland ranked 4 of 55 after the United
  States, Singapore and Hong Kong

10
Globalization Strengths of Switzerland

• 3) Economic Freedom of the World-Index 2008
  (Fraser Institute)
• ?Switzerland ranked 4 of 141 after Hong Kong,
  Singapore and New Zealand for its overall
  economic freedom

11
Globalization Strengths of Switzerland

• Strengths (GCI 2008)
• Quality of research institutions rank 1
• Company spending on RD rank 1
• University-industry research collaboration rank 2
• Quality of educational system rank 3 Quality
  of overall infrastructure rank 1
• Financial market sophistication rank 1
• Efficiency of legal framework rank 3

12
Globalization Weaknesses of Switzerland

• Weaknesses (GCI 2008)
• University enrollment rate rank 45
• Prevalence of trade barriers rank 80
• Government debt rank 99
• Strength of investor protection rank 113
• Agricultural policy costs rank 118

13
(No Transcript)
14
Globalization Threats to Responsible Growth

1. Increased sensitivity to external economic
   volatility
2. Demographic shift and human resources
3. Strong competition with emerging economies
4. Natural resources and environmental depletion
5. Global climate change
6. International security problems

15
Globalization Threats to Responsible Growth

• 1. Increased sensitivity to external economic
  volatility
• International integration leads to increased
  sensitivity to disruptions emanating from global
  markets (e.g. global financial crisis)
• Increased dependence of single countries on the
  world economic situation

16
Globalization Threats to Responsible Growth

• 2. Demographic Shift and Human Resources
• Swiss population will be declining and getting
  older
• Social insurance schemes will be at risk
• New ways to profit from older persons work and
  life experience are needed

17
Human Resources and Demography

• Population in Switzerland
• Peak reached in 2025

18
Human Resources and Demography

• Population pyramides in Switzerland

19
Globalization Threats to Responsible Growth

• 2. Demographic Shift and Human Resources
• Longer working lives for all people make sense
• A good education for younger people is required
  to sustain a high GDP level
• Until now the university enrolment in Switzerland
  is relatively low (27 of university degree
  holders vs. 36 in OECD 7.7 vs. 9.1 for
  science engineering)

20
Globalization Threats to Responsible Growth

• 2. Demographic Shift and Human Resources
• Qualified immigration may be desired (economic
  vs. cultural effects)
• Current new immigration is qualified (20? 60
  with bachelor or more)
• Fields RD, informatics, education, finance and
  insurance (high value added)

21
Globalization Threats to Responsible Growth

• 2. Demographic Shift and Human Resources
• Female labor force is not used adequately
• High female participation in the labor market
  (60)
• BUT extremely high share of part time work (due
  to child care and domestic work)

22
Human Resources and Demography
Level of employment in Switzerland, 1991 and 2007
Female
Male
Full time 90-100
Part time 50-89
Part time less than 50
23
Globalization Threats to Responsible Growth

• 3. Strong competition with emerging economies
• Competition with emerging economies like India,
  China or Russia will increase (increased
  productivity, technological innovations, educated
  workforce, etc.)
• Home markets are contested (labor, products)
• Problem of short term vs. long term effects

24
Globalization Threats to Responsible Growth

• 3. Stronger competition with emerging economies
• Protectionist reactions and increasing trade
  barriers as potential consequence (e.g. based on
  environmental protection or intellectual
  property)
• Stronger integration and networks as remedy?

25
Globalization Threats to Responsible Growth

• 4. Natural Resources and Environmental Depletion
• Switzerlands wealth is partly depending on
  natural resources and landscapes
• Deterioration of natural resources and
  environment endangers future wealth
• Internalization of (negative externalities) as
  essential requirement

26
Globalization Threats to Responsible Growth

• 5. Global Climate Change
• Ongoing climate change causes environmental
  degradation ? Consequences for Switzerland
• Glacier melt reduced snow cover in winter
  
• Changes in the characteristic landscape
• Decreasing income from snow tourism
• ? Diversification of tourism sector necessary
  (e.g. promotion of summer tourism)

27
Globalization Threats to Responsible Growth

• 5. Global Climate Change
• Increased temperatures reduced water
  availability in summer
• Species migration / Reduced biodiversity
• Decrease in agricultural productivity (long term)
• Forest degradation
• Reduced productivity of hydroelectric power
  plants
• Glacier melt warming of permafrost
• Increased risk of extreme events (flooding,
  landslides)

28
Globalization Threats to Responsible Growth

• 6. International Security Problems
• Distributional inequalities cause security
  problems
• Global climate change causes international
  security problems due to a deterioration of
  natural resources and environmental quality
• Ethical questions involved

29
(No Transcript)
30
Globalization Opportunities for Responsible
Growth

• Increasing market size ? opportunities for Swiss
  technologies, e.g. environmental technologies
• Increasing environmental activities ? first mover
  advantage innovation incentives
• Immigration of highly skilled work force ?
  balancing the decline in Swiss population

31
Globalization Opportunities for Responsible
Growth

• Lower importance of industrial production as
  compared to technologies and services ?
  corresponds to comparative advantages of
  Switzerland
• Political system (democracy) as stabilizing
  factor and export product
• Role of Switzerland at the international level

32
(No Transcript)
33
Globalization Challenges for Switzerland Part
II

• Improvement of current opportunities matters
  (technology, work force quality, political
  system, environment, international activities)
• Fighting against current or potential threats
  matters
• Key areas increasing competitiveness, improving
  human resources, mitigating environmental damages

34
Globalization Challenges for Switzerland (1)
Competition

• Reduce agricultural support payments
• Remove non-tariff trade barriers
• Liberalize network industries (energy,
  telecommunications, postal services)
• Reduce costs of social spending (e.g. for health
  system)
• Warning competitive elements vs. ethical values

35
Specific Challenges for Industry, Science and
Education (2) Human Resources

• Maintain the high overall quality of education
• Increase the openness of Swiss education system
• Increase activities to form intellectual elites
• Increase interdisciplinarity (research/ teaching)
• Increase the cooperation between science and
  industry to enhance technological innovation

36
Specific Challenges for Industry, Science and
Education (2) Human Resources

• Increase the permeability between industry,
  (politics) and academia
• Improve the integration of younger and older
  persons in education and work
• Improve the integration of immigrants into the
  labor market and society
• Facilitate women's full-time participation in the
  labor market

37
Specific Challenges for Industry, Science and
Education (3) Environment, Climate

• Introduce measures to reduce consumption of
  natural resources and energy
• Strengthen the cooperation between academia and
  industry with respect to certification (life
  cycle assessments, sustainability)
• Investigate into ways to overcome myopic
  behavior/ discounting of consumers and
  politicians

38
Specific Challenges for Industry, Science and
Education (3) Environment, Climate

• Involve students of all ages in interdisciplinary
  problem solving
• With global focus develop new products within
  the area of environmental finance
• Improve and participate in international GHG
  mitigation strategies (CDM, emissions trading
  etc.)

39
Résumé

• Current global position of Switzerland is OK
• Future threats to Switzerlands wealth and
  development as well as to Swiss contributions to
  global wealth and development are significant
• Competitiveness, human resources and natural
  resources climate change are the most important
  areas

40
Résumé

• Strong collaboration of industry, science and
  education can maintain or improve Switzerlands
  position
• This cooperation enables Switzerlands
  responsible growth, i.e. a growth which also
  contributes to an improvement of the welfare
  conditions within less rich countries worldwide
  and for future generations