ICC G20 CEO Advisory Group by The Group of Nations

The Official ICC CEO G20 Advisory Group Publication

InSIDE G20

› Trade: Resolving Commerce Barriers › Energy: A Future of Sustainability › Food: Ecosystem for Prosperity › PLUS: Richard Goyder & Robert Milliner

G20 AND BUSINESS ENGAGEMENT

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Contents & Contributors

July 2014

Cover Story 14 / G20 BUSINESS ENGAGEMENT

CATCOMPANYInc G20 › THOUGHT LEADERSHIP › Sydney ❙ Australia ❙ July 2014

Richard Goyder and Robert Milliner outline goals and challenges for the G20 Leaders Summit with attempts to nourish and expand economic growth, employment, and infrastructure.

The Official ICC G20 CEO Advisory Group Publication

24 / Australia: The need to break down the barriers to trade and investment

By John W.H. Denton By Andrew N. Liveris

32 / Financial issues within the global agenda from Russia B20 Sherpa’s point of view By O.M.Preksin By Jamal Malaikah

44 / Meeting the energy demands the future By Zola Tsotsi

00 48

48 / The new world of energy: Digital, local and consumer focussed By Jean-Pascal Tricoire

52 / The need to preserve the genuine instruments of progress

58 / Energy Access: a G20 Priority for Economic Growth, Social Development, Political Stability and Sustainability By Kimball C. Chen

Features

By Jeff Balser

80 / Too Big to Ignore - globally By Kate Carnell AO

82 / The Urgency for Academic-Business Collaboration: Establishing a Global Food System Roadmap By Roger N. Beachy

86 / Economic Development goes Societal Needs: A work in progress By Christian Ketels

90 / How Australia’s Mining Industry Contributes to Regional and Global Prosperity By Glen Cass

92 / Trends and Challenges in Education: What global leaders need to know! 08 ❙ G20 Business 2014

WElCoME NotEs: Terry McGraw, Marcus Wallenberg John Danilovich

Editor’s Note By Ana C. Rold

By Niels B. Christiansen

By Tim Evans

Publisher: Chris Atkins

Publisher’s Note By Chris Atkins

By Antonio Estrany y Gendre

56 / Modern infrastructures help drive development

76 / The Urgency for an Innovation Roadmap to Transform Health Care

CATCOMPANYInc Publications

Creative Director: Christian Gilliham christian@cgcreate.co.uk T: (+44) 7951 722265

By Eduardo Eurnekian and Javier Milei

74 / Saving Lives, Increasing Economic Growth and Lifting Millions out of Poverty: The Push for Universal Health Coverage

g20g8.com

Editorial Assistant: Rob Arcand

40 / Argentina: Back on Track to the Promised Land

By Emiliano Duch

Managing Editor: Chrisella Herzog

36 / How the G20 and B20 can work to resolve commerce barriers

72 / Building an Abundant Ecosystem for Prosperity: The Competitiveness Agenda

› Food: Ecosystem for Prosperity

Editor-in-Chief: Ana C. Rold editors@diplomaticourier.org

28 / Partnership to Unlock Global Progress

By Juergen Voegele

The Official ICC CEO G20 Advisory Group Publication

INSIDE G20

› Trade: Resolving Commerce Barriers › Energy: A Future of Sustainability

› PLUS: Richard Goyder & Robert Milliner

G20 AND BUSINESS ENGAGEMENT

ICC Features

64 / The Urgency for Global Action on Food

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Contributors: Andrew N. Liveris; Antonio Estrany y Gendre; Christian Ketels; Eduardo Eurnekian; Emiliano Duch; Glen Cass; Jamal Malaikah; Javier Milei; Jean-Pascal Tricoire; Jeff Balser; John W.H. Denton; Juergen Voegele; O.M. Preksin; Richard Goyer; Robert Milliner; Roger N. Beachy; Tim Evans; Zola Tsotsi Publishing Firm: The CAT Company, Inc. Chris Atkins, President Global Advisory Group: Chris Atkins, Peter Atkins Jennifer Latchman, Manuel C. Menendez III (Chairman & Strategic Advisor) Keith Foote Nyborg (United States Ambassador (Ret.) President of sales: Mike Nyborg Director EMEA: Tryrone Eastman sales Executives: Tony Royle, Peter Scott, Ralph Windsor Ray Baker, Phil Cook special thanks: Diplomatic Courier for their editorial direction and strategy To contact the editors please email us at: editors@diplomaticourier.org

Editor’s Note

Ana C. Rold Editor-in-Chief

Welcome to the July 2014 edition of the G20 Business. We are thrilled to collaborate with the International Chamber of Commerce again to produce a publication focused on how the global business leadership collaborates with the political leadership to debate and solve some of the biggest issues facing our world. We are particularly proud to have been selected as the official publication for this year’s increasingly relevant and important forum of global leaders–a testament to our longevity in the field and our team’s tireless efforts to produce a publication by the leaders for the leaders. The issues at hand are many and it is abundantly clear the G20 remains a key forum for managing the global economy beyond the current economic crisis. The membership of the G20–which includes both developed and developing economies–is such that allows for greater inclusion and collaboration; more so than any other global gathering of such nature. The B20, the G20’s business mirror summit has become an important voice and conduit; it integrates the international business community–a key partner–into the G20 process. This group of select business leaders represents the most important industries involved in solution making. From green growth to food security to employment, the task forces within the B20 have set to research solutions to seemingly intractable issues. Their cooperation with the G20 leaders is paramount to the efforts to curtail the global economic crises. Even though the G20 was the result of the financial crisis in 2008, the institution has carried on well after the crisis. In the future, the G20 has the potential of being the venue of choice for multiple stakeholders to come together to carry on complex solutions that require collaboration on multiple levels and via multiple sectors in a flexible format. That type of work is already being carried out by the B20, which is engaging with multiple partners like the World Economic Forum and the OECD. We are particularly pleased to have several business leaders contributing articles and editorials for this special edition of the Australia B20 meeting. We are also pleased to have select thought leaders commenting on these important issues for a publication that is for the leaders by the leaders. We hope you enjoy reading them and that you will email us with any editorial comments and thoughts, which we can include in the subsequent editions of this publication.

10 ❙ G20 Business 2014

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Publisher’s Note

Distinguished Guests I would like to take this opportunity to thank all those involved for their dedication in helping produce the official ICC G20 CEO advisory Group publication. Christopher Atkins Publisher and Founder Cat Company, Inc.

It has been a great honor again to collaborate with the International chamber of Commerce CEO G20 advisory group and the G20 Business host committee, especially Robert Milliner and his team. As the most experienced publisher in this field, the CAT Company has proven again that it can deliver a great product that is sure to be enjoyed by thought leaders and professionals interested in the intersection of business and global diplomacy. I am thrilled to announce that the Queensland Government, this year’s host for the upcoming G20 Leaders Summit in November, has selected the CAT Company as the official G20 Leaders Summit publisher. We are hard at work producing this official publication for the hosts of the Summit this year. Please get in touch with our team to discuss how your company can be a part of this publication in November.

I am thrIlled to announce that the Queensland Government, thIs year’s host for the upcomInG G20 leaders summIt In november, has selected the cat company as the offIcIal G20 leaders summIt publIsher.

12 ❙ G20 Business 2014

Please go to the APP Store or Google Play store to download the app to read the G20 magazine on your mobile devices. INSIDE G20

› Trade: Resolving Commerce Barriers › Energy: A Future of Sustainability › Food: Ecosystem for Prosperity › PLUS: Richard Goyder & Robert Milliner

Business

G20 › THOUGHT LEADERSHIP › Brisbane, Australia ❙ July 17-18 July 2014

G20 › THOUGHT LEADERSHIP › Sydney ❙ Australia ❙ July 2014

The Official ICC CEO G20 Advisory Group Publication

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G20 AND BUSINESS ENGAGEMENT

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The Official G20 Publication for The Queensland Government

The Official ICC G20 CEO Advisory Group Publication

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Cover Story / G20 and Business

Thought Leadership

Authored by: Richard Goyder and Robert Milliner, B20 Chair and B20 Sherpa

G20 business engagement Richard Goyder and Robert Milliner outline goals and challenges for the G20 Leaders Summit with attempts to nourish and expand economic growth, employment, and infrastructure.

he challenge put to G20 leaders following the St Petersburg Leaders Summit in 2013 was in taking decisive action to return the global economy to a strong and sustainable growth path. At the World Economic Forum in Davos in January, Prime Minister Tony Abbott articulated a strong purpose for Australia’s host year in his commitment to focusing Australia’s presidency on promoting stronger economic growth and making the global economy more resilient to deal with future shocks. The B20 strongly supports these objectives. The February Finance Ministers and Central Bank Governors meeting built on this clear agenda, with G20 governments pledging to work together to lift collective GDP by more than two per cent above trend over the next five years. They committed to take concrete action to increase investment, lift employment and participation, enhance trade and promote competition, in addition to existing macroeconomic policies. At the April meeting of Finance Ministers in Washington, Treasurer Hockey emphasised the importance of members lifting their individual and collective ambition if the desired growth is to be achieved. Challenges facing the G20 While the global economic outlook gives reason for optimism in 2014, serious challenges do remain. Growth remains sluggish and high unemployment persists across much of the developed world. Meanwhile emerging economies are confronting challenges of their own, including the need for structural reform and new geopolitical tensions have the potential to be a further drag on growth. The G20 may be an international forum, but as Christine Lagarde, Managing Director of the International Monetary Fund, noted in

14 ❙ G20 Business 2014

April, the macroeconomic reform strategies needed to drive growth in the current environment are largely domestic. The crisis reminded us all of the interdependence of our financial systems. The world needs a stable and effective multilateral economic system if it is to drive stronger economic growth and employment outcomes. Business input into the G20 agenda Prime Minister Abbott’s Davos speech highlighted the absolute centrality of private business to sustainable growth. He said if the economic policies of our countries do not successfully promote and foster profitable private businesses, they simply do not work at all. These comments recognise that business will play a critical role in the global economic recovery. Since the B20 was first convened as part of the Canadian G20 Presidency in June 2010, it has played an important role in the G20 process. To date, five Summits have been held by five different host countries. Collectively, they have produced more than 440 recommendations on a range of topics to G20 leaders. The B20 has opted for a tighter focus in 2014 and is concentrating on topics that represent the most substantial obstacles to global growth and job creation. The B20 sees four critical issues – the effective operation of financial markets, the development of global human capital, the investment environment (particularly the development of economic infrastructure) and greater opportunities for trade in goods and services. Taskforces established around these areas have identified the core problems and are developing a set of pragmatic and practical recommendations for G20 governments. The taskforces are meeting regularly to test and refine potential recommendations ahead of the July B20 Australia Summit in Sydney where the recommendations will be

finalised and prioritised for G20 leaders. Economic growth will be driven by structural reform and the B20 is working to set a structural reform agenda narrative to that effect. B20 priority areas The B20 has undertaken research to identify the main barriers to economic growth and job creation and is developing a set of

Cover Story / G20 and Business

The woRLd needS a STabLe and effecTive MuLTiLaTeRaL econoMic SySTeM.

Financing growth Michael Smith, CEO of ANZ Banking Group The availability of credit to business is vital to global economic growth. The G20 Finance Ministers and Central Bank Governors Communiqué in February noted that the core financial market reforms, building resilient financial institutions, ending ‘too-big-to-fail’, addressing shadow banking risks and making derivatives markets safer, should be substantially completed by the November Brisbane Summit. To ensure that global regulation does not inhibit growth and the creation of jobs, the Taskforce is examining how the core reforms can be implemented in a way that promotes an integrated global financial system, reduces harmful fragmentation and avoids unintended costs. The Taskforce is also examining how to provide greater recognition for emerging market economies in the development of international standards; address issues relating to the implementation of international standards in emerging market economies; facilitate greater infrastructure financing; and remove impediments to trade finance.

recommendations to address them. Approximately 300 taskforce members drawn from the international business community are meeting regularly to develop, test and refine potential solutions ahead of the B20 Australia Summit. B20 Australia has engaged a group of international CEOs known as the CEO Forum, who together with the B20 Australia

Leadership Group inform and guide the B20’s work. An Australian Coordinating Chair from the B20 Australia Leadership Group leads each taskforce with support from chairs and participants from previous years. A summary of each policy area and its progress ahead of the B20 Australia Summit follows:

Human capital Steve Sargent, President and CEO of GE Mining Long term unemployment, youth unemployment and jobless growth are key human capital challenges. An employment paradox exists in many countries. While unemployment remains relatively high, many economies are also struggling to fill job vacancies. Workplaces are being transformed by technology, with one report suggesting 47 per cent of job categories could be automated within two decades. The B20 is considering recommendations in the following areas: maximising the job creation potential of the private and public sectors, building adaptable › Sydney. Australia 2014 ❙ 15

Cover Story / G20 and Business â&#x20AC;ş and resilient skill sets aligned with future workforce needs, improving alignment of people, skills, jobs and locations, increasing organisation and workforce adaptability and flexibility, and implementing measures to ensure accountability and real progress against targets. Infrastructure and investment David Thodey, CEO of Telstra G20 countries face a number of common challenges including urban population growth and aging infrastructure. To address these challenges, at least $57 trillion is needed to fund infrastructure investment to 2030, but on current trends approximately $20 trillion will remain unfunded. Challenges persist across the G20, including a lack of bankable projects and barriers to financing. The infrastructure & investment taskforce is considering areas where action can be taken to accelerate the provision of essential economic infrastructure by addressing these common challenges. G20 leaders may be asked to reassert the primacy of infrastructure investment in national growth plans, establish and publish national infrastructure pipelines, commit to specific time limits for regulatory and environmental approvals, and create a global knowledge platform. Business could assist governments by creating a global infrastructure project evaluation tool. Trade Andrew Mackenzie, CEO of BHP Billiton Growth in world trade has flattened since 2011. While additional tariff protections have been avoided since 2008, G20 nations have increasingly imposed a significant number of non-tariff barriers. Services are becoming a much more important part of world trade although they still only account for 20 per cent, despite representing 70 per cent of global GDP. The B20 is identifying potential policy solutions to facilitate trade growth including rapidly implementing and ratifying the Bali Package Agreement on Trade Facilitation, reinforcing the standstill on protectionism and winding back barriers triggered by the financial crisis, especially non-tariff barriers, developing countryspecific supply chain strategies and ensuring PTAs realise better business outcomes. Through the establishment of the anticorruption working group, the B20 will identify and highlight to the G20 specific instances in which corruption and a lack of transparency create impediments to economic and employment growth across the four priority areas. 16 â?&#x2122; G20 Business 2014

TO DATE, FIVE SUMMITS HAVE BEEN HELD BY FIVE DIFFERENT HOST COUNTRIES.

The B20 process The B20 process will bring together approximately 400 business leaders at the B20 Australia Summit in Sydney on 16-18 July followed by the G20 Trade Ministers meeting to be held on 19 July. The B20 Australia Summit will be an opportunity to discuss, finalise and prioritise policy recommendations ahead of the November G20 Leaders Summit in Brisbane. Realising success The best way to drive strong, sustainable economic growth and create jobs is to work collaboratively on the key areas that will deliver a better environment for investment.

Cover Story / G20 and Business

Biography Richard Goyder AO joined Wesfarmers in 1993 after working in various commercial roles at Tubemakers of Australia Limited. He has held a number of commercial positions in Wesfarmers’ Business Development Department including General Manager. In 1999 Richard was Managing Director of Wesfarmers Dalgety Limited, which subsequently became Wesfarmers Landmark Limited, a position he retained until his appointment as Finance Director of Wesfarmers Limited in 2002. He was appointed Deputy Managing Director and Chief Financial Officer of Wesfarmers Limited in May 2004 and assumed the role of Managing Director and Chief Executive Officer on 13 July 2005. In 2007, Richard transformed Wesfarmers with the successful acquisition of the Coles Group of companies. At more than $19 billion, this purchase was, and remains, the biggest transaction in Australian corporate history. Wesfarmers is now a top 10 Australian company, it has more than 500,000 shareholders and with a workforce of more than 200,000 people is the country’s largest private sector employer. Richard joined the Board of Wesfarmers Limited in 2002 and is a director of a number of Wesfarmers group subsidiaries. Outside of his Wesfarmers group board commitments Richard is also a member of the AFL Commission, the UWA Business School, the Business Council of Australia, and Chairman of Scotch College in Perth. Richard was appointed as Chairman of the Australian B20 (the key business advisory body to the international economic forum which includes business leaders from all G20 economies) in February 2013. Richard has been awarded the Honorary Degree of Doctor of Commerce from the University of Western Australia. Richard was made an Officer in the Order of Australia in 2013 for distinguished service to business through executive roles and through the promotion of corporate sponsorship of the arts and Indigenous programs, and to the community.

Biography Robert Milliner is a Senior Adviser at UBS and the B20 Sherpa for Australia for 2014. He is also Chairman of the Board of the Foundation for Young Australians and a director of the Australian Charities Fund. From 2004-2011 he was Chief Executive Partner of Australia’s pre-eminent international law firm Mallesons Stephen Jaques (now King & Wood Mallesons) and retired from Mallesons in January 2012 after 28 years as a partner.

Following the B20 Australia Summit, the B20 will resume its dialogue with G20 policy makers to identify how to implement B20 proposals. The B20 will harness the strength of the international business community to advocate the benefits of adopting B20 recommendations in G20 member countries. The B20 is committed to helping Australia deliver concrete outcomes from its G20 presidency. Bridging the gap in infrastructure investment, removing barriers to trade, improving the allocation of global human capital and completing major financial reforms would all be real achievements from Australia’s G20 year. ■

He led the negotiations for and completion of Mallesons ground breaking merger with the premier Chinese firm King & Wood in 2011. In 2012 he was the co-author of an independent review of Commonwealth regulation making practices for the Minister for Finance & Deregulation. The Federal Government agreed to the majority of the review recommendations in December 2012. Robert was a director of the Business Council of Australia from 2005-2011, chaired the Business Reform Task Force and was a member of the Global Engagement Task Force. He was a participant in the 1st and 2nd Australia-China CEO Roundtables in Australia in 2010 and China in 2011. He was the inaugural chair of the Large Law Firm Group which represents Australia’s 9 largest law firms and was the only law firm member of the Law Council of Australia, and held that role from 2006-2011. He was a member of the International Legal Services Advisory Council (which advises the Federal Attorney-General on the export of legal services) from 2004 -2013, a director of Asialink - Asia Society Australasia Centre, Australian Business and Community Network and Deputy Chairman of the Mallesons in the Community Board from 2004-2011. He has a Bachelor of Commerce and Bachelor of Laws (Hons) from the University of Queensland and a Master of Business Administration from the University of Western Australia. In 2010 he attended the Advanced Management Program at Harvard Business School.

Sydney. Australia 2014 ❙ 17

Welcome: ICC, G20 and Global Governance

Terry McGraw Chairman, International Chamber of Commerce

ICC is – and has been throughout its long existence – a steadfast rallying point for those who believe, like our founders, that strengthening commercial ties among nations is not only good for business but good for global living standards and good for peace. Over the last six years, the G20 has become an indispensable instrument for forging effective international collaboration in an interdependent world. The G20 agenda has a major impact on core business goals and will increasingly shape the policy direction of other national governments and international organizations. As the world business organization – with a global network reaching over 6 million companies, chambers of commerce and business associations in more than 130 countries – the International Chamber of Commerce (ICC) is committed to ensuring that the voice of business is heard and that business interests considered by

policymakers at the highest levels. The work of the G20 is a natural focal point for ICC’s unique international policy stewardship – and presents an opportunity for global business to establish an enduring mechanism to engage with the Group of 20 governments and provide regular input into the G20 policy process. To that end, ICC formed the ICC G20 CEO Advisory Group to spearhead global business engagement with G20 governments at the highest levels and advocate for business priorities within the G20 policymaking processes. ICC and CEO members of the ICC G20 CEO Advisory Group have been deeply engaged in the G20-B20 process since the Seoul G20 Summit in 2010 and are now recognized by those nations’ leaders as an important strategic business partner in the push for economic growth and job creation globally. Over the past 60 years, international trade and investment and the multilateral trading system has been an undeniable engine of growth, that is why ICC has urged G20 Leaders to use their increasing influence on global policy priorities to further advance global trade liberalization and rule making within the WTO. After years of political deadlock, I’m happy to see G20 leaders start to make progress on the multilateral trade agenda. Perhaps the single most apparent result of our work was evidenced during the St. Petersburg Summit (2013), when leaders set aside differences on trade and rallied their support for a successful outcome on trade facilitation. Those commitments held firm when the WTO completed its first multilateral treaty in nearly 20 years by completing WTO

The sheer scale of benefiT deriving from a single Trade agreemenT serves To demonsTraTe The power of The g20 To resTore global growTh if They have The courage and will-power To sTick To Their sTaTed objecTives. 18 ❙ G20 Business 2014

Agreement on Trade Facilitation in Bali on December 7, 2013. That agreement alone could increase exports by more than $1 trillion, supporting the creation of an additional 21 million jobs in both developing and developed economies. The sheer scale of benefit deriving from a single trade agreement serves to demonstrate the power of the G20 to restore global growth if they have the courage and will-power to stick to their stated objectives. Going into the Brisbane G20 Summit in November of this year, business is optimistic that G20 Leaders will maintain the momentum on the trade agenda. Notably, if G20 leaders follow through on business priorities – such as reducing trade barriers, liberalizing trade in services and expanding the International Technology Agreement – they will go a long way in reaching their own target of boosting GDP by an extra 2% over the coming five years. International business stands ready to partner with G20 governments in advancing a growth and jobs agenda. I remain encouraged by the possibilities that collaborative and concerted G20 action can have on the global economy and look forward to continuing the business dialogue with leaders at the November G20 Summit in Brisbane. Together, we can create new opportunities on a global basis that will spur economic growth, create new jobs and increase prosperity and peace. Terry McGraw Chairman, International Chamber of Commerce

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Welcome: The role of Business in G20 policymaking

Marcus Wallenberg Chairman, ICC G20 Advisory Group

It has now been five years since the Group of Twenty (G20) was elevated to Leaders’ level in the face of an unprecedented global financial crisis. Despite a number of challenges to the group’s cohesion, the G20 remains uniquely positioned to address some of the world’s most important and intractable economic problems and will increasingly shape intergovernmental policies that affect business internationally. The G20 agenda bears upon core business goals for trade, investment, economic growth and job creation and will increasingly shape intergovernmental policies that affect business internationally. In order to play a constructive role in representing business views to G20 governments, the International Chamber of Commerce (ICC) has established the ICC G20 CEO Advisory Group. The Group comprises approximately 40 CEOs actively concerned with the G20 policy agenda and keen to engage with peers, set priorities and speak out on the issues most vital to business. Over the last several years, the ICC

G20 CEO Advisory Group has served as a strategic, global business partner to successive G20 host countries in Korea, France, Mexico, Russia and now here in Australia. Many of the CEO members of the ICC group were early business activists on the G20 agenda, and continue to be deeply engaged in the development and advocacy of B20 policy recommendations. It is with pleasure that I have noted a steady improvement in government-business dialogue since Korea invited business into the process through the G20 Business Summit in Seoul in 2010. G20 governments now recognize the B20 as an important stakeholder, and the presentation of B20 recommendations to Australian Prime Minister Tony Abbott during the B20 Summit in Sydney in July will constitute the fifth consecutive year of CEO-level business engagement in the G20 policy agenda. Collectively, the recommendations presented to the G20 in Korea, France, Mexico, Russia, and soon Australia, comprise a seminal compendium of international business priorities and recommendations that continue to be shaped and reshaped as the process moves from Summit to Summit. Investment, particularly in infrastructure, is a vital driver of global economic growth and job creation. As a co-chair of the Australia B20 Infrastructure and Investment Taskforce, I’m therefore particularly pleased that the Australian G20 presidency has focused on this issue through the creation of a newly formed G20 Investment and Infrastructure Working Group (IIWG). This is an important recognition of the role of investors for creating economic growth, sustainable development and jobs and business looks forward to deepen this work with G20 governments. The proliferation of international investment agreements has highlighted the need for more harmonized investment

Investment, partIcularly In Infrastructure, Is a vItal drIver of global economIc growth and job creatIon. 20 ❙ G20 Business 2014

rules to fulfill the vast potential of crossborder investment for shared global growth. CEO members of the ICC G20 CEO Advisory Group therefore continue to call for the development of a multi-lateral framework for investment (MFI), which would help with both a freer inflow and outflow of foreign direct investment (FDI). This in turn would promote and protect cross-border capital flows, especially foreign direct investment (FDI). As government and business move forward together, a key challenge will be to ensure that business recommendations remain relevant and that progress remains foremost. With this in mind, the ICC G20 CEO Advisory Group created the ICC G20 Business Scorecard to examine the G20’s recognition of core business messages and its collective policy response to recommendations put forward by the international business community. The third installment of the annual Scorecard shows a year-on-year improvement in score since ICC’s monitoring began, demonstrating an increasing responsiveness to business priorities over time. ICC and our member companies have high expectations for the G20 Summit this year in Brisbane – to provide much-needed stewardship to shore up the drifting world economy and create the confidence we need to invest. International business stands ready to partner with G20 governments in advancing their growth and jobs agenda. We remain committed to generating solid policy work and working with G20 leaders before, during and after the G20 Summit events – from Australia to Turkey and beyond. Marcus Wallenburg Chairman, ICC G20 Advisory Group

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Welcome

John Danilovich Secretary General, International Chamber of Commerce

As the everyday practitioners in the global economy, international business has a clear stake in the success of the G20– and is willing to play an increasing role, delivering real-world input to policymaking; partnering with governments to implement commitments; and validating the G20’s actions through increased international trade and investment, economic growth, and job creation. The G20, with its mixed membership of advanced and emerging economies, has become a powerful force for shaping the rules of engagement for global market competition. With this understanding, along with the recognition that the G20 agenda will substantially impact core business goals to expand economic growth and employment, the International Chamber of Commerce (ICC) has been deeply engaged in the work of the G20, and formed the ICC G20 CEO Advisory Group to intensify top-level international business engagement and to ensure the inclusion of business views in the deliberations of G20 Leaders ICC has served as a strategic, global business partner to successive host

countries: Korea, France, Mexico, Russia and most recently Australia. Over the last several years, the ICC G20 CEO Advisory Group has joined with host country business associations, CEOs from corporations large and small, and representatives from the B20 coalition of national business federations to collaborate on the formulation of business-based policy recommendations. As part of our responsibility to ensure the delivery of balanced and substantive business recommendations to G20 leaders, ICC hosts a series of regional policy consultations to solicit priorities and recommendations from companies and business organizations of all sizes and in all regions of the world. In 2014, G20 consultations have been held in the United States, Turkey, UAE and most recently on the sidelines of the ICC Asia Pacific CEO Forum in Kunshan, China. These events allow ICC to tap into the broadest possible constituencies of businesses and provide local businesses with an opportunity to help shape ICC’s policy recommendations for input into the G20 process. In addition to developing policy recommendations, ICC also recognizes the need to evaluate the impact of past business recommendations. With this in mind, ICC has developed the ICC G20 Business Scorecard to rate the overall responses by G20 governments to key business goals. The purpose of the Scorecard is to provide a detailed assessment of the G20’s recognition of, action on and response to recommendations put forward by the global business community. Compilation of the annual Scorecard reflects ICC’s belief that if the G20 has better information on how its actions are interpreted by the business community this will help it set priorities, honour commitments, measure its own progress over time and identify deficiencies

The purpose of The scorecard is To provide a deTailed assessmenT of The G20’s recoGniTion of, acTion on and response To recommendaTions puT forward by The Global business communiTy. 22 ❙ G20 Business 2014

that deserve greater attention. Evaluation of past recommendations also helps business leaders pick up where the past B20 left off, so that they can better tailor future recommendations. Published earlier this year, the third installment of the annual Scorecard, shows a year-on-year improvement in score since ICC’s monitoring began. Among the positive outcomes that led to this year’s higher score was the G20 support for the historic World Trade Organization Agreement on Trade Facilitation and the extension of the G20 standstill on protectionist measures until the end of 2016. The improvement in score also reflected G20 efforts to increase access to finance for small and medium businesses and the recognition of business as a key partner in the fight against corruption. Still, several business priorities continue to go unnoticed, including the G20’s failure to recognize the importance of information and communication technologies (ICTs) and a lack of discussions on a hig-standard multilateral framework for international investment. For the 3rd Edition of the Scorecard we also invited our colleagues at the International Organization of Employers (IOE) and the Business and Industry Advisory Committee to the OECD (BIAC) to contribute a specific chapter on the issue of employment, skills and job creation in the G20. I look forward to continuing this type of collaborative outreach in the coming years to ensure that the voice of business – small and big - are heard, and their interests taken on board by policymakers at the highest level. John Danilovich Secretary General, International Chamber of Commerce

ICC Feature / Australia Authored by: John W.H. Denton

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Thought Leadership

ICC Feature / Australia

Australia: The need to break down the barriers to trade and investment John W.h. denton outlines the importance of streamlining and simplifying Australia’s trade borders to further integrate the nation into the global economy.

he World Trade Organisation director-general, Roberto Azevêdo, invoked the words of Nelson Mandela when concluding the WTO’s ministerial meeting in Bali earlier this month: “It always seems impossible, until it’s done.” Since the establishment of the WTO in 1995, more often than not, it has seemed real and effective trade liberalisation is firmly in the “impossible” category. As Australia prepares to host the G20 meetings next year, it can help make the impossible possible by influencing discussions on the future of the multilateral trading system in a real way. With trade accounting for some 40 per cent of Australia’s GDP and one in five Australian jobs related to trade, it is firmly in our national interest to see a lowering of trade barriers. As the global economy tries to shrug off the full impact of the global financial crisis, liberalising trade flows matters now more than ever to all nations. The OECD has found there are extensive benefits from reducing trade barriers between countries. Consumers benefit from the lower prices and wider range of quality goods and services that liberalised trade brings. Companies benefit from the diversified risks as well as the more efficient allocation of resources. And indeed, the OECD found that if G20 countries agreed to halve the level of existing trade barriers, they would see more jobs for both low and high skilled workers, higher real wages, and export levels would rise by up to 20 per cent. ›

As host of A dedicAted G20 trAde Ministers MeetinG next yeAr, AustrAliA hAs the chAnce to focus G20 Minds on the future of the Wto. Sydney. Australia 2014 ❙ 25

ICC Feature / Australia › While the WTO’s recent Bali Package achieved worthwhile, but still relatively modest outcomes in simplifying customs procedures, streamlining trade flows and boosting food security, it also provided a good opportunity to consider the future of the WTO as the main body for pushing much needed trade liberalisation. While Azevêdo saw the Bali outcome as strengthening the WTO and bolstering the cause of multilateralism, others saw a dysfunctional body taking 18 years to reach consensus on the relatively low-hanging fruit of trade facilitation measures. Chinese Commerce Minister Gao Hucheng highlighted this view when he told the Bali conference that the low efficiency of the WTO’s decision-making system had to change. As the G20 approaches, Australia’s G20 business body, the B20, has already stated trade will be one of the four key focus issues it will consider and on which it will provide recommendations to G20 leaders. The G20 has previously recognised the potentially fragmenting effect of the proliferation of preferential trade agreements, such as the Trans-Pacific Partnership. These bilateral or plurilateral agreements could lead to trade rules becoming increasingly Balkanised, complicated and unequal between developing and developed countries. While the G20 has called for the WTO to remain as the central body in multilateral trade, and has urged greater transparency in preferential trade agreements, it needs to confront head-on the reality of the WTO’s dysfunction. Innovative approaches are needed, like the Trade in Services Agreement negotiations championed by former trade minister Craig Emerson, which sought to advance services liberalisation in a WTO-consistent way by forming a coalition of the willing – some 50 developing and developed economies that have the willpower to promote services trade reform. A similar approach is needed on investment, given the ineffective efforts by the WTO on trade-related investment measures. Trade Minister Andrew Robb has shown astute pragmatism and determination in resolving long-standing obstacles in Australia’s FTA negotiations with Korea, and is working hard to resolve outstanding barriers to concluding very significant agreements with Japan and China – representing three of our four largest trading partners. As host of a dedicated G20 Trade Ministers meeting next year, Australia has the chance to focus G20 minds on the future of the WTO, and define a new narrative around global 26 ❙ G20 Business 2014

the G20 hAs previously recoGnised the potentiAlly frAGMentinG effect of the proliferAtion of preferentiAl trAde AGreeMents, such As the trAns-pAcific pArtnership.

trade, recognising that the outdated definitions we are still using fail to capture the reality of the contemporary global trading system, such as rules relating to global value chains. Just as the WTO was established in 1995 when it became obvious the General Agreement on Tariffs and Trade was not adapting to the globalised world economy, the ongoing transformation of the global trading and business models is increasing pressure to either reform the WTO, or start considering alternatives. As a relatively small economy competing in a global environment, Australia’s future success and prosperity relies on breaking down barriers to trade and investment flows. Our jobs and our level of economic growth are on the line, and we need to find an effective mechanism to achieve this. ■

Biography John W.H. Denton is Partner and CEO of Corrs Chambers Westgarth. He is a member of the Australian B20 leadership group, chair of the APEC Business Advisory Committee’s Finance and Economics Working Group and chairs the Business Council of Australia’s Global Engagement Taskforce. This opinion piece was originally published in The Australian Financial Review.

ICC Feature / Global Partnerships Authored by: Andrew N. Liveris

Partnership to Unlock Global Progress Andrew Liveris speaks to the importance of global collaboration in increasing efficiency and employment, both domestically and abroad.

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Thought Leadership

ICC Feature / Global Partnerships

ohn Donne wrote, “No man is an island.” To which we might add in a 21st-century postscript: neither are countries or companies. The issues that define our times – from sustainability challenges to youth unemployment to unrealized prosperity – are difficult and complex. To solve them, none of us can remain on our own island – or in our own silo (choose your metaphor). I firmly believe the only way we can address them successfully is through focused, fruitful collaboration among business, government, and society. As partners in the B20, we have all expressed our commitment to collaborating at the intersection of the public and private sectors in order to create real catalysts for change and human progress. My fellow CEOs would be quick to acknowledge that, in order to unlock this progress, we must engage in dialogue. By working together in a truly coordinated fashion, we can develop and support the implementation of sound policy frameworks to achieve the priorities proposed by the B20. After all, the collective aim of the B20 is not simply to foster job creation and economic growth. It is to do these things sustainably. Meeting pressing global needs will require, over the long term, growth that is sustainable in all respects: economically, socially, and environmentally. That imperative shapes the work we do in a range of areas, especially the field of advanced manufacturing. Scientists, engineers, and inventors are meeting increasingly complex demands with breakthrough, new solutions developed at the intersections of the sciences. With every new innovation, from enabling higher crop yields to supplying more and cleaner water, we see even more clearly that solving tough problems is good for business – and better for the world. Innovative companies like the B20 membership are determined to make the necessary investments in order to create evolutionary leaps forward where the greatest global needs exist. It is time for governments to match us with adaptations of their own, and the G20 is uniquely positioned to lead the way. Increasingly, countries must operate like companies – particularly by making investments that encourage competition and allow innovation to flourish. These actions might include investing in R&D and infrastructure, as well as implementing smart regulations, streamlining permitting processes, and opening markets to facilitate global value chains.

ONLY BY CREATING THE CONDITIONS FOR INNOVATION TO FLOURISH CAN WE SOLVE THE COMPLEX CHALLENGES WE FACE. COLLABORATION AT THE INTERSECTION OF BUSINESS, GOVERNMENT AND SOCIETY IS THE KEY TO FUTURE PROSPERITY. These growth-oriented policies will inevitably improve a country’s business climate – indeed, they are vital. Still, no country can succeed in the long term while failing to develop its human capital. Last year, 13.1 percent of young people around the world remained unemployed – nearly the entire population of Germany. We face the risk not only of a lost generation, but of lost potential and lost progress. This is a recipe for social, political, and economic instability around the world. It is also an area of major concern for advanced › Sydney. Australia 2014 ❙ 29

ICC Feature / Global Partnerships

LAST YEAR, 13.1 PERCENT OF YOUNG PEOPLE AROUND THE WORLD REMAINED UNEMPLOYED – NEARLY THE ENTIRE POPULATION OF GERMANY. › manufacturers that depend on a steady stream of highly skilled employees. Companies are determined to be part of the solution – not only to build a robust talent pipeline but also to further develop a fast-growing middle class of global consumers. Around the world, industry is creating next-generation technologies and powering high-tech manufacturing careers. This is true whether you are talking about job training collaborations in Michigan or about technology creation and commercialization efforts with King Abdullah University of Science and Technology in Saudi Arabia. As technology continues to disrupt workplaces, companies around the globe will continue to make investments in human capital. That is how we invest in our own long-term, sustainable growth – while earning anew our license to operate in communities in every region of the world. At the core of all these ideas is the human desire for progress. And yet, unless we can combine our efforts at the intersection of business, government, and society, they will 30 ❙ G20 Business 2014

have a limited impact. By collaborating to solve common problems, we will create the conditions for innovation to ﬂourish. Greater prosperity and a better quality of life depend on the ability of global leaders in every sector to engage in a robust public discussion, develop sound public policy, and implement crucial reforms in a way that beneﬁts countries, companies and citizens alike. As businesses, we will continue to unlock progress in every way that we can. And as society continues to call for solutions, and as innovative companies continue to answer, governments must do more to hold up their end of the bargain. The G20 in particular has the unique opportunity to demonstrate leadership – with developed and developing economies uniting to promote an enabling policy environment for investment and sustainable economic growth. If they do this, then together – at the intersection between science and human advancement – we will all be able to contribute to the fullest of our potential. ■

Biography Andrew N. Liveris is Chairman and Chief Executive Officer of The Dow Chemical Company, a global technology company focused on developing innovative solutions at the intersections of the physical, materials, polymer and biological sciences with 2013 annual sales of more than $57 billion. Liveris advocates the criticality of manufacturing worldwide. He is Co-Chair of U.S. President Obama’s Advanced Manufacturing Partnership and the author of Make It in America. Liveris sits on the Board of Directors of IBM, is Chairman of the U.S. Business Council, Vice Chair of the Business Roundtable and a member of the U.S. President’s Export Council.

BUSINESS MATTERS.

Chairman: Marcus Wallenberg Chairman and CEO, SEB (Sweden)

www.iccwbo.org/G20 Aâ&#x20AC;&#x2122;amal Group Australia New Zealand Bank Bayer Bridas Corporation CinĂŠpolis Corporacion America Corrs Chambers Westgart Daesungh Danfoss Group Deep Roots Capital Doha Insurance

Union of Chambers and Commodity Exchanges of Turkey Eskom Holdings Fung Group GDF Suez Great Eastern Energy Hanwha Ilthabi Rekatama Infosys McGraw Hill Financial MK Sanghi Group

The Dow Chemical Company

National Petrochemical Industrial Company

Energy Transportation Group

Nestle

Novozymes The Rasoi Group Repsol Rothschild Europe Royal Dutch Shell Russian Union of Industrialists and Entrepreneurs Severstal Schneider Electric Telefonica Televisa Wesfarmers Limited Zurich Insurance Group

Comprising business leaders and CEOs from major global corporations, the ICC G20 Advisory Group effectively targets G20 policy development on a worldwide scale. The group has proven itself to be an enduring, legitimate voice of international business, gaining recognition by G20 governments as the primary source of business expertise on the global policy agenda.

ICC Feature / Global Agenda

Thought Leadership

Authored by: O.M.Preksin

Financial issues within the global agenda from Russia B20 Sherpa’s point of view Oleg M. Preksin outlines details of the economic challenges facing the G20 leaders in Australia.

inancial issues have always been a focus of global leaders’ activities, especially within the Group of Twenty (G20). First, because this institution emerged as an upgrade of well-established working format for finance ministers and central banks governors from the leading economies. Second, because their dialog switched to the top level at the time of the most destructive financial crisis in modern history. Financial themes prevailed, but the substance of dialogue gradually changed. The initial calls for radical financial reforms evolved to regulatory modifications that ought to preserve a traditional state of order. The willingness of standard setters to change the system that led to the severe global crisis and could provoke its reiteration was toned down as the world seemed to pass the worst and the signs of recovery strengthened in mature economies. G20 concentrated most efforts promoting Basel III regulation in relation to bank’s leverage ratios and risk weighting of assets, addressing the “too big to fail” issue of G-SIFIs and resolution plans for these institutions, approaching shadow banking and reducing systemic risks arising from OTC derivatives markets. The global development issues corresponding to the UN Millennium Development Goals (MDG) were also on the agenda. These are reflected in the G8 Lough Erne Accountability Report (Keeping Our Promises) and in Saint Petersburg Accountability Report on G20 Development Commitments – both issued in 2013. However, a number of MDG have not yet been reached. Russian presidency in the Group of Twenty paid high attention to the financial aspects of sustainable growth and job creation, adding new themes to G20 agenda. Among those – the availability of financing for investment, government borrowing and public debt sustainability. The international business

32 ❙ G20 Business 2014

community led by the Russian Union of Industrialists and Entrepreneurs (RSPP) supported such priorities in the B20 White Book – the list of recommendations, presented at G20 Summit last September. Most of them were reflected in the Summit documents and formed the basis for B20’s processes under the Australian presidency. The business community came to the conclusion that it’s time for international regulators to ‘pause, take stock and align to ensure their agenda is coherent, consistent and working as intended’. The B20 members drew the attention of standard setters’ to the fact that instead of wider financial inclusion, some Basel III requirements lead to financial exclusion of important categories of market participants. Increased supervisory and enforcement activity of regulators seriously affected SMEs, innovators and developing countries, all feel discriminated against by the new rules for risk weighting of assets and higher reserve requirements. ›

StrOnG finAnciAl iMbAlAnceS reMAin And the nuMber Of riSkS fAced by the ecOnOMy Only increASeS.

ICC Feature / Global Agenda

Sydney. Australia 2014 â?&#x2122; 33

ICC Feature / Global Agenda

› Concerns have been expressed that the global rules setters give insufficient consideration to the impact of regulatory requirements on emerging economies. An independent report on the cumulative impact of the new rules on financial system’s capacity to contribute to growth would be helpful. It becomes obvious that Basel capital and liquidity requirements should be reviewed, to ensure that they do not impose severe restrictions on SME loans, trade finance, long term infrastructure investment

or capital inflow to emerging economies. But a free capital flow could be dangerous if it has a speculative background and so direct investment and speculations should be treated differently. The standard setting bodies are also expected to secure greater use of cost/benefit analysis and arrange post implementation reviews. Some fundamental G20 decisions, such as the one for new IMF’s quotas, voting power and governance, which was taken in 2010, remained implemented for years. And there

the GAP between the finAnciAl SPhere And reAl ecOnOMy iS becOMinG MOre chAllenGinG, nOt Only frOM the GenerAl bAlAnce Of POwer POint Of view, but AlSO On the exPectAtiOnS thAt finAnciAl inStitutiOnS Are tO fulfill their key functiOnS in SuPPOrtinG GrOwth And develOPMent.

34 ❙ G20 Business 2014

is a growing understanding that the onesize-fits-all approach in G20 decision making is not-applicable to every economy. The gap between the financial sphere and real economy is becoming more challenging, not only from the general balance of power point of view, but also on the expectations that financial institutions are to fulfill their key functions in supporting growth and development. Strong financial imbalances remain and the number of risks faced by the economy only increases. The core financial reforms are inevitable and the sooner the international community begins to prepare and execute these - the better. Combined and well-balanced investment in productive capacity and infrastructure seems to be the best way to contribute effectively to global recovery. And there is no need to choose between public and private sector investment – in most cases both sources of finance will need to be tapped and compliment to each other in various PPP forms, facilitating risk-sharing. To support the reform process, governments will need to improve their impact analyses and regulatory consultation practice with business. Independent preliminary assessment of the potential impact of new regulatory measures seems to be a step in the right direction. To encourage further interaction on the global agenda between the authorities, business community and other outreach at national, regional and broad international levels, a network of public and private dialogue centers would be helpful in opening new opportunities to overcome global challenges and establish momentum for sustainable growth and high employment. ■

Biography Oleg M. Preksin is B20 Sherpa for Russia & Deputy Chairman of Committee for International Cooperation, Russian Union of Industrialists and Entrepreneurs (RSPP); Vice President of the Association of Russian Banks (ARB); Senior Advisor to Renova Group; Chairman of Supervisory Committee-Member of the Board of Directors, Bank of Settlements and Savings: Board Member of Energotransbank; Advisor to Rector of Financial University under the Government of the Russian Federation.

ICC Feature / Global Commerce

Thought Leadership

Authored by: Jamal Malaikah

How the G20 and B20 can work to resolve commerce barriers The G20 agenda, together with with the WTO, needs to work to foster the development of a more laissez-faire trade system that allows greater transparency and openness in both tariff and non-tariff transactions.

usiness leaders around the globe view the G20 as a platform that can effectively lead policy coordination to address economic and trade imbalances that have been exposed during the global financial crisis. The G20 can resolve remaining imbalances by emphasizing that stimulating the flow of goods across borders ultimately supports growth and creates jobs. The business community applauds the G20 governments’ efforts to shape policy that allows prosperity not only to developed and emerging countries but also to developing and least-develop countries. Economic theory and practices prove that policies that encourage globalization bring better returns than policies that primarily focus on local development. While mindful of domestic economic and social realities, G20 governments must continue to strive to develop comprehensive disciplines that will facilitate exchanges between both companies and individuals. Dialogue between the business community and G20 governments is vital in shaping practical economic and trade policies

for the greater benefit. Accordingly, the G20 agenda should emphasize the business communities’ trade-related recommendations, expectations, and priorities.The G20 governments must be aligned in their domestic recommendations that respond to international trade challenges. Such alignment in trade recommendations among the G20 is key to promote robust and sustainable growth in all countries, regardless of their level of development. Improving the environment, so as to allow for the growth of international trade flows, requires willingness and effort on the part of G20 governments with the support of the business community. The Bali Package that was negotiated by WTO members at the end of last year and concluded in the last hour is a good example of the importance and force of political will. The business community calls on G20 governments to agree to further strengthen the multilateral trading system that is embodied by the World Trade Organization (WTO) and develop a new generation of comprehensive multilateral trade and

investment agreements that will bring opportunities for growth and balance to all regions. In pursuit of this objective, the WTO must have a proactive rather than a reactive role. It must ensure that the international environment is suited to meet tomorrow’s challenges by allowing for greater transparency and openness. Today, enterprises of all sizes are vulnerable to tariff and non-tariff barriers. Despite reductions, tariffs remain a significant barrier to trade and have a substantial cost for exporters and importers alike. They affect the competitiveness of industries and their ability to innovate. The G20 should therefore give special attention to the multilateral removal of tariffs as bilateral and regional preferential trade agreements do not provide a far-reaching solution.During the Doha Ministerial Conference, WTO members agreed to negotiations “to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non -tariff barriers, in particular on products ›

The business cOmmuniTy calls On G20 GOvernmenTs TO aGree TO furTher sTrenGThen The mulTilaTeral TradinG sysTem ThaT is embOdied by The WOrld Trade OrGanizaTiOn (WTO) and develOp a neW GeneraTiOn Of cOmprehensive mulTilaTeral Trade and invesTmenT aGreemenTs ThaT Will brinG OppOrTuniTies fOr GrOWTh and balance TO all reGiOns. 36 ❙ G20 Business 2014

ICC Feature / Global Commerce

Sydney. Australia 2014 â?&#x2122; 37

ICC Feature / Global Commerce

failure TO remOve nOn-Tariff barriers Will siGnificanTly Weaken GrOWTh aT a Time When iT is mOsT needed. › of export interest to developing countries.” G20 governments should support the immediate resumption of the negotiations on market access for non-agricultural goods (NAMA). Attention is also required in these negotiations to the removal of non-tariff barriers that play an increasing role in restricting trade. The promising work undertaken within the NAMA negotiations in the last decade must be pursued. WTO Members had submitted proposals covering, in particular, chemical substances and preparations for which sufficient information is available and which pose minimum risk to human health and the environment.The proposals identified obstacles concerning substance labeling requirements; requirements with regard to conformity assessment procedures; substance registration and cost registration; and laboratory accreditation. Basic parameters were proposed to dismantle the obstacles identified. Failure to remove non-tariff barriers will significantly weaken growth at a time when it is most needed. If tariff and non-tariff barriers are lowered or removed, even on sectoral basis, it will 38 ❙ G20 Business 2014

send a strong signal to the business community that will contribute to healthy, fair trade flows and bring less uncertainty to global trade. Lastly, the G20 must continue to condemn all protectionist measures, including the abusive use of trade remedy instruments. With over 35 percent of cases concerning chemicals and plastics, the chemical industry greatly suffers from the unjustified initiation of trade remedy investigations and the imposition of unwarranted trade remedy measures. Multilateral disciplines must continue to be reviewed and improved to ensure that anti-dumping, anti-subsidy and safeguard measures are only imposed in exceptional circumstances and are balanced. Measures cannot be repeatedly extended – particularly in the absence of imports. Also, the WTO, in the least, needs to be firm in its response to members’ imposition of all protectionism measures and encourage and reward policies towards liberalization. Global trade reform is a condition for economic and trade development within and amongst G20 members and beyond. ■

Biography Jamal Malaikah has been the President of the National Petrochemical Industrial Company (NATPET) since 2007. Malaikah is a Board member of Alahli Takaful Company (Islamic Compliance Insurance), and Board member of the Petrochemicals Manufacturer Committee (Saudi Arabia). At ICC, Malaikah is a member of G20 CEO Advisory Group and 2014 B20 Trade Taskforce.

THE BRIDLE HIDE COLLECTION

ET TINGER.CO.UK

ICC Feature / Future of Argentina

Thought Leadership

Authored by: Eduardo Eurnekian and Javier Milei

Argentina: Back on Track to the Promised Land Eduardo Eurnekian and Javier Millei outline the country’s challenges in resource development and food production to feed and manage a growing population in its increasingly urbanizing future.

eyond its continuous cyclical and idiosyncratic challenges, Argentina’s desire for long term-sustained development sits upon its staggering endowment of natural resources and available human capital. It represents an opportunity in itself, especially if we draw the lens while the world is struggling with the consequences of demographic change. If the potential for increasing the capital stock (implying high rates of return on investments), short levels of actual government debt and low asset prices across the market is to be added, one cannot but see solid foundations for strong investment-driven growth, thereby generating value for both business and consumers. As from 2010, for the first time in history, more than half of the world’s population now lives in urban centers. In 2012, 82 percent of the U.S. population lived in cities while in Mexico, Brazil, Russia and Japan that percentage was measured at 78, 87, 73 and 92 percent respectively. Interestingly enough, this phenomenon is only nascent in India and 40 ❙ G20 Business 2014

China, where in the former 52 percent of the population live in cities while in the latter that percentage comes down to 32. Naturally, these countries continue their convergence towards Western levels. In fact, China sees its urban population increasing at a rate of 50,000 individuals per day (that means more than 18 million people annually). This impressive demographic phenomenon implies strong future challenges regarding food, energy, services and the environment. One major consequence of these challenges is the loss of productive farmland: during the last twenty years, China’s rapid urbanization with, consequentially, a strong environmental impact has “eliminated” 8 million hectares of former suitable farmland. In comparison, 8 million hectares of land represent three times Argentina’s current corn-production farmland area. In addition, as more and more people join the middle class, they no longer look to produce solely for their own needs but instead offer their services within a growing labor market. The middle class in Asia is

currently measured at 500 million people and forecasted in 3.2 billion people in 15 years. These phenomena result in a reduction of land and labor, necessary for sustained food production. But urbanization and an enlarging middle class also have an impact on eating habits. In urban areas, diets become more meat-intensive, increasing the demand for animal feed and reducing food selfsufficiency. Indeed, it is estimated that by 2030, Southeast Asia will have to import 26 percent of the food that it consumes, in order to feed up to 900 million people. Therefore, the essential feature of Asia’s urbanization phenomenon is that the world will have to face a higher demand for food, while resources are simultaneously falling. Naturally, increasing productivity and human capital in rural activities will be the only way to solve this conflict. In fact, as estimated by the World Hunger Index, the total productivity of agricultural factors should be doubled from the present to 2050 so as to cover the dietary needs of the

ICC Feature / Future of Argentina

Biography Javier Milei is a Graduate in Economics (Universidad de Belgrano, Argentina) has two Master degrees in Economics (Universidad Torcuato Di Tella and CEDES/IDES). Is currently Head Economist at Corporación América and a B-20/G-20 Advisor. As from 2012, leads the Department for Economic Studies at Fundación Acordar, an Argentine think tank.

ThE MiddlE class in asia is currEnTly MEasurEd aT 500 Million pEoplE and forEcasTEd To bEcoME 3.2 billion pEoplE in 15 yEars. new population structure. Recent data has shown that biotechnology is on the right path to solve this problem by fostering higher yield and, at the same time, decreasing the characteristic volatility in food production. In addition, the use of biotechnology has shown a dramatic reduction in the implementation of chemicals and the toxicity side-effects, rendering the food production process more sustainable and ensuring the coverage of increasing food requirements. However, investment opportunities in Argentina will not be limited to the food sector. Research shows that its infrastructure needs in the next ten years will require investment of up to USD 295 billion (86 percent of Argentina’s GDP in 2012). Demand for road transport works, electricity and oil & gas represent 68% of this total. Immediate needs for the oil & gas sector (including downstream) sum up USD 107bn, allocating USD 29.7bn to conventional oil & gas, USD 29.3bn to shale oil, USD 34.7bn to shale gas and approximately USD 14bn to

downstream activities. Regarding electricity, investment demand stands at USD 36bn, allocating USD 24bn to generation and USD 12bn to distribution. In addition, corresponding modernization and maintenance demands reach USD 50bn. Current needs for road works are estimated at USD 58bn, railways and subways at USD 34.5bn, water and sanitation at USD 6.5bn and mobile phone infrastructure at USD 1bn. All in all, if Argentina manages to attract this investment, its growth rate will increase to levels of 7 percent, with real GDP doubling over the course of the next decade. Naturally, this is where long term policy planning becomes essential in order to rebuild the institutional, political and economic framework that is friendly to private capital and keen to overcome the current investment gaps. Therefore, if Argentina succeeds in achieving these basic standards, fundamentals for shaping an incentive-compatible institutional framework, the way to convergence will no longer be a chimera. ■

Has been Head Economist at Maxima AFJP, Senior Economist at HSBC Argentina, and Argentine Government Advisor to the ICSID (2005-2007). Is the author of more than 50 academic papers (two of them together with William Baumol) and three books. His latest, “Política Económica Contrarreloj” (Counter-clock Economic Policy) was published in January 2014.

Biography Eduardo Eurnekian is an Argentine entrepreneur and is the President of Corporación América, Board-member of the ICC, and Chairman of the International Raoul Wallenberg Foundation. He initiated his career in the textile industry to later create a multi-media company in Argentina. Since 1998, Corporación América has grown into a global holding company diversified in airport management, infrastructure development, financial services, energy, wine and microchip production. Corporación América currently operates 53 airports in Argentina, Italy, Armenia, Ecuador, Peru, Brazil and Uruguay and is championing the Bioceánico Aconcagua project, a 52 km-long tunnel across the Andes, linking Chilean harbours with South America’s most productive region.

Sydney. Australia 2014 ❙ 41

ICC Feature / Energy Security Authored by: Zola Tsotsi

44 â?&#x2122; G20 Business 2014

Thought Leadership

ICC Feature / Energy Security

Meeting the energy demands of the future Can Africa cope with the increasingly explosive demands for energy and pave the way for a sustainable global future?

rojections of global energy demands suggest that emerging economies are expected to account for more than 90% of the world’s total energy demand in 2035. It is against this background that the discussions and preparations for the energy demands of the future should be taking place now. However, these debates and preparations should be taking place within a climate expansion on, and saving of, the energy resources we currently have. For Africa, this means going beyond a solar panel outside a home, where people then have to choose among heating, cooking, or listening to the radio. It is about enabling communities to do all of these things at the same time, if necessary. It is about growing communities, enabling economic growth, achieving socio-economic upliftment, and doing all of this while protecting the environment and pursuing a lower carbon growth. Africa, as a continent, is a low emitter of greenhouse gas emissions, but is one of the most vulnerable continents to the impacts of climate change due to its geographical location and poverty levels – which means that the ability to respond quickly to disasters is compromised. Due to the nature and reach of the electricity business, the sector itself remains very vulnerable. Pursuing a sustainable energy future for Africa is, therefore, about meeting a number of interlinked imperatives. › Sydney. Australia 2014 ❙ 45

ICC Feature / Energy Security › African power utilities are increasingly aware of the global energy trends that have a direct impact on the continent. The global energy landscape is changing; there is a growing reticence regarding nuclear power in some countries, a resurgence of oil and gas in others, and continued growth in wind and solar power, while coal remains steadily in the background. Energy demand is barely rising in the developed countries, while the developing countries are becoming more and more power hungry. In this, lies the opportunity for the African continent to shine. Africa has an abundance of primary energy resources that could easily meet the needs of the continent and beyond in a sustainable manner. Resources range from hydro, to solar, to gas, to coal and nuclear. The abundance

Sustainable Energy for All initiative (SE4All) run by the UN Secretary-General’s office. The goal is to facilitate 100 million new connections worldwide by 2025. This starts at home, where we are involved in a number of partnerships in developing an electrification roadmap for Southern Africa. The aim is to deliver the 35 million connections that are required in the SADC region and, thereafter, to replicate the roadmap in other regions. This is an exciting initiative that will go a long way to turning the tide for Africa. Sustainable energy access translates into sustainable economic growth, poverty eradication, and the opportunity for equitable growth in the region. With this comes the belief that the continent can rid itself of the stigma of being a “risky” place to do business. ■

AfriCAn power utilities Are inCreAsingly AwAre of the globAl energy trends thAt hAve A direCt impACt on the Continent.

Biography Andile Zola Tsotsi has been serving as the Chairman of Eskom’s Board of Directors since June 2011. He obtained a Bachelor of Science in Mathematics and Chemistry from the the then UBLS (University of Botswana, Lesotho and Swaziland)in 1970. He was then appointed as a research assistant and a lecturer at the University of Zambia for a period of three years. In 1974, he was awarded an honours degree in Chemical Engineering by the University of Surrey in the United Kingdom. Tsotsi’s career began in the Process Division of Universal Oil Products (UOP) in Illinois in the United States of America, where, on joining, he was immediately assigned to the parent office for training. He has had an illustrious career in business. He was appointed Chairman of the Board of Eskom in July 2011. Tsotsi is passionate about transformation.

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ICC Feature / Future of Energy

Thought Leadership

Authored by: Jean-Pascal Tricoire, Chairman & CEO of Schneider Electric

The new world of energy: Digital, local and consumer focussed Jean-pascal tricoire comments on newfound issues with increasingly decentralized energy systems and his optimism for the future of global energy .

he energy world is changing. From a concentrated and centralized system discovered in 1888, the energy system is evolving to a decentralized system with diverse energy generation sources. There are two main factors causing this transformation: the introduction of information technology in the energy sector, and the emergence of alternative energy generation sources at scalable levels. The convergence of information technology and energy In the past 20 years, the internet has connected 2.5 billion people together and in the coming 6 years, this number will double. Concurrently, the internet will connect 40 billion machines to those 5 billion connected people. The next stage of connectivity is about machines. The combination of IT software with electrical devices and products provides customers with real-time information and smart services that allow all stakeholders an opportunity to implement active energy

efficiency, share better energy, and consume at the right moment across smart grids. Alternative energy generation sources From the shale-gas boom in America to the rise of renewable in the energy mix, energy sources are widening and reaching scalability. The price of crystalline silicon photovoltaic cells, for instance, have gone from USD 78 per watt to USD 0.72 in less than 4 decades (1978 to 2013, BNEF). Policy driven markets have facilitated the deployment of these technologies that are reaching grid-parity in many markets. As of the first quarter of 2014, there are 79 countries where price of photovoltaic electricity is equal to or less than the grid average price (Al Gore, http://www.politico.com/). This wider choice in energy generation sources, combined with the emergence of information technologies in the energy sector, are redefining the energy ecosystems on demand and supply side, and paving opportunities of increased efficiency at all levels, from people to power plant, to ensure a complete optimization of the supply chain.

Impact on the entire energy chain For consumers, the connection of energy systems, phones and machines, in everyday life provides real-time information on consumersâ&#x20AC;&#x2122; needs and offers an opportunity to control their consumption. It reduces the consumersâ&#x20AC;&#x2122; energy bill, and increases their purchasing power within a very short pay back. Access to real time information and flexible, connected devices, allow consumers to change their consumption patterns. They are empowered to choose when, what and how they consume energy, presumably when electricity is cheap and green. At the utilities and regional level, energy efficiency enables increasingly reliable supply and provides hedging against black outs. It also saves significant amounts in investments costs by avoiding the creation of new plants. Energy efficient technologies also save significant amounts by increasing resilience, security and anticipation of extreme weather conditions. Utilities can connect supply and demand, and offer new

In the past 20 years the Internet has connected 2.5 bIllIon people together. In the comIng 8 years, thIs number wIll double. concurrently the Internet wIll connect 40 bIllIon machInes to those 5 bIllIon connected people. 48 â?&#x2122; G20 Business 2014

ICC Feature / Future of Energy

services to their customers, so that they consume less and at a more optimal time. At a country level, the implementation of higher energy efficiency levels creates an economic opportunity for reduced public expenditure as Governments balance their energy trades that are causing major strains on the economy. The EU energy balance has multiplied by 6 in 10 years, with oil imports alone reaching USD 500bn in 2012 (Enerdata, 2013).The Efficient World Scenario put forward by the World Energy Outlook of the IEA, highlights that there could be USD 570Bn positive effect of the Energy Balance of 5 key regions, with China seeing USD 190Bn and India USD 110Bn of positive effect, through the implementation of a higher energy efficient scenario; as well as a huge potential for job creation, with estimates ranging from 800,000 to 1 million jobs by 2025 in a country like France (Ademe, OFCE, 2013). Power the People Individuals are at the center of this new energy world, where roles are redefined. No doubt, utilities must keep their central role in this evolution and they are already rethinking the way they operate and address customers. Customers are changing in needs, behaviors as well as demands.This transition needs solid change management to avoid overproduction. All stakeholders, utilities, cities, facility managers, technology suppliers, should be prepared to continue an evolution in their roles, in business models and in technology offers. The transformation places consumers at the center and opens the way for new models of consuming energy â&#x20AC;ş Sydney. Australia 2014 â?&#x2122; 49

ICC Feature / Future of Energy › and managing resources. A reliable and simple technology is needed to guide all through the various transitions. Technologies exist to harness this efficiency at all levels The evolution of technologies, through software and the internet of Things, are opening new means of optimizing the overall energy chain through systems of integration. Such systems ensure that energy is safe, reliable, green, and efficient for the least amount of money. Already, by using the Internet to connect people to their environment, and their environment to the smart grid, by switching off automatically, by promoting consumption when energy is cheap and green, at least 30% savings is achieved through energy efficiency measures that do not involve major renovations or disturbances to the end-users. All this with paybacks under 5 years. Software now allow the curtailment of peaks. As an example, Schneider’s EnergyPool has curtailed over 1.7GW of energy since its inception–equivalent to 1 nuclear reactor. Customers in buildings, industry, data-centers and infrastructures are offered a range of technologies, from products to systems and solutions, that restrain energy use and allow saving energy throughout the entire chain. While we should embrace cost-effective tactics to confront some of the major challenges of our generation–from resource scarcity, traffic congestion, pollution, and an increase in extreme weather conditions, as well as energy poverty and competitiveness– estimates show that over 2/3rd of energy efficiency’s cost-effective potential is still not being implemented. Change is now Market failures and resistance to change explain this untapped potential. Pay back times are short, within a few years, and investments are refunded by savings. Governments should create environments to facilitate the implementation of energy efficiency and smart grids. They should enforce a level-playing field and ensure that all energy markets are free and competitive, notably by halting subsidies of fossil fuel technology.1 Transitions can be long. But this one is worthwhile, and should be happening faster as it brings benefits to all: Carbon emissions reduction, consumer purchasing power, job creation, and country balance of payments and capital expenditure avoidance. It is time to power the people and unleash a new world of energy that is digital, local and consumer focused. ■ 50 ❙ G20 Business 2014

utIlItIes can connect supply and demand, and offer new servIces to theIr customers, so that they consume less and at a more optImal tIme.

Biography Jean-Pascal Tricoire, 50 years old, joined Schneider Electric in 1986. He was appointed President and Chief Executive Officer in 2006 and named Chairman & CEO in April 2013. His career at Schneider Electric has developed largely outside France in operational functions in Italy, China, South Africa and USA. Within the General Management, he served as Vice Executive President of the International Operating Division from 2002 before being appointed in 2004 Chief Operating Officer (COO). Moreover, Jean-Pascal is President of the France-China Committee since 2009.

Estimates show that there are still yearly subsidies of over USD 500bn in fossil fuel generation and some renewable subsidies are no longer justified.

Jean-Pascal holds a degree in Electronic Engineering and a MBA.

Schneider Electric

ICC Feature / Global Economy

Thought Leadership

Authored by: Antonio Estrany y Gendre

The need to preserve the genuine instruments of progress Capitalism, proven to be the most effective human system in the allocation of goods and resources, needs to better facilitate emergency situations to ensure a quicker return to economic growth and development.

hroughout history, civilizations have developed without contributing substantial improvements to the living standards of the world’s population. Circumstantial discoveries such as the wheel or the gunpowder have hardly fostered advances in the global conditions. The civilization that Spengler used to call ‘Western’, which today might be called ‘world’, has caused a profound change in the history of humankind, as it generated a number of resources that would have been unimaginable in previous civilizations. The conjunction of the capitalist system with the findings of experimental science have made it possible to accumulate virtually unlimited wealth to such an extent that the world capital accumulated in recent decades dramatically exceeds the total produced throughout all previous civilizations. This wondrous growth has been possible thanks to an instrument that constitutes the essence of capitalism: the market. Today there is almost worldwide consensus that the market is the best imaginable system for the allocation of production-related resources. The gradual incorporation of all the countries to the World Trade Organization, which requires precertification of its members as ‘market economies’, is sufficient proof of this reality. The fact that the market system has eventually established itself as ideal for the allocation of production factors does not mean that it offers appropriate solutions to all the problems of the economy. The fair distribution of what is produced inevitably requires prudent actions by public authorities, whose intervention may also be necessary to correct the disparities arising from business cycle alternatives and other unforeseen emergencies. It is well known that the process of production, distribution and consumption is not static but evolves over expansion and contraction cycles. Additionally the world

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economy in our days is characterized by increasing globalization, which implies degrees of homogenization and integration, and therefore more possibilities to participate in global growth during periods of expansion cycles, but also risks that the difficulties or disorders from other countries may spread globally in any crisis that may arise during contraction periods. The size of the current world economy poses new challenges to its governance as a result of said globalization process. The depressive phase of the global economic cycle we are going through has led to extraordinary international political decisions of which the creation of G20 is good evidence. Without a doubt, emergencies caused by wars are inevitable, while other circumstances occurring at present might just as well lead to exceptional decisions. During the two world wars of the last century, the destruction costs of directly affected countries were huge, and perhaps their magnitude and severity resulted in other, less immediate and less visible costs going unnoticed, though they also hit hard and delayed world recovery. All affected countries were forced to implement a series of measures that were collectively regarded as ‘war economies’ to cope with their most urgent needs. Price controls, rationing, export and import bans, stiffer government permits, etc. interfered in the countries’ economies and replaced the market mechanisms with central planning systems. It took quite some time to assess the cost of these measures fully; restoration of the market system was slow and expensive due to the obstacles placed by the remnants of obsolete protectionism, some of which is still reluctant to disappear either due to individual or sectorial interests, and the lack of perception of a global economic future. Today the world feels it is just coming out of a deep crisis that had a strong impact on

all countries. The coincidence of the depressive phase of the global economic cycle and the particularly hard situation of countries such as the United States and those of the European Union stepped up concerns in all countries. The problems arising from the subprime mortgage crisis in the United States, along with the delicate situation in several member countries of the European Union and the increasing perception - that the creation of the Euro zone should have been accompanied by some kind of agreement towards the joint development of budgetary and economic policy commitments certainly justified these concerns. It was only logical that, in such situations, the countries would decide to establish a High Level Group to propose emergency measures in light of the unforeseen problems that might emerge from the existing situation. The G20,

ICC Feature / Global Economy

Today The world feels iT is jusT Coming ouT of a deep Crisis ThaT had a sTrong impaCT on all CounTries.

Biography

both at summits and at technical meetings known as sherpas level, has shown great caution in their actions and consistently sought the advice of international institutions such as the International Monetary Fund, the World Bank and the World Trade Organization, while also taking into consideration the recommendations put forward by the private sector. Moreover, even though countries are free to formulate and implement their own policies, they definitely analyze the issues raised by the G20 with respect and consideration. Therefore, it would surely help if the G20 reminded them of the lessons learned from past experiences when exceptional measures are adopted to deal with emergency situations. The first recommendation would be that emergency measures should always be

temporary. Once their origin has been overcome, they should be repealed. But the most important concept to bear in mind in any emergency is that, once the emergency is over, it is necessary to preserve the system that made it possible to accumulate wealth and constitutes the groundwork of the capitalist system, which is a main feature of our civilization. When faced with emergency measures that interfere with market mechanisms, we must make sure that the system will be restored in due course. If it is clear that the market is the best mechanism to allocate resources, and that the private enterprise is the best unit capable of achieving higher productivity through competition, there will be no doubts about how to move from emergency measures to normal growth and development. ■

Antonio Estrany y Gendre is an Argentine economist and diplomat, specialized in international affairs. He is President of AXION Energy (former ESSO in Argentina, Paraguay, Uruguay) and member of the Board of Bridas Corporation. Besides he is the President of the CICYP (Consejo Interamericano de Comercio y Producción) in Latin America and Vice-President of the CARI (Consejo Argentino para las Relaciones Internacionales). He is member of the Advisory Board of the Center for Strategic and International Studies (CSIS), in Washington. He is former Co-President of the Mercosur European Union Business Forum (MEBF) and member of the Argentine National Committee of the International Chamber of Commerce (ICC). During seven years he has been Secretary of State for International Economic Relations and ambassador in Geneva for the GATT negotiations. He became Alternate Governor of the World Bank and has presided on many opportunities over the CECLA (Comisión Especial de Coordinación Latinoamericana).

Sydney. Australia 2014 ❙ 53

ICC Feature / Danfoss Authored by: By Niels B. Christiansen

Modern infrastructures help drive development As decision-makers from across the world meet up at the G20 summit to discuss ways to drive global sustainable growth, they can help ensure that solutions are put into play just where they are needed most.

Thought Leadership

‘N

o Man is an Island,’ wrote the English poet, John Donne, in 1624. This statement still holds true today. It could even be a slogan for this year’s G20 summit. The fact is that global megatrends concern us all, and if they present a challenge in one part of the world, a solution is likely to exist in another part. And as decision-makers from across the world meet up at the G20 summit to discuss ways to drive global sustainable growth, they can help ensure that these solutions are put into play just where they are needed most. Examples of megatrends that generate a growing need for solutions are urbanization and a growing population. These trends spur on a demand for modern infrastructure, food safety, efficient energy consumption and tools to combat climate change. The good news is that the innovative technologies which provide the solutions already exist: technologies that can contribute to driving development and long-term sustainable growth.

City developers have the opportunity to get it right first time Urban growth plays a key role. Today, half the world’s population lives in cities, but in 2030, just sixteen years from now, two out of three people will have settled in urban areas1. Another key point is that 60% of these future urban areas have not even been built yet. The demand for modern infrastructure that can cater for this development is massive. This includes roads, energy supply, food supply chains and water distribution systems. With this development comes significant opportunities. City developers in emerging markets have the chance to get it right first time and achieve great results by choosing the best innovative solutions to invest in. By applying modern technologies today, developers can cater for tomorrow’s needs and expand their cities without causing an explosion of energy consumption. Therefore, it is vital that they are aware of what technologies are available within, for example, district heating and cooling, controls to regulate heating and air conditioning, construction and waste water. A lot can be achieved; Shanghai Tower3, for example, will take a leap forward by applying 6700 new control valves to the heating, ventilation and air conditioning system of the building, which is the tallest in China. This will cut down 20 percent of the energy used by the system. And adding motor controls will generate an additional savings of 20-40%. Chinese city puts surplus heat to good use The world needs to increase investment in infrastructure by nearly 60% up to 2030. 56 ❙ G20 Business 2014

ICC Feature / Danfoss However, there is also a lot to gain by improving the productivity of existing infrastructures such as power distribution4. A great example is the Chinese city Anshan4, where a comprehensive district heating solution is being applied, in which surplus heat from the local steel plant is used as energy. The surplus heat is channeled into the district heating network instead of being lost. This means that over the next four years, coal usage and CO2 emissions will be reduced by 60-90%, and air quality will be improved for the 1.8million people who live in the city. At the same time, a lot of energy and money will be saved too. The solution could also be applied in many other cities, and as district heating can utilize a wide range of energy sources, there is great untapped potential to be seized so that even more people across the world can experience the benefits of reduced carbon emissions, cleaner air and cheaper heating and cooling. Innovative technologies provide food safety The world’s increasing population is another common focus. Going towards 20505, the number of people in the world will grow by a third, putting food safety and minimization of food waste high on the global agenda. A staggering one third of all food produced goes to waste instead of ending up on the dinner table. There are several means to reduce this: strengthening cold chains, upgrading infrastructure and free trade. Simultaneously, the food sector accounts for approximately one third of the world’s energy consumption. This can be reduced by applying technologies that enable the user to obtain the required effect with less energy. Today, innovative technologies can control, steer and propel agricultural vehicles with optimal effectiveness so that farming output is increased and diesel consumption is reduced. Other solutions keep food fresh and safe all along its journey to consumers; motor controls, for example, can reduce the energy consumption of refrigeration systems by 15-25% in the dairy, meat and poultry industries. Refrigeration technology can optimize the daily operations of supermarkets, so the risk of poor food quality and waste is minimized while at the same time energy is saved. An example is Winn-Dixie3, the ninth largest supermarket chain in the US, which has installed modern refrigeration system controllers and services to monitor energy consumption and ensure food safety. This project has resulted in Winn-Dixie reducing energy consumption massively over the last two years, and many other retailers are following suit.

The world needs To increAse invesTmenT in infrAsTrucTure by neArly 60% up To 2030.

The G20 summit helps pave the way for solutions We have many of the solutions at hand that can cater for some of today’s global challenges, and at the same time contribute to growth. Modern technologies that improve energy efficiency can help people and societies prosper. Energy efficiency has already helped reduce our energy consumption by 65%6 since the seventies. This is way more than achieved by renewable energy and shale gas put together. It is also over two thirds less energy that needs to be paid for and catered for by power plants or grids. Maria van der Hoeven, Executive Director of IEA sums it up, when she says; “Energy efficiency is the only ‘fuel’ that simultaneously meets economic, energy security and environmental objectives.” However, for the energy efficient solutions to come into play to a much greater extent, an increased awareness of what they can achieve is essential as well as a positive political framework. This is where the G20 summit makes the difference; by joining forces and reaching out to decision-makers in the field, G20 delegates can pave the way for modern infrastructures that will help drive development and sustainable growth. It takes awareness, focus and action to open the door to innovative solutions. ■ Citygroup: Citi Perspectives, Volume 6, Q1/Q2 2012) Institute for Sustainable Communities: Urban Climate Adaptation: From Risk Barriers to Results, 2013 3 Danfoss Media Relations (3 cases) 4 McKinsey Global Institute Infrastructure productivity: How to save $1 trillion a year, 2013 5 UN’s Food and Agriculture Organization: Global Food Losses and Waste. Extent, Causes and Prevention (2011) and Food wastage footprint. Impact on natural resources. Summary report (2013). 6 IEA New Policies Scenario 1 2

Biography Niels B. Christiansen is the President & CEO of global group Danfoss A/S, which produces and sells an extensive range of energy-efficient products and services. Danfoss is also a world leader within mobile hydraulics and provides solutions for renewable energy such as solar and wind power. Niels B. Christiansen has a broad experience of leading large global high-tech companies. He joined Danfoss in 2004, and before that he was Executive Vice President at GN Store Nord and President & CEO of GN Netcom. He has also held leading positions at McKinsey & Co., and Hilti Corp., Switzerland. Niels B. Christiansen has an MSc in Engineering from the Technical University of Denmark and holds an MBA from INSEAD in France. He is the Chairman of the Board of Axcel A/S, a member of the Board of Directors of A. P. Møller-Mærsk A/S and a member of the Board of Directors of William Demant Holding A/S. He is also Vice Chairman of the Board of the Confederation of Danish Industry and member of the Board of Directors of the Federation of Regional Industries in Denmark.

Sydney. Australia 2014 ❙ 57

ICC Feature / G20 Priorities

Thought Leadership

Authored by: Kimball C. Chen, Chairman, Energy Transportation Group

Energy Access: a G20 Priority for Economic Growth, Social Development, Political Stability and Sustainability achieving universal access to affordable energy saves lives, forests, the climate; it increases productivity and drives growth.

t is widely accepted that access to affordable, usable energy is essential for economic and social development. Major world institutions, including the United Nations, the International Energy Agency (“IEA”), and World Bank, concur that there are three top priority energy goals for the world: 1. Universal access to modern energy, to benefit health and development. 2. Increased energy efficiency, to decarbonize growth. 3. A greater share of renewable energy in the global energy mix, to increase sustainability. These are goals not only for developed countries but also for the 2.7 billion people in developing countries who presently lack access to modern forms of energy such as electricity, natural gas and natural gas liquids (LPG). These goals will be recognized and included in the Sustainable Development Goals that will succeed the Millennium Development Goals in 2015. In the developing world, lack of access to modern energy causes several major problems: 1. Smoke from cooking with solid fuels causes 4 million premature deaths per year – more than HIV, malaria and TB combined – among the 2.7 billion people who lack access to clean cooking energy. 2. In Africa, harvesting of biomass for fuel causes 50% of the continent’s deforestation – less than a decade’s worth of trees remain in many key regions. 3. Fuel gathering diverts huge amounts of time every day away from productive uses and from education for many of the women and children among those 2.7 billion people. 4. Lack of lighting causes the work day and study day to stop after sunset, curtailing economic activity and educational progress. 58 ❙ G20 Business 2014

5. The solutions to these problems differ greatly in cost, complexity, and time to carry out. Providing another one billion people with access to LPG for cooking and heating on a commercial basis would require only $12-15 billion of capital investment and could be implemented in 10 years, with no requirement for technological breakthroughs. Universal electrification would take 20 years and cost up to $700 billion over 20 years (OECD/ IEA estimate). However, all solutions have been delayed for want of public-private coordination and cooperation, with a few notable exceptions. Indonesia and India, as examples, undertook major public-private initiatives which between them have transitioned in just 5 years, 10% of the world’s population to LPG (200 million people in Indonesia; 500 million people in India) from traditional, unhealthy fuels in just 5 years. Other nations can and must match this rate and scale of progress. The G20 nations must continue their diversification of energy mix and sources to realize policy goals of security, stability, growth and climate change mitigation. But the G20 must also add global access to clean, modern energy as a necessary top-priority goal. The benefits for the entire world will be significant: 1. Achieving universal access to affordable energy not only saves lives, forests and the climate, it also increases productivity and drives growth. 2. In turn, growth creates larger markets and strengthens trade and investment flows for both buyer and seller nations. 3. Growth also moderates disorderly emigration and political unrest. 4. In turn, shared and sustainable prosperity is increased for G20 and non-G20 nations alike when all countries have adequate access to affordable energy. ■

Universal electrification woUld take 20 years and cost Up to $700 billion over 20 years (oecd/iea estimate). Biography Mr. Chen is Chairman of Energy Transportation Group, Inc., (“ETG”) which develops international liquefied natural gas (“LNG”) and liquefied petroleum gas (“LPG”) projects. He presently serves as Chairman of the Global LPG Partnership (“GLPGP”), a public private partnership leading global efforts to provide LPG to the 1 billion people who most urgently need it. Mr. Chen also is the current President of the World LP Gas Association (“WLPGA”), the global LPG industry association. He advises governments and international agencies in regard to LNG and LPG policy issues and also serves on the International Chamber of Commerce G20 CEO Advisory Group, which provide policy recommendations to G20 heads of state. Mr. Chen graduated from Harvard University with a B.A. (Magna Cum Laude) in 1973 and with an MBA in 1978.

We partner with major governments and corporations in development of strategic LNG and LPG projects. Since 1972.

ENERGY TRANSPORTATION GROUP

Human Capital / Education

Authored by: Santiago Iniguez, Dean IE Business School

The Future Belongs to Blended Education The life of a manager is continually evolving. Their careers change, they move to different companies, and they even switch between diverse sectors. You could say they live “blended” lives. Advances are also made in management practices and managers must keep their skills up to date. Education should also be blended, accommodating these necessities.

anagers have ever-changing needs when it comes to their education and development as they look to continue on the upward trajectory in their career progression. IE Business School, one of the leading business schools in the world, has responded to those needs and fine-tuned its approach to blended teaching. The results of this change have been hugely positive, culminating in our blended Executive MBA being named the best in the world in 2014 by Financial Times. The recognition earned by the program has been the result of a truly innovative process, following a trial and error approach. At the same time, we kept a close eye on developments in the management education sector and beyond. Developing our blended educational method was not so much about inventing a new model, radically different from traditional teaching. Instead, it was based upon time-honored methods combining teaching strategies with accessible technology. Furthermore, we understood that involving our teaching faculty in this process was essential. We knew that if teachers lacked the qualifications and experience of our professors, they would not be able to successfully deliver blended teaching. We gave support and intensive training to our faculty about how to teach online. At the same time, we understood that traditional teaching materials as well as innovative teaching tools, needed to be developed by the same people, rather than being outsourced. To do this, we set up a special team to help our professors develop materials such as multimedia case studies.

62 ❙ G20 Business 2014

Last but not least, the success of these blended programs does not rely on a magical technological platform that is able to solve the challenges associated with the learning process. As with traditional teaching methods, the successful outcome is a result of the interaction between students and staff, program directors, and the technicians who keep the platform running. We have been able to make the blended learning experience just as satisfying and effective as traditional methods; it is not about the platform but the quality of the learning process. Along the way, we have seen that the hurdles we have faced while developing our blended learning method can be overcome or worked through. One of the greatest challenges was to ensure that our teaching staff could dedicate enough time to each individual following a blended program. Other online educational providers have separate tutors for their online programs, but we ensure that our blended students receive the same experience as students in the traditional classroom as they are taught by the same professors. Students at IE Business School can access an online session for several days. Our experience shows that teachers often end up putting about four times as much work into answering students’ questions and advising them as they would in a normal classroom situation. Therefore, the learning momentum lasts longer than traditional face-to-face sessions. Another aspect of our blended programs is that we require students to finish their studies within the same time frame as they would if they were following a face-to-face course.

In other words, they learn as a group and share the blended experience together. We feel that this approach builds a stronger sense of belonging because students establish rapport with their fellow participants. At a first glance, our blended approach might seem less flexible than those at other schools, which allow participants to complete their studies over a longer period of time. However, we believe the benefits of continuous learning far outweigh any disadvantages and makes for a more complete educational experience. Blended format education will continue to grow and improve in the coming years and I can see three principal challenges in the future. Firstly, dealing with market segmentation as more and more schools seek to set themselves apart from the mainstream online competition. Secondly, the need for ongoing training by teachers to improve their ability to combine technology with educational delivery. And finally, developing new content, formats and networks by making use of the growing number of new resources and relationships available through the internet. I am sure that the future belongs to blended programs, no matter what challenges arise as a result of new technologies being developed and introduced to business schools. ■

For further information: www.ie.edu/business

Human Capital / Education

Above: Santiago Iñiguez, Dean of IE Business School

ThE bEnEfiTs of blEndEd lEArning fAr ouTwEigh AnY disAdvAnTAgEs And mAkE for A morE complETE EducATionAl ExpEriEncE. Sydney. Australia 2014 ❙ 63

Feature / Food Security Authored by: Juergen Voegele

The Urgency for Global Action on Food Juergen Voegele discusses the evolving needs of agricultural development and food production within a changing, modern world.

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Feature / Food Security

he world is changing at an increasingly faster rate – income growth, shifts in consumption patterns, climate change, and natural resource depletion are all occurring faster now than at any time over the last century – and the responsiveness of our food system needs to change too if we want to ensure a sustainable and prosperous future. We need a food system that can feed every person, every day, in every country; that can raise incomes of the poorest people; that can provide adequate nutrition; and that can better steward the world’s natural resources. Urgently, we need a food system that shifts from being a major contributor to climate change to being part of the solution. The amount of food the world consumes continues to increase with more people to feed, more calorie intensive diets, and more use of food crops for biofuels. Added to this is the high food loss and waste between farmers’ fields and dinner plates. World food prices have increased as grain stocks have declined. Farmers are responding to higher prices to produce more, but they are faced with rising water scarcity, degrading land, and increasingly extreme weather events. We need an agriculture and food system that can adequately respond to the world’s food needs. Global diets are changing rapidly. While a billion people go to bed hungry every night, a similar number of people in developing countries are obese. Calorie consumption of the most undernourished needs to increase, and the changing nutrient content of foods and diets shaping poor nutrition and health outcomes need more attention. We still live in a world where seven million children die before their fifth birthday every year, and almost half of these deaths are associated with undernutrition. Current food production and processing practices make agriculture the largest user of water, one of the largest polluters of the atmosphere through greenhouse gas emissions, and one of the largest user of mined elements (due to inorganic fertilizers) – all of which are finite. While other sectors are innovating to reduce greenhouse gas emissions, agriculture is lagging. The world needs to shift from denial to action to rapidly catch up. Water and fertilizer efficient agricultural practices must be more widely adopted, and emissions must be lowered and even removed wherever possible. ›

Production systems can and need to manage resources in a more integrated way, balancing trade-offs.

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Feature / Food Security

we are within reach of ending extreme PoVerty globally. › Production systems can and need to manage resources in a more integrated way, balancing trade-offs. We cannot produce the food we eat without preserving the ecosystem services provided from other sources such as forests, we cannot sustain forests without thinking how we will feed a growing population, and both require consideration of how we manage our watersheds and rural landscapes. Even with urban migration, 4 of every 5 people in extreme poverty live in rural areas and most rely on agriculture for their livelihoods. We are within reach of ending extreme poverty globally within a generation. In order for us to achieve this remarkable milestone, incomes from agriculture in the poorest countries will need to increase substantially. 66 ❙ G20 Business 2014

Global and local action, at scale, is needed to address this agenda – private sector innovation, effective government policy, partnering with civil society, universities, and global institutions. More open trade can facilitate a more responsive food system to shocks, better science can help adapt to climate change and lower emissions, better education can help inform diet choice, and more finance to support farming systems in poor countries can help raise farmer incomes. These are some of the ingredients needed. The world’s food system has made life and prosperity possible, let’s ensure that going forward we better shape a system that can provide the world with needed food, incomes, nutrition, and sustainable management of natural resources. ■

Biography Mr. Juergen Voegele joined the World Bank in 1991 after working with the University of Hohenheim, the GTZ, and the BMZ Federal Ministry of Economic Cooperation in Germany, including a three-year field assignment in Western Samoa. His initial assignments in the World Bank’s Washington headquarters included working in agriculture and natural resources divisions in the Europe and Central Asia Region and in the East Asia and Pacific Region. He held various assignments for the East Asia and Pacific Region and in 1998, he transferred to the World Bank’s Beijing, China Office to lead the Agriculture Unit. This article is part of the 2014 Global Action Report.

Nymity / Privacy Compliance

Authored by: Terry McQuay, President and Founder, Nymity Inc

Are you at risk? Is your organization adequately responding to the increasing privacy risk?

e live in an increasingly interconnected world where personal data collection and use is escalating at an exponential pace and personal data flows are more complex and unclear – increasing risk is inextricably linked with this trend. Governments are responding to this new reality by creating and expanding rules and regulations that address specific industries (e.g. telecom rules in EU); specific technologies (e.g. cookie rule in EU); specific uses (e.g. social media laws in USA); and specific concerns/risks (e.g. data breach notification rules in USA). Regulatory authorities are also casting the net wider by broadening existing obligations or creating new ones (e.g. “right to be forgotten” and data portability in new EU Regulation). Governments are expanding powers of the data protection authorities and regulators (e.g. power of UK regulator to levy monetary penalties) and regulators are increasing the use of technology and enhanced international co-operation to enforce data protection laws (e.g. Google Streetview orders in many jurisdictions, Facebook). As technology and regulations rapidly change, how can organizations mitigate the regulatory risk? How can organizations deal with more data privacy laws, more contractual obligations, more data protection authority powers and more enforcement actions? These are pressing questions that all organizations face every day - now is the time to act! We believe a strategic approach to effective privacy management and standing ready to demonstrate accountability mitigates the privacy compliance risk. At Nymity, we know a challenge like this is too great for any one organization and that the strength in addressing this challenge is a holistic, multi-disciplinary approach to risk and benchmarking across organizations, globally. We understand that organizations want to be accountable and seek a framework to demonstrate this accountability. We also realize that privacy compliance and risk

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mitigation need to be an ongoing process, embedded into the operations of the organization, with metrics. At Nymity, we measure privacy regulatory risk based on the following premise: laws and regulations created by governments are designed to protect the interest of citizens and therefore reflect societal values. How are organizations responding to the challenge of mitigating privacy risk? Nymity works closely with its customers, research partners and regulators around the world to innovate compliance software technology and methodologies that will provide answers to these global risk challenges. In doing so, we strive to help our customers comply with confidence and make compliance a tangible benefit to their organization. Organizations including governments around the world are seeking the most effective means to demonstrate compliance/ accountability and mitigate risk. Organizations are increasingly searching for benchmarking metrics to ensure that their organization is doing the right things to mitigate the risk. Many want to ensure that their privacy program is best in class while others want to be on par with industry norms. Nymity has responded to this challenge by developing privacy management software that enables organizations to manage and measure their privacy program effectiveness, making it a tangible benefit to the organization. Based on privacy management processes and activities, our software enables the privacy office to easily measure privacy management, understand privacy regulatory risk, monitor their privacy program and demonstrate accountability and compliance – on demand. Based on our research, responsible organizations can incorporate privacy risk management within their governance structure and mitigate risk – simply by implementing a privacy program and approaching privacy compliance strategically. By appointing a privacy officer, the

foundation for accountability-based privacy risk management is established. This individual first establishes a foundational privacy program based on processes and activities common to all jurisdictions, then addresses outliers. In the privacy and data protection regimes around the world, implementing a privacy program - with evidence - is equal to ›

Nymity / Privacy Compliance

NymIty works closely wIth Its customers, research partNers aNd regulators arouNd the world to INNovate complIaNce software techNology aNd methodologIes that wIll provIde aNswers to these global rIsk challeNges. Sydney. Australia 2014 â?&#x2122; 69

Feature / Global Economy Authored by: Emiliano Duch

Building an Abundant Ecosystem for Prosperity: The Competitiveness Agenda Emiliano Duch discusses goals for the World Bank Group in the reduction and eradication of poverty and the struggle between the public and private sectors in the process.

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he World Bank Group has set two ambitious goals, to end extreme poverty within a generation, something which has always been in our mission, but now setting a concrete target of reducing Extreme Poverty to less than 3% by year 2030, and we have added a new goal, increasing shared prosperity, by fostering income growth of the bottom 40% of the population. These two goals address the stigma of poverty and inequality that our society cannot tolerate, focusing on enriching livelihoods through economic growth, inclusion, and sustainability In the past decades, great advances have been made in tools and policies to fight poverty, from the advances in health to microfinance, using a combination of social and economic growth policies, but when we set the ambitious goal of increasing the prosperity of almost half the population of our countries, we will need to rely on increasing prosperity by increasing jobs and the productivity of those jobs, so they can generate higher returns to the ones that perform them; and that is only possible in the long term having competitive industries. Competitiveness is a requisite for creating prosperity and inclusion for sharing it, a challenge that all countries in the world are facing, including the United States. One of the roles of the World Bank is to facilitate the dialogue and action in ongoing and emerging development challenges, bringing the perspective of developing countries to global issues. We support our client countries in delivering customized development solutions by packaging finance, knowledge, and convening services, so it is of utmost importance for us to help advance the knowledge about what works and what does not work to promote Competitiveness, and thus our interest to exchange experiences with the policy makers and practitioners participating in the Global South Summit. Even if our focus is in emerging and developing economies, we observe carefully the examples in advanced economies like the Unites States as well, especially to understand the role of the Public Private Dialogue in developing a competitive economy. We all know that the Private Sector is the one that will create the jobs at the same time, an uncompetitive private sector is the one that will lose the jobs. How do we establish that positive competitiveness building dialogue and not end in rent seeking behavior by the incumbent players? One of the examples here in the United States, that we can learn from, is the rise of the Tucson Optics cluster, starting from literally nothing

Feature / Global Economy

ONE OF THE ROLES OF THE WORLD BANK IS TO FACILITATE THE DIALOGUE AND ACTION IN ONGOING AND EMERGING DEVELOPMENT CHALLENGES, BRINGING THE PERSPECTIVE OF DEVELOPING COUNTRIES TO GLOBAL ISSUES. in the Arizona dessert less than 50 years ago, and the “disastrous fallout” (as the Harvard researcher Dina Gederman called it)1 of the Rochester Optics cluster, where the iconic companies like Kodak, Xerox, Bausch and Lomb were based, and leaded the dialogue. What is really at the center of this example is the confrontation of two Private Sector Development policy models: an old model of incumbent driven dialogue, and new model of dialogue driven by new market needs and companies willing to pursue them changing their business models. A better competitive position does not come only from improving efficiency in the existing businesses by working together, but by identifying business in new strategic segments that respond to new consumer demands, environmental, health and socially responsible, addressing our societal challenges while making sound business. The Tucson Optics cluster developed new light-based tissue diagnostics techniques that dramatically reduce the cost and time of each analysis, resulting in a large investment by Swiss company Roche, which moved its knowledge base there. But we also have many examples of this change in strategic segment in developing countries, from moving from basic commodity coffee to specialty in Colombia, or from low cost garment manufacturing (maquila) to fast fashion in Mexico.

The need of a dynamic and innovative private sector ready to move to more attractive strategic segments is particularly important for many of our client countries, where some of the incumbent players have built their position based on protectionism or favoritism. It is very difficult to engage in the positive Public Private Dialogue to develop competitive industries with a Private Sector anchored in the old model, which is why we are very interested to know more about your experiences. But, as Christian Ketels has mentioned, we cannot say anymore that this is “new”, when we have been working in developing the tools to move cluster of companies up to more attractive and competitive positions for already more than twenty years. So one of the roles that we need to play, as a development institution, is to enhance and diffuse these learnings, collaborating with other academic, governments and multilateral institutions. This is the objective of the Competitive Industries and Innovation Program, a joint initiative of the World Bank, with the support of the European Union, the governments of Austria and Switzerland, that will help us work better towards our two goals, and more especially on our new challenge of increasing shared prosperity through more competitive and inclusive growth. ■

Biography Emiliano Duch is the Lead Specialist at the Competitive Industries Global Practice at the World Bank. The Practice was created to help achieve the bank’s goals of elimination of poverty and shared prosperity, by helping countries to develop competitive private sectors that create sustainable shared value. Before joining the Bank in June 2013, Emiliano was the founder of Competitiveness, the first consulting firm specialized in supporting governments in their economic development strategies based on clusters. More recently, Emiliano has led the European Cluster Excellence Initiative, a European Commission program to set the standards of excellence for competitiveness focused cluster work. This article is part of the 2014 Global Action Report.

D. Gederman, “Kodak: A Parable of American Competitiveness”, HBR Research, Feb. 2012

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Feature / Healthcare Authored by: Tim Evans

Saving Lives, Increasing Economic Growth and Lifting Millions out of Poverty: The Push for Universal Health Coverage Tim Evans discusses challenges in the struggle for universal healthcare, both in the developed and developing world.

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Feature / Healthcare

ith just more than a year remaining until the deadline for the Millennium Development Goals, countries are pushing to achieve and exceed all of the goals. Yet despite our best efforts, our work will not be done when 2015 ends. Too many people will be dying from preventable causes because they lack access to essential, quality care, or because they cannot afford to pay for the care they need. The developmental and global health landscapes will continue to change, with half of today’s low-income countries transitioning to become middle-income countries, and chronic conditions–such as heart disease and diabetes–rapidly becoming an even greater threat. Yet, we know what is needed to end preventable maternal and child deaths. And we know how we can sharply reduce deaths and disability from chronic illnesses. The most equitable and sustainable way to achieve the health outcomes we all want by 2030 is through universal health coverage, which means that everyone can access quality, essential health services without struggling to pay for them. Worldwide, 1 billion people lack access to health care, and about 100 million people face poverty every year as a result of out-of-pocket health care costs. If we want to end extreme poverty by 2030 and boost shared prosperity, we must reach universal health coverage. Countries like Japan, Thailand, and Turkey have shown the promise of universal health coverage for their people, and more and more countries–like Myanmar, Nigeria, Peru, Senegal, Kenya, South Africa and the Philippines–are prioritizing universal health coverage. These countries and others will chart their progress, both in scaling up equitable access to essential health services, and in preventing poverty due to out-of-pocket payments for health, using new, time-bound targets for universal health coverage. These targets, which the World Bank Group and the World Health Organization developed, can be applied to all countries, rich and poor, as envisioned in the post-2015 framework. These targets will drive policy and program choices that will lead to better heath–such as investing in strong, front-line primary care that is accessible to the poorest and most marginalized communities. Good primary care delivers essential services like antenatal care, skilled birth attendants, child vaccines, blood pressure and diabetes monitoring, and other interventions that prevent health crises and keep health care costs from escalating. Investing in health also will continue to

AchiEving univErsAl hEAlTh covErAgE by 2030 is possiblE. drive great economic returns. The Lancet Commission on Investing in Health found that nearly a quarter of the growth in full income in low-and middle-income countries between 2000 and 2011 was due to better health outcomes. Universal health coverage is the progressive pathway that will save lives, increase economic growth and help millions of people lift themselves out of poverty. Achieving universal health coverage by 2030 is possible. Unwavering political commitment, clear progressive goals and measureable targets will drive the change. Investing in health–and achieving universal health coverage–will help us achieve the development goals to end extreme poverty by 2030 and boost shared prosperity. This is an unprecedented opportunity to achieve these goals and change millions of lives for the better. ■

Biography Timothy Evans is Senior Director of Health, Nutrition and Population at the World Bank Group. From 2010 to 2013, Tim was Dean of the James P. Grant School of Public Health at BRAC University in Dhaka, Bangladesh, and Senior Advisor to the BRAC Health Program. From 2003 to 2010, he was Assistant Director General at the World Health Organization. Prior to this, he served as Director of the Health Equity Theme at the Rockefeller Foundation. Earlier in his career he was an attending physician of internal medicine at Brigham and Women’s Hospital in Boston and was Assistant Professor in International Health Economics at the Harvard School of Public Health. This article is part of the 2014 Global Action Report.

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Feature / Healthcare Authored by: Jeff Balser

The Urgency for an Innovation Roadmap to Transform Health Care Jeff Balser outlines the need for new innovation in health care to maximize output of care and cost effectiveness to the public.

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Feature / Healthcare

he U.S. health care system is in crisis. In America, the health of our citizens not only compares unfavorably to many other nations; annual health care costs account for 18 percent of the gross domestic product (GDP) and drive a large portion of our growing annual budget deficit. There is no other country on the planet where the cost of health care is so disproportionate to the results achieved. Not only here in the U.S., but elsewhere around the globe, health care is being called upon to be not only more cost-effective, but simply better. We are far beyond the point where small fixes and iterative change will achieve meaningful improvement in the time frame demanded by a too-long avoided, and now urgent economic predicament. Riding the same bicycle harder and faster will not get us to the finish line. We need an entirely new kind of vehicle to carry us forward – a new kind of thinking. That new kind of thinking is surely a commitment to innovation. Innovation begins with creativity, but also requires those participating in the ecosystem to alter perceptions and behaviors in a manner that allows innovation to soar. Turning ideas into products and services at a rapid pace requires a willingness to consider and test new ideas, even those that might prove to be failures. In such an atmosphere, the best ideas can succeed, allowing that nation’s health to leap forward. While sweeping change in a health care industry as large and complex as ours creates excitement and opportunity, it is at the same time anxiety provoking. It sometimes feels like we are attempting to fix an airplane while in mid-flight. Many people working at the front lines of health care, as well as patients experiencing gaps in service delivery, wonder whether we are headed to better place or simply toward chaos. Success requires both our optimism and courage. We find ourselves at a point of convergence, where the urgency for innovation is matched by decades of discovery and development in broad areas of computer science and information technology, to fundamental advances in biology and genetics, to the social and process-oriented sciences that consider the means of health care service delivery to patients. If we are going to leverage these gains, how do we do so to effect change? A first step will almost certainly be humility – a recognition that what we are doing today, while seemingly “good” in a local sphere, does not scale to improve the health of all ›

While sWeeping change in a health care industry as large and complex as ours creates excitement and opportunity, it is at the same time anxiety provoking. Sydney. Australia 2014 ❙ 77

Feature / Healthcare

not only here in the u.s., But elseWhere around the gloBe, health care is Being called upon to Be not only more cost-effective, But simply Better.

› people and is economically unsustainable. Innovation is born in such an atmosphere, where both procedural and cultural norms can be openly questioned and challenged. For example, the model where the physician is the sole or even primary point of service, a cornerstone of our health care model in the U.S. for more than a century – whether in an office setting or in an emergency room – no longer scales to the continuous and growing health needs of our aging population. MyHealth Team, a project initiated at Vanderbilt and funded by the Centers for Medicare and Medicaid Healthcare Innovation Awards Program, is implementing a regional, team-based innovation model for ambulatory health management to find a better and more cost-effective way to manage some of the most costly and debilitating chronic diseases in our society: diabetes, hypertension and congestive heart failure. In collaboration with other regional hospitals in the Vanderbilt Health Affiliated Network, using enhanced health information 78 ❙ G20 Business 2014

technology (HIT) and evidence-based decision support integrated into the clinical workflow, an inter-professional staff including physicians, nurses and medical assistants are working to improve communication, care planning and monitoring. The goal is to communicate with patients continuously in a manner that results in improved care with reduced hospital admissions and emergency room visits. The proverb “necessity is the mother of invention,” ascribed to Plato, was never more real in health care as we witness the development and testing of innovative solutions like MyHealth Team at centers across the country. For sustainable change, measures of cost and quality in these experiments must show clear improvement over the status quo. But even so, transformative gains will not be realized unless we – as providers and patients – can imagine a “new normal” for how people can remain healthy and prosper in an entirely new delivery system. ■

Biography Jeff Balser, M.D., Ph.D., is Vice Chancellor for Health Affairs (CEO) for Vanderbilt University Medical Center and Dean of the Vanderbilt University School of Medicine. He is a member of the Institute of Medicine of the National Academy of Sciences, American Society of Clinical Investigation and Association of American Physicians, and is past chair of the NIH Director’s Pioneer Awards Committee. This article is part of the 2014 Global Action Report.

Feature / International Affairs

Authored by: Kate Carnell AO

above trend over the next 5 years, must include invigorating the SME sector in each one of the G20 countries and the world in general. Critical to achieving this ambitious target will be: 1. Significant labour market reforms 2. Major tax reform 3. Global trade liberalisation

Too Big to Ignore globally Small and medium-sized enterprises (SMEs) are ’the world’s most concentrated, booming and innovative engine for world trade and growth’, according to the Executive Director of the International Trade Centre (ITC), Arancha González

nce it is over, 2014 will be seen as one of the most significant years in terms of Australia’s international engagement. As host of the G20, Chair of the Indian Ocean Rim and the completion of multiple preferential trade agreements, there is no shortage of global attention on Australia. During 2013, ACCI took a leading position to highlight the issues of importance for small business during the Federal election campaign. The sentiments of the Big 4 You can’t Ignore identified in the campaign continue to be relevant and the focus of our advocacy into the global arena: 1. Cut down red tape 2. Simplify the tax system 80 ❙ G20 Business 2014

3. Make it easier to employ people 4. Build better infrastructure Too often high level discussions take place between Governments, and sometimes business interests, based on the assumption that what is good for big business is also good for small business. Sometimes this is right but we need to ensure that the SME sector and their representatives are fully engaged and that their voice is being heard at the highest levels. With more than 95% of global businesses being small and medium enterprises, clearly the challenge that the G20 Finance Ministers developed this year at their February meeting in Sydney to increase global growth by 2%

As the world continues to suffer from lower than expected growth, options for continued stimulus become more limited. The debt free stimulus available to the worlds Governments is the completion of the Doha Round of trade talks. It is estimated that completion of the previous Uruguay Round provided benefits of about 1% lift in global GDP. Estimates of the current Doha Round value of benefits could be around 0.5% lift in GDP globally. The G20 is critical to maintaining the momentum towards a final agreement. In December last year the Governments of the World Trade Organisation (WTO) parties demonstrated they were capable of an agreement of this scale. They agreed to the Bali package which included beneficial aspects on trade facilitation but also some on agriculture. The procedural steps for ratification of this agreement by the required 2/3 of WTO party Governments are underway and Australia should signify its leadership in this field by being one of the first to ratify and do this before the G20 Leaders Summit in Brisbane n November. The B20 have been deliberating on these and other issues and ACCI will join our international partners of ICC, BIAC and IOE as delegates to the B20 Summit in Sydney in July. Aligned to this meeting, the G20 trade Ministers will also be meeting. This is the first time this group of Trade Ministers has met since the Mexican host year and so it is an important step in the work plan to achieve the goals set by G20 Leaders to complete the Doha Round, noted in their previous Summit communiques. But completing Doha is hard work. Multiple Leaders declarations have not resulted in a breakthrough. ACCI and the international business community have identified that Trade needs to be elevated to the same focus within the G20 as financial matters. If this status can be achieved then the Australian host year can be considered a success. With this focus, with regular meetings between the G20 trade ministers, we are confident that it is possible to reach a finalisation of the Doha Round in the foreseeable future.

Feature / International Affairs Returning to the Growth Target of the G20, this is a platform that enables a national discussion. The targets require each member of the G20 to develop a National Action Plan of unilateral initiative that each Government can commit to undertaking that will lead to the target being reached. These are driven by national self-interest and don’t depend on group action - simply mutual unilateral action. ACCI is involved with the development of Australia’s national plan. Our advocacy is based on the Big 4 You can’t Ignore and have hosted an event in Melbourne on 20 June jointly with Minister for Small Business, the Hon Bruce Billson MP which discussed what opportunities lie ahead and how we can overcome any constraints to enable the power of the SME sector to be unleashed and make appropriate national contributions to meeting these targets for global growth. Our key message in this discussion was Small Business is Too Big to Ignore – globally. ■

WITh MorE ThAn 95% of GlobAl buSInESSES bEInG SMAll AnD MEDIuM EnTErprISES, ClEArly ThE ChAllEnGE ThAT ThE G20 fInAnCE MInISTErS DEvElopED ThIS yEAr AT ThEIr fEbruAry MEETInG In SyDnEy To InCrEASE GlobAl GroWTh by 2% AbovE TrEnD ovEr ThE nExT 5 yEArS, MuST InCluDE InvIGorATInG ThE SME SECTor In EACh onE of ThE G20 CounTrIES AnD ThE WorlD In GEnErAl.

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Sydney. Australia 2014 ❙ 81

Feature / Food Security Authored by: Roger N. Beachy

The Urgency for Academic-Business Collaboration: Establishing a Global Food System Roadmap Dr. Roger Beachy details the growing need for agricultural reform, both locally and globally, and outlines four potential areas for reform, along with the measures necessary for those reforms to occur.

any voices have called for the global community to ensure adequate food and nutrition for a growing world population, a goal that must take into account changing climates, both physical and political. The call to feed the planet comes from influential individuals, NGOs, universities, national and international governing bodies, and the private sector. There is a growing recognition that challenges for security in food and nutrition are more than can be addressed by single actions: real solutions include more than simply increasing food production per se; more than simply increasing availability of clean; more than better transportation infrastructure; more than increasing supplies of affordable energy; more than improving training and access to communications; more than providing food calories; more than increasing markets; more than access to credit and safety nets for farmers; more than favorable policies from central and regional governments. The complex, integrated system that comprises ‘food and agriculture’ is both broad and deep. All members of the food system must be knowledgeable of the breadth of challenges while taking responsibility for creating a sustainable system that meets global needs. While the scale of the challenges for the global community is significant, it is possible to make changes in the immediate term that can increase the chances of long-term success to achieve food and nutrition security. Universities, colleges, technical schools and research laboratories have vital roles to play in improving the ‘food and agriculture system’. However, it is not reasonable to expect that any single institution will have all the necessary expertise and resources required to meet these emerging challenges.

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Rather, each academic/research institution must recognize its role and responsibility in the complex system if they are to contribute to creating innovative solutions for global food and nutrition security. For example, universities that focus on research, education and outreach related to food production likely also have strengths in agriculture economics, and agriculture policy programs; but they may be less strong in food safety and nutrition, or in public health. Other research institutions have strengths in fundamental sciences in plant, animal, human biology, medicine, and social sciences but have little expertise in agriculture, agroecology and sustainability, or water management, and so forth. As a consequence of the nature of how colleges and universities have historically developed and survived financially, very few faculty, and fewer students, have the capacity or incentives to engage across the full spectrum of the food and agriculture system. Moving forward, academic collaborations and larger systems understanding are both essential. In other words, to build the comprehensive system that the world needs, and to have greater impact, we need to actively expand our research and education collaborations among academic institutions and the private sector. As a result, those that we educate, train and employ will be better suited to compete successfully, to innovate, to contribute and to work towards improved solutions for our food and nutrition challenges Developing research and education missions with greater impact in this ‘space’ requires significant changes in institutional, national and international policies and processes. Some changes to be considered in the immediate and near term include: ›

Feature / Food Security

As A consequence of the nAtuRe of how colleges AnD univeRsities hAve histoRicAlly DevelopeD AnD suRviveD finAnciAlly, veRy few fAculty, AnD feweR stuDents, hAve the cApAcity oR incentives to engAge AcRoss the full spectRum of the fooD AnD AgRicultuRe system.

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Feature / Food Security

1. For policy and planning institutions a. Commit to making changes that lead to achievable national goals for local and global security in food and nutrition b. Establish roadmaps with clear steps to achieve goals for food and nutrition security; engage the natural and social/ policy sciences, and stakeholders spanning all implicit parts of the ‘system’ from the lab/clinic to the consumer’s fork. 2. For universities and research institutions a. Ensure commitment of administration, faculty and students to the common mission b. Engage with private sector, funders and other partners to establish common interests and pathways to success c. Commit incentives and seed funds that create interdisciplinary research/teaching activities leading to productive collaborations across and among essential disciplines in the food and agriculture system d. Create changes in the review and reward system to value more innovative research collaborations, goal oriented activities, teaching, communications among faculty and staff with incentives to participate in joint, long term projects. 3. For agencies and organizations that fund and facilitate programs a. Develop well-formed programs that lead to goals set forth in the roadmap which can be financially supported by multiple or single sources b. Establish mechanisms to create team-based projects that require trans-disciplinary research and education, while achieving 84 ❙ G20 Business 2014

specific goals and with metrics; create disincentives for lack of performance c. Establish mechanisms for sponsoring program activities and for sharing benefits/outcomes d. Measure outcomes against the roadmap, adjust, and move to continue, expand, extend or abandon 4. For corporations and the private sector a. Actively participate as a stakeholder in developing suitable roadmaps that prioritize short and mid-term goals in food and nutrition security, including strategies for developing economies b. Promote collaboration with other companies and agencies to co-fund pre-competitive research that builds knowledge and targets roadmap goals c. Develop collaborative goal oriented research and education programs with universities and institutes that lead to increased global impacts in food and nutrition security and nutrition

There are those that would consider some of these steps to be inappropriate for universities and academic institutions. Fair enough. On the other hand, it can be argued that unless there is such collaborative engagement, the chances of achieving global security in food and nutrition are lessened: grand challenges require input from as many ‘brains and hands’ as can be mustered. The challenges facing our food system require a global food system roadmap with proactive collaboration among the world’s academies as well as broader collaboration with governments and the private sector. ■

the complex, integRAteD system thAt compRises ‘fooD AnD AgRicultuRe’ is Both BRoAD AnD Deep.

Biography Dr. Roger Beachy is Executive Director of the World Food Center at the University of California, Davis. He is also Professor of Biology at Washington University in St. Louis. In 2013 he was Founding Executive Director and CEO of the Global Institute for Food Security at the University of Saskatchewan, Canada. Beachy was appointed by President Obama to serve as Director of the National Institute of Food and Agriculture (NIFA) in the U.S. Department of Agriculture, from October, 2009 through May, 2011; and was Chief scientist of the USDA in 2010. This article is part of the 2014 Global Action Report

Bondurant School of Driving

Feature / Global Economy Authored by: Christian Ketels

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Feature / Global Economy

Economic Development goes Societal Needs: A work in progress Does growing global economic development still speak to societal needs? Christian Ketels distinguishes the need for data transparency and collaboration between public and private enterprises to foster innovation and fit modern needs. .

ith the global economy slowly grinding its way out of the financial and economic crisis, the reality of a ‘new normal’ with lower growth rates in many parts of the world is starting to sink in. But it is not only the outlook of lower growth and the fear of a secular reduction in the speed of innovation seen by some (but disputed by others) that worries many. It is also that headline GDP growth seems to translate less clearly into standard of living-improvements. Is the economy no longer serving the needs of society, as Adam Smith’s ‘invisible hand’ was supposed to ensure? This concern is highly visible in the US, where median prosperity has fallen behind GDP growth and income mobility has shown to be no higher than in Europe. There is widespread unease about the future of the American Dream, whether it materializes in ‘Occupy Wall Street’ or the enthusiastic reception of Thomas Piketty’s “Capital in the Twenty-First Century”. In Europe, other societal needs, especially environmental sustainability, are right there next to the concerns about the social repercussions of fiscal consolidation in the name of future economic growth. Emerging countries like China and Korea, too, experience growing demands for more than headline GDP growth. What has been the reaction to these societal needs, whether they are shared

prosperity, environmental sustainability, or other dimensions of social progress? For companies, the pressure from NGOs and other stakeholders has significantly increased efforts to show corporate social responsibility. There has also been growing interest in social entrepreneurship, i.e. applying the techniques of business with a mission to address specific societal needs. While on both tracks there have been many interesting developments, a key challenge turns out to be scalability: as long as what a firm does to address societal needs is not generating a profit, these efforts are not self-sustaining and remain a cost burden on their traditional business activities. For governments, social, environmental, and economic policies have historically been organized in different ‘silos’. The European Union’s approach to making a number of so-called ‘grand (societal) challenges’ the key focus of regional and innovation policies points into a new direction: using existing policy tools but adjusting the objective function from economic growth to a broader bundle of societal needs. It remains to be seen whether policy approaches that have seen their effectiveness being questioned already for more narrow economic goals will fare better under this new orientation. And while redirecting funds into addressing environmental issues and other societal needs will have some effect, the experience in many countries has been mixed as to the ›

ACross soCieties, there is A growing Consensus thAt eConomiC Development neeDs to fully embrACe soCietAl neeDs. Sydney. Australia 2014 ❙ 87

Feature / Global Economy

› efficiency of this spending. Here, too, scalability is an issue: there are many competing demands on limited government funds. Across societies, there is a growing consensus that economic development needs to fully embrace societal needs. But what is important is to act more effectively in this spirit. First, transparent data on a broader measure of progress is critical. A lot has been happening in this area over the last few years, from research on beyond GDP measures and happiness to the Better Life index to the recently launched Social Progress Index. In these areas, as in others we need to know where we are to inform what we are going to do. Second, collaboration, often among public and private actors, is needed to create the innovations and make the systemic changes to implement them that are required to address the societal challenges we are facing. This will only happen if we create the right kind of institutional architecture and ‘social capital’to facilitate this type of collective action. Third, within the context of collaboration, 88 ❙ G20 Business 2014

it is important to have firms and governments focus on what they can do best. For firms, this is striving for profitability by serving market needs and continuously exploring new markets and new ways to serve them. Here, the work on Corporate Shared Value has shown that there is a lot of room for raising profitability in ways that also address societal needs by taking a new look at unserved markets, at collaborating with partners in the supply chain, and at the internal processes. For governments, this remains providing public goods that individual firms do not deliver. Importantly, this includes organizing markets in which these firms get the economic signals that serving societal needs is profitable. When such market signals are in place, traditional policies like the provision of financial support, for example research on sustainable energy sources, will trigger a much stronger response by firms. The new frontier for economic development, then, is to simultaneously solve the equations for shared prosperity, social progress, and environmental sustainability. This will require

new tools and approaches, not only the acknowledgment of a broader objective function. And it will involve making sure that Adam Smith’s old dictum is perceived to hold again and the market rewards those the most that serve the needs of all individuals in society the best. ■

Biography Dr. Christian Ketels is a member of the Harvard Business School faculty at the Institute for Strategy and Competitiveness. Dr. Ketels has worked with a many international organizations, government agencies, and firms and is President of TCI, a global professional network on cluster-based economic development. He has published widely on economic policy issues and is coeditor of the Competitiveness Review. This article is part of the 2014 Global Action Report.

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Over the course of APCO’s 30-year history, we have assisted sovereign nations across the globe. Our experts come from diplomatic and government backgrounds and offer functional and regional expertise. We have a deep understanding of how governments make decisions and how to communicate those decisions. This extensive experience allows us to advise sovereign nations on how best to communicate with their international stakeholders and, often, how to build capacity and improve their own in-house communication function. Services APCO offers to governments include: • Reputation Management • Foreign Direct Investment • Policy and Market Issues Research • Internal Communication • Direct Representation Custom tools and services: Global Political StrategiesSM (GPS). An executive service of APCO Worldwide, GPS brings together an international team of experienced diplomats, policy advisers and business people to provide governments, businesses and nongovernmental organizations with the strategic insight and forward-looking counsel they need to properly understand what’s next in their world. Chaired by Gov. Bill Richardson, former U.S. ambassador to the United Nations, GPS is your personal foreign affairs department with experience drawn from developed and emerging markets around the world. Our team helps you navigate the challenges of operating in a truly global environment. APCO’s Global Investment Compass (GIC). In a highly competitive market, GIC charts the path to increased foreign direct investment with a report that collects data from a variety of sources, produces an analysis and offers strategic recommendations on how the investment destination can better promote itself. n

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ABOUT APCO WORLDWIDE APCO Worldwide is a global communication, stakeholder engagement and business strategy firm with more than 30 offices in major political, business and media capitals around the world. APCO is an industry leader in providing services to governments and has assisted dozens of regional, national and state governments throughout the Americas, Europe, Asia and Africa in developing and implementing strategic communication campaigns.

Feature / Mining Authored by: Glen Cass, Managing Director, WYN Recruitment

How Australia’s Mining Industry Contributes to Regional and Global Prosperity the boom of australia’s mining industry has positively contributed to economic growth but ﬁerce competition on the international market have impacted east coast operations with mine closures and job losses.

ver recent years the boom of Australia’s mining industry has positively contributed to economic growth and job creation, undoubtedly reducing the impact felt by global recession. However, fierce competition on the international market for coal combined with high extraction costs have impacted east coast operations with mine closures and job losses creating a ripple effect on the mining supply and manufacturing industries. Coal has undoubtedly been the worst to suffer, due to international over supply, with the closure of all Vale operations for maintenance. Iron ore has largely escaped major job loss but expected job growth has not occurred. Mining industry shareholders in 42 of the world’s biggest miners lost 20 per cent of investments last year according to a global research survey 90 ❙ G20 Business 2014

by Boston Consulting group. Falling commodity prices and soaring costs - led by Australian mines - have meant shareholder returns trended downward. Companies have been focusing on reducing debt and reviewing potential efficiency gains as the market becomes largely ‘survival of the fittest’. Indeed, in the words of NSW Minerals Council CEO Stephen Galilee ‘over the last 18 months we have experienced some of the most difficult trading conditions for decades’. The Australian resource industry is currently shifting from its construction phase to operations and maintenance with increasing volumes of iron ore, coal and gas. Many projects will have a long operational life ensuring increases in export capacity for the next decade or beyond are possible. According to the recent Bureau of Resources and Energy

Economics (BREE) April 2014 report the value of committed resource projects has decreased from its peak in April 2013 with 8 projects approved in the last six months to start constriction with a combined value of $12.8 billion. There are now 48 projects at the committed stage with a combined value of $229b. While the number of projects in the construction phase has declined, this decline is from record highs, and has been offset by the recent approval of the $10.7b Roy Hill iron ore project, and a handful of other smaller projects. For the year ending June 2014, mining firms plan to spend a commendable enough $167 billion, still a high level of investment by historical standards. Signs on the west cost for iron ore operations indicate a move towards stabilization even though prices have

Feature / Mining fallen below the $100 a tonne mark. In the next 12 months the increased global supply and shift by the Chinese economy toward a consumer driven economy will continue the pressure for further price falls. Companies will seek increased efficiencies and productivity from their workforce and look to employ only those with proven track records of successful delivery. WYN Recruitment is in a prime position to assist companies in this transition with our wide array of contacts and close relationships with the top players in the industry. A strong Australian currency means a falling iron ore price is less troublesome than seen in 2012 and increased export levels ensure slim margins can still mean profitability for the companies concerned. More positively, the 2014 budget was largely a ‘win’ for the resource industries with the government pledging to abolish the Mineral Resources Rent tax and support development of new projects whilst cutting red and green tape requirements. The Diesel Fuel Tax Rebate scheme remains unchanged and a promise of $100 million as exploration incentives should help halt the decline in exploration spending seen industry wide in recent years. The decision to develop a whitepaper to consider a Northern Economic Zone will be popular as will the political focus on increased infrastructure projects. Longer term prospects for mining remain, in our opinion, positive with continued high demand, a very skilled experienced workforce and good infrastructure access. Australia has a very strong traditional resources base and remains top of the queue to meet the emerging Asian market demand. The resource industry market turnaround may take several years to occur but more positively, signs were of increasing manufacturing industry spend in 2013-14 to partially fill the void. Other industries are also improving such as the LNG sector. There are seven Australian based LNG projects coming on stream over the next five years, accounting for around 60 per cent of the 138 bcm under construction worldwide. Current LNG projects under construction represent a combined $188b in investment, and revenues are expected to increase five fold over the next five years. On the Australian east coast major investment in rail is positive with the first step to investigating the Inland Rail line to Brisbane being confirmed. ■ Glen Cass, Managing Director, WYN Recruitment www.wynrecruitment.com glen.cass@wynrecruitment.com

SignS on the weSt coSt for iron ore operationS indicate a move towardS Stabilization even though priceS have fallen below the $100 a tonne mark. Sydney. Australia 2014 ❙ 91

Feature / Future of Education

Trends and Challenges in Education: What global leaders need to know! Konica Minolta and iMirus, have partnered with the leading authority in K-12 and higher education research–the New Media Consortium (NMC)–to bring insight into the future trends and challenges in the field of education.

f you ask current world leaders today, what is the single most important initiative in preparing our children’s future, the response is simple– education. Two of the top print and digital technology companies in the world, Konica Minolta and iMirus, have partnered with the leading authority in K-12 and higher education research–the New Media Consortium (NMC)–to bring you insight into the future trends and challenges in the field of education through a special digital version of an NMC and Open Universities Australia report: The 2014 NMC Technology Outlook for Australian Tertiary Education: A Horizon Project Regional Report reflects a collaborative research effort between the New Media Consortium (NMC) and Open Universities Australia to help inform Australian education leaders about significant developments in technologies supporting teaching, learning, and creative inquiry in tertiary education.

All of the research underpinning the report makes use of the NMC’s Delphi-based process for bringing groups of experts to a consensus viewpoint, in this case around the impact of emerging technologies on teaching, learning, or creative inquiry in Australian tertiary education over the next five years. The same process underlies the well-known NMC Horizon Report series, which is the most visible product of an on-going research effort begun more than 12 years ago to systematically identify and describe emerging technologies likely to have a large impact on education around the globe. The 2014 NMC Technology Outlook for Australian Tertiary Education was produced to explore emerging technologies and forecast their potential impact expressly in a tertiary education context. In the effort that took place from January through March 2014, a carefully selected panel of experts was asked to consider hundreds of relevant articles, news, blog posts, research, and project

Table 1: Comparison of “Final 12” Topics Across Three NMC Horizon Research Projects

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examples as part of the preparation that ultimately pinpointed the most notable emerging technology topics, trends, and challenges for Australian tertiary education over the next five years. Known as the 2014 Horizon Project Australia Expert Panel, that group of thought leaders consists of notably knowledgeable individuals, all highly regarded in their fields. Collectively the panel represents a range of diverse perspectives across the education sector. The project has been conducted under an open data philosophy, and all the interim projects, secondary research, discussions, and ranking instrumentation can be viewed at aus.wiki.nmc.org. The 12 “technologies to watch” presented in the body of the report reflect our experts’ opinions as to which of the nearly 60 technologies considered will be most important to Australian tertiary education over the five years following the publication of the report. As Table 1 above illustrates, the choices of our experts overlap in interesting ways with those who contributed to the NMC Horizon Report > 2014 Higher Education Edition, which looked at technology uptake from a global perspective, and the 2013 NMC Technology Outlook for Australian Tertiary Education, which provides perspective on how the technology discussions in Australia have shifted in the past year. All three of these projects’ expert panels– a group of 145 acknowledged experts– strongly agree that mobile learning and online learning, in some form, will likely tip into mainstream use within the next year–a trend that spans education across much of the world. While there are several other overlaps between two of the panels, there are some differences between perceived time-toadoption horizons. For example, the 2013 Australian panel and the 2014 Higher Education panel felt that learning analytics and the mining of student data would enter the mainstream within a year, while the 2014 Australian panel placed the topic further out, at two to three years away. That is not to say that learning analytics has slowed in Australian tertiary education, but different facets of it have emerged in the past year, such as adaptive learning, adding more complexity to the topic that will require more time to explore and implement at scale. Both the 2014 Australian panel and global Higher Education panel agree that games and gamification are gaining traction in teaching and learning, but expect it will take two to three years to fully come to fruition. While games and game elements have proven to

Feature / Future of Education make learning more engaging for students, some panel members discussed concerns about educational games matching the high quality of games that are produced for entertainment. Individual institutions, such as Griffith University and their “World Trade Game,” have developed successful models to emulate. New this year to the list of top challenges facing Australian tertiary education is the concern over keeping formal education relevant. As the workforce has evolved, calling for a mix of highly technical and communication-centric skill sets, student expectations of the traditional university degree are changing. There is less perceived value in large lecture hall courses and a greater emphasis on campus experiences that invoke more hands-on, immersive learning that either simulate the real world or are part of it. These points and comparisons provide an important context for the main body of the report. There, 12 key technologies are profiled, each on a single page that describes and defines a technology ranked as very important for Australian tertiary education over the next year, two to three years, and four to five years. Each page opens with a carefully crafted definition of the highlighted technology, outlines its educational relevance, points to several real life examples of its current use, and ends with a short list of additional readings for those who wish to learn more. Following those discussions are sections that detail the expert panel’s top ranked trends and challenges, and frame them into categories that illuminate why they are seen as highly influential factors in the adoption or proliferation of any of these technologies over the coming five years. Those key sections, and this report in general, constitute a reference and straightforward technology-planning guide for educators, researchers, administrators, policy makers, and technologists. It is our hope that this research will help to inform the choices that institutions are making about technology to improve, support, or extend teaching, learning, and creative inquiry in Australian tertiary education. Educators and administrators worldwide look to the NMC Horizon Project and both its global and regional reports as key strategic technology planning references, and it is for that purpose that the 2014 NMC Technology Outlook for Australian Tertiary Education is presented. ■ To view the entire report, visit http://nmc. imirus.com/Mpowered/book/vnmc14/i3/p1 For more information about the New Media Consortium visit www.nmc.org.

KNowN as the 2014 horizoN ProjeCt australia exPert PaNel, the grouP of thought leaders CoNsists of Notably KNowledgeable iNdividuals, all highly regarded iN their fields. Sydney. Australia 2014 ❙ 93

Interview / Turkey’s Leadership

Authored by: Mr. Ilker Aycı, President of Prime Ministry Investment Support and Promotion Agency of Turkey

A Safe Harbour for international investors with its dynamic economy With its young population, fast-growing economy and strategic location, Turkey offers vast opportunities to international investors and will continue to be one of the top destinations for investments in its region and in the globe.

urkey has joined various international organizations, which aim to provide a more secure investment environment for foreign investors, such as the WTO, IMF, World Bank Group, as well as G-20. Ensuring global economic and financial stability, reforming the global economic system according to the realities of today, reflecting the increasing weight of emerging economies are important issues for Turkey. As a member of the G-20, Turkey, with its global and regional connections and dynamic economy, gives utmost importance to expanding and strengthening the competiveness, effectiveness and visibility of its business environment. In 2015, Turkey will assume the G-20 Presidency and host the G-20 Leaders Summit. Turkey attaches the highest importance to this task. Turkey also aims to further develop the relationship and cooperation between the G-20 and the countries and organizations in its region. In addition, Turkey has signed various agreements to protect and promote investments and to avoid double taxation with specific countries. In other words, Turkey has internal as well as external checks and balances in place to ensure the efficiency of the business environment in Turkey. Which industry sectors in Turkey are currently showing the most investment potential? Abundant investment opportunities are available in Turkey ranging from real estate, finance, automotive, ICT, energy, renewable energy, iron and steel to petro-chemicals. The national and local authorities in Turkey have been implementing numerous investment projects through PPP, and they are also keen to realize further opportunities in education,

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energy, defense, healthcare, transportation and other public services. Similarly, opportunities are also available in the privatization projects. It is also a national target for Turkey to make Istanbul an international finance center. Having been tested by the global economic crisis, Turkey has one of the most stable and profitable financial sectors in its region. The Turkish government’s Istanbul Finance Center project offers global companies a chance to run their financial operations in the region through Istanbul, thanks to various incentives, a skilled workforce, and a global, cosmopolitan city with a vibrant local economy. What are the key factors you would highlight to companies and investors considering Turkey as part of their future business strategy? Turkey has set specific targets to achieve by 2023, the centennial celebration of the foundation of the republic, from healthcare to economy, and from defense to education. It targets to become one of the top 10 economies in the world with a GDP of USD 2 trillion, to increase exports to USD 500 billion, to upgrade the country’s energy, transportation and healthcare infrastructure through the construction of hospital cities, to more than double its electricity generation, and to build new bridges on the Bosphorus and the Dardanelles straits. What benefits have resulted from Turkey’s status as an official European Union candidate country, and how do you envisage the country’s future investment landscape once accession is confirmed? Turkey has been an EU accession country since October 2005 when the negotiations started for full membership. The hindsight

speaks for itself; Turkey has attracted more than USD 70 billion of foreign direct investment from the EU over the past eight years since the negotiations started. Today there are more than 18,000 companies from the EU countries with active investments in Turkey. Similarly, foreign trade between Turkey and the EU has tremendously increased. It is noteworthy to highlight that almost three quarters of FDI inflows to Turkey have come from the EU countries - a clear indication of our economy’s de facto integration with the EU economy. Turkey became a member of the European Union Customs Union in 1996, since then trade between Turkey and the EU has more than quadrupled. Today, many EU companies are using Turkey as a manufacturing base for the EU and other markets surrounding Turkey. Most European business leaders choose Turkey not just because of its vast domestic market, but also to expand their businesses in the region through Turkey, using it as a hub for their regional operations. The European Union accession negotiations have made Turkey one of the most attractive destinations for foreign investment, and an entry to European Union as a member country will serve both Turkey and other investing countries. How does Turkey’s strategic geographical position contribute to its appeal to investors, domestically and regionally? Turkey has part of her land in Europe and other part in Asia, and is referred to as “the bridge between the East and the West.” It is indeed a source of sensation when every time you cross the Bosphorus Bridge, as you cross between Europe and Asia at the same time. Yet, the phrase of “the bridge between the East and the West” does not quite explain the geopolitical benefit of Turkey and its location

Interview / Turkey’s Leadership

in the global map. Especially in the current uncertain economic climate in mature markets of the US and Europe, the benefit of Turkey’s location is that the country is at a close proximity to North African countries, the Middle Eastern countries, Iraq, with its tremendous demand for reconstruction, resource-rich Iran, Central Asian countries which are also rich in natural resources and in an urgent need to upgrade their infrastructure, and Russia in north.

All of these countries have potential demands that are much stronger than mature markets. Of course, it is right next to the EU. Turkey has been a member of the EU Customs Union since 1996 and any product manufactured in Turkey can be shipped to Europe without paying customs duties. Most large-scale companies, however, have already done what they have to with regard to European market, but very few activities are available in the Middle East. North Africa and Central Asia

are even less developed as a market for them and when they try to establish a regional base to develop these markets, Turkey is often the answer. What role does ISPAT play in assisting potential and existing foreign investors in Turkey? Turkey strongly supports foreign investors through its public institutions. To this end, it established the Investment Support and › Sydney. Australia 2014 ❙ 97

Interview / Turkey’s Leadership

As The presidenT of The invesTmenT supporT And promoTion Agency of Turkey, i inviTe globAl invesTors To join Turkey’s economic rise.

› Promotion Agency of Turkey (ISPAT), under the auspices of the Prime Ministry. Since its foundation in 2006, the Agency has been providing assistance to global investors before, during and after their entry into Turkey. The Agency’s free services include, but are not limited to providing market information and analyses, site selection, B2B meetings, coordination with relevant governmental institutions, facilitating legal procedures and applications, such as establishing business operations, incentives applications, obtaining licenses and work permits. Being attached to the Prime Ministry and directly reporting to the Prime Minister provide the Agency with operational freedom and flexibility. The Agency serves as a reference and a point of contact for international investors by linking them with both the government and businesses in Turkey, working on a fully confidential basis and functioning as a private venture. We consider investors as clients and client satisfaction is a top priority for us. 98 ❙ G20 Business 2014

Of the many success stories of foreign and multinational companies expanding their operations in Turkey, which are your personal highlights? Today, there are more than 38,000 foreign companies in Turkey and they invested billions of dollars in Turkey over the last decade. In order to benefit from Turkey’s economic dynamism and unique advantages, such as a young population, skilled labor force, economic performance, strategic location, and its historical and cultural ties in the region, many global companies have either established their manufacturing bases in Turkey or moved their regional headquarters to Istanbul as the country offers a robust platform for economic expansion on a regional scale, enabling these companies to leverage common qualities and local capabilities in Turkey. For example, HP has inaugurated a manufacturing facility in Turkey to produce and export more than 2 million computers to the Middle East and North Africa. GE Healthcare has moved its

regional headquarters to Istanbul to manage its operations in 80 countries in four major regions - Central Asia, the Middle East, Russia and Africa. Both Coca-Cola and Microsoft have their regional headquarters in Turkey, managing almost a hundred countries from Turkey. Do you have a concluding message for potential investors? As the president of the Investment Support and Promotion Agency of Turkey, I invite global investors to join Turkey’s economic rise. The global economy is undergoing a profound transformation; the center of the world economy is shifting toward emerging economies like Turkey. In such a juncture, Turkey is differentiating itself economically with its robust and stable economic growth; hence it is the right time to invest in Turkey in order to seize the opportunity. Global investors will not only benefit from the opportunities in Turkey but also in emerging markets surrounding Turkey. ■

More than 37,500 foreign companies have already invested in Turkey. How about you?

One of the fastest growing economies in the world and the fastest growing economy in Europe with an average annual real GDP growth rate of 5,1% over the past decade (2004-2013) The fastest growing economy among the OECD members with an average annual growth rate of 5.2% (OECD 2012-2017) 16th largest economy in the world with over $1,1 trillion GDP at PPP (IMF 2013)

A population of 76,6 million with half under the age of 30,4 Access to Europe, Caucasus, Central Asia, the Middle East and North Africa Highly competitive investment incentives as well as exclusive R&D support Around 610,000 university graduates per year

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