Global crisis 'opens opportunity to restructure key institutions'

DubaI: "The 20th century ended with the bang of the financial crisis, but this has opened up the possibility for the serious restructuring of [global institutions]", said Ashraf Ghani, chairman of the Institute for State Effectiveness.

He was speaking during the final plenary of the Global Agenda Summit of the World Economic Forum (WEF) and the Government of Dubai, which wrapped up Sunday.

Over 700 global leaders have been meeting, talking and thinking in the city about the threats facing the world and what international institutions are needed to safeguard the future.

"There is a market for big ideas," observed, Richard Samans, Managing Director of the WEF, who warned that unemployment is a gathering international force. Despite signs that the international financial crisis is easing and the global economy is showing strong signs of recovery, the consensus from many of the delegates was that the world "is not out of the woods".

"Risk is the new normal," said Executive Director of the World Food Programme Josette Sheeran, adding that the present crises including pandemics and food security were just "a wake-up call". She said that the world was facing financial as well as food and fuel crises and it was essential that the international community find ways of identifying these threats and building up resilience to them, in part through better collaboration between governments and private companies.

While many delegates made it clear that the free market and close collaboration between governments and the private sector were essential for securing human welfare, there were also suggestions that the present international financial crisis pointed to the need for government regulation in some markets. However, David Kennedy, of the Institute on Global Law and Policy, from the Harvard Law School, pointed out: "The financial crisis impressed on us that our economies are increasingly organised on a global basis, but our political culture is largely organised on a local and regional basis". Delegates underlined the need for a global response to monitoring and responding to financial crisis.

Dubai Business, private foundations and individuals are all getting into development finance: the business of building and strengthening emerging economies.

Development finance used to be government to government transfer of resources from rich to poor, but now there are players from individuals like Bill Gates to big private companies, said Ann Grant of Standard Charter. The international banking group is very active in emerging markets in China and Africa, among others.

Grant points out that in the past countries tried to create a business-friendly environment to attract foreign investment. Now, countries are working towards a business-friendly environment that will nurture and grow local companies.

"What we're increasingly seeing in every economy is that jobs and growth depend on small and medium businesses; and that countries need a tax base to fund their own development. We need to see what we can do to develop and promote [local businesses]," said Grant.

She referred to a recent talk by the South African finance minister, Pravin Gordhan, where he pointed out that unless countries develop their own tax base, they will forever be dependent on foreign aid to meet the needs of their people. "We need to look at moving people from informal to the formal sector and accelerate that process," she said. A good environment for local business, will also help attract necessary foreign direct investment. "It's quite difficult to see why foreigners should [put their money] in a country where its own nationals don't think its worth investing," she observes. Grant is convinced that local and international companies are up to the new challenges facing the world."

Dubai Business, private foundations and individuals are all getting into development finance: the business of building and strengthening emerging economies.

Development finance used to be government to government transfer of resources from rich to poor, but now there are players from individuals like Bill Gates to big private companies, said Ann Grant of Standard Charter. The international banking group is very active in emerging markets in China and Africa, among others.

Grant points out that in the past countries tried to create a business-friendly environment to attract foreign investment. Now, countries are working towards a business-friendly environment that will nurture and grow local companies.

"What we're increasingly seeing in every economy is that jobs and growth depend on small and medium businesses; and that countries need a tax base to fund their own development. We need to see what we can do to develop and promote [local businesses]," said Grant.

She referred to a recent talk by the South African finance minister, Pravin Gordhan, where he pointed out that unless countries develop their own tax base, they will forever be dependent on foreign aid to meet the needs of their people. "We need to look at moving people from informal to the formal sector and accelerate that process," she said.

Key ideas

• A high-level institution to complete the job of providing universal education
• A universal vaccine initiative
• An advertising and marketing agency to get across key social messages, on issues like health the environment
• An institution to work towards closing the gender gap
• Greatly expanding special drawing rights at the international financial institutions, to meet the desire to have strong foreign reserves