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									       Responsible Growth in a Global World –
       Opportunities and Threats

       Prof. Dr. Renate Schubert




Rüschlikon, 14./15.11. 2008
Overview
 What is Responsible Growth?
 Globalization - Strengths/Weaknesses of
     Switzerland
 Globalization - Threats to Responsible Growth
 Globalization - Opportunities for Responsible
     Growth
 Globalization - Challenges for Switzerland
 Specific Challenges for Industry, Science and
     Education
Rüschlikon, 14./15.11.2008                        2
What is Responsible Growth?

 Responsible growth means that an economy is
      growing such that future generations and other
      countries/regions have similar growth
      opportunities
 Close relation to the notion of sustainability: to
      satisfy the needs of today‟s generation without
      endangering the satisfaction of future
      generations„ needs
Rüschlikon, 14./15.11.2008                              3
Some Determinants of Responsible
Growth
 Strong and reliable institutional framework
 Well educated workforce
 Efficient and flexible labor markets
 Stable macroeconomic conditions
 Technological innovations
 Open markets

Rüschlikon, 14./15.11.2008                      4
Some Determinants of Responsible
Growth

 Protection of natural resources and environment
 Climate change mitigation
 Development assistance
 International cooperation




Rüschlikon, 14./15.11.2008                          5
Which are the Challenges for
Switzerland? – Part I

 As we will see, Switzerland„s current position is
     not bad
 However, threats are significant and increasing
 Key areas of action have to be identified




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Globalization – Strengths of Switzerland

 Global comparison: Switzerland is well positioned
 1) Global Competitiveness Index 2008
    (World Economic Forum)
           Switzerland ranked 2nd of 134 after the
            United States for its overall competitiveness
           ranked 2nd for its sophisticated business
            culture and 3rd for its innovation capacity

Rüschlikon, 14./15.11.2008                                  8
Globalization – Strengths of Switzerland


2) World Competitiveness Yearbook 2008
   (IMD Lausanne)
         Switzerland ranked 4 of 55 after the
          United States, Singapore and Hong Kong




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Globalization – Strengths of Switzerland

 3) Economic Freedom of the World-Index 2008
    (Fraser Institute)
          Switzerland ranked 4 of 141 after Hong
           Kong, Singapore and New Zealand for its
           overall economic freedom




Rüschlikon, 14./15.11.2008                           10
Globalization – Strengths of Switzerland

 Strengths (GCI 2008)
 Quality of research institutions             rank 1
 Company spending on R&D                      rank 1
 University-industry research collaboration   rank 2
 Quality of educational system                rank 3
 Quality of overall infrastructure            rank 1
 Financial market sophistication              rank 1
 Efficiency of legal framework                rank 3
Rüschlikon, 14./15.11.2008                             11
Globalization – Weaknesses of
Switzerland

 Weaknesses (GCI 2008)
 University enrollment rate        rank 45
 Prevalence of trade barriers      rank 80
 Government debt                   rank 99
 Strength of investor protection   rank 113
 Agricultural policy costs         rank 118


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Rüschlikon, 14./15.11.2008   13
Globalization – Threats to Responsible
Growth
1. Increased sensitivity to external economic volatility
2. Demographic shift and human resources
3. Strong competition with emerging economies
4. Natural resources and environmental depletion
5. Global climate change
6. International security problems

Rüschlikon, 14./15.11.2008                                 14
Globalization – Threats to Responsible
Growth
1. Increased sensitivity to external economic
  volatility
 International integration leads to increased
      sensitivity to disruptions emanating from global
      markets (e.g. global financial crisis)
 Increased dependence of single countries on the
      world economic situation

Rüschlikon, 14./15.11.2008                               15
Globalization – Threats to Responsible
Growth
2. Demographic Shift and Human Resources
 Swiss population will be declining and getting
      older
 Social insurance schemes will be at risk
 New ways to profit from older persons‟ work and
      life experience are needed


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Human Resources and Demography

Population in Switzerland
Peak reached in 2025

                                               Population in Switzerland - outlook
                          7900000
                          7800000
                          7700000
                          7600000
             Population




                          7500000
                          7400000
                          7300000
                          7200000
                          7100000
                          7000000
                                 2000   2005   2010   2015   2020   2025    2030    2035    2040    2045    2050
                                                             source: US Census Bureau - international data base

Rüschlikon, 14./15.11.2008                                                                                         17
Human Resources and Demography

 Population pyramides in Switzerland




Rüschlikon, 14./15.11.2008              18
Globalization – Threats to Responsible
Growth
2. Demographic Shift and Human Resources
 Longer working lives for all people make sense
 A good education for younger people is required
     to sustain a high GDP level
 Until now the university enrolment in Switzerland
     is relatively low (27% of university degree
     holders vs. 36% in OECD; 7.7% vs. 9.1% for
     science + engineering)
Rüschlikon, 14./15.11.2008                          19
Globalization – Threats to Responsible
Growth
2. Demographic Shift and Human Resources
 Qualified immigration may be desired (economic
      vs. cultural effects)
 Current “new” immigration is qualified (20%
      60% with bachelor or more)
 Fields: R&D, informatics, education, finance and
      insurance (high value added)
Rüschlikon, 14./15.11.2008                       20
Globalization – Threats to Responsible
Growth
2. Demographic Shift and Human Resources
 Female labor force is not used “adequately”
 High female participation in the labor market
      (60%)
 BUT extremely high share of part time work (due
      to child care and domestic work)


Rüschlikon, 14./15.11.2008                        21
   Human Resources and Demography
       Level of employment in Switzerland, 1991 and 2007


Female




Male




                                 Full time 90-100%   Part time 50-89%   Part time less than 50%


    Rüschlikon, 14./15.11.2008                                                                22
Globalization – Threats to Responsible
Growth
3. Strong competition with emerging economies
 Competition with emerging economies like India,
      China or Russia will increase (increased
      productivity, technological innovations, educated
      workforce, etc.)

 Home markets are contested (labor, products)
 Problem of short term vs. long term effects

Rüschlikon, 14./15.11.2008                                23
Globalization – Threats to Responsible
Growth
3. Stronger competition with emerging economies
 Protectionist reactions and increasing trade
      barriers as potential consequence (e.g. based on
      environmental protection or intellectual property)

 Stronger integration and networks as remedy?




Rüschlikon, 14./15.11.2008                                 24
Globalization – Threats to Responsible
Growth
4. Natural Resources and Environmental Depletion
 Switzerland‟s wealth is partly depending on
      natural resources and landscapes
 Deterioration of natural resources and
      environment endangers future wealth
 Internalization of (negative externalities) as
      essential requirement

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Globalization – Threats to Responsible
Growth
5. Global Climate Change
Ongoing climate change causes environmental
degradation  Consequences for Switzerland:
Glacier melt & reduced snow cover in winter
          -     Changes in the characteristic landscape
          -     Decreasing income from snow tourism
                 Diversification of tourism sector necessary (e.g.
                promotion of summer tourism)

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Globalization – Threats to Responsible
Growth
5. Global Climate Change
 Increased temperatures & reduced water
      availability in summer
        -     Species migration / Reduced biodiversity
        -     Decrease in agricultural productivity (long term)
        -     Forest degradation
        -     Reduced productivity of hydroelectric power plants
 Glacier melt & warming of permafrost
        -     Increased risk of extreme events (flooding, landslides)
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Globalization – Threats to Responsible
Growth
6. International Security Problems
 Distributional inequalities cause security
      problems
 Global climate change causes international
      security problems due to a deterioration of
      natural resources‟ and environmental quality
 Ethical questions involved
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Globalization – Opportunities for
Responsible Growth

 Increasing market size  opportunities for Swiss
      technologies, e.g. environmental technologies
 Increasing environmental activities  first mover
      advantage + innovation incentives
 Immigration of highly skilled work force 
      balancing the decline in Swiss population

Rüschlikon, 14./15.11.2008                            30
Globalization – Opportunities for
Responsible Growth

 Lower importance of industrial production as
      compared to technologies and services 
      corresponds to comparative advantages of
      Switzerland
 Political system (democracy) as stabilizing factor
      and „export product“
 Role of Switzerland at the international level
Rüschlikon, 14./15.11.2008                         31
Rüschlikon, 14./15.11.2008   32
Globalization – Challenges for
Switzerland – Part II
 Improvement of current opportunities matters
(technology, work force quality, political system,
environment, international activities)
 Fighting against current or potential threats
matters
Key areas: increasing competitiveness, improving
human resources, mitigating environmental
damages
Rüschlikon, 14./15.11.2008                           33
Globalization – Challenges for
Switzerland: (1) Competition

 Reduce agricultural support payments
 Remove non-tariff trade barriers
 Liberalize network industries (energy,
       telecommunications, postal services)
 Reduce costs of social spending (e.g. for health
       system)
 Warning: competitive elements vs. ethical values
Rüschlikon, 14./15.11.2008                           34
Specific Challenges for Industry, Science
and Education: (2) Human Resources
 Maintain the high overall quality of education
 Increase the openness of Swiss education
      system
 Increase activities to form intellectual elites
 Increase interdisciplinarity (research/ teaching)
 Increase the cooperation between science and
      industry to enhance technological innovation

Rüschlikon, 14./15.11.2008                            35
Specific Challenges for Industry, Science
and Education: (2) Human Resources
 Increase the permeability between industry,
      (politics) and academia
 Improve the integration of younger and older
      persons in education and work
 Improve the integration of immigrants into the
      labor market and society
 Facilitate women's full-time participation in the
      labor market
Rüschlikon, 14./15.11.2008                            36
Specific Challenges for Industry, Science
and Education: (3) Environment, Climate
 Introduce measures to reduce consumption of
        natural resources and energy
 Strengthen the cooperation between academia
        and industry with respect to certification (life
        cycle assessments, sustainability)
 Investigate into ways to overcome myopic
        behavior/ discounting of consumers and
        politicians
Rüschlikon, 14./15.11.2008                                 37
Specific Challenges for Industry, Science
and Education: (3) Environment, Climate
 Involve students of all ages in interdisciplinary
        problem solving
 With global focus: develop new products within
        the area of environmental finance
 Improve and participate in international GHG
        mitigation strategies (CDM, emissions trading
        etc.)

Rüschlikon, 14./15.11.2008                              38
Résumé

 Current global position of Switzerland is OK
 Future threats to Switzerland‟s wealth and
        development as well as to Swiss contributions to
        global wealth and development are significant
 Competitiveness, human resources and natural
        resources + climate change are the most
        important areas


Rüschlikon, 14./15.11.2008                             39
Résumé

 Strong collaboration of industry, science and
        education can maintain or improve Switzerland„s
        position
 This cooperation enables Switzerland„s
        responsible growth, i.e. a growth which also
        contributes to an improvement of the welfare
        conditions within less rich countries worldwide
        and for future generations

Rüschlikon, 14./15.11.2008                                40

								
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