Economic challenges

Economic challenges of globalisation

A debate about the economic problems troubling  contemporary Europe makes us realise that we can no longer think, not to say act, only locally. One of the fundamental dimensions of globalisation is the universalisation of economic problems and processes. Maintaining positive economic development indices requires us to quickly make up for extended historical negligence which can pose a threat to the EU's economic future. In times full of commotion, it is of the utmost importance to follow the rules of the market economy and to responsibly define the level of budget deficit as cost of debt may prove to be too heavy a burden, slowing down economic growth. Marek Belka, President of the National Bank of Poland, stated that especially in such turbulent times with such a high public debt, markets cannot forget about watching this closely and expecting that money will be used more effectively. It is of utmost importance to maintain the costs of debt servicing at the present level. During the plenary session entitled "How to make up for the lost time" Paul Jorion from France pointed out that according to the recent data included in rankings presenting the competitiveness of economies, prepared for the World Economic Forum in Davos, Switzerland, Sweden and Singapore have moved to the top places whereas the USA has fallen to fourth place. The economic climate is changing and it affects the competitiveness of these countries. 

Already in the nineties Sweden had to make a turn to the 'doing-business' direction whereas in the USA there are ever more limitations and burdens. The necessity of limiting public debt levels was emphasised by Luc Frieden, Minister of Finance in Luxemburg. Unless public debt level is reduced citizens of particular countries may expect only increasing taxes, a tougher financial situation and belt tightening. Unfortunately, while watching what European and also national politicians are doing one may come to the conclusion that they pay much more attention to other issues than the proper balancing of expenditure and revenues in particular countries – concluded the Minister of Finance in Luxemburg. 

Each country goes through crisis in its own way and expects aid also from its neighboring countries. Arsenij Jaceniuk, Chairman of the "Front Zmin" party contributed to the debate about the current world crisis by making a reference to his country's situation. Crisis in Ukraine caused GDP to fall in 2009 by approximately 15%. Ukraine is a huge country which needs free access to international markets where it can supply food. "It is easily predictable that the world is headed for another food crisis in the very near future and we may prove to be helpful in this respect," declared the former Chairman of the Ukrainian Parliament. Debating the current crisis, its repercussions and, first of all, its consequences Walter Radermacher, General Director of Eurostat, pointed out that Eurozone crisis was caused by providing false economic data, which undermined the trust European countries had in one another. In the name of responsibility for the state and for the entire EU organism we have to "prevent falsification of  data and we have to show true figures." He gave assurances that upon adopting Strategy 2010 the European Union defined its goals for the next ten years. A completely different crisis dimension was presented by Bernard Wientjes, Chairman of the the Confederation of Netherlands Industry and Employers (VNO – NCW). The Netherlands is a relatively small country, which, however, has the sixteenth strongest economy in the world and occupies seventh place in the banking sector. Therefore, the crisis has to be perceived as an opportunity. The fact that we are recovering from the current crisis does not mean that everything is already fixed. He expressed his conviction that "We have to be prepared for crises to come within five or ten years.

Differences in the level of particular countries' development are compensated for at a different pace. According to Christian Wiest, Executive Vice President Customers & Alliances at Schneider Electric from France, today the most important challenge for concerns operating globally is being able to do business in different areas while taking into consideration their specific character and local, and national peculiarities. Contemporary Europe has got its advantages compared to other parts of the world – proximity of other well-developed markets and a high level of education. However, new regions of the world are systematically overcoming their limitations and hence becoming more competitive. An important asset of the European Union as a global market player is its uniform market.

Download: Economic challenges of globalisation