Why Economic Slowdown

My Dear Friends

I happen to attend the seminar on global crisis by Dr. Jean-Pierre Lehmann, Professor of International Political Economy, IMD Lausanne, Switzerland & Founding Director of The EVIAN He did throw light on following issues. What do you need to do effectively in these turbulent times? What issues are keeping top executives up at night in this global crisis? What are the prospects for globalization and implications for India?

I am here with highlighting the crux of it. 1. The global business environment has undergone the most profound transformation since last two centuries Driven by the global market and ICT revolution Collapse of the first and second /third world paradigm The dramatic re –emergence of China

2. 3. 4.

5. The emergence of multiple new actions and instruments –eg: Mittal steel, Google, CNOOC, SWIF, etc 6. 7. 8. The closing of the developing –developed countries gap With significant global benefits-but very unevenly spread Unprecedented opportunities and threats.

The reasons for global crisis are : 1) 2) 3) 4) Excessive Liquidity and Cheap credit The “Chimerica effect” Absence of rules and oversight Institutional deficiencies

Why Economic Slowdown
5) 6) 7) 8) Hubris Defective corporate governance (incentives and greed0 Technology (the pompidou syndrome) Huge commodity/energy price volatilizes

The crisis consequences: 1. 2. 3. 4. 5. 6. 7. 8. Tight credit squeeze-eg; trade finance Collapse in demand Recession /low growth Decline in world trade Massive government intervention Dismal social consequences Rising protectism Failure of G20

Global Systematic Crisis 1. 2. 3. 4. 5. 6. 7. 8. 9. Institutional crisis Financial crisis Trade crisis Food crisis Water crisis Fisheries crisis Energy crisis Geopolitical crisis Crisis in confidence

Why Economic Slowdown
10. 11. 12. 13. 14. 15. 16. 17. 18. Environmental crisis Looming climate change crisis Poverty /Inequality crisis Crisis of capitalist (market economy ) Health (AIDS/HIV) crisis Value crisis (greed) Youth Unemployment Crisis Leadership crisis US crisis

As long as we rely on technical fixes to plug moral gaps and governments rush in with rescue packages that enable the merry-go-round to start up again, we are bound to keep lurching from frenzy to frenzyBy Robert Skidelsky

50% of the world population have less than 1% of global wealth

Thoughts and Suggestions by the Evian Group 1. 2. 3. 4. 5. 6. 7. 8. Fair Rules Strong Institutions to implement them The ethics to drive them The entrepreneurs to create wealth Inclusivity to empower those to the BOP The technologies to mitigate adversities The imperative to focus on the next generation Mind sets for Knowledge :

Why Economic Slowdown
9. 10. 11. 12. Never extrapolate –do not believe in forecasts Think holistically and laterally –not in logical and linear fashion not confuse wishful thinking with analysis Seek diverse and conflicting sources of information

13. Learn from Darwin –not the strongest , not the most intelligent , but the most adaptive to change will sustain 14. Be prepared for the Black swan.

Best Regards. Ms. Bindu Rathore

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