New economic narratives and two Davos
More than two years after the Lehman bankruptcy, many rich countries continue to muse about free market capitalism, wondering whether we are entering a “new reality”. The revival of state capitalism seems to strike fear in any discussion about new economic narratives. This year’s Davos, where the political and business elite will gather to brainstorm, is aptly titled “Shared Norms for the New Reality”.
In the capitals of emerging economies, however, I rarely hear such philosophical musing. Dinner conversations with policy-makers and business leaders in Beijing, Hanoi or Manila are more likely about a wide range of very specific topics on how and what, not why or why not. Where should we re-allocate our SWF capital when there is a complete lack of visibility over the direction of the US economy and politics? What can this government do, now, to attract “patient money” into bankable infrastructure projects?
Many emerging economies long ago seem to have started to live, breathe, and position themselves to compete, in the new reality. Meanwhile, the Tea Party garnered more support in the US as people seem to prefer old reality over the new one, while the Europeans are outraged when they were told that they cannot live beyond their means and that lunch breaks for their kids, by the time they grow up, may have to be a lot shorter, if they have jobs at all.
So while I am packing for my Swiss Air flight, I see two Davos that will unfold this week in the beautiful snowy mountains of Switzerland. One is likely to be dominated by nostalgia, hesitation, soul-searching and possibly frustration. The other is likely to be far less philosophical. The latter will look at not only what the new economic narratives would be for the 21st century, but much more importantly how exactly each country could position itself competitively in this new landscape.
When De Xiaoping made his famous comment on black and white cats, and when the succession of Chinese leaderships refuse to debate whether a particular policy is “named after She (socialism)” or “named after Zi (capitalism)”, the Chinese have figured out something that so far has escaped the mainstream Western discourse. That is what we need today is what works or what is more likely to work, not what looks better, or what could have been better, or what sounds morally more righteous, or what gets you more votes, or what appears less painful. Denial about the past or musing about the new reality gets a country nowhere. Decisive policy-making based on rational thinking and necessary trade-offs does. A country with that ability will adapt itself to the new reality, whatever that might be according to Davos.
Kevin Lu is the World Bank Group's Multilateral Investment Guarantee Group's (MIGA) Director for the Asia-Pacific Region. In this capacity, Mr. Lu serves as the senior representative of MIGA in the region, manages relationships with key regional clients and partners, oversees regional business development activities, and runs MIGA’s regional presence in Hong Kong, Singapore, Beijing, and Tokyo. Mr. Lu is a member of MIGA’s Senior Management Team.
| January 23, 2011; 3:45 PM ET
Categories: Kevin Lu
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