The strength of the world economic recovery will depend largely on whether public policies result in encouraging open markets, increasing trade, and insuring that international financial flows remain unimpeded, ICC Vice Chairman Rajat Gupta told a regional grouping of the world business organization’s national committees.
“More than ever before in our lifetimes, choices in public policy will shape the economy’s ability to rebound from the recession,” said Mr Gupta, who is also Senior Partner Emeritus at McKinsey & Company. “The right mix of policies could help lead to a long-term renewal – while misguided policy choices could slow the economy to a slow, painful crawl.”
Mr Gupta was the keynote speaker at the first meeting of the ICC Regional Coordinating Group for the Americas that brought together 13 national committees from South America, Spain and the United States. The session, chaired by Pierre Froidevaux, Chairman of ICC Mexico and a member of the ICC Executive Board, discussed the priorities of the region’s national committees, including the promotion of the ATA Carnet System in Argentina and Brazil.
Two top Chilean economists, Andres Concha and Vittorio Corbo, participated in the meetings. Mr Corbo, a member of the Chilean Centre for Public Studies, said the sustainability of the current economic recovery is not guaranteed. For it to continue, he argued, the United States will have to increase its exports and investment while emerging nations in Asia as well as Japan and Germany will have to expand their internal spending. Industrial countries, for their part,must rebuilda solid and reliable financial system.
“The world has to continue working to take advantage of the opportunities provided by the increasing integration of emerging countries into the international economy,” Mr Corbo said.
In his remarks Mr Gupta said that a positive outcome, what he called a “battered but resilient” economy, will be painful in the short run but would allow the global economy to appropriately correct its imbalances and return to sustainable growth in the long run. The other model, which Mr Gupta labelled “stalled globalization,” would result in an anaemic upturn requiring many years for the global economy to reach even barely tolerable growth-rates.
“The difference between promoting a ‘resilient’ economy and a ‘stalled’ economy depends, in large part, on whether policymakers choose open markets, open trade, and open competition – or adopt various forms of protectionism,” he said.
Mr Gupta also urged businessmen to become more involved in the debate over trade policy and speak out against protectionism. “It’s been puzzling to see the reluctance of many CEOs to engage in the debate,” he said, speculating that corporate leaders may be waiting for the anti-business sentiment the recession has spurred to recede.
“This is the moment when business statesmen should articulate how market-oriented policies benefit society as a whole,” he said. “Governments, non-profit organizations and the voters are already debating far reaching changes to our economic system, which will redefine the way business is conducted long after today’s crisis is over. It will be a far more enriching conversation for everyone if business is present at the table.”
To view a copy of Mr Gupta speech, please click here