Stéphane Garelli is considered a leading authority on world competitiveness, which he teaches at IMD and at the University of Lausanne, having pioneered this new field of economics and founded the World Competitiveness Center. Formerly a managing director of the World Economic Forum and of the Davos Annual Meetings, Stéphane Garelli has also been an advisor… to the management of several large international companies, and chairman of the FF Sandoz Financial and Banking Holding. He is a member of a number of institutes worldwide and currently the chairman of the Swiss newspaper Le Temps. He was also a member of the Constitutional Assembly of his regional state in Switzerland.
The subprime crisis, which raised the spectre of a new Great Depression, has left the world economy deeply scarred. Six years on, the so-called advanced economies are still caught in profoundly modified cycles. Prior to 2008, cyclical development was composed primarily of robust growth with bouts of recession. Not so today, with only soft growth boosted by slightly stronger bursts. According to Stéphane Garelli, professor of world competitiveness at IMD, this trend reversal has deeper roots, in globalisation.
“Between 1980 and 2010, the United States, Europe and Japan invested massively in the emerging economies. Some three thousand billion dollars in all, and for what results?” he asked at the 6th Forum de la Haute Horlogerie. “For wide-scale deindustrialisation in developed countries while exports from the new tigers have surged, creating unprecedented foreign reserves.” Granted, not everyone has lost out to globalisation. True multinationals such as Apple, Microsoft and Google have come out well on top, and are now sitting on huge piles of cash. These insatiable giants use this “war chest” to keep on growing through acquisitions. It also benefits their shareholders, possibly even their employees, but definitely not the countries in which they do business, now that tax evasion has become an international sport that commands a new generation of referees.
While companies may do little to support government efforts to stimulate growth, as the revelation of Luxembourg’s tax rulings recently showed, not to mention debt overload in many countries, they still have a role to play in job creation. Except that unemployment rates, particularly among the young, suggest that any change for the better on this front remains tantamount to wishful thinking. This certainly isn’t the case in emerging countries where homegrown champions are fast becoming tomorrow’s global corporations, across every sector. One figure says it all: one thousand companies from these emerging economies generate revenue in excess of one billion dollars, while their share of the “Fortune Global 500” list increases accordingly.
Must we conclude that consumer behaviour, that pillar of the economy, has fundamentally changed? Stéphane Garelli points to one development that is typical of periods of prosperity: in industrialised countries, households no longer make utilitarian purchases, motivated by necessity, but instead consume for pleasure. This has led to the erratic growth observed these past years, due in particular to a drop in purchases in consumerist societies. But as Stéphane Garelli remarks, quoting George Bernard Shaw, “the future perhaps isn’t so bleak, because while our necessities are few, our wants are endless.”
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