Catarina's World

Now the permanent stewards of the world economy, will G20 keep the momentum going by improving the global economic regime that has been crafted over the years?

Will G20 leaders from developing countries manage to make their colleagues from the West realize that in order for the world economy to work properly, there need to be advantages for the poor as well?

G20 has come a long way – the new kid on the block in 2004 is now the leader of the pack. It started as an alliance to bring democracy to world trade at the WTO talks in Cancun and has become the main permanent body in the world responsible for economic co-operation, meeting annually at the leaders level

Hopefully G20 will not forget the importance of world trade. Will G20 again, manage to have an impact on world trade? The WTO trade talks in Cancun, as you may remember, collapsed as a result of G20 demanding fairer trade. If so, what strategies will be deployed to negotiate a trade deal that benefits not only multinationals in the North but also the poor in the South? How will G20 make the world focus on making international trade rules fairer? What steps will be taken to decrease rich countries protectionist policies?

G20 is now the key player on the global scene which, at least in theory, enables it to provide the conditions for developing countries to embark on peace, prosperity and pluralism. We have come a long way from G8 to G20 and it will go further. The developing world, representing four-fifth of humanity, is now much better represented on the global scene.

Poverty does not cause terrorism – but it causes frustration and resentment that help foster the kind of atmosphere in which extremist groups can thrive. A much better, and cheaper, way of defeating extremists than war on terrorism would be to give developing countries the possibility to trade out of poverty.

Trade has been shown to be the indispensable means for poverty reduction and growth. There also seems to be a close correlation between a country engaging in open trade and ultimately embracing democracy. With 40 percent of humanity living on less than $2 a day and approximately a billion living under military style dictatorships often engaged in civil war and genocide, we should care a lot. The most striking example of the benefits of a trade oriented economy versus a closed, self-sufficient one is the two Koreas. At the end of the Korean war in 1952 they were both extremely poor. And how North and South Korea have developed since then under their different systems is well known.

What will G20 do to craft a fairer world trade order? Most Westerners would like a fair global economic system. If, for instance, the issue of access to life-saving Aids drugs were put to a vote, the overwhelming majority would not support the position of Western pharmaceutical companies. The power of special interests is high – but will it still be if trade moves up the political agenda in G20? And once that has happened, will people in the West agree to anything that asks the poorest people in the world – the billions living on less than $2 a day – to pay the price? Will G20 leaders from developing countries manage to make their colleagues from the West realize that in order for the world economy to work properly, there need to be advantages for the poor as well? That’s the big question isn’t it ,and my hope is that they will succeed so that we can finally unlock the benefits of the world economy for all.

(Photo:www.flickr.com/photos/londonsummit/href=”http://www.flickr.com/photos/londonsummit)

Everything and everyone is a product. A country, a city, a company, a product, a service a person – yes you and me included. And how the market perceives the product determines its value. It’s sounds cynic, I know. But if you want a high value and be sought for on the market you have to create a brand that is in demand and sells.

Want to be assiciated with Chanel or Wall-Mart? Depends on which market you are aiming for.

And then when the product is a success all of a sudden the brand matures, growth slows and it comes under pressure from competitors. This is the time to start innovating and spending again if you want to defend your market position. If not ,don’t complain if nobody wants to hire you, go on holiday to your country, do business with your company or buy the wonderful product or service you are selling.

You may object that some brands, like Cornflakes, or Chanel for that matter, have been around for a long time. But what we buy today is very different from the same product 50 years ago, not least when it comes to packaging and design. If your personal brand is out of date you will have to make an investment to innovate yourself. Maybe learn a new skill, have a make-over or simply learn how to better promote yourself? How you want to be perceived depends on what market you are aiming for.

When it comes to countries, Europe and the US have matured and competitors are moving in. But the West seem to take their current status for granted and the only thing they are doing to defend their market position is protectionism, unfortunately. And they really have to do much more if they want to keep their position in this globalised world. What happened to innovation and making their markets more attractive to investors not to mention more business friendly?

Nowadays it’s irrevocably one global market. And Sweden, to my great surprise, hasn’t wholeheartedly joined. Sweden as a product has matured badly and needs to innovate to get back the position it had on the market in the 60′s and 70′s. Join the global market wholeheartedly, reduce corporate taxation drastically and realize that there is a reason that Sweden’s unemployment is more than twice as high as it’s neighbours Denmark and Norway would make a good start. But there doesn’t seem to be any political will to do so.

More and more Swedish companies are using IT consultants in India. Naturally the Swedes, not least the trade unions, don’t like that. They conveniently forget that the main objective of a company is to make money. And using Indian IT consultants is far cheaper than using their Swedish counterparts. On top if it India, unlike Sweden, has four universities that when it comes to IT are on par with MIT. Unless taxation in Sweden, i.e. the politicians, change we will see more and more Swedish companies outsourcing IT to India.

Obviously this is not only happening in Sweden but in the West as a whole and there is no stopping it. Look at all the out-sourced call centres, for instance. Since it is an issue that is not going away I’m surprised that not more is being done in the West to adapt to the global market. It surprises me that we are not facing up to the issue.

Globalisation is irrevocably the governing principle of commerce. That does not mean it is popular everywhere. The US will continue to lose relative power because of globalisation. It’s ironic that thanks to its generosity in exporting the secrets of success, China and other emerging giants are catching up. Public support for protectionism has hence surged in the United States. But there is only so much current protectionism can achieve. Look at the way China is surging, despite Western protectionism.

Developing nations are not going to cede power to the US and Europe out of gratefulness. So it’s time for the West to face up to reality – their brand is loosing out. It’s time to innovate and make it profitable for businesses again to stop them moving to other parts of the world.

(Photo Handosh Flickr)

G20 rich and emerging countries have been quite successful in holding protectionist pressures in check in recent months.

Will G20 leaders continue to be successful in keeping trade protectionism at a minimum?

However, some G20 countries, in contradiction to pledges at their London and Pittsburgh summits last year, have actually implemented new measures to restrict trade. Luckily however their scope has been limited and the group has continued to avoid an escalation of protectionism.

The Financial Times noted that the new import-restricting measures imposed over the past six months by G20 countries had affected at most 0.7 percent of G20 goods imports. Or to put it in another way – or 0.4 percent of world imports about half the increase in the previous six months.

G20 must remain vigilant however since when a global recession is easing off the temptation to resort to protectionism is huge. And we don’t want the world to go down that road, do we? In today’s global market it is of vital importance to facilitate trade and not to restrict it, so let’s hope G20 continues to battle protectionism.

(photo:downingstreet – flickr)