Saturday, September 6, 2008

Ambassador Robert Blake, at Carsons Undergraduate Convention: Opportunities and challenges in the globalized world

Opportunities and challenges in the globalized world

"Rohan Weerasinghe graduated from Harvard College and then earned a joint MBA and law degree from Harvard Business School and Law School. He is now the senior partner at Shearman and Sterling, a major Wall Street law firm, and the first Asian to head a Wall Street firm.

Raj Rajaratnam received his MBA from the University of Pennsylvania and founded the Galleon Fund which is one of the largest hedge funds in the world managing more than $5 billion in assets.

Jayantha Dhanapala earned a BA at the School of Oriental and African Studies, University of London, UK and an MA from American University in Washington D.C. He capped an extraordinary diplomatic career by serving as Under-Secretary General for Disarmament Affairs.

Rohan de Silva studied at the Royal Academy of Music and The Juilliard School in New York and is widely recognized as one of the world great pianists.

Radhika Coomaraswamy received her BA from Yale University, and a law degree from Columbia University. She is now Under-Secretary-General, Special Representative for Children and Armed Conflict" - US Ambassador Robert Blake
US Ambassador Robert Blake's Remarks for the Carsons Undergraduate Convention, September 4, 2008:

Students, parents, friends, first let me congratulate Carsons Management Services for organizing this gathering.

I thought I would use this opportunity to talk to you a little about the globalized world you will be entering, the tectonic changes that are taking place, and the opportunities and challenges you will face.

[Ambassador Robert Blake, at Carsons Undergraduate Convention, September 4, 2008]

It might be appropriate to start by defining globalization. My boss, Secretary of State Condoleezza Rice in a recent speech characterized globalization as the interdependence among peoples and governments and the rapid international movement of information, money, technology and people. She said these are the main drivers of change in the world today. They are transforming our world in two important ways.

First, globalization is empowering those nations that can seize its benefits, and at the same time, it is revealing the weaknesses of many others and their inability to govern effectively. She said America’s greatest foreign policy challenge will come from the many states that are too weak, too corrupt or too poorly governed to be able exercise their basic responsibilities like policing their territory, governing justly, enabling the potential of their people and preventing the threats that gather within their countries from destabilizing their neighbors and, ultimately, the international system.

David Rothkopf, of the Carnegie Endowment, takes Secretary Rice’s argument one step further. He says that one of the major challenges of our time is the waning power of nation states which is creating a void. That void is being filled by a new “superclass,” a new global elite who are much more nimble in operating on the global stage and influencing global outcomes than the vast majority of national political leaders. Many of this new superclass are leaders from business such as Bill Gates, entertainment such as Bono, and academics such as Jeffrey Sachs, who is a Professor of Sustainable Development at Columbia University and Special Advisor to U.N. Secretary-General Ban Ki-moon. But some of them also are criminals such as the notorious arms dealer Victor Bout (who is now in custody) and terrorists like Osama Bin Laden.

Another Perspective

Richard Haass, the President of the respected Council on Foreign Relations in New York, provided another perspective in a recent article. Haass believes the days when the U.S. was the world’s only superpower are now over. Power in international relations in the twenty-first century will be more diffuse and shared by nonstate actors.

Haass tells us that at first glance, the world today appears to be multipolar. The great powers – the United States, China, the European Union (EU), India, Japan, and Russia -- contain just over half the world's people, and account for 75 percent of global GDP and 80 percent of global defense spending. But those statistics can be misleading, he argues, because there are many more power centers. One of the new features of today’s globalized world is that nation-states have lost their monopoly on power. They are being challenged by regional and global organizations; from below, by militias; and from the side, by a variety of nongovernmental organizations (NGOs) and corporations. In sum, power is now found in many hands and in many places.

Economic power also is becoming diffused, Haass tells us. Sovereign wealth funds, that is government-controlled pools of wealth, mostly from oil and gas exports in countries such as Kuwait, Russia, Saudi Arabia, and the United Arab Emirates now total some $3 trillion. These are part of a massive wealth transfer that is taking place from oil importing countries to oil exporters. These wealth funds are growing at a projected rate of $1 trillion a year and will continue to do so for the foreseeable future because energy prices are likely to remain high, driven mostly by the surge in Chinese and Indian demand.

Is Multi-Polarity A Bad Thing?

Some people are worried that the diffusion of global political and economic power is a bad thing. David Brooks, a respected columnist for the New York Times recently wrote that ever since the Berlin Wall fell in 1989, people have looked at the way President Harry Truman, Secretary of State George C. Marshall and others created forward-looking global institutions after World War II, and they’ve asked: Why can’t we rally that kind of international cooperation to confront terrorism, global warming, nuclear proliferation and the rest of today’s problems?

Brooks’ answer is that, in the late 1940s, global power was concentrated and global leadership rested on the Atlantic alliance. The United States accounted for roughly half of world economic output. Today power is dispersed with the rise of China, India, Brazil and the rest.

Brooks contends that while some think dispersion of power should be a good thing, in practice, multipolarity means that more groups have effective veto power over collective action. Put another way, this new pluralistic world has given rise to what Brooks aptly calls “globosclerosis,” that is an inability to solve problem after problem.

As an example, Brooks points to the recent failure of multilateral talks in Doha to liberalize global trade. He argues that the Doha round collapsed, despite broad international support, because India’s Congress Party did not want to offend small farmers in the run up to India’s national elections next year, and because Chinese leaders refused to compromise in defending their cotton and rice producers.

Brooks provides other examples. The world has failed to effectively end genocide in Darfur because China needs oil from Sudan and has therefore blocked more aggressive UN action in Darfur. Chinese and Russian vetoes foiled efforts to impose sanctions on Zimbabwe. Similarly the world has failed to implement effective measures to deter Iran’s nuclear ambitions. The world has failed to embrace a collective approach to global warming. In each case, the logic is the same. Groups with a strong narrow interest are able to block larger groups with a diffuse but generalized interest.

Not so Fast

Others are not so pessimistic about the global future or the loss of U.S. influence in the world. Fareed Zakaria, the editor of Newsweek International, has written a much discussed book called the Post American World in which he documents the rise of countries like China, India, Brazil and Turkey, but also provides a cogent argument to show that the United States will remain a vital, vibrant economy, at the forefront of the next revolutions in science, technology, and industry. Let me briefly summarize Zakaria’s view.

Zakaria demonstrates that improved communications technologies have leveled the global playing field, allowing capital to move freely across the world. The United States has benefited massively from these trends. The US economy has received hundreds of billions of dollars in investment, and its companies have entered new countries and industries with great success.
Zakaria highlights several indicators to prove his point:

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The World Economic Forum currently ranks the United States as the world's most competitive economy.
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GDP growth has averaged just over three percent in the United States for 25 years, significantly higher than in Europe or Japan.
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Productivity growth has been over 2.5 percent for a decade now, a full percentage point higher than the European average.

America’s leading role is likely to continue, Zakaria argues. By way of example, he cites nanotechnology which is likely to lead to fundamental breakthroughs over the next 50 years, and is a field dominated by the United States. The US has more dedicated "nanocenters" than the next three nations (Germany, Britain, and China) combined and has issued more patents for nanotechnology than the rest of the world combined, illustrating America’s unusual ability to turning abstract theory into practical products.

The same is true for Biotechnology. Biotechnology revenues in the United States approached $50 billion in 2005, five times as large as the amount in Europe and representing 76 percent of global biotechnology revenues.

Zakaria acknowledges that manufacturing has been leaving the U.S. to the developing world, transforming the United States into a service economy. But outsourcing has strengthened U.S. competitiveness. He shows that the real money is in designing and distributing products -- which the United States dominates -- rather than manufacturing them. A vivid example of this is the iPod: it is manufactured mostly outside the United States in countries such as China, but most of the added value is captured by Apple, in California.

Why is the U.S. still leading the world in 21st century products such as nano and biotechnology? Zakaria says it is because higher education is the United States' best industry. He cites a 2006 report from the London-based Center for European Reform which points out that the United States invests 2.6 percent of its GDP in higher education, compared with 1.2 percent in Europe and 1.1 percent in Japan.

He also points to studies that show that the United States, with five percent of the world's population, has either seven or eight of the world's top ten universities and between 48 and 68 percent of the top 50. The situation in the sciences is particularly striking. In India, universities graduate between 35 and 50 Ph.D.'s in computer science each year; in the United States, the figure is 1,000. A list of where the world's 1,000 best computer scientists were educated shows that the top ten schools are all American.

The United States also remains by far the most attractive destination for students, taking in 30 percent of the total number of foreign students globally, and its collaborations between business and educational institutions are unmatched anywhere in the world. Zakaria argues these advantages are likely to be sustained because the structure of European and Japanese universities -- mostly state-run bureaucracies -- is unlikely to change. And while China and India are opening new institutions, it is not easy to create a world-class university in even a few decades.

Let me take shameless advantage of this opportunity to put in a brief plug. This Friday and Saturday at the Hilton Hotel, the US Embassy will be hosting our first ever education fair at which American representatives from 22 U.S. Universities will be available to meet Sri Lankan students to talk about undergraduate and graduate study opportunities in the U.S. I hope all of you will come.

Returning to my topic, Zakaria interviews Singapore's minister of education, who explains the difference between his country's system and that of the United States as follows. "We both have meritocracies, America’s is a talent meritocracy, ours is an exam meritocracy. We know how to train people to take exams. You know how to use people's talents to the fullest. Both are important, but there are some parts of the intellect that we are not able to test well -- like creativity, curiosity, a sense of adventure, ambition. Most of all, America has a culture of learning that challenges conventional wisdom, even if it means challenging authority."

Zakaria also points to another crucial advantage the US has over Europe and most of the developed world that will help America sustain its pre-eminent economic and technological advantage: the United States is demographically vibrant. He cites studies that estimate that the U.S. population will increase by 65 million by 2030, whereas Europe's population will remain "virtually stagnant." Moreover, Europe by 2030 will have more than twice as many seniors older than 65 than children under 15, with drastic implications for future aging. (Fewer children now means fewer workers later.) In the United States, by contrast, children will continue to outnumber the elderly.

The only real way to avert this demographic decline is for Europe to take in more immigrants. But Zakaria says that “European societies do not seem able to take in and assimilate people from strange and unfamiliar cultures, especially from rural and backward regions in the world of Islam. The question of who is at fault here -- the immigrant or the society -- is irrelevant. The reality is that Europe is moving toward taking in fewer immigrants at a time when its economic future rides on its ability to take in many more.” The United States, on the other hand, is famously an immigrant nation made up of all colors, races, and creeds, living and working together in considerable harmony.

Zakaria tells us the effects of an aging population are considerable:

-- Fewer workers must pay higher taxes to support the pensions of the growing elderly population.

-- A smaller working-age population means fewer technological, scientific, and managerial advances because most innovative inventors -- and the overwhelming majority of Nobel laureates -- do their most important work between the ages of 30 and 44.

In the US by contrast:

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Foreign students and immigrants account for 50 percent of the science researchers in the country and in 2006 received 40 percent of the doctorates in science and engineering and 65 percent of the doctorates in computer science.
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By 2010, foreign students will get more than 50 percent of all the Ph.D.'s awarded in every subject in the United States. In the sciences, that figure will be closer to 75 percent.
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Half of all Silicon Valley start-ups have one founder who is an immigrant or a first-generation American.

Implications:

So what does all this mean for all of you? It means that in this 21st century world of improved communications, faster travel, and the rapid international movement of information, money, technology and people, there are going to be extraordinary opportunities for you and the other young people of the world who have strong education credentials, strong English language capabilities and the willingness to take risks.

A recent survey by the Economist Magazine found that even though Asia has more than half of the planet’s inhabitants, the biggest problem facing employers in this region is the lack of employees trained in the skills businesses need. This is because schools and universities in Asia have been unable to provide sufficient opportunities for the growing number of young Asians to pursue a university education, and those that do attend universities are not able to acquire the skills they need to compete in the 21st century.

As a result the shortage of trained talent ranks as one of the major concerns of businesspeople in Asia, according to the Economist. NASSCOM, which represents India’s computer software industry, estimates there could be a shortfall of 500,000 IT professionals in India by 2010. The McKinsey Global Institute estimates that 75,000 business leaders will be needed in China in the next 10 years, while the current stock is 3-5,000.

This means there will be a global war for talent and all of you can benefit, if you have the right skills. I think many of you do. I am continually impressed by the extraordinary Sri Lankans who have distinguished themselves in my country and can be role models for all of you. Let me cite just a few.

Rohan Weerasinghe graduated from Harvard College and then earned a joint MBA and law degree from Harvard Business School and Law School. He is now the senior partner at Shearman and Sterling, a major Wall Street law firm, and the first Asian to head a Wall Street firm.

Raj Rajaratnam received his MBA from the University of Pennsylvania and founded the Galleon Fund which is one of the largest hedge funds in the world managing more than $5 billion in assets.

Jayantha Dhanapala earned a BA at the School of Oriental and African Studies, University of London, UK and an MA from American University in Washington D.C. He capped an extraordinary diplomatic career by serving as Under-Secretary General for Disarmament Affairs.

Rohan de Silva studied at the Royal Academy of Music and The Juilliard School in New York and is widely recognized as one of the world great pianists.

Radhika Coomaraswamy received her BA from Yale University, and a law degree from Columbia University. She is now Under-Secretary-General, Special Representative for Children and Armed Conflict.

These outstanding Sri Lankans have risen to the top of their global professions. So can you through strong educational achievement and hard work.

Giving Back

I am confident that many if not most of you will prosper in this globalized world. But let me also ask that you not forget those who were less fortunate than you. Each of you received assistance or a leg up from parents, mentors and others who helped you to get where you are today. You must not forget your duty to give back and help others achieve what you have.

Bill Gates, who is perhaps the most famous drop-out of Harvard College, received an honorary degree from Harvard a few years ago and gave those graduating that year some good advice. He said that “From those to whom much is given, much is expected."

He urged each of the graduates to take on an issue – either a complex problem, or a deep inequity, and become a specialist on it. Some could make the issue the focus of their career, but you don't have to do that to make an impact. He urged that for a few hours every week, each graduate should use the growing power of the Internet to get informed, find others with the same interests, see the barriers, and find ways to cut through them.

He concluded by saying: “Don't let complexity stop you. Be activists. Take on big inequities. I feel sure it will be one of the great experiences of your lives.”

Let me conclude by offering some pieces of advice that I wish someone had told me when I was your age.

First, remember that not all learning takes place in the classroom. Midway through my undergraduate education, I took time off. I worked for six months as a bellhop in a hotel carrying suitcases to earn some money and then spent nine months traveling around the world with a backpack. This was one of the greatest experiences of my life and convinced me I wanted to lead a life of public service and work on international issues. I urge all of you to seek out new experiences, especially while you’re young and do not have to worry about taking care of a spouse and children or making payments on your new scooter or car. People live to learn and every day I still learn something new.

My second piece of advice is to follow your passion. The world is full of unhappy people who failed to heed this advice. But it is never too late. Sri Lanka’s greatest architect was a lawyer until the age of 38. It was only then that he pursued his passion for architecture and became one of Asia’s greatest architects and a winner of the prestigious Aga Khan award for architecture.

In my last tour in India I met another individual who followed his passion, which in his case was a river, the Yamuna River which runs through Delhi. I attended a small event one day where I met an extraordinary young 23 year old man called Vimlendhu Jha who had organized it. The river was his passion and he organized boat trips to help raise awareness. I helped him win a grant so he could go on a short trip to the US where he learned more about organizing and fund raising. While watching CNN the other day, I was delighted to see Vimlendhu is one of 6 young people whom CNN has equipped with cameras, laptops and a brand new Web site. Vimlendhu and his colleagues are blogging and posting videos of their lives and new jobs.

My third piece of advice is don’t be afraid to challenge conventional wisdom. Robert Kennedy said “There are those who look at things the way they are, and ask why... I dream of things that never were, and ask why not?”

As I look out into this audience, I see a new generation; a roomful of dreamers, rebels and maybe even some rabble rousers, and that’s a good thing!

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Ted Turner rebelled against the convention of the six o’clock evening news and reshaped television reporting by founding CNN.
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Twenty years ago Steve Jobs revolutionized the computer industry when Apple computer introduced a computer that used a mouse and icons, today he’s turned the music industry on its head with digital downloads to iPods.
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Mahatma Gandhi defied conventional wisdom and brought down an empire through his selfless moral authority and his powerful example of non-violence. African Americans took Gandhi’s lessons to heart and won the civil rights so long denied to them.

Let me conclude with a brief anecdote.

Three boys are in the schoolyard bragging of how great their fathers are.

The first one says: "Well, my father runs the fastest. He can fire an arrow, and start to run, I tell you, he gets there before the arrow".

The second one says: "Ha! You think that's fast! My father is a hunter. He can shoot his gun and be there before the bullet".

The third one listens to the other two and shakes his head. He then says: "You two know nothing about fast. My father is a civil servant. He stops working at 4:30 and he is home by 3:45"!!

So, no, I am not urging all of you to become civil servants although I myself have enjoyed government service immensely.

Instead I invite you to go out into the world and make a difference. Be the dreamer, the iconoclast and the person who asks why, or why not, to challenge conventional thinking. Go out and explore, invent, heal, create and inspire. While society might run smoothly when everyone agrees, it surges forward when pioneers decide to blaze their own trail. In this globalized world we all inhabit, you have been blessed with a fine education and the opportunity to pursue your passion and do great things for Sri Lanka and yourself. Do not be content with mediocrity!

When all is said and done, more is said than done - so let’s do!

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